UNDER
THE SECURITIES ACT OF 1933
Delaware | 6282 | 45-2832612 | ||
(State or other jurisdiction of incorporation or organization) | (Primary Standard Industrial Classification Code Number) | (I.R.S. Employer Identification Number) |
Joshua Ford Bonnie Simpson Thacher & Bartlett LLP 425 Lexington Avenue New York, NY10017-3954 Telephone:(212) 455-2000 Facsimile:(212) 455-2502 | Phyllis G. Korff David J. Goldschmidt Skadden, Arps, Slate, Meagher & Flom LLP Four Times Square New York, NY 10036-6522 Telephone: (212) 735-3000 Facsimile: (212) 735-2000 |
Large accelerated filer o | Accelerated filer o | Non-accelerated filer þ | Smaller reporting company o |
The information in this prospectus is not complete and may be changed. We may not sell these securities until the registration statement filed with the Securities and Exchange Commission is effective. This prospectus is not an offer to sell these securities and it is not soliciting an offer to buy these securities in any jurisdiction where the offer or sale is not permitted. |
• | adverse economic and market conditions, which can affect our business and liquidity position in many ways, including by reducing the value or performance of the investments made by our investment funds and reducing the ability of our investment funds to raise or deploy capital; | |
• | changes in the debt financing markets, which could negatively impact the ability of our funds and their portfolio companies to obtain attractive financing or refinancing for their investments and operations, and could increase the cost of such financing if it is obtained, leading to lower-yielding investments; | |
• | the potential volatility of our revenue, income and cash flow; | |
• | our dependence on our founders and other key personnel and our ability to attract, retain and motivate high quality employees who will bring value to our operations; | |
• | business and regulatory impediments to our efforts to expand into new investment strategies, markets and businesses; | |
• | the fact that most of our investment funds invest in illiquid, long-term investments that are not marketable securities, and such investments may lose significant value during an economic downturn; | |
• | the potential for poor performance of our investment funds; and | |
• | the possibility that we will not be able to continue to raise capital from third-party investors on advantageous terms. |
Proceeds, Before | ||||||||||||
Expenses, to The | ||||||||||||
Price to | Underwriting | Carlyle | ||||||||||
Public | Discount | Group L.P. | ||||||||||
Per Common Unit | $ | $ | $ | |||||||||
Total | $ | $ | $ |
J.P. Morgan | Citigroup | Credit Suisse |
(1) | As of September 30, 2011. |
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(ii)
(iii)
(iv)
• | no exercise by the underwriters of the option to purchase up to an additional common units from us; |
• | the common units to be sold in this offering are sold at $ per common unit, which is the midpoint of the price range indicated on the front cover of this prospectus; and |
• | the conversion of the convertible notes held by Mubadala, as further described below under “Organizational Structure — Reorganization.” |
(v)
(vi)
• | Excellence in Investing. Our primary goal is to invest wisely and create value for our fund investors. We strive to generate superior investment returns by combining deep industry expertise, a global network of local investment teams who can leverage extensive firm-wide resources and a consistent and disciplined investment process. | |
• | Commitment to our Fund Investors. Our fund investors come first. This commitment is a core component of our firm culture and informs every aspect of our business. We believe this philosophy is in the long-term best interests of Carlyle and its owners, including our prospective common unitholders. | |
• | Investment in the Firm. We have invested, and intend to continue to invest, significant resources in hiring and retaining a deep talent pool of investment professionals and in building the infrastructure of the firm, including our expansive local office network and our comprehensive investor support team, which provides finance, legal and compliance and tax services in addition to other corporate services. |
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• | Expansion of our Platform. We innovate continuously to expand our investment capabilities through the creation or acquisition of new asset-, sector- and regionally-focused strategies in order to provide our fund investors a variety of investment options. | |
• | Unified Culture. We seek to leverage the local market insights and operational capabilities that we have developed across our global platform through a unified culture we call “One Carlyle.” Our culture emphasizes collaboration and sharing of knowledge and expertise across the firm to create value. |
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For the Nine Months Ended September 30, 2011 | ||||||||||||||||||||
Corporate | ||||||||||||||||||||
Private | Global Market | Fund of Funds | ||||||||||||||||||
Equity | Real Assets | Strategies | Solutions(4) | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Total Revenues (GAAP) | $ | 2,013.5 | ||||||||||||||||||
Income before provision for income taxes (GAAP) | $ | 470.4 | ||||||||||||||||||
Segment Revenues(1) | $ | 990.4 | $ | 210.2 | $ | 267.5 | $ | 15.6 | $ | 1,483.7 | ||||||||||
Economic Net Income(1)(2) | $ | 352.4 | $ | 80.0 | $ | 139.3 | $ | 7.2 | $ | 578.9 | ||||||||||
Distributable Earnings(1)(3) | $ | 431.9 | $ | 70.4 | $ | 103.0 | $ | 11.7 | $ | 617.0 | ||||||||||
For the Year Ended December 31, 2010 | ||||||||||||||||||||
Corporate | ||||||||||||||||||||
Private | Global Market | Fund of Funds | ||||||||||||||||||
Equity | Real Assets | Strategies | Solutions | Total | ||||||||||||||||
(In millions) | ||||||||||||||||||||
Total Revenues (GAAP) | $ | 2,798.9 | ||||||||||||||||||
Income before provision for income taxes (GAAP) | $ | 1,479.7 | ||||||||||||||||||
Segment Revenues(1) | $ | 1,897.2 | $ | 235.0 | $ | 253.6 | n/a | $ | 2,385.8 | |||||||||||
Economic Net Income(1)(2) | $ | 819.3 | $ | 90.7 | $ | 104.0 | n/a | $ | 1,014.0 | |||||||||||
Distributable Earnings(1)(3) | $ | 307.2 | $ | 12.7 | $ | 22.6 | n/a | $ | 342.5 | |||||||||||
(1) | Under GAAP, we are required to consolidate certain of the investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these funds. | |
(2) | ENI, a non-GAAP measure, represents segment net income excluding the impact of income taxes, acquisition-related items including amortization of acquired intangibles and earn-outs, charges associated with equity-based compensation, corporate actions and infrequently occurring or unusual events (e.g., acquisition related costs, gains and losses on mark to market adjustments on contingent consideration, gains and losses from the retirement of our debt, charges associated with lease terminations and employee severance and settlements of legal claims). For a further discussion about ENI and a reconciliation to Income (Loss) Before Provision for Taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Financial Measures — Non-GAAP Financial Measures — Economic Net Income” and “ — Non-GAAP Financial Measures,” and Note 14 to our combined and consolidated financial statements appearing elsewhere in this prospectus. |
(3) | Distributable Earnings, a non-GAAP measure, is a component of ENI representing total ENI less unrealized performance fees and unrealized investment income plus unrealized performance fee compensation expense. For a further discussion about Distributable Earnings and a reconciliation to Income (Loss) Before Provision for Taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Financial Measures — Non-GAAP Financial Measures — Distributable Earnings,” “ — Non-GAAP Financial Measures” and Note 14 to our combined and consolidated financial statements appearing elsewhere in this prospectus. For a discussion of cash distributions and the difference between Distributable Earnings and such cash distributions, during the historical periods presented, see “Cash Distribution Policy.” |
(4) | We established our Fund of Funds Solutions segment on July 1, 2011. These results are for the period from July 1, 2011 to September 30, 2011. |
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• | Buyout Funds. Our buyout teams advise a diverse group of 16 active funds that invest in transactions that focus either on a particular geography (United States, Europe, Asia, Japan, South America or the Middle East and North Africa (“MENA”)) or a particular industry (e.g., financial services). As of September 30, 2011, our buyout funds had, in the aggregate, approximately $47 billion in AUM. |
• | Growth Capital Funds. Our nine active growth capital funds are advised by threeregionally-focused teams in the United States, Europe and Asia, with each team generally focused on middle-market and growth companies consistent with specific regional investment considerations. As of September 30, 2011, our growth capital funds had, in the aggregate, approximately $4 billion in AUM. |
% of | Fee- | Amount | Investments | |||||||||||||||||||||||||||||||||||
Total | AUM | Earning | Active | Active | Available | Investment | Invested Since | Since | ||||||||||||||||||||||||||||||
AUM | AUM | CAGR | AUM | Investments | Funds | Capital | Professionals | Inception | Inception | |||||||||||||||||||||||||||||
$ | 51 | 34 | % | 22 | % | $ | 39 | 161 | 25 | $ | 15 | 256 | $ | 48 | 414 |
• | Real Estate. Our 11 active real estate funds pursue real estate investment opportunities in Asia, Europe and the United States and generally focus on acquiring single-property opportunities rather than large-cap companies with real estate portfolios. As of September 30, 2011, our real estate funds had, in the aggregate, approximately $12 billion in AUM. |
• | Infrastructure. Our infrastructure investment team focuses on investments in infrastructure companies and assets. As of September 30, 2011, we advised one infrastructure fund with approximately $1 billion in AUM. |
• | Energy & Renewable Resources. Our energy and renewable resources activities focus on buyouts, growth capital investments and strategic joint ventures in the midstream, upstream, power and oilfield services sectors, as well as the renewable and alternative sectors of the energy industry. We currently conduct these activities with Riverstone, jointly advising six funds with approximately $17 billion in AUM as of September 30, 2011. We and Riverstone have mutually decided not to pursue additional jointly managed funds (although we will continue to advise jointly with Riverstone the six existing energy and renewable resources funds). We are actively exploring new approaches through which to expand our energy capabilities and intend to augment our significant in-house expertise in this sector. |
% of | Fee- | Amount | Investments | |||||||||||||||||||||||||||||||||||
Total | AUM | Earning | Active | Active | Available | Investment | Invested Since | Since | ||||||||||||||||||||||||||||||
AUM | AUM | CAGR | AUM | Investments | Funds | Capital | Professionals | Inception | Inception | |||||||||||||||||||||||||||||
$ | 30 | 20 | % | 39 | % | $ | 22 | 323 | 18 | $ | 9 | 135 | $ | 26 | 541 |
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% of Total | Fee-Earning | Active | Investment | |||||||||||||||||||
AUM | AUM | AUM CAGR | AUM | Funds | Professionals | |||||||||||||||||
$ | 23 | 16 | % | 33 | % | $ | 21 | 46 | 129 |
• | Fund Investments. AlpInvest fund of funds vehicles make investment commitments directly to buyout, growth capital, venture and other alternative asset funds advised by other general partners (“portfolio funds”). As of September 30, 2011, AlpInvest advised 26 fund of funds vehicles totaling, in the aggregate, approximately $32 billion in AUM. |
• | Co-investments. AlpInvest invests alongside other private equity and mezzanine funds in which it has a fund investment throughout Europe, North America and Asia. As of September 30, 2011, AlpInvest co-investments programs were conducted through 15 fund of funds vehicles totaling, in the aggregate, approximately $6 billion in AUM. |
• | Secondary Investments. AlpInvest also advises funds that acquire interests in portfolio funds in secondary market transactions. As of September 30, 2011, AlpInvest’s secondary investments program was conducted through 11 fund of funds vehicles totaling, in the aggregate, approximately $6 billion in AUM. |
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% of | Fund of | Amount | ||||||||||||||||||||||||
Total | Fee-Earning | Funds | Available | Invested | Investment | |||||||||||||||||||||
AUM(1) | AUM | AUM | Vehicles | Capital | Since Inception | Professionals | ||||||||||||||||||||
$ | 44 | 30 | % | $ | 30 | 52 | $ | 16 | $ | 38 | 61 |
(1) | Under our arrangements with the historical owners and management team of AlpInvest, such persons are allocated all carried interest in respect of the historical investments and commitments to our fund of funds vehicles that existed as of December 31, 2010, 85% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and 2020 and 60% of the carried interest in respect of all other commitments (including all future commitments from third parties). |
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As of September 30, 2011 | Inception to September 30, 2011 | |||||||||||||||||||||||
Realized/ | ||||||||||||||||||||||||
Realized/ | Partially | |||||||||||||||||||||||
Cumulative | Partially | Realized | ||||||||||||||||||||||
Invested | Realized | Gross | Net | Gross | ||||||||||||||||||||
Capital(2) | MOIC(3) | MOIC(3)(4) | IRR(5) | IRR(6) | IRR(4)(5) | |||||||||||||||||||
(Dollars in billions) | ||||||||||||||||||||||||
Corporate Private Equity(1) | $ | 47.7 | 1.7 | x | 2.5x | 26 | % | 18 | % | 31% | ||||||||||||||
Real Assets(1) | $ | 25.6 | 1.4 | x | 2.0x | 17 | % | 10 | % | 30% | ||||||||||||||
Fund of Funds Solutions(1) | $ | 38.0 | 1.3 | x | n/a | 11 | % | 10 | % | n/a |
As of | ||||||||||||||||
September 30, | ||||||||||||||||
2011 | Inception to September 30, 2011 | |||||||||||||||
Net | Net Annualized | |||||||||||||||
Total AUM | Gross IRR(5) | IRR(6) | Return(7) | |||||||||||||
(Dollars in billions) | ||||||||||||||||
Global Market Strategies(8) | ||||||||||||||||
CSP II (carry fund) | $ | 1.7 | 14% | 9% | n/a | |||||||||||
Claren Road Master Fund (hedge fund) | $ | 4.1 | n/a | n/a | 12% | |||||||||||
Claren Road Opportunities Fund (hedge fund) | $ | 1.3 | n/a | n/a | 20% |
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(1) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate. | |
(2) | Represents the original cost of all capital called for investments since inception. | |
(3) | Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. |
(4) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. |
(5) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest. | |
(6) | Net IRR represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. | |
(7) | Net Annualized Return is presented for fee-paying investors on a total return basis, net of all fees and expenses. | |
(8) | Due to the disparate nature of the underlying asset classes in which our Global Market Strategies funds participate (e.g., syndicated loans, bonds, distressed securities, mezzanine loans, emerging markets equities, macroeconomic products) and the inherent difficulties in aggregating the performance of closed-end and open-end funds, the presentation of aggregate investment performance across this segment would not be meaningful. |
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• | continue to generate attractive investment returns for our fund investors across our multi-fund, multi-product global investment platform, including by increasing the value of our current portfolio and leveraging the strong capital position of our investment funds to pursue new investment opportunities; | |
• | continue to inspire the confidence and loyalty of our more than 1,400 carry fund investors, and further expand our investor base, with a focus on client service and strong investment performance; | |
• | continue to grow our AUM by raising follow-on investment funds across our four segments and by broadening our platform, through both organic growth and selective acquisitions, where we believe we can provide investors with differentiated products to meet their needs; | |
• | further advance our leadership position in corenon-U.S. geographic markets, including high-growth emerging markets such as China, Latin America, India, MENA andSub-Saharan Africa; and | |
• | continue to demonstrate principled industry leadership and to be a responsible and respected member of the global community by demonstrating our commitment to environmental, social and governance standards in our investment activities. |
• | adverse economic and market conditions, which can affect our business and liquidity position in many ways, including by reducing the value or performance of the investments made by our investment funds and reducing the ability of our investment funds to raise or deploy capital; | |
• | changes in the debt financing markets, which could negatively impact the ability of our funds and their portfolio companies to obtain attractive financing or refinancing for their investments and operations, and could increase the cost of such financing if it is obtained, leading to lower-yielding investments; | |
• | the potential volatility of our revenue, income and cash flow, which is influenced by: |
• | the fact that carried interest is only received when investments are realized and achieve a certain specified return; | |
• | changes in the carrying values and performance of our funds’ investments; and | |
• | the life cycle of our carry funds, which influences the timing of our accrual and realization of carried interest; | |
• | the fact that the fees we receive for transaction advisory services are dependent upon the level of transactional activity during the period; |
• | our dependence on our founders and other key personnel and our ability to attract, retain and motivate high quality employees who will bring value to our operations; | |
• | business and regulatory impediments to our efforts to expand into new investment strategies, markets and businesses; |
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• | the fact that most of our investment funds invest in illiquid, long-term investments that are not marketable securities, and such investments may lose significant value during an economic downturn; | |
• | the potential for poor performance of our investment funds; and | |
• | the possibility that we will not be able to continue to raise capital from third-party investors on advantageous terms. |
• | The Carlyle Group L.P. will be treated as a partnership for U.S. federal income tax purposes, and our common unitholders therefore will be required to take into account their allocable share of items of income, gain, loss and deduction of The Carlyle Group L.P. in computing their U.S. federal income tax liability; | |
• | Although we currently intend to make annual distributions in an amount sufficient to cover the anticipated U.S. federal, state and local income tax liabilities of holders of common units in respect of their allocable share of our net taxable income, it is possible that such tax liabilities will exceed the cash distributions that holders of common units receive from us; and | |
• | Although not enacted, the U.S. Congress has considered legislation that would have precluded us from qualifying as a partnership for U.S. federal income tax purposes or required us to hold carried interest through taxable subsidiary corporations for taxable years after a ten-year transition period and would have taxed individual holders of common units with respect to certain income and gains now taxed at capital gains rates, including gain on disposition of units, at increased rates. Similar legislation could be enacted in the future. The Obama administration has indicated that it supports the adoption of such legislation. In its published revenue proposal for 2012, as well as in proposed legislation recently submitted to Congress in the American Jobs Act, the Obama administration proposed that the current law regarding the treatment of carried interest be changed to subject such income to ordinary income tax. |
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• | all management fees payable in respect of all current and future investment funds that we advise, as well as the fees for transaction advisory and oversight services that may be payable |
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by these investment funds’ portfolio companies (subject to certain third party interests, as described below); |
• | all carried interest earned in respect of all current and future carry funds that we advise (subject to certain third party interests, including those described below and to the allocation to our investment professionals who work in these operations of a portion of this carried interest as described below); | |
• | all incentive fees (subject to certain interests in Claren Road and ESG and, with respect to other funds earning incentive fees, any performance-related allocations to investment professionals); and |
• | all returns on investments of our own balance sheet capital that we make following this offering (as well as on existing investments with an aggregate value of approximately $ million as of September 30, 2011). |
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(1) | The Carlyle Group L.P. common unitholders will have only limited voting rights and will have no right to remove our general partner or, except in limited circumstances, elect the directors of our general partner. TCG Carlyle Global Partners L.L.C., an entity wholly-owned by our senior Carlyle professionals, will hold a special voting unit in The Carlyle Group L.P. that will entitle it, on those few matters that may be submitted for a vote of The Carlyle Group L.P. common unitholders, to participate in the vote on the same basis as the common unitholders and provide it with a number of votes that is equal to the aggregate number of vested and unvested partnership units in Carlyle Holdings held by the limited partners of Carlyle Holdings on the relevant record date. See “Material Provisions of The Carlyle Group L.P. Partnership Agreement — Withdrawal or Removal of the General Partner,” “— Meetings; Voting” and “— Election of Directors of General Partner.” | |
(2) | Certain individuals engaged in our business will continue to own interests directly in selected operating subsidiaries, including, in certain instances, entities that receive management fees from funds that we advise. The Carlyle Holdings partnerships will also directly own interests in selected operating subsidiaries. |
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Common units offered by The Carlyle Group L.P. | common units. | |
Common units outstanding after the offering transactions | common units (or common units if all outstanding Carlyle Holdings partnership units held by our existing owners were exchanged for newly-issued common units on aone-for-one basis). | |
Use of proceeds | We estimate that the net proceeds to The Carlyle Group L.P. from this offering, after deducting estimated underwriting discounts, will be approximately $ , or $ if the underwriters exercise in full their option to purchase additional common units. | |
The Carlyle Group L.P. intends to use all of these proceeds to purchase newly issued Carlyle Holdings partnership units from Carlyle Holdings, as described under “Organizational Structure — Offering Transactions.” We intend to cause Carlyle Holdings to use approximately $ of these proceeds to repay outstanding indebtedness and the remainder for general corporate purposes, including general operational needs, growth initiatives, acquisitions and strategic investments and to fund capital commitments to, and other investments in and alongside of, our investment funds. We anticipate that the acquisitions we may pursue will be those that would broaden our platform where we believe we can provide investors with differentiated products to meet their needs. Carlyle Holdings will also bear or reimburse The Carlyle Group L.P. for all of the expenses of this offering, which we estimate will be approximately $ . | ||
Voting rights | Our general partner, Carlyle Group Management L.L.C., will manage all of our operations and activities. You will not hold an interest in our general partner, which is wholly-owned by our senior Carlyle professionals. Unlike the holders of common stock in a corporation, you will have only limited voting rights and will have no right to remove our general partner or, except in limited circumstances, elect the directors of our general partner. | |
In addition, TCG Carlyle Global Partners L.L.C., an entity wholly-owned by our senior Carlyle professionals, will hold a special voting unit that provides it with a number of votes on any matter that may be submitted for a vote of our common unitholders that is equal to the aggregate number of vested and unvested Carlyle Holdings partnership units held by the limited partners of Carlyle Holdings. Accordingly, immediately following this offering our existing owners generally will have sufficient voting power to determine the outcome of those few matters that may be submitted for a vote of the limited partners of The Carlyle Group L.P. Our common unitholders’ voting rights will be further restricted by the provision in our partnership agreement stating that any common units held by a person that beneficially owns 20% or |
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more of any class of The Carlyle Group L.P. common units then outstanding (other than our general partner and its affiliates, or a direct or subsequently approved transferee of our general partner or its affiliates) cannot be voted on any matter. See “Material Provisions of The Carlyle Group L.P. Partnership Agreement — Withdrawal or Removal of the General Partner,” “— Meetings; Voting” and “— Election of Directors of General Partner.” |
Cash distribution policy | Our general partner currently intends to cause The Carlyle Group L.P. to make quarterly distributions to our common unitholders of its share of distributions from Carlyle Holdings, net of taxes and amounts payable under the tax receivable agreement as described below. We currently anticipate that we will cause Carlyle Holdings to make quarterly distributions to its partners, including The Carlyle Group L.P.’s wholly owned subsidiaries, that will enable The Carlyle Group L.P. to pay a quarterly distribution of $ per common unit. In addition, we currently anticipate that we will cause Carlyle Holdings to make annual distributions to its partners, including The Carlyle Group L.P.’s wholly owned subsidiaries, in an amount that, taken together with the other above-described quarterly distributions, represents substantially all of our Distributable Earnings in excess of the amount determined by our general partner to be necessary or appropriate to provide for the conduct of our business, to make appropriate investments in our business and our funds or to comply with applicable law or any of our financing agreements. We anticipate that the aggregate amount of our distributions for most years will be less than our Distributable Earnings for that year due to these funding requirements. For a discussion of the difference between Distributable Earnings and cash distributions during the historical periods presented, see “Cash Distribution Policy.” |
Notwithstanding the foregoing, the declaration and payment of any distributions will be at the sole discretion of our general partner, which may change our distribution policy at any time. Our general partner will take into account general economic and business conditions, our strategic plans and prospects, our business and investment opportunities, our financial condition and operating results, working capital requirements and anticipated cash needs, contractual restrictions and obligations, legal, tax and regulatory restrictions, other constraints on the payment of distributions by us to our common unitholders or by our subsidiaries to us, and such other factors as our general partner may deem relevant. | ||
The Carlyle Group L.P. will be a holding partnership and will have no material assets other than its ownership of partnership units in Carlyle Holdings held throughwholly-owned subsidiaries. We intend to cause Carlyle Holdings to make distributions to its partners, including the wholly-owned subsidiaries of The Carlyle Group L.P., in order to fund any distributions we may declare on the |
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common units. If Carlyle Holdings makes such distributions, the limited partners of Carlyle Holdings will be entitled to receive equivalent distributions pro rata based on their partnership interests in Carlyle Holdings. Because Carlyle Holdings I GP Inc. must pay taxes and make payments under the tax receivable agreement, the amounts ultimately distributed by The Carlyle Group L.P. to common unitholders are expected to be less, on a per unit basis, than the amounts distributed by the Carlyle Holdings partnerships to the limited partners of the Carlyle Holdings partnerships in respect of their Carlyle Holdings partnership units. | ||
In addition, the partnership agreements of the Carlyle Holdings partnerships will provide for cash distributions, which we refer to as “tax distributions,” to the partners of such partnerships if our wholly-owned subsidiaries that are the general partners of the Carlyle Holdings partnerships determine that the taxable income of the relevant partnership will give rise to taxable income for its partners. Generally, these tax distributions will be computed based on our estimate of the net taxable income of the relevant partnership allocable to a partner multiplied by an assumed tax rate equal to the highest effective marginal combined U.S. federal, state and local income tax rate prescribed for an individual or corporate resident in New York, New York (taking into account the non-deductibility of certain expenses and the character of our income). The Carlyle Holdings partnerships will make tax distributions only to the extent distributions from such partnerships for the relevant year were otherwise insufficient to cover such tax liabilities. The Carlyle Group L.P. is not required to distribute to its common unitholders any of the cash that its wholly-owned subsidiaries may receive as a result of tax distributions by the Carlyle Holdings partnerships. | ||
For limitations on our ability to make distributions, see “Cash Distribution Policy.” | ||
Exchange rights of holders of Carlyle Holdings partnership units | Prior to this offering we will enter into an exchange agreement with our senior Carlyle professionals and the other limited partners of the Carlyle Holdings partnerships so that these holders, subject to the vesting and minimum retained ownership requirements and transfer restrictions set forth in the partnership agreements of the Carlyle Holdings partnerships, may on a quarterly basis, from and after the first anniversary of the date of the closing of this offering (subject to the terms of the exchange agreement), exchange their Carlyle Holdings partnership units for The Carlyle Group L.P. common units on aone-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. A Carlyle Holdings limited partner must exchange one partnership unit in each of the three Carlyle Holdings |
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partnerships to effect an exchange for a common unit. As the number of Carlyle Holdings partnership units held by the limited partners of the Carlyle Holdings partnerships declines, the number of votes to which TCG Carlyle Global Partners L.L.C. is entitled as a result of its ownership of the special voting unit will be correspondingly reduced. For information concerning transfer restrictions that will apply to holders of Carlyle Holdings partnership units, including our senior Carlyle professionals, see “Management — Vesting; Minimum Retained Ownership Requirements and Transfer Restrictions.” |
Tax receivable agreement | Future exchanges of Carlyle Holdings partnership units are expected to result in increases in the tax basis of the tangible and intangible assets of Carlyle Holdings, primarily attributable to a portion of the goodwill inherent in our business. These increases in tax basis will increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of tax that certain of our subsidiaries, including Carlyle Holdings I GP Inc., which we refer to as the “corporate taxpayers,” would otherwise be required to pay in the future. This increase in tax basis may also decrease gain (or increase loss) on future dispositions of certain capital assets to the extent tax basis is allocated to those capital assets. We will enter into a tax receivable agreement with our existing owners whereby the corporate taxpayers will agree to pay to our existing owners 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax that they realize as a result of these increases in tax basis. The corporate taxpayers will have the right to terminate the tax receivable agreement by making payments to our existing owners calculated by reference to the value of all future payments that our existing owners would have been entitled to receive under the tax receivable agreement using certain valuation assumptions, including that any Carlyle Holdings partnership units that have not been exchanged are deemed exchanged for the market value of the common units at the time of termination, and that the corporate taxpayers will have sufficient taxable income in each future taxable year to fully realize all potential tax savings. Based upon certain assumptions described in greater detail under “Certain Relationships and Related Person Transactions — Tax Receivable Agreement,” we estimate that if the corporate taxpayers were to exercise their termination right immediately following this offering, the aggregate amount of these termination payments would be approximately $ million. See “Certain Relationships and Related Person Transactions — Tax Receivable Agreement.” | |
Risk factors | See “Risk Factors” for a discussion of risks you should carefully consider before deciding to invest in our common units. |
Proposed trading symbol | “CG.” |
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• | common units issuable upon exercise of the underwriters’ option to purchase additional common units from us; | |
• | common units issuable upon exchange of Carlyle Holdings partnership units that will be held by our existing owners immediately following the offering transactions; or | |
• | interests that may be granted under the 2012 Carlyle Group Equity Incentive Plan, or our “Equity Incentive Plan,” consisting of: |
— | deferred restricted units that we expect to grant to our employees at the time of this offering; | |
— | phantom deferred restricted units that we expect to grant to our employees at the time of this offering, which are settleable in cash; and | |
— | additional common units or Carlyle Holdings partnership units available for future grant under our Equity Incentive Plan, which are subject to automatic annual increases. |
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Pro Forma(4) for | ||||||||||||||||||||||||||||
the Nine | Pro Forma(4) for | |||||||||||||||||||||||||||
Months Ended | Nine Months Ended | Year Ended | ||||||||||||||||||||||||||
September 30, | September 30, | December 31, | Year Ended December 31, | |||||||||||||||||||||||||
2011 | 2011 | 2010 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Fund management fees | $ | $ | 683.2 | $ | 566.2 | $ | $ | 770.3 | $ | 788.1 | $ | 811.4 | ||||||||||||||||
Performance fees | ||||||||||||||||||||||||||||
Realized | 870.1 | 92.4 | 266.4 | 11.1 | 59.3 | |||||||||||||||||||||||
Unrealized | (133.6 | ) | 220.8 | 1,215.6 | 485.6 | (944.0 | ) | |||||||||||||||||||||
Total performance fees | 736.5 | 313.2 | 1,482.0 | 496.7 | (884.7 | ) | ||||||||||||||||||||||
Investment income (loss) | 56.6 | 43.3 | 72.6 | 5.0 | (104.9 | ) | ||||||||||||||||||||||
Interest and other income | 15.6 | 15.7 | 21.4 | 27.3 | 38.2 | |||||||||||||||||||||||
Interest and other income of Consolidated Funds | 521.6 | 318.4 | 452.6 | 0.7 | 18.7 | |||||||||||||||||||||||
Total Revenues | 2,013.5 | 1,256.8 | 2,798.9 | 1,317.8 | (121.3 | ) | ||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Compensation and benefits | 331.7 | 261.9 | 429.0 | 348.4 | 97.4 | |||||||||||||||||||||||
General, administrative and other expenses | 224.7 | 105.4 | 177.2 | 236.6 | 245.1 | |||||||||||||||||||||||
Interest | 48.5 | 13.5 | 17.8 | 30.6 | 46.1 | |||||||||||||||||||||||
Interest and other expenses of Consolidated Funds | 290.0 | 162.8 | 233.3 | 0.7 | 6.8 | |||||||||||||||||||||||
Other non-operating expenses | 30.0 | — | — | — | — | |||||||||||||||||||||||
Loss (gain) from early extinguishment of debt, net of related expenses | — | — | 2.5 | (10.7 | ) | — | ||||||||||||||||||||||
Equity issued for affiliate debt financing | — | — | 214.0 | — | — | |||||||||||||||||||||||
