Exhibit 99.1
KKR & Co. L.P. Announces
Fourth Quarter and Full Year 2010 Results
Assets under management (“AUM”) totaled $61.0 billion as of December 31, 2010, up 16.8% from $52.2 billion as of December 31, 2009.
Fee related earnings (“FRE”) were $95.1 million and $318.3 million for the fourth quarter and year ended December 31, 2010, respectively, up from FRE of $87.5 million and pro forma(1) FRE of $247.4 million in the comparable periods of 2009.
Economic net income (“ENI”) was $714.6 million and $2,139.8 million for the fourth quarter and year ended December 31, 2010, respectively, up from ENI of $515.3 million and pro forma ENI of $1,953.9 million in the comparable periods of 2009.
GAAP net income attributable to KKR & Co. L.P. was $180.6 million and $333.2 million for the fourth quarter and year ended December 31, 2010, respectively(2).
Book value was $5.7 billion on a segment basis as of December 31, 2010, representing $8.38 per adjusted unit.
After-tax ENI was $1.02 and $2.83 per adjusted unit for the fourth quarter and year ended December 31, 2010, respectively.
KKR & Co. L.P. declares a fourth quarter distribution of $0.29 per common unit, bringing total distributions for 2010 results to $0.60 per common unit.
NEW YORK, February 23, 2011—KKR & Co. L.P. (NYSE: KKR) today reported its fourth quarter and full year 2010 results. ENI was $2.1 billion for the year, an increase of 9.5% versus 2009 driven by accelerated performance across each of KKR’s businesses. The continued appreciation of KKR’s private equity investments, by 11% for the quarter and 33% for the full year, was the key contributor to the strong results.
AUM and fee paying assets under management (“FPAUM”) ended the year at $61.0 billion and $46.0 billion, respectively. The strong growth over the prior quarter and year was a result of continued success in capital raising and significant investment appreciation.
“We continue to show great progress in the two areas that drive our business: investment performance and capital raising. Our investment returns across all strategies compared favorably to their benchmarks. Our private equity funds returned 33% for the year, significantly outperforming the S&P 500 return of 15%, while each of our credit strategies also beat benchmark indices. In addition, despite a challenging fundraising environment in 2010, we raised $5 billion of capital to support our China growth equity, oil & gas, infrastructure, mezzanine, special situations and other strategies. All of this provides us with strong momentum heading into 2011,” said Henry R. Kravis and George R. Roberts, Co-Founders, Co-Chairmen and Co-Chief Executive Officers of KKR.
Note: Certain financial measures, including FRE, ENI, after-tax ENI and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP.
(1) On October 1, 2009, KKR & Co. L.P. and KKR & Co. (Guernsey) L.P. completed a transaction to combine their businesses (the “Business Combination”). Amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they had been completed on January 1, 2009.
(2) For the years ended December 31, 2010 and 2009, the GAAP financial information is not directly comparable as GAAP financial information prior to October 1, 2009 did not reflect certain adjustments that are applicable as a result of the Business Combination.
GAAP Results
GAAP results for the quarter and year ended December 31, 2010 included net income attributable to KKR & Co. L.P. of $180.6 million and $333.2 million, respectively, and net income per common unit attributable to KKR & Co. L.P. of $0.86 and $1.62, respectively. For the quarter and year ended December 31, 2009, net income (loss) attributable to KKR & Co. L.P. was ($78.2) million and $849.7 million, respectively.
The quarter over quarter increase is primarily due to a higher level of appreciation of KKR’s investments and a one-time recognition of non-cash compensation charges in connection with the Business Combination and related transactions in the fourth quarter of 2009.
The year over year decrease is primarily due to certain adjustments applicable to periods after October 1, 2009 as a result of the Business Combination and related transactions including: (i) the allocation of earnings of KKR to KKR Holdings L.P. (the vehicle through which KKR principals own interests in KKR), (ii) the recognition of non-cash compensation charges, and (iii) the recognition of corporate income taxes. These factors were partially offset by the inclusion of income from KKR’s principal investments for all of 2010.
Total Reportable Segments
AUM was $61.0 billion as of December 31, 2010, an increase of $5.5 billion or 9.9% compared to AUM of $55.5 billion as of September 30, 2010. The increase was primarily due to appreciation in the fair value of KKR’s private equity portfolio as well as new capital raised, partially offset by distributions to limited partners arising from realizations.
FPAUM was $46.0 billion as of December 31, 2010, an increase of $3.3 billion or 7.7% compared to FPAUM of $42.7 billion as of September 30, 2010. The increase was primarily due to new capital raised across many of KKR’s strategies.
FRE was $95.1 million for the quarter ended December 31, 2010, an increase of $7.6 million or 8.7% compared to FRE of $87.5 million for the quarter ended December 31, 2009. The increase is primarily due to higher capital markets fees as a result of increased activity and incentive fees earned in the public markets segment. These increases were partially offset by lower monitoring fees in the private markets segment as a result of a termination payment on a monitoring agreement with a portfolio company received during the fourth quarter of 2009.
For the year ended December 31, 2010, FRE was $318.3 million, an increase of $70.9 million or 28.7% compared to pro forma FRE of $247.4 million for the year ended December 31, 2009. The increase was primarily due to (i) higher capital markets fees as a result of increased activity, (ii) higher incentive fees earned in the public markets segment, and (iii) higher transaction fees in the private markets segment as a result of more transactions closing. These increases were partially offset by higher compensation expense as a result of improved performance and the expansion of KKR’s business as well as lower monitoring fees as a result of monitoring agreement termination payments received during 2009.
ENI was $714.6 million for the quarter ended December 31, 2010, an increase of $199.3 million or 38.7% compared to ENI of $515.3 million for the quarter ended December 31, 2009. The increase primarily reflects a higher level of appreciation of KKR’s private equity portfolio, which drove increases in both net carried interest and the income from principal investments.
For the year ended December 31, 2010, ENI was $2,139.8 million, an increase of $185.9 million or 9.5% compared to pro forma ENI of $1,953.9 million for the year ended December 31, 2009. The increase primarily reflects a higher level of net carried interest and the growth in FRE discussed above.
Private Markets
AUM in the private markets segment was $46.2 billion as of December 31, 2010, an increase of $4.3 billion or 10.3% compared to AUM of $41.9 billion as of September 30, 2010. The increase was primarily due to appreciation in the fair value of KKR’s private equity portfolio as well as new capital raised, partially offset by distributions to limited partners arising from realizations.
FPAUM in the private markets segment was $38.2 billion as of December 31, 2010, an increase of $2.2 billion or 6.1% compared to FPAUM of $36.0 billion as of September 30, 2010. The increase was primarily due to new capital raised.
FRE in the private markets segment was $41.1 million for the quarter ended December 31, 2010, a decrease of $28.1 million or 40.6% compared to FRE of $69.2 million for the quarter ended December 31, 2009. The decrease was primarily due to (i) lower monitoring fees as a result of a $46.1 million termination payment on a monitoring agreement with a portfolio company during the fourth quarter of 2009, which impacted FRE by $28.6 million net of associated fee credits, and (ii) higher compensation and other operating expenses in connection with the expansion of KKR’s business and increased transaction activity. These downward drivers were partially offset by higher transaction fees as a result of more transactions closing.
FRE in the private markets segment was $182.3 million for the year ended December 31, 2010, a decrease of $34.7 million or 16.0% compared to pro forma FRE of $217.0 million for the year ended December 31, 2009. The decrease was primarily due to (i) lower monitoring fees as a result of $72.2 million in payments received during 2009 related to the termination of monitoring agreements with portfolio companies, which impacted FRE by $37.8 million net of associated fee credits, and (ii) higher compensation and other operating expenses in connection with the expansion of KKR’s business and increased transaction activity. These downward drivers were partially offset by higher transaction fees as a result of more transactions closing.
ENI in the private markets segment was $262.0 million for the quarter ended December 31, 2010, an increase of $116.4 million or 79.9% compared to ENI of $145.6 million for the quarter ended December 31, 2009. The increase was primarily due to higher net carried interest resulting from a higher level of appreciation of KKR’s private equity portfolio.
ENI in the private markets segment was $784.6 million for the year ended December 31, 2010, an increase of $123.1 million or 18.6% compared to pro forma ENI of $661.5 million for the year ended December 31, 2009. The increase was primarily due to higher net carried interest driven by certain private equity funds that were not in a carry-earning position during 2009 earning carried interest in 2010 as a result of appreciation above their cost basis.
Public Markets
AUM in the public markets segment was $14.8 billion as of December 31, 2010, an increase of $1.2 billion or 8.8% compared to AUM of $13.6 billion as of September 30, 2010. The increase was primarily due to new capital raised during the quarter and appreciation in the net asset value of certain vehicles.
FPAUM in the public markets segment was $7.8 billion as of December 31, 2010, an increase of $1.1 billion or 16.4% compared to FPAUM of $6.7 billion as of September 30, 2010. The increase was primarily due to new capital raised during the quarter and appreciation in the net asset value of certain vehicles.
FRE in the public markets segment was $16.3 million for the quarter ended December 31, 2010, an increase of $13.9 million compared to FRE of $2.4 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, FRE was $57.0 million, an increase of $45.2 million compared to pro forma FRE of $11.8 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to (i) higher incentive fees and (ii) higher transaction fees arising primarily from new strategies that drive such fees.
ENI in the public markets segment was $17.8 million for the quarter ended December 31, 2010, an increase of $16.3 million compared to ENI of $1.5 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, ENI was $60.1 million, an increase of $53.7 million compared to pro forma ENI of $6.4 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to the growth in FRE discussed above.
