Exhibit 99.1
KKR & Co. L.P. Announces Second Quarter 2013 Results
Realization activity drives record cash carry and $0.42 distribution per common unit
GAAP net income (loss) attributable to KKR & Co. L.P. was $15.1 million and $208.6 million for the quarter and six months ended June 30, 2013, respectively, down from $146.3 million and $336.7 million in the comparable periods of 2012.
Assets under management (“AUM”) totaled $83.5 billion as of June 30, 2013, up from $78.3 billion as of March 31, 2013.
Fee related earnings (“FRE”) were $98.2 million and $186.2 million for the quarter and six months ended June 30, 2013, respectively, up from $69.8 million and $143.1 million in the comparable periods of 2012.
Total distributable earnings were $403.8 million for the quarter ended June 30, 2013, down from $406.1 million for the quarter ended June 30, 2012. Total distributable earnings were $694.4 million for the six months ended June 30, 2013, up from $570.2 million in the comparable period of 2012.
Economic net income (“ENI”) was $144.4 million and $792.2 million for the quarter and six months ended June 30, 2013, respectively, down from $546.1 million and $1,273.3 million in the comparable periods of 2012.
After-tax ENI was $0.18 and $1.06 per adjusted unit for the quarter and six months ended June 30, 2013, respectively, down from $0.74 and $1.73 per adjusted unit in the comparable periods of 2012.
Book value was $6.9 billion on a total reportable segment basis as of June 30, 2013 or $9.65 per adjusted unit.
KKR & Co. L.P. declares a second quarter distribution of $0.42 per common unit, which includes $0.23 per common unit of cash carry and $0.09 per common unit of net realized principal investment income.
NEW YORK--(BUSINESS WIRE)--July 26, 2013--KKR & Co. L.P. (NYSE: KKR) today reported its second quarter 2013 results.
AUM and fee paying assets under management (“FPAUM”) were $83.5 billion and $68.0 billion, respectively as of June 30, 2013, both up from March 31, 2013. The increases in both AUM and FPAUM were primarily attributable to new capital raised relating to the Asian Fund II. The increases were partially offset by distributions to fund limited partners and to a lesser extent the impact of the Asian Fund entering its post-investment period.
For the quarter and six months ended June 30, 2013, FRE was $98.2 million and $186.2 million, respectively, up from $69.8 million and $143.1 million in the comparable periods of 2012. The increase in both comparable periods was primarily driven by new capital raised over the past twelve months and the acquisition of Prisma.
For the quarter and six months ended June 30, 2013, the carrying value of our private equity investment portfolio appreciated 0.9% and 6.6%, respectively. ENI was $144.4 million and $792.2 million for the quarter and six months ended June 30, 2013, respectively, down from $546.1 million and $1,273.3 million in the comparable periods of 2012. The decrease in both comparable periods was primarily due to lower investment income earned from our principal investments as well as a lower level of net carried interest earned from our private equity funds. While the fair value of our principal investments increased during the quarter and six months ended June 30, 2013, the level of appreciation was lower than in the comparable periods of 2012.
“Over the past year, organic fee-paying AUM inflows have exceeded $19 billion, supporting the continued growth of our Private Markets business as well as the scaling of our newer strategies in Public Markets,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “In addition, our realization activity in the second quarter drove the highest cash carry we’ve reported since going public, contributing to a quarterly distribution of $0.42 per unit.”
| |
| Note: Certain financial measures, including FRE, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee related EBITDA, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP. |
GAAP RESULTS
GAAP results for the quarter and six months ended June 30, 2013 included net income attributable to KKR & Co. L.P. of $15.1 million and $208.6 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.05 and $0.72, respectively, on a diluted basis. For the quarter and six months ended June 30, 2012, net income attributable to KKR & Co. L.P. was $146.3 million and $336.7 million, respectively, and net income attributable to KKR & Co. L.P. per common unit was $0.58 and $1.37, respectively, on a diluted basis. The decrease in both comparable periods was primarily due to a lower level of investment appreciation recorded in net gains (losses) from investment activities. The decrease in net gains (losses) from investment activities was partially offset by increases in fees primarily attributable to the acquisition of Prisma and higher transaction fees. The decrease in compensation and benefits expense was primarily attributable to lower carry pool allocations as a result of the recognition of lower carried interest during the quarter and six months ended June 30, 2013 compared to the comparable periods in 2012.
SEGMENT RESULTS
Private Markets
AUM was $54.5 billion as of June 30, 2013, an increase of $4.2 billion, or 8.3%, compared to AUM of $50.3 billion as of March 31, 2013. The increase was primarily attributable to new capital raised from the Asian Fund II and to a lesser extent appreciation in the fair value of our private equity portfolio. These increases were partially offset by distributions to the limited partners of our private equity funds arising from realizations and a reduction in AUM as a result of the Asian Fund entering its post-investment period.
FPAUM was $45.9 billion as of June 30, 2013, an increase of $4.7 billion, or 11.4%, compared to FPAUM of $41.2 billion as of March 31, 2013. The increase was primarily attributable to new capital raised from the Asian Fund II partially offset by distributions to the limited partners of our private equity funds arising from realizations and the reduction in the fee base of the Asian Fund as a result of the fund entering the post-investment period.
FRE was $42.6 million for the quarter ended June 30, 2013, an increase of $6.4 million, or 17.6%, compared to FRE of $36.2 million for the quarter ended June 30, 2012. FRE was $83.4 million for the six months ended June 30, 2013, an increase of $9.4 million, or 12.7%, compared to FRE of $74.0 million for the six months ended June 30, 2012. The increase in both comparable periods was primarily driven by higher management fees resulting from new capital raised and higher transaction fees. These increases were partially offset by higher compensation expense due to additional headcount.
ENI was $72.0 million for the quarter ended June 30, 2013, a decrease of $102.7 million, or 58.7%, compared to ENI of $174.7 million for the quarter ended June 30, 2012. ENI was $338.7 million for the six months ended June 30, 2013, a decrease of $101.4 million, or 23.0%, compared to ENI of $440.1 million for the six months ended June 30, 2012. The decrease in both comparable periods was primarily attributable to lower net carried interest resulting from a lower level of appreciation in our private equity portfolio, partially offset by the increase in FRE discussed above.
Public Markets
AUM was $29.0 billion as of June 30, 2013, an increase of $1.1 billion, or 3.9%, compared to AUM of $27.9 billion as of March 31, 2013. FPAUM was $22.0 billion as of June 30, 2013, an increase of $0.8 billion, or 3.7%, compared to FPAUM of $21.2 billion as of March 31, 2013. For both AUM and FPAUM, the increases were primarily attributable to net new capital raised and to a lesser extent appreciation in the net asset values of certain credit investment vehicles.
FRE was $34.4 million for the quarter ended June 30, 2013, an increase of $22.1 million compared to FRE of $12.3 million for the quarter ended June 30, 2012. FRE was $71.5 million for the six months ended June 30, 2013, an increase of $43.8 million compared to FRE of $27.7 million for the six months ended June 30, 2012. The increase in both comparable periods was principally attributable to (i) higher management fees related to new capital raised, (ii) the acquisition of Prisma and (iii) higher incentive fees earned.
ENI was $40.5 million for the three months ended June 30, 2013, an increase of $33.7 million compared to ENI of $6.8 million for the three months ended June 30, 2012. ENI was $89.6 million for the six months ended June 30, 2013, an increase of $58.9 million compared to ENI of $30.7 million for the six months ended June 30, 2012. The increase in both comparable periods was primarily driven by the increase in FRE discussed above and to a lesser extent higher net carried interest due to investment appreciation of certain carry-earning investment vehicles.
Capital Markets and Principal Activities
FRE was $21.2 million for the quarter ended June 30, 2013, which was the same as in the quarter ended June 30, 2012.
FRE was $31.3 million for the six months ended June 30, 2013, a decrease of $10.2 million, or 24.5%, compared to FRE of $41.5 million for the six months ended June 30, 2012. The decrease was primarily driven by a lower level of overall capital markets transaction activity.
ENI was $31.9 million for the quarter ended June 30, 2013, a decrease of $332.6 million compared to ENI of $364.5 million for the quarter ended June 30, 2012. ENI was $363.8 million for the six months ended June 30, 2013, a decrease of $438.8 million compared to ENI of $802.6 million for the six months ended June 30, 2012. The decrease in both comparative periods was primarily due to a lower level of investment income from our principal investments. While the fair value of our principal investments increased during the quarter and six months ended June 30, 2013, the level of appreciation was lower than in the comparable periods of 2012.
CAPITAL AND LIQUIDITY
As of June 30, 2013, KKR had $2.0 billion of cash and short-term investments on a total reportable segment basis and $1.0 billion of outstanding debt obligations. KKR’s availability for borrowings was $750.0 million (reduced for an outstanding letter of credit), which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of June 30, 2013.
As of June 30, 2013, KKR’s portion of total uncalled commitments to its investment funds was $786.6 million, consisting of the following (amounts in thousands):
| | | | |
| | | | Uncalled Commitments |
Private Markets | | | | |
| North America Fund XI | | | | $ | 229,600 |
| Real Estate Fund | | | | | 135,100 |
| European Fund III | | | | | 125,100 |
| Asian Fund II | | | | | 75,000 |
| 2006 Fund | | | | | 63,800 |
| Infrastructure | | | | | 28,900 |
| E2 Investors (Annex Fund) | | | | | 14,000 |
| Asian Fund | | | | | 10,900 |
| Natural Resources | | | | | 10,300 |
| China Growth Fund | | | | | 6,500 |
| Other | | | | | 11,300 |
| Total Private Markets Commitments | | | | | 710,500 |
| | | | |
Public Markets | | | | |
| Direct Lending Vehicles | | | | | 30,100 |
| Mezzanine Fund | | | | | 29,600 |
| Special Situations Vehicles | | | | | 16,400 |
| Total Public Markets Commitments | | | | | 76,100 |
| | | | |
| Total Uncalled Commitments | | | | $ | 786,600 |
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DISTRIBUTION
A distribution of $0.42 per common unit has been declared, comprised of (i) $0.10 per common unit from after-tax FRE, (ii) $0.23 per common unit from realized cash carry, and (iii) $0.09 per common unit from net realized principal investment income. The distribution will be paid on August 20, 2013 to unitholders of record as of the close of business on August 5, 2013. Please refer to the distribution policy presented later in this release.
CONFERENCE CALL
A conference call to discuss KKR’s financial results will be held on Friday, July 26, 2013 at 10:00 a.m. EDT. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Public Investors section of KKR’s website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 14885175, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.
ABOUT KKR
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $83.5 billion in assets under management as of June 30, 2013. With 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 fund investors through its client relationships and capital markets platform. KKR & Co. L.P. is publicly traded on the New York Stock Exchange (NYSE: KKR) and “KKR”, as used in this release, includes its subsidiaries, their managed investment funds and accounts, and/or their affiliated investment vehicles, as appropriate. 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 AUM, FPAUM, FRE, total distributable earnings, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee related EBITDA, committed dollars invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized principal investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships such as Prisma or Nephila; 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 factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the SEC on February 22, 2013, and other filings with the SEC, which are available at www.sec.gov.