Loss on CCC liquidation | — | — | — | — | 147.0 | |||||||||||||||||||||||
Total Expenses | 924.9 | 543.6 | 1,073.8 | 605.6 | 542.4 | |||||||||||||||||||||||
Other Income (Loss) | ||||||||||||||||||||||||||||
Net investment gains (losses) of Consolidated Funds | (618.2 | ) | 173.7 | (245.4 | ) | (33.8 | ) | 162.5 | ||||||||||||||||||||
Income (loss) before provision for income taxes | 470.4 | 886.9 | 1,479.7 | 678.4 | (501.2 | ) | ||||||||||||||||||||||
Provision for income taxes | 25.7 | 14.5 | 20.3 | 14.8 | 12.5 | |||||||||||||||||||||||
Net income (loss) | 444.7 | 872.4 | 1,459.4 | 663.6 | (513.7 | ) | ||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (473.4 | ) | 301.3 | (66.2 | ) | (30.5 | ) | 94.5 | ||||||||||||||||||||
Net income (loss) attributable to Carlyle Group | $ | $ | 918.1 | $ | 571.1 | $ | $ | 1,525.6 | $ | 694.1 | $ | (608.2 | ) | |||||||||||||||
Other Data | ||||||||||||||||||||||||||||
Economic Net Income (Loss)(1)(2) | $ | $ | 578.9 | $ | 368.0 | $ | $ | 1,014.0 | $ | 416.3 | $ | (259.6 | ) | |||||||||||||||
Distributable Earnings(1)(3) | $ | $ | 617.0 | $ | 207.3 | $ | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||||||||||||
Fee-Earning Assets Under Management (at period end) | $ | $ | 112,646.7 | $ | 75,572.1 | $ | $ | 80,796.5 | $ | 75,410.5 | $ | 76,326.4 | ||||||||||||||||
Total Assets Under Management (at period end) | $ | $ | 148,660.6 | $ | 94,900.9 | $ | $ | 107,511.8 | $ | 89,831.5 | $ | 86,339.5 | ||||||||||||||||
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Pro Forma(4) | ||||||||||||||||||||
As of | As of | |||||||||||||||||||
September 30, | September 30, | As of December 31, | ||||||||||||||||||
2011 | 2011 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||
Cash and cash equivalents | $ | $ | 712.6 | $ | 616.9 | $ | 488.1 | $ | 680.8 | |||||||||||
Investments and accrued performance fees | $ | $ | 2,589.9 | $ | 2,594.3 | $ | 1,279.2 | $ | 702.4 | |||||||||||
Investments of Consolidated Funds(5) | $ | $ | 20,148.0 | $ | 11,864.6 | $ | 163.9 | $ | 187.0 | |||||||||||
Total assets | $ | $ | 25,440.3 | $ | 17,062.8 | $ | 2,509.6 | $ | 2,095.8 | |||||||||||
Loans payable | $ | $ | 698.5 | $ | 597.5 | $ | 412.2 | $ | 765.5 | |||||||||||
Subordinated loan payable to affiliate | $ | $ | 520.0 | $ | 494.0 | $ | — | $ | — | |||||||||||
Loans payable of Consolidated Funds | $ | $ | 10,100.8 | $ | 10,433.5 | $ | — | $ | — | |||||||||||
Total liabilities | $ | $ | 14,056.1 | $ | 14,170.2 | $ | 1,796.0 | $ | 1,733.3 | |||||||||||
Redeemable non-controlling interests in consolidated entities | $ | $ | 1,796.8 | $ | 694.0 | $ | — | $ | — | |||||||||||
Total members’ equity | $ | $ | 740.9 | $ | 895.2 | $ | 437.5 | $ | 59.6 | |||||||||||
Equity appropriated for Consolidated Funds | $ | $ | 648.8 | $ | 938.5 | $ | — | $ | — | |||||||||||
Non-controlling interests in consolidated entities | $ | $ | 8,197.7 | $ | 364.9 | $ | 276.1 | $ | 302.9 | |||||||||||
Total equity | $ | $ | 9,587.4 | $ | 2,198.6 | $ | 713.6 | $ | 362.5 | |||||||||||
(1) | Under GAAP, we are required to consolidate certain of the investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these investment funds. | |
(2) | ENI, a non-GAAP measure, represents segment net income excluding the impact of income taxes, acquisition-related items including amortization of acquired intangibles and earn-outs, charges associated with equity-based compensation, corporate actions and infrequently occurring or unusual events (e.g., acquisition related costs and gains and losses on mark to market adjustments on contingent consideration, gains and losses from the retirement of our debt, charges associated with lease terminations and employee severance and settlements of legal claims). For discussion about the purposes for which our management uses ENI and the reasons why we believe our presentation of ENI provides useful information to investors regarding our results of operations as well as a reconciliation of Economic Net Income to Income (Loss) Before Provision for Taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Financial Measures — Non-GAAP Financial Measures — Economic Net Income” and “— Non-GAAP Financial Measures” and Note 14 to our combined and consolidated financial statements appearing elsewhere in this prospectus. | |
(3) | Distributable Earnings, a non-GAAP measure, is a component of ENI representing total ENI less unrealized performance fees and unrealized investment income plus unrealized performance fee compensation expense. For a discussion about the purposes for which our management uses Distributable Earnings and the reasons why we believe our presentation of Distributable Earnings provides useful information to investors regarding our results of operations as well as a reconciliation of Distributable Earnings to Income (Loss) Before Provision for Taxes, see “Management’s Discussion and Analysis of Financial Condition and Results of Operations — Key Financial Measures — Non-GAAP Financial Measures — Distributable Earnings” and — Non-GAAP Financial Measures” and Note 14 to our combined and consolidated financial statements appearing elsewhere in this prospectus. | |
(4) | Refer to “Unaudited Pro Forma Financial Information.” | |
(5) | The entities comprising our consolidated funds are not the same entities for all periods presented. Pursuant to revised consolidation guidance that became effective January 1, 2010, we consolidated the existing and any subsequently acquired CLOs where we hold a controlling financial interest. The consolidation of funds during the periods presented generally has the effect of grossing up reported assets, liabilities, and cash flows, and has no effect on net income attributable to Carlyle Group or members’ equity. |
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• | the availability of suitable opportunities; | |
• | the level of competition from other companies that may have greater financial resources; | |
• | our ability to value potential development or acquisition opportunities accurately and negotiate acceptable terms for those opportunities; |
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• | our ability to obtain requisite approvals and licenses from the relevant governmental authorities and to comply with applicable laws and regulations without incurring undue costs and delays; and | |
• | our ability to successfully negotiate and enter into beneficial arrangements with our counterparties. |
• | the diversion of management’s attention to integration matters; | |
• | difficulties and costs associated with the integration of operations and systems; | |
• | difficulties and costs associated with the assimilation of employees; and | |
• | the risk that a change in ownership will negatively impact the relationship between an acquiree and the investors in its investment vehicles. |
• | the required investment of capital and other resources; | |
• | the possibility that we have insufficient expertise to engage in such activities profitably or without incurring inappropriate amounts of risk; | |
• | the combination or integration of operational and management systems and controls; and | |
• | the broadening of our geographic footprint, including the risks associated with conducting operations in certain foreign jurisdictions where we currently have no presence. |
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• | The Dodd-Frank Act establishes the Financial Stability Oversight Council (the “FSOC”), a federal agency acting as the financial system’s systemic risk regulator with the authority to review the activities of nonbank financial companies predominantly engaged in financial activities that are designated as “systemically important.” Such designation is applicable to companies where material financial distress could pose risk to the financial stability of the United States or if the nature, scope, size, scale, concentration, interconnectedness or mix of their activities could pose a threat to U.S. financial stability. On October 11, 2011, the FSOC issued a proposed rule and interpretive guidance regarding the process by which it will designate nonbank financial companies as systemically important. The regulation details a three-stage process, with the level of scrutiny increasing at each stage. During Stage 1, the FSOC will apply a broad set of uniform quantitative metrics to screen out financial companies that do not warrant additional review. The FSOC will consider whether a company has at least $50 billion in total consolidated assets and whether it meets other thresholds relating to credit default swaps outstanding, derivative liabilities, loans and bonds outstanding, a |
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minimum leverage ratio of total consolidated assets to total equity of 15 to 1, and a short-term debt ratio of debt (with maturities less than 12 months) to total consolidated assets of 10%. A company that meets both the asset test and one of the other thresholds will be subject to additional review. Although it is unlikely that we would be designated as systemically important under the process outlined in the proposed rule, the designation criteria could evolve over time. If the FSOC were to determine that we were a systemically important nonbank financial company, we would be subject to a heightened degree of regulation, which could include a requirement to adopt heightened standards relating to capital, leverage, liquidity, risk management, credit exposure reporting and concentration limits, restrictions on acquisitions and being subject to annual stress tests by the Federal Reserve. |
• | The Dodd-Frank Act, under what has become known as the “Volcker Rule,” generally prohibits depository institution holding companies (including foreign banks with U.S. branches and insurance companies with U.S. depository institution subsidiaries), insured depository institutions and subsidiaries and affiliates of such entities from investing in or sponsoring private equity funds or hedge funds. The Volcker Rule will become effective on July 21, 2012 and is subject to certain transition periods and exceptions for certain “permitted activities” that would enable certain institutions subject to the Volcker Rule to continue investing in private equity funds under certain conditions. Although we do not currently anticipate that the Volcker Rule will adversely affect our fundraising to any significant extent, there is uncertainty regarding the implementation of the Volcker Rule and its practical implications and there could be adverse implications on our ability to raise funds from the types of entities mentioned above as a result of this prohibition. On October 11, 2011, the Federal Reserve and other federal regulatory agencies issued a proposed rule implementing the Volcker Rule. |
• | The Dodd-Frank Act requires many private equity and hedge fund advisers to register with the SEC under the Advisers Act, to maintain extensive records and to file reports with information that the regulators identify as necessary for monitoring systemic risk. Although a Carlyle subsidiary has been registered as an investment adviser for 15 years, the Dodd-Frank Act will affect our business and operations, including increasing regulatory costs, imposing additional burdens on our staff and potentially requiring the disclosure of sensitive information. | |
• | The Dodd-Frank Act authorizes federal regulatory agencies to review and, in certain cases, prohibit compensation arrangements at financial institutions that give employees incentives to engage in conduct deemed to encourage inappropriate risk taking by covered financial institutions. Such restrictions could limit our ability to recruit and retain investment professionals and senior management executives. | |
• | The Dodd-Frank Act requires public companies to adopt and disclose policies requiring, in the event the company is required to issue an accounting restatement, the clawback of related incentive compensation from current and former executive officers. | |
• | The Dodd-Frank Act amends the Exchange Act to compensate and protect whistleblowers who voluntarily provide original information to the SEC and establishes a fund to be used to pay whistleblowers who will be entitled to receive a payment equal to between 10% and 30% of certain monetary sanctions imposed in a successful government action resulting from the information provided by the whistleblower. |
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• | market conditions at times were significantly more favorable for generating positive performance, particularly in our Corporate Private Equity and Real Assets businesses, than the market conditions we experienced in the past three years and may continue to experience for the foreseeable future; | |
• | the rates of returns of our carry funds reflect unrealized gains as of the applicable measurement date that may never be realized, which may adversely affect the ultimate value realized from those funds’ investments; | |
• | unitholders will not benefit from any value that was created in our funds prior to your investment in our common units to the extent such value has been realized; | |
• | in recent years, there has been increased competition for private equity investment opportunities resulting from the increased amount of capital invested in alternative investment funds and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; | |
• | the rates of returns of some of our funds in certain years have been positively influenced by a number of investments that experienced rapid and substantial increases in value following the dates on which those investments were made, which may not occur with respect to future investments; | |
• | our investment funds’ returns in some years have benefited from investment opportunities and general market conditions that may not repeat themselves (including, for example, particularly favorable borrowing conditions in the debt markets during 2005, 2006 and early 2007), and our current or future investment funds might not be able to avail themselves of comparable investment opportunities or market conditions; and | |
• | we may create new funds in the future that reflect a different asset mix and different investment strategies, as well as a varied geographic and industry exposure as compared to our present funds, and any such new funds could have different returns than our existing or previous funds. |
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• | subject the entity to a number of restrictive covenants, terms and conditions, any violation of which could be viewed by creditors as an event of default and could materially impact our ability to realize value from the investment; | |
• | allow even moderate reductions in operating cash flow to render the entity unable to service its indebtedness, leading to a bankruptcy or other reorganization of the entity and a loss of part or all of the equity investment in it; | |
• | give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit the entity’s ability to respond to changing industry conditions to the extent additional cash is needed for the response, to make unplanned but necessary capital expenditures or to take advantage of growth opportunities; | |
• | limit the entity’s ability to adjust to changing market conditions, thereby placing it at a competitive disadvantage compared to its competitors that have relatively less debt; |
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• | limit the entity’s ability to engage in strategic acquisitions that might be necessary to generate attractive returns or further growth; and | |
• | limit the entity’s ability to obtain additional financing or increase the cost of obtaining such financing, including for capital expenditures, working capital or other general corporate purposes. |
• | the inability of our investment professionals to identify attractive investment opportunities; | |
• | competition for such opportunities among other potential acquirers; |
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• | decreased availability of capital on attractive terms; and | |
• | our failure to consummate identified investment opportunities because of business, regulatory or legal complexities and adverse developments in the U.S. or global economy or financial markets. |
• | a number of our competitors in some of our businesses have greater financial, technical, marketing and other resources and more personnel than we do; | |
• | some of our funds may not perform as well as competitors’ funds or other available investment products; | |
• | a significant number of investors have materially decreased or temporarily suspended making new fund investments recently because of the global economic downturn and poor returns in their overall investment portfolios in 2008 and 2009; | |
• | several of our competitors have significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that otherwise could be exploited; | |
• | some of these competitors may also have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to investment opportunities; | |
• | some of our competitors may have higher risk tolerances, different risk assessments or lower return thresholds than us, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments that we want to make; | |
• | some of our competitors may be subject to less regulation and accordingly may have more flexibility to undertake and execute certain businesses or investments than we doand/or bear less compliance expense than we do; |
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• | some of our competitors may have more flexibility than us in raising certain types of investment funds under the investment management contracts they have negotiated with their investors; | |
• | some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do; | |
• | our competitors that are corporate buyers may be able to achieve synergistic cost savings in respect of an investment, which may provide them with a competitive advantage in bidding for an investment; | |
• | there are relatively few barriers to entry impeding the formation of new alternative asset management firms, and the successful efforts of new entrants into our various businesses, including former “star” portfolio managers at large diversified financial institutions as well as such institutions themselves, is expected to continue to result in increased competition; | |
• | some investors may prefer to invest with an asset manager that is not publicly traded or is smaller with only one or two investment products that it manages; and | |
• | other industry participants may, from time to time, seek to recruit our investment professionals and other employees away from us. |
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• | we advise funds that invest in businesses that operate in a variety of industries that are subject to extensive domestic and foreign regulation, such as the telecommunications industry, the aerospace, defense and government services industry and the healthcare industry (including companies that supply equipment and services to governmental agencies), that may involve greater risk due to rapidly changing market and governmental conditions in those sectors; | |
• | significant failures of our portfolio companies to comply with laws and regulations applicable to them could affect the ability of our funds to invest in other companies in certain industries in the future and could harm our reputation; | |
• | companies in which private equity investments are made may have limited financial resources and may be unable to meet their obligations, which may be accompanied by a deterioration in the value of their equity securities or any collateral or guarantees provided with respect to their debt; | |
• | companies in which private equity investments are made are more likely to depend on the management talents and efforts of a small group of persons and, as a result, the death, disability, resignation or termination of one or more of those persons could have a material adverse impact on their business and prospects and the investment made; | |
• | companies in which private equity investments are made may from time to time be parties to litigation, may be engaged in rapidly changing businesses with products subject to a substantial risk of obsolescence and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position; | |
• | companies in which private equity investments are made generally have less predictable operating results; | |
• | instances of fraud and other deceptive practices committed by senior management of portfolio companies in which our funds invest may undermine our due diligence efforts with respect to such companies and, upon the discovery of such fraud, negatively affect the valuation of a fund’s investments as well as contribute to overall market volatility that can negatively impact a fund’s investment program; | |
• | our funds may make investments that they do not advantageously dispose of prior to the date the applicable fund is dissolved, either by expiration of such fund’s term or otherwise, resulting in a lower than expected return on the investments and, potentially, on the fund itself; | |
• | our funds generally establish the capital structure of portfolio companies on the basis of the financial projections based primarily on management judgments and assumptions, and general economic conditions and other factors may cause actual performance to fall short of these financial projections, which could cause a substantial decrease in the value of our equity holdings in the portfolio company and cause our funds’ performance to fall short of our expectations; and | |
• | executive officers, directors and employees of an equity sponsor may be named as defendants in litigation involving a company in which a private equity investment is made or is being made. |
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• | those associated with the burdens of ownership of real property; | |
• | general and local economic conditions; | |
• | changes in supply of and demand for competing properties in an area (as a result, for instance, of overbuilding); | |
• | fluctuations in the average occupancy and room rates for hotel properties; | |
• | the financial resources of tenants; | |
• | changes in building, environmental and other laws; | |
• | energy and supply shortages; | |
• | various uninsured or uninsurable risks; | |
• | natural disasters; | |
• | changes in government regulations (such as rent control); | |
• | changes in real property tax rates; | |
• | changes in interest rates; | |
• | the reduced availability of mortgage funds which may render the sale or refinancing of properties difficult or impracticable; | |
• | negative developments in the economy that depress travel activity; | |
• | environmental liabilities; | |
• | contingent liabilities on disposition of assets; and | |
• | terrorist attacks, war and other factors that are beyond our control. |
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• | certain economic and political risks, including potential exchange control regulations and restrictions on ournon-U.S. investments and repatriation of profits on investments or of capital invested, the risks of political, economic or social instability, the possibility of expropriation or confiscatory taxation and adverse economic and political developments; | |
• | the imposition ofnon-U.S. taxes on gains from the sale of investments by our funds; | |
• | the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation; | |
• | changes in laws or clarifications to existing laws that could impact our tax treaty positions, which could adversely impact the returns on our investments; | |
• | differences in the legal and regulatory environment or enhanced legal and regulatory compliance; | |
• | limitations on borrowings to be used to fund acquisitions or dividends; |
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• | political hostility to investments by foreign or private equity investors; | |
• | less liquid markets; | |
• | reliance on a more limited number of commodity inputs, service providersand/or distribution mechanisms; | |
• | adverse fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another; | |
• | higher rates of inflation; | |
• | higher transaction costs; | |
• | less government supervision of exchanges, brokers and issuers; | |
• | less developed bankruptcy, corporate, partnership and other laws; | |
• | difficulty in enforcing contractual obligations; | |
• | less stringent requirements relating to fiduciary duties; | |
• | fewer investor protections; and | |
• | greater price volatility. |
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• | The AlpInvest business is subject to business and other risks and uncertainties generally consistent with our business as a whole, including without limitation legal and regulatory risks, the avoidance or management of conflicts of interest and the ability to attract and retain investment professionals and other personnel. | |
• | We will restrict ourday-to-day participation in the AlpInvest business, which may in turn limit our ability to address risks arising from the AlpInvest business for so long as AlpInvest maintains separate investment operations. Although we maintain ultimate control over AlpInvest, AlpInvest’s historical management team (who are our employees) will continue to exercise independent investment authority without involvement by other Carlyle personnel. For so long as these arrangements are in place, Carlyle representatives will serve on the board of AlpInvest but we will observe substantial restrictions on our ability to access investment information or engage inday-to-day participation in the AlpInvest investment business, including a restriction that AlpInvest investment decisions are made and maintained without involvement by other Carlyle personnel and that no specific investment data, other than data on the investment performance of its client mandates, will be shared. As such, we will have a reduced ability to identify or respond to investment and other operational issues that may arise within the AlpInvest business, relative to other Carlyle investment funds. |
• | AlpInvest is currently subject to regulatory capital requirements which may limit our ability to withdraw cash from AlpInvest, or require additional investments of capital in order for AlpInvest to maintain certain licenses to operate its business. |
• | Historically, the main part of AlpInvest capital commitments have been obtained from its initial co-owners, with such owners thereby holding highly concentrated voting rights with respect to potential suspension or termination of investment commitments made to AlpInvest. | |
• | AlpInvest is expected to seek to broaden its client base by advising separate accounts for investors on anaccount-by-account basis. AlpInvest has only limited experience in attracting new clients and may not be successful in this strategy. | |
• | AlpInvest’s co-investment business is subject to the risk that other private equity sponsors, alongside whom AlpInvest has historically invested in leveraged buyouts and growth capital transactions throughout Europe, North America and Asia, will no longer be willing to provide AlpInvest with investment opportunities as favorable as in the past, if at all, as a result of our ownership of AlpInvest. |
• | AlpInvest’s secondary investments business is subject to the risk that opportunities in the secondary investments market may not be as favorable as the recent past. |
• | Generally, there are few limitations on the execution of these hedge funds’ investment strategies, which are subject to the sole discretion of the management company or the general partner of such funds. | |
• | These funds may engage in short-selling, which is subject to a theoretically unlimited risk of loss because there is no limit on how much the price of a security may appreciate before the short position is closed out. A fund may be subject to losses if a security lender demands |
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return of the lent securities and an alternative lending source cannot be found or if the fund is otherwise unable to borrow securities that are necessary to hedge its positions. |
• | These funds may be limited in their ability to engage in short selling or other activities as a result of regulatory mandates. Such regulatory actions may limit our ability to engage in hedging activities and therefore impair our investment strategies. In addition, these funds may invest in securities and other assets for which appropriate market hedges do not exist or cannot be acquired on attractive terms. | |
• | These funds are exposed to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the contract (whether or not bona fide) or because of a credit or liquidity problem, thus causing the fund to suffer a loss. | |
• | Credit risk may arise through a default by one of several large institutions that are dependent on one another to meet their liquidity or operational needs, so that a default by one institution causes a series of defaults by the other institutions. This “systemic risk” could have a further material adverse effect on the financial intermediaries (such as prime brokers, clearing agencies, clearing houses, banks, securities firms and exchanges) with which these funds transact on a daily basis. | |
• | The efficacy of investment and trading strategies depend largely on the ability to establish and maintain an overall market position in a combination of financial instruments, which can be difficult to execute. | |
• | These funds may make investments or hold trading positions in markets that are volatile and may become illiquid. | |
• | These funds’ investments are subject to risks relating to investments in commodities, futures, options and other derivatives, the prices of which are highly volatile and may be subject to a theoretically unlimited risk of loss in certain circumstances. In addition, the funds’ assets are subject to the risk of the failure of any of the exchanges on which their positions trade or of their clearinghouses or counterparties. | |
• | These funds may make investments that they do not advantageously dispose of prior to the date the applicable fund is dissolved, either by expiration of such fund’s term or otherwise. Although we generally expect that investments will be disposed of prior to dissolution or be suitable for in-kind distribution at dissolution, and the general partners of the funds have a limited ability to extend the term of the fund with the consent of fund investors or the advisory board of the fund, as applicable, our funds may have to sell, distribute or otherwise dispose of investments at a disadvantageous time as a result of dissolution. This would result in a lower than expected return on the investments and, perhaps, on the fund itself. |
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• | compensation committees be composed of fully independent directors, as determined pursuant to new independence requirements; | |
• | compensation committees be explicitly charged with hiring and overseeing compensation consultants, legal counsel and other committee advisors; and | |
• | compensation committees be required to consider, when engaging compensation consultants, legal counsel or other advisors, certain independence factors, including factors that examine the relationship between the consultant or advisor’s employer and the company. |
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• | our general partner determines the amount and timing of our investments and dispositions, indebtedness, issuances of additional partnership interests and amounts of reserves, each of which can affect the amount of cash that is available for distribution to you; | |
• | our general partner is allowed to take into account the interests of parties other than us and the common unitholders in resolving conflicts of interest, which has the effect of limiting its duties (including fiduciary duties) to our common unitholders. For example, our subsidiaries that serve as the general partners of our investment funds have fiduciary and contractual obligations to the investors in those funds as a result of which we expect to regularly take actions that might adversely affect our near-term results of operations or cash flow; | |
• | because our senior Carlyle professionals hold their Carlyle Holdings partnership units directly or through entities that are not subject to corporate income taxation and The Carlyle Group L.P. holds Carlyle Holdings partnership units through wholly-owned subsidiaries, some of which are subject to corporate income taxation, conflicts may arise between our senior Carlyle professionals and The Carlyle Group L.P. relating to the selection, structuring and disposition of investments and other matters. For example, the earlier disposition of assets following an exchange or acquisition transaction by a senior Carlyle professional generally will accelerate payments under the tax receivable agreement and increase the present value of such payments, and the disposition of assets before an exchange or acquisition transaction will increase an existing owner’s tax liability without giving rise to any rights of an existing owner to receive payments under the tax receivable agreement; | |
• | our partnership agreement does not prohibit affiliates of the general partner, including its owners, from engaging in other businesses or activities, including those that might directly compete with us; | |
• | our general partner has limited its liability and reduced or eliminated its duties (including fiduciary duties) under the partnership agreement, while also restricting the remedies available to our common unitholders for actions that, without these limitations, might constitute breaches of duty (including fiduciary duty). In addition, we have agreed to indemnify our general partner and its affiliates to the fullest extent permitted by law, except with respect to conduct involving bad faith, fraud or willful misconduct.By purchasing our common units, you will have agreed and consented to the provisions set forth in our partnership agreement, including the provisions regarding conflicts of interest situations that, in the absence of such provisions, might constitute a breach of fiduciary or other duties under applicable state law; | |
• | our partnership agreement will not restrict our general partner from causing us to pay it or its affiliates for any services rendered, or from entering into additional contractual arrangements with any of these entities on our behalf, so long as our general partner agrees to the terms of any such additional contractual arrangements in good faith as determined under the partnership agreement; | |
• | our general partner determines how much debt we incur and that decision may adversely affect our credit ratings; | |
• | our general partner determines which costs incurred by it and its affiliates are reimbursable by us; | |
• | our general partner controls the enforcement of obligations owed to us by it and its affiliates; and | |
• | our general partner decides whether to retain separate counsel, accountants or others to perform services for us. |
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• | the provisions of our partnership agreement (including without limitation the validity, scope or enforceability of the arbitration provisions of our partnership agreement or the arbitrability of any such claim, suit, action or proceeding); |
• | the duties, obligations or liabilities of us to our common unitholders or our general partner, or of our common unitholders or our general partner to us, or among partners; |
• | the rights or powers of, or restrictions on, us, our common unitholders or our general partner; |
• | any provision of the Delaware Limited Partnership Act or other similar applicable statutes; |
• | any other instrument, document, agreement or certificate contemplated either by any provision of the Delaware Limited Partnership Act relating to us or by our partnership agreement; and |
• | the federal securities laws of the United States or the securities or antifraud laws of any international, national, state, provincial, territorial, local or other governmental or regulatory authority, including, in each case, the applicable rules and regulations promulgated thereunder. |
• | the arbitrator(s) may award declaratory or injunctive relief only in favor of the individual party seeking relief and only to the extent necessary to provide relief warranted by that party’s individual claim; |
• | you may bring claims only in your individual capacity, and not as a plaintiff, class representative or class member, or as a private attorney general, in any purported class or representative proceeding; and |
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• | the arbitrator(s) may not consolidate more than one person’s claims, and may not otherwise preside over any form of a representative or class or consolidated proceeding. |
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• | it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or | |
• | absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis. |