Capital Markets and Principal Activities
FRE in the capital markets and principal activities segment was $37.7 million for the quarter ended December 31, 2010, an increase of $21.9 million compared to FRE of $15.8 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, FRE was $79.1 million, an increase of $60.4 million compared to pro forma FRE of $18.7 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to an increase in overall capital markets transaction activity resulting from an improved environment and the continued growth of this business.
ENI in the capital markets and principal activities segment was $434.9 million for the quarter ended December 31, 2010, an increase of $66.7 million or 18.1% compared to ENI of $368.2 million for the quarter ended December 31, 2009. The increase was primarily due to a higher level of investment income.
For the year ended December 31, 2010, ENI was $1,295.1 million, an increase of $9.1 million or 0.7% compared to pro forma ENI of $1,286.0 million for the year ended December 31, 2009. The increase was primarily due to the growth in FRE discussed above partially offset by a lower level of investment income. While the fair value of KKR’s principal investments increased in 2010, the overall level of appreciation was slightly lower than in 2009.
CAPITAL AND LIQUIDITY
As of December 31, 2010, KKR had an available cash balance of $756.3 million and $500.0 million of outstanding debt obligations. On February 22, 2011, KKR entered into an amended and restated credit agreement with HSBC Bank plc, which will become effective upon the satisfaction of certain customary closing conditions. Upon effectiveness, the current availability for borrowings under this facility will be reduced from $1.0 billion to $700.0 million, and the scheduled maturity will be extended by three years to expire on the fifth anniversary of the date of closing. The rates for borrowings and the facility fee will remain the
same. Following the amendment, KKR’s availability for further borrowings was approximately $1.6 billion (which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of December 31, 2010).
As of December 31, 2010, KKR’s portion of total uncalled commitments to its investment funds was $923.7 million, consisting of the following (amounts in thousands):
|
| Commitments |
| |
Private Markets |
|
|
| |
2006 Fund |
| $ | 362,684 |
|
European Fund III |
| 300,540 |
| |
Asian Fund |
| 117,396 |
| |
Infrastructure Fund |
| 50,000 |
| |
E2 Investors (Annex Fund) |
| 30,833 |
| |
China Growth Fund |
| 8,506 |
| |
Natural Resources I |
| 5,413 |
| |
Other Private Markets Commitments |
| 1,264 |
| |
Total Private Markets Commitments |
| 876,636 |
| |
|
|
|
| |
Public Markets |
|
|
| |
Mezzanine Fund |
| 34,100 |
| |
Capital Solutions Vehicles |
| 13,000 |
| |
Total Public Markets Commitments |
| 47,100 |
| |
|
|
|
| |
Total Uncalled Commitments |
| $ | 923,736 |
|
DISTRIBUTION
A distribution of $0.29 per common unit will be paid on March 21, 2011 to unitholders of record as of the close of business on March 7, 2011.
OTHER
KKR will hold its first investor day on March 15, 2011. Additional details will follow in a press release that will be issued prior to the event. The investor day will be broadcast live over the Internet and will be accessible by all interested parties.
CONFERENCE CALL
A conference call to discuss KKR’s financial results will be held on Wednesday, February 23, 2011 at 10:00 a.m. EST. The conference call may be accessed by dialing (877) 857-6144 (U.S. callers) or +1 (719) 325-4932 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Relations section of KKR’s website at http://www.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (888) 203-1112 (U.S. callers) and +1 (719) 457-0820 (non-U.S. callers), pass code 2815232, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Relations section of KKR’s website at www.kkr.com. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email within the “Email Alerts” area of the Investor Relations section of the website.
ABOUT KKR
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $61.0 billion in assets under management as of December 31, 2010. With 14 offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platforms. KKR is
publicly traded on the New York Stock Exchange (NYSE: KKR). For additional information, please visit KKR’s website at www.kkr.com.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to assets under management, fee paying assets under management, fee related earnings, economic net income, committed dollars invested, uncalled commitments and book value, may vary material ly from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR’s investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about facto rs affecting KKR is available in KKR & Co. L.P.’s prospectus filed with the SEC on October 5, 2010 and other filings with the SEC, which are available at www.sec.gov.
CONTACT INFORMATION
Investor Relations: Jonathan Levin Kohlberg Kravis Roberts & Co. L.P. Tel: +1 (877) 610-4910 (U.S.) / +1 (212) 230-9410 investor-relations@kkr.com |
| Media Contact: Peter McKillop or Kristi Huller Kohlberg Kravis Roberts & Co. L.P. Tel: +1 (212) 750-8300 |
* * * * *
KKR
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
|
| Quarter Ended |
| Year Ended |
| ||||||||
|
| December 31, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| December 31, 2009 |
| ||||
Revenues |
|
|
|
|
|
|
|
|
| ||||
Fees |
| $ | 146,267 |
| $ | 129,856 |
| $ | 435,386 |
| $ | 331,271 |
|
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee Compensation and Benefits |
| 299,123 |
| 686,021 |
| 1,344,455 |
| 838,072 |
| ||||
Occupancy and Related Charges |
| 10,124 |
| 9,896 |
| 39,692 |
| 38,013 |
| ||||
General, Administrative and Other |
| 81,377 |
| 124,498 |
| 311,147 |
| 264,396 |
| ||||
Fund Expenses |
| 28,278 |
| 18,218 |
| 67,369 |
| 55,229 |
| ||||
Total Expenses |
| 418,902 |
| 838,633 |
| 1,762,663 |
| 1,195,710 |
| ||||
Investment Income (Loss) |
|
|
|
|
|
|
|
|
| ||||
Net Gains (Losses) from Investment Activities |
| 2,986,845 |
| 1,959,537 |
| 7,755,090 |
| 7,505,005 |
| ||||
Dividend Income |
| 441,781 |
| 3,831 |
| 1,250,293 |
| 186,324 |
| ||||
Interest Income |
| 55,766 |
| 45,137 |
| 226,824 |
| 142,117 |
| ||||
Interest Expense |
| (18,706 | ) | (18,797 | ) | (53,099 | ) | (79,638 | ) | ||||
Total Investment Income (Loss) |
| 3,465,686 |
| 1,989,708 |
| 9,179,108 |
| 7,753,808 |
| ||||
Income (Loss) Before Taxes |
| 3,193,051 |
| 1,280,931 |
| 7,851,831 |
| 6,889,369 |
| ||||
Income Taxes |
| 14,362 |
| 31,193 |
| 75,360 |
| 36,998 |
| ||||
Net Income (Loss) |
| 3,178,689 |
| 1,249,738 |
| 7,776,471 |
| 6,852,371 |
| ||||
Less: Net Income (Loss) Attributable to |
|
|
|
|
|
|
|
|
| ||||
Noncontrolling Interests in Consolidated Entities |
| 2,586,697 |
| 1,444,655 |
| 6,544,016 |
| 6,119,382 |
| ||||
Less: Net Income (Loss) Attributable to |
|
|
|
|
|
|
|
|
| ||||
Noncontrolling Interests Held by KKR Holdings L.P. |
| 411,413 |
| (116,696 | ) | 899,277 |
| (116,696 | ) | ||||
Net Income (Loss) Attributable to KKR & Co. L.P. |
| $ | 180,579 |
| $ | (78,221 | ) | $ | 333,178 |
| $ | 849,685 |
|
|
|
|
|
|
|
|
|
|
| ||||
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit |
|
|
|
|
|
|
|
|
| ||||
Basic |
| $ | 0.86 |
| $ | (0.38 | ) | $ | 1.62 |
|
|
| |
Diluted (a) |
| $ | 0.86 |
| $ | (0.38 | ) | $ | 1.62 |
|
|
| |
Weighted Average Common Units |
|
|
|
|
|
|
|
|
| ||||
Basic |
| 209,383,219 |
| 204,902,226 |
| 206,031,682 |
|
|
| ||||
Diluted (a) |
| 209,413,219 |
| 204,902,226 |
| 206,039,244 |
|
|
|
Note: Prior to the Business Combination and related transactions, there was no single capital structure upon which to calculate historical earnings per common unit since KKR’s business was conducted through a large number of entities for which there was no single holding entity. Accordingly, earnings per common unit has not been presented for periods prior to the Transactions.