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| KKR |
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED) |
| (Amounts in thousands, except common unit and per common unit amounts) |
| | | | | | | | | | |
| | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| Revenues | | | | | | | | | | |
| Fees | | | | $ | 166,376 | | | $ | 112,360 | | | $ | 317,616 | | | $ | 228,667 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and Benefits | | | | | 200,602 | | | | 280,640 | | | | 531,723 | | | | 653,050 | |
| Occupancy and Related Charges | | | | | 13,878 | | | | 14,095 | | | | 28,399 | | | | 29,292 | |
| General, Administrative and Other | | | | | 77,542 | | | | 54,004 | | | | 171,230 | | | | 111,655 | |
| Total Expenses | | | | | 292,022 | | | | 348,739 | | | | 731,352 | | | | 793,997 | |
| | | | | | | | | | |
| Investment Income (Loss) | | | | | | | | | | |
| Net Gains (Losses) from Investment Activities | | | | | 98,537 | | | | 1,601,688 | | | | 2,368,354 | | | | 4,688,553 | |
| Dividend Income | | | | | 209,486 | | | | 79,919 | | | | 248,955 | | | | 252,858 | |
| Interest Income | | | | | 128,020 | | | | 87,892 | | | | 237,389 | | | | 164,091 | |
| Interest Expense | | | | | (24,614 | ) | | | (16,884 | ) | | | (47,637 | ) | | | (34,889 | ) |
| Total Investment Income (Loss) | | | | | 411,429 | | | | 1,752,615 | | | | 2,807,061 | | | | 5,070,613 | |
| | | | | | | | | | |
| Income (Loss) Before Taxes | | | | | 285,783 | | | | 1,516,236 | | | | 2,393,325 | | | | 4,505,283 | |
| | | | | | | | | | |
| Income Taxes | | | | | 8,525 | | | | 11,093 | | | | 17,881 | | | | 28,165 | |
| | | | | | | | | | |
| Net Income (Loss) | | | | | 277,258 | | | | 1,505,143 | | | | 2,375,444 | | | | 4,477,118 | |
| | | | | | | | | | |
| Net Income (Loss) Attributable to | | | | | | | | | | |
| Redeemable Noncontrolling Interests | | | | | (7,800 | ) | | | 3,285 | | | | 16,823 | | | | 8,557 | |
| Net Income (Loss) Attributable to | | | | | | | | | | |
| Noncontrolling Interests | | | | | 269,924 | | | | 1,355,597 | | | | 2,150,048 | | | | 4,131,864 | |
| | | | | | | | | | |
| Net Income (Loss) Attributable to KKR & Co. L.P. | | | | $ | 15,134 | | | $ | 146,261 | | | $ | 208,573 | | | $ | 336,697 | |
| | | | | | | | | | |
| Distributions Declared per KKR & Co. L.P. Common Unit | | | | $ | 0.42 | | | $ | 0.13 | | | $ | 0.69 | | | $ | 0.28 | |
| | | | | | | | | | |
| Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit | | | | | | | | | | |
| Basic | | | | $ | 0.06 | | | $ | 0.62 | | | $ | 0.79 | | | $ | 1.45 | |
| Diluted (a) | | | | $ | 0.05 | | | $ | 0.58 | | | $ | 0.72 | | | $ | 1.37 | |
| Weighted Average Common Units Outstanding | | | | | | | | | | |
| Basic | | | | | 271,983,811 | | | | 235,781,983 | | | | 264,555,267 | | | | 232,440,659 | |
| Diluted (a) | | | | | 298,078,764 | | | | 252,507,802 | | | | 290,104,942 | | | | 245,169,954 | |
| | | | | | | | | | | | | | | | | | |
| | | |
| (a) | | KKR Holdings L.P. 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. |
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KKR |
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| (Amounts in thousands, except unit and per unit amounts) |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| Fees | | | | | | | | | | | | |
| Management and incentive fees: | | | | | | | | | | | | |
| Management fees | | | | $ | 164,176 | | | $ | 152,963 | | | $ | 129,626 | | | $ | 317,139 | | | $ | 258,269 | |
| Incentive fees | | | | | 15,590 | | | | 18,849 | | | | 4,057 | | | | 34,439 | | | | 13,727 | |
| Management and incentive fees | | | | | 179,766 | | | | 171,812 | | | | 133,683 | | | | 351,578 | | | | 271,996 | |
| | | | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | | | |
| Monitoring fees | | | | | 28,907 | | | | 32,068 | | | | 27,786 | | | | 60,975 | | | | 53,608 | |
| Transaction fees | | | | | 62,785 | | | | 40,299 | | | | 43,706 | | | | 103,084 | | | | 88,004 | |
| Fee credits | | | | | (34,751 | ) | | | (23,065 | ) | | | (16,689 | ) | | | (57,816 | ) | | | (36,032 | ) |
| Net monitoring and transaction fees | | | | | 56,941 | | | | 49,302 | | | | 54,803 | | | | 106,243 | | | | 105,580 | |
| | | | | | | | | | | | |
| Total fees | | | | | 236,707 | | | | 221,114 | | | | 188,486 | | | | 457,821 | | | | 377,576 | |
| | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | |
| Compensation and benefits | | | | | 80,436 | | | | 75,162 | | | | 62,746 | | | | 155,598 | | | | 125,470 | |
| Occupancy and related charges | | | | | 13,067 | | | | 13,322 | | | | 13,239 | | | | 26,389 | | | | 27,700 | |
| Other operating expenses | | | | | 45,027 | | | | 44,630 | | | | 42,729 | | | | 89,657 | | | | 81,278 | |
| Total expenses | | | | | 138,530 | | | | 133,114 | | | | 118,714 | | | | 271,644 | | | | 234,448 | |
| | | | | | | | | | | | |
| Fee Related Earnings | | | | | 98,177 | | | | 88,000 | | | | 69,772 | | | | 186,177 | | | | 143,128 | |
| | | | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | | | |
| Realized carried interest | | | | | 269,828 | | | | 88,167 | | | | 65,600 | | | | 357,995 | | | | 140,478 | |
| Unrealized carried interest | | | | | (202,018 | ) | | | 331,198 | | | | 217,274 | | | | 129,180 | | | | 611,760 | |
| Gross carried interest | | | | | 67,810 | | | | 419,365 | | | | 282,874 | | | | 487,175 | | | | 752,238 | |
| Less: allocation to KKR carry pool | | | | | (26,536 | ) | | | (169,504 | ) | | | (112,553 | ) | | | (196,040 | ) | | | (304,059 | ) |
| Less: management fee refunds (a) | | | | | (4,735 | ) | | | (9,216 | ) | | | (32,804 | ) | | | (13,951 | ) | | | (73,512 | ) |
| Net carried interest | | | | | 36,539 | | | | 240,645 | | | | 137,517 | | | | 277,184 | | | | 374,667 | |
| Other investment income (loss) | | | | | 11,050 | | | | 320,198 | | | | 340,103 | | | | 331,248 | | | | 760,010 | |
| Total investment income (loss) | | | | | 47,589 | | | | 560,843 | | | | 477,620 | | | | 608,432 | | | | 1,134,677 | |
| | | | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | | | |
| in Income of consolidated entities | | | | | 145,766 | | | | 648,843 | | | | 547,392 | | | | 794,609 | | | | 1,277,805 | |
| Income (Loss) attributable to | | | | | | | | | | | | |
| noncontrolling interests | | | | | 1,323 | | | | 1,101 | | | | 1,277 | | | | 2,424 | | | | 4,488 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 144,443 | | | $ | 647,742 | | | $ | 546,115 | | | $ | 792,185 | | | $ | 1,273,317 | |
| | | | | | | | | | | | |
| Provision for Income Taxes | | | | | 13,486 | | | | 20,117 | | | | 25,857 | | | | 33,603 | | | | 69,240 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss), After Taxes (b) | | | | $ | 130,957 | | | $ | 627,625 | | | $ | 520,258 | | | $ | 758,582 | | | $ | 1,204,077 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss), After Taxes per Adjusted Unit (b) | | | | $ | 0.18 | | | $ | 0.88 | | | $ | 0.74 | | | $ | 1.06 | | | $ | 1.73 | |
| | | | | | | | | | | | | |
| Assets Under Management | | | | $ | 83,500,900 | | | $ | 78,253,400 | | | $ | 61,488,900 | | | $ | 83,500,900 | | | $ | 61,488,900 | |
| Fee Paying Assets Under Management | | | | $ | 67,956,400 | | | $ | 62,454,100 | | | $ | 47,200,500 | | | $ | 67,956,400 | | | $ | 47,200,500 | |
| Committed Dollars Invested and Syndicated Capital | | | | $ | 1,889,400 | | | $ | 824,400 | | | $ | 680,200 | | | $ | 2,713,800 | | | $ | 1,713,200 | |
| Uncalled Commitments | | | | $ | 21,364,400 | | | $ | 16,207,300 | | | $ | 10,610,300 | | | $ | 21,364,400 | | | $ | 10,610,300 | |
| | | | | | | | | | | | | |
Other Information | | | | | | | | | | | | |
| Fee Related Earnings | | | | $ | 98,177 | | | $ | 88,000 | | | $ | 69,772 | | | $ | 186,177 | | | $ | 143,128 | |
| Plus: depreciation and amortization | | | | | 3,708 | | | | 3,681 | | | | 3,093 | | | | 7,389 | | | | 5,646 | |
| Fee Related EBITDA | | | | $ | 101,885 | | | $ | 91,681 | | | $ | 72,865 | | | $ | 193,566 | | | $ | 148,774 | |
| | | | | | | | | | | | |
| Distributed Earnings | | | | $ | 313,559 | | | $ | 198,720 | | | $ | 104,548 | | | $ | 512,279 | | | $ | 216,034 | |
| Plus: Undistributed net realized principal investment income | | | | | 90,217 | | | | 91,894 | | | | 301,580 | | | | 182,111 | | | | 354,198 | |
| Total Distributable Earnings (b) | | | | $ | 403,776 | | | $ | 290,614 | | | $ | 406,128 | | | $ | 694,390 | | | $ | 570,232 | |
| | | | | | | | | | | | |
| GAAP interest expense | | | | $ | 24,614 | | | $ | 23,023 | | | $ | 16,884 | | | $ | 47,637 | | | $ | 34,889 | |
| Less: interest expense related to debt obligations | | | | | | | | | | | | |
| from investment financing arrangements | | | | | 8,404 | | | | 6,790 | | | | 7,461 | | | | 15,194 | | | | 15,534 | |
| Core Interest Expense (b) | | | | $ | 16,210 | | | $ | 16,233 | | | $ | 9,423 | | | $ | 32,443 | | | $ | 19,355 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss), After Taxes and Equity-based Charges (b) | | | | $ | 105,021 | | | $ | 600,207 | | | $ | 506,208 | | | $ | 705,228 | | | $ | 1,173,763 | |
| | | | | | | | | | | | | |
| | | |
| (a) | | As of June 30, 2013, there is no carried interest subject to management fee refunds, which may reduce carried interest in future periods. |
| |
| (b) | | See definitions for economic net income (loss), after taxes, adjusted units, total distributable earnings, core interest expense and economic net income (loss), after taxes and equity-based charges under “Notes to Reportable Segments.” |
| |
| KKR |
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION |
| PRIVATE MARKETS SEGMENTS (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| Fees | | | | | | | | | | | | |
| Management and incentive fees: | | | | | | | | | | | | |
| Management fees | | | | $ | 114,700 | | | $ | 106,605 | | | $ | 107,170 | | | $ | 221,305 | | | $ | 214,082 | |
| Incentive fees | | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Management and incentive fees | | | | | 114,700 | | | | 106,605 | | | | 107,170 | | | | 221,305 | | | | 214,082 | |
| | | | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | | | |