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Units — Passive Foreign Investment Companies” and “— Consequences to U.S. Holders of Common Units Controlled Foreign Companies” for additional information regarding such consequences.
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(1) | Certain individuals engaged in our business own interests directly in selected subsidiaries of the Parent Entities. |
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(1) | The Carlyle Group L.P. common unitholders will have only limited voting rights and will have no right to remove our general partner or, except in limited circumstances, elect the directors of our general partner. TCG Carlyle Global Partners L.L.C., an entity wholly-owned by our senior Carlyle professionals, will hold a special voting unit in The Carlyle Group L.P. that will entitle it, on those few matters that may be submitted for a vote of The Carlyle Group L.P. common unitholders, to participate in the vote on the same basis as the common unitholders and provide it with a number of votes that is equal to the aggregate number of vested and unvested partnership units in Carlyle Holdings held by the limited partners of Carlyle Holdings on the relevant record date. See “Material Provisions of The Carlyle Group L.P. Partnership Agreement — Withdrawal or Removal of the General Partner,” “— Meetings; Voting” and “— Election of Directors of General Partner.” | |
(2) | Certain individuals engaged in our business will continue to own interests directly in selected operating subsidiaries including, in certain instances, entities that receive management fees from funds that we advise. The Carlyle Holdings partnerships will also directly own interests in selected operating subsidiaries. |
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• | all management fees payable in respect of all current and future investment funds that we advise, as well as the fees for transaction advisory and oversight services that may be payable by these investment funds’ portfolio companies (subject to certain third-party interests, as described below); | |
• | all carried interest earned in respect of all current and future carry funds that we advise (subject to certain third-party interests, including those described below and to the allocation to our investment professionals who work in these operations of a portion of this carried interest as described below); | |
• | all incentive fees (subject to certain interests in Claren Road and ESG and, with respect to other funds earning incentive fees, any performance-related allocations to investment professionals); and |
• | all returns on investments of our own balance sheet capital that we make following this offering (as well as on existing investments with an aggregate value of approximately $ million as of September 30, 2011). |
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• | our senior Carlyle professionals, Mubadala and CalPERS will contribute all of their interests in: |
• | TC Group, L.L.C. to Carlyle Holdings I L.P.; | |
• | TC Group Investment Holdings, L.P. and TC Group Cayman Investment Holdings, L.P. to Carlyle Holdings II L.P.; and | |
• | TC Group Cayman, L.P. to Carlyle Holdings III L.P.; and |
• | our senior Carlyle professionals and other individuals engaged in our business will contribute to the Carlyle Holdings partnerships a portion of the equity interests they own in the general partners of our existing carry funds. |
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• | The Carlyle Group L.P., through its wholly-owned subsidiaries, will hold partnership units in Carlyle Holdings (or partnership units if the underwriters exercise in full their option to purchase additional common units) and will, through its wholly-owned subsidiaries, be the sole general partner of each of the Carlyle Holdings partnerships and, through Carlyle Holdings and its subsidiaries, operate the Contributed Businesses; |
• | our existing owners will hold vested partnership units and unvested partnership units in Carlyle Holdings; |
• | investors in this offering will hold common units (or common units if the underwriters exercise in full their option to purchase additional common units); and |
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• | on those few matters that may be submitted for a vote of the limited partners of The Carlyle Group L.P.: |
• | investors in this offering will collectively have % of the voting power of The Carlyle Group L.P. limited partners (or % if the underwriters exercise in full their option to purchase additional common units) and | |
• | our existing owners will collectively have % of the voting power of The Carlyle Group L.P. limited partners (or % if the underwriters exercise in full their option to purchase additional common units). |
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• | general economic and business conditions; | |
• | our strategic plans and prospects; | |
• | our business and investment opportunities; | |
• | our financial condition and operating results, including our cash position, our net income and our realizations on investments made by our investment funds; | |
• | working capital requirements and anticipated cash needs; | |
• | contractual restrictions and obligations, including payment obligations pursuant to the tax receivable agreement and restrictions pursuant to our credit facility; | |
• | legal, tax and regulatory restrictions; | |
• | other constraints on the payment of distributions by us to our common unitholders or by our subsidiaries to us; and | |
• | such other factors as our general partner may deem relevant. |
• | first, we will cause Carlyle Holdings to make distributions to its partners, including The Carlyle Group L.P.’s wholly-owned subsidiaries. If Carlyle Holdings makes such distributions, the limited partners of Carlyle Holdings will be entitled to receive equivalent distributions pro rata based on their partnership interests in Carlyle Holdings; | |
• | second, we will cause The Carlyle Group L.P.’s wholly-owned subsidiaries to distribute to The Carlyle Group L.P. their share of such distributions, net of taxes and amounts payable under the tax receivable agreement by such wholly-owned subsidiaries; and | |
• | third, The Carlyle Group L.P. will distribute its net share of such distributions to our common unitholders on a pro rata basis. |
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Nine Months Ended | ||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||
2011 | 2010 | 2009 | 2008 | |||||||||||||
Cash distributions to the owners of the Parent Entities | $ | 1,040.9 | $ | 787.8 | $ | 215.6 | $ | 253.9 | ||||||||
Compensatory payments and distributions related to co-investments | (492.8 | ) | (283.5 | ) | (188.6 | ) | (110.1 | ) | ||||||||
Distribution related to 2010 Mubadala investment | — | (398.5 | ) | — | — | |||||||||||
Cash distributions, net of compensatory payments, distributions related toco-investments and distributions related to the Mubadala investment | $ | 548.1 | $ | 105.8 | $ | 27.0 | $ | 143.8 | ||||||||
Distributable Earnings | $ | 617.0 | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||||
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• | on a historical basis; and | |
• | on a pro forma basis for The Carlyle Group L.P. giving effect to the transactions described under “Unaudited Pro Forma Financial Information,” including the repayment of indebtedness with a portion of the proceeds from this offering as described in “Use of Proceeds.” |
September 30, 2011 | ||||||||
Actual | Pro Forma | |||||||
(Dollars in millions) | ||||||||
Cash and cash equivalents | $ | 712.6 | $ | |||||
Loans payable | $ | 698.5 | $ | |||||
Subordinated loan payable to Mubadala | 520.0 | |||||||
Loans payable of Consolidated Funds | 10,100.8 | |||||||
Redeemable non-controlling interests in consolidated entities | 1,796.8 | |||||||
Members’ equity | 772.6 | |||||||
Accumulated other comprehensive loss | (31.7 | ) | ||||||
Equity appropriated for Consolidated Funds | 648.8 | |||||||
Non-controlling interests in consolidated entities | 8,197.7 | |||||||
Total capitalization | $ | 22,703.5 | $ | |||||
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Assumed initial public offering price per common unit | $ | |||||||
Pro forma net tangible book value per common unit as of September 30, 2011 | $ | |||||||
Increase in pro forma net tangible book value per common unit attributable to investors in this offering | $ | |||||||
Adjusted pro forma net tangible book value per common unit after the offering | $ | |||||||
Dilution in adjusted pro forma net tangible book value per common unit to investors in this offering | $ | |||||||
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Common Units | Total | Average | ||||||||||||||||||
Purchased | Consideration | Price per | ||||||||||||||||||
Number | Percent | Amount | Percent | Common Unit | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Existing equityholders | % | $ | % | $ | ||||||||||||||||
Investors in this offering | % | $ | % | $ | ||||||||||||||||
Total | % | $ | % | $ | ||||||||||||||||
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Nine Months Ended | ||||||||||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | 2007 | 2006 | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Statement of Operations Data | ||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||
Fund management fees | $ | 683.2 | $ | 566.2 | $ | 770.3 | $ | 788.1 | $ | 811.4 | $ | 668.9 | $ | 186.3 | ||||||||||||||
Performance fees | ||||||||||||||||||||||||||||
Realized | 870.1 | 92.4 | 266.4 | 11.1 | 59.3 | 1,013.1 | 63.7 | |||||||||||||||||||||
Unrealized | (133.6 | ) | 220.8 | 1,215.6 | 485.6 | (944.0 | ) | 376.7 | 42.3 | |||||||||||||||||||
Total performance fees | 736.5 | 313.2 | 1,482.0 | 496.7 | (884.7 | ) | 1,389.8 | 106.0 | ||||||||||||||||||||
Investment income (loss) | 56.6 | 43.3 | 72.6 | 5.0 | (104.9 | ) | 75.6 | 7.6 | ||||||||||||||||||||
Interest and other income | 15.6 | 15.7 | 21.4 | 27.3 | 38.2 | 36.3 | 22.9 | |||||||||||||||||||||
Interest and other income of Consolidated Funds | 521.6 | 318.4 | 452.6 | 0.7 | 18.7 | 51.9 | 41.3 | |||||||||||||||||||||
Total Revenues | 2,013.5 | 1,256.8 | 2,798.9 | 1,317.8 | (121.3 | ) | 2,222.5 | 364.1 | ||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||
Compensation and benefits | 331.7 | 261.9 | 429.0 | 348.4 | 97.4 | 775.5 | 500.2 | |||||||||||||||||||||
General, administrative and other expenses | 224.7 | 105.4 | 177.2 | 236.6 | 245.1 | 234.3 | 160.2 | |||||||||||||||||||||
Interest | 48.5 | 13.5 | 17.8 | 30.6 | 46.1 | 15.9 | 4.4 | |||||||||||||||||||||
Interest and other expenses of Consolidated Funds | 290.0 | 162.8 | 233.3 | 0.7 | 6.8 | 38.8 | 126.9 | |||||||||||||||||||||
Other non-operating expenses | 30.0 | — | — | — | — | — | — | |||||||||||||||||||||
Loss (gain) from early extinguishment of debt, net of related expenses | — | — | 2.5 | (10.7 | ) | — | — | — | ||||||||||||||||||||
Equity issued for affiliate debt financing | — | — | 214.0 | — | — | — | — | |||||||||||||||||||||
Loss on CCC liquidation | — | — | — | — | 147.0 | — | ||||||||||||||||||||||
Total Expenses | 924.9 | 543.6 | 1,073.8 | 605.6 | 542.4 | 1,064.5 | 791.7 | |||||||||||||||||||||
Other Income (Loss) | ||||||||||||||||||||||||||||
Net investment gains (losses) of Consolidated Funds | (618.2 | ) | 173.7 | (245.4 | ) | (33.8 | ) | 162.5 | 300.4 | 6,503.5 | ||||||||||||||||||
Income (loss) before provision for income taxes | 470.4 | 886.9 | 1,479.7 | 678.4 | (501.2 | ) | 1,458.4 | 6,075.9 | ||||||||||||||||||||
Provision for income taxes | 25.7 | 14.5 | 20.3 | 14.8 | 12.5 | 15.2 | 14.7 | |||||||||||||||||||||
Net income (loss) | 444.7 | 872.4 | 1,459.4 | 663.6 | (513.7 | ) | 1,443.2 | 6,061.2 | ||||||||||||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (473.4 | ) | 301.3 | (66.2 | ) | (30.5 | ) | 94.5 | 182.4 | 4,923.8 | ||||||||||||||||||
Net income (loss) attributable to Carlyle Group | $ | 918.1 | $ | 571.1 | $ | 1,525.6 | $ | 694.1 | $ | (608.2 | ) | $ | 1,260.8 | $ | 1,137.4 | |||||||||||||
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As of | ||||||||||||||||||||||||
September 30, | As of December 31, | |||||||||||||||||||||||
2011 | 2010 | 2009 | 2008 | 2007 | 2006 | |||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||
Balance Sheet Data | ||||||||||||||||||||||||
Cash and cash equivalents | $ | 712.6 | $ | 616.9 | $ | 488.1 | $ | 680.8 | $ | 1,115.0 | $ | 387.0 | ||||||||||||
Investments and accrued performance fees | $ | 2,589.9 | $ | 2,594.3 | $ | 1,279.2 | $ | 702.4 | $ | 2,150.6 | $ | 1,175.4 | ||||||||||||
Investments of Consolidated Funds(1) | $ | 20,148.0 | $ | 11,864.6 | $ | 163.9 | $ | 187.0 | $ | 1,629.3 | $ | 1,364.8 | ||||||||||||
Total assets | $ | 25,440.3 | $ | 17,062.8 | $ | 2,509.6 | $ | 2,095.8 | $ | 5,788.3 | $ | 3,232.4 | ||||||||||||
Loans payable | $ | 698.5 | $ | 597.5 | $ | 412.2 | $ | 765.5 | $ | 691.4 | $ | 19.0 | ||||||||||||
Subordinated loan payable to Mubadala | $ | 520.0 | $ | 494.0 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Loans payable of Consolidated Funds | $ | 10,100.8 | $ | 10,433.5 | $ | — | $ | — | $ | 1,007.3 | $ | — | ||||||||||||
Total liabilities | $ | 14,056.1 | $ | 14,170.2 | $ | 1,796.0 | $ | 1,733.3 | $ | 3,429.1 | $ | 1,068.4 | ||||||||||||
Redeemable non-controlling interests in consolidated entities | $ | 1,796.8 | $ | 694.0 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Total members’ equity | $ | 740.9 | $ | 895.2 | $ | 437.5 | $ | 59.6 | $ | 1,256.1 | $ | 980.9 | ||||||||||||
Equity appropriated for Consolidated Funds | $ | 648.8 | $ | 938.5 | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Non-controlling interests in consolidated entities | $ | 8,197.7 | $ | 364.9 | $ | 276.1 | $ | 302.9 | $ | 1,103.1 | $ | 1,183.1 | ||||||||||||
Total equity | $ | 9,587.4 | $ | 2,198.6 | $ | 713.6 | $ | 362.5 | $ | 2,359.2 | $ | 2,164.0 | ||||||||||||
(1) | The entities comprising our Consolidated Funds are not the same entities for all periods presented. As of December 31, 2006, our Consolidated Funds primarily relate to certain funds and other co-investment entities for which we are the general partner and the presumption of control by the general partner had not been overcome. In February 2007, we formed a hedge fund which we consolidated into our financial statements and included in our Consolidated Funds prospectively from that date. In December 2007, we amended most of the co-investment entities so that the presumption of control by the general partner had been overcome, and therefore we ceased to consolidate those entities prospectively from that date. In 2008, the hedge fund that we had formed in February 2007 began an orderly liquidation and ceased operations. Pursuant to revised consolidation guidance that became effective January 1, 2010, we consolidated the existing and any subsequently acquired CLOs where we hold a controlling financial interest. The consolidation or deconsolidation of funds generally has the effect of grossing up or down, respectively, reported assets, liabilities, and cash flows, and has no effect on net income attributable to Carlyle Group or members’ equity. |
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OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
• | Corporate Private Equity— Our Corporate Private Equity segment advises our buyout and growth capital funds, which seek a wide variety of investments of different sizes and growth potentials. As of September 30, 2011, our Corporate Private Equity segment had approximately $51 billion in AUM and approximately $39 billion in fee-earning AUM. |
• | Real Assets— Our Real Assets segment advises our U.S. and internationally focused real estate and infrastructure funds, as well as our energy and renewable resources funds. As of September 30, 2011, our Real Assets segment had approximately $30 billion in AUM and approximately $22 billion in fee-earning AUM. |
• | Global Market Strategies— Our Global Market Strategies segment advises a group of funds that pursue investment opportunities across various types of credit, equities and alternative instruments, and (as regards to certain macroeconomic strategies) currencies, commodities and interest rate products and their derivatives. As of September 30, 2011, our Global Market Strategies segment had approximately $23 billion in AUM and approximately $21 billion in fee-earning AUM. |
• | Fund of Funds Solutions— Our Fund of Funds Solutions segment was launched upon our acquisition of a 60% equity interest in AlpInvest on July 1, 2011 and advises a global private equity fund of funds program and related co-investment and secondary activities. As of September 30, 2011, AlpInvest had approximately $44 billion in AUM and approximately $30 billion in fee-earning AUM. |
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• | The attractiveness of the alternative asset management industry. Our ability to attract new capital and investors is driven in part by the extent to which investors continue to see the alternative asset management industry as an attractive vehicle for capital preservation and growth. While our recent fundraising has resulted in new capital commitments at levels that remain below the historically high volume achieved during 2007 and early 2008, we believe our fundraising efforts will benefit from certain fundamental trends that include: (i) institutional investors’ pursuit of higher relative investment returns which have historically been provided by top quartile alternative asset management funds; (ii) distributions to existing investors from historical commitments which could be used to fund new allocations; (iii) the entrance of new institutional investors from developing markets, including sovereign wealth funds and other entities; and (iv) increasing interest from high net worth individuals. |
• | Our ability to generate strong returns. The strength of our investment performance affects investors’ willingness to commit capital to our funds. The capital we are able to attract drives the growth of our AUM and the management fees we earn. During the year ended December 31, 2010 and the nine months ended September 30, 2011, we have distributed more than $23 billion from our carry funds to our investors. Although we have recently exited several investments at attractive returns and the fair value of our funds’ net assets has increased significantly with the economic recovery, there can be no assurance that these trends will continue. In addition, many of our funds across all of our business segments experienced volatility in light of the economic conditions that prevailed in 2008 and 2009, a trend which could occur again in the near- to medium-term. |
During 2008 and 2009, many economies around the world, including the U.S. economy, experienced significant declines in employment, household wealth and lending. Those events |
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led to a significantly diminished availability of credit and an increase in the cost of financing. The lack of credit in 2008 and 2009 materially hindered the initiation of new, large-sized transactions for our Corporate Private Equity and Real Assets segments and adversely impacted our operating results in those periods. The capital market volatility we are currently experiencing that became more pronounced beginning in August 2011 has adversely impacted valuations of a significant number of our funds’ investments and fund performance. However, in contrast to 2008 and 2009, credit remains available selectively for high quality corporate transactions, though financing costs remain elevated from pre-recession levels. Finally, a significant portion of our revenues are derived from performance fees, the size of which is dependent on the success of our fund investments. A decrease in valuations of our fund investments will result in a reduction of accrued performance fees which we would expect to be most significant in Corporate Private Equity, our largest business segment. |
• | Our successful deployment of capital. Our ability to maintain and grow our revenue base is dependent upon our ability to successfully deploy the capital that our investors have committed to our funds. During the year ended December 31, 2010 and the nine months ended September 30, 2011, we have invested approximately $18 billion in new and existing investments representing an investment pace that is comparable to our investment pace during the peak of private equity capital deployment during 2006 through 2008. As of September 30, 2011, we had approximately $41 billion in capital available for investment. We believe that this puts us in a position to grow our revenues over time. Our ability to identify and execute investments which our investment professionals determine to be attractive continues to depend on a number of factors, including competition, valuation, credit availability and pricing and other general market conditions. |
• | Our ability to meet evolving investor requirements. We believe that investors will seek to deploy their investment capital in a variety of different ways, including fund investments, separate accounts and direct co-investments. We anticipate that this trend will result in a bifurcation within the global alternative asset management industry, with a limited number of large global market participants joined by numerous smaller and more specialized funds, providing investors with greater flexibility when allocating their investment capital. In addition, we expect that larger investors will seek to allocate more resources to managed accounts through which they can directly hold title to assets and better control their investments. |
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• | our senior Carlyle professionals, Mubadala and CalPERS will contribute all of their interests in: |
• | TC Group, L.L.C. to Carlyle Holdings I L.P.; | |
• | TC Group Investment Holdings, L.P. and TC Group Cayman Investment Holdings, L.P. to Carlyle Holdings II L.P.; and | |
• | TC Group Cayman, L.P. to Carlyle Holdings III L.P.; and |
• | senior Carlyle professionals and other individuals engaged in our business will contribute to the Carlyle Holdings partnerships a portion of the equity interests they own in the general partners of our existing carry funds. |
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As of September 30, | As of December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Consolidated Results | ||||||||||||||||||||
Components of Fee-earning AUM | ||||||||||||||||||||
Fee-earning AUM based on capital commitments(1) | $ | 53,108 | $ | 46,589 | $ | 44,515 | $ | 46,460 | $ | 46,099 | ||||||||||
Fee-earning AUM based on invested capital(2) | 20,393 | 17,400 | 19,306 | 18,456 | 18,848 | |||||||||||||||
Fee-earning AUM based on collateral balances, at par(3) | 11,491 | 10,560 | 11,377 | 9,379 | 9,693 | |||||||||||||||
Fee-earning AUM based on net asset value(4) | 7,184 | 209 | 4,782 | 298 | 117 | |||||||||||||||
Fee-earning AUM based on lower of cost or fair value and other(5) | 20,471 | 814 | 816 | 818 | 1,569 | |||||||||||||||
Total Fee-earning AUM | $ | 112,647 | $ | 75,572 | $ | 80,796 | $ | 75,411 | $ | 76,326 | ||||||||||
(1) | Reflects limited partner capital commitments where the investment period has not expired. | |
(2) | Reflects limited partner invested capital and includes amounts committed to or reserved for investments for certain real assets funds. | |
(3) | Reflects the gross amount of aggregate collateral balances, at par, for our CLOs. | |
(4) | Reflects the net asset value of our hedge funds (pre-redemptions and subscriptions). |
(5) | Includes funds with fees based on notional value and gross asset value. |
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Nine Months Ended September 30, | Twelve Months Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Consolidated Results | ||||||||||||||||||||
Fee-Earning AUM Rollforward | ||||||||||||||||||||
Balance, Beginning of Period | $ | 80,796 | $ | 75,411 | $ | 75,411 | $ | 76,326 | $ | 64,848 | ||||||||||
Acquisitions | 33,058 | 3,927 | 9,604 | — | — | |||||||||||||||
Inflows, including Commitments(1) | 4,782 | 1,657 | 3,030 | 1,488 | 10,478 | |||||||||||||||
Outflows, including Distributions(2) | (5,259 | ) | (2,133 | ) | (3,375 | ) | (1,681 | ) | (3,445 | ) | ||||||||||
Subscriptions, net of Redemptions(3) | 405 | (64 | ) | (88 | ) | 32 | (179 | ) | ||||||||||||
Changes in CLO collateral balances | (492 | ) | (2,361 | ) | (2,534 | ) | (1,140 | ) | 4,839 | |||||||||||
Market Appreciation/(Depreciation)(4) | 682 | 23 | 38 | 129 | (314 | ) | ||||||||||||||
Foreign exchange and other(5) | (1,325 | ) | (888 | ) | (1,290 | ) | 257 | 99 | ||||||||||||
Balance, End of Period | $ | 112,647 | $ | 75,572 | $ | 80,796 | $ | 75,411 | $ | 76,326 | ||||||||||
(1) | Inflows represent limited partner capital raised by our carry funds and fund of funds vehicles and capital invested by our carry funds and fund of funds vehicles outside the investment period. |
(2) | Outflows represent limited partner distributions from our carry funds and fund of funds vehicles and changes in basis for our carry funds and fund of funds vehicles where the investment period has expired. |
(3) | Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds. |
(4) | Market Appreciation/(Depreciation) represents changes in the net asset value of our hedge funds. |
(5) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
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Available | Fair Value | ||||||||||||||
Consolidated Results | Capital | of Capital | Total AUM | ||||||||||||
(Dollars in millions) | |||||||||||||||
Total AUM Rollforward | |||||||||||||||
Balance, As of December 31, 2007 | $ | 35,364 | $ | 45,245 | $ | 80,609 | |||||||||
Commitments(1) | 14,560 | — | 14,560 | ||||||||||||
Capital Called, net(2) | (13,239 | ) | 12,618 | (621 | ) | ||||||||||
Distributions(3) | 545 | (2,464 | ) | (1,919 | ) | ||||||||||
Subscriptions, net of Redemptions(4) | — | (271 | ) | (271 | ) | ||||||||||
Changes in CLO collateral balances | — | 3,717 | 3,717 | ||||||||||||
Market Appreciation/(Depreciation)(5) | — | (9,287 | ) | (9,287 | ) | ||||||||||
Foreign exchange(6) | (48 | ) | (401 | ) | (449 | ) | |||||||||
Balance, As of December 31, 2008 | $ | 37,182 | $ | 49,157 | $ | 86,339 | |||||||||
Commitments(1) | 969 | — | 969 | ||||||||||||
Capital Called, net(2) | (5,812 | ) | 5,041 | (771 | ) | ||||||||||
Distributions(3) | 1,225 | (2,259 | ) | (1,034 | ) | ||||||||||
Subscriptions, net of Redemptions(4) | — | 32 | 32 | ||||||||||||
Changes in CLO collateral balances | — | (1,171 | ) | (1,171 | ) | ||||||||||
Market Appreciation/(Depreciation)(5) | — | 5,135 | 5,135 | ||||||||||||
Foreign exchange(6) | 84 | 249 | 333 | ||||||||||||
Balance, As of December 31, 2009 | $ | 33,648 | $ | 56,184 | $ | 89,832 | |||||||||
Acquisitions | — | 10,463 | 10,463 | ||||||||||||
Commitments(1) | 3,944 | — | 3,944 | ||||||||||||
Capital Called, net(2) | (14,819 | ) | 14,312 | (507 | ) | ||||||||||
Distributions(3) | 2,151 | (8,391 | ) | (6,240 | ) | ||||||||||
Subscriptions, net of Redemptions(4) | — | (140 | ) | (140 | ) | ||||||||||
Changes in CLO collateral balances | — | (3,119 | ) | (3,119 | ) | ||||||||||
Market Appreciation/(Depreciation)(5) | — | 14,524 | 14,524 | ||||||||||||
Foreign exchange(6) | (508 | ) | (737 | ) | (1,245 | ) | |||||||||
Balance, As of December 31, 2010 | $ | 24,416 | $ | 83,096 | $ | 107,512 | |||||||||
Acquisitions | 16,926 | 30,083 | 47,009 | ||||||||||||
Commitments(1) | 4,508 | — | 4,508 | ||||||||||||
Capital Called, net(2) | (7,296 | ) | 6,704 | (592 | ) | ||||||||||
Distributions(3) | 3,138 | (16,860 | ) | (13,722 | ) | ||||||||||
Subscriptions, net of Redemptions(4) | — | 512 | 512 | ||||||||||||
Changes in CLO collateral balances | — | (951 | ) | (951 | ) | ||||||||||
Market Appreciation/(Depreciation)(5) | — | 4,529 | 4,529 | ||||||||||||
Foreign exchange(6) | (203 | ) | 58 | (145 | ) | ||||||||||
Balance, As of September 30, 2011 | $ | 41,489 | $ | 107,171 | $ | 148,660 | |||||||||
(1) | Represents capital raised by our carry funds and fund of funds vehicles, net of expired available capital. |
(2) | Represents capital called by our carry funds and fund of funds vehicles, net of fund fees and expenses. |
(3) | Represents distributions from our carry funds and fund of funds vehicles, net of amounts recycled. |
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(4) | Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds. |
(5) | Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments and changes in the net asset value of our hedge funds. |
(6) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
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Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Statement of operations data | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Fund management fees | $ | 683.2 | $ | 566.2 | $ | 770.3 | $ | 788.1 | $ | 811.4 | ||||||||||
Performance fees | ||||||||||||||||||||
Realized | 870.1 | 92.4 | 266.4 | 11.1 | 59.3 | |||||||||||||||
Unrealized | (133.6 | ) | 220.8 | 1,215.6 | 485.6 | (944.0 | ) | |||||||||||||
Total performance fees | 736.5 | 313.2 | 1,482.0 | 496.7 | (884.7 | ) | ||||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 50.3 | (0.8 | ) | 11.9 | (5.2 | ) | 5.7 | |||||||||||||
Unrealized | 6.3 | 44.1 | 60.7 | 10.2 | (110.6 | ) | ||||||||||||||
Total investment income (loss) | 56.6 | 43.3 | 72.6 | 5.0 | (104.9 | ) | ||||||||||||||
Interest and other income | 15.6 | 15.7 | 21.4 | 27.3 | 38.2 | |||||||||||||||
Interest and other income of Consolidated Funds | 521.6 | 318.4 | 452.6 | 0.7 | 18.7 | |||||||||||||||
Total revenues | 2,013.5 | 1,256.8 | 2,798.9 | 1,317.8 | (121.3 | ) | ||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||
Base compensation | 277.2 | 221.5 | 265.2 | 264.2 | 297.2 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 136.2 | (0.1 | ) | 46.6 | 1.1 | 23.3 | ||||||||||||||
Unrealized | (81.7 | ) | 40.5 | 117.2 | 83.1 | (223.1 | ) | |||||||||||||
Total compensation and benefits | 331.7 | 261.9 | 429.0 | 348.4 | 97.4 | |||||||||||||||
General, administrative and other expenses | 224.7 | 105.4 | 177.2 | 236.6 | 245.1 | |||||||||||||||
Interest | 48.5 | 13.5 | 17.8 | 30.6 | 46.1 | |||||||||||||||
Interest and other expenses of Consolidated Funds | 290.0 | 162.8 | 233.3 | 0.7 | 6.8 | |||||||||||||||
Loss (gain) from early extinguishment of debt, net of related expenses | — | — | 2.5 | (10.7 | ) | — | ||||||||||||||
Equity issued for affiliate debt financing | — | — | 214.0 | — | — | |||||||||||||||
Other non-operating expenses | 30.0 | — | — | — | — | |||||||||||||||
Loss on CCC liquidation | — | — | — | — | 147.0 | |||||||||||||||
Total expenses | 924.9 | 543.6 | 1,073.8 | 605.6 | 542.4 | |||||||||||||||
Net investment gains (losses) of Consolidated Funds | (618.2 | ) | 173.7 | (245.4 | ) | (33.8 | ) | 162.5 | ||||||||||||
Income (loss) before provision for income taxes | 470.4 | 886.9 | 1,479.7 | 678.4 | (501.2 | ) | ||||||||||||||
Provision for income taxes | 25.7 | 14.5 | 20.3 | 14.8 | 12.5 | |||||||||||||||
Net income (loss) | 444.7 | 872.4 | 1,459.4 | 663.6 | (513.7 | ) | ||||||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (473.4 | ) | 301.3 | (66.2 | ) | (30.5 | ) | 94.5 | ||||||||||||
Net income (loss) attributable to Carlyle Group | $ | 918.1 | $ | 571.1 | $ | 1,525.6 | $ | 694.1 | $ | (608.2 | ) | |||||||||
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Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Realized gains (losses) | $ | 474.0 | $ | (7.2 | ) | |||
Net change in unrealized gains/losses | (946.1 | ) | 299.4 | |||||
Total gains (losses) | (472.1 | ) | 292.2 | |||||
Losses on liabilities of CLOs | (149.2 | ) | (121.3 | ) | ||||
Gains on other assets of CLOs | 3.1 | 2.8 | ||||||
Total | $ | (618.2 | ) | $ | 173.7 | |||
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Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Realized gains (losses) | $ | 74.1 | $ | (6.4 | ) | |||
Net change in unrealized gains | 427.9 | (27.4 | ) | |||||
Total gains (losses) | 502.0 | (33.8 | ) | |||||
Gains (losses) on liabilities of CLOs | (752.4 | ) | — | |||||
Gains on other assets of CLOs | 5.0 | — | ||||||
Total | $ | (245.4 | ) | $ | (33.8 | ) | ||
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Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Revenues | ||||||||||||||||||||
Fund level fee revenues | ||||||||||||||||||||
Fund management fees | $ | 649.9 | $ | 570.4 | $ | 763.5 | $ | 755.2 | $ | 767.4 | ||||||||||
Portfolio advisory fees, net | 31.8 | 13.3 | 19.8 | 18.2 | 18.4 | |||||||||||||||
Transaction fees, net | 28.3 | 13.7 | 30.2 | 14.7 | 25.6 | |||||||||||||||
Total fund level fee revenues | 710.0 | 597.4 | 813.5 | 788.1 | 811.4 | |||||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 886.7 | 99.8 | 274.2 | 11.0 | 98.8 | |||||||||||||||
Unrealized | (191.7 | ) | 203.1 | 1,204.1 | 479.7 | (948.8 | ) | |||||||||||||
Total performance fees | 695.0 | 302.9 | 1,478.3 | 490.7 | (850.0 | ) | ||||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 48.4 | 7.1 | 10.4 | (1.7 | ) | 17.7 | ||||||||||||||
Unrealized | 15.4 | 41.8 | 61.2 | 9.4 | (84.7 | ) | ||||||||||||||
Total investment income (loss) | 63.8 | 48.9 | 71.6 | 7.7 | (67.0 | ) | ||||||||||||||
Interest and other income | 14.9 | 16.4 | 22.4 | 27.3 | 38.2 | |||||||||||||||
Total revenues | 1,483.7 | 965.6 | 2,385.8 | 1,313.8 | (67.4 | ) |
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Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Expenses | ||||||||||||||||||||
Direct compensation and benefits | ||||||||||||||||||||
Direct base compensation | 303.4 | 262.6 | 350.1 | 340.4 | 294.3 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 425.6 | 55.1 | 140.7 | 3.6 | 56.9 | |||||||||||||||
Unrealized | (138.2 | ) | 84.2 | 593.8 | 238.1 | (522.0 | ) | |||||||||||||
Total direct compensation and benefits | 590.8 | 401.9 | 1,084.6 | 582.1 | (170.8 | ) | ||||||||||||||
General, administrative and other indirect expenses | 267.6 | 182.2 | 269.4 | 284.8 | 316.9 | |||||||||||||||
Interest expense | 46.4 | 13.5 | 17.8 | 30.6 | 46.1 | |||||||||||||||
Total expenses | 904.8 | 597.6 | 1,371.8 | 897.5 | 192.2 | |||||||||||||||
Economic Net Income (Loss) | $ | 578.9 | $ | 368.0 | $ | 1,014.0 | $ | 416.3 | $ | (259.6 | ) | |||||||||
Fee Related Earnings | $ | 107.5 | $ | 155.5 | $ | 198.6 | $ | 159.6 | $ | 192.3 | ||||||||||
Net Performance Fees | $ | 407.6 | $ | 163.6 | $ | 743.8 | $ | 249.0 | $ | (384.9 | ) | |||||||||
Investment Income (Loss) | $ | 63.8 | $ | 48.9 | $ | 71.6 | $ | 7.7 | $ | (67.0 | ) | |||||||||
Distributable Earnings | $ | 617.0 | $ | 207.3 | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||||||
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Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Income (loss) before provision for income taxes | $ | 470.4 | $ | 886.9 | $ | 1,479.7 | $ | 678.4 | $ | (501.2 | ) | |||||||||
Partner compensation(1) | (458.3 | ) | (222.8 | ) | (768.2 | ) | (339.7 | ) | 134.3 | |||||||||||
Acquisition related charges and amortization of intangibles | 57.1 | 1.5 | 11.0 | — | — | |||||||||||||||
Equity issued for affiliate debt financing | — | — | 214.0 | — | — | |||||||||||||||
Loss on CCC liquidation | — | — | — | — | 152.3 | |||||||||||||||
Loss on NYAG settlement | — | — | — | 20.0 | — | |||||||||||||||
Loss (gain) associated with early extinguishment of debt | — | — | 2.5 | (10.7 | ) | — | ||||||||||||||
Other non-operating expenses | 30.0 | — | — | — | — | |||||||||||||||
Non-controlling interests in consolidated entities | 473.4 | (301.3 | ) | 66.2 | 30.5 | (94.5 | ) | |||||||||||||
Severance and lease terminations | 6.3 | 4.1 | 8.5 | 29.0 | 49.5 | |||||||||||||||
Other | — | (0.4 | ) | 0.3 | 8.8 | — | ||||||||||||||
Economic Net Income (Loss) | $ | 578.9 | $ | 368.0 | $ | 1,014.0 | $ | 416.3 | $ | (259.6 | ) | |||||||||
Net performance fees(2) | 407.6 | 163.6 | 743.8 | 249.0 | (384.9 | ) | ||||||||||||||
Investment income (loss)(2) | 63.8 | 48.9 | 71.6 | 7.7 | (67.0 | ) | ||||||||||||||
Fee Related Earnings | $ | 107.5 | $ | 155.5 | $ | 198.6 | $ | 159.6 | $ | 192.3 | ||||||||||
Realized performance fees, net of related compensation(2) | 461.1 | 44.7 | 133.5 | 7.4 | 41.9 | |||||||||||||||
Investment income (loss) — realized(2) | 48.4 | 7.1 | 10.4 | (1.7 | ) | 17.7 | ||||||||||||||
Distributable Earnings | $ | 617.0 | $ | 207.3 | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||||||
(1) | Adjustments for partner compensation reflect amounts due to senior Carlyle professionals for compensation and carried interest allocated to them which amounts were classified as distributions from equity in our financial statements. |
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(2) | See reconciliation to most directly comparable U.S. GAAP measure below: |
Nine Months Ended September 30, 2011 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 870.1 | $ | 16.6 | $ | 886.7 | ||||||
Unrealized | (133.6 | ) | (58.1 | ) | (191.7 | ) | ||||||
Total performance fees | 736.5 | (41.5 | ) | 695.0 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | 136.2 | 289.4 | 425.6 | |||||||||
Unrealized | (81.7 | ) | (56.5 | ) | (138.2 | ) | ||||||