(a) KKR Holdings units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.’s interests in KKR’s business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
|
| Quarter Ended |
| Year Ended |
| |||||||||||
|
| Actual |
| Actual |
| Actual |
| Actual |
| Pro Forma* |
| |||||
|
| December 31, 2010 |
| September 30, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| December 31, 2009 |
| |||||
Fees |
|
|
|
|
|
|
|
|
|
|
| |||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Management fees |
| $ | 119,043 |
| $ | 112,545 |
| $ | 113,615 |
| $ | 453,286 |
| $ | 437,716 |
|
Incentive fees |
| 8,427 |
| 9,555 |
| — |
| 38,832 |
| 4,472 |
| |||||
Management and incentive fees |
| 127,470 |
| 122,100 |
| 113,615 |
| 492,118 |
| 442,188 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring fees |
| 22,108 |
| 21,780 |
| 68,383 |
| 86,932 |
| 158,243 |
| |||||
Transaction fees |
| 86,774 |
| 40,634 |
| 39,842 |
| 220,383 |
| 91,828 |
| |||||
Fee credits |
| (21,671 | ) | (13,683 | ) | (26,260 | ) | (64,899 | ) | (73,901 | ) | |||||
Net monitoring and transaction fees |
| 87,211 |
| 48,731 |
| 81,965 |
| 242,416 |
| 176,170 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total fees |
| 214,681 |
| 170,831 |
| 195,580 |
| 734,534 |
| 618,358 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Employee compensation and benefits |
| 55,594 |
| 49,056 |
| 48,018 |
| 206,334 |
| 168,597 |
| |||||
Occupancy and related charges |
| 10,124 |
| 10,373 |
| 9,896 |
| 39,715 |
| 38,013 |
| |||||
Other operating expenses |
| 53,872 |
| 41,896 |
| 50,199 |
| 170,163 |
| 164,331 |
| |||||
Total expenses |
| 119,590 |
| 101,325 |
| 108,113 |
| 416,212 |
| 370,941 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fee Related Earnings |
| 95,091 |
| 69,506 |
| 87,467 |
| 318,322 |
| 247,417 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investment income (loss) |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross carried interest |
| 416,442 |
| 237,923 |
| 139,034 |
| 1,207,070 |
| 602,427 |
| |||||
Less: allocation to KKR carry pool |
| (169,305 | ) | (91,156 | ) | (40,077 | ) | (455,872 | ) | (153,827 | ) | |||||
Less: management fee refunds |
| (24,412 | ) | (17,387 | ) | (22,720 | ) | (143,446 | ) | (22,720 | ) | |||||
Net carried interest |
| 222,725 |
| 129,380 |
| 76,237 |
| 607,752 |
| 425,880 |
| |||||
Other investment income (loss) |
| 398,389 |
| 120,006 |
| 352,576 |
| 1,218,128 |
| 1,283,338 |
| |||||
Total investment income (loss) |
| 621,114 |
| 249,386 |
| 428,813 |
| 1,825,880 |
| 1,709,218 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 716,205 |
| 318,892 |
| 516,280 |
| 2,144,202 |
| 1,956,635 |
| |||||
Income (Loss) attributable to noncontrolling interests |
| 1,592 |
| 1,567 |
| 1,025 |
| 4,409 |
| 2,691 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income (Loss) |
| $ | 714,613 |
| $ | 317,325 |
| $ | 515,255 |
| $ | 2,139,793 |
| $ | 1,953,944 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Provision for Income Taxes |
| 17,400 |
| 47,784 |
| 97,014 |
| 210,196 |
|
|
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income, After Taxes (a) |
| $ | 697,213 |
| $ | 269,541 |
| $ | 418,241 |
| $ | 1,929,597 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income, After Taxes per Adjusted Unit (b) |
| $ | 1.02 |
| $ | 0.39 |
| $ | 0.61 |
| $ | 2.83 |
|
|
| |
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets Under Management |
| $ | 60,997,500 |
| $ | 55,498,500 |
| $ | 52,204,200 |
| $ | 60,997,500 |
| $ | 52,204,200 |
|
Fee Paying Assets Under Management |
| $ | 46,011,100 |
| $ | 42,705,200 |
| $ | 42,779,800 |
| $ | 46,011,100 |
| $ | 42,779,800 |
|
Committed Dollars Invested |
| $ | 2,691,000 |
| $ | 540,400 |
| $ | 456,700 |
| $ | 5,253,300 |
| $ | 2,107,700 |
|
Uncalled Commitments |
| $ | 14,074,700 |
| $ | 13,750,900 |
| $ | 14,544,427 |
| $ | 14,074,700 |
| $ | 14,544,427 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Other Information |
|
|
|
|
|
|
|
|
|
|
| |||||
Fee Related Earnings |
| $ | 95,091 |
| $ | 69,506 |
| $ | 87,467 |
| $ | 318,322 |
| $ | 247,417 |
|
Plus: Depreciation and Amortization |
| 2,790 |
| 2,674 |
| 3,191 |
| 11,664 |
| 9,799 |
| |||||
Fee Related EBITDA |
| $ | 97,881 |
| $ | 72,180 |
| $ | 90,658 |
| $ | 329,986 |
| $ | 257,216 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
GAAP interest expense |
| $ | 18,706 |
| $ | 10,432 |
| $ | 18,797 |
| $ | 53,099 |
| $ | 79,638 |
|
Less: interest expense related to debt obligations from investment financing arrangements |
| 7,535 |
| 6,849 |
| 9,673 |
| $ | 28,622 |
| $ | 42,458 |
| |||
Core Interest Expense (c) |
| $ | 11,171 |
| $ | 3,583 |
| $ | 9,124 |
| $ | 24,477 |
| $ | 37,180 |
|
(a) | After-tax ENI is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units. |
|
|
(b) | Adjusted units represents the weighted-average fully diluted unit count for Economic Net Income purposes using the if-converted method. See Exhibit B for a reconciliation of this item to the comparable GAAP measure. |
|
|
(c) | Core interest expense excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s private equity funds and principal investments. These financing arrangements are not direct obligations of the general partners of KKR’s private equity funds or its management companies. On a segment basis, interest expense is included in other investment income. |
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
|
| Quarter Ended |
| Year Ended |
| |||||||||||
|
| Actual |
| Actual |
| Actual |
| Actual |
| Pro Forma* |
| |||||
|
| December 31, 2010 |
| September 30, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| December 31, 2009 |
| |||||
Fees |
|
|
|
|
|
|
|
|
|
|
| |||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Management fees |
| $ | 102,684 |
| $ | 98,337 |
| $ | 99,221 |
| $ | 396,227 |
| $ | 387,112 |
|
Incentive fees |
| — |
| — |
| — |
| — |
| — |
| |||||
Management and incentive fees |
| 102,684 |
| 98,337 |
| 99,221 |
| 396,227 |
| 387,112 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring fees |
| 22,108 |
| 21,780 |
| 68,383 |
| 86,932 |
| 158,243 |
| |||||
Transaction fees |
| 30,942 |
| 19,816 |
| 20,269 |
| 96,000 |
| 57,699 |
| |||||
Fee credits |
| (15,673 | ) | (12,941 | ) | (26,260 | ) | (52,563 | ) | (73,901 | ) | |||||
Net monitoring and transaction fees |
| 37,377 |
| 28,655 |
| 62,392 |
| 130,369 |
| 142,041 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total fees |
| 140,061 |
| 126,992 |
| 161,613 |
| 526,596 |
| 529,153 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Employee compensation and benefits |
| 42,396 |
| 37,861 |
| 39,399 |
| 159,561 |
| 136,465 |
| |||||
Occupancy and Related Charges |
| 9,206 |
| 9,513 |
| 9,080 |
| 36,395 |
| 34,747 |
| |||||
Other operating expenses |
| 47,392 |
| 36,733 |
| 43,911 |
| 148,357 |
| 140,989 |
| |||||
Total expenses |
| 98,994 |
| 84,107 |
| 92,390 |
| 344,313 |
| 312,201 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fee Related Earnings |
| 41,067 |
| 42,885 |
| 69,223 |
| 182,283 |
| 216,952 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investment income (loss) |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross carried interest |
| 414,025 |
| 236,792 |
| 139,034 |
| 1,202,070 |
| 602,427 |
| |||||
Less: allocation to KKR carry pool |
| (168,338 | ) | (90,704 | ) | (40,077 | ) | (453,872 | ) | (153,827 | ) | |||||
Less: management fee refunds |
| (24,412 | ) | (17,387 | ) | (22,720 | ) | (143,446 | ) | (22,720 | ) | |||||
Net carried interest |
| 221,275 |
| 128,701 |
| 76,237 |
| 604,752 |
| 425,880 |
| |||||
Other investment income (loss) |
| (111 | ) | 2,524 |
| 605 |
| (1,643 | ) | 20,621 |
| |||||
Total investment income (loss) |
| 221,164 |
| 131,225 |
| 76,842 |
| 603,109 |
| 446,501 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 262,231 |
| 174,110 |
| 146,065 |
| 785,392 |
| 663,453 |
| |||||
Income (Loss) attributable to noncontrolling interests |
| 259 |
| 394 |
| 497 |
| 839 |
| 1,973 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income (Loss) |
| $ | 261,972 |
| $ | 173,716 |
| $ | 145,568 |
| $ | 784,553 |
| $ | 661,480 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets Under Management |
| $ | 46,223,900 |
| $ | 41,878,700 |
| $ | 38,842,900 |
| $ | 46,223,900 |
| $ | 38,842,900 |
|
Fee Paying Assets Under Management |
| $ | 38,186,700 |
| $ | 36,032,300 |
| $ | 36,484,400 |
| $ | 38,186,700 |
| $ | 36,484,400 |
|
Committed Dollars Invested |
| $ | 2,371,500 |
| $ | 349,500 |
| $ | 456,700 |
| $ | 4,555,700 |
| $ | 2,107,700 |
|
Uncalled Commitments |
| $ | 12,625,900 |
| $ | 12,495,400 |
| $ | 13,728,100 |
| $ | 12,625,900 |
| $ | 13,728,100 |
|
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
|
| Quarter Ended |
| Year Ended |
| |||||||||||
|
| Actual |
| Actual |
| Actual |
| Actual |
| Pro Forma* |
| |||||
|
| December 31, 2010 |