| Monitoring fees | | | | | 28,907 | | | | 32,068 | | | | 27,786 | | | | 60,975 | | | | 53,608 | |
| Transaction fees | | | | | 25,231 | | | | 16,412 | | | | 10,768 | | | | 41,643 | | | | 22,435 | |
| Fee credits | | | | | (29,547 | ) | | | (21,009 | ) | | | (15,642 | ) | | | (50,556 | ) | | | (33,348 | ) |
| Net monitoring and transaction fees | | | | | 24,591 | | | | 27,471 | | | | 22,912 | | | | 52,062 | | | | 42,695 | |
| | | | | | | | | | | | |
| Total fees | | | | | 139,291 | | | | 134,076 | | | | 130,082 | | | | 273,367 | | | | 256,777 | |
| | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | |
| Compensation and benefits | | | | | 51,516 | | | | 48,001 | | | | 45,991 | | | | 99,517 | | | | 90,477 | |
| Occupancy and related charges | | | | | 11,143 | | | | 11,425 | | | | 11,633 | | | | 22,568 | | | | 24,438 | |
| Other operating expenses | | | | | 33,988 | | | | 33,942 | | | | 36,230 | | | | 67,930 | | | | 67,905 | |
| Total expenses | | | | | 96,647 | | | | 93,368 | | | | 93,854 | | | | 190,015 | | | | 182,820 | |
| | | | | | | | | | | | |
| Fee Related Earnings | | | | | 42,644 | | | | 40,708 | | | | 36,228 | | | | 83,352 | | | | 73,957 | |
| | | | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | | | |
| Realized carried interest | | | | | 269,828 | | | | 88,167 | | | | 65,600 | | | | 357,995 | | | | 140,478 | |
| Unrealized carried interest | | | | | (212,809 | ) | | | 310,799 | | | | 226,186 | | | | 97,990 | | | | 605,813 | |
| Gross carried interest | | | | | 57,019 | | | | 398,966 | | | | 291,786 | | | | 455,985 | | | | 746,291 | |
| Less: allocation to KKR carry pool | | | | | (22,220 | ) | | | (161,344 | ) | | | (116,118 | ) | | | (183,564 | ) | | | (301,680 | ) |
| Less: management fee refunds | | | | | (4,735 | ) | | | (9,216 | ) | | | (32,804 | ) | | | (13,951 | ) | | | (73,512 | ) |
| Net carried interest | | | | | 30,064 | | | | 228,406 | | | | 142,864 | | | | 258,470 | | | | 371,099 | |
| Other investment income (loss) | | | | | (249 | ) | | | (2,035 | ) | | | (3,990 | ) | | | (2,284 | ) | | | (2,338 | ) |
| Total investment income (loss) | | | | | 29,815 | | | | 226,371 | | | | 138,874 | | | | 256,186 | | | | 368,761 | |
| | | | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | | | |
| in Income of consolidated entities | | | | | 72,459 | | | | 267,079 | | | | 175,102 | | | | 339,538 | | | | 442,718 | |
| Income (Loss) attributable to | | | | | | | | | | | | |
| noncontrolling interests | | | | | 411 | | | | 398 | | | | 358 | | | | 809 | | | | 2,654 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 72,048 | | | $ | 266,681 | | | $ | 174,744 | | | $ | 338,729 | | | $ | 440,064 | |
| | | | | | | | | | | | | |
| Assets Under Management | | | | $ | 54,452,400 | | | $ | 50,340,400 | | | $ | 45,528,100 | | | $ | 54,452,400 | | | $ | 45,528,100 | |
| Fee Paying Assets Under Management | | | | $ | 45,907,500 | | | $ | 41,218,000 | | | $ | 37,858,300 | | | $ | 45,907,500 | | | $ | 37,858,300 | |
| Committed Dollars Invested | | | | $ | 1,314,000 | | | $ | 598,500 | | | $ | 606,300 | | | $ | 1,912,500 | | | $ | 1,182,500 | |
| Uncalled Commitments | | | | $ | 19,972,800 | | | $ | 14,560,900 | | | $ | 9,304,500 | | | $ | 19,972,800 | | | $ | 9,304,500 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| KKR |
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION |
| PUBLIC MARKETS SEGMENTS (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| Fees | | | | | | | | | | | | |
| Management and incentive fees: | | | | | | | | | | | | |
| Management fees | | | | $ | 49,476 | | | $ | 46,358 | | | $ | 22,456 | | | $ | 95,834 | | | $ | 44,187 | |
| Incentive fees | | | | | 15,590 | | | | 18,849 | | | | 4,057 | | | | 34,439 | | | | 13,727 | |
| Management and incentive fees | | | | | 65,066 | | | | 65,207 | | | | 26,513 | | | | 130,273 | | | | 57,914 | |
| | | | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | | | |
| Monitoring fees | | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Transaction fees | | | | | 7,243 | | | | 3,106 | | | | 1,319 | | | | 10,349 | | | | 3,741 | |
| Fee credits | | | | | (5,204 | ) | | | (2,056 | ) | | | (1,047 | ) | | | (7,260 | ) | | | (2,684 | ) |
| Net monitoring and transaction fees | | | | | 2,039 | | | | 1,050 | | | | 272 | | | | 3,089 | | | | 1,057 | |
| | | | | | | | | | | | |
| Total fees | | | | | 67,105 | | | | 66,257 | | | | 26,785 | | | | 133,362 | | | | 58,971 | |
| | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | |
| Compensation and benefits | | | | | 21,990 | | | | 19,700 | | | | 9,229 | | | | 41,690 | | | | 20,611 | |
| Occupancy and related charges | | | | | 1,615 | | | | 1,542 | | | | 1,366 | | | | 3,157 | | | | 2,784 | |
| Other operating expenses | | | | | 9,147 | | | | 7,826 | | | | 3,880 | | | | 16,973 | | | | 7,857 | |
| Total expenses | | | | | 32,752 | | | | 29,068 | | | | 14,475 | | | | 61,820 | | | | 31,252 | |
| | | | | | | | | | | | |
| Fee Related Earnings | | | | | 34,353 | | | | 37,189 | | | | 12,310 | | | | 71,542 | | | | 27,719 | |
| | | | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | | | |
| Realized carried interest | | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Unrealized carried interest | | | | | 10,791 | | | | 20,399 | | | | (8,912 | ) | | | 31,190 | | | | 5,947 | |
| Gross carried interest | | | | | 10,791 | | | | 20,399 | | | | (8,912 | ) | | | 31,190 | | | | 5,947 | |
| Less: allocation to KKR carry pool | | | | | (4,316 | ) | | | (8,160 | ) | | | 3,565 | | | | (12,476 | ) | | | (2,379 | ) |
| Less: management fee refunds | | | | | - | | | | - | | | | - | | | | - | | | | - | |
| Net carried interest | | | | | 6,475 | | | | 12,239 | | | | (5,347 | ) | | | 18,714 | | | | 3,568 | |
| Other investment income (loss) | | | | | 22 | | | | 62 | | | | (12 | ) | | | 84 | | | | (35 | ) |
| Total investment income (loss) | | | | | 6,497 | | | | 12,301 | | | | (5,359 | ) | | | 18,798 | | | | 3,533 | |
| | | | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | | | |
| in Income of consolidated entities | | | | | 40,850 | | | | 49,490 | | | | 6,951 | | | | 90,340 | | | | 31,252 | |
| Income (Loss) attributable to | | | | | | | | | | | | |
| noncontrolling interests | | | | | 378 | | | | 355 | | | | 123 | | | | 733 | | | | 554 | |
| | | | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 40,472 | | | $ | 49,135 | | | $ | 6,828 | | | $ | 89,607 | | | $ | 30,698 | |
| | | | | | | | | | | | | |
| Assets Under Management | | | | $ | 29,048,500 | | | $ | 27,913,000 | | | $ | 15,960,800 | | | $ | 29,048,500 | | | $ | 15,960,800 | |
| Fee Paying Assets Under Management | | | | $ | 22,048,900 | | | $ | 21,236,100 | | | $ | 9,342,200 | | | $ | 22,048,900 | | | $ | 9,342,200 | |
| Committed Dollars Invested | | | | $ | 370,800 | | | $ | 164,900 | | | $ | 73,900 | | | $ | 535,700 | | | $ | 280,100 | |
| Uncalled Commitments | | | | $ | 1,391,600 | | | $ | 1,646,400 | | | $ | 1,305,800 | | | $ | 1,391,600 | | | $ | 1,305,800 | |
| | | | | | | | | | | | |
| |
| KKR |
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION |
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENTS (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| Fees | | | | | | | | | | | | |
| Management and incentive fees: | | | | | | | | | | | | |
| Management fees | | | | $ | - | | $ | - | | $ | - | | $ | - | | $ | - |
| Incentive fees | | | | | - | | | - | | | - | | | - | | | - |
| Management and incentive fees | | | | | - | | | - | | | - | | | - | | | - |
| | | | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | | | |
| Monitoring fees | | | | | - | | | - | | | - | | | - | | | - |
| Transaction fees | | | | | 30,311 | | | 20,781 | | | 31,619 | | | 51,092 | | | 61,828 |
| Fee credits | | | | | - | | | - | | | - | | | - | | | - |
| Net monitoring and transaction fees | | | | | 30,311 | | | 20,781 | | | 31,619 | | | 51,092 | | | 61,828 |
| | | | | | | | | | | | |
| Total fees | | | | | 30,311 | | | 20,781 | | | 31,619 | | | 51,092 | | | 61,828 |
| | | | | | | | | | | | |
| Expenses | | | | | | | | | | | | |
| Compensation and benefits | | | | | 6,930 | | | 7,461 | | | 7,526 | | | 14,391 | | | 14,382 |
| Occupancy and related charges | | | | | 309 | | | 355 | | | 240 | | | 664 | | | 478 |
| Other operating expenses | | | | | 1,892 | | | 2,862 | | | 2,619 | | | 4,754 | | | 5,516 |
| Total expenses | | | | | 9,131 | | | 10,678 | | | 10,385 | | | 19,809 | | | 20,376 |
| | | | | | | | | | | | |
| Fee Related Earnings | | | | | 21,180 | | | 10,103 | | | 21,234 | | | 31,283 | | | 41,452 |
| | | | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | | | |
| Realized carried interest | | | | | - | | | - | | | - | | | - | | | - |
| Unrealized carried interest | | | | | - | | | - | | | - | | | - | | | - |
| Gross carried interest | | | | | - | | | - | | | - | | | - | | | - |
| Less: allocation to KKR carry pool | | | | | - | | | - | | | - | | | - | | | - |
| Less: management fee refunds | | | | | - | | | - | | | - | | | - | | | - |
| Net carried interest | | | | | - | | | - | | | - | | | - | | | - |
| Other investment income (loss) (a) | | | | | 11,277 | | | 322,171 | | | 344,105 | | | 333,448 | | | 762,383 |
| Total investment income (loss) | | | | | 11,277 | | | 322,171 | | | 344,105 | | | 333,448 | | | 762,383 |
| | | | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | | | |
| in Income of consolidated entities | | | | | 32,457 | | | 332,274 | | | 365,339 | | | 364,731 | | | 803,835 |
| Income (Loss) attributable to | | | | | | | | | | | | |
| noncontrolling interests | | | | | 534 | | | 348 | | | 796 | | | 882 | | | 1,280 |
| | | | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 31,923 | | $ | 331,926 | | $ | 364,543 | | $ | 363,849 | | $ | 802,555 |
| | | | | | | | | | | | | |
| Syndicated Capital | | | | $ | 204,600 | | $ | 61,000 | | $ | - | | $ | 265,600 | | $ | 250,600 |
| | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | (a) | | Amount is net of (i) interest expense and (ii) certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income that is not included in “Compensation and benefits” and “Other operating expenses” above and on page 6. |