Total performance fee related compensation expense | 54.5 | 232.9 | 287.4 | |||||||||
Net performance fees | ||||||||||||
Realized | 733.9 | (272.8 | ) | 461.1 | ||||||||
Unrealized | (51.9 | ) | (1.6 | ) | (53.5 | ) | ||||||
Total net performance fees | $ | 682.0 | $ | (274.4 | ) | $ | 407.6 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | 50.3 | $ | (1.9 | ) | $ | 48.4 | |||||
Unrealized | 6.3 | 9.1 | 15.4 | |||||||||
Total investment income | $ | 56.6 | $ | 7.2 | $ | 63.8 | ||||||
Nine Months Ended September 30, 2010 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 92.4 | $ | 7.4 | $ | 99.8 | ||||||
Unrealized | 220.8 | (17.7 | ) | 203.1 | ||||||||
Total performance fees | 313.2 | (10.3 | ) | 302.9 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | (0.1 | ) | 55.2 | 55.1 | ||||||||
Unrealized | 40.5 | 43.7 | 84.2 | |||||||||
Total performance fee related compensation expense | 40.4 | 98.9 | 139.3 | |||||||||
Net performance fees | ||||||||||||
Realized | 92.5 | (47.8 | ) | 44.7 | ||||||||
Unrealized | 180.3 | (61.4 | ) | 118.9 | ||||||||
Total net performance fees | $ | 272.8 | $ | (109.2 | ) | $ | 163.6 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | (0.8 | ) | $ | 7.9 | $ | 7.1 | |||||
Unrealized | 44.1 | (2.3 | ) | 41.8 | ||||||||
Total investment income (loss) | $ | 43.3 | $ | 5.6 | $ | 48.9 | ||||||
(3) | Adjustments to performance fees and investment income (loss) relate to amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, and amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results. Adjustments to performance fee related compensation expense relate to the inclusion of partner compensation in the segment results. Adjustments are also included in these financial statement captions to reflect the Company’s 55% economic interest in Claren Road and ESG in the segment results. |
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(2) | See reconciliation to most directly comparable U.S. GAAP measure below: |
Year Ended December 31, 2010 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 266.4 | $ | 7.8 | $ | 274.2 | ||||||
Unrealized | 1,215.6 | (11.5 | ) | 1,204.1 | ||||||||
Total performance fees | 1,482.0 | (3.7 | ) | 1,478.3 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | 46.6 | 94.1 | 140.7 | |||||||||
Unrealized | 117.2 | 476.6 | 593.8 | |||||||||
Total performance fee related compensation expense | 163.8 | 570.7 | 734.5 | |||||||||
Net performance fees | ||||||||||||
Realized | 219.8 | (86.3 | ) | 133.5 | ||||||||
Unrealized | 1,098.4 | (488.1 | ) | 610.3 | ||||||||
Total net performance fees | $ | 1,318.2 | $ | (574.4 | ) | $ | 743.8 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | 11.9 | $ | (1.5 | ) | $ | 10.4 | |||||
Unrealized | 60.7 | 0.5 | 61.2 | |||||||||
Total investment income | $ | 72.6 | $ | (1.0 | ) | $ | 71.6 | |||||
Year Ended December 31, 2009 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 11.1 | $ | (0.1 | ) | $ | 11.0 | |||||
Unrealized | 485.6 | (5.9 | ) | 479.7 | ||||||||
Total performance fees | 496.7 | (6.0 | ) | 490.7 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | 1.1 | 2.5 | 3.6 | |||||||||
Unrealized | 83.1 | 155.0 | 238.1 | |||||||||
Total performance fee related compensation expense | 84.2 | 157.5 | 241.7 | |||||||||
Net performance fees | ||||||||||||
Realized | 10.0 | (2.6 | ) | 7.4 | ||||||||
Unrealized | 402.5 | (160.9 | ) | 241.6 | ||||||||
Total net performance fees | $ | 412.5 | $ | (163.5 | ) | $ | 249.0 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | (5.2 | ) | $ | 3.5 | $ | (1.7 | ) | ||||
Unrealized | 10.2 | (0.8 | ) | 9.4 | ||||||||
Total investment income (loss) | $ | 5.0 | $ | 2.7 | $ | 7.7 | ||||||
(3) | Adjustments to performance fees and investment income (loss) relate to amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, and amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results. Adjustments to performance fee related compensation expense relate to the inclusion of partner compensation in the segment results. Adjustments are also included in these financial statement captions to reflect the Company’s 55% economic interest in Claren Road and ESG in the segment results. |
131
(2) | See reconciliation to most directly comparable U.S. GAAP measure below: |
Year Ended December 31, 2008 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 59.3 | $ | 39.5 | $ | 98.8 | ||||||
Unrealized | (944.0 | ) | (4.8 | ) | (948.8 | ) | ||||||
Total performance fees | (884.7 | ) | 34.7 | (850.0 | ) | |||||||
Performance fee related compensation expense | ||||||||||||
Realized | 23.3 | 33.6 | 56.9 | |||||||||
Unrealized | (223.1 | ) | (298.9 | ) | (522.0 | ) | ||||||
Total performance fee related compensation expense | (199.8 | ) | (265.3 | ) | (465.1 | ) | ||||||
Net performance fees | ||||||||||||
Realized | 36.0 | 5.9 | 41.9 | |||||||||
Unrealized | (720.9 | ) | 294.1 | (426.8 | ) | |||||||
Total net performance fees | $ | (684.9 | ) | $ | 300.0 | $ | (384.9 | ) | ||||
Investment income (loss) | ||||||||||||
Realized | $ | 5.7 | $ | 12.0 | $ | 17.7 | ||||||
Unrealized | (110.6 | ) | 25.9 | (84.7 | ) | |||||||
Total investment income | $ | (104.9 | ) | $ | 37.9 | $ | (67.0 | ) | ||||
(3) | Adjustments to performance fees and investment income (loss) relate to amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, and amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results. Adjustments to performance fee related compensation expense relate to the inclusion of partner compensation in the segment results. Adjustments are also included in these financial statement captions to reflect the Company’s 55% economic interest in Claren Road and ESG in the segment results. |
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Economic Net Income (Loss) | ||||||||||||||||||||
Corporate Private Equity | $ | 352.4 | $ | 285.3 | $ | 819.3 | $ | 400.4 | $ | (138.9 | ) | |||||||||
Real Assets | 80.0 | 26.6 | 90.7 | 16.9 | (78.1 | ) | ||||||||||||||
Global Market Strategies | 139.3 | 56.1 | 104.0 | (1.0 | ) | (42.6 | ) | |||||||||||||
Fund of Funds Solutions | 7.2 | — | — | — | — | |||||||||||||||
Economic Net Income (Loss) | $ | 578.9 | $ | 368.0 | $ | 1,014.0 | $ | 416.3 | $ | (259.6 | ) | |||||||||
Distributable Earnings: | ||||||||||||||||||||
Corporate Private Equity | $ | 431.9 | $ | 170.4 | $ | 307.2 | $ | 159.7 | $ | 199.6 | ||||||||||
Real Assets | 70.4 | 20.4 | 12.7 | 6.9 | 32.3 | |||||||||||||||
Global Market Strategies | 103.0 | 16.5 | 22.6 | (1.3 | ) | 20.0 | ||||||||||||||
Fund of Funds Solutions | 11.7 | — | — | — | — | |||||||||||||||
Distributable Earnings | $ | 617.0 | $ | 207.3 | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||||||
132
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Revenues | ||||||||||||||||||||
Fund level fee revenues | ||||||||||||||||||||
Fund management fees | $ | 387.7 | $ | 401.2 | $ | 537.6 | $ | 536.0 | $ | 522.8 | ||||||||||
Portfolio advisory fees, net | 27.0 | 10.1 | 14.9 | 15.9 | 14.0 | |||||||||||||||
Transaction fees, net | 26.4 | 5.5 | 21.5 | 12.0 | 19.9 | |||||||||||||||
Total fund level fee revenues | 441.1 | 416.8 | 574.0 | 563.9 | 556.7 | |||||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 690.7 | 97.8 | 267.3 | 3.5 | 54.3 | |||||||||||||||
Unrealized | (179.0 | ) | 144.0 | 996.3 | 491.8 | (742.6 | ) | |||||||||||||
Total performance fees | 511.7 | 241.8 | 1,263.6 | 495.3 | (688.3 | ) | ||||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 35.1 | 2.0 | 4.2 | (2.7 | ) | 18.6 | ||||||||||||||
Unrealized | (5.6 | ) | 31.5 | 40.6 | 9.5 | (13.8 | ) | |||||||||||||
Total investment income (loss) | 29.5 | 33.5 | 44.8 | 6.8 | 4.8 | |||||||||||||||
Interest and other income | 8.1 | 10.1 | 14.8 | 10.8 | 19.3 | |||||||||||||||
Total revenues | 990.4 | 702.2 | 1,897.2 | 1,076.8 | (107.5 | ) | ||||||||||||||
Segment Expenses | ||||||||||||||||||||
Direct compensation and benefits | ||||||||||||||||||||
Direct base compensation | 189.2 | 175.1 | 237.6 | 227.4 | �� | 195.0 | ||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 355.6 | 54.7 | 136.0 | 0.6 | 33.3 | |||||||||||||||
Unrealized | (105.1 | ) | 60.6 | 524.8 | 260.6 | (417.9 | ) | |||||||||||||
Total direct compensation and benefits | 439.7 | 290.4 | 898.4 | 488.6 | (189.6 | ) | ||||||||||||||
General, administrative and other indirect expenses | 168.3 | 118.0 | 168.1 | 168.0 | 188.1 | |||||||||||||||
Interest expense | 30.0 | 8.5 | 11.4 | 19.8 | 32.9 | |||||||||||||||
Total expenses | 638.0 | 416.9 | 1,077.9 | 676.4 | 31.4 | |||||||||||||||
Economic Net Income (Loss) | $ | 352.4 | $ | 285.3 | $ | 819.3 | $ | 400.4 | $ | (138.9 | ) | |||||||||
Fee Related Earnings | $ | 61.7 | $ | 125.3 | $ | 171.7 | $ | 159.5 | $ | 160.0 | ||||||||||
Net Performance Fees | $ | 261.2 | $ | 126.5 | $ | 602.8 | $ | 234.1 | $ | (303.7 | ) | |||||||||
Investment Income | $ | 29.5 | $ | 33.5 | $ | 44.8 | $ | 6.8 | $ | 4.8 | ||||||||||
Distributable Earnings | $ | 431.9 | $ | 170.4 | $ | 307.2 | $ | 159.7 | $ | 199.6 | ||||||||||
133
134
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Buyout funds | $ | 525.6 | $ | 189.8 | ||||
Growth Capital funds | (13.9 | ) | 52.0 | |||||
Performance fees | $ | 511.7 | $ | 241.8 | ||||
135
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Buyout funds | $ | 1,213.6 | $ | 485.4 | ||||
Growth Capital funds | 50.0 | 9.9 | ||||||
Performance fees | $ | 1,263.6 | $ | 495.3 | ||||
136
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
(Dollars in millions) | ||||||||
Buyout funds | $ | 485.4 | $ | (627.0 | ) | |||
Growth Capital funds | 9.9 | (61.3 | ) | |||||
Performance fees | $ | 495.3 | $ | (688.3 | ) | |||
137
As of September 30, | As of December 31, | |||||||||||||||||||
Corporate Private Equity | 2011 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||
Components of Fee-earning AUM(1) | (Dollars in millions) | |||||||||||||||||||
Fee-earning AUM based on capital commitments | $ | 28,811 | $ | 28,174 | $ | 28,386 | $ | 27,884 | $ | 27,097 | ||||||||||
Fee-earning AUM based on invested capital | 9,588 | 10,724 | 10,209 | 12,251 | 12,834 | |||||||||||||||
Fee-earning AUM based on lower of cost or fair value and other(2) | 295 | 303 | 305 | 248 | 266 | |||||||||||||||
Total Fee-earning AUM | $ | 38,694 | $ | 39,201 | $ | 38,900 | $ | 40,383 | $ | 40,197 | ||||||||||
Weighted Average Management Fee Rates(3) | ||||||||||||||||||||
All Funds | 1.30 | % | 1.33 | % | 1.29 | % | 1.32 | % | 1.32 | % | ||||||||||
Funds in Investment Period | 1.37 | % | 1.44 | % | 1.37 | % | 1.43 | % | 1.43 | % |
(1) | For additional information concerning the components of fee-earning AUM, please see “— Fee-earning Assets under Management.” |
(2) | Includes certain funds that are calculated on gross asset value. |
(3) | Represents the aggregate effective management fee rate for each fund in the segment, weighted by each fund’s fee-earning AUM, as of the end of each period presented. |
As of September 30, | As of December 31, | |||||||||||||||||||
Corporate Private Equity | 2011 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||
Fee-Earning AUM Rollforward | (Dollars in millions) | |||||||||||||||||||
Balance, Beginning of Period | $ | 38,900 | $ | 40,383 | $ | 40,383 | $ | 40,197 | $ | 36,581 | ||||||||||
Inflows, including Commitments(1) | 819 | 832 | 1,504 | 907 | 4,863 | |||||||||||||||
Outflows, including Distributions(2) | (1,433 | ) | (1,713 | ) | (2,441 | ) | (826 | ) | (1,178 | ) | ||||||||||
Foreign exchange(3) | 408 | (301 | ) | (546 | ) | 105 | (69 | ) | ||||||||||||
Balance, End of Period | $ | 38,694 | $ | 39,201 | $ | 38,900 | $ | 40,383 | $ | 40,197 | ||||||||||
(1) | Inflows represent limited partner capital raised and capital invested by funds outside the investment period. | |
(2) | Outflows represent limited partner distributions from funds outside the investment period and changes in basis for our carry funds where the investment period has expired. | |
(3) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-USD funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
138
Available | Fair Value of | |||||||||||
Capital | Capital | Total AUM | ||||||||||
Corporate Private Equity | (Dollars in millions) | |||||||||||
Balance, As of December 31, 2007 | $ | 23,181 | $ | 25,364 | $ | 48,545 | ||||||
Commitments raised, net(1) | 5,265 | — | 5,265 | |||||||||
Capital Called, net(2) | (5,514 | ) | 5,268 | (246 | ) | |||||||
Distributions, net(3) | 212 | (1,698 | ) | (1,486 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | (6,955 | ) | (6,955 | ) | |||||||
Foreign exchange(5) | 62 | 1 | 63 | |||||||||
Balance, As of December 31, 2008 | $ | 23,206 | $ | 21,980 | $ | 45,186 | ||||||
Commitments raised, net(1) | 89 | — | 89 | |||||||||
Capital Called, net(2) | (2,303 | ) | 1,841 | (462 | ) | |||||||
Distributions, net(3) | 631 | (920 | ) | (289 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 4,217 | 4,217 | |||||||||
Foreign exchange(5) | 51 | 51 | 102 | |||||||||
Balance, As of December 31, 2009 | $ | 21,674 | $ | 27,169 | $ | 48,843 | ||||||
Commitments raised, net(1) | 2,258 | — | 2,258 | |||||||||
Capital Called, net(2) | (9,163 | ) | 8,830 | (333 | ) | |||||||
Distributions, net(3) | 700 | (5,350 | ) | (4,650 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 10,738 | 10,738 | |||||||||
Foreign exchange(5) | (340 | ) | (206 | ) | (546 | ) | ||||||
Balance, As of December 31, 2010 | $ | 15,129 | $ | 41,181 | $ | 56,310 | ||||||
Commitments raised, net(1) | 1,259 | — | 1,259 | |||||||||
Capital Called, net(2) | (3,052 | ) | 2,763 | (289 | ) | |||||||
Distributions, net(3) | 1,085 | (10,056 | ) | (8,971 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 2,366 | 2,366 | |||||||||
Foreign exchange(5) | 169 | 200 | 369 | |||||||||
Balance, As of September 30, 2011 | $ | 14,590 | $ | 36,454 | $ | 51,044 | ||||||
139
(1) | Represents capital raised by our carry funds, net of expired available capital. |
(2) | Represents capital called by our carry funds, net of fund fees and expenses. |
(3) | Represents distributions from our carry funds, net of amounts recycled. |
(4) | Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments. |
(5) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-USD funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
140
As of September 30, 2011 | ||||||||||||||||||||||||||||||||
Total Investments | Realized/Partially Realized Investments(5) | |||||||||||||||||||||||||||||||
Fund | Cumulative | Total | Cumulative | Total | ||||||||||||||||||||||||||||
Inception | Committed | Invested | Fair | Invested | Fair | |||||||||||||||||||||||||||
Date(1) | Capital | Capital(2) | Value(3) | MOIC(4) | Capital(2) | Value(3) | MOIC(4) | |||||||||||||||||||||||||
(Reported in Local Currency, in Millions) | ||||||||||||||||||||||||||||||||
Corporate Private Equity Fully Invested Funds(6) | ||||||||||||||||||||||||||||||||
CP II | 10/1994 | $ | 1,331.1 | $ | 1,362.4 | $ | 4,047.3 | 3.0 | x | $ | 1,347.5 | $ | 4,030.5 | 3.0 | x | |||||||||||||||||
CP III | 2/2000 | $ | 3,912.7 | $ | 4,031.7 | $ | 9,988.4 | 2.5 | x | $ | 3,851.7 | $ | 9,820.3 | 2.5 | x | |||||||||||||||||
CP IV | 12/2004 | $ | 7,850.0 | $ | 7,612.6 | $ | 13,025.0 | 1.7 | x | $ | 3,223.8 | $ | 7,338.2 | 2.3 | x | |||||||||||||||||
CEP I | 12/1997 | € | 1,003.6 | € | 972.0 | € | 2,119.5 | 2.2 | x | € | 972.0 | € | 2,119.5 | 2.2 | x | |||||||||||||||||
CEP II | 9/2003 | € | 1,805.4 | € | 2,036.1 | € | 3,602.1 | 1.8 | x | € | 1,016.5 | € | 2,727.0 | 2.7 | x | |||||||||||||||||
CAP I | 12/1998 | $ | 750.0 | $ | 627.7 | $ | 2,435.9 | 3.9 | x | $ | 627.7 | $ | 2,435.9 | 3.9 | x | |||||||||||||||||
CAP II | 2/2006 | $ | 1,810.0 | $ | 1,599.1 | $ | 2,334.9 | 1.5 | x | $ | 305.1 | $ | 1,088.2 | 3.6 | x | |||||||||||||||||
CJP I | 10/2001 | ¥ | 50,000.0 | ¥ | 47,291.4 | ¥ | 114,674.8 | 2.4 | x | ¥ | 30,009.4 | ¥ | 104,486.3 | 3.5 | x | |||||||||||||||||
All Other Funds(7) | Various | $ | 2,880.0 | $ | 4,243.0 | 1.5 | x | $ | 1,992.0 | $ | 3,344.2 | 1.7 | x | |||||||||||||||||||
Co-investments and Other(8) | Various | $ | 6,338.3 | $ | 15,439.3 | 2.4 | x | $ | 4,136.6 | $ | 12,927.2 | 3.1 | x | |||||||||||||||||||
Total Fully Invested Funds | $ | 29,159.0 | $ | 60,790.0 | 2.1 | x | $ | 18,579.8 | $ | 48,937.9 | 2.6 | x | ||||||||||||||||||||
Funds in the Investment Period(6) | ||||||||||||||||||||||||||||||||
CP V | 5/2007 | $ | 13,719.7 | $ | 8,384.7 | $ | 11,125.5 | 1.3 | x | |||||||||||||||||||||||
CEP III | 12/2006 | € | 5,294.9 | € | 3,785.0 | € | 3,883.1 | 1.0 | x | |||||||||||||||||||||||
CAP III | 5/2008 | $ | 2,551.6 | $ | 1,321.2 | $ | 1,257.6 | 1.0 | x | |||||||||||||||||||||||
CJP II | 7/2006 | ¥ | 165,600.0 | ¥ | 112,039.7 | ¥ | 105,327.4 | 0.9 | x | |||||||||||||||||||||||
CGSFP | 9/2008 | $ | 1,100.2 | $ | 703.8 | $ | 855.2 | 1.2 | x | |||||||||||||||||||||||
CAGP IV | 6/2008 | $ | 1,041.4 | $ | 367.0 | $ | 454.4 | 1.2 | x | |||||||||||||||||||||||
All Other Funds(9) | Various | $ | 1,130.1 | $ | 1,438.7 | 1.3 | x | |||||||||||||||||||||||||
Total Funds in the Investment Period | $ | 18,515.5 | $ | 21,785.8 | 1.2 | x | ||||||||||||||||||||||||||
TOTAL CORPORATE PRIVATE EQUITY(10) | $ | 47,674.5 | $ | 82,575.8 | 1.7 | x | $ | 20,317.5 | $ | 51,266.1 | 2.5x | |||||||||||||||||||||
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. | ||
(1) | The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Corporate Private Equity segment our first fund was formed in 1990. | |
(2) | Represents the original cost of all capital called for investments since inception of the fund. |
(3) | Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. Please see note 4 to the combined and consolidated financial statements for the year ended December 31, 2010 and the nine months ended September 30, 2011 appearing elsewhere in this prospectus for further information regarding management’s determination of fair value. |
(4) | Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. |
(5) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of |
141
realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Corporate Private Equity. | ||
(6) | Fully invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested. |
(7) | Includes the following funds: CP I, CMG, CVP I, CVP II, CEVP I, CETP I, CAVP I, CAVP II, CAGP III and Mexico I. |
(8) | Includes co-investments and certain other stand-alone investments arranged by us. |
(9) | Includes the following funds: MENA I, CSABF I, CUSGF III, CETP II and CBPF. |
(10) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the spot rate as of the end of the reporting period. |
Committed | ||||||||||||||||||
Capital | Inception to September 30, 2011 | |||||||||||||||||
Fund | As of | Realized/Partially | ||||||||||||||||
Inception | September 30, | Gross | Net | Realized Gross | ||||||||||||||
Date(1) | 2011 | IRR(2) | IRR(3) | IRR(4) | ||||||||||||||
(Reported in Local Currency, in Millions) | ||||||||||||||||||
Corporate Private Equity Fully Invested Funds(5) | ||||||||||||||||||
CP II | 10/1994 | $ | 1,331.1 | 34 | % | 25 | % | 34 | % | |||||||||
CP III | 2/2000 | $ | 3,912.7 | 27 | % | 20 | % | 27 | % | |||||||||
CP IV | 12/2004 | $ | 7,850.0 | 13 | % | 10 | % | 24 | % | |||||||||
CEP I | 12/1997 | € | 1,003.6 | 18 | % | 11 | % | 18 | % | |||||||||
CEP II | 9/2003 | € | 1,805.4 | 40 | % | 22 | % | 72 | % | |||||||||
CAP I | 12/1998 | $ | 750.0 | 25 | % | 18 | % | 25 | % | |||||||||
CAP II | 2/2006 | $ | 1,810.0 | 10 | % | 7 | % | 39 | % | |||||||||
CJP I | 10/2001 | ¥ | 50,000.0 | 61 | % | 36 | % | 72 | % | |||||||||
All Other Funds(6) | Various | 18 | % | 7 | % | 22 | % | |||||||||||
Co-investments and Other(7) | Various | 36 | % | 33 | % | 36 | % | |||||||||||
Total Fully Invested Funds | 28 | % | 21 | % | 31 | % | ||||||||||||
Funds in the Investment Period(5) | ||||||||||||||||||
CP V | 5/2007 | $ | 13,719.7 | 14 | % | 9 | % | |||||||||||
CEP III | 12/2006 | € | 5,294.9 | 1 | % | (3 | )% | |||||||||||
CAP III | 5/2008 | $ | 2,551.6 | (3 | )% | (12 | )% | |||||||||||
CJP II | 7/2006 | ¥ | 165,600.0 | (3 | )% | (9 | )% | |||||||||||
CGFSP I | 9/2008 | $ | 1,100.2 | 15 | % | 8 | % | |||||||||||
CAGP IV | 6/2008 | $ | 1,041.4 | 22 | % | 3 | % | |||||||||||
All Other Funds(8) | Various | 12 | % | 3 | % | |||||||||||||
Total Funds in the Investment Period | 8 | % | 3 | % | ||||||||||||||
TOTAL CORPORATE PRIVATE EQUITY(9) | 26 | % | 18 | % | 31 | % | ||||||||||||
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. | ||
(1) | The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Corporate Private Equity segment, our first fund was formed in 1990. | |
(2) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest. | |
(3) | Net IRR represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. |
(4) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may |
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not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Corporate Private Equity. |
(5) | Fully invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested. |
(6) | Includes the following funds: CP I, CMG, CVP I, CVP II, CEVP I, CETP I, CAVP I, CAVP II, CAGP III and Mexico I. |
(7) | Includes co-investments and certain other stand-alone investments arranged by us. |
(8) | Includes the following funds: MENA I, CUSGF III, CETP II, CSABF I, CBPF and CEOF. |
(9) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the spot rate as of the end of the reporting period. |
Nine Months Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Revenues | ||||||||||||||||||||
Fund level fee revenues | ||||||||||||||||||||
Fund management fees | $ | 114.9 | $ | 107.5 | $ | 144.0 | $ | 150.4 | $ | 157.0 | ||||||||||
Portfolio advisory fees, net | 2.6 | 1.6 | 2.6 | 1.6 | 3.5 | |||||||||||||||
Transaction fees, net | 1.9 | 8.1 | 8.6 | 1.8 | 5.7 | |||||||||||||||
Total fund level fee revenues | 119.4 | 117.2 | 155.2 | 153.8 | 166.2 | |||||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 81.1 | 0.1 | (2.9 | ) | 5.9 | 28.8 | ||||||||||||||
Unrealized | 1.7 | 0.3 | 72.7 | (13.6 | ) | (192.7 | ) | |||||||||||||
Total performance fees | 82.8 | 0.4 | 69.8 | (7.7 | ) | (163.9 | ) | |||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 2.3 | 1.7 | 1.4 | 0.8 | 5.8 | |||||||||||||||
Unrealized | 3.5 | (0.9 | ) | 3.7 | 0.1 | (15.2 | ) | |||||||||||||
Total investment income (loss) | 5.8 | 0.8 | 5.1 | 0.9 | (9.4 | ) | ||||||||||||||
Interest and other income | 2.2 | 4.1 | 4.9 | 14.3 | 16.7 | |||||||||||||||
Total revenues | 210.2 | 122.5 | 235.0 | 161.3 | 9.6 | |||||||||||||||
Segment Expenses | ||||||||||||||||||||
Direct compensation and benefits | ||||||||||||||||||||
Direct base compensation | 58.3 | 55.8 | 72.4 | 74.2 | 68.7 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 8.1 | (0.1 | ) | 0.5 | 2.8 | 16.3 | ||||||||||||||
Unrealized | (4.4 | ) | (6.8 | ) | (1.6 | ) | (23.5 | ) | (97.5 | ) | ||||||||||
Total direct compensation and benefits | 62.0 | 48.9 | 71.3 | 53.5 | (12.5 | ) | ||||||||||||||
General, administrative and other indirect expenses | 59.3 | 44.1 | 69.2 | 84.2 | 90.3 | |||||||||||||||
Interest expense | 8.9 | 2.9 | 3.8 | 6.7 | 9.9 | |||||||||||||||
Total expenses | 130.2 | 95.9 | 144.3 | 144.4 | 87.7 | |||||||||||||||
Economic Net Income (Loss) | $ | 80.0 | $ | 26.6 | $ | 90.7 | $ | 16.9 | $ | (78.1 | ) | |||||||||
Fee Related Earnings | $ | (4.9 | ) | $ | 18.5 | $ | 14.7 | $ | 3.0 | $ | 14.0 | |||||||||
Net Performance Fees | $ | 79.1 | $ | 7.3 | $ | 70.9 | $ | 13.0 | $ | (82.7 | ) | |||||||||
Investment Income (Loss) | $ | 5.8 | $ | 0.8 | $ | 5.1 | $ | 0.9 | $ | (9.4 | ) | |||||||||
Distributable Earnings | $ | 70.4 | $ | 20.4 | $ | 12.7 | $ | 6.9 | $ | 32.3 | ||||||||||
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Nine Months | ||||||||
Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Energy funds | $ | 77.6 | $ | 17.4 | ||||
Real Estate funds | 5.2 | (17.0 | ) | |||||
Performance fees | $ | 82.8 | $ | 0.4 | ||||
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Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Energy funds | $ | 82.8 | $ | 39.2 | ||||
Real Estate funds | (13.0 | ) | (46.9 | ) | ||||
Total performance fees | $ | 69.8 | $ | (7.7 | ) | |||
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Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
(Dollars in millions) | ||||||||
Energy funds | $ | 39.2 | $ | (28.7 | ) | |||
Real Estate funds | (46.9 | ) | (135.2 | ) | ||||
Performance fees | $ | (7.7 | ) | $ | (163.9 | ) | ||
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As of September 30, | As of December 31, | |||||||||||||||||||
Real Assets | 2011 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||
Components of Fee-earning AUM (1) | (Dollars in millions) | |||||||||||||||||||
Fee-earning AUM based on capital commitments | $ | 12,981 | $ | 16,589 | $ | 14,155 | $ | 16,750 | $ | 17,176 | ||||||||||
Fee-earning AUM based on invested capital(2) | 9,371 | 6,323 | 8,782 | 5,796 | 5,581 | |||||||||||||||
Total Fee-earning AUM(3) | $ | 22,352 | $ | 22,912 | $ | 22,937 | $ | 22,546 | $ | 22,757 | ||||||||||
Weighted Average Management Fee Rates(4) | ||||||||||||||||||||
All Funds | 1.23 | % | 1.31 | % | 1.28 | % | 1.37 | % | 1.38 | % | ||||||||||
Funds in Investment Period | 1.26 | % | 1.35 | % | 1.35 | % | 1.35 | % | 1.38 | % |
(1) | For additional information concerning the components of fee-earning AUM, please see “— Fee-earning Assets under Management.” |
(2) | Includes amounts committed to or reserved for investments for certain real estate funds. |
(3) | Carlyle/Riverstone Global Energy and Power, L.P., Carlyle/Riverstone Global Energy and Power II, L.P. Carlyle/Riverstone Global Energy and Power III, L.P., Riverstone/Carlyle Global Energy and Power IV, L.P., Carlyle/Riverstone Renewable Energy Infrastructure, L.P. and Riverstone/Carlyle Renewable Energy Infrastructure II, L.P. (collectively, the “Energy Funds”), are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisers to each of the Energy Funds. With the exception of Riverstone/Carlyle Global Energy and Power IV, L.P. and Riverstone/Carlyle Renewable Energy Infrastructure II, L.P., where Carlyle has a minority representation on the funds’ management committees, management of each of the Energy Funds is vested in committees with equal representation by Carlyle and Riverstone, and the consent of representatives of both Carlyle and Riverstone are required for investment decisions. As of September 30, 2011, the Energy Funds had, in the aggregate, approximately $17 billion in AUM and $12 billion in fee-earning AUM. |
(4) | Represents the aggregate effective management fee rate for each fund in the segment, weighted by each fund’s fee-earning AUM, as of the end of each period presented. |
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
Real Assets | 2011 | 2010 | 2010 | 2009 | 2008 | |||||||||||||||
Fee-Earning AUM Rollforward | (Dollars in millions) | |||||||||||||||||||
Balance, Beginning of Period | $ | 22,937 | $ | 22,546 | $ | 22,546 | $ | 22,757 | $ | 19,982 | ||||||||||
Inflows, including Commitments(1) | 2,144 | 823 | 1,375 | 542 | 4,482 | |||||||||||||||
Outflows, including Distributions(2) | (2,836 | ) | (314 | ) | (788 | ) | (811 | ) | (2,182 | ) | ||||||||||
Foreign exchange(3) | 107 | (143 | ) | (196 | ) | 58 | 475 | |||||||||||||
Balance, End of Period | $ | 22,352 | $ | 22,912 | $ | 22,937 | $ | 22,546 | $ | 22,757 | ||||||||||
(1) | Inflows represent limited partner capital raised and capital invested by funds outside the investment period. | |
(2) | Outflows represent limited partner distributions from funds outside the investment period and changes in basis for our carry funds where the investment period has expired. |
(3) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
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Available | Fair Value of | |||||||||||
Capital | Capital | Total AUM | ||||||||||
Real Assets | (Dollars in millions) | |||||||||||
Balance, As of December 31, 2007 | $ | 11,504 | $ | 10,162 | $ | 21,666 | ||||||
Commitments raised, net(1) | 8,203 | — | 8,203 | |||||||||
Capital Called, net(2) | (6,900 | ) | 6,668 | (232 | ) | |||||||
Distributions, net(3) | 217 | (529 | ) | (312 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | (1,848 | ) | (1,848 | ) | |||||||
Foreign exchange(5) | (110 | ) | (89 | ) | (199 | ) | ||||||
Balance, As of December 31, 2008 | $ | 12,914 | $ | 14,364 | $ | 27,278 | ||||||
Commitments raised, net(1) | 880 | — | 880 | |||||||||
Capital Called, net(2) | (2,992 | ) | 2,791 | (201 | ) | |||||||
Distributions, net(3) | 439 | (1,089 | ) | (650 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 276 | 276 | |||||||||
Foreign exchange(5) | 33 | 100 | 133 | |||||||||
Balance, As of December 31, 2009 | $ | 11,274 | $ | 16,442 | $ | 27,716 | ||||||
Commitments raised, net(1) | 1,400 | — | 1,400 | |||||||||
Capital Called, net(2) | (4,955 | ) | 4,745 | (210 | ) | |||||||
Distributions, net(3) | 811 | (2,136 | ) | (1,325 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 3,235 | 3,235 | |||||||||
Foreign exchange(5) | (168 | ) | (32 | ) | (200 | ) | ||||||
Balance, As of December 31, 2010 | $ | 8,362 | $ | 22,254 | $ | 30,616 | ||||||
Commitments raised, net(1) | 1,888 | — | 1,888 | |||||||||
Capital Called, net(2) | (2,474 | ) | 2,323 | (151 | ) | |||||||
Distributions, net(3) | 1,344 | (4,449 | ) | (3,105 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 1,091 | 1,091 | |||||||||
Foreign exchange(5) | 14 | 20 | 34 | |||||||||
Balance, As of September 30, 2011 | $ | 9,134 | $ | 21,239 | $ | 30,373 | ||||||
(1) | Represents capital raised by our carry funds, net of expired available capital. | |
(2) | Represents capital called by our carry funds, net of fund fees and expenses. | |
(3) | Represents distributions from our carry funds, net of amounts recycled. | |
(4) | Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments. |
(5) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
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As of September 30, 2011 | ||||||||||||||||||||||||||||||||
Total Investments | Realized/Partially Realized Investments(5) | |||||||||||||||||||||||||||||||
Fund | Cumulative | Total | Cumulative | Total | ||||||||||||||||||||||||||||
Inception | Committed | Invested | Fair | Invested | Fair | |||||||||||||||||||||||||||
Date(1) | Capital | Capital(2) | Value(3) | MOIC(4) | Capital(2) | Value(3) | MOIC(4) | |||||||||||||||||||||||||
(Reported in Local Currency, in Millions) | ||||||||||||||||||||||||||||||||
Real Assets Fully Invested Funds(6) | ||||||||||||||||||||||||||||||||
CRP III | 11/2000 | $ | 564.1 | $ | 522.5 | $ | 1,244.4 | 2.4 | x | $ | 451.3 | $ | 1,168.9 | 2.6 | x | |||||||||||||||||
CRP IV | 12/2004 | $ | 950.0 | $ | 1,186.1 | $ | 1,034.7 | 0.9 | x | $ | 360.6 | $ | 506.4 | 1.4 | x | |||||||||||||||||
CRP V | 11/2006 | $ | 3,000.0 | $ | 3,002.3 | $ | 3,469.6 | 1.2 | x | $ | 1,353.9 | $ | 1,671.1 | 1.2 | x | |||||||||||||||||
CEREP I | 3/2002 | € | 426.6 | € | 517.0 | € | 789.9 | 1.5 | x | € | 441.2 | € | 790.9 | 1.8 | x | |||||||||||||||||
CEREP II | 4/2005 | € | 762.7 | € | 826.9 | € | 579.9 | 0.7 | x | € | 296.5 | € | 244.5 | 0.8 | x | |||||||||||||||||
Energy II | 7/2002 | $ | 1,100.0 | $ | 1,311.9 | $ | 3,177.0 | 2.4 | x | $ | 681.7 | $ | 2,584.5 | 3.8 | x | |||||||||||||||||
Energy III | 10/2005 | $ | 3,800.0 | $ | 3,449.6 | $ | 5,800.7 | 1.7 | x | $ | 1,275.3 | $ | 2,962.9 | 2.3 | x | |||||||||||||||||
All Other Funds(7) | Various | $ | 1,720.9 | $ | 1,783.4 | 1.0 | x | $ | 875.2 | $ | 1,419.9 | 1.6 | x | |||||||||||||||||||
Co-investments and Other(8) | Various | $ | 3,792.6 | $ | 6,426.6 | 1.7 | x | $ | 1,367.9 | $ | 3,527.7 | 2.6 | x | |||||||||||||||||||
Total Fully Invested Funds | $ | 16,813.3 | $ | 24,798.9 | 1.5 | x | $ | 7,368.8 | $ | 15,249.2 | 2.1 | x | ||||||||||||||||||||
Funds in the Investment Period(6) | ||||||||||||||||||||||||||||||||
CRP VI | 9/2010 | $ | 2,205.0 | $ | 126.0 | $ | 113.7 | 0.9 | x | |||||||||||||||||||||||
CIP | 9/2006 | $ | 1,143.7 | $ | 550.2 | $ | 551.4 | 1.0 | x | |||||||||||||||||||||||
CEREP III | 5/2007 | € | 2,229.5 | € | 1,218.1 | € | 1,346.4 | 1.1 | x | |||||||||||||||||||||||
Energy IV | 12/2007 | $ | 5,979.1 | $ | 4,251.7 | $ | 6,488.4 | 1.5 | x | |||||||||||||||||||||||
Renew II | 3/2008 | $ | 3,417.5 | $ | 1,877.5 | $ | 2,438.8 | 1.3 | x | |||||||||||||||||||||||
All Other Funds(9) | Various | $ | 290.4 | $ | 263.4 | 0.9 | x | |||||||||||||||||||||||||
Total Funds in the Investment Period | $ | 8,752.1 | $ | 11,686.4 | 1.3 | x | ||||||||||||||||||||||||||
TOTAL REAL ASSETS(10) | $ | 25,565.4 | $ | 36,485.3 | 1.4 | x | $ | 8,030.9 | $ | 16,169.4 | 2.0x | |||||||||||||||||||||
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. |
(1) | The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Real Assets segment, our first fund was formed in 1997. |
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(2) | Represents the original cost of all capital called for investments since inception of the fund. |
(3) | Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. Please see Note 4 to the combined and consolidated financial statements for the year ended December 31, 2010 and the nine months ended September 30, 2011 appearing elsewhere in this prospectus for further information regarding management’s determination of fair value. |
(4) | Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. |
(5) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Real Assets. |
(6) | Fully Invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested. | |
(7) | Includes the following funds: CRP I, CRP II, CAREP I, ENERGY I and RENEW I. | |
(8) | Includes Co-Investments, prefund investments and certain other stand-alone investments arranged by us. | |
(9) | Includes the following fund: CAREP II. | |
(10) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the spot rate as of the end of the reporting period. |
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Committed | ||||||||||||||||||||
Capital | Inception to September 30, 2011 | |||||||||||||||||||
Fund | As of | Realized/ | ||||||||||||||||||
Inception | September 30, | Gross | Net | Partially Realized | ||||||||||||||||
Date(1) | 2011 | IRR(2) | IRR(3) | Gross IRR(4) | ||||||||||||||||
(Reported in Local Currency, in Millions) | ||||||||||||||||||||
Real Assets | ||||||||||||||||||||
Fully Invested Funds(5) | ||||||||||||||||||||
CRP III | 11/2000 | $ | 564.1 | 44 | % | 30 | % | 50 | % | |||||||||||
CRP IV | 12/2004 | $ | 950.0 | (5 | )% | (10 | )% | 23 | % | |||||||||||
CRP V | 11/2006 | $ | 3,000.0 | 6 | % | 2 | % | 10 | % | |||||||||||
CEREP I | 3/2002 | € | 426.6 | 15 | % | 9 | % | 20 | % | |||||||||||
CEREP II | 4/2005 | € | 762.7 | (16 | )% | (17 | )% | (16 | )% | |||||||||||
Energy II | 7/2002 | $ | 1,100.0 | 82 | % | 54 | % | 111 | % | |||||||||||
Energy III | 10/2005 | $ | 3,800.0 | 15 | % | 11 | % | 26 | % | |||||||||||
All Other Funds(6) | Various | 2 | % | (5 | )% | 18 | % | |||||||||||||
Co-investments and Other(7) | Various | 23 | % | 19 | % | 31 | % | |||||||||||||
Total Fully Invested Funds | 17 | % | 10 | % | 31 | % | ||||||||||||||
Funds in the Investment Period(5) | ||||||||||||||||||||
CRP VI(8) | 9/2010 | $ | 2,205.0 | n/m | n/m | |||||||||||||||
CIP | 9/2006 | $ | 1,143.7 | 1 | % | (7 | )% | |||||||||||||
CEREP III | 5/2007 | € | 2,229.5 | 5 | % | (2 | )% | |||||||||||||
Energy IV | 12/2007 | $ | 5,979.1 | 29 | % | 19 | % | |||||||||||||
Renew II | 3/2008 | $ | 3,417.5 | 16 | % | 8 | % | |||||||||||||
All Other Funds(9) | Various | (5 | )% | (10 | )% | |||||||||||||||
Total Funds in the Investment Period | 18 | % | 9 | % | ||||||||||||||||
TOTAL REAL ASSETS(10) | 17 | % | 10 | % | 30 | % | ||||||||||||||
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. |
(1) | The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Real Assets segment, our first fund was formed in 1997. | |
(2) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest. | |
(3) | Net IRR represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. |
(4) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Real Assets. |
(5) | Fully invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested. |
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(6) | Includes the following funds: CRP I, CRP II, CAREP I, ENERGY I and RENEW I. | |
(7) | Includes co-investments, prefund investments and certain other stand-alone investments arranged by us. | |
(8) | Gross IRR and Net IRR for CRP VI are not meaningful as the investment period commenced in September 2010. | |
(9) | Includes the following fund: CAREP II. | |
(10) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the spot rate as of the end of the reporting period. |
Nine Months Ended | ||||||||||||||||||||
September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Revenues | ||||||||||||||||||||
Fund level fee revenues | ||||||||||||||||||||
Fund management fees | $ | 128.6 | $ | 61.7 | $ | 81.9 | $ | 68.8 | $ | 87.6 | ||||||||||
Portfolio advisory fees, net | 2.2 | 1.6 | 2.3 | 0.7 | 0.9 | |||||||||||||||
Transaction fees, net | — | 0.1 | 0.1 | 0.9 | — | |||||||||||||||
Total fund level fee revenues | 130.8 | 63.4 | 84.3 | 70.4 | 88.5 | |||||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 95.7 | 1.9 | 9.8 | 1.6 | 15.7 | |||||||||||||||
Unrealized | 8.1 | 58.8 | 135.1 | 1.5 | (13.5 | ) | ||||||||||||||
Total performance fees | 103.8 | 60.7 | 144.9 | 3.1 | 2.2 | |||||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 11.0 | 3.4 | 4.8 | 0.2 | (6.7 | ) | ||||||||||||||