| September 30, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| December 31, 2009 |
| |||||
Fees |
|
|
|
|
|
|
|
|
|
|
| |||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Management fees |
| $ | 16,359 |
| $ | 14,208 |
| $ | 14,394 |
| $ | 57,059 |
| $ | 50,604 |
|
Incentive fees |
| 8,427 |
| 9,555 |
| — |
| 38,832 |
| 4,472 |
| |||||
Management and incentive fees |
| 24,786 |
| 23,763 |
| 14,394 |
| 95,891 |
| 55,076 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring fees |
| — |
| — |
| — |
| — |
| — |
| |||||
Transaction fees |
| 9,292 |
| 1,672 |
| — |
| 19,117 |
| — |
| |||||
Fee credits |
| (5,998 | ) | (742 | ) | — |
| (12,336 | ) | — |
| |||||
Net monitoring and transaction fees |
| 3,294 |
| 930 |
| — |
| 6,781 |
| — |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total fees |
| 28,080 |
| 24,693 |
| 14,394 |
| 102,672 |
| 55,076 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Employee compensation and benefits |
| 7,586 |
| 7,708 |
| 6,909 |
| 29,910 |
| 22,677 |
| |||||
Occupancy and related charges |
| 612 |
| 615 |
| 624 |
| 2,375 |
| 2,483 |
| |||||
Other operating expenses |
| 3,580 |
| 3,160 |
| 4,444 |
| 13,430 |
| 18,104 |
| |||||
Total expenses |
| 11,778 |
| 11,483 |
| 11,977 |
| 45,715 |
| 43,264 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fee Related Earnings |
| 16,302 |
| 13,210 |
| 2,417 |
| 56,957 |
| 11,812 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investment income (loss) |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross carried interest |
| 2,417 |
| 1,131 |
| — |
| 5,000 |
| — |
| |||||
Less: allocation to KKR carry pool |
| (967 | ) | (452 | ) | — |
| (2,000 | ) | — |
| |||||
Less: management fee refunds |
| — |
| — |
| — |
| — |
| — |
| |||||
Net carried interest |
| 1,450 |
| 679 |
| — |
| 3,000 |
| — |
| |||||
Other investment income (loss) |
| 188 |
| 148 |
| (952 | ) | 718 |
| (5,259 | ) | |||||
Total investment income (loss) |
| 1,638 |
| 827 |
| (952 | ) | 3,718 |
| (5,259 | ) | |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 17,940 |
| 14,037 |
| 1,465 |
| 60,675 |
| 6,553 |
| |||||
Income (Loss) attributable to noncontrolling interests |
| 157 |
| 125 |
| 15 |
| 537 |
| 109 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income (Loss) |
| $ | 17,783 |
| $ | 13,912 |
| $ | 1,450 |
| $ | 60,138 |
| $ | 6,444 |
|
|
|
|
|
|
|
|
|
|
|
|
| |||||
Assets Under Management |
| $ | 14,773,600 |
| $ | 13,619,800 |
| $ | 13,361,300 |
| $ | 14,773,600 |
| $ | 13,361,300 |
|
Fee Paying Assets Under Management |
| $ | 7,824,400 |
| $ | 6,672,900 |
| $ | 6,295,400 |
| $ | 7,824,400 |
| $ | 6,295,400 |
|
Committed Dollars Invested |
| $ | 319,500 |
| $ | 190,900 |
| $ | — |
| $ | 697,600 |
| $ | — |
|
Uncalled Commitments |
| $ | 1,448,800 |
| $ | 1,255,500 |
| $ | 816,327 |
| $ | 1,448,800 |
| $ | 816,327 |
|
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)
(Amounts in thousands)
|
| Quarter Ended |
| Year Ended |
| |||||||||||
|
| Actual |
| Actual |
| Actual |
| Actual |
| Pro Forma* |
| |||||
|
| December 31, 2010 |
| September 30, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| December 31, 2009 |
| |||||
Fees |
|
|
|
|
|
|
|
|
|
|
| |||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Management fees |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
| $ | — |
|
Incentive fees |
| — |
| — |
| — |
| — |
| — |
| |||||
Management and incentive fees |
| — |
| — |
| — |
| — |
| — |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
|
|
| |||||
Monitoring fees |
| — |
| — |
| — |
| — |
| — |
| |||||
Transaction fees |
| 46,540 |
| 19,146 |
| 19,573 |
| 105,266 |
| 34,129 |
| |||||
Fee credits |
| — |
| — |
| — |
| — |
| — |
| |||||
Net monitoring and transaction fees |
| 46,540 |
| 19,146 |
| 19,573 |
| 105,266 |
| 34,129 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Total fees |
| 46,540 |
| 19,146 |
| 19,573 |
| 105,266 |
| 34,129 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Expenses |
|
|
|
|
|
|
|
|
|
|
| |||||
Employee compensation and benefits |
| 5,612 |
| 3,487 |
| 1,710 |
| 16,863 |
| 9,455 |
| |||||
Occupancy and related charges |
| 306 |
| 245 |
| 192 |
| 945 |
| 783 |
| |||||
Other operating expenses |
| 2,900 |
| 2,003 |
| 1,844 |
| 8,376 |
| 5,238 |
| |||||
Total expenses |
| 8,818 |
| 5,735 |
| 3,746 |
| 26,184 |
| 15,476 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Fee Related Earnings |
| 37,722 |
| 13,411 |
| 15,827 |
| 79,082 |
| 18,653 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Investment income (loss) |
|
|
|
|
|
|
|
|
|
|
| |||||
Gross carried interest |
| — |
| — |
| — |
| — |
| — |
| |||||
Less: allocation to KKR carry pool |
| — |
| — |
| — |
| — |
| — |
| |||||
Less: management fee refunds |
| — |
| — |
| — |
| — |
| — |
| |||||
Net carried interest |
| — |
| — |
| — |
| — |
| — |
| |||||
Other investment income (loss) |
| 398,312 |
| 117,334 |
| 352,923 |
| 1,219,053 |
| 1,267,976 |
| |||||
Total investment income (loss) |
| 398,312 |
| 117,334 |
| 352,923 |
| 1,219,053 |
| 1,267,976 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 436,034 |
| 130,745 |
| 368,750 |
| 1,298,135 |
| 1,286,629 |
| |||||
Income (Loss) attributable to noncontrolling interests |
| 1,176 |
| 1,048 |
| 513 |
| 3,033 |
| 609 |
| |||||
|
|
|
|
|
|
|
|
|
|
|
| |||||
Economic Net Income (Loss) |
| $ | 434,858 |
| $ | 129,697 |
| $ | 368,237 |
| $ | 1,295,102 |
| $ | 1,286,020 |
|
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)
Quarter Ended December 31, 2010
(Amounts in thousands)
|
|
|
|
|
| Capital Markets |
| Total |
| ||||
|
| Private Markets |
| Public Markets |
| and Principal |
| Reportable |
| ||||
|
| Segment |
| Segment |
| Activities Segment |
| Segments |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fees |
|
|
|
|
|
|
|
|
| ||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
| ||||
Management fees |
| $ | 102,684 |
| $ | 16,359 |
| $ | — |
| $ | 119,043 |
|
Incentive fees |
| — |
| 8,427 |
| — |
| 8,427 |
| ||||
Management and incentive fees |
| 102,684 |
| 24,786 |
| — |
| 127,470 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
| ||||
Monitoring fees |
| 22,108 |
| — |
| — |
| 22,108 |
| ||||
Transaction fees |
| 30,942 |
| 9,292 |
| 46,540 |
| 86,774 |
| ||||
Fee credits |
| (15,673 | ) | (5,998 | ) | — |
| (21,671 | ) | ||||
Net monitoring and transaction fees |
| 37,377 |
| 3,294 |
| 46,540 |
| 87,211 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total fees |
| 140,061 |
| 28,080 |
| 46,540 |
| 214,681 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
| 42,396 |
| 7,586 |
| 5,612 |
| 55,594 |
| ||||
Occupancy and related charges |
| 9,206 |
| 612 |
| 306 |
| 10,124 |
| ||||
Other operating expenses |
| 47,392 |
| 3,580 |
| 2,900 |
| 53,872 |
| ||||
Total expenses |
| 98,994 |
| 11,778 |
| 8,818 |
| 119,590 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee Related Earnings |
| 41,067 |
| 16,302 |
| 37,722 |
| 95,091 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment income (loss) |
|
|
|
|
|
|
|
|
| ||||
Gross carried interest |
| 414,025 |
| 2,417 |
| — |
| 416,442 |
| ||||
Less: allocation to KKR carry pool |
| (168,338 | ) | (967 | ) | — |
| (169,305 | ) | ||||
Less: management fee refunds |
| (24,412 | ) | — |
| — |
| (24,412 | ) | ||||
Net carried interest |
| 221,275 |
| 1,450 |
| — |
| 222,725 |
| ||||
Other investment income (loss) |
| (111 | ) | 188 |
| 398,312 |
| 398,389 |
| ||||
Total investment income (loss) |
| 221,164 |
| 1,638 |
| 398,312 |
| 621,114 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 262,231 |
| 17,940 |
| 436,034 |
| 716,205 |
| ||||
Income (Loss) attributable to noncontrolling interests |
| 259 |
| 157 |
| 1,176 |
| 1,592 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Economic Net Income (Loss) |
| $ | 261,972 |
| $ | 17,783 |
| $ | 434,858 |
| $ | 714,613 |
|
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)
Quarter Ended September 30, 2010
(Amounts in thousands)
|
|
|
|
|
| Capital Markets |
| Total |
| ||||
|
| Private Markets |
| Public Markets |
| and Principal |
| Reportable |
| ||||
|
| Segment |
| Segment |
| Activities Segment |
| Segments |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fees |
|
|
|
|
|
|
|
|
| ||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
| ||||
Management fees |
| $ | 98,337 |
| $ | 14,208 |
| $ | — |
| $ | 112,545 |
|
Incentive fees |
| — |
| 9,555 |
| — |
| 9,555 |
| ||||
Management and incentive fees |
| 98,337 |
| 23,763 |
| — |
| 122,100 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
| ||||
Monitoring fees |
| 21,780 |
| — |
| — |
| 21,780 |
| ||||
Transaction fees |
| 19,816 |
| 1,672 |
| 19,146 |
| 40,634 |
| ||||
Fee credits |
| (12,941 | ) | (742 | ) | — |
| (13,683 | ) | ||||
Net monitoring and transaction fees |
| 28,655 |
| 930 |
| 19,146 |
| 48,731 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total fees |
| 126,992 |
| 24,693 |
| 19,146 |