| | | | | | | | | | |
| KKR |
| STATEMENTS OF OPERATIONS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| Quarter Ended June 30, 2013 |
| (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 | | | | $ | 114,700 | | | $ | 49,476 | | | $ | - | | $ | 164,176 | |
| Incentive fees | | | | | - | | | | 15,590 | | | | - | | | 15,590 | |
| Management and incentive fees | | | | | 114,700 | | | | 65,066 | | | | - | | | 179,766 | |
| | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | |
| Monitoring fees | | | | | 28,907 | | | | - | | | | - | | | 28,907 | |
| Transaction fees | | | | | 25,231 | | | | 7,243 | | | | 30,311 | | | 62,785 | |
| Fee credits | | | | | (29,547 | ) | | | (5,204 | ) | | | - | | | (34,751 | ) |
| Net monitoring and transaction fees | | | | | 24,591 | | | | 2,039 | | | | 30,311 | | | 56,941 | |
| | | | | | | | | | |
| Total fees | | | | | 139,291 | | | | 67,105 | | | | 30,311 | | | 236,707 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and benefits | | | | | 51,516 | | | | 21,990 | | | | 6,930 | | | 80,436 | |
| Occupancy and related charges | | | | | 11,143 | | | | 1,615 | | | | 309 | | | 13,067 | |
| Other operating expenses | | | | | 33,988 | | | | 9,147 | | | | 1,892 | | | 45,027 | |
| Total expenses | | | | | 96,647 | | | | 32,752 | | | | 9,131 | | | 138,530 | |
| | | | | | | | | | |
| Fee Related Earnings | | | | | 42,644 | | | | 34,353 | | | | 21,180 | | | 98,177 | |
| | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | |
| Realized carried interest | | | | | 269,828 | | | | - | | | | - | | | 269,828 | |
| Unrealized carried interest | | | | | (212,809 | ) | | | 10,791 | | | | - | | | (202,018 | ) |
| Gross carried interest | | | | | 57,019 | | | | 10,791 | | | | - | | | 67,810 | |
| Less: allocation to KKR carry pool | | | | | (22,220 | ) | | | (4,316 | ) | | | - | | | (26,536 | ) |
| Less: management fee refunds | | | | | (4,735 | ) | | | - | | | | - | | | (4,735 | ) |
| Net carried interest | | | | | 30,064 | | | | 6,475 | | | | - | | | 36,539 | |
| Other investment income (loss) | | | | | (249 | ) | | | 22 | | | | 11,277 | | | 11,050 | |
| Total investment income (loss) | | | | | 29,815 | | | | 6,497 | | | | 11,277 | | | 47,589 | |
| | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | |
| in Income of consolidated entities | | | | | 72,459 | | | | 40,850 | | | | 32,457 | | | 145,766 | |
| Income (Loss) attributable to | | | | | | | | | | |
| noncontrolling interests | | | | | 411 | | | | 378 | | | | 534 | | | 1,323 | |
| | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 72,048 | | | $ | 40,472 | | | $ | 31,923 | | $ | 144,443 | |
| | | | | | | | | | |
| |
| KKR |
| STATEMENTS OF OPERATIONS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| Quarter Ended March 31, 2013 |
| (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 | | | | $ | 106,605 | | | $ | 46,358 | | | $ | - | | $ | 152,963 | |
| Incentive fees | | | | | - | | | | 18,849 | | | | - | | | 18,849 | |
| Management and incentive fees | | | | | 106,605 | | | | 65,207 | | | | - | | | 171,812 | |
| | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | |
| Monitoring fees | | | | | 32,068 | | | | - | | | | - | | | 32,068 | |
| Transaction fees | | | | | 16,412 | | | | 3,106 | | | | 20,781 | | | 40,299 | |
| Fee credits | | | | | (21,009 | ) | | | (2,056 | ) | | | - | | | (23,065 | ) |
| Net monitoring and transaction fees | | | | | 27,471 | | | | 1,050 | | | | 20,781 | | | 49,302 | |
| | | | | | | | | | |
| Total fees | | | | | 134,076 | | | | 66,257 | | | | 20,781 | | | 221,114 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and benefits | | | | | 48,001 | | | | 19,700 | | | | 7,461 | | | 75,162 | |
| Occupancy and related charges | | | | | 11,425 | | | | 1,542 | | | | 355 | | | 13,322 | |
| Other operating expenses | | | | | 33,942 | | | | 7,826 | | | | 2,862 | | | 44,630 | |
| Total expenses | | | | | 93,368 | | | | 29,068 | | | | 10,678 | | | 133,114 | |
| | | | | | | | | | |
| Fee Related Earnings | | | | | 40,708 | | | | 37,189 | | | | 10,103 | | | 88,000 | |
| | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | |
| Realized carried interest | | | | | 88,167 | | | | - | | | | - | | | 88,167 | |
| Unrealized carried interest | | | | | 310,799 | | | | 20,399 | | | | - | | | 331,198 | |
| Gross carried interest | | | | | 398,966 | | | | 20,399 | | | | - | | | 419,365 | |
| Less: allocation to KKR carry pool | | | | | (161,344 | ) | | | (8,160 | ) | | | - | | | (169,504 | ) |
| Less: management fee refunds | | | | | (9,216 | ) | | | - | | | | - | | | (9,216 | ) |
| Net carried interest | | | | | 228,406 | | | | 12,239 | | | | - | | | 240,645 | |
| Other investment income (loss) | | | | | (2,035 | ) | | | 62 | | | | 322,171 | | | 320,198 | |
| Total investment income (loss) | | | | | 226,371 | | | | 12,301 | | | | 322,171 | | | 560,843 | |
| | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | |
| in Income of consolidated entities | | | | | 267,079 | | | | 49,490 | | | | 332,274 | | | 648,843 | |
| Income (Loss) attributable to | | | | | | | | | | |
| noncontrolling interests | | | | | 398 | | | | 355 | | | | 348 | | | 1,101 | |
| | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 266,681 | | | $ | 49,135 | | | $ | 331,926 | | $ | 647,742 | |
| | | | | | | | | | |
| | | | | | | | | | |
| KKR |
| STATEMENTS OF OPERATIONS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| Quarter Ended June 30, 2012 |
| (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 | | | | $ | 107,170 | | | $ | 22,456 | | | $ | - | | $ | 129,626 | |
| Incentive fees | | | | | - | | | | 4,057 | | | | - | | | 4,057 | |
| Management and incentive fees | | | | | 107,170 | | | | 26,513 | | | | - | | | 133,683 | |
| | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | |
| Monitoring fees | | | | | 27,786 | | | | - | | | | - | | | 27,786 | |
| Transaction fees | | | | | 10,768 | | | | 1,319 | | | | 31,619 | | | 43,706 | |
| Fee credits | | | | | (15,642 | ) | | | (1,047 | ) | | | - | | | (16,689 | ) |
| Net monitoring and transaction fees | | | | | 22,912 | | | | 272 | | | | 31,619 | | | 54,803 | |
| | | | | | | | | | |
| Total fees | | | | | 130,082 | | | | 26,785 | | | | 31,619 | | | 188,486 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and benefits | | | | | 45,991 | | | | 9,229 | | | | 7,526 | | | 62,746 | |
| Occupancy and related charges | | | | | 11,633 | | | | 1,366 | | | | 240 | | | 13,239 | |
| Other operating expenses | | | | | 36,230 | | | | 3,880 | | | | 2,619 | | | 42,729 | |
| Total expenses | | | | | 93,854 | | | | 14,475 | | | | 10,385 | | | 118,714 | |
| | | | | | | | | | |
| Fee Related Earnings | | | | | 36,228 | | | | 12,310 | | | | 21,234 | | | 69,772 | |
| | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | |
| Realized carried interest | | | | | 65,600 | | | | - | | | | - | | | 65,600 | |
| Unrealized carried interest | | | | | 226,186 | | | | (8,912 | ) | | | - | | | 217,274 | |
| Gross carried interest | | | | | 291,786 | | | | (8,912 | ) | | | - | | | 282,874 | |
| Less: allocation to KKR carry pool | | | | | (116,118 | ) | | | 3,565 | | | | - | | | (112,553 | ) |
| Less: management fee refunds | | | | | (32,804 | ) | | | - | | | | - | | | (32,804 | ) |
| Net carried interest | | | | | 142,864 | | | | (5,347 | ) | | | - | | | 137,517 | |
| Other investment income (loss) | | | | | (3,990 | ) | | | (12 | ) | | | 344,105 | | | 340,103 | |
| Total investment income (loss) | | | | | 138,874 | | | | (5,359 | ) | | | 344,105 | | | 477,620 | |
| | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | |
| in Income of consolidated entities | | | | | 175,102 | | | | 6,951 | | | | 365,339 | | | 547,392 | |
| Income (Loss) attributable to | | | | | | | | | | |
| noncontrolling interests | | | | | 358 | | | | 123 | | | | 796 | | | 1,277 | |
| | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 174,744 | | | $ | 6,828 | | | $ | 364,543 | | $ | 546,115 | |
| | | | | | | | | | |
| | | | | | | | | | |
| KKR |
| STATEMENTS OF OPERATIONS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| Six Months Ended June 30, 2013 |
| (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 | | | | $ | 221,305 | | | $ | 95,834 | | | $ | - | | $ | 317,139 | |
| Incentive fees | | | | | - | | | | 34,439 | | | | - | | | 34,439 | |
| Management and incentive fees | | | | | 221,305 | | | | 130,273 | | | | - | | | 351,578 | |
| | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | |
| Monitoring fees | | | | | 60,975 | | | | - | | | | - | | | 60,975 | |
| Transaction fees | | | | | 41,643 | | | | 10,349 | | | | 51,092 | | | 103,084 | |
| Fee credits | | | | | (50,556 | ) | | | (7,260 | ) | | | - | | | (57,816 | ) |
| Net monitoring and transaction fees | | | | | 52,062 | | | | 3,089 | | | | 51,092 | | | 106,243 | |
| | | | | | | | | | |
| Total fees | | | | | 273,367 | | | | 133,362 | | | | 51,092 | | | 457,821 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and benefits | | | | | 99,517 | | | | 41,690 | | | | 14,391 | | | 155,598 | |
| Occupancy and related charges | | | | | 22,568 | | | | 3,157 | | | | 664 | | | 26,389 | |
| Other operating expenses | | | | | 67,930 | | | | 16,973 | | | | 4,754 | | | 89,657 | |
| Total expenses | | | | | 190,015 | | | | 61,820 | | | | 19,809 | | | 271,644 | |
| | | | | | | | | | |
| Fee Related Earnings | | | | | 83,352 | | | | 71,542 | | | | 31,283 | | | 186,177 | |
| | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | |
| Realized carried interest | | | | | 357,995 | | | | - | | | | - | | | 357,995 | |
| Unrealized carried interest | | | | | 97,990 | | | | 31,190 | | | | - | | | 129,180 | |
| Gross carried interest | | | | | 455,985 | | | | 31,190 | | | | - | | | 487,175 | |
| Less: allocation to KKR carry pool | | | | | (183,564 | ) | | | (12,476 | ) | | | - | | | (196,040 | ) |
| Less: management fee refunds | | | | | (13,951 | ) | | | - | | | | - | | | (13,951 | ) |