Unrealized | 17.5 | 11.2 | 16.9 | (0.2 | ) | (55.7 | ) | |||||||||||||
Total investment income (loss) | 28.5 | 14.6 | 21.7 | — | (62.4 | ) | ||||||||||||||
Interest and other income | 4.4 | 2.2 | 2.7 | 2.2 | 2.2 | |||||||||||||||
Total revenues | 267.5 | 140.9 | 253.6 | 75.7 | 30.5 | |||||||||||||||
Segment Expenses | ||||||||||||||||||||
Direct compensation and benefits | ||||||||||||||||||||
Direct base compensation | 47.8 | 31.7 | 40.1 | 38.8 | 30.6 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 46.6 | 0.5 | 4.2 | 0.2 | 7.3 | |||||||||||||||
Unrealized | (10.7 | ) | 30.4 | 70.6 | 1.0 | (6.6 | ) | |||||||||||||
Total direct compensation and benefits | 83.7 | 62.6 | 114.9 | 40.0 | 31.3 | |||||||||||||||
General, administrative and other indirect expenses | 37.0 | 20.1 | 32.1 | 32.6 | 38.5 | |||||||||||||||
Interest expense | 7.5 | 2.1 | 2.6 | 4.1 | 3.3 | |||||||||||||||
Total expenses | 128.2 | 84.8 | 149.6 | 76.7 | 73.1 | |||||||||||||||
Economic Net Income (Loss) | $ | 139.3 | $ | 56.1 | $ | 104.0 | $ | (1.0 | ) | $ | (42.6 | ) | ||||||||
Fee Related Earnings | $ | 42.9 | $ | 11.7 | $ | 12.2 | $ | (2.9 | ) | $ | 18.3 | |||||||||
Net Performance Fees | $ | 67.9 | $ | 29.8 | $ | 70.1 | $ | 1.9 | $ | 1.5 | ||||||||||
Investment Income (Loss) | $ | 28.5 | $ | 14.6 | $ | 21.7 | $ | — | $ | (62.4 | ) | |||||||||
Distributable Earnings | $ | 103.0 | $ | 16.5 | $ | 22.6 | $ | (1.3 | ) | $ | 20.0 | |||||||||
155
156
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Carry funds | $ | 8.0 | $ | 58.2 | ||||
Hedge funds | 79.4 | — | ||||||
Structured credit funds | 16.4 | 2.5 | ||||||
Performance fees | $ | 103.8 | $ | 60.7 | ||||
157
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Carry funds | $ | 110.8 | $ | 2.2 | ||||
Structured credit funds | 34.1 | 0.9 | ||||||
Performance fees | $ | 144.9 | $ | 3.1 | ||||
158
Year Ended December 31, | ||||||||
2009 | 2008 | |||||||
(Dollars in millions) | ||||||||
Carry funds | $ | 2.2 | $ | (6.4 | ) | |||
Structured credit funds | 0.9 | 8.6 | ||||||
Performance fees | $ | 3.1 | $ | 2.2 | ||||
As of September 30, | As of December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
Global Market Strategies | (Dollars in millions) | |||||||||||||||||||
Components of Fee-earning AUM(1) | ||||||||||||||||||||
Fee-earning AUM based on capital commitments | $ | 804 | $ | 1,826 | $ | 1,974 | $ | 1,826 | $ | 1,826 | ||||||||||
Fee-earning AUM based on invested capital | 1,434 | 353 | 315 | 409 | 433 | |||||||||||||||
Fee-earning AUM based on collateral balances, at par | 11,491 | 10,560 | 11,377 | 9,379 | 9,693 | |||||||||||||||
Fee-earning AUM based on net asset value | 7,184 | 209 | 4,782 | 298 | 117 | |||||||||||||||
Fee-earning AUM based on other(2) | 511 | 511 | 511 | 570 | 1,303 | |||||||||||||||
Total Fee-earning AUM | $ | 21,424 | $ | 13,459 | $ | 18,959 | $ | 12,482 | $ | 13,372 | ||||||||||
Weighted Average Management Fee Rates(3) | ||||||||||||||||||||
All Funds, excluding CLOs | 1.75% | 1.64% | 1.88% | 1.60% | 1.60% |
(1) | For additional information concerning the components of fee-earning AUM, please see “— Fee-earning Assets under Management.” |
(2) | Includes funds with fees based on notional value. |
(3) | Represents the aggregate effective management fee rate for carry funds and hedge funds, weighted by each fund’s fee-earning AUM, as of the end of each period presented. Management fees for CLOs are based on the total par amount of the assets (collateral) in the fund and are not calculated as a percentage of equity and are therefore not included. |
159
Nine Months | ||||||||||||||||||||
Ended | ||||||||||||||||||||
September 30, | Twelve Months Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Global Market Strategies | ||||||||||||||||||||
Fee-earning AUM Rollforward | ||||||||||||||||||||
Balance, Beginning of Period | $ | 18,959 | $ | 12,482 | $ | 12,482 | $ | 13,372 | $ | 8,285 | ||||||||||
Acquisitions | 2,102 | 3,927 | 9,604 | — | — | |||||||||||||||
Inflows, including Commitments(1) | 297 | 2 | 151 | 39 | 1,133 | |||||||||||||||
Outflows, including Distributions(2) | (421 | ) | (106 | ) | (146 | ) | (44 | ) | (85 | ) | ||||||||||
Subscriptions, net of Redemptions(3) | 405 | (64 | ) | (88 | ) | 32 | (179 | ) | ||||||||||||
Changes in CLO collateral balances | (492 | ) | (2,361 | ) | (2,534 | ) | (1,140 | ) | 4,839 | |||||||||||
Market Appreciation/(Depreciation)(4) | 466 | 23 | 38 | 129 | (314 | ) | ||||||||||||||
Foreign exchange and other(5) | 108 | (444 | ) | (548 | ) | 94 | (307 | ) | ||||||||||||
Balance, End of Period | $ | 21,424 | $ | 13,459 | $ | 18,959 | $ | 12,482 | $ | 13,372 | ||||||||||
(1) | Inflows represent limited partner capital raised by our carry funds and capital invested by our carry funds outside the investment period. |
(2) | Outflows represent limited partner distributions from our carry funds and changes in basis for our carry funds where the investment period has expired. |
(3) | Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds. |
(4) | Market Appreciation/(Depreciation) represents changes in the net asset value of our hedge funds and open-end structured credit funds. |
(5) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
160
Available | Fair Value of | |||||||||||
Capital | Capital | Total AUM | ||||||||||
(Dollars in millions) | ||||||||||||
Global Market Strategies | ||||||||||||
Balance, As of December 31, 2007 | $ | 679 | $ | 9,719 | $ | 10,398 | ||||||
Commitments(1) | 1,092 | — | 1,092 | |||||||||
Capital Called, net(2) | (825 | ) | 682 | (143 | ) | |||||||
Distributions(3) | 116 | (237 | ) | (121 | ) | |||||||
Subscriptions, net of Redemptions(4) | — | (271 | ) | (271 | ) | |||||||
Changes in CLO collateral balances | — | 3,717 | 3,717 | |||||||||
Market Appreciation/(Depreciation)(5) | — | (484 | ) | (484 | ) | |||||||
Foreign exchange(6) | — | (313 | ) | (313 | ) | |||||||
Balance, As of December 31, 2008 | $ | 1,062 | $ | 12,813 | $ | 13,875 | ||||||
Capital Called, net(2) | (517 | ) | 409 | (108 | ) | |||||||
Distributions(3) | 155 | (250 | ) | (95 | ) | |||||||
Subscriptions, net of Redemptions(4) | — | 32 | 32 | |||||||||
Changes in CLO collateral balances | — | (1,171 | ) | (1,171 | ) | |||||||
Market Appreciation/(Depreciation)(5) | — | 642 | 642 | |||||||||
Foreign exchange(6) | — | 98 | 98 | |||||||||
Balance, As of December 31, 2009 | $ | 700 | $ | 12,573 | $ | 13,273 | ||||||
Acquisitions | — | 10,463 | 10,463 | |||||||||
Commitments(1) | 286 | — | 286 | |||||||||
Capital Called, net(2) | (701 | ) | 737 | 36 | ||||||||
Distributions(3) | 640 | (905 | ) | (265 | ) | |||||||
Subscriptions, net of Redemptions(4) | — | (140 | ) | (140 | ) | |||||||
Changes in CLO collateral balances | — | (3,119 | ) | (3,119 | ) | |||||||
Market Appreciation/(Depreciation)(5) | — | 551 | 551 | |||||||||
Foreign exchange(6) | — | (499 | ) | (499 | ) | |||||||
Balance, As of December 31, 2010 | $ | 925 | $ | 19,661 | $ | 20,586 | ||||||
Acquisitions | — | 2,157 | 2,157 | |||||||||
Commitments(1) | 365 | — | 365 | |||||||||
Capital Called, net(2) | (562 | ) | 536 | (26 | ) | |||||||
Distributions(3) | 668 | (960 | ) | (292 | ) | |||||||
Subscriptions, net of Redemptions(4) | — | 512 | 512 | |||||||||
Changes in CLO collateral balances | — | (951 | ) | (951 | ) | |||||||
Market Appreciation/(Depreciation)(5) | — | 592 | 592 | |||||||||
Foreign exchange(6) | — | 106 | 106 | |||||||||
Balance, As of September 30, 2011 | $ | 1,396 | $ | 21,653 | $ | 23,049 | ||||||
(1) | Represents capital raised by our carry funds, net of expired available capital. |
(2) | Represents capital called by our carry funds, net of fund fees and expenses. |
161
(3) | Represents distributions from our carry funds, net of amounts recycled. |
(4) | Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds. |
(5) | Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments and changes in the net asset value of our hedge funds. |
(6) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
162
As of September 30, 2011 | ||||||||||||||||||||
Cumulative | Inception to September 30, | |||||||||||||||||||
Invested | Total Fair | 2011(1) | ||||||||||||||||||
Capital(2) | Value(3) | MOIC(4) | Gross IRR(5) | Net IRR(6) | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
CSP II | $ | 1,352.3 | $ | 1,867.7 | 1.4 | x | 14 | % | 9 | % | ||||||||||
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. |
(1) | The data presented herein that provides “inception to September 30, 2011” performance results for CSP II relates to the period following the formation of the fund in June 2007. |
(2) | Represents the original cost of investments net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC. |
(3) | Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. Please see Note 4 to the combined and consolidated financial statements for the year ended December 31, 2010 and the nine months ended September 30, 2011 appearing elsewhere in this prospectus for further information regarding management’s determination of fair value. |
(4) | Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. | |
(5) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest. | |
(6) | Net IRR represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. |
1 Year(2) | 3-Year(2) | 5-Year(2) | Inception(3) | |||||||||||||
Net Annualized Return(1) | ||||||||||||||||
Claren Road Master Fund | 5% | 12% | 12% | 12% | ||||||||||||
Claren Road Opportunities Fund | 9% | n/a | n/a | 20% | ||||||||||||
Barclays Aggregate Bond Index | 7% | 6% | 6% | 6% | ||||||||||||
Volatility(4) | ||||||||||||||||
Claren Road Master Fund Standard Deviation (Annualized) | 5% | 5% | 4% | 4% | ||||||||||||
Claren Road Opportunities Fund Standard Deviation (Annualized) | 9% | n/a | n/a | 7% | ||||||||||||
Barclays Aggregate Bond Index Standard Deviation (Annualized) | 3% | 4% | 4% | 4% | ||||||||||||
Sharpe Ratio (1M LIBOR)(5) | ||||||||||||||||
Claren Road Master Fund | 0.90 | 2.43 | 2.33 | 2.50 | ||||||||||||
Claren Road Opportunities Fund | 0.94 | n/a | n/a | 2.37 | ||||||||||||
Barclays Aggregate Bond Index | 2.15 | 1.15 | 0.85 | 1.09 |
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P. | ||
(1) | Net annualized return is presented for fee-paying investors only on a total return basis, net of all fees and expenses. | |
(2) | As of December 31, 2010. |
(3) | The Claren Road Master Fund was established in January 2006. The Claren Road Opportunities Fund was established in April 2008. Performance is from inception through September 30, 2011. |
(4) | Volatility is the annualized standard deviation of monthly net investment returns. | |
(5) | The Sharpe Ratio compares the historical excess return on an investment over the risk free rate of return with its historical annualized volatility. |
163
Period from | ||||
July 1, 2011 | ||||
through | ||||
September 30, | ||||
2011 | ||||
Segment Revenues | ||||
Fund level fee revenues | ||||
Fund management fees | $ | 18.7 | ||
Portfolio advisory fees, net | — | |||
Transaction fees, net | — | |||
Total fund level fee revenues | 18.7 | |||
Performance fees | ||||
Realized | 19.2 | |||
Unrealized | (22.5 | ) | ||
Total performance fees | (3.3 | ) | ||
Investment income | ||||
Realized | — | |||
Unrealized | — | |||
Total investment income | — | |||
Interest and other income | 0.2 | |||
Total revenues | 15.6 | |||
Segment Expenses | ||||
Direct compensation and benefits | ||||
Direct base compensation | 8.1 | |||
Performance fee related | ||||
Realized | 15.3 | |||
Unrealized | (18.0 | ) | ||
Total direct compensation and benefits | 5.4 | |||
General, administrative and other indirect expenses | 3.0 | |||
Interest expense | — | |||
Total expenses | 8.4 | |||
Economic Net Income | $ | 7.2 | ||
Fee Related Earnings | $ | 7.8 | ||
Net Performance Fees | $ | (0.6 | ) | |
Investment Income | $ | — | ||
Distributable Earnings | $ | 11.7 | ||
164
As of | ||||
September 30, | ||||
Fund of Funds Solutions | 2011 | |||
Components of Fee-earning AUM(1) | (Dollars in millions) | |||
Fee-earning AUM based on capital commitments | $ | 10,512 | ||
Fee-earning AUM based on lower of cost or fair value | 19,665 | |||
Total Fee-earning AUM | $ | 30,177 | ||
(1) | For additional information concerning the components of fee-earning AUM, please see “— Fee-earning Assets under Management.” |
165
Three Months Ended | ||||
September 30, | ||||
Fund of Funds Solutions | 2011 | |||
Fee-earning AUM Rollforward | (Dollars in millions) | |||
Balance, Beginning of Period | $ | — | ||
Acquisitions | 30,956 | |||
Inflows, including Commitments(1) | 1,522 | |||
Outflows, including Distributions(2) | (569 | ) | ||
Market Appreciation/(Depreciation)(3) | 216 | |||
Foreign exchange and other(4) | (1,948 | ) | ||
Balance, End of Period | $ | 30,177 | ||
(1) | Inflows represent capital raised and capital invested by funds outside the investment period. |
(2) | Outflows represent distributions from funds outside the investment period and changes in basis for our fund of funds vehicles where the investment period has expired. |
(3) | Market Appreciation/(Depreciation) represents changes in the fair market value of our fund of funds vehicles. |
(4) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. |
Available | Fair Value of | |||||||||||
Capital | Capital | Total AUM | ||||||||||
Fund of Funds Solutions | (Dollars in millions) | |||||||||||
Total AUM Rollforward | ||||||||||||
Balance, As of June 30, 2011 | $ | — | $ | — | $ | — | ||||||
Acquisitions | 16,926 | 27,926 | 44,852 | |||||||||
Commitments raised, net(1) | 996 | — | 996 | |||||||||
Capital Called, net(2) | (1,208 | ) | 1,082 | (126 | ) | |||||||
Distributions, net(3) | 41 | (1,395 | ) | (1,354 | ) | |||||||
Market Appreciation/(Depreciation)(4) | — | 480 | 480 | |||||||||
Foreign exchange(5) | (386 | ) | (268 | ) | (654 | ) | ||||||
Balance, As of September 30, 2011 | $ | 16,369 | $ | 27,825 | $ | 44,194 | ||||||
(1) | Represents new active mandates, net of expired commitments. |
(2) | Represents capital called by our fund investments, secondary investments and co-investments. |
(3) | Represents distributions from our fund investments, secondary investments and co-investments, net of amounts recycled. |
166
(4) | Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on fund investments, secondary investments andco-investments. Fair market values for AlpInvest primary fund investments and secondary investments are based on the latest available valuations of the underlying limited partnership interests (in most cases as of June 30, 2011), as provided by their general partners, plus the net cash flow since the latest valuation, up to and including September 30, 2011. |
(5) | Represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated fund investments, secondary investments and co-investments at the spot rate as of the period end. |
Total Investments | ||||||||||||||||||
As of September 30, 2011 | ||||||||||||||||||
Cumulative | ||||||||||||||||||
Vintage | Fund | Invested | Total | |||||||||||||||
AlpInvest(1) | Year | Size | Capital(2) | Value(2),(3) | MOIC(2),(4) | |||||||||||||
(Reported in Local Currency, in Millions) | ||||||||||||||||||
Fully Committed Funds(5) | ||||||||||||||||||
Main Fund I — Fund Investments | 2000 | € | 5,174.6 | € | 3,827.6 | € | 6,162.5 | 1.6 | x | |||||||||
Main Fund II — Fund Investments | 2003 | € | 4,545.0 | € | 4,220.5 | € | 5,882.4 | 1.4 | x | |||||||||
Main Fund III — Fund Investments | 2006 | € | 11,500.0 | € | 8,047.2 | € | 8,801.5 | 1.1 | x | |||||||||
Main Fund I — Secondary Investments | 2001 | € | 519.4 | € | 450.6 | € | 845.5 | 1.9 | x | |||||||||
Main Fund II — Secondary Investments | 2003 | € | 998.4 | € | 903.6 | € | 1,603.2 | 1.8 | x | |||||||||
Main Fund III — Secondary Investments | 2006 | € | 2,250.0 | € | 1,938.9 | € | 2,453.6 | 1.3 | x | |||||||||
Main Fund II — Co-Investments | 2003 | € | 1,090.0 | € | 855.8 | € | 2,198.5 | 2.6 | x | |||||||||
Main Fund III — Co-Investments | 2006 | € | 2,760.0 | € | 2,392.2 | € | 1,718.6 | 0.7 | x | |||||||||
Main Fund II — Mezzanine Investments | 2005 | € | 700.0 | € | 675.6 | € | 828.8 | 1.2 | x | |||||||||
All Other Funds(6) | Various | € | 1,146.8 | € | 1,747.5 | 1.5 | x | |||||||||||
Total Fully Committed Funds | € | 24,459.0 | € | 32,242.0 | 1.3 | x | ||||||||||||
Funds in the Commitment Period | ||||||||||||||||||
Main Fund IV — Fund Investments | 2009 | € | 4,880.0 | € | 470.4 | € | 458.9 | 1.0 | x | |||||||||
Main Fund IV — Secondary Investments | 2010 | € | 1,855.0 | € | 1,261.8 | € | 1,549.8 | 1.2 | x | |||||||||
Main Fund IV — Co-Investments | 2010 | € | 1,575.0 | € | 643.3 | € | 608.8 | 0.9 | x | |||||||||
Main Fund III — Mezzanine Investments | 2007 | € | 2,000.0 | € | 1,081.3 | € | 1,307.8 | 1.2 | x | |||||||||
Total Funds in the Commitment Period | € | 3,456.9 | € | 3,925.3 | 1.1 | x | ||||||||||||
TOTAL ALPINVEST | € | 27,915.9 | € | 36,167.3 | 1.3 | x | ||||||||||||
TOTAL ALPINVEST(7) | $ | 37,957.2 | $ | 49,176.7 | 1.3 | x | ||||||||||||
167
(1) | Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team. Excluded from the performance information shown are a) investments that were not originated by AlpInvest and b) Direct Investments, which was spun off from AlpInvest in 2005. As of September 30, 2011, these excluded investments represent $1.0 billion of AUM. |
(2) | To exclude the impact of foreign exchange, all foreign currency cash flows have been converted to Euro at the reporting period spot rate. |
(3) | Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. To exclude the impact of foreign exchange, all foreign currency cash flows have been converted to Euro at the reporting period spot rate. |
(4) | Multiple of invested capital (“MOIC”) represents total fair value, before AlpInvest management fees, fund expenses and AlpInvest carried interest, divided by cumulative invested capital. |
(5) | Fully Committed funds are past the expiration date of the commitment period as defined in the respective limited partnership agreement. |
(6) | Includes Main Fund I — Secondary Investments, Main Fund I — Co-Investments, Main Fund I — Mezzanine Investments, Main Fund II — Mezzanine Investments, AlpInvest CleanTech Funds and Funds with private equity fund investments, secondary investments and co-investments made on behalf of other investors than AlpInvest’s two anchor clients. |
(7) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. Dollars at the spot rate as of the end of the reporting period. |
Vintage | Inception to September 30, 2011 | |||||||||||||
AlpInvest(1) | Year | Fund Size | Gross IRR(2) | Net IRR(3) | ||||||||||
Reported in Local Currency, in Millions | ||||||||||||||
Fully Committed Funds(4) | ||||||||||||||
Main Fund I — Fund Investments | 2000 | € | 5,174.6 | 13 | % | 12 | % | |||||||
Main Fund II — Fund Investments | 2003 | € | 4,545.0 | 11 | % | 10 | % | |||||||
Main Fund III — Fund Investments | 2006 | € | 11,500.0 | 4 | % | 3 | % | |||||||
Main Fund I — Secondary Investments | 2001 | € | 519.4 | 55 | % | 51 | % | |||||||
Main Fund II — Secondary Investments | 2003 | € | 998.4 | 29 | % | 27 | % | |||||||
Main Fund III — Secondary Investments | 2006 | € | 2,250.0 | 10 | % | 9 | % | |||||||
Main Fund II — Co-Investments | 2003 | € | 1,090.0 | 45 | % | 43 | % | |||||||
Main Fund III — Co-Investments | 2006 | € | 2,760.0 | (9 | )% | (10 | )% | |||||||
Main Fund II — Mezzanine Investments | 2005 | € | 700.0 | 7 | % | 6 | % | |||||||
All Other Funds(5) | Various | 20 | % | 16 | % | |||||||||
Total Fully Committed Funds | 11 | % | 10 | % | ||||||||||
Funds in the Commitment Period | ||||||||||||||
Main Fund IV — Fund Investments | 2009 | € | 4,880.0 | (4 | )% | (9 | )% | |||||||
Main Fund IV — Secondary Investments | 2010 | € | 1,855.0 | 44 | % | 41 | % | |||||||
Main Fund IV — Co-Investments | 2010 | € | 1,575.0 | (6 | )% | (9 | )% | |||||||
Main Fund III — Mezzanine Investments | € | 2,000.0 | 9 | % | 7 | % | ||||||||
Total Funds in the Commitment Period | 11 | % | 9 | % | ||||||||||
TOTAL ALPINVEST(6) | 11 | % | 10 | % | ||||||||||
(1) | Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team. Excluded from the performance information shown are a) investments that were not originated by AlpInvest and b) Direct Investments, which was spun off from AlpInvest in 2005. As of September 30, 2011, these excluded investments represent $1.0 billion of AUM. |
(2) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated taking into account investments, divestments unrealized value before management fees, expenses and carried interest. |
(3) | Net Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated taking into account investments, divestments and unrealized value after management fees, expenses and carried interest. |
(4) | Fully Committed funds are past the expiration date of the commitment period as defined in the respective limited partnership agreement. |
(5) | Includes Main Fund I — Secondary Investments, Main Fund I — Co-Investments, Main Fund I — Mezzanine Investments, Main Fund II — Mezzanine Investments, AlpInvest CleanTech Funds and Funds with private equity fund investments, secondary investments and co-investments made on behalf of other investors than AlpInvest’s two anchor clients. |
(6) | For purposes of aggregation, all foreign currency cash flows have been converted to Euro at the spot rate as of the end of the reporting period. |
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Nine Months Ended September 30, | Year Ended December 31, | |||||||||||||||||||
2011 | 2010 | 2010 | 2009 | 2008 | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Statements of Cash Flows Data | ||||||||||||||||||||
Net cash provided by operating activities | $ | 1,981.0 | $ | 2,524.9 | $ | 2,877.0 | $ | 418.7 | $ | 54.3 | ||||||||||
Net cash used in investing activities | (121.1 | ) | (66.9 | ) | (185.6 | ) | (27.5 | ) | (15.5 | ) | ||||||||||
Net cash used in financing activities | (1,772.7 | ) | (2,451.3 | ) | (2,533.4 | ) | (587.3 | ) | (469.4 | ) | ||||||||||
Effect of foreign exchange rate change | 8.5 | (1.9 | ) | (29.2 | ) | 3.4 | (3.6 | ) | ||||||||||||
Net change in cash and cash equivalents | $ | 95.7 | $ | 4.8 | $ | 128.8 | $ | (192.7 | ) | $ | (434.2 | ) | ||||||||
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• | provide capital to facilitate the growth of our existing business lines; | |
• | provide capital to facilitate our expansion into new, complementary business lines, including acquisitions; | |
• | pay operating expenses, including compensation and other obligations as they arise; | |
• | fund capital expenditures; | |
• | repay borrowings and related interest costs and expenses; | |
• | pay income taxes; | |
• | make distributions to Carlyle Holdings unit holders; and | |
• | fund the capital investments of Carlyle in our funds. |
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Total Current Equity | ||||||||||||
Current Equity | Unfunded | Invested and | ||||||||||
Asset Class | Invested | Commitment | Unfunded Commitment | |||||||||
(Dollars in millions) | ||||||||||||
Corporate Private Equity | $ | 1,315.2 | $ | 932.7 | $ | 2,247.9 | ||||||
Real Assets | 491.2 | 276.1 | 767.3 | |||||||||
Global Market Strategies | 371.2 | 80.5 | 451.7 | |||||||||
Fund of Funds Solutions | — | — | — | |||||||||
Total | $ | 2,177.6 | $ | 1,289.3 | $ | 3,466.9 | ||||||
Accrued | Accrued | Net Accrued | ||||||||||
Performance | Giveback | Performance | ||||||||||
Asset Class | Fees | Obligation | Fees | |||||||||
(Dollars in millions) | ||||||||||||
Corporate Private Equity | $ | 1,536.2 | $ | 96.8 | $ | 1,439.4 | ||||||
Real Assets | 213.3 | 50.7 | 162.6 | |||||||||
Global Market Strategies | 202.9 | 1.2 | 201.7 | |||||||||
Fund of Funds Solutions | 196.7 | — | 196.7 | |||||||||
Total | $ | 2,149.1 | $ | 148.7 | $ | 2,000.4 | ||||||
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Weighted | ||||||||||||
Average | ||||||||||||
Weighted | Remaining | |||||||||||
Borrowing | Average | Maturity | ||||||||||
Outstanding | Interest Rate | in Years | ||||||||||
(Dollars in millions) | ||||||||||||
Senior secured notes | $ | 10,609.9 | 1.32% | 9.07 | ||||||||
Subordinated notes, income notes and preferred shares | 337.9 | n/a | (1) | 8.82 | ||||||||
Combination notes | 10.8 | n/a | (2) | 10.18 | ||||||||
Total | $ | 10,958.6 | ||||||||||
(1) | The subordinated notes, income notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs. | |
(2) | The combination notes do not have contractual interest rates and have recourse only to U.S. Treasury securities and OATS specifically held to collateralize such combination notes. |
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October 1, | ||||||||||||||||||||
2011 to | ||||||||||||||||||||
December 31, | ||||||||||||||||||||
Contractual Obligations | 2011 | 2012-2013 | 2014-2015 | Thereafter | Total | |||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Loans payable(a) | $ | 13.5 | $ | 160.0 | $ | 275.0 | $ | 250.0 | $ | 698.5 | ||||||||||
Interest payable(b) | 6.3 | 37.7 | 35.1 | 7.6 | 86.7 | |||||||||||||||
Operating lease obligations(c) | 9.4 | 73.2 | 64.9 | 138.3 | 285.8 | |||||||||||||||
Capital commitments to Carlyle funds(d) | 1,289.3 | — | — | — | 1,289.3 | |||||||||||||||
Loans payable of Consolidated Funds(e) | 1.9 | �� | 5.9 | 89.4 | 10,863.3 | 10,960.5 | ||||||||||||||
Interest on loans payable of Consolidated Funds(f) | 35.4 | 281.5 | 279.3 | 731.4 | 1,327.6 | |||||||||||||||
Unfunded commitments of the CLOs and Consolidated Funds(g) | 1,679.1 | — | — | — | 1,679.1 | |||||||||||||||
Redemptions payable of Consolidated Funds(h) | 27.0 | 3.8 | — | — | 30.8 | |||||||||||||||
Consolidated contractual obligations | 3,061.9 | 562.1 | 743.7 | 11,990.6 | 16,358.3 | |||||||||||||||
Loans payable of Consolidated Funds(e) | (1.9 | ) | (5.9 | ) | (89.4 | ) | (10,863.3 | ) | (10,960.5 | ) | ||||||||||
Interest on loans payable of Consolidated Funds(f) | (35.4 | ) | (281.5 | ) | (279.3 | ) | (731.4 | ) | (1,327.6 | ) | ||||||||||
Unfunded commitments of the CLOs and Consolidated Funds(g) | (1,679.1 | ) | — | — | — | (1,679.1 | ) | |||||||||||||
Redemptions payable of Consolidated Funds(h) | (27.0 | ) | (3.8 | ) | — | — | (30.8 | ) | ||||||||||||
Carlyle Operating Entities’ contractual obligations(i) | $ | 1,318.5 | $ | 270.9 | $ | 375.0 | $ | 395.9 | $ | 2,360.3 | ||||||||||
(a) | These obligations exclude the subordinated notes payable to Mubadala, which will be converted into additional equity interests in the Parent Entities upon the consummation of this offering as described under “— Our Balance Sheet and Indebtedness — Subordinated Notes Payable to Mubadala” and assume that no prepayments are made on outstanding loans. |
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(b) | These obligations exclude interest on the subordinated notes payable to Mubadala. Borrowings on our revolving credit facility accrue interest at LIBOR plus 1.75% per annum (1.99% as of September 30, 2011). Interest payments on the term loan are based on a rate of 5.069% for the hedged portion of the term loan and variable rates ranging from 1.99% to 4.29% for the unhedged portion of the term loan (based on the one-month LIBOR forward rate curve at September 30, 2011 and a 1.75% spread). Interest payments on fixed-rate loans are based on rates ranging from 6.0% to 8.0%. Interest payments assume that no prepayments are made and loans are held until maturity. |
(c) | We lease office space in various countries around the world and maintain our headquarters in Washington, D.C., where we lease our primary office space under a non-cancelable lease agreement expiring on July 31, 2026. Our office leases in other locations expire in various years from 2011 through 2020. The amounts in this table represent the minimum lease payments required over the term of the lease. |
(d) | These obligations represent commitments by us to fund a portion of the purchase price paid for each investment made by our funds. These amounts are generally due on demand and are therefore presented in the less than one year category. A substantial majority of these investments is expected to be funded by senior Carlyle professionals and other professionals through our internal co-investment program. Of the remaining $1.3 billion of commitments, approximately $1.2 billion is expected to be funded individually by senior Carlyle professionals, senior advisors and other professionals, with the balance funded directly by the firm. |
(e) | These obligations represent amounts due to holders of debt securities issued by the consolidated CLO vehicles. |
(f) | These obligations represent interest to be paid on debt securities issued by the consolidated CLO vehicles. Interest payments assume that no prepayments are made and loans are held until maturity. For debt securities with rights only to the residual value of the CLO and no stated interest, no interest payments were included in this calculation. Interest payments on variable-rate debt securities are based on interest rates in effect as of September 30, 2011, at spreads to market rates pursuant to the debt agreements, and range from 0.5% to 12.7%. |
(g) | These obligations represent commitments of the CLOs and Consolidated Funds to fund certain investments. These amounts are generally due on demand and are therefore presented in the less than one year category. |
(h) | Our consolidated hedge funds are subject to quarterly or monthly redemption by investors in these funds. These obligations represent the amount of redemptions where the amount requested in the redemption notice has become fixed and payable. | |
(i) | The amounts shown in this table exclude certain contingent consideration payments that we may pay in connection with the Business Acquisitions (defined below) if certain performance criteria are met. See Note 3 and Note 15 to our combined and consolidated financial statements included elsewhere in this prospectus for additional information. |
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As of September 30, 2011 | ||||||||||||||||||||
Corporate Private | Global Market | Fund of Funds | ||||||||||||||||||
Equity | Real Assets | Strategies(1) | Solutions | Total | ||||||||||||||||
(Dollars, in millions) | ||||||||||||||||||||
Level I | $ | 10,514 | $ | 3,178 | $ | (1,899 | ) | $ | 803 | $ | 12,596 | |||||||||
Level II | 1,726 | 443 | 850 | — | 3,019 | |||||||||||||||
Level III | 22,918 | 18,460 | 13,684 | 27,022 | 82,084 | |||||||||||||||
Total Fair Value | $ | 35,158 | $ | 22,081 | $ | 12,635 | $ | 27,825 | $ | 97,699 | ||||||||||
Other Net Asset Value | 1,296 | (842 | ) | 9,018 | — | 9,472 | ||||||||||||||
Total AUM, Excluding Available Capital Commitments | 36,454 | 21,239 | 21,653 | 27,825 | 107,171 | |||||||||||||||
Available Capital Commitments | 14,590 | 9,134 | 1,396 | 16,369 | 41,489 | |||||||||||||||
Total AUM | $ | 51,044 | $ | 30,373 | $ | 23,049 | $ | 44,194 | $ | 148,660 | ||||||||||
(1) | Negative Fair Value amounts relate to shorts and derivative instruments in our hedge funds. Corresponding cash collateral amounts have been included in Other Net Asset Value. |
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10% Increase in Total | 10% Decrease in Total | |||||||
Remaining Fair Value | Remaining Fair Value | |||||||
(Dollars in Millions) | ||||||||
Corporate Private Equity | $ | 478.3 | $ | (631.6 | ) | |||
Real Assets | 81.4 | (64.1 | ) | |||||
Global Market Strategies | 167.7 | (192.3 | ) | |||||
Fund of Funds Solutions | 96.3 | (55.9 | ) | |||||
Total | $ | 823.7 | $ | (943.9 | ) | |||
10% Increase in Level III | 10% Decrease in Level III | |||||||
Remaining Fair Value | Remaining Fair Value | |||||||
(Dollars in Millions) | ||||||||
Corporate Private Equity | $ | 286.4 | $ | (465.6 | ) | |||
Real Assets | 64.0 | (51.6 | ) | |||||
Global Market Strategies | 22.1 | (42.3 | ) | |||||
Fund of Funds Solutions | 95.9 | (55.7 | ) | |||||
Total | $ | 468.4 | $ | (615.2 | ) | |||
Total Assets Under Management, | Percentage Amount | |||||||
Excluding Available Capital | Classified as Level | |||||||
Commitments | III Investments | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 36,454 | 63 | % | ||||
Real Assets | $ | 21,239 | 87 | % | ||||
Global Market Strategies | $ | 21,653 | 63 | % | ||||
Fund of Funds Solutions | $ | 27,825 | 97 | % |
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• | The acquisition by Carlyle Group in December 2010 of 55% of Claren Road, a long/short credit hedge fund manager. |
• | The acquisition by Carlyle Group in July 2011 of a 60% equity interest in AlpInvest, one of the world’s largest investors in private equity which advises a global private equity and mezzanine fund of funds program and related co-investment and secondary activities. | |
• | The acquisition by Carlyle Group in July 2011 of a 55% interest in ESG, an emerging markets equities and macroeconomic strategies investment manager. |
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• | the restructuring of certain beneficial interests in investments in or alongside our funds that were funded by certain existing and former owners of the Parent Entities indirectly through the Parent Entities, such that the Parent Entities will (i) distribute a portion of these interests so that they are held directly by such persons and are no longer consolidated in our financial statements, and (ii) restructure the remainder of these interests so that they are reflected as non-controlling interests in our financial statements; |
• | the redemption in October 2011 using borrowings on the revolving credit facility of our existing senior secured credit facility of $250 million aggregate principal amount of the subordinated notes; |
• | the restructuring of certain carried interest rights allocated to retired senior Carlyle professionals so that such carried interest rights will be reflected as non-controlling interests in our financial statements. Our retired senior Carlyle professionals who have existing carried interests rights through their ownership in the Parent Entities will not participate in the transactions described in Reorganization and Offering Transactions under “Organizational Structure”. The carried interest rights held by these individuals will be restructured such that they will exchange their existing carried interest rights (through their ownership interests in the Parent Entities) for an equivalent amount of carried interest rights in the general partners of our funds. The individuals maintain the same carried interest rights before and after this restructuring, and no consideration in any form is being provided to them.; | |
• | the reallocation of carried interest to senior Carlyle professionals and other individuals who manage our carry funds, such that the allocation to these individuals will be approximately 45% of all carried interest on a blended average basis, with the exception of the Riverstone funds, where Carlyle will retain essentially all of the carry to which we are entitled under our arrangements for those funds; | |
• | an adjustment to reflect compensation attributable to our senior Carlyle professionals as compensation expense rather than as distributions from equity, as well as an adjustment to reclassify the liability for amounts owed to our senior Carlyle professionals from due to Carlyle partners to accrued compensation and benefits; and | |
• | a provision for corporate income taxes on the income of The Carlyle Group L.P.’s wholly-owned subsidiaries that will be taxable for U.S. income tax purposes, which we refer to as the “corporate taxpayers.” |
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• | the effect of one or more cash distributions that our Parent Entities will make to their owners of previously undistributed earnings and accumulated cash totaling $ ; | |
• | the issuance of additional equity interests in the Parent Entities to Mubadala upon the exchange of the subordinated notes, as determined based upon the initial public offering price of the common units in this offering, which will subsequently be contributed to Carlyle Holdings in exchange for Carlyle Holdings partnership units; | |
• | an adjustment to reflect compensation expense related to the issuance and vesting of Carlyle Holdings partnership units as part of the Carlyle Holdings formation; | |
• | an adjustment to reflect compensation expense related to the grant and vesting of the deferred restricted units of The Carlyle Group L.P. and the phantom deferred restricted units, which will be granted to our employees at the time of this offering; | |
• | the issuance of common units in this offering at an assumed initial public offering price of $ per common unit, less estimated underwriting discounts and the payment of offering expenses by Carlyle Holdings; | |
• | the purchase by The Carlyle Group L.P.’s wholly-owned subsidiaries of newly-issued Carlyle Holdings partnership units for cash with the proceeds from this offering; and | |
• | the application by Carlyle Holdings of a portion of the proceeds from this offering to repay outstanding indebtedness, as described in “Use of Proceeds.” |
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As of September 30, 2011
Carlyle | |||||||||||||||||||||||||||||
Holdings | |||||||||||||||||||||||||||||
Pro Forma | Adjustments | The Carlyle | |||||||||||||||||||||||||||
Carlyle Group | Reorganization | Carlyle | As Adjusted | for Non- | Group L.P. | ||||||||||||||||||||||||