| 170,831 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
| 37,861 |
| 7,708 |
| 3,487 |
| 49,056 |
| ||||
Occupancy and related charges |
| 9,513 |
| 615 |
| 245 |
| 10,373 |
| ||||
Other operating expenses |
| 36,733 |
| 3,160 |
| 2,003 |
| 41,896 |
| ||||
Total expenses |
| 84,107 |
| 11,483 |
| 5,735 |
| 101,325 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee Related Earnings |
| 42,885 |
| 13,210 |
| 13,411 |
| 69,506 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment income (loss) |
|
|
|
|
|
|
|
|
| ||||
Gross carried interest |
| 236,792 |
| 1,131 |
| — |
| 237,923 |
| ||||
Less: allocation to KKR carry pool |
| (90,704 | ) | (452 | ) | — |
| (91,156 | ) | ||||
Less: management fee refunds |
| (17,387 | ) | — |
| — |
| (17,387 | ) | ||||
Net carried interest |
| 128,701 |
| 679 |
| — |
| 129,380 |
| ||||
Other investment income (loss) |
| 2,524 |
| 148 |
| 117,334 |
| 120,006 |
| ||||
Total investment income (loss) |
| 131,225 |
| 827 |
| 117,334 |
| 249,386 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 174,110 |
| 14,037 |
| 130,745 |
| 318,892 |
| ||||
Income (Loss) attributable to noncontrolling interests |
| 394 |
| 125 |
| 1,048 |
| 1,567 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Economic Net Income (Loss) |
| $ | 173,716 |
| $ | 13,912 |
| $ | 129,697 |
| $ | 317,325 |
|
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)
Quarter Ended December 31, 2009
(Amounts in thousands)
|
|
|
|
|
| Capital Markets |
| Total |
| ||||
|
| Private Markets |
| Public Markets |
| and Principal |
| Reportable |
| ||||
|
| Segment |
| Segment |
| Activities Segment |
| Segments |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fees |
|
|
|
|
|
|
|
|
| ||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
| ||||
Management fees |
| $ | 99,221 |
| $ | 14,394 |
| $ | — |
| $ | 113,615 |
|
Incentive fees |
| — |
| — |
| — |
| — |
| ||||
Management and incentive fees |
| 99,221 |
| 14,394 |
| — |
| 113,615 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
| ||||
Monitoring fees |
| 68,383 |
| — |
| — |
| 68,383 |
| ||||
Transaction fees |
| 20,269 |
| — |
| 19,573 |
| 39,842 |
| ||||
Fee credits |
| (26,260 | ) | — |
| — |
| (26,260 | ) | ||||
Net monitoring and transaction fees |
| 62,392 |
| — |
| 19,573 |
| 81,965 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total fees |
| 161,613 |
| 14,394 |
| 19,573 |
| 195,580 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
| 39,399 |
| 6,909 |
| 1,710 |
| 48,018 |
| ||||
Occupancy and related charges |
| 9,080 |
| 624 |
| 192 |
| 9,896 |
| ||||
Other operating expenses |
| 43,911 |
| 4,444 |
| 1,844 |
| 50,199 |
| ||||
Total expenses |
| 92,390 |
| 11,977 |
| 3,746 |
| 108,113 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee Related Earnings |
| 69,223 |
| 2,417 |
| 15,827 |
| 87,467 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment income (loss) |
|
|
|
|
|
|
|
|
| ||||
Gross carried interest |
| 139,034 |
| — |
| — |
| 139,034 |
| ||||
Less: allocation to KKR carry pool |
| (40,077 | ) | — |
| — |
| (40,077 | ) | ||||
Less: management fee refunds |
| (22,720 | ) | — |
| — |
| (22,720 | ) | ||||
Net carried interest |
| 76,237 |
| — |
| — |
| 76,237 |
| ||||
Other investment income (loss) |
| 605 |
| (952 | ) | 352,923 |
| 352,576 |
| ||||
Total investment income (loss) |
| 76,842 |
| (952 | ) | 352,923 |
| 428,813 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 146,065 |
| 1,465 |
| 368,750 |
| 516,280 |
| ||||
Income (Loss) attributable to noncontrolling interests |
| 497 |
| 15 |
| 513 |
| 1,025 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Economic Net Income (Loss) |
| $ | 145,568 |
| $ | 1,450 |
| $ | 368,237 |
| $ | 515,255 |
|
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)
Year Ended December 31, 2010
(Amounts in thousands)
|
|
|
|
|
| Capital Markets |
| Total |
| ||||
|
| Private Markets |
| Public Markets |
| and Principal |
| Reportable |
| ||||
|
| Segment |
| Segment |
| Activities Segment |
| Segments |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fees |
|
|
|
|
|
|
|
|
| ||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
| ||||
Management fees |
| 396,227 |
| $ | 57,059 |
| $ | — |
| $ | 453,286 |
| |
Incentive fees |
| — |
| 38,832 |
| — |
| 38,832 |
| ||||
Management and incentive fees |
| 396,227 |
| 95,891 |
| — |
| 492,118 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
| ||||
Monitoring fees |
| 86,932 |
| — |
| — |
| 86,932 |
| ||||
Transaction fees |
| 96,000 |
| 19,117 |
| 105,266 |
| 220,383 |
| ||||
Fee credits |
| (52,563 | ) | (12,336 | ) | — |
| (64,899 | ) | ||||
Net monitoring and transaction fees |
| 130,369 |
| 6,781 |
| 105,266 |
| 242,416 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total fees |
| 526,596 |
| 102,672 |
| 105,266 |
| 734,534 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
| 159,561 |
| 29,910 |
| 16,863 |
| 206,334 |
| ||||
Occupancy and related charges |
| 36,395 |
| 2,375 |
| 945 |
| 39,715 |
| ||||
Other operating expenses |
| 148,357 |
| 13,430 |
| 8,376 |
| 170,163 |
| ||||
Total expenses |
| 344,313 |
| 45,715 |
| 26,184 |
| 416,212 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee Related Earnings |
| 182,283 |
| 56,957 |
| 79,082 |
| 318,322 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment income (loss) |
|
|
|
|
|
|
|
|
| ||||
Gross carried interest |
| 1,202,070 |
| 5,000 |
| — |
| 1,207,070 |
| ||||
Less: allocation to KKR carry pool |
| (453,872 | ) | (2,000 | ) | — |
| (455,872 | ) | ||||
Less: management fee refunds |
| (143,446 | ) | — |
| — |
| (143,446 | ) | ||||
Net carried interest |
| 604,752 |
| 3,000 |
| — |
| 607,752 |
| ||||
Other investment income (loss) |
| (1,643 | ) | 718 |
| 1,219,053 |
| 1,218,128 |
| ||||
Total investment income (loss) |
| 603,109 |
| 3,718 |
| 1,219,053 |
| 1,825,880 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 785,392 |
| 60,675 |
| 1,298,135 |
| 2,144,202 |
| ||||
Income (Loss) attributable to noncontrolling interests |
| 839 |
| 537 |
| 3,033 |
| 4,409 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Economic Net Income (Loss) |
| $ | 784,553 |
| $ | 60,138 |
| $ | 1,295,102 |
| $ | 2,139,793 |
|
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS - PRO FORMA* (UNAUDITED)
Year Ended December 31, 2009
(Amounts in thousands)
|
|
|
|
|
| Capital Markets |
| Total |
| ||||
|
| Private Markets |
| Public Markets |
| and Principal |
| Reportable |
| ||||
|
| Segment |
| Segment |
| Activities Segment |
| Segments |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fees |
|
|
|
|
|
|
|
|
| ||||
Management and incentive fees: |
|
|
|
|
|
|
|
|
| ||||
Management fees |
| $ | 387,112 |
| $ | 50,604 |
| $ | — |
| $ | 437,716 |
|
Incentive fees |
| — |
| 4,472 |
| — |
| 4,472 |
| ||||
Management and incentive fees |
| 387,112 |
| 55,076 |
| — |
| 442,188 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Monitoring and transaction fees: |
|
|
|
|
|
|
|
|
| ||||
Monitoring fees |
| 158,243 |
| — |
| — |
| 158,243 |
| ||||
Transaction fees |
| 57,699 |
| — |
| 34,129 |
| 91,828 |
| ||||
Fee credits |
| (73,901 | ) | — |
| — |
| (73,901 | ) | ||||
Net monitoring and transaction fees |
| 142,041 |
| — |
| 34,129 |
| 176,170 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Total fees |
| 529,153 |
| 55,076 |
| 34,129 |
| 618,358 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Expenses |
|
|
|
|
|
|
|
|
| ||||
Employee compensation and benefits |
| 136,465 |
| 22,677 |
| 9,455 |
| 168,597 |
| ||||
Occupancy and related charges |
| 34,747 |
| 2,483 |
| 783 |
| 38,013 |
| ||||
Other operating expenses |
| 140,989 |
| 18,104 |
| 5,238 |
| 164,331 |
| ||||
Total expenses |
| 312,201 |
| 43,264 |
| 15,476 |
| 370,941 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Fee Related Earnings |
| 216,952 |
| 11,812 |
| 18,653 |
| 247,417 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Investment income (loss) |
|
|
|
|
|
|
|
|
| ||||
Gross carried interest |
| 602,427 |
| — |
| — |
| 602,427 |
| ||||
Less: allocation to KKR carry pool |
| (153,827 | ) | — |
| — |
| (153,827 | ) | ||||
Less: management fee refunds |
| (22,720 | ) | — |
| — |
| (22,720 | ) | ||||
Net carried interest |
| 425,880 |
| — |
| — |
| 425,880 |
| ||||
Other investment income (loss) |
| 20,621 |
| (5,259 | ) | 1,267,976 |
| 1,283,338 |
| ||||
Total investment income (loss) |
| 446,501 |
| (5,259 | ) | 1,267,976 |
| 1,709,218 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Income (Loss) before noncontrolling interests in Income of consolidated entities |
| 663,453 |
| 6,553 |
| 1,286,629 |
| 1,956,635 |
| ||||
Income (Loss) attributable to noncontrolling interests |
| 1,973 |
| 109 |
| 609 |
| 2,691 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Economic Net Income (Loss) |
| $ | 661,480 |
| $ | 6,444 |
| $ | 1,286,020 |
| $ | 1,953,944 |
|
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.
KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
As of December 31, 2010
|
| Private Markets |
| Public Markets |
| Capital Markets |
| Total Reportable |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 229,729 |
| $ | 10,007 |
| $ | 516,544 |
| $ | 756,280 |
|
Investments |
| — |
| — |
| 4,831,798 | (a) | 4,831,798 |
| ||||
Unrealized carry |
| 523,002 |
| 3,001 |
| — |
| 526,003 |
| ||||
Other assets |
| 194,424 |
| 53,222 |
| 39,730 |
| 287,376 |
| ||||
Total assets |
| $ | 947,155 |
| $ | 66,230 |
| $ | 5,388,072 |
| $ | 6,401,457 |
|
|
|
|
|
|
|
|
|
|
| ||||
Debt obligations |
| $ | — |
| $ | — |
| $ | 500,000 |
| $ | 500,000 |
|
Other liabilities |
| 104,248 |
| 10,193 |
| 45,837 |
| 160,278 |
| ||||
Total liabilities |
| 104,248 |
| 10,193 |
| 545,837 |
| 660,278 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Noncontrolling interests |
| (1,750 | ) | 766 |
| 16,537 |
| 15,553 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Partners’ capital |
| $ | 844,657 |
| $ | 55,271 |
| $ | 4,825,698 |
| $ | 5,725,626 |
|
|
|
|
|
|
|
|
|
|
| ||||
Book value per adjusted unit (b) |
| $ | 1.24 |
| $ | 0.08 |
| $ | 7.06 |
| $ | 8.38 |
|
As of December 31, 2009
|
| Private Markets |
| Public Markets |
| Capital Markets |
| Total Reportable |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Cash and cash equivalents |
| $ | 51,015 |
| $ | 9,089 |
| $ | 496,554 |
| $ | 556,658 |
|
Investments |
| — |
| — |
| 4,108,359 |
| 4,108,359 |
| ||||
Unrealized carry |
| 156,149 |
| — |
| — |
| 156,149 |
| ||||
Other assets |
| 154,964 |
| 53,319 |
| 55,219 |
| 263,502 |
| ||||
Total assets |
| $ | 362,128 |
| $ | 62,408 |
| $ | 4,660,132 |
| $ | 5,084,668 |
|
|
|
|
|
|
|
|
|
|
| ||||
Debt obligations |
| $ | — |
| $ | — |
| $ | 733,697 |
| $ | 733,697 |
|
Other liabilities |
| 84,936 |
| 12,300 |
| 85,802 |
| 183,038 |
| ||||
Total liabilities |
| 84,936 |
| 12,300 |
| 819,499 |
| 916,735 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Noncontrolling interests |
| 130 |
| 527 |
| 14,392 |
| 15,049 |
| ||||
|
|
|
|
|
|
|
|
|
| ||||
Partners’ capital |
| $ | 277,062 |
| $ | 49,581 |
| $ | 3,826,241 |
| $ | 4,152,884 |
|
|
|
|
|
|
|
|
|
|
| ||||
Book value per adjusted unit (b) |
| $ | 0.41 |
| $ | 0.07 |
| $ | 5.60 |
| $ | 6.08 |
|
(a) See capital markets and principal activities segment schedule of investments that follows in this press release.
(b) Adjusted units represents the fully diluted unit count using the if-converted method. See Exhibit B for a reconciliation of this item to the comparable GAAP measure.
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS
(Amounts in thousands, except percentage amounts)
|
| As of December 31, 2010 |
| ||||||
Investment |
| Cost |
| Fair |
| Fair Value as |
| ||
|
|
|
|
|
|
|
| ||
Private Equity Investments: |
|
|
|
|
|
|
| ||
Co-investments in portfolio companies of private equity funds: |
|
|
|
|
|
|
| ||
Dollar General Corporation |
| $ | 164,291 |
| $ | 575,862 |
| 11.9 | % |
HCA Inc. |
| 201,444 |
| 436,473 |
| 9.0 |
| ||
Alliance Boots GmbH. |
| 301,352 |
| 304,192 |
| 6.3 |
| ||
The Nielsen Company B.V. |
| 156,839 |
| 235,258 |
| 4.9 |
| ||
NXP B.V. |
| 250,000 |
| 198,253 |
| 4.1 |
| ||
Biomet, Inc. |
| 151,443 |
| 151,443 |
| 3.1 |
| ||
U.S. Foodservice, Inc. |
| 100,000 |
| 120,000 |
| 2.5 |
| ||
ProSiebenSat.1 Media AG |
| 226,913 |
| 106,731 |
| 2.2 |
| ||
First Data Corporation |
| 135,258 |
| 81,155 |
| 1.7 |
| ||
KION Group GmbH. |
| 128,058 |
| 55,199 |
| 1.1 |
| ||
Energy Future Holdings Corp. |
| 200,000 |
| 40,000 |
| 0.9 |
| ||
PagesJaunes Groupe S.A. |
| 235,201 |
| — |
| — |
| ||
Capmark Financial Group Inc. |
| 137,321 |
| — |
| — |
| ||
|
| 2,388,120 |
| 2,304,566 |
| 47.7 | % | ||
Private equity funds: |
|
|
|
|
|
|
| ||
KKR 2006 Fund L.P. |
| 1,080,930 |
| 1,148,646 |
| 23.8 | % | ||
KKR Asian Fund L.P. |
| 177,996 |
| 237,606 |
| 4.9 |
| ||
KKR European Fund III, Limited Partnership |
| 183,368 |
| 193,090 |
| 4.0 |
| ||
KKR European Fund, Limited Partnership |
| 144,133 |
| 189,240 |
| 3.9 |
| ||
KKR Millennium Fund L.P. |
| 195,164 |
| 181,989 |
| 3.8 |
| ||
KKR European Fund II, Limited Partnership |
| 95,974 |
| 83,923 |
| 1.7 |
| ||
KKR E2 Investors, L.P. |
| 9,432 |
| 13,334 |
| 0.3 |
| ||
KKR China Growth Fund |
| 1,479 |
| 1,479 |
| — |
| ||
|
| 1,888,476 |
| 2,049,307 |
| 42.4 | % | ||
|
|
|
|
|
|
|
| ||
Other Investments |
| 505,820 |
| 477,925 |
| 9.9 | % | ||
|
|
|
|
|
|
|
| ||
Total Investments |
| $ | 4,782,416 |
| $ | 4,831,798 |
| 100.0 | % |
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED
(Amounts in thousands, except percentage amounts)
|
| As of December 31, 2010 |
| ||||||
Investment |
| Cost |
| Fair |
| Fair Value as |
| ||
|
|
|
|
|
|
|
| ||
Significant Aggregate Investments: (a) |
|
|
|
|
|
|
| ||
|
|
|
|
|
|
|
| ||
Dollar General Corporation |
| $ | 227,972 |
| $ | 767,168 |
| 15.9 | % |
HCA Inc. |
| 255,307 |
| 540,618 |
| 11.2 |
| ||
Alliance Boots GmbH |
| 426,523 |
| 437,905 |
| 9.1 |
| ||
The Nielsen Company B.V. |
| 172,841 |
| 257,662 |
| 5.3 |
| ||
Biomet, Inc. |
| 242,866 |
| 242,866 |
| 5.0 |
| ||
|
| 1,325,509 |
| 2,246,219 |
| 46.5 |
| ||
Other portfolio companies (b) |
| 2,951,087 |
| 2,107,654 |
| 43.6 |
| ||
Other investments |
| 505,820 |
| 477,925 |
| 9.9 |
| ||
|
| $ | 4,782,416 |
| $ | 4,831,798 |
| 100.0 | % |
|
|
|
|
|
|
|
| ||
Investments by Geography: |
|
|
|
|
|
|
| ||
North America |
| $ | 2,613,189 |
| $ | 3,071,011 |
| 63.6 | % |
Europe |
| 1,738,313 |
| 1,250,258 |
| 25.9 |
| ||
Asia Pacific |
| 430,914 |
| 510,529 |
| 10.5 |
| ||
|
| $ | 4,782,416 |
| $ | 4,831,798 |
| 100.0 | % |
|
|
|
|
|
|
|
| ||
Investments by Industry: |
|
|
|
|
|
|
| ||
Healthcare |
| $ | 992,269 |
| $ | 1,286,435 |
| 26.6 | % |
Retail |
| 544,719 |
| 1,093,883 |
| 22.6 |
| ||
Financial Services |
| 999,425 |
| 693,866 |
| 14.4 |
| ||
Media/Telecom |
| 811,348 |
| 541,846 |
| 11.2 |
| ||
Technology |
| 532,138 |
| 538,496 |
| 11.1 |
| ||
Industrial |
| 326,163 |
| 305,948 |
| 6.3 |
| ||
Energy |
| 454,412 |
| 213,564 |
| 4.4 |
| ||
Consumer Products |
| 100,850 |
| 124,543 |
| 2.6 |
| ||
Other |
| 21,092 |
| 33,217 |
| 0.8 |
| ||
|
| $ | 4,782,416 |
| $ | 4,831,798 |
| 100.0 | % |
(a) The significant aggregate investments include investments in portfolio companies with individual fair values of 5% or more of the capital markets and principal activities segment investments balance as of December 31, 2010. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.