| Net carried interest | | | | | 258,470 | | | | 18,714 | | | | - | | | 277,184 | |
| Other investment income (loss) | | | | | (2,284 | ) | | | 84 | | | | 333,448 | | | 331,248 | |
| Total investment income (loss) | | | | | 256,186 | | | | 18,798 | | | | 333,448 | | | 608,432 | |
| | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | |
| in Income of consolidated entities | | | | | 339,538 | | | | 90,340 | | | | 364,731 | | | 794,609 | |
| Income (Loss) attributable to | | | | | | | | | | |
| noncontrolling interests | | | | | 809 | | | | 733 | | | | 882 | | | 2,424 | |
| | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 338,729 | | | $ | 89,607 | | | $ | 363,849 | | $ | 792,185 | |
| | | | | | | | | | | | | | | | | |
| | | | | | | | | | |
| KKR |
| STATEMENTS OF OPERATIONS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| Six Months Ended June 30, 2012 |
| (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 | | | | $ | 214,082 | | | $ | 44,187 | | | $ | - | | $ | 258,269 | |
| Incentive fees | | | | | - | | | | 13,727 | | | | - | | | 13,727 | |
| Management and incentive fees | | | | | 214,082 | | | | 57,914 | | | | - | | | 271,996 | |
| | | | | | | | | | |
| Monitoring and transaction fees: | | | | | | | | | | |
| Monitoring fees | | | | | 53,608 | | | | - | | | | - | | | 53,608 | |
| Transaction fees | | | | | 22,435 | | | | 3,741 | | | | 61,828 | | | 88,004 | |
| Fee credits | | | | | (33,348 | ) | | | (2,684 | ) | | | - | | | (36,032 | ) |
| Net monitoring and transaction fees | | | | | 42,695 | | | | 1,057 | | | | 61,828 | | | 105,580 | |
| | | | | | | | | | |
| Total fees | | | | | 256,777 | | | | 58,971 | | | | 61,828 | | | 377,576 | |
| | | | | | | | | | |
| Expenses | | | | | | | | | | |
| Compensation and benefits | | | | | 90,477 | | | | 20,611 | | | | 14,382 | | | 125,470 | |
| Occupancy and related charges | | | | | 24,438 | | | | 2,784 | | | | 478 | | | 27,700 | |
| Other operating expenses | | | | | 67,905 | | | | 7,857 | | | | 5,516 | | | 81,278 | |
| Total expenses | | | | | 182,820 | | | | 31,252 | | | | 20,376 | | | 234,448 | |
| | | | | | | | | | |
| Fee Related Earnings | | | | | 73,957 | | | | 27,719 | | | | 41,452 | | | 143,128 | |
| | | | | | | | | | |
| Investment income (loss) | | | | | | | | | | |
| Realized carried interest | | | | | 140,478 | | | | - | | | | - | | | 140,478 | |
| Unrealized carried interest | | | | | 605,813 | | | | 5,947 | | | | - | | | 611,760 | |
| Gross carried interest | | | | | 746,291 | | | | 5,947 | | | | - | | | 752,238 | |
| Less: allocation to KKR carry pool | | | | | (301,680 | ) | | | (2,379 | ) | | | - | | | (304,059 | ) |
| Less: management fee refunds | | | | | (73,512 | ) | | | - | | | | - | | | (73,512 | ) |
| Net carried interest | | | | | 371,099 | | | | 3,568 | | | | - | | | 374,667 | |
| Other investment income (loss) | | | | | (2,338 | ) | | | (35 | ) | | | 762,383 | | | 760,010 | |
| Total investment income (loss) | | | | | 368,761 | | | | 3,533 | | | | 762,383 | | | 1,134,677 | |
| | | | | | | | | | |
| Income (Loss) before noncontrolling interests | | | | | | | | | | |
| in Income of consolidated entities | | | | | 442,718 | | | | 31,252 | | | | 803,835 | | | 1,277,805 | |
| Income (Loss) attributable to | | | | | | | | | | |
| noncontrolling interests | | | | | 2,654 | | | | 554 | | | | 1,280 | | | 4,488 | |
| | | | | | | | | | |
| Economic Net Income (Loss) | | | | $ | 440,064 | | | $ | 30,698 | | | $ | 802,555 | | $ | 1,273,317 | |
| | | | | | | | | | |
| | | | | | | | | | | | |
| KKR |
| BALANCE SHEETS |
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) |
| (Amounts in thousands, except per unit amounts) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| As of June 30, 2013 |
| | | | Private
Markets
Segment | | Public
Markets
Segment | | Capital
Markets and
Principal
Activities
Segment | | | Total
Reportable
Segments |
| | | | | | | | | | | | |
| Cash and short-term investments | | | $ | 322,639 | | $ | 35,229 | | $ | 1,636,977 | | | | $ | 1,994,845 |
| Investments | | | | | - | | | - | | | 4,607,196 | | (a) | | | 4,607,196 |
| Unrealized carry | | | | | 770,245 | | | 43,653 | | | - | | | | | 813,898 |
| Other assets | | | | | 316,317 | | | 308,837 | | | 68,028 | | | | | 693,182 |
| Total assets | | | | $ | 1,409,201 | | $ | 387,719 | | $ | 6,312,201 | | | | $ | 8,109,121 |
| | | | | | | | | | | | |
| Debt obligations | | | | $ | - | | $ | - | | $ | 1,000,000 | | | | $ | 1,000,000 |
| Other liabilities | | | | | 111,550 | | | 38,181 | | | 39,356 | | | | | 189,087 |
| Total liabilities | | | | | 111,550 | | | 38,181 | | | 1,039,356 | | | | | 1,189,087 |
| | | | | | | | | | | | |
| Noncontrolling interests | | | | | 1,457 | | | 825 | | | 18,695 | | | | | 20,977 |
| | | | | | | | | | | | |
| Book value | | | | $ | 1,296,194 | | $ | 348,713 | | $ | 5,254,150 | | | | $ | 6,899,057 |
| | | | | | | | | | | | |
| Book value per adjusted unit | | | | $ | 1.81 | | $ | 0.49 | | $ | 7.35 | | | | $ | 9.65 |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| As of December 31, 2012 |
| | | | Private
Markets
Segment | | Public Markets
Segment | | Capital
Markets and
Principal
Activities
Segment | | | Total
Reportable
Segments |
| | | | | | | | | | | | |
| Cash and short-term investments | | | $ | 358,237 | | $ | 28,690 | | $ | 1,147,360 | | | | $ | 1,534,287 |
| Investments | | | | | - | | | - | | | 4,758,157 | | | | | 4,758,157 |
| Unrealized carry | | | | | 730,292 | | | 24,939 | | | - | | | | | 755,231 |
| Other assets | | | | | 207,047 | | | 280,472 | | | 62,119 | | | | | 549,638 |
| Total assets | | | | $ | 1,295,576 | | $ | 334,101 | | $ | 5,967,636 | | | | $ | 7,597,313 |
| | | | | | | | | | | | |
| Debt obligations | | | | $ | - | | $ | - | | $ | 500,000 | | | | $ | 500,000 |
| Other liabilities | | | | | 78,724 | | | 16,433 | | | 24,275 | | | | | 119,432 |
| Total liabilities | | | | | 78,724 | | | 16,433 | | | 524,275 | | | | | 619,432 |
| | | | | | | | | | | | |
| Noncontrolling interests | | | | | 1,339 | | | 739 | | | 18,619 | | | | | 20,697 |
| | | | | | | | | | | | |
| Book value | | | | $ | 1,215,513 | | $ | 316,929 | | $ | 5,424,742 | | | | $ | 6,957,184 |
| | | | | | | | | | | | |
| Book value per adjusted unit | | | | $ | 1.72 | | $ | 0.45 | | $ | 7.70 | | | | $ | 9.87 |
| | | | | | | | | | | | |
| | | | | | |
| | | | (a) | | See Capital Markets and Principal Activities segment schedule of investments that follows. |
| | | | | | | | |
| KKR |
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS (UNAUDITED) |
| (Amounts in thousands, except percentage amounts) |
| | | | | | | | |
| | | | | | | | |
| | | | As of June 30, 2013 |
| Investment | | | | | | Fair Value as |
| | | | | | Fair | | a Percentage of |
| | | | Cost | | Value | | Total Investments |
| | | | | | | | |
| Co-Investments in Portfolio Companies of | | |
| Private Equity Investment Vehicles: | | |
| Alliance Boots GmbH | | | | | 195,640 | | | 473,795 | | 10.3 | % |
| HCA Inc. | | | | | 96,289 | | | 306,709 | | 6.6 | % |
| The Nielsen Company B.V. | | | | | 87,657 | | | 196,662 | | 4.3 | % |
| NXP B.V. | | | | | 167,276 | | | 196,601 | | 4.3 | % |
| Samson Resources Corporation | | | | | 237,514 | | | 190,012 | | 4.1 | % |
| ProSiebenSat.1 Media AG | | | | | 226,913 | | | 183,483 | | 4.0 | % |
| KION Group GmbH | | | | | 128,058 | | | 162,598 | | 3.5 | % |
| US Foods, Inc. | | | | | 100,000 | | | 130,000 | | 2.8 | % |
| Biomet, Inc. | | | | | 151,444 | | | 121,155 | | 2.6 | % |
| First Data Corporation | | | | | 135,258 | | | 94,681 | | 2.1 | % |
| Dollar General Corporation | | | | | 14,043 | | | 78,796 | | 1.7 | % |
| Energy Future Holdings Corp. | | | | | 200,000 | | | 10,000 | | 0.2 | % |
| | | | | 1,740,092 | | | 2,144,492 | | 46.5 | % |
| | | | | | | | |
| Private Equity Investment Vehicles | | |
| KKR 2006 Fund L.P. | | | | | 346,036 | | | 394,058 | | 8.5 | % |
| KKR European Fund III L.P. | | | | | 233,706 | | | 261,169 | | 5.7 | % |
| KKR Asian Fund L.P. | | | | | 82,542 | | | 92,554 | | 2.0 | % |
| KKR European Fund II L.P. | | | | | 54,546 | | | 57,806 | | 1.2 | % |
| KKR Millennium Fund L.P. | | | | | 53,844 | | | 44,969 | | 1.0 | % |
| KKR North America Fund XI L.P. | | | | | 20,177 | | | 21,510 | | 0.5 | % |
| KKR E2 Investors, L.P. | | | | | 10,418 | | | 20,568 | | 0.4 | % |
| KKR European Fund L.P. | | | | | 47,664 | | | 4,318 | | 0.1 | % |
| KKR China Growth Fund L.P. | | | | | 3,286 | | | 3,314 | | 0.1 | % |
| Co-Investment Vehicles | | | | | 546 | | | 653 | | 0.0 | % |
| | | | | 852,765 | | | 900,919 | | 19.5 | % |
| | | | | | | | |
| Private Equity Total | | | | | 2,592,857 | | | 3,045,411 | | 66.0 | % |
| | | | | | | | |
| Real Assets | | |
| Royalties and Drilling | | | | | 142,272 | | | 157,062 | | 3.4 | % |
| Real Estate Fund | | | | | 83,920 | | | 100,355 | | 2.2 | % |
| Infrastructure Fund | | | | | 25,825 | | | 26,570 | | 0.6 | % |
| Co-Investments | | | | | 10,835 | | | 12,988 | | 0.3 | % |
| Natural Resources | | | | | 13,172 | | | 8,836 | | 0.2 | % |
| Real Assets Total | | | | | 276,024 | | | 305,811 | | 6.7 | % |
| | | | | | | | |
| Private Markets Total | | | | | 2,868,881 | | | 3,351,222 | | 72.7 | % |
| | | | | | | | |
| Public Markets Investment Strategies | | |
| Liquid Credit | | | | | 187,263 | | | 195,094 | | 4.2 | % |
| Long/Short Equities | | | | | 100,000 | | | 109,906 | | 2.4 | % |
| Credit Relative Value | | | | | 82,000 | | | 88,775 | | 1.9 | % |
| Direct Lending | | | | | 39,069 | | | 44,006 | | 1.0 | % |
| Special Situations | | | | | 27,297 | | | 30,661 | | 0.7 | % |
| Mezzanine Fund | | | | | 14,564 | | | 17,937 | | 0.4 | % |
| Public Markets Total | | | | | 450,193 | | | 486,379 | | 10.6 | % |
| | | | | | | | |
| Other | | | | | 760,606 | | | 769,595 | | 16.7 | % |
| | | | | | | | |
| Total Investments | | | | $ | 4,079,680 | | $ | 4,607,196 | | 100.0 | % |
| | | | | | | | |
| | | | | | | | |
| KKR |
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED (UNAUDITED) |
| (Amounts in thousands, except percentage amounts) |