Combined | and Other | Holdings | Offering | for the | Controlling | Consolidated | |||||||||||||||||||||||
Historical | Adjustments(1) | Pro Forma | Adjustments(2) | Offering | Interests(3) | Pro Forma | |||||||||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||||||||||
Assets | |||||||||||||||||||||||||||||
Cash and cash equivalents | $ | 712.6 | $ | (a | ) | $ | $ | ||||||||||||||||||||||
Cash and cash equivalents held at Consolidated Funds | 678.3 | ||||||||||||||||||||||||||||
Restricted cash | 32.8 | ||||||||||||||||||||||||||||
Restricted cash and securities of Consolidated Funds | 92.7 | ||||||||||||||||||||||||||||
Investments and accrued performance fees | 2,589.9 | $ | (a | ) | |||||||||||||||||||||||||
Investments of Consolidated Funds | 20,148.0 | ||||||||||||||||||||||||||||
Due from affiliates and other receivables, net | 263.1 | ||||||||||||||||||||||||||||
Due from affiliates and other receivables of Consolidated Funds, net | 181.0 | ||||||||||||||||||||||||||||
Fixed assets, net | 48.0 | ||||||||||||||||||||||||||||
Deposits and other | 68.7 | ||||||||||||||||||||||||||||
Intangible assets, net | 608.3 | ||||||||||||||||||||||||||||
Deferred tax assets | 16.9 | (b | ) | ||||||||||||||||||||||||||
Total assets | $ | 25,440.3 | $ | $ | $ | $ | |||||||||||||||||||||||
Liabilities and equity | |||||||||||||||||||||||||||||
Loans payable | $ | 698.5 | $ | (a | ) | $ | (c | ) | |||||||||||||||||||||
265.5 | (b | ) | |||||||||||||||||||||||||||
Subordinated loan payable to affiliate | 520.0 | (260.0 | )(b) | (d | ) | ||||||||||||||||||||||||
Loans payable of Consolidated Funds | 10,100.8 | (a | ) | ||||||||||||||||||||||||||
Accounts payable, accrued expenses and other liabilities | 203.4 | (5.5 | )(b) | ||||||||||||||||||||||||||
(d | ) | ||||||||||||||||||||||||||||
Accrued compensation and benefits | 544.4 | 1,109.7 | (c | ) | |||||||||||||||||||||||||
Due to Carlyle partners | 1,109.7 | (1,109.7 | )(c) | ||||||||||||||||||||||||||
Due to affiliates | 26.1 | ||||||||||||||||||||||||||||
Deferred revenue | 213.2 | ||||||||||||||||||||||||||||
Deferred tax liabilities | 57.5 | ||||||||||||||||||||||||||||
Other liabilities of Consolidated Funds | 433.8 | ||||||||||||||||||||||||||||
Accrued giveback obligations | 148.7 | ||||||||||||||||||||||||||||
Total liabilities | 14,056.1 | ||||||||||||||||||||||||||||
Commitments and contingencies | |||||||||||||||||||||||||||||
Redeemable non-controlling interests in consolidated entities | 1,796.8 | ||||||||||||||||||||||||||||
Members’ equity | 772.6 | (a | ) | (a | ) | (a) | |||||||||||||||||||||||
(d | ) | (b | ) | ||||||||||||||||||||||||||
(e | ) | (c | ) | ||||||||||||||||||||||||||
(d | ) | ||||||||||||||||||||||||||||
Accumulated other comprehensive loss | (31.7 | ) | |||||||||||||||||||||||||||
Total members’ equity | 740.9 | ||||||||||||||||||||||||||||
Equity appropriated for Consolidated Funds | 648.8 | (a | ) | ||||||||||||||||||||||||||
Non-controlling interests in consolidated entities | 8,197.7 | (a | ) | (a) | |||||||||||||||||||||||||
(e | ) | ||||||||||||||||||||||||||||
Total equity | 9,587.4 | ||||||||||||||||||||||||||||
Total liabilities and equity | $ | 25,440.3 | $ | $ | $ | $ | |||||||||||||||||||||||
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as of September 30, 2011
1. | Reorganization and Other Adjustments |
(a) | Reflects the restructuring of certain beneficial interests in investments in or alongside our funds that were funded by certain existing and formers owners of the Parent Entities indirectly through the Parent Entities. As part of the Reorganization, approximately $ million of these interests at September 30, 2011 will be distributed so that they are held directly by such persons and are no longer consolidated in our financial statements, and approximately $ million of these interests at September 30, 2011 will be restructured so that they will be reported as non-controlling interests in our financial statements. |
Historically, these beneficial interests were funded through capital contributions to the Parent Entities, which were then invested into the respective fund. Accordingly, in the historical financial statements of Carlyle Group, these beneficial interests were included in the captions “investments and accrued performance fees” and “members’ equity” on the Carlyle Group balance sheet, and investment income/losses on such interests were included in “investment income (loss)” and “net income attributable to Carlyle Group” on the Carlyle Group statement of operations. |
For the beneficial interests to be distributed that will be held directly by such persons, a pro forma adjustment has been recorded to decrease investments and members’ equity, as such interests will be distributed from the Parent Entities to the beneficial owners. Included in the distributed beneficial interests were $ million of interests in our CLOs that are included in our Consolidated Funds; in our historical combined and consolidated financial statements, these investments had been eliminated against the related liability or equity recorded by the Consolidated Fund. For these interests in consolidated CLOs, the pro forma adjustment results in increases to loans payable of Consolidated Funds and equity appropriated for Consolidated Funds (as the aforementioned elimination is no longer applicable after the interest is held directly by the beneficial owner) and a decrease to members’ equity to reflect the distribution of the interest. |
For the restructured beneficial interests that will be reflected as non-controlling interests totaling $ million at September 30, 2011, a pro forma adjustment has been recorded to decrease members’ equity and increase non-controlling interests in consolidated entities, as such interests have been distributed from the Parent Entities to a legal entity that is not consolidated by Carlyle Holdings. For these beneficial interests, the underlying investment related to those interests continues to be held by a consolidated subsidiary of Carlyle Holdings. |
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The pro forma adjustments are based on the carrying amounts of these beneficial interests in the historical financial statements. The following table summarizes the pro forma impact for the restructured beneficial interests (amounts in millions): |
Non-controlling | ||||||||||||||||||||||||
Equity appropriated | interests in | |||||||||||||||||||||||
Loans payable of | for Consolidated | consolidated | ||||||||||||||||||||||
Investments | Loans payable | Consolidated Funds | Members’ equity | Funds | entities | |||||||||||||||||||
Distributed beneficial interests in Consolidated Funds | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
Other distributed beneficial interests | ||||||||||||||||||||||||
Restructured beneficial interests | ||||||||||||||||||||||||
Total | $ | $ | $ | $ | $ | $ | ||||||||||||||||||
(b) | Reflects the redemption in October 2011 of $250 million aggregate principal amount of the subordinated loan payable to affiliate for a redemption price of $260.0 million, plus accrued interest of approximately $5.5 million. The redemption was funded through borrowings on the revolving credit facility of Carlyle Group’s existing senior secured credit facility. |
(c) | Reflects the reclassification of amounts owed to senior Carlyle professionals to accrued compensation and benefits. Prior to the Reorganization and this offering, the entities that comprise Carlyle Group have been partnerships or limited liability companies, and our senior Carlyle professionals were part of the ownership group of those entities. In the historical financial statements, the liability to senior Carlyle professionals for amounts owed to them (primarily compensation and performance fee related compensation) was reported separately from compensation amounts owed to other Carlyle employees. Subsequent to the Reorganization, the liability for compensation amounts owed to senior Carlyle professionals and other Carlyle employees will be aggregated on our balance sheet. |
(d) | Reflects the reallocation of carried interest to senior Carlyle professionals and other individuals who manage our carry funds, such that the allocation to these individuals will be approximately 45% of all carried interest on a blended average basis, with the exception of the Riverstone funds, where Carlyle will retain essentially all of the carry to which we are entitled under our arrangements for those funds. As part of the Reorganization, our senior Carlyle professionals and other individuals who manage our carry funds will contribute to Carlyle Holdings a portion of the equity interests they own in the general partners of our existing carry funds in exchange for an equivalent fair value of Carlyle Holdings partnership units. |
Historically, these allocations of carried interest were accounted for as compensatory profit sharing arrangements. This adjustment reduces accrued compensation as of September 30, 2011 and increases members’ equity, to reflect the elimination of the compensation liability through the issuance of Carlyle Holdings partnership units in the exchange. As of September 30, 2011, the compensation liability related to this exchange was $ million. The fair value of the Carlyle Holdings partnership units issued in this transaction will exceed the carrying value of the liability, resulting in a loss on the exchange. The fair value |
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of the Carlyle Holdings partnership units has not been determined at this time. However, the pro forma increase to members’ equity (based on the fair value of Carlyle Holdings partnership units issued, when determined) less the decrease to members’ equity for the loss on the exchange results in the net pro forma increase to members’ equity of $ million. The amounts for this adjustment have been derived from our historical results. |
(e) | Reflects the restructuring of ownership of certain carried interest rights allocated to retired senior Carlyle professionals so that such carried interest rights will be reflected as non-controlling interests. Our retired senior Carlyle professionals who have existing carried interests rights through their ownership in the Parent Entities will not participate in the transactions described in Reorganization and Offering Transactions under “Organizational Structure”. The carried interest rights held by these individuals will be restructured such that they will exchange their existing carried interest rights (through their ownership interests in the Parent Entities) for an equivalent amount of carried interest rights in the general partners of our funds. The individuals maintain the same carried interest rights before and after this restructuring, and no consideration in any form is being provided to them. Historically, these interests were reflected within “members’ equity” on the Carlyle Group balance sheet, as these interests existed through the individuals’ ownership interests in the Parent Entities, and the income attributable to these carried interest rights was included in “net income attributable to Carlyle Group” on the Carlyle Group statement of operations because their interests were part of the controlling interest in Carlyle Group. The amounts for this adjustment have been derived from our historical results. At September 30, 2011, the carrying value of these restructured carried interest rights was approximately $ million. This adjustment has been recorded to reclassify this balance from members’ equity to non-controlling interests in consolidated entities. |
2. | Offering Adjustments |
(a) | Reflects net proceeds of $ million from this offering through the issuance of common units at an assumed initial public offering price of $ per common unit (the midpoint of the range indicated on the front cover of this prospectus), less estimated underwriting discounts of $ million, with a corresponding increase to members’ equity. The net cash proceeds reflect a reduction of $ million for expenses of the offering that Carlyle Holdings will bear or reimburse to The Carlyle Group L.P. See note 3(a). |
(b) | Reflects an adjustment to record deferred tax assets for outside tax basis differences created as a result of Carlyle Holdings I GP Inc.’s investment in Carlyle Holdings I L.P. In connection with the offering, Carlyle Holdings I GP Inc. will use offering proceeds to purchase its interest in Carlyle Holdings I L.P. As a result of the dilution that will occur from the purchase of interests in Carlyle Holdings I L.P. at a valuation in excess of the proportion of the book value of net assets acquired, there will be a tax basis difference associated with the investment. This adjustment is recorded to recognize the deferred tax assets for the excess of Carlyle Holdings I GP Inc.’s tax basis over its book basis related to its investment in Carlyle Holdings I L.P. to the extent that such differences are expected to reverse in the foreseeable future. We have not reduced the deferred tax asset with a |
198
valuation allowance as we believe it is more likely than not that the deferred tax assets will be realized. |
(c) | Reflects the effect of one or more distributions to our existing owners of cash representing undistributed earnings and accumulated cash generated by the Parent Entities prior to the date of the offering in an aggregate amount of $ million. |
(d) | Reflects the issuance of $ of equity interests in the Parent Entities in exchange for the $250 million subordinated loan payable to affiliate (after giving effect to the October 2011 redemption of $250 million aggregate principal amount). The amount of additional equity interests in the Parent Entities which Mubadala will receive upon exchange of the notes will be determined based on the initial public offering price of the common units in this offering. More specifically, Mubadala will receive upon exchange of the notes that amount of additional equity interests in the Parent Entities that will, when such equity interests are contributed to Carlyle Holdings, entitle Mubadala to a number of Carlyle Holdings partnership units that is equal to the quotient of $250 million (plus any accrued and unpaid interest on the notes) divided by the product of .925 multiplied by the initial public offering price per common unit in this offering. |
Based on an assumed initial offering price of $ per common unit (the midpoint of the range indicated on the front cover of this prospectus), the assumed equity interest in the Parent Entities issued in this transaction is $ million (calculated as $ million divided by .925). The equity interests in the Parent Entities issued in this exchange will subsequently be contributed to Carlyle Holdings in exchange for Carlyle Holdings partnership units. The difference between the value of the Carlyle Holdings partnership units issued of $ million and the carrying value of the subordinated loan payable to affiliate of $ million is reflected as a reduction of members’ equity of $ million. |
3. | Adjustments for Non-Controlling Interests |
(a) | Our existing owners will contribute to Carlyle Holdings their interests in the Parent Entities and a portion of the equity interests they own in the general partners of our existing investment funds and other entities that have invested in or alongside our funds in exchange for partnership units in Carlyle Holdings. The exchange is structured as a fair value exchange where the existing owners will exchange their interests in the Parent Entities and general partners for an equivalent fair value of Carlyle Holdings partnership units. Each existing owner will receive a number of Carlyle Holdings partnership units that is based on his/her individual interest in the Parent Entities and general partners, but in each case the individual will receive an equal number of partnership units in each of the three Carlyle Holdings partnerships. |
We will operate and control all of the business and affairs of Carlyle Holdings and will consolidate the financial results of Carlyle Holdings and its subsidiaries. The ownership interests of the existing owners in Carlyle Holdings will be reflected as a non-controlling interest in our financial statements. The following table summarizes the pro forma adjustment for non-controlling interests in consolidated entities as of September 30, 2011 (Dollars in millions): |
Carlyle Group combined historical members’ equity | (1 | ) | $ | |||||
Beneficial interests in Parent Entities purchased by Carlyle Holdings | (2 | ) | ||||||
Restructuring of carried interest rights | (3 | ) | ||||||
Distributions of undistributed earnings and accumulated cash | (4 | ) | ||||||
Acquisition of Carlyle Holdings partnership units by The Carlyle Group L.P. | (5 | ) | ||||||
Dilution of interests held by The Carlyle Group L.P. | (6 | ) | ||||||
Reimbursement of offering expenses to The Carlyle Group L.P. | (7 | ) | ||||||
$ | ||||||||
199
(1) | At the time of the Reorganization, all the outstanding members’ equity of the entities that comprise Carlyle Group will be exchanged for members’ equity in Carlyle Holdings. This ownership interest will be classified as non-controlling interests in consolidated entities of The Carlyle Group L.P. |
(2) | The beneficial interests acquired by Carlyle Holdings that were funded through the Parent Entities reduce Carlyle Group’s members’ equity and accordingly, reduce the balance ofnon-controlling interests in consolidated entities. See note 1(a). |
(3) | The restructuring of ownership of certain carried interest rights reduces Carlyle Group’s members’ equity and accordingly, reduce the balance of non-controlling interests in consolidated entities. See note 1(e). |
(4) | See note 2(c). |
(5) | Reflects our use of $ of assumed net proceeds from the issuance of the common units in this offering to purchase newly issued Carlyle Holdings partnership units at fair value. Assuming the underwriters do not exercise their option to purchase additional common units from us, we will directly and indirectly own % of the outstanding Carlyle Holdings partnership units upon the completion of this offering and the balance of the outstanding Carlyle Holdings partnership units will be owned by the existing owners. | |
We account for this portion of the Reorganization as a change in a parent’s ownership interest while retaining control; accordingly, we account for the cost of the interests purchased as a reduction of non-controlling interests in consolidated entities. The cost of interests purchased is $ million. | ||
(6) | Reflects an adjustment to record non-controlling interests in consolidated entities relating to the Carlyle Holdings partnership units to be held by our existing owners after this offering; such units represent % of all Carlyle Holdings partnership units outstanding after this offering. Because we will purchase the interests in Carlyle Holdings at a valuation in excess of the proportion of the book value of net assets acquired, we will incur an immediate dilution in carrying value of approximately $ million. This dilution is reflected within members’ equity as a reallocation from members’ equity to non-controlling interests in consolidated entities. See “Organizational Structure — Offering Transactions” and “Use of Proceeds.” | |
In connection with the Reorganization, we will enter into an exchange agreement with the limited partners of the Carlyle Holdings partnerships. Under the exchange agreement, subject to the applicable vesting and minimum retained ownership requirements and transfer restrictions, each holder of Carlyle Holdings partnership units (and certain transferees thereof), other than the subsidiaries of The Carlyle Group L.P., may up to four times a year, from and after the first anniversary of the date of the closing of this offering (subject to the terms of the exchange agreement), exchange these partnership units for The Carlyle Group L.P. common units on aone-for-one basis, subject to customary conversion rate adjustments for splits, unit distributions and reclassifications. Under the exchange agreement, to effect an exchange a holder of partnership units in Carlyle Holdings must simultaneously exchange one partnership unit in each of the Carlyle Holdings partnerships. No such exchanges have been assumed in the calculation of the pro forma adjustment for non-controlling interests. |
(7) | See note 2(a). |
200
For the Nine Months Ended September 30, 2011
Carlyle | ||||||||||||||||||||||||||||||||||||
Carlyle | Holdings | |||||||||||||||||||||||||||||||||||
Carlyle | Group | Pro Forma | Adjustments | The Carlyle | ||||||||||||||||||||||||||||||||
Group | Including | Reorganization | Carlyle | As Adjusted | for Non- | Group L.P. | ||||||||||||||||||||||||||||||
Combined | Business | the Business | and Other | Holdings | Offering | for the | Controlling | Consolidated | ||||||||||||||||||||||||||||
Historical | Acquisitions(1) | Acquisitions | Adjustments(2) | Pro Forma | Adjustments(3) | Offering | Interests(4) | Pro Forma | ||||||||||||||||||||||||||||
(Dollars in millions, except per unit data) | ||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Fund management fees | $ | 683.2 | $ | 46.7 | $ | 729.9 | $ | $ | $ | |||||||||||||||||||||||||||
Performance fees | ||||||||||||||||||||||||||||||||||||
Realized | 870.1 | 18.2 | 888.3 | |||||||||||||||||||||||||||||||||
Unrealized | (133.6 | ) | 59.7 | (73.9 | ) | |||||||||||||||||||||||||||||||
Total performance fees | 736.5 | 77.9 | 814.4 | |||||||||||||||||||||||||||||||||
Investment income | ||||||||||||||||||||||||||||||||||||
Realized | 50.3 | — | 50.3 | (a) | ||||||||||||||||||||||||||||||||
Unrealized | 6.3 | 0.4 | 6.7 | (a) | ||||||||||||||||||||||||||||||||
Total investment income | 56.6 | 0.4 | 57.0 | |||||||||||||||||||||||||||||||||
Interest and other income | 15.6 | 2.3 | 17.9 | |||||||||||||||||||||||||||||||||
Interest and other income of Consolidated Funds | 521.6 | 71.9 | 593.5 | |||||||||||||||||||||||||||||||||
Total revenues | 2,013.5 | 199.2 | 2,212.7 | |||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||
Compensation and benefits Base compensation | 277.2 | 28.2 | 305.4 | (b) | (a) | |||||||||||||||||||||||||||||||
Performance fee related | ||||||||||||||||||||||||||||||||||||
Realized | 136.2 | 7.9 | 144.1 | (b) | ||||||||||||||||||||||||||||||||
Unrealized | (81.7 | ) | 34.0 | (47.7 | ) | (b) | ||||||||||||||||||||||||||||||
Total compensation and benefits | 331.7 | 70.1 | 401.8 | (b) | ||||||||||||||||||||||||||||||||
General, administrative and other expenses | 163.1 | 14.9 | 178.0 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 61.6 | 10.4 | 72.0 | |||||||||||||||||||||||||||||||||
Interest | 48.5 | 3.4 | 51.9 | (c) | (b) | |||||||||||||||||||||||||||||||
Interest and other expenses of Consolidated Funds | 290.0 | 43.9 | 333.9 | |||||||||||||||||||||||||||||||||
Other non-operating expenses | 30.0 | — | 30.0 | (c) | ||||||||||||||||||||||||||||||||
Total expenses | 924.9 | 142.7 | 1,067.6 | |||||||||||||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||||||||||||
Net investment gains (losses) of Consolidated Funds | (618.2 | ) | 560.7 | (57.5 | ) | (a) | ||||||||||||||||||||||||||||||
Income before provision for income taxes | 470.4 | 617.2 | 1,087.6 | |||||||||||||||||||||||||||||||||
Provision for income taxes | 25.7 | 15.8 | 41.5 | (d) | ||||||||||||||||||||||||||||||||
Income from continuing operations before nonrecurring charges directly attributable to the transaction | 444.7 | 601.4 | 1,046.1 | |||||||||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (473.4 | ) | 568.1 | 94.7 | (a) | (a) | ||||||||||||||||||||||||||||||
(b) | ||||||||||||||||||||||||||||||||||||
(e) | ||||||||||||||||||||||||||||||||||||
Net income attributable to Carlyle Group | $ | 918.1 | $ | 33.3 | $ | 951.4 | (a) | $ | (a) | $ | (a) | $ | ||||||||||||||||||||||||
(b) | (b) | |||||||||||||||||||||||||||||||||||
(c) | ||||||||||||||||||||||||||||||||||||
(d) | ||||||||||||||||||||||||||||||||||||
(e) | ||||||||||||||||||||||||||||||||||||
Net income per common unit | ||||||||||||||||||||||||||||||||||||
Basic | $ | (5a) | ||||||||||||||||||||||||||||||||||
Diluted | $ | (5a) | ||||||||||||||||||||||||||||||||||
Weighted average common units outstanding | ||||||||||||||||||||||||||||||||||||
Basic | (5a) | |||||||||||||||||||||||||||||||||||
Diluted | (5a) | |||||||||||||||||||||||||||||||||||
201
For the Year Ended December 31, 2010
Carlyle | ||||||||||||||||||||||||||||||||||||
Carlyle | Holdings | |||||||||||||||||||||||||||||||||||
Carlyle | Group | Pro Forma | Adjustments | The Carlyle | ||||||||||||||||||||||||||||||||
Group | Including | Reorganization | Carlyle | As Adjusted | for Non- | Group L.P. | ||||||||||||||||||||||||||||||
Combined | Business | the Business | and Other | Holdings | Offering | for the | Controlling | Consolidated | ||||||||||||||||||||||||||||
Historical | Acquisitions(1) | Acquisitions | Adjustments(2) | Pro Forma | Adjustments(3) | Offering | Interests(4) | Pro Forma | ||||||||||||||||||||||||||||
(Dollars in millions, except per unit data) | ||||||||||||||||||||||||||||||||||||
Revenues | ||||||||||||||||||||||||||||||||||||
Fund management fees | $ | 770.3 | $ | 145.8 | $ | 916.1 | $ | $ | $ | |||||||||||||||||||||||||||
Performance fees | ||||||||||||||||||||||||||||||||||||
Realized | 266.4 | 71.6 | 338.0 | |||||||||||||||||||||||||||||||||
Unrealized | 1,215.6 | (0.3 | ) | 1,215.3 | ||||||||||||||||||||||||||||||||
Total performance fees | 1,482.0 | 71.3 | 1,553.3 | |||||||||||||||||||||||||||||||||
Investment income | ||||||||||||||||||||||||||||||||||||
Realized | 11.9 | 3.9 | 15.8 | (a) | ||||||||||||||||||||||||||||||||
Unrealized | 60.7 | 0.7 | 61.4 | (a) | ||||||||||||||||||||||||||||||||
Total investment income | 72.6 | 4.6 | 77.2 | |||||||||||||||||||||||||||||||||
Interest and other income | 21.4 | 5.6 | 27.0 | |||||||||||||||||||||||||||||||||
Interest and other income of Consolidated Funds | 452.6 | 257.9 | 710.5 | |||||||||||||||||||||||||||||||||
Total revenues | 2,798.9 | 485.2 | 3,284.1 | |||||||||||||||||||||||||||||||||
Expenses | ||||||||||||||||||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||||||||||||||||||
Base compensation | 265.2 | 85.7 | 350.9 | 230.0 | (b) | (a) | ||||||||||||||||||||||||||||||
Performance fee related | ||||||||||||||||||||||||||||||||||||
Realized | 46.6 | 30.0 | 76.6 | 76.7 | (b) | |||||||||||||||||||||||||||||||
Unrealized | 117.2 | 3.5 | 120.7 | 329.4 | (b) | |||||||||||||||||||||||||||||||
Total compensation and benefits | 429.0 | 119.2 | 548.2 | 636.1 | (b) | |||||||||||||||||||||||||||||||
General, administrative and other expenses | 152.7 | 26.9 | 179.6 | |||||||||||||||||||||||||||||||||
Depreciation and amortization | 24.5 | 61.3 | 85.8 | |||||||||||||||||||||||||||||||||
Interest | 17.8 | 10.4 | 28.2 | (c) | (b) | |||||||||||||||||||||||||||||||
Interest and other expenses of Consolidated Funds | 233.3 | 136.6 | 369.9 | |||||||||||||||||||||||||||||||||
Other non-operating expenses | — | — | — | |||||||||||||||||||||||||||||||||
Loss from early extinguishment of debt, net of related expenses | 2.5 | — | 2.5 | |||||||||||||||||||||||||||||||||
Equity issued for affiliate debt financing | 214.0 | — | 214.0 | (c) | ||||||||||||||||||||||||||||||||
Total expenses | 1,073.8 | 354.4 | 1,428.2 | |||||||||||||||||||||||||||||||||
Other income (loss) | ||||||||||||||||||||||||||||||||||||
Net investment gains (losses) of Consolidated Funds | (245.4 | ) | 1,848.0 | 1,602.6 | (a) | |||||||||||||||||||||||||||||||
Income before provision for income taxes | 1,479.7 | 1,978.8 | 3,458.5 | |||||||||||||||||||||||||||||||||
Provision for income taxes | 20.3 | 17.3 | 37.6 | (d) | ||||||||||||||||||||||||||||||||
Income from continuing operations before nonrecurring charges directly attributable to the transaction | 1,459.4 | 1,961.5 | 3,420.9 | |||||||||||||||||||||||||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (66.2 | ) | 1,937.1 | 1,870.9 | (a) | (b) | (a) | |||||||||||||||||||||||||||||
(5.8 | )(b) | |||||||||||||||||||||||||||||||||||
(e) | ||||||||||||||||||||||||||||||||||||
Net income attributable to Carlyle Group | $ | 1,525.6 | $ | 24.4 | $ | 1,550.0 | (a) | $ | (a) | $ | (a) | $ | ||||||||||||||||||||||||
(630.3 | )(b) | (b) | ||||||||||||||||||||||||||||||||||
(c) | ||||||||||||||||||||||||||||||||||||
(d) | ||||||||||||||||||||||||||||||||||||
(e) | ||||||||||||||||||||||||||||||||||||
Net income per common unit | ||||||||||||||||||||||||||||||||||||
Basic | $ | (5a) | ||||||||||||||||||||||||||||||||||
Diluted | $ | (5a) | ||||||||||||||||||||||||||||||||||
Weighted average common units outstanding | ||||||||||||||||||||||||||||||||||||
Basic | (5a) | |||||||||||||||||||||||||||||||||||
Diluted | (5a) | |||||||||||||||||||||||||||||||||||
202
1. | Business Acquisitions |
203
AlpInvest | ESG | Pro Forma | ||||||||||||||||||
Consolidated | Consolidated | Acquisition | Total Business | |||||||||||||||||
Historical | Historical | Adjustments | Acquisitions | |||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Revenues | ||||||||||||||||||||
Fund management fees | $ | 37.9 | $ | 8.8 | $ | — | $ | 46.7 | ||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 18.1 | 0.1 | — | 18.2 | ||||||||||||||||
Unrealized | 40.4 | 19.3 | — | 59.7 | ||||||||||||||||
Total performance fees | 58.5 | 19.4 | — | 77.9 | ||||||||||||||||
Investment income | ||||||||||||||||||||
Realized | — | — | — | — | ||||||||||||||||
Unrealized | — | 0.4 | — | 0.4 | ||||||||||||||||
Total investment income | — | 0.4 | — | 0.4 | ||||||||||||||||
Interest and other income | 1.5 | 0.2 | 0.6 | (a) | 2.3 | |||||||||||||||
Interest and other income of Consolidated Funds | 69.6 | 2.3 | — | 71.9 | ||||||||||||||||
Total revenues | 167.5 | 31.1 | 0.6 | 199.2 | ||||||||||||||||
Expenses | ||||||||||||||||||||
Compensation and benefits | ||||||||||||||||||||
Base compensation | 26.0 | 4.6 | (2.4 | )(b) | 28.2 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 12.0 | 0.1 | (4.2 | )(b) | 7.9 | |||||||||||||||
Unrealized | 43.8 | 2.4 | (12.2 | )(b) | 34.0 | |||||||||||||||
Total compensation and benefits | 81.8 | 7.1 | (18.8 | ) | 70.1 | |||||||||||||||
General, administrative and other expenses | 9.1 | 5.8 | — | 14.9 | ||||||||||||||||
Depreciation and amortization | 0.4 | — | 10.0 | (c) | 10.4 | |||||||||||||||
Interest | 1.5 | — | 1.9 | (d) | 3.4 | |||||||||||||||
Interest and other expenses of Consolidated Funds | 36.6 | 7.3 | — | 43.9 | ||||||||||||||||
Other non-operating expenses | — | — | — | — | ||||||||||||||||
Total expenses | 129.4 | 20.2 | (6.9 | ) | 142.7 | |||||||||||||||
Other income (loss) | ||||||||||||||||||||
Net investment gains of Consolidated Funds | 525.5 | 35.2 | — | 560.7 | ||||||||||||||||
Income before provision for income taxes | 563.6 | 46.1 | 7.5 | 617.2 | ||||||||||||||||
Provision for income taxes | 16.4 | 0.4 | (1.0 | )(e) | 15.8 | |||||||||||||||
Net income | 547.2 | 45.7 | 8.5 | 601.4 | ||||||||||||||||
Net income attributable to non-controlling interests in consolidated entities | 529.5 | 22.6 | 16.0 | (f) | 568.1 | |||||||||||||||
Net income attributable to Carlyle Group (or controlling interest) | $ | 17.7 | $ | 23.1 | $ | (7.5 | ) | $ | 33.3 | |||||||||||
204
Claren Road | AlpInvest | ESG | Pro Forma | ||||||||||||||||||
Consolidated | Consolidated | Consolidated | Acquisition | Total Business | |||||||||||||||||
Historical | Historical | Historical | Adjustments | Acquisitions | |||||||||||||||||
(Dollars in millions) | |||||||||||||||||||||
Revenues | |||||||||||||||||||||
Fund management fees | $ | 50.7 | $ | 80.1 | $ | 15.0 | $ | — | $ | 145.8 | |||||||||||
Performance fees | |||||||||||||||||||||
Realized | 20.2 | 32.0 | 19.4 | — | 71.6 | ||||||||||||||||
Unrealized | — | (0.3 | ) | — | — | (0.3 | ) | ||||||||||||||
Total performance fees | 20.2 | 31.7 | 19.4 | — | 71.3 | ||||||||||||||||
Investment income | |||||||||||||||||||||
Realized | 3.8 | 0.1 | — | — | 3.9 | ||||||||||||||||
Unrealized | — | — | 0.7 | — | 0.7 | ||||||||||||||||
Total investment income | 3.8 | 0.1 | 0.7 | — | 4.6 | �� | |||||||||||||||
Interest and other income | — | 4.0 | 0.4 | 1.2 | (a | ) | 5.6 | ||||||||||||||
Interest and other income of Consolidated Funds | 40.1 | 213.8 | 4.0 | — | 257.9 | ||||||||||||||||
Total revenues | 114.8 | 329.7 | 39.5 | 1.2 | 485.2 | ||||||||||||||||
Expenses | |||||||||||||||||||||
Compensation and benefits | |||||||||||||||||||||
Base compensation | 35.3 | 55.6 | 4.9 | (10.1 | )(b) | 85.7 | |||||||||||||||
Performance fee related | |||||||||||||||||||||
Realized | 19.9 | 14.9 | 3.0 | (7.8 | )(b) | 30.0 | |||||||||||||||
Unrealized | — | 3.7 | — | (0.2 | )(b) | 3.5 | |||||||||||||||
Total compensation and benefits | 55.2 | 74.2 | 7.9 | (18.1 | ) | 119.2 | |||||||||||||||
General, administrative and other expenses | 5.7 | 18.2 | 3.0 | — | 26.9 | ||||||||||||||||
Depreciation and amortization | 0.5 | 1.4 | 0.1 | 59.3 | (c | ) | 61.3 | ||||||||||||||
Interest | — | 0.5 | — | 9.9 | (d | ) | 10.4 | ||||||||||||||
Interest and other expenses of Consolidated Funds | 48.3 | 79.2 | 9.1 | — | 136.6 | ||||||||||||||||
Other non-operating expenses | — | — | — | — | — | ||||||||||||||||
Total expenses | 109.7 | 173.5 | 20.1 | 51.1 | 354.4 | ||||||||||||||||
Other income (loss) | |||||||||||||||||||||
Net investment gains of Consolidated Funds | 58.8 | 1,752.7 | 36.5 | — | 1,848.0 | ||||||||||||||||
Income before provision for income taxes | 63.9 | 1,908.9 | 55.9 | (49.9 | ) | 1,978.8 | |||||||||||||||
Provision for income taxes | 0.6 | 18.1 | 0.7 | (2.1 | )(e) | 17.3 | |||||||||||||||
Net income | 63.3 | 1,890.8 | 55.2 | (47.8 | ) | 1,961.5 | |||||||||||||||
Net income attributable to non-controlling interests in consolidated entities | 35.7 | 1,855.8 | 25.0 | 20.6 | (f | ) | 1,937.1 | ||||||||||||||
Net income attributable to Carlyle Group (or controlling interest) | $ | 27.6 | $ | 35.0 | $ | 30.2 | $ | (68.4 | ) | $ | 24.4 | ||||||||||
(a) | This adjustment reflects interest income on loans issued by Carlyle Group in conjunction with the Claren Road and AlpInvest acquisitions of $13.5 million and $1.7 million, respectively, at their contractual annual interest rates of 8% and 7%, respectively. | |
(b) | In conjunction with the Business Acquisitions, certain employees were admitted as senior Carlyle professionals. The entities that comprise Carlyle Group are partnerships or limited liability companies. Accordingly, all payments to our senior Carlyle professionals have been accounted for as distributions from members’ equity rather than as compensation expenses in the historical Carlyle Group financial statements. Accordingly, this adjustment reduces the historical compensation expenses of the Business Acquisitions for the amounts associated with those employees who are senior Carlyle professionals. Following this offering, we intend to account for compensation payments to our senior Carlyle professionals as compensation expenses. The amounts in this pro forma acquisition adjustment are included in that compensation pro forma adjustment (See note 2(b)). |
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(c) | This adjustment reflects the amortization expense associated with intangible assets acquired from the Business Acquisitions. The acquisition of Claren Road included approximately $393.6 million of intangible assets with an estimated useful life of ten years. Amortization of the Claren Road intangible assets of $39.4 million has been included in the pro forma adjustment for the year ended December 31, 2010. |
The acquisition of AlpInvest included approximately $72.0 million of intangible assets with an estimated useful life of ten years. Amortization of the AlpInvest intangible assets of $7.2 million for the year ended December 31, 2010 and $3.6 million for the six months ended June 30, 2011 have been included in the pro forma adjustment. | ||
The acquisition of ESG included approximately $89.0 million of intangible assets with an estimated useful life of seven years. Amortization of the ESG intangible assets of $12.7 million for the year ended December 31, 2010 and $6.4 million for the six months ended June 30, 2011 have been included in the pro forma adjustment. |
(d) | This adjustment reflects interest expense on Carlyle Group’s borrowing of €81.0 million ($116.6 million) on the revolving credit facility of its existing senior secured credit facility to finance the AlpInvest acquisition. The variable interest rate applied to the borrowing during the periods presented ranged from 2.72% to 3.57%. For 2010, this adjustment also includes interest expense on two loans associated with the Claren Road acquisition of $47.5 million (at an interest rate of 6%) and $50.0 million (at an interest rate of 8%). |
(e) | This adjustment reflects the expected reduction of the deferred tax liabilities associated with the amortization of identifiable intangible assets arising from the AlpInvest and ESG acquisitions. The deferred tax liabilities will be reduced over the same period as the related identifiable intangible assets (see note (c) above) are amortized. The reduction of the AlpInvest deferred tax liabilities was $0.8 million and $1.6 million for the six months ended June 30, 2011 and year ended December 31, 2010, respectively. The reduction of the ESG deferred tax liabilities was $0.2 million and $0.5 million for the six months ended June 30, 2011 and year ended December 31, 2010, respectively. |