(b) Other portfolio companies includes investments in private equity portfolio companies with individual fair values less than 5% of the capital markets and principal activities segment investments balance as of December 31, 2010.
KKR
ASSETS UNDER MANAGEMENT AND FEE PAYING ASSETS UNDER MANAGEMENT
(Amounts in thousands)
Assets Under Management
|
| Private Markets |
| Public Markets |
| Total Reportable |
| |||
Quarter Ended December 31, 2010 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
AUM as of September 30, 2010 |
| $ | 41,878,700 |
| $ | 13,619,800 |
| $ | 55,498,500 |
|
New Capital Raised |
| 2,483,100 |
| 993,200 |
| 3,476,300 |
| |||
Distributions |
| (1,400,500 | ) | (59,100 | ) | (1,459,600 | ) | |||
Foreign Exchange |
| (45,900 | ) | — |
| (45,900 | ) | |||
Change in Value |
| 3,308,500 |
| 219,700 |
| 3,528,200 |
| |||
AUM as of December 31, 2010 |
| $ | 46,223,900 |
| $ | 14,773,600 |
| $ | 60,997,500 |
|
|
|
|
|
|
|
|
| |||
Year Ended December 31, 2010 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
AUM as of December 31, 2009 |
| $ | 38,842,900 |
| $ | 13,361,300 |
| $ | 52,204,200 |
|
New Capital Raised |
| 3,025,500 |
| 1,970,100 |
| 4,995,600 |
| |||
Distributions |
| (4,085,200 | ) | (1,281,700 | ) | (5,366,900 | ) | |||
Foreign Exchange |
| (274,800 | ) | — |
| (274,800 | ) | |||
Change in Value |
| 8,715,500 |
| 723,900 |
| 9,439,400 |
| |||
AUM as of December 31, 2010 |
| $ | 46,223,900 |
| $ | 14,773,600 |
| $ | 60,997,500 |
|
Fee Paying Assets Under Management
|
| Private Markets |
| Public Markets |
| Total Reportable |
| |||
Quarter Ended December 31, 2010 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
FPAUM as of September 30, 2010 |
| $ | 36,032,300 |
| $ | 6,672,900 |
| $ | 42,705,200 |
|
New Capital Raised |
| 2,437,100 |
| 991,700 |
| 3,428,800 |
| |||
Distributions |
| (152,000 | ) | (59,100 | ) | (211,100 | ) | |||
Foreign Exchange |
| (137,900 | ) | — |
| (137,900 | ) | |||
Change in Value |
| 7,200 |
| 218,900 |
| 226,100 |
| |||
FPAUM as of December 31, 2010 |
| $ | 38,186,700 |
| $ | 7,824,400 |
| $ | 46,011,100 |
|
|
|
|
|
|
|
|
| |||
Year Ended December 31, 2010 |
|
|
|
|
|
|
| |||
|
|
|
|
|
|
|
| |||
FPAUM as of December 31, 2009 |
| $ | 36,484,400 |
| $ | 6,295,400 |
| $ | 42,779,800 |
|
New Capital Raised |
| 2,971,600 |
| 1,893,000 |
| 4,864,600 |
| |||
Distributions |
| (650,300 | ) | (1,281,700 | ) | (1,932,000 | ) | |||
Foreign Exchange |
| (658,800 | ) | — |
| (658,800 | ) | |||
Change in Value |
| 39,800 |
| 917,700 |
| 957,500 |
| |||
FPAUM as of December 31, 2010 |
| $ | 38,186,700 |
| $ | 7,824,400 |
| $ | 46,011,100 |
|
KKR
INVESTMENT VEHICLE SUMMARY (UNAUDITED)
As of December 31, 2010
(Amounts in millions, except percentages)
|
| Investment Period |
| Amount |
| ||||||||||||||||||||
Private Markets |
| Commencement |
| End |
| Commitment |
| Uncalled |
| Percentage |
| Invested |
| Realized |
| Remaining |
| Fair Value |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Private Equity Funds |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
China Growth Fund |
| 11/2010 |
| 11/2016 |
| $ | 943.8 |
| $ | 837.5 |
| 1.1% |
| $ | 106.3 |
| $ | — |
| $ | 106.3 |
| $ | 106.3 |
|
E2 Investors (Annex Fund) |
| 8/2009 |
| 11/2011 |
| 539.4 |
| 424.6 |
| 4.2% |
| 114.8 |
| — |
| 114.8 |
| 165.9 |
| ||||||
European Fund III |
| 3/2008 |
| 3/2014 |
| 5,956.2 |
| 3,709.6 |
| 4.5% |
| 2,246.6 |
| — |
| 2,246.6 |
| 2,342.8 |
| ||||||
Asian Fund |
| 7/2007 |
| 7/2013 |
| 3,983.2 |
| 1,567.6 |
| 2.5% |
| 2,415.6 |
| — |
| 2,415.6 |
| 3,442.2 |
| ||||||
2006 Fund |
| 9/2006 |
| 9/2012 |
| 17,642.2 |
| 4,726.5 |
| 2.1% |
| 12,915.7 |
| 2,405.1 |
| 11,836.5 |
| 13,410.2 |
| ||||||
European Fund II |
| 11/2005 |
| 10/2008 |
| 5,750.8 |
| — |
| 2.1% |
| 5,750.8 |
| 761.6 |
| 5,335.9 |
| 4,594.0 |
| ||||||
Millennium Fund |
| 12/2002 |
| 12/2008 |
| 6,000.0 |
| — |
| 2.5% |
| 6,000.0 |
| 6,056.3 |
| 3,965.3 |
| 5,742.5 |
| ||||||
European Fund |
| 12/1999 |
| 12/2005 |
| 3,085.4 |
| — |
| 3.2% |
| 3,085.4 |
| 6,525.0 |
| 492.3 |
| 2,249.4 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total Private Equity Funds |
|
|
|
|
| 43,901.0 |
| 11,265.8 |
|
|
| 32,635.2 |
| 15,748.0 |
| 26,513.3 |
| 32,053.3 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Co-Investment Vehicles |
| Various |
| Various |
| 3,194.4 |
| 659.3 |
| Various |
| 2,535.1 |
| 316.4 |
| 2,447.8 |
| 3,057.5 |
| ||||||
Natural Resources I |
| 3/2010 |
| 10/2013 |
| 257.5 |
| 185.8 |
| 2.9% |
| 71.7 |
| — |
| 71.7 |
| 71.7 |
| ||||||
Infrastructure Fund |
| 9/2010 |
| 9/2016 |
| 515.0 |
| 515.0 |
| 9.7% |
| — |
| — |
| — |
| — |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Private Markets Total |
|
|
|
|
| 47,867.9 |
| 12,625.9 |
|
|
| 35,242.0 |
| 16,064.4 |
| 29,032.8 |
| 35,182.5 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Public Markets |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Capital Solutions Vehicles |
| Various |
| Various |
| 1,757.0 |
| 1,018.2 |
| Various |
| 738.8 |
| — |
| 738.8 |
| 787.7 |
| ||||||
Mezzanine Fund |
| 3/2010 |
| 3/2015 |
| 558.6 |
| 430.6 |
| 8.1% |
| 128.0 |
| — |
| 128.0 |
| 125.2 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Public Markets Total |
|
|
|
|
| 2,315.6 |
| 1,448.8 |
|
|
| 866.8 |
| — |
| 866.8 |
| 912.9 |
| ||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
| ||||||
Total |
|
|
|
|
| $ | 50,183.5 |
| $ | 14,074.7 |
|
|
| $ | 36,108.8 |
| $ | 16,064.4 |
| $ | 29,899.6 |
| $ | 36,095.4 |
|
KKR
DISTRIBUTION CALCULATION
(Amounts in thousands, except unit and per unit amounts)
|
| Quarter Ended |
| |
|
| December 31, 2010 |
| |
|
|
|
| |
FRE |
| $ | 95,091 |
|
Realized cash carry |
| 68,958 |
| |
Less: local income taxes |
| (5,111 | ) | |
Less: noncontrolling interests |
| (1,592 | ) | |
Gross distributable earnings |
| 157,346 |
| |
|
|
|
| |
Distributable earnings to KKR & Co. L.P. |
| 49,014 |
| |
|
|
|
| |
Less: estimated current corporate income taxes |
| (13,880 | ) | |
Net cash available for distribution |
| $ | 35,134 |
|
|
|
|
| |
Additional distribution (a) |
| $ | 27,000 |
|
|
|
|
| |
Total distribution |
| $ | 62,134 |
|
|
|
|
| |
Distribution per KKR & Co. L.P. common unit |
| $ | 0.29 |
|
|
|
|
| |
Outstanding KKR & Co. L.P. common units |
| 212,770,091 |
|
(a) Additional distribution is provided primarily from certain realizations on investments within KKR’s capital markets and principal activities segment and was calculated in accordance with our distribution policy to cover certain tax liabilities. The amount of any additional distribution in the future should not be expected to be consistent or regularly declared.