| | | | | | | | |
| | | | | | | | |
| | | | As of June 30, 2013 |
| | | | | | | | Fair Value as |
| | | | | | | | a Percentage |
Investment | | | | Cost | | Fair Value | | of Total Investments |
| | | | | | | | |
| Significant Aggregate Investments: (a) | | | | | | | | |
| Alliance Boots GmbH | | | | $ | 228,769 | | $ | 545,895 | | 11.9 | % |
| HCA Inc. | | | | | 117,624 | | | 365,344 | | 7.9 | % |
| | | | | 346,393 | | | 911,239 | | 19.8 | % |
| | | | | | | | |
| Other investments | | | | | 3,733,287 | | | 3,695,957 | | 80.2 | % |
| Total Investments | | | | $ | 4,079,680 | | $ | 4,607,196 | | 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 June 30, 2013. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company. |
| | |
| KKR |
| ASSETS UNDER MANAGEMENT* (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | | | | | | | |
| | | | | | | | | | | | | |
| | | | | | | Private
Markets
Segment | | Public Markets Segment | | | Total
Reportable
Segments |
Quarter Ended June 30, 2013 | | | |
| | | | | | | | | | | | | |
| March 31, 2013 | | | | $ | 50,340,400 | | | $ | 27,913,000 | | | | | $ | 78,253,400 | |
| New Capital Raised | | | | | 6,681,000 | | | | 1,703,300 | | | | | | 8,384,300 | |
| Distributions | | | | | (2,685,400 | ) | | | (720,500 | ) | | (c) | | | (3,405,900 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (272,300 | ) | | | - | | | | | | (272,300 | ) |
| Foreign Exchange | | | | | 12,600 | | | | - | | | | | | 12,600 | |
| Change in Value | | | | | 376,100 | | | | 152,700 | | | | | | 528,800 | |
| June 30, 2013 | | | | $ | 54,452,400 | | | $ | 29,048,500 | | | | | $ | 83,500,900 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Six Months Ended June 30, 2013 | | | |
| | | | | | | | | | | | | |
| December 31, 2012 | | | | $ | 49,127,600 | | | $ | 26,399,900 | | | | | $ | 75,527,500 | |
| New Capital Raised | | | | | 7,648,200 | | | | 3,234,800 | | | | | | 10,883,000 | |
| Distributions | | | | | (4,517,400 | ) | | | (1,400,200 | ) | | (d) | | | (5,917,600 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (272,300 | ) | | | - | | | | | | (272,300 | ) |
| Foreign Exchange | | | | | (11,000 | ) | | | - | | | | | | (11,000 | ) |
| Change in Value | | | | | 2,477,300 | | | | 814,000 | | | | | | 3,291,300 | |
| June 30, 2013 | | | | $ | 54,452,400 | | | $ | 29,048,500 | | | | | $ | 83,500,900 | |
| | | | | | | | | | | | | |
| | | | | | | | | | | | | |
Trailing Twelve Months Ended June 30, 2013 | | | |
| | | | | | | | | | | | | |
| June 30, 2012 | | | | $ | 45,528,100 | | | $ | 15,960,800 | | | | | $ | 61,488,900 | |
| New Capital Raised | | | | | 14,551,400 | | | | 5,464,000 | | | | | | 20,015,400 | |
| Acquisitions (b) | | | | | - | | | | 8,086,900 | | | | | | 8,086,900 | |
| Distributions | | | | | (10,254,300 | ) | | | (2,091,500 | ) | | (e) | | | (12,345,800 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (1,600,200 | ) | | | - | | | | | | (1,600,200 | ) |
| Foreign Exchange | | | | | 68,200 | | | | - | | | | | | 68,200 | |
| Change in Value | | | | | 6,159,200 | | | | 1,628,300 | | | | | | 7,787,500 | |
| June 30, 2013 | | | | $ | 54,452,400 | | | $ | 29,048,500 | | | | | $ | 83,500,900 | |
| | | | | | | | | | |
| | | |
| * | | Assets Under Management exclude those assets managed by entities where KKR holds less than a 50% ownership interest. |
| |
| (a) | | Represents the impact of including certain funds entering the post-investment period. |
| (b) | | Represents AUM of Prisma as of October 1, 2012, the date of acquisition. This figure excludes new capital raised and distributions since the acquisition. |
| (c) | | Includes $193.5 million of redemptions by fund investors. |
| (d) | | Includes $539.2 million of redemptions by fund investors. |
| (e) | | Includes $709.1 million of redemptions by fund investors. |
| |
| KKR |
| FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | | | | Private
Markets
Segment | | Public
Markets
Segment | | Total
Reportable
Segments |
Quarter Ended June 30, 2013 | | | | |
| | | | | | | | | | | | |
| March 31, 2013 | | | | $ | 41,218,000 | | | $ | 21,236,100 | | | | $ | 62,454,100 | |
| New Capital Raised | | | | | 6,402,100 | | | | 1,203,000 | | | | | 7,605,100 | |
| Distributions | | | | | (1,109,900 | ) | | | (437,200 | ) | | (c) | | (1,547,100 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (654,700 | ) | | | - | | | | | (654,700 | ) |
| Foreign Exchange | | | | | 48,300 | | | | - | | | | | 48,300 | |
| Change in Value | | | | | 3,700 | | | | 47,000 | | | | | 50,700 | |
| June 30, 2013 | | | | $ | 45,907,500 | | | $ | 22,048,900 | | | | $ | 67,956,400 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Six Months Ended June 30, 2013 | | | | |
| | | | | | | | | | | | |
| December 31, 2012 | | | | $ | 41,173,000 | | | $ | 19,673,000 | | | | $ | 60,846,000 | |
| New Capital Raised | | | | | 7,363,900 | | | | 2,734,300 | | | | | 10,098,200 | |
| Distributions | | | | | (1,951,000 | ) | | | (973,700 | ) | | (d) | | (2,924,700 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (654,700 | ) | | | - | | | | | (654,700 | ) |
| Foreign Exchange | | | | | (55,400 | ) | | | - | | | | | (55,400 | ) |
| Change in Value | | | | | 31,700 | | | | 615,300 | | | | | 647,000 | |
| June 30, 2013 | | | | $ | 45,907,500 | | | $ | 22,048,900 | | | | $ | 67,956,400 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
Trailing Twelve Months Ended June 30, 2013 | | | | |
| | | | | | | | | | | | |
| June 30, 2012 | | | | $ | 37,858,300 | | | $ | 9,342,200 | | | | $ | 47,200,500 | |
| New Capital Raised | | | | | 14,361,000 | | | | 4,727,500 | | | | | 19,088,500 | |
| Acquisitions (b) | | | | | - | | | | 8,078,400 | | | | | 8,078,400 | |
| Distributions | | | | | (2,757,200 | ) | | | (1,322,300 | ) | | (e) | | (4,079,500 | ) |
| Net Changes in Fee Base of Certain Funds (a) | | | | | (3,860,100 | ) | | | - | | | | | (3,860,100 | ) |
| Foreign Exchange | | | | | 238,300 | | | | - | | | | | 238,300 | |
| Change in Value | | | | | 67,200 | | | | 1,223,100 | | | | | 1,290,300 | |
| June 30, 2013 | | | | $ | 45,907,500 | | | $ | 22,048,900 | | | | $ | 67,956,400 | |
| | | | | | | | | |
| | | |
| * | | Fee Paying Assets Under Management exclude those assets managed by entities where KKR holds less than a 50% ownership interest. |
| |
| (a) | | Represents the impact of including certain funds entering the post-investment period. |
| (b) | | Represents FPAUM of Prisma as of October 1, 2012, the date of acquisition. This figure excludes new capital raised and distributions since the acquisition. |
| (c) | | Includes $193.5 million of redemptions by fund investors. |
| (d) | | Includes $539.2 million of redemptions by fund investors. |
| (e) | | Includes $709.1 million of redemptions by fund investors. |
| |
| KKR |
| INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED) |
| As of June 30, 2013 |
| (Amounts in millions, except percentages) |
| | | | | | | | | | | | | | | | | | | | |
| | | | Investment Period | | Amount |
| | | | Commencement
Date | | End Date | | Commitment | | Uncalled
Commitments | | Percentage
Committed
by General
Partner | | Invested | | Realized | | Remaining
Cost | | Remaining
Fair Value |
Private Markets | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Private Equity Funds | | | | | | | | | | | | | | | | | | | | |
| Asian Fund II | | | | 4/2013 | | 4/2019 | | $ | 5,825.0 | | $ | 5,825.0 | | 1.3% | | $ | - | | $ | - | | $ | - | | $ | - |
| North America Fund XI | | | | 9/2012 | | 9/2018 | | | 7,230.7 | | | 6,740.2 | | 3.5% | | | 490.5 | | | 3.9 | | | 490.5 | | | 524.5 |
| China Growth Fund | | | | 11/2010 | | 11/2016 | | | 1,010.0 | | | 692.4 | | 1.0% | | | 317.6 | | | 28.5 | | | 300.1 | | | 305.4 |
| E2 Investors (Annex Fund) | | | | 8/2009 | | 11/2013 | | | 345.9 | | | 191.6 | | 4.3% | | | 154.3 | | | - | | | 154.2 | | | 325.2 |
| European Fund III | | | | 3/2008 | | 3/2014 | | | 6,077.2 | | | 1,729.2 | | 4.6% | | | 4,348.0 | | | 549.5 | | | 3,990.6 | | | 4,697.2 |
| Asian Fund | | | | 7/2007 | | 4/2013 | | | 3,983.2 | | | 273.9 | | 2.5% | | | 3,709.3 | | | 1,623.7 | | | 2,864.8 | | | 4,737.9 |
| 2006 Fund | | | | 9/2006 | | 9/2012 | | | 17,642.2 | | | 1,269.1 | | 2.1% | | | 16,373.1 | | | 10,509.6 | | | 10,021.7 | | | 14,378.1 |
| European Fund II | | | | 11/2005 | | 10/2008 | | | 5,750.8 | | | - | | 2.1% | | | 5,750.8 | | | 2,442.6 | | | 3,922.9 | | | 4,926.6 |
| Millennium Fund | | | | 12/2002 | | 12/2008 | | | 6,000.0 | | | - | | 2.5% | | | 6,000.0 | | | 9,320.5 | | | 2,218.9 | | | 3,335.2 |
| European Fund | | | | 12/1999 | | 12/2005 | | | 3,085.4 | | | - | | 3.2% | | | 3,085.4 | | | 8,720.0 | | | - | | | 51.7 |
| Total Private Equity Funds | | | | | | | | | 56,950.4 | | | 16,721.4 | | | | | 40,229.0 | | | 33,198.3 | | | 23,963.7 | | | 33,281.8 |
| | | | | | | | | | | | | | | | | | | | |
| Co-Investment Vehicles | | | | Various | | Various | | | 2,434.1 | | | 504.1 | | Various | | | 1,930.0 | | | 2,318.9 | | | 1,309.7 | | | 1,752.0 |
| Total Private Equity | | | | | | | | | 59,384.5 | | | 17,225.5 | | | | | 42,159.0 | | | 35,517.2 | | | 25,273.4 | | | 35,033.8 |
| | | | | | | | | | | | | | | | | | | | |
| Real Assets | | | | | | | | | | | | | | | | | | | | |
| Natural Resources Fund | | | | Various | | Various | | | 1,232.0 | | | 658.9 | | Various | | | 573.1 | | | 46.9 | | | 547.0 | | | 370.1 |
| Global Energy Opportunities | | | | Various | | Various | | | 1,011.0 | | | 884.4 | | Various | | | 126.6 | | | - | | | 126.6 | | | 113.4 |
| Infrastructure Fund | | | | Various | | Various | | | 1,041.5 | | | 614.2 | | 4.8% | | | 427.3 | | | 9.0 | | | 427.3 | | | 437.9 |
| Infrastructure Co-Investments | | | | Various | | Various | | | 1,356.7 | | | 252.2 | | Various | | | 1,104.5 | | | 190.5 | | | 1,104.5 | | | 1,355.8 |
| Real Estate Fund | | | | 5/2013 | | (b) | | | 500.0 | | | 337.6 | | 40% | | | 162.4 | | | - | | | 162.4 | | | 203.8 |
| Real Assets | | | | | | | | | 5,141.2 | | | 2,747.3 | | | | | 2,393.9 | | | 246.4 | | | 2,367.8 | | | 2,481.0 |