(f) | This adjustment reflects the allocation of the pro-forma net income for the periods presented to the 40% non-controlling interests in AlpInvest. This adjustment allocates to the non-controlling interests 40% of the historical income attributable to the controlling interest for AlpInvest, 40% of the pro forma acquisition adjustments attributable to AlpInvest, and 100% of all carried interest income in respect of the historical investments and commitments to the AlpInvest fund of funds vehicles that existed as of December 31, 2010. The table below summarizes the components of this adjustment: |
For the Period | ||||||||
from January 1, | For the | |||||||
2011 through | Year Ended | |||||||
June 30, 2011 | December 31, 2010 | |||||||
(Dollars in millions) | ||||||||
AlpInvest net income attributable to controlling interest | $ | 17.7 | $ | 35.0 | ||||
Deduct: Carried interest income attributable to historical investments (100% non-controlling interest) | (4.5 | ) | (3.4 | ) | ||||
Add (Deduct) pro forma adjustments: | ||||||||
Compensation for admitted senior Carlyle professionals | 18.3 | 17.0 | ||||||
Amortization of intangible assets | (3.6 | ) | (7.2 | ) | ||||
Amortization of deferred tax liabilities | 0.8 | 1.6 | ||||||
AlpInvest adjusted earnings subject to 40% non-controlling interest | 28.7 | 43.0 | ||||||
Non-controlling interest | 40 | % | 40 | % | ||||
11.5 | 17.2 | |||||||
Add: Carried interest income attributable to historical investments (100% non-controlling interest) | 4.5 | 3.4 | ||||||
Net income attributable to non-controlling interests | $ | 16.0 | $ | 20.6 | ||||
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2. | Reorganization and Other Adjustments |
(a) | This adjustment reflects the restructuring of certain beneficial interests in investments in or alongside our funds that were funded by certain existing and formers owners of the Parent Entities indirectly through the Parent Entities. As part of the Reorganization, certain interests will be distributed so that they are held directly by such persons and are no longer consolidated in our financial statements, and certain other interests will be restructured so that they will be reported as non-controlling interests. |
Historically, these beneficial interests were funded through capital contributions to the Parent Entities, which were then invested into the respective fund. Accordingly, in the historical financial statements of Carlyle Group, these beneficial interests were included in the captions “investments and accrued performance fees” and “members’ equity” on the Carlyle Group balance sheet, and investment income/losses on such interests were included in “investment income (loss)” and “net income attributable to Carlyle Group” on the Carlyle Group statement of operations. |
For the beneficial interests to be distributed so that will be held directly by such persons, a pro forma adjustment has been recorded to eliminate the historical investment income associated with the investments with a corresponding decrease to net income attributable to Carlyle Group as they are no longer investments of Carlyle Holdings. Included in the distributed beneficial interests were certain interests in our CLOs that are included in our Consolidated Funds; in our historical combined and consolidated financial statements, the investment income on those interests had been eliminated against the related gain/loss recorded by the Consolidated Fund. For these interests in consolidated CLOs, the pro forma adjustment results in a decrease to net investment gains (losses) of Consolidated Funds (as the aforementioned elimination is no longer applicable after the interest is held directly by the beneficial owner). |
For the beneficial interests that will be reflected as non-controlling interests, a pro forma adjustment has been recorded to reclassify the income attributable to the restructured interests to income attributable to non-controlling interests in consolidated entities from income attributable to Carlyle Group. For these beneficial interests, the underlying investment related to those interests continues to be held by a consolidated subsidiary of Carlyle Holdings. |
The amounts for these adjustments were derived based on historical financial results. The following table summarizes the pro forma impact for the restructured beneficial interests: |
Net income (loss) | ||||||||||||||||
attributable to | ||||||||||||||||
non-controlling | ||||||||||||||||
Net investment | interests in | Net income | ||||||||||||||
Investment | gains (losses) of | consolidated | attributable to | |||||||||||||
Income | Consolidated Funds | entities | Carlyle Group | |||||||||||||
(Amounts in millions) | ||||||||||||||||
For the Nine Months Ended September 30, 2011 | ||||||||||||||||
Distributed beneficial interests in Consolidated Funds | $ | $ | $ | $ | ||||||||||||
Other distributed beneficial interests | ||||||||||||||||
Restructured beneficial interests | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
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Net income (loss) | ||||||||||||||||
attributable to | ||||||||||||||||
non-controlling | ||||||||||||||||
Net investment | interests in | Net income | ||||||||||||||
Investment | gains (losses) of | consolidated | attributable to | |||||||||||||
Income | Consolidated Funds | entities | Carlyle Group | |||||||||||||
(Amounts in millions) | ||||||||||||||||
For the Year Ended December 31, 2010 | ||||||||||||||||
Distributed beneficial interests in Consolidated Funds | $ | $ | $ | $ | ||||||||||||
Other distributed beneficial interests | ||||||||||||||||
Restructured beneficial interests | ||||||||||||||||
Total | $ | $ | $ | $ | ||||||||||||
(b) | This adjustment reflects changes to compensation and benefits expenses associated with historical payments to our senior Carlyle professionals attributable to compensation and benefits and the reallocation of carried interest in our carry funds that are currently held by our senior Carlyle professionals and other Carlyle employees. The effects of these items on our unaudited condensed combined and consolidated pro forma statements of operations for the nine months ended September 30, 2011 and the year ended December 31, 2010 are as follows: |
Nine Months | ||||||||
Ended | Year Ended | |||||||
September 30, 2011 | December 31, 2010 | |||||||
(Dollars in millions) | ||||||||
Compensation and benefits attributable to senior Carlyle professionals(1) | $ | $ | 230.0 | |||||
Performance fee related compensation attributable to senior Carlyle professionals(1) | 591.4 | |||||||
Performance fee related compensation expense adjustment due to carried interest reallocation(2) | (185.3 | ) | ||||||
Total | $ | $ | 636.1 | |||||
(1) | Reflects an adjustment to record base salary, annual bonus, and benefit expenses attributable to our senior Carlyle professionals as compensation expense. Additionally, performance fee related compensation attributable to our senior Carlyle professionals is included in this pro forma adjustment. Prior to the Reorganization and this offering, the entities that comprise Carlyle Group have been partnerships or limited liability companies. Accordingly, all payments to our senior Carlyle professionals generally have been accounted for as distributions from members’ equity rather than as compensation expenses. Following this offering, we intend to account for compensation payments to our senior Carlyle professionals as compensation expenses. Amounts have been derived based upon our historical results and do not reflect the assumed acquisition by Carlyle Holdings of the additional allocations of carried interest in our carry funds that are currently held by our senior Carlyle professionals (see (2) below). |
(2) | As part of the Reorganization, there will be a reallocation of carried interest to senior Carlyle professionals and other individuals who manage our carry funds, such that the allocation to these individuals will be approximately 45% of all carried interest on a blended average basis, with the exception of the Riverstone funds, where Carlyle will retain essentially all of the carry to which we are entitled under our arrangements for those funds. Our senior Carlyle professionals and other individuals who manage our carry funds will contribute to Carlyle Holdings a portion of the equity interests they own in the general partners of our existing carry funds in exchange for an equivalent fair value of Carlyle Holdings partnership units. No compensation is associated with this exchange as the individuals are receiving an equivalent fair value of Carlyle Holdings partnership units for the fair value of the carried interest rights that they are contributing. |
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Historically, these allocations of carried interest were accounted for as performance fee compensation expense for our Carlyle employees and as distributions from members’ equity for our senior Carlyle professionals. This adjustment reduces the performance fee related compensation expense associated with the reallocation of carried interest. The amounts have been derived from our historical results. The fair value of the Carlyle Holdings interests issued in this transaction totaling $ million exceeds the carrying value of the compensation liability totaling $ million, resulting in a nonrecurring charge of $ million associated with this transaction. |
Subsequent to the completion of the Reorganization and this offering, we will account for the remaining equity interests that our senior Carlyle professionals and other individuals who manage our carry funds own in the general partners of our existing carry funds as performance fee compensation expense. |
(c) | Reflects the elimination of all interest expense, debt issuance costs and fair value adjustments associated with the subordinated loan payable to affiliate. This adjustment also reflects additional interest costs associated with pro forma borrowings on the Carlyle Group revolving credit facility of Carlyle Group’s existing senior secured credit facility. In October 2011, the Parent Entities redeemed $250 million aggregate principal amount of the subordinated loan payable to affiliate. Immediately prior to the contribution of the Parent Entities to Carlyle Holdings, as described under “Reorganization,” the remaining principal value and unpaid interest on the subordinated loan payable to affiliate will be exchanged into additional equity interests of the Parent Entities. The equity interests in the Parent Entities issued in this exchange will subsequently be contributed to Carlyle Holdings in exchange for Carlyle Holdings partnership units. |
As the subordinated loan payable to affiliate will be fully redeemed through the transaction which occurred in October 2011 and through the exchange for Carlyle Holdings equity in conjunction with the Reorganization, interest expense of $ million for the nine months ended September 30, 2011, debt issuance costs of $214.0 million for the year ended December 31, 2010, and fair value adjustments of $ million for the nine months ended September 30, 2011 and $0 for the year ended December 31, 2010 have been eliminated from the condensed combined and consolidated pro forma statements of operations. The conversion of the subordinated loan will result in a charge to income of approximately $ million (based on an assumed initial offering price of $ per common unit, the midpoint of the range indicated on the front cover of this prospectus) computed as the difference between the value of the Carlyle Holdings partnership units issued and the carrying value of the subordinated loan payable to affiliate. This charge is not included in the accompanying condensed combined and consolidated pro forma statement of operations. |
This adjustment also reflects pro forma interest expense of $ million and $ million for the nine months ended September 30, 2011 and the year ended December 31, 2010, respectively, related to pro forma borrowings on the revolving credit facility of Carlyle Group’s existing senior secured credit facility totaling $ million (refer to note 1(a) and 1(b) on the unaudited condensed combined and consolidated pro forma balance sheet) at an average interest rate of % and 2.02% for 2011 and 2010, respectively. |
(d) | We have historically operated as a group of partnerships for U.S. federal income tax purposes and, for certain entities located outside the United States, corporate entities for foreign income tax purposes. Because most of the entities in our consolidated group are pass-through entities for U.S. federal income tax purposes, our profits and losses are generally allocated to the partners who are individually responsible for reporting such amounts and we are not taxed at the entity level. Based on applicable foreign, state, and local tax laws, we record a provision for income taxes for certain entities. Accordingly, the income tax provisions shown on Carlyle Group’s historical combined and consolidated statements of operations of $20.3 million for the year ended December 31, 2010 and $25.7 million for the nine months ended September 30, 2011 primarily consisted of the District of Columbia and foreign corporate income taxes. |
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Nine Months | ||||||||
Ended | Year Ended | |||||||
September 30, 2011 | December 31, 2010 | |||||||
(Dollars in millions) | ||||||||
Income before provision for income taxes — Carlyle Holdings pro forma | $ | $ | ||||||
Less: income before provision for income taxes — attributable to non-taxable subsidiaries(1) | ||||||||
Income before provision for income taxes — attributable to Carlyle Holdings I L.P. | ||||||||
Less: income attributable to existing owners (not Carlyle Holdings I GP Inc.) | ||||||||
Income before provision for income taxes — attributable to Carlyle Holdings I GP Inc. | $ | $ | ||||||
Federal tax expense at statutory rate, net of foreign tax credits | $ | $ | ||||||
State and local tax expense and foreign tax expense (net of federal benefit)(2) | ||||||||
Total provision for income taxes | $ | $ | ||||||
(1) | Income was attributed to these entities based on income or losses of the subsidiaries of the entities. Please see “Material U.S. Federal Tax Considerations” for a discussion of the different tax requirements of the subsidiaries of The Carlyle Group L.P. | |
(2) | State and local tax expense was determined at a blended rate of %. |
(e) | Reflects the historical basis of partnership interests in subsidiaries of the Parent Entities that the existing owners are retaining. Certain retired senior Carlyle professionals will retain their interests in our carried interest entities. For these individuals, their carried interests rights will be restructured such that they will exchange their pre-existing carried interest rights (through their ownership interests in the Parent Entities) for an equivalent amount of carried interest rights in the general partners of our funds. Historically, these interests were reflected within “members’ equity” on the Carlyle Group balance sheet, as these interests existed through the individuals’ ownership interests in the Parent Entities, and the income attributable to these carried interests rights were included in “net income attributable to Carlyle Group” on the Carlyle Group statement of operations because their interests were part of the controlling interest in Carlyle Group. As their carried interest rights will no longer be held through a parent of Carlyle Group directly or indirectly after this exchange, |
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this adjustment reclassifies the income attributable to those interests as net income attributable to non-controlling interests in consolidated entities from net income attributable to Carlyle Group. This amount was derived based on historical financial results as well as the ownership of the individuals. |
3. | Offering Adjustments |
(a) | This adjustment reflects additional compensation and benefits expenses associated with (1) the issuance of unvested Carlyle Holdings partnership units as part of the Carlyle Holdings formation, (2) the grant of unvested deferred restricted units of The Carlyle Group L.P., and (3) the grant of unvested phantom deferred restricted units. The effects of these items on our unaudited condensed combined and consolidated pro forma statements of operations for the nine months ended September 30, 2011 and the year ended December 31, 2010 are as follows: |
Nine Months | ||||||||
Ended | ||||||||
September 30, | Year Ended | |||||||
2011 | December 31, 2010 | |||||||
(Dollars in millions) | ||||||||
Issuance of unvested Carlyle Holdings partnership units to our senior Carlyle professionals(1) | $ | $ | ||||||
Grant of unvested deferred restricted units of The Carlyle Group L.P.(2) | ||||||||
Grant of unvested phantom deferred restricted units(3) | ||||||||
Total | $ | $ | ||||||
(1) | As part of the Reorganization, our existing owners will receive Carlyle Holdings partnership units, of which will be vested and will be unvested. | |
We intend to reflect the unvested Carlyle Holdings partnership units as compensation expense in accordance with Accounting Standards Codification Topic 718,Compensation — Stock Compensation(“ASC 718”). The unvested Carlyle Holdings partnership units will be charged to expense as the Carlyle Holdings partnership units vest over the service period on a straight-line basis. See “Certain Relationships and Related Person Transactions — Carlyle Holdings Partnership Agreements.” Amounts have been derived assuming a fair value of $ per partnership unit (based on the assumed initial public offering price per common unit in this offering, determined as the midpoint of the range indicated on the front cover of this prospectus), multiplied by the number of unvested units, expensed over the assumed service period, which ranges from to years. Additionally, the calculation of the expense assumes a forfeiture rate of up to %. This expense is derived from awards with a total service period of five years or less of $ million and a total service period of greater than five years of $ million. | ||
(2) | At the time of the offering, we intend to grant deferred restricted units of The Carlyle Group L.P. to our employees. The deferred restricted units will be unvested when granted and will vest over a service period. The grant-date fair value of the units will be charged to compensation expense over the vesting period. The amount in the adjustment has been derived assuming an offering price of $ per unit, multiplied by the number of unvested units, expensed over the assumed service period, which ranges from to years. Additionally, the calculation of the expense assumes a forfeiture rate up to %. This expense is derived from awards with a total service period of five years or less of $ million and a total service period of greater than five years of $ million. |
(3) | At the time of the offering, we intend to grant phantom deferred restricted units to our employees. The phantom deferred restricted units will be unvested when granted and will vest over a service period. Upon vesting, the units will be settled in cash. Because the awards are subject to vesting, no liability will be recorded upon grant and thus no pro forma adjustment is reflected in our unaudited condensed combined and consolidated pro forma balance sheet. The fair value of the units will be re-measured each reporting period until settlement and charged to compensation expense over the vesting period. The amount in the adjustment has been derived assuming an offering price of $ per unit (the assumed initial fair value of the phantom deferred restricted units), multiplied by the number of unvested units, expensed over the assumed service period, which ranges from to years. No change to the fair value of the liability is assumed over the periods presented. Additionally, the calculation of the expense assumes a forfeiture rate of up to %. This expense is derived from awards with a total service period of five years or less of $ million and a total service period of greater than five years of $ million. |
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(b) | Reflects a reduction of pro forma interest expense of $ million for the nine months ended September 30, 2011 and $ million for the year ended December 31, 2010 associated with the assumed repayment of $ million of borrowings using the proceeds of this offering. See “Use of Proceeds.” |
4. | Adjustments for Non-Controlling Interests |
(a) | In order to reflect the Reorganization and offering transaction as if they occurred on January 1, 2010, an adjustment has been made to reflect the inclusion of non-controlling interests in consolidated entities representing Carlyle Holdings partnership units that are held by the existing owners after this offering. Such Carlyle Holdings partnership units represent % of all Carlyle Holdings partnership units outstanding immediately following this offering. |
Nine Months | ||||||||
Ended | Year Ended | |||||||
September 30, 2011 | December 31, 2010 | |||||||
(Dollars in millions) | ||||||||
Net income — Carlyle Holdings pro forma | $ | $ | ||||||
Less: net income attributable to non-controlling interests in consolidated entities | ||||||||
Net income attributable to Carlyle Holdings | ||||||||
Percentage allocable to existing owners | ||||||||
Net income attributable to non-controlling interests held by the existing owners | $ | $ | ||||||
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5. | Calculation of Earnings per Common Unit |
(a) | For purposes of calculating the pro forma net income per common unit, the number of common units of The Carlyle Group L.P. outstanding are calculated as follows: |
Nine Months | ||||||||
Ended | Year Ended | |||||||
September 30, 2011 | December 31, 2010 | |||||||
Units from which proceeds will be used to purchase interests in Carlyle Holdings | ||||||||
Units issued in exchange for the subordinated loan payable to affiliate | ||||||||
Units from which proceeds will be used to repay outstanding loans payable | ||||||||
The Carlyle Group L.P. deferred restricted units which vest one year subsequent to the completion of the offering | ||||||||
Total pro forma common units of The Carlyle Group L.P. outstanding | ||||||||
Nine Months Ended | Year Ended | |||||||||||||||
September 30, 2011 | December 31, 2010 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
The Carlyle Group L.P. common units outstanding | ||||||||||||||||
Unvested deferred restricted units | ||||||||||||||||
Carlyle Holdings partnership units | ||||||||||||||||
Weighted-average common units outstanding | ||||||||||||||||
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Nine Months Ended | Year Ended | |||||||||||||||
September 30, 2011 | December 31, 2010 | |||||||||||||||
Basic | Diluted | Basic | Diluted | |||||||||||||
(Dollars in millions, except per unit data) | ||||||||||||||||
Pro forma net income attributable to The Carlyle Group L.P. | $ | $ | $ | $ | ||||||||||||
Weighted average common units outstanding | ||||||||||||||||
Pro forma net income per common unit | $ | $ | $ | $ | ||||||||||||
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• | Excellence in Investing. Our primary goal is to invest wisely and create value for our fund investors. We strive to generate superior investment returns by combining deep industry expertise, a global network of local investment teams who can leverage extensive firm-wide resources and a consistent and disciplined investment process. | |
• | Commitment to our Fund Investors. Our fund investors come first. This commitment is a core component of our firm culture and informs every aspect of our business. We believe this philosophy is in the long-term best interests of Carlyle and its owners, including our prospective common unitholders. | |
• | Investment in the Firm. We have invested, and intend to continue to invest, significant resources in hiring and retaining a deep talent pool of investment professionals and in building the infrastructure of the firm, including our expansive local office network and our comprehensive investor support team, which provides finance, legal and compliance and tax services in addition to other services. | |
• | Expansion of our Platform. We innovate continuously to expand our investment capabilities through the creation or acquisition of new asset-, sector- and regional-focused strategies in order to provide our fund investors a variety of investment options. |
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• | Unified Culture. We seek to leverage the local market insights and operational capabilities that we have developed across our global platform through a unified culture we call “One Carlyle.” Our culture emphasizes collaboration and sharing of knowledge and expertise across the firm to create value. We believe our collaborative approach enhances our ability to analyze investments, deploy capital and improve the performance of our portfolio companies. |
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As of September 30, 2011 | Inception to September 30, 2011 | |||||||||||||||||||||||
Realized/ | ||||||||||||||||||||||||
Realized/ | Partially | |||||||||||||||||||||||
Cumulative | Partially | Realized | ||||||||||||||||||||||
Invested | Realized | Gross | Net | Gross | ||||||||||||||||||||
Capital(2) | MOIC(3) | MOIC(3)(4) | IRR(5) | IRR(6) | IRR(4)(5) | |||||||||||||||||||
(Dollars in billions) | ||||||||||||||||||||||||
Corporate Private Equity(1) | $ | 47.7 | 1.7 | x | 2.5x | 26% | 18% | 31% | ||||||||||||||||
Real Assets(1) | $ | 25.6 | 1.4 | x | 2.0x | 17% | 10% | 30% | ||||||||||||||||
Fund of Funds Solutions(1) | $ | 38.0 | 1.3 | x | n/a | 11% | 10% | n/a |
As of | ||||||||||||||||
September 30, | ||||||||||||||||
2011 | Inception to September 30, 2011 | |||||||||||||||
Net | ||||||||||||||||
Gross | Net | Annualized | ||||||||||||||
Total AUM | IRR(5) | IRR(6) | Return(7) | |||||||||||||
(Dollars in billions) | ||||||||||||||||
Global Market Strategies(8) | ||||||||||||||||
CSP II (carry fund) | $ | 1.7 | 14% | 9% | n/a | |||||||||||
Claren Road Master Fund (hedge fund) | $ | 4.1 | n/a | n/a | 12% | |||||||||||
Claren Road Opportunities Fund (hedge fund) | $ | 1.3 | n/a | n/a | 20% |
The returns presented herein represent those of the applicable Carlyle funds and not those of The Carlyle Group L.P.See “Risk Factors — Risks Related to Our Business Operations — The historical returns attributable to our funds, including those presented in this prospectus, should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common units.” |
(1) | For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate. | |
(2) | Represents the original cost of all capital called for investments since inception. | |
(3) | Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. |
(4) | An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, is a substantial majority of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such |
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investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. |
(5) | Gross Internal Rate of Return (“IRR”) represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest. | |
(6) | Net IRR represents the annualized IRR for the period indicated on limited partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest. | |
(7) | Net Annualized Return is presented for fee-paying investors on a total return basis, net of all fees and expenses. | |
(8) | Due to the disparate nature of the underlying asset classes in which our Global Market Strategies funds participate (e.g., syndicated loans, bonds, distressed securities, mezzanine loans, emerging markets equities, macroeconomic products) and the inherent difficulties in aggregating the performance of closed-end and open-end funds, the presentation of aggregate investment performance across this segment would not be meaningful. |
Cumulative and Annual Investments(1) | Cumulative and Annual Distributions(1) |
(1) | Funds with a functional currency other than U.S. dollars have been converted at the average rate for each period indicated. |
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• | continue to generate attractive investment returns for our fund investors across ourmulti-fund, multi-product global investment platform, including by increasing the value of our current portfolio and leveraging the strong capital position of our investment funds to pursue new investment opportunities; | |
• | continue to inspire the confidence and loyalty of our more than 1,400 carry fund investors, and further expand our investor base, with a focus on client service and strong investment performance; | |
• | continue to grow our AUM by raising follow-on investment funds across our four segments and by broadening our platform through both organic growth and selective acquisitions, where we believe we can provide investors with differentiated products to meet their needs; | |
• | further advance our leadership position in corenon-U.S. geographic markets, includinghigh-growth emerging markets such as China, Latin America, India, MENA andSub-Saharan Africa; and | |
• | continue to demonstrate principled industry leadership and be a responsible and respected member of the global community by demonstrating our commitment to environmental, social and governance standards in our investment activities. |
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• | Buyout Funds. Our buyout teams advise a diverse group of 16 active funds that invest in transactions that focus either on a particular geography (United States, Europe, Asia, Japan, South America or MENA) or a particular industry (e.g., financial services). In addition, we continually seek to expand and diversify our buyout portfolio into new areas where we see opportunity for future growth. In 2010, we launched a new operation to target opportunities in middle-market private equity in North America across the nine industry sectors of our Corporate Private Equity business. In early 2011, we formed a team to focus on the emerging market ofSub-Saharan Africa. As of September 30, 2011, our buyout funds had, in the aggregate, approximately $47 billion in AUM. |
• | Growth Capital Funds. Our nine active growth capital funds are advised by threeregionally-focused teams in the United States, Europe and Asia, with each team generally focused on middle-market and growth companies consistent with specific regional investment considerations. The investment mandate for our growth capital funds is to seek out companies with the potential for growth, strategic redirection and operational improvements. These funds typically do not invest in early stage or venture-type investments. As of September 30, 2011, our growth capital funds had, in the aggregate, approximately $4 billion in AUM. |
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Amount | ||||||||||||||||||||||||||||||||||||||
% of | Fee- | Invested | Investments | |||||||||||||||||||||||||||||||||||
Total | AUM | Earning | Active | Active | Available | Investment | Since | Since | ||||||||||||||||||||||||||||||
AUM | AUM | CAGR | AUM | Investments | Funds | Capital | Professionals | Inception | Inception | |||||||||||||||||||||||||||||
$ | 51 | 34 | % | 22 | % | $ | 39 | 161 | 25 | $ | 15 | 256 | $ | 48 | 414 |
• | Real Estate. Our 11 active real estate funds pursue real estate investment opportunities in Asia, Europe and the United States and generally focus on acquiring single-property opportunities rather than large-cap companies with real estate portfolios. Our team of more than 120 real estate investment professionals has made approximately 464 investments in over 120 cities/metropolitan statistical areas around the world as of September 30, 2011, including office buildings, hotels, retail properties, residential properties, industrial properties and senior living facilities. As of September 30, 2011, our real estate funds had, in the aggregate, approximately $12 billion in AUM. |
• | Infrastructure. Our infrastructure investment team focuses on investments in infrastructure companies and assets. The team comprises 11 investment professionals and works in conjunction with the public sector to find cooperative methods of managing and investing in infrastructure assets. As of September 30, 2011, we advised one infrastructure fund with approximately $1 billion in AUM. |
• | Energy & Renewable Resources. Our energy and renewable resources activities focus on buyouts, growth capital investments and strategic joint ventures in the midstream, upstream, power and oilfield services sectors, as well as the renewable and alternative sectors of the energy industry. We currently conduct these activities with Riverstone, jointly advising six funds with approximately $17 billion in AUM as of September 30, 2011. We and Riverstone have mutually decided not to pursue additional jointly managed funds (although we will continue to advise jointly with Riverstone the six existing energy and renewable resources funds). We are actively |
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exploring new approaches through which to expand our energy capabilities and intend to augment our significant in-house expertise in this sector. |
Amount | ||||||||||||||||||||||||||||||||||||||
% of | Fee- | Invested | Investments | |||||||||||||||||||||||||||||||||||
Total | AUM | Earning | Active | Active | Available | Investment | Since | Since | ||||||||||||||||||||||||||||||
AUM | AUM | CAGR | AUM | Investments | Funds | Capital | Professionals | Inception | Inception | |||||||||||||||||||||||||||||
$ | 30 | 20 | % | 39 | % | $ | 22 | 323 | 18 | $ | 9 | 135 | $ | 26 | 541 |
• | Structured Credit Funds. Our structured credit funds invest primarily in performing senior secured bank loans through structured vehicles and other investment vehicles. In 2010, we acquired CLO management contracts from Mizuho Alternative Investments LLC and Stanfield Capital Partners LLC aggregating approximately $5 billion of AUM. As of September 30, 2011, our structured credit team advised 32 collateral loan funds in the United States and Europe totaling, in the aggregate, approximately $12 billion in AUM. |
• | Distressed and Corporate Opportunities. Our distressed and corporate opportunities funds generally invest in liquid and illiquid securities and obligations, including secured debt, senior and subordinated unsecured debt, convertible debt obligations, preferred stock and |
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public and private equity of financially distressed companies in defensive and asset-rich industries. In certain investments, our funds may seek to restructure pre-reorganization debt claims into controlling positions in the equity of reorganized companies. As of September 30, 2011, our distressed and corporate opportunities team advised three funds, totaling in the aggregate, approximately $2 billion in AUM. |
• | Corporate Mezzanine. Our corporate mezzanine investment team advises funds that invest in mezzanine loans of middle-market companies, typically defined as companies with annual EBITDA ranging from $10 million to $50 million that lack access to the broadly syndicated loan and bond markets. Our corporate mezzanine business focuses on leveraged buyouts, recapitalizations, acquisitions and growth financings. As of September 30, 2011, our corporate mezzanine team advised two funds totaling, in the aggregate, approximately $700 million in AUM. |
• | Energy Mezzanine Opportunities. Our energy mezzanine opportunities team was organized in 2010 and advises a fund that invests primarily in privately negotiated mezzanine debt investments in North American energy and power projects and companies. As of September 30, 2011, our energy mezzanine opportunities team advised one fund with approximately $330 million in AUM. |
• | Long/Short Credit. On December 31, 2010, we acquired a 55% stake in Claren Road Asset Management, LLC (“Claren Road”). As of September 30, 2011, Claren Road advised two long/short credit hedge funds focusing on the global high grade and high yield markets totaling, in the aggregate, approximately $5 billion in AUM. Claren Road seeks to profit from market mispricing of longand/or short positions in corporate bonds and loans, and their derivatives, across investment grade, high yield, or distressed companies. |
• | Emerging Market Equity and Macroeconomic Strategies. On July 1, 2011, we acquired a 55% stake in ESG. ESG advises six emerging markets equities and macroeconomic hedge funds with approximately $2 billion of AUM. ESG’s emerging markets equities’ funds invest in publicly-traded equities across a range of developing countries. ESG’s macroeconomic funds pursue investment strategies in developed and developing countries, and opportunities resulting from changes in the global economic environment. |
% of | ||||||||||||||||||||||
Total | AUM | Fee-Earning | Active | Investment | ||||||||||||||||||
AUM | AUM | CAGR | AUM | Funds | Professionals | |||||||||||||||||
$ | 23 | 16 | % | 33 | % | $ | 21 | 46 | 129 |