DISTRIBUTION POLICY
KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its investment management business each year in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other agreements. KKR does not intend to distribute gains on principal investments, other than certain additional distributions, that KKR may determine to make. These additional distributions, if any, are intended to cover certain tax liabilities, as calculated by KKR. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the K KR Group Partnerships. For the purposes of KKR’s distribution policy, its distributions are expected to consist of an amount consisting of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, and (iii) certain tax distributions, if any. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) noncontrolling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.
The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P. and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that such distributions will be sufficient to pay any particular KKR unit holder’s actual U.S. or non-U.S. tax liability.
KKR
Notes to Reportable Segments (Unaudited)
The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total.
Business Combination
FRE and ENI previously reported for periods prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination, which include items such as:
· the exclusion of approximately 40% of the carry allocated to KKR principals pursuant to its carry pool;
· the exclusion of carry allocated to former KKR principals;
· the exclusion of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Business Combination and any returns thereon;
· the exclusion of the economic interests associated with the KKR 1996 Fund;
· the elimination of management fees paid by KKR & Co. (Guernsey) L.P. formerly known as KKR Private Equity Investors, L.P. (“KPE”), prior to the Business Combination, to KKR’s management companies;
· the inclusion of the financial results of KPE; and
· certain compensation adjustments including: (i) the exclusion of bonuses earned by certain of KKR’s principals which will not be borne by public investors and (ii) the inclusion of salaries for KKR’s senior principals.
Given the significance of these adjustments, the comparisons to all periods prior to October 1, 2009 in this press release are on a pro forma basis giving effect to the adjustments above. For a further discussion of adjustments related to the Business Combination please refer to KKR & Co. L.P.’s prospectus filed on October 5, 2010, which is available at the SEC’s website at www.sec.gov.
Definitions
Fee related earnings (“FRE”) is comprised of segment operating revenues, less segment operating expenses. The components of FRE on a segment basis differ from the equivalent U.S. GAAP amounts on a combined basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of expenses of consolidated funds; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges borne by KKR Holdings; (vi) the exclusion of certain reimbursable expenses and (vii) the exclusion of certain non-rec urring items.
Economic net income (“ENI”) is a measure of profitability for KKR’s reportable segments and is comprised of: (i) FRE; plus (ii) segment investment income, which is reduced for carry pool allocations and management fee refunds; less (iii) certain economic interests in KKR’s segments held by third parties. ENI differs from net income on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income relating to noncontrolling interests; and (iii) the exclusion of income taxes.
After-tax ENI is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR’s fixed income products; and (iv) the value of outstanding structured finance vehicles. You should note that KKR’s calculation of AUM may differ from the calculations of other asset managers and, as a result, its measurements of AUM may not be comparable to similar measures presented by other asset managers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in the agreements governing the investment funds, vehicles or accounts that it manages.
KKR
Notes to Reportable Segments (Unaudited) (Continued)
Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest); and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR’s investment funds and carry-yielding co-investment vehicles during a given period. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR.
Uncalled commitments represent unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments.
Fee Credits require KKR to share a portion of any monitoring and transaction fees received from portfolio companies with limited partners in certain of its investment funds. Fee credits exclude fees that are not attributable to a fund’s investment in a portfolio company and generally amount to 80% of monitoring and transaction fees after fund related expenses are recovered.
KKR Carry Pool represents a portion of the carried interest earned in relation to certain of KKR’s active and future investment funds and co-investment vehicles that will be allocated to its principals, other professionals and selected other individuals.
Management Fee Refunds represent 20% of any cash management fees earned from limited partners in the event that certain of KKR’s investment funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, carried interest is reduced, not to exceed 20% of management fees earned. As of December 31, 2010, the amount subject to management fee refunds, which may reduce carried interest in future periods, totaled $58.7 million.
Noncontrolling interests represent economic interests that will (i) allocate to a former principal an aggregate of 1% of profits and losses of its management companies until a future date and (ii) allocate to a third party investor an aggregate of 2% of the equity in its capital markets business.
KKR
EXHIBIT A
RECONCILIATION OF TOTAL REPORTABLE SEGMENTS FEE RELATED EARNINGS AND ECONOMIC NET INCOME
TO NET INCOME ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS - UNAUDITED)
(Amounts in thousands)
|
| Quarter Ended |
| Quarter Ended |
| Year Ended |
| |||
|
| December 31, 2010 |
| December 31, 2009 |
| December 31, 2010 |
| |||
Total reportable segments fee related earnings |
| $ | 95,091 |
| $ | 87,467 |
| $ | 318,322 |
|
Investment income |
| 621,114 |
| 428,813 |
| 1,825,880 |
| |||
Less: Income attributable to noncontrolling interests |
| (1,592 | ) | (1,025 | ) | (4,409 | ) | |||
Economic net income (loss) |
| 714,613 |
| 515,255 |
| 2,139,793 |
| |||
Income taxes |
| (14,362 | ) | (31,193 | ) | (75,360 | ) | |||
Amortization of intangibles and other, net |
| (1,219 | ) | (1,066 | ) | (7,785 | ) | |||
Non-cash equity based charges |
| (107,040 | ) | (562,373 | ) | (824,193 | ) | |||
Allocations to carry pool recorded in connection with the Transactions |
| — |
| (115,540 | ) | — |
| |||
Allocation to noncontrolling interests held by KKR Holdings L.P. |
| (411,413 | ) | 116,696 |
| (899,277 | ) | |||
Net (income) loss attributable to KKR & Co. L.P. |
| $ | 180,579 |
| $ | (78,221 | ) | $ | 333,178 |
|
|
| Year Ended |
| |
|
| December 31, 2009 (a) |
| |
Total pro forma reportable segments fee related earnings |
| $ | 247,417 |
|
Investment income |
| 1,709,218 |
| |
Less: Income attributable to noncontrolling interests |
| (2,691 | ) | |
Pro forma economic net income (loss) |
| 1,953,944 |
| |
Allocation to carry pool |
| 95,857 |
| |
Carry allocated to former KKR principals |
| 172,637 |
| |
Income on capital invested by or on behalf of KKR principals prior to completion of the Business Combination |
| 86,452 |
| |
Economic interests associated with the KKR 1996 Fund |
| 67,163 |
| |
Elimination of management fees paid by KPE prior to completion of Business Combination |
| 28,244 |
| |
Financial results of KPE |
| (906,492 | ) | |
Certain compensation adjustments |
| (12,753 | ) | |
Income attributable to noncontrolling interests |
| 1,601 |
| |
Total actual economic net income (loss) |
| $ | 1,486,653 |
|
Costs relating to the Business Combination and related transactions |
| (34,846 | ) | |
Income taxes |
| (36,998 | ) | |
Amortization of intangibles and other, net |
| (3,907 | ) | |
Non-cash equity based charges |
| (562,373 | ) | |
Allocations to carry pool recorded in connection with the Transactions |
| (115,540 | ) | |
Allocation to noncontrolling interests held by KKR Holdings L.P. |
| 116,696 |
| |
Net income attributable to KKR & Co. L.P. |
| $ | 849,685 |
|
(a) The segment financial information for the year ended December 31, 2009 is presented on a pro forma basis to give effect to the Business Combination and related transactions as if they were completed on January 1, 2009 whereas the 2009 GAAP financial information is presented on an actual basis. Accordingly, the reconciliation of segment financial information to GAAP financial information for the year ended December 31, 2009 is presented in two parts: (i) a reconciliation of 2009 pro forma segment financial information to 2009 actual segment financial information and (ii) a reconciliation of 2009 actual segment financial information to 2009 actual GAAP information.
KKR
EXHIBIT B
RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS
The following table provides a reconciliation of KKR’s Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.
|
| Quarter Ended |
| Year Ended |
| ||||
|
| December 31, 2010 |
| September 30, 2010 |
| December 31, 2009 |
| December 31, 2010 |
|
Weighted Average GAAP Common Units Outstanding - Basic |
| 209,383,219 |
| 204,902,226 |
| 204,902,226 |
| 206,031,682 |
|
Weighted Average Unvested Common Units(a) |
| 30,000 |
| — |
| — |
| 7,562 |
|
Weighted Average GAAP Common Units Outstanding - Diluted |
| 209,413,219 |
| 204,902,226 |
| 204,902,226 |
| 206,039,244 |
|
Adjustments: |
|
|
|
|
|
|
|
|
|
Weighted Average KKR Holdings Units (b) |
| 473,624,201 |
| 478,105,194 |
| 478,105,194 |
| 476,975,738 |
|
Weighted Average Adjusted Units |
| 683,037,420 |
| 683,007,420 |
| 683,007,420 |
| 683,014,982 |
|
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS
The following table provides a reconciliation of KKR’s GAAP Common Units Outstanding to Adjusted Units.
|
| As of |
| As of |
|
|
| December 31, 2010 |
| December 31, 2009 |
|
GAAP Common Units Outstanding - Basic |
| 212,770,091 |
| 204,902,226 |
|
Unvested Common Units(a) |
| 30,000 |
| — |
|
GAAP Common Units Outstanding - Diluted |
| 212,800,091 |
| 204,902,226 |
|
Adjustments: |
|
|
|
|
|
KKR Holdings Units (b) |
| 470,237,329 |
| 478,105,194 |
|
Adjusted Units |
| 683,037,420 |
| 683,007,420 |
|
(a) Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.
(b) Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.