| | | | | | | | | | | | | | | | | | | | |
| Private Markets Total | | | | | | | | | 64,525.7 | | | 19,972.8 | | | | | 44,552.9 | | | 35,763.6 | | | 27,641.2 | | | 37,514.8 |
| | | | | | | | | | | | | | | | | | | | |
Public Markets | | | | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | | | |
| Special Situations Vehicles | | | | Various | | Various | | | 2,131.9 | | | 407.5 | | Various | | | 1,724.4 | | | 417.9 | | | 1,562.4 | | | 1,904.3 |
| Mezzanine Fund | | | | 3/2010 | | 8/2015 | | | 987.0 | | | 650.7 | | 4.6% | | | 336.3 | | | 52.3 | | | 336.3 | | | 394.6 |
| Direct Lending Vehicles | | | | Various | | Various | | | 668.5 | | | 333.4 | | Various | | | 335.1 | | | 9.4 | | | 335.1 | | | 359.4 |
| | | | | | | | | | | | | | | | | | | | |
| Public Markets Total | | | | | | | | | 3,787.4 | | | 1,391.6 | | | | | 2,395.8 | | | 479.6 | | | 2,233.8 | | | 2,658.3 |
| | | | | | | | | | | | | | | | | | | | |
| Grand Total | | | | | | | | $ | 68,313.1 | | $ | 21,364.4 | | | | $ | 46,948.7 | | $ | 36,243.2 | | $ | 29,875.0 | | $ | 40,173.1 |
| | | | | | | | | | | | | | | | | | | | |
| | | | | | |
| | | | (a) | | Reflects investment vehicles for which KKR has the ability to earn carried interest. |
| | | (b) | | Third anniversary of final close. |
| | | | | | | | | | | | |
| KKR |
| DISTRIBUTION CALCULATION (UNAUDITED) |
| (Amounts in thousands, except unit and per unit amounts) |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| | | | Quarter Ended | | Six Months Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 | | June 30, 2013 | | June 30, 2012 |
| | | | | | | | | | | | |
| FRE (a) | | | | $ | 98,177 | | | $ | 88,000 | | | $ | 69,772 | | | $ | 186,177 | | | $ | 143,128 | |
| Realized cash carry | | | | | 161,897 | | | | 52,900 | | | | 39,360 | | | | 214,797 | | | | 84,287 | |
| Net realized principal investment income | | | | | 150,361 | | | | 153,156 | | | | 301,580 | | | | 303,517 | | | | 354,198 | |
| Less: local income taxes | | | | | (5,336 | ) | | | (2,341 | ) | | | (3,307 | ) | | | (7,677 | ) | | | (6,893 | ) |
| Less: noncontrolling interests | | | | | (1,323 | ) | | | (1,101 | ) | | | (1,277 | ) | | | (2,424 | ) | | | (4,488 | ) |
| Total Distributable Earnings | | | | | 403,776 | | | | 290,614 | | | | 406,128 | | | | 694,390 | | | | 570,232 | |
| | | | | | | | | | | | |
| Less: Undistributed net realized principal investment income | | | | | (90,217 | ) | | | (91,894 | ) | | | (301,580 | ) | | | (182,111 | ) | | | (354,198 | ) |
| | | | | | | | | | | | |
| Distributed Earnings | | | | | 313,559 | | | | 198,720 | | | | 104,548 | | | | 512,279 | | | | 216,034 | |
| | | | | | | | | | | | |
| Distributed Earnings to KKR & Co. L.P. (b) | | | | | 126,295 | | | | 75,749 | | | | 36,401 | | | | 202,044 | | | | 74,201 | |
| | | | | | | | | | | | |
| Less: estimated current corporate income taxes | | | | | (10,125 | ) | | | (6,376 | ) | | | (4,268 | ) | | | (16,501 | ) | | | (8,290 | ) |
| | | | | | | | | | | | |
| Distributed Earnings to KKR & Co. L.P., After Taxes | | | | | 116,170 | | | | 69,373 | | | | 32,133 | | | | 185,543 | | | | 65,911 | |
| | | | | | | | | | | | |
| | | | | | | | | | | | |
| Distribution per KKR & Co. L.P. common unit | | | | $ | 0.42 | | | $ | 0.27 | | | $ | 0.13 | | | $ | 0.69 | | | $ | 0.28 | |
| | | | | | | | | | | | | |
Components of Distribution per KKR & Co. L.P. common unit | | | | | | | | | | | | |
| | | | | | | | | | | | |
| After-tax FRE | | | | $ | 0.10 | | | $ | 0.10 | | | $ | 0.07 | | | $ | 0.20 | | | $ | 0.15 | |
| Realized Cash Carry | | | | $ | 0.23 | | | $ | 0.08 | | | $ | 0.06 | | | $ | 0.31 | | | $ | 0.13 | |
| Distributed Net Realized Principal Investment Income | | | | $ | 0.09 | | | $ | 0.09 | | | $ | - | | | $ | 0.18 | | | $ | - | |
| | | | | | | | | | | | |
| Outstanding KKR & Co. L.P. common units | | | | | 277,834,343 | | | | 261,781,303 | | | | 238,155,157 | | | | | |
| | | | | | | | | | | | |
| | | |
| (a) | | See Exhibit A for a reconciliation of such measure to financial results prepared in accordance with GAAP. |
| | |
| (b) | | Represents the amount of distributed earnings allocable to KKR & Co. L.P. based on its ownership in the KKR business. |
| | |
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 and 40% of the net cash income from realized principal investments, in each case 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 obligations. For purposes of KKR’s distribution policy, its distributions are expected to consist 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) a percentage of net realized principal investment income. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling 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., which may change the distribution policy at any time, 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 unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR & Co. L.P. 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 KKR Group Partnerships.
KKR
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Fee related earnings (“FRE”) is comprised of segment operating revenues less segment operating expenses, excluding certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income. This measure is used by management as an alternative measurement of the operating earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan; (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items.
Economic net income (loss) (“ENI”) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of investment income and carried interest. ENI is comprised of: (i) FRE plus (ii) segment investment income (loss), which is reduced for carry pool allocations, management fee refunds, interest expense and certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income; less (iii) certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income (loss) relating to noncontrolling interests; and (iii) the exclusion of income taxes.
Economic net income (loss), after taxes is used to measure KKR’s implied ENI on a fully diluted basis. We believe this measure is useful to unitholders as it provides an indication of KKR’s ENI as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P. Economic Net Income (Loss), After Taxes 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.
Economic net income (loss), after taxes and equity-based charges is used to measure KKR’s implied ENI on a fully diluted basis. We believe this measure is useful to unitholders as it provides an indication of KKR’s ENI as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P. Economic Net Income (Loss), After Taxes and Equity-based Charges is calculated by deducting from ENI: (i) equity-based charges associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan; and (ii) 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.
Net realized principal investment income refers to net cash income from (i) realized investment gains and losses excluding certain realized investment losses from principal investments during the second quarter of 2013 to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009, (ii) dividend income and (iii) interest income net of interest expense less certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income in each case generated by KKR’s principal investments held on or through KKR’s balance sheet in our Capital Markets and Principal Activities segment. This is a term to describe a portion of KKR’s quarterly distribution.
Total distributable earnings is the sum 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) net realized principal investment income; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and also assess amounts available for distribution to KKR unitholders. However, total distributable earnings is not a measure that calculates actual distributions under KKR’s current distribution policy.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR’s capital raising activities and the overall activity in its investment funds and vehicles. 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; (iv) the value of outstanding structured finance vehicles; and (v) the fair value of other assets managed by KKR. KKR’s definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR’s capital raising activities and the overall activity in its investment funds and vehicles, for only those funds and vehicles where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). 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 and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of committed capital. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a fee or carried interest and (ii) capital invested by KKR’s investment funds and vehicles.
Syndicated capital is the aggregate amount of debt or equity capital in transactions originated by KKR investment funds and vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital committed to such transactions by carry-yielding co-investment vehicles, which is instead reported in committed dollars invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds and vehicles. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR’s Capital Markets and Principal Activities segment and across its investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds and vehicles to make future investments.
Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. and KKR Holdings and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P.
Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s private equity funds, investment vehicles 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. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds and vehicles and other noncontrolling interest holders. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations.
Book value is a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of our investment portfolio, including carried interest, as well as our overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from the equivalent GAAP amounts on a consolidated basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings L.P.
Fee related EBITDA is comprised of FRE before the impact of depreciation of fixed assets and amortization of intangible assets and is used by management as a measure of the cash earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the amount of cash earnings generated by KKR’s management companies and capital markets businesses.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.
| | | | | | | | |
| KKR |
EXHIBIT A |
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT (GAAP BASIS) |
| TO ENI AFTER TAXES PER ADJUSTED UNIT (UNAUDITED) |
| (Amounts in thousands, except common unit and per common unit amounts) |
| | | | | | | | |
| | | | | | | | |
| | | | Quarter Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 |
| | | | | | | | |
| Net income (loss) attributable to KKR & Co. L.P. per common unit | | | | $ | 0.06 | | $ | 0.75 | | $ | 0.62 |
| Weighted Average Common Units Outstanding | | | | | 271,983,811 | | | 257,044,184 | | | 235,781,983 |
| Net income (loss) attributable to KKR & Co. L.P. | | | | | 15,134 | | | 193,439 | | | 146,261 |
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | | | | | 28,106 | | | 334,112 | | | 292,833 |
| Plus: Non-cash equity based charges | | | | | 80,318 | | | 81,650 | | | 93,540 |
| Plus: Amortization of intangibles and other, net | | | | | 12,360 | | | 29,185 | | | 2,388 |
| Plus: Income taxes | | | | | 8,525 | | | 9,356 | | | 11,093 |
| Economic net income (loss) | | | | | 144,443 | | | 647,742 | | | 546,115 |
| Less: Provision for income taxes | | | | | 13,486 | | | 20,117 | | | 25,857 |
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | | | | | 25,936 | | | 27,418 | | | 14,050 |
| Economic net income (loss) after taxes and equity-based charges | | | | | 105,021 | | | 600,207 | | | 506,208 |
| Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | | | | | 25,936 | | | 27,418 | | | 14,050 |
| Economic net income (loss) after taxes | | | | | 130,957 | | | 627,625 | | | 520,258 |
| Weighted Average Adjusted Units | | | | | 715,453,358 | | | 711,229,881 | | | 700,720,686 |
| Economic net income (loss) after taxes per adjusted unit | | | | $ | 0.18 | | $ | 0.88 | | $ | 0.74 |
| | | | | | | | |
| | | | | | | | |
| | | | Six Months Ended | | |
| | | | June 30, 2013 | | June 30, 2012 | | |
| | | | | | | | |
| Net income (loss) attributable to KKR & Co. L.P. per common unit | | | | $ | 0.79 | | $ | 1.45 | | |
| Weighted Average Common Units Outstanding | | | | | 264,555,267 | | | 232,440,659 | | |
| Net income (loss) attributable to KKR & Co. L.P. | | | | | 208,573 | | | 336,697 | | |
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | | | | | 362,218 | | | 697,024 | | |
| Plus: Non-cash equity based charges | | | | | 161,968 | | | 207,881 | | |
| Plus: Amortization of intangibles and other, net | | | | | 41,545 | | | 3,550 | | |
| Plus: Income taxes | | | | | 17,881 | | | 28,165 | | |
| Economic net income (loss) | | | | | 792,185 | | | 1,273,317 | | |
| Less: Provision for income taxes | | | | | 33,603 | | | 69,240 | | |
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | | | | | 53,354 | | | 30,314 | | |
| Economic net income (loss) after taxes and equity-based charges | | | | | 705,228 | | | 1,173,763 | | |
| Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | | | | | 53,354 | | | 30,314 | | |
| Economic net income (loss) after taxes | | | | | 758,582 | | | 1,204,077 | | |
| Weighted Average Adjusted Units | | | | | 713,353,287 | | | 696,408,937 | | |
| Economic net income (loss) after taxes per adjusted unit | | | | $ | 1.06 | | $ | 1.73 | | |
| | | | | | | | | | |
| | | | | | | | |
| KKR |
EXHIBIT A (CONTINUED) |
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS) |
| TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE RELATED EBITDA, AND TOTAL DISTRIBUTABLE EARNINGS (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | | | |
| | | | Quarter Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 |
| | | | | | | | |
| Net income (loss) attributable to KKR & Co. L.P. | | | | $ | 15,134 | | $ | 193,439 | | $ | 146,261 |
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | | | 28,106 | | | 334,112 | | | 292,833 |
| Plus: Non-cash equity based charges | | | | | 80,318 | | | 81,650 | | | 93,540 |
| Plus: Amortization of intangibles and other, net | | | | | 12,360 | | | 29,185 | | | 2,388 |
| Plus: Income taxes | | | | | 8,525 | | | 9,356 | | | 11,093 |
| Economic net income (loss) | | | | | 144,443 | | | 647,742 | | | 546,115 |
| Plus: Income attributable to segment noncontrolling interests | | | | | 1,323 | | | 1,101 | | | 1,277 |
| Less: Investment income (loss) | | | | | 47,589 | | | 560,843 | | | 477,620 |
| Fee related earnings | | | | | 98,177 | | | 88,000 | | | 69,772 |
| Plus: Depreciation and amortization | | | | | 3,708 | | | 3,681 | | | 3,093 |
| Fee related EBITDA | | | | $ | 101,885 | | $ | 91,681 | | $ | 72,865 |
| Less: Depreciation and amortization | | | | | 3,708 | | | 3,681 | | | 3,093 |
| Plus: Realized cash carry | | | | | 161,897 | | | 52,900 | | | 39,360 |
| Plus: Net realized principal investment income | | | | | 150,361 | | | 153,156 | | | 301,580 |
| Less: Local income taxes and noncontrolling interests | | | | | 6,659 | | | 3,442 | | | 4,584 |
| Total distributable earnings | | | | $ | 403,776 | | $ | 290,614 | | $ | 406,128 |
| | | | | | | | |
| | | | | | | | |
| | | | | | | | |
| | | | Six Months Ended | | |
| | | | June 30, 2013 | | June 30, 2012 | | |
| | | | | | | | |
| Net income (loss) attributable to KKR & Co. L.P. | | | | $ | 208,573 | | $ | 336,697 | | |
| Plus: Net income (loss) attributable to noncontrolling interests held by KKR Holdings L.P. | | | 362,218 | | | 697,024 | | |
| Plus: Non-cash equity based charges | | | | | 161,968 | | | 207,881 | | |
| Plus: Amortization of intangibles and other, net | | | | | 41,545 | | | 3,550 | | |
| Plus: Income taxes | | | | | 17,881 | | | 28,165 | | |
| Economic net income (loss) | | | | | 792,185 | | | 1,273,317 | | |
| Plus: Income attributable to segment noncontrolling interests | | | | | 2,424 | | | 4,488 | | |
| Less: Investment income (loss) | | | | | 608,432 | | | 1,134,677 | | |
| Fee related earnings | | | | | 186,177 | | | 143,128 | | |
| Plus: Depreciation and amortization | | | | | 7,389 | | | 5,646 | | |
| Fee related EBITDA | | | | $ | 193,566 | | $ | 148,774 | | |
| Less: Depreciation and amortization | | | | | 7,389 | | | 5,646 | | |
| Plus: Realized cash carry | | | | | 214,797 | | | 84,287 | | |
| Plus: Net realized principal investment income | | | | | 303,517 | | | 354,198 | | |
| Less: Local income taxes and noncontrolling interests | | | | | 10,101 | | | 11,381 | | |
| Total distributable earnings | | | | $ | 694,390 | | $ | 570,232 | | |
| | | | | | | | |
| | | | | | |
| KKR |
EXHIBIT A (CONTINUED) |
| RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS) |
| TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED) |
| (Amounts in thousands, except common unit and per common unit amounts) |
| | | | | | |
| | | | | | |
| | | | As of | | As of |
| | | | June 30, 2013 | | December 31, 2012 |
| | | | | | |
| KKR & Co. L.P. partners’ capital | | | | $ | 2,287,389 | | | $ | 2,004,359 | |
| | | | | | |
| Noncontrolling interests held by KKR Holdings L.P. | | | | | 4,699,114 | | | | 4,981,864 | |
| | | | | | |
| Equity impact of KKR Management Holdings Corp. and other | | | | | (87,446 | ) | | | (29,039 | ) |
| | | | | | |
| Book value | | | | | 6,899,057 | | | | 6,957,184 | |
| | | | | | |
| Adjusted units | | | | | 715,296,775 | | | | 704,780,484 | |
| | | | | | |
| Book value per adjusted unit | | | | $ | 9.65 | | | $ | 9.87 | |
| | | | | | |
| | | | | | |
| | | | | | | |
| | | | | | |
| | | | | | |
| RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS) |
| TO CASH AND SHORT-TERM INVESTMENTS (SEGMENT BASIS) (UNAUDITED) |
| (Amounts in thousands) |
| | | | | | |
| | | | As of | | As of |
| | | | June 30, 2013 | | December 31, 2012 |
| | | | | | |
| Cash and cash equivalents | | | | $ | 1,167,413 | | | $ | 1,230,464 | |
| | | | | | |
| Liquid short-term investments | | | | | 827,432 | | | | 303,823 | |
| | | | | | |
| Cash and short-term investments | | | | $ | 1,994,845 | | | $ | 1,534,287 | |
| | | | | | |
| | | | | | | | |
| KKR |
EXHIBIT B |
| | | | | | | | |
| RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS (UNAUDITED) |
| | | | | | | | |
| The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units. |
| | | | | | | | |
| | | | Quarter Ended |
| | | | June 30, 2013 | | March 31, 2013 | | June 30, 2012 |
| Weighted Average GAAP Common Units Outstanding - Basic | | | | 271,983,811 | | 257,044,184 | | 235,781,983 |
| Weighted Average Unvested Common Units(a) | | | | 26,094,953 | | 24,998,337 | | 16,725,819 |
| Weighted Average GAAP Common Units Outstanding - Diluted | | | | 298,078,764 | | 282,042,521 | | 252,507,802 |
| Adjustments: | | | | | | | | |
| Weighted Average KKR Holdings Units(b) | | | | 417,374,594 | | 429,187,360 | | 448,212,884 |
| Weighted Average Adjusted Units | | | | 715,453,358 | | 711,229,881 | | 700,720,686 |
| | | | | | | | |
| | | | | | | | |
| | | | Six Months Ended | | |
| | | | June 30, 2013 | | June 30, 2012 | | |
| Weighted Average GAAP Common Units Outstanding - Basic | | | | 264,555,267 | | 232,440,659 | | |
| Weighted Average Unvested Common Units(a) | | | | 25,549,675 | | 12,729,295 | | |
| Weighted Average GAAP Common Units Outstanding - Diluted | | | | 290,104,942 | | 245,169,954 | | |
| Adjustments: | | | | | | | | |
| Weighted Average KKR Holdings Units(b) | | | | 423,248,345 | | 451,238,983 | | |
| Weighted Average Adjusted Units | | | | 713,353,287 | | 696,408,937 | | |
| | | | | | | | |
| | | | | | | | | |
| | | | | | | | |
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS (UNAUDITED) | |
| | | | | | | | |
| The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units. |
| | | | | | | | |
| | | | As of | | As of | | |
| | | | June 30, 2013 | | December 31, 2012 | | |
| GAAP Common Units Outstanding - Basic | | | | 277,834,343 | | 253,363,691 | | |
| Unvested Common Units(a) | | | | 25,501,501 | | 18,863,517 | | |
| GAAP Common Units Outstanding - Diluted | | | | 303,335,844 | | 272,227,208 | | |
| Adjustments: | | | | | | | | |
| KKR Holdings Units(b) | | | | 411,960,931 | | 432,553,276 | | |
| Adjusted Units | | | | 715,296,775 | | 704,780,484 | | |
| | | | | | | | |
| | | |
(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. |
CONTACT:
Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
Craig Larson, +1-877-610-4910 (U.S.) / +1-212-230-9410
investor-relations@kkr.com
or
Media:
Kohlberg Kravis Roberts & Co. L.P.
Kristi Huller, +1-212-750-8300
media@kkr.com