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• | Fund Investments. AlpInvest fund of funds vehicles make investment commitments directly to buyout, growth capital, venture and other alternative asset funds advised by other general partners (“portfolio funds”). As of September 30, 2011, AlpInvest advised 26 fund of funds vehicles totaling, in the aggregate, approximately $32 billion in AUM. |
• | Co-investments. AlpInvest invests alongside other private equity and mezzanine funds in which it has a fund investment throughout Europe, North America and Asia (for example, when an investment opportunity is too large for a particular fund, the adviser of the fund may seek to raise additional “co-investment” capital from sources such as AlpInvest for that one large transaction). As of September 30, 2011, AlpInvest co-investments programs were conducted through 15 fund of funds vehicles totaling, in the aggregate, approximately $6 billion in AUM. |
• | Secondary Investments. AlpInvest also advises funds that acquire interests in portfolio funds in secondary market transactions. Private equity investors who desire to sell or restructure their pre-existing investment commitments to a fund may negotiate to sell the fund interests to AlpInvest. In this manner, AlpInvest’s secondary investments team provides liquidity and restructuring alternatives for third-party private equity investors. As of September 30, 2011, AlpInvest’s secondary investments program was conducted through 11 fund of funds vehicles totaling, in the aggregate, approximately $6 billion in AUM. |
% of | Fund of | Amount | ||||||||||||||||||||||||
Total | Fee-Earning | Funds | Available | Invested | Investment | |||||||||||||||||||||
AUM(1) | AUM | AUM | Vehicles | Capital | Since Inception | Professionals | ||||||||||||||||||||
$ | 44 | 30 | % | $ | 30 | 52 | $ | 16 | $ | 38 | 61 |
(1) | Under our arrangements with the historical owners and management team of AlpInvest, such persons are allocated all carried interest in respect of the historical investments and commitments to our fund of funds vehicles that existed as of December 31, 2010, 85% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and 2020 and 60% of the carried interest in respect of all other commitments (including all future commitments from third parties). |
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• | Consistent and Disciplined Investment Process. We believe our successful investment track record is the result in part of a consistent and disciplined application of our investment process. Investment opportunities for our Corporate Private Equity funds are initially sourced and evaluated by one or more of our deal teams. Each investment opportunity of our private equity funds must first pass an approval process that involves initial approvals from a fund head (or co-fund heads), interim update meetings that frequently include senior advisors as well as our Chief Investment Officer, William E. Conway, Jr., and a due diligence review. Our due diligence approach typically incorporates meetings with management, company facility visits, discussions with industry analysts and consultants and an in-depth examination of financial results and projections. This transaction review process places a special emphasis on, among other considerations, the reputation of a target company’s shareholders and management, the company’s size and sensitivity of cash flow generation, the business sector and competitive risks, the portfolio fit, exit risks and other key factors highlighted by the deal team. An investment opportunity must secure final approval from the investment committee of the applicable investment fund. The investment committee approval process involves a detailed overview of the transaction and investment thesis, business, risk factors and diligence issues, as well as financial models. | |
• | Industry-Focused. We have adopted an industry-focused approach to investing. We have particular industry expertise in aerospace, defense and government services, consumer and retail, financial services, healthcare, industrial, technology and business services, telecommunications and media and transportation. As a result, we believe that our in-depth knowledge of specific industries improves our ability to source and create transactions, conduct effective and more informed due diligence, develop strong relationships with management teams and use contacts and relationships within such industries to identify potential buyers as part of a coherent exit strategy. As the firm has expanded to include teams in Europe, Asia, Japan, South America,Sub-Saharan Africa and MENA, the industry groups have also grown and reach across even more geographies, disciplines and funds. | |
• | Variable Deal Sizes. Our teams are staffed not only to effectively pursue large transactions, but also other transactions of varying sizes. We often invest in smaller companies and this has allowed us to obtain greater diversity across our entire portfolio. On an overall basis, we believe that having the resources to complete investments of varying sizes provides our funds with the ability to enhance their investment returns while providing for prudent industry, geographic and size diversification. | |
• | Control and Influence Oriented. Our Corporate Private Equity funds, other than our growth funds and our funds focused on emerging markets, typically acquire, either alone or as part of a consortium, control of companies in leveraged buyout transactions. Additionally, we seek |
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to obtain board representation and typically appoint our investment professionals and senior advisors to represent us on the board of a company in which we invest. Where our funds, either alone or as part of a consortium, are not the controlling investor, we typically, subject to applicable regulatory requirements, acquire significant voting and other rights with a view to securing influence over conduct of the business. |
• | Driving Value Creation. Our Corporate Private Equity teams seek to make investments in portfolio companies in which our particular strengths and resources, including industry expertise, extensive local presence across the globe and deep business relationships, may be employed to their best advantage. Typically, as part of a Corporate Private Equity investment, Carlyle’s investment teams will develop and execute a customized, value creation thesis that underpins the projected investment return for the company. The value creation plan is developed during a thorough due diligence effort and draws on the deep resources available across our global platform, specifically relying on: |
• | Industry Sector and Geographic Specialists: Our investment professionals and our specialists dedicated to nine industry sectors, who provide extensive sector-specific knowledge and local market expertise. | |
• | Global Platform and One Carlyle Culture: Our global team and global presence that enables us to support international expansion efforts and global supply chain initiatives. |
• | Senior Advisors: Our 27 Senior Advisors, primarily deeply experienced former CEOs, who work with our investment teams during due diligence, provide board-level governance and support and advise our portfolio company CEOs. |
• | Network of Specialist Consultants and Advisors: Our extensive pool of advisors who provide specialist expertise to support specific value creation initiatives. |
• | Pursuing Best Exit Alternatives. In determining when to exit an investment, our private equity teams consider whether a portfolio company has achieved its objectives, the financial returns and the appropriate timing in industry cycles and company development to strive for the optimal value. Senior members of the fund’s investment committee must approve all exit decisions. From inception through September 30, 2011, our Corporate Private Equity funds have invested approximately $48 billion in 414 transactions, and we have fully realized 253 of these investments. |
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• | Pursue an Opportunistic Strategy. In general, our real estate funds have focused on single asset transactions, using an opportunistic real estate investment strategy. We follow this approach because we believe that pursuing single assets enables us to better underwrite the factors that contribute to the fundamental value of each property; mitigate concentration risk; establish appropriateasset-by-asset capital structures; and maintain governance over major property-level decisions. In addition, direct ownership of assets typically enables us to effectively employ an active asset management approach and reduce financing and operating risk, while increasing the visibility of factors that affect the overall returns of the investment. We evaluate the risk and return factors that are inherent in each specific property situation. We believe we have an in-depth understanding of the key factors affecting real property markets, flows of domestic and cross-border capital and macroeconomic trends, which allow us to identify, analyze and evaluate potential investments quickly and creatively, often in connection with complex transactions. | |
• | Seek out Strong Joint Venture Partners or Managers. Where appropriate, we seek out joint venture partners or managers with significant operational expertise. For each joint venture, we design structures and terms that provide situationally appropriate incentives, often including, for example, the subordination of the joint venture partner’s equity and profits interest to that of a fund, claw back provisionsand/or profits escrow accounts in favor of a fund, and exclusivity. We also typically structure positions with control or veto rights over major decisions. | |
• | Source Deals Directly. Our teams endeavor to establish “market presence” in our target geographies where we have a history of operating in our local markets and benefit from extensive long-term relationships with developers, corporate real estate owners, institutional investors and private owners. Such relationships have resulted in our ability to source investments on a direct negotiated basis. We generally seek to avoid situations in which there are a large number of competitive bidders and prioritize situations that offer the opportunity to negotiate with owners directly in non-bid processes. | |
• | Focus on Sector-Specific Strategies. Our real estate funds focus on specific sectors and markets in areas where we believe the fundamentals are sound and dynamic capital markets allow for identification of assets whose value is not fully recognized. The real estate funds we advise have invested according to strategies established in several main sectors: office, hotel, retail, industrial, for-sale residential, apartment and senior living. | |
• | Actively Manage our Real Estate Investments. Our real estate investments often require active management to uncover and create value. Accordingly, we have put in place experienced local asset management teams. These teams add value through analysis and execution of capital expenditure programs, development projects, lease negotiations, operating cost reduction programs and asset dispositions. The asset management teams work closely with the other real estate professionals to effectively formulate and implement strategic management plans. | |
• | Manage the Exit of Investments. We believe that “exit management” is as important as traditional asset management in order to take full advantage of the typically short windows of opportunity created by temporary imbalances in capital market forces that affect real estate. In determining when to exit an investment, our real estate teams consider whether an investment has fulfilled its strategic plan, the depth of the market and generally prevailing industry conditions. |
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• | Source Investment Opportunities. Our Global Market Strategies teams source investment opportunities through our global network and strong relationships with the financial community. The teams source assets from both the primary and secondary markets. All of our closed-end Global Market Strategies funds focus on sourcing investment opportunities that are consistent with their respective return objectives. We typically target portfolio companies that have a demonstrated track record of profitability, market leadership in their respective niche, predictability of cash flow, a definable competitive advantage and products or services that are value added to its customer base. | |
• | Conduct Fundamental Due Diligence and Perform Capital Structure Analysis. After an opportunity is identified, our Global Market Strategies teams conduct fundamental due diligence to determine the relative value of the potential investment and capital structure analyses to determine the credit worthiness. Our due diligence approach typically incorporates meetings with management, company facility visits, discussions with industry analysts and consultants and an in-depth examination of financial results and projections. Our structured credit team adheres to strict credit approval processes to ensure that every investment brought into a fund’s portfolio is first reviewed by experienced senior investment professionals and then presented to a credit committee, which approves or declines the investment. | |
• | Evaluation of Macroeconomic Factors. Our Global Market Strategies teams evaluate technical factors such as supply and demand, the market’s expectations surrounding an issuer and the existence of short- and long-term value creation or destruction catalysts. Inherent in all stages of credit evaluation is a determination of the likelihood of potential catalysts emerging, such as corporate reorganizations, recapitalizations, asset sales, changes in a company’s liquidity and mergers and acquisitions. Our Global Market Strategies teams constantly evaluate the overall investment climate given their assessment of the economic outlook, changes in industry fundamentals, market changes, redemption risk, financial market liquidity and valuation levels. | |
• | Risk Minimization. Our Global Market Strategies teams seek to make investments in capital structures to enable companies to both expand and weather downturnsand/or below-plan performance. Our Global Market Strategies teams seek to structure investments with strong financial covenants, frequent reporting requirements and board representation if possible. Through board observation rights or a board seat, our Global Market Strategies teams have historically provided a consultative, interactive approach to equity sponsors and management partners as part of the overall portfolio management process. |
• | Premium on Liquidity. Our hedge funds generally run liquid portfolios that place an emphasis on maintaining tradable assets in their respective funds. Additionally, they generally employ long and short positions and construct their portfolios to produce returns absent broad market movements. | |
• | Unique, Actionable Idea Generation. The public markets are thoroughly analyzed by the numerous competitors in asset management. However, due to technical factors or general investor sentiment, securities can become over or undervalued quickly relative to their intrinsic value. Our hedge fund managers separate their research teams into industry and geography specific analysts in order to develop in-depth coverage on companies and sectors to generate proprietary research with actionable alpha-generating ideas as prices evolve. |
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• | Strong Risk Management Oversight. A well-controlled risk profile is an important part of our Global Market Strategies investment methodology. Our risk officers constantly assess the portfolios of our hedge funds in light of market movements. In addition, Global Market Strategies has a separate team which has developed a rigorous risk management system whereby we analyze the concentration risk, liquidity risk, historical scenario risk analysis, counterparty risk and value at risk of our various funds on a daily basis. |
• | Depth of Investment Expertise. AlpInvest has dedicated teams for each area of focus, allowing it to attract and retain talent with the required skill-set for each strategy. AlpInvest professionals have trading, operational, portfolio and risk management expertise. From atop-down perspective, AlpInvest investment professionals seek to position the Fund of Funds Solutions to capitalize on market opportunities through focused research and allocation of resources. From abottom-up perspective, they seek to build deep relationships with underlying fund managers that are strengthened by the investment professionals’ relevant experience in the broader financial markets. AlpInvest investment professionals hold advisory board positions in the vast majority of the active funds in which it has invested. |
• | Discipline. AlpInvest professionals focus on diversification, risk management and downside protection. Its processes include the analysis and interpretation of macro-developments in the global economy and the assessment of a wide variety of issues which can influence the emphasis placed on sectors, geographies and asset classes when constructing investment portfolios. A team of AlpInvest investment professionals performs investment analysis of each proposed investment with an underlying fund manager or company that includes due diligence and market analysis, considering both financial and non-financial issues. All investment decisions must ultimately be approved by a majority of the members of AlpInvest’s Investment Committee, which is comprised of five AlpInvest managing partners. After making an investment commitment, the investment portfolios are subject to at least semi-annual reviews comprising both quantitative and qualitative performance evaluations conducted by the respective investment team responsible for each investment as well as AlpInvest’s chief financial officer and chief operating officer. |
• | Innovation. AlpInvest professionals seek to leverage the intellectual capital within its organization and strategy-focused investment teams to take advantage of synergies that exist within other areas of the firm to identify emerging trends, market anomalies and new investment technologies to facilitate the formation of new strategies, as well as to set the direction for exiting strategies. This market intelligence provides them with an additional feedback channel for the development of new investment products. | |
• | Corporate Social Responsibility (“CSR”). AlpInvest has adopted the UN Global Compact as a CSR framework to evaluate fund managers and portfolio companies. AlpInvest has fully integrated CSR into its investment process and actively engages with fund managers and other stakeholders in the private equity markets to promote sustainability and improved corporate governance. In addition, the firm seeks opportunities to invest in sustainability solutions. |
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Name | Age | Position | ||||
William E. Conway, Jr. | 62 | Director of Carlyle Group Management L.L.C., Founder and Co-Chief Executive Officer | ||||
Daniel A. D’Aniello | 65 | Director of Carlyle Group Management L.L.C., Founder and Chairman | ||||
David M. Rubenstein | 62 | Director of Carlyle Group Management L.L.C., Founder and Co-Chief Executive Officer | ||||
Glenn A. Youngkin | 45 | Chief Operating Officer | ||||
Adena T. Friedman | 42 | Chief Financial Officer | ||||
Jeffrey W. Ferguson | 46 | General Counsel |
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All Other | ||||||||||||||||||||
Salary | Bonus | Compensation | Total | |||||||||||||||||
Name and Principal Position | Year | ($) | ($) | ($)(1) | ($) | |||||||||||||||
William E. Conway, | 2011 | 275,000 | 3,545,850 | 6,125 | (2) | 3,826,975 | ||||||||||||||
Jr., Founder and Co-Chief Executive Officer | ||||||||||||||||||||
(co-principal executive officer) | ||||||||||||||||||||
Daniel A. D’Aniello, | 2011 | 275,000 | 3,545,850 | 6,125 | (2) | 3,826,975 | ||||||||||||||
Founder and Chairman | ||||||||||||||||||||
(co-principal executive officer) | ||||||||||||||||||||
David M. Rubenstein, | 2011 | 275,000 | 3,545,850 | 6,125 | (2) | 3,826,975 | ||||||||||||||
Founder and Co-Chief Executive Officer | ||||||||||||||||||||
(co-principal executive officer) | ||||||||||||||||||||
Glenn A. Youngkin, | 2011 | 275,000 | 3,000,000 | (4) | ||||||||||||||||
Chief Operating Officer | ||||||||||||||||||||
(former interim principal financial officer)(3) | ||||||||||||||||||||
Adena T. Friedman | 2011 | 200,961 | 1,900,000 | — | 2,100,961 | |||||||||||||||
Chief Financial Officer | ||||||||||||||||||||
(principal financial officer)(3) |
(1) | As discussed above, pursuant to commitments we made to CalPERS and Mubadala at the times of those institutions’ investments in our firm, our founders own all of their equity interests in our firm through their ownership interests in the Parent Entities and, accordingly, do not directly own carried interest at the fund level, but instead benefit, together with our other equity owners, from the carried interest and other income that is retained by the firm through our founders’ ownership interests in the Parent Entities. Accordingly, we have not historically recorded, and following this offering do not anticipate that we will record, compensation expense (positive or negative) in respect of our founders’ indirect ownership of carried interest. |
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(2) | This amount represents our 401(k) matching contribution. | |
(3) | Mr. Youngkin served as our interim principal financial officer from October 2010 until Ms. Friedman became our principal financial officer effective on March 28, 2011. |
(4) | The amount of compensation expense that would have been recorded on an accrual basis in respect of direct carried interest allocations to Mr. Youngkin for 2011 is not yet available. This amount does not reflect actual cash carried interest distributions to Mr. Youngkin during such period. For financial statement reporting purposes, compensation expense is equal to the sum of the carried interest distributions during the year and the change in the value of carried interest during the year related to unrealized investments. Such expense could also turn negative in the event of a reduction of previously accrued allocation of carried interest due to negative adjustments in the fair value of fund investments. The ultimate amount of actual carried interest that may be realized and received by our named executive officers may be more or less than the amounts indicated and is unknown at this time. The amount in the table also includes $6,125 representing our 401(k) matching contribution. |
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• | the timing of exchanges — for instance, the increase in any tax deductions will vary depending on the fair value, which may fluctuate over time, of the depreciable or amortizable assets of Carlyle Holdings at the time of each exchange; | |
• | the price of our common units at the time of the exchange — the increase in any tax deductions, as well as the tax basis increase in other assets, of Carlyle Holdings, is directly proportional to the price of our common units at the time of the exchange; | |
• | the extent to which such exchanges are taxable — if an exchange is not taxable for any reason, increased deductions will not be available; and | |
• | the amount and timing of our income — the corporate taxpayers will be required to pay 85% of the cash tax savings as and when realized, if any. If the corporate taxpayers do not have taxable income, the corporate taxpayers are not required (absent a change of control or other circumstances requiring an early termination payment) to make payments under the tax receivable agreement for that taxable year because no cash tax savings will have been realized. However, any cash tax savings that do not result in realized benefits in a given tax year will likely generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments under the tax receivables agreement. |
• | we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange; | |
• | to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and | |
• | we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to partners’ capital. |
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Carlyle Holdings Partnership Units | ||||||||||||||||||||||||||||||||||||||||
Beneficially Owned(1)(2) | ||||||||||||||||||||||||||||||||||||||||
Common Units Beneficially Owned(1)(2) | After the | |||||||||||||||||||||||||||||||||||||||
% After | % After | Offering | ||||||||||||||||||||||||||||||||||||||
the Offering | the Offering | After the | Transactions | |||||||||||||||||||||||||||||||||||||
Transactions | Transactions | Offering | Assuming the | |||||||||||||||||||||||||||||||||||||
Assuming the | Assuming the | Transactions | Underwriters’ | |||||||||||||||||||||||||||||||||||||
% Prior | Underwriters’ | Underwriters’ | Assuming the | Option is | ||||||||||||||||||||||||||||||||||||
to the | Option | Option is | Prior to the Offering | Underwriters’ | Exercised | |||||||||||||||||||||||||||||||||||
Offering | is Not | Exercised | Transactions | Option is Not Exercised | in Full | |||||||||||||||||||||||||||||||||||
Name of Beneficial Owner | Number | Transactions | Exercised | in Full | Number | % | Number | % | Number | % | ||||||||||||||||||||||||||||||
William E. Conway, Jr. | — | — | — | — | % | % | % | |||||||||||||||||||||||||||||||||
Daniel A. D’Aniello | — | — | — | — | % | % | % | |||||||||||||||||||||||||||||||||
David M. Rubenstein | — | — | — | — | % | % | % | |||||||||||||||||||||||||||||||||
Glenn A. Youngkin | — | — | — | — | % | % | % | |||||||||||||||||||||||||||||||||
Adena T. Friedman | — | — | — | — | % | % | % | |||||||||||||||||||||||||||||||||
Directors and executive officers as a group (6 persons) | — | — | — | — | % | % | % |
(1) | Subject to certain requirements and restrictions, the partnership units of Carlyle Holdings are exchangeable for common units of The Carlyle Group L.P. on aone-for-one basis, from and after the first anniversary date of the closing of this offering (subject to the terms of the exchange agreement). See “Certain Relationships and Related Person Transactions — Exchange Agreement.” Beneficial ownership of Carlyle Holdings partnership units reflected in this table is presented separately from the beneficial ownership of the common units of The Carlyle Group L.P. for which such partnership units may be exchanged. | |
(2) | TCG Carlyle Global Partners L.L.C., an entity wholly-owned by our senior Carlyle professionals, will hold a special voting unit in The Carlyle Group L.P. that will entitle it, on those few matters that may be submitted for a vote of The Carlyle Group L.P. common unitholders, to participate in the vote on the same basis as the common unitholders and provide it with a number of votes that is equal to the aggregate number of vested and unvested partnership units in Carlyle Holdings held by the limited partners of Carlyle Holdings on the relevant record date. See “Material Provisions of The Carlyle Group L.P. Partnership Agreement — Withdrawal or Removal of the General Partner,” “— Meetings; Voting” and “— Election of Directors of General Partner.” |
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Initial Public Offering Price per Common Unit | ||||||||||||
$ | $ | $ | ||||||||||
(Dollars in millions, except per unit data) | ||||||||||||
Outstanding Equity Following the Offering Transactions | ||||||||||||
Number of common units offered in this offering | ||||||||||||
Common units outstanding after the offering transactions | ||||||||||||
Number of Carlyle Holdings partnership units held by wholly-owned subsidiaries of The Carlyle Group L.P. after this offering | ||||||||||||
Carlyle Holdings partnership units held by our existing owners after the offering transactions (including Carlyle Holdings partnership units issued upon conversion of notes)(1): | ||||||||||||
Vested | ||||||||||||
Unvested | ||||||||||||
Total | ||||||||||||
Common units outstanding after the offering transactions if all outstanding Carlyle Holdings partnership units (other than those held by wholly-owned subsidiaries of The Carlyle Group L.P.) were exchanged for newly-issued common units on aone-for-one basis | ||||||||||||
Carlyle Holdings Equity Ownership Percentages Following the Offering Transactions | ||||||||||||
Percentage held by wholly-owned subsidiaries of The Carlyle Group L.P. | % | % | % | |||||||||
Percentage held by existing owners (other than wholly-owned subsidiaries of The Carlyle Group L.P.) | % | % | % | |||||||||
% | % | % | ||||||||||
Limited Partner Voting Power of The Carlyle Group L.P. Following the Offering Transactions | ||||||||||||
Percentage held by investors in this offering | % | % | % | |||||||||
Percentage held by existing owners | % | % | % | |||||||||
% | % | % | ||||||||||
Use of Proceeds | ||||||||||||
Proceeds from offering, net of underwriting discounts | $ | $ | $ | |||||||||
Estimated offering expenses to be borne by Carlyle Holdings | ||||||||||||
Remaining proceeds to Carlyle Holdings | $ | $ | $ | |||||||||
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Initial Public Offering Price per Common Unit | ||||||||||||
$ | $ | $ | ||||||||||
(Dollars in millions, except per unit data) | ||||||||||||
Pro Forma Cash and Cash Equivalents and Capitalization of The Carlyle Group L.P. | ||||||||||||
Cash and cash equivalents | $ | $ | $ | |||||||||
Loans payable | $ | $ | $ | |||||||||
Subordinated loan payable to Mubadala | ||||||||||||
Loans payable to Consolidated Funds | ||||||||||||
Redeemable non-controlling interests in consolidated entities | ||||||||||||
Members’ equity | ||||||||||||
Accumulated other comprehensive income | ||||||||||||
Equity appropriated for Consolidated Funds | ||||||||||||
Non-controlling interests in consolidated entities | ||||||||||||
Total capitalization | $ | $ | $ | |||||||||
Dilution | ||||||||||||
Pro forma net tangible book value per common unit after the offering | $ | $ | $ | |||||||||
Dilution in pro forma net tangible book value per common unit to investors in this offering | $ | $ | $ |
(1) | As further described in “Organizational Structure — Reorganization,” the number of Carlyle Holdings partnership units to be received by Mubadala (as part of the Reorganization) upon conversion of the notes held by it will vary depending on the initial public offering price per common unit in this offering. |
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Initial Public Offering Price per Common Unit | ||||||||||||
$ | $ | $ | ||||||||||
(Dollars in millions, except per unit data) | ||||||||||||
Outstanding Equity Following the Offering Transactions(1) | ||||||||||||
Number of common units offered in this offering | ||||||||||||
Common units outstanding after the offering transactions | ||||||||||||
Number of Carlyle Holdings partnership units held by wholly-owned subsidiaries of The Carlyle Group L.P. after this offering | ||||||||||||
Carlyle Holdings partnership units held by our existing owners after the offering transactions (including Carlyle Holdings partnership units issued upon conversion of notes)(1): | ||||||||||||
Vested | ||||||||||||
Unvested | ||||||||||||
Total | ||||||||||||
Common units outstanding after the offering transactions if all outstanding Carlyle Holdings partnership units (other than those held by wholly-owned subsidiaries of The Carlyle Group L.P.) were exchanged for newly-issued common units on aone-for-one basis | ||||||||||||
Carlyle Holdings Equity Ownership Percentages Following the Offering Transactions | ||||||||||||
Percentage held by wholly-owned subsidiaries of The Carlyle Group L.P. | % | % | % | |||||||||
Percentage held by existing owners (other than wholly-owned subsidiaries of The Carlyle Group L.P.) | % | % | % | |||||||||
% | % | % | ||||||||||
Limited Partner Voting Power of The Carlyle Group L.P. Following the Offering Transactions | ||||||||||||
Percentage held by investors in this offering | % | % | % | |||||||||
Percentage held by existing owners | % | % | % | |||||||||
% | % | % | ||||||||||
Use of Proceeds | ||||||||||||
Proceeds from offering, net of underwriting discounts | $ | $ | $ | |||||||||
Proceeds used by The Carlyle Group L.P. to purchase newly-issued Carlyle Holdings partnership units from Carlyle Holdings | ||||||||||||
Estimated offering expenses to be borne by Carlyle Holdings | ||||||||||||
Remaining proceeds to Carlyle Holdings | $ | $ | $ | |||||||||
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Initial Public Offering Price per Common Unit | ||||||||||||
$ | $ | $ | ||||||||||
(Dollars in millions, except per unit data) | ||||||||||||
Pro Forma Cash and Cash Equivalents and Capitalization of The Carlyle Group L.P. | ||||||||||||
Cash and cash equivalents | $ | $ | $ | |||||||||
Loans payable | $ | $ | $ | |||||||||
Subordinated loan payable to Mubadala | ||||||||||||
Loans payable of Consolidated Funds | ||||||||||||
Redeemable non-controlling interests in consolidated entities | ||||||||||||
Members’ equity | ||||||||||||
Accumulated other comprehensive loss | ||||||||||||
Equity appropriated for Consolidated Funds | ||||||||||||
Non-controlling interests in consolidated entities | ||||||||||||
Total capitalization | $ | $ | $ | |||||||||
Dilution | ||||||||||||
Pro forma net tangible book value per common unit after the offering | $ | $ | $ | |||||||||
Dilution in pro forma net tangible book value per common unit to investors in this offering | $ | $ | $ |
(1) | As further described in “Organizational Structure — Reorganization,” the number of Carlyle Holdings partnership units to be received by Mubadala (as part of the Reorganization) upon conversion of the notes held by it will vary depending on the initial public offering price per common unit in this offering. |
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• | approved by the conflicts committee, although our general partner is not obligated to seek such approval; | |
• | approved by the vote of a majority of the voting power of our voting units, excluding any voting units owned by our general partner and any of its affiliates, although our general partner is not obligated to seek such approval; or | |
• | approved by our general partner in good faith as determined under the partnership agreement. |
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• | the amount and timing of cash expenditures, including those relating to compensation; | |
• | the amount and timing of investments and dispositions; | |
• | levels of indebtedness; | |
• | tax matters; | |
• | levels of reserves; and | |
• | issuances of additional partnership securities. |
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State Law Fiduciary Duty Standards | Fiduciary duties are generally considered to include an obligation to act in good faith and with due care and loyalty. In the absence of a provision in a partnership agreement providing otherwise, the duty of care would generally require a general partner to inform itself prior to making a business decision of all material information reasonably available to it. In the absence of a provision in a partnership agreement providing otherwise, the duty of loyalty would generally prohibit a general partner of a Delaware limited partnership from taking any action or engaging in any transaction that is not fair to and in the best interests of the partnership where a conflict of interest is present. | |
Partnership Agreement Modified Standards | General. Our partnership agreement contains provisions that waive duties of or consent to conduct by our general partner and its affiliates that might otherwise raise issues about compliance with fiduciary duties or applicable law. For example, our partnership agreement provides that when our general partner, in its capacity as our general partner, is permitted to or required to make a decision in its “sole discretion” or “pursuant to any provision of our partnership agreement not subject to an express standard of “good faith” then our general partner will not be subject to any fiduciary duty and will be entitled to consider only such interests and factors as it desires, including its own interests, and will have no duty or obligation (fiduciary or otherwise) to give any consideration to any factors affecting us or any limited partners, including our common unitholders, and will not be subject to any different standards imposed by the partnership agreement or otherwise existing of law, in equity or otherwise. In addition, when our general partner is acting in its individual capacity, as opposed to in its capacity as our general partner, it may act without any fiduciary obligation to us or the common unitholders whatsoever. These standards reduce the obligations to which our general partner would otherwise be held. | |
In addition to the other more specific provisions limiting the obligations of our general partner, our partnership agreement further provides that our general partner and its officers and directors will not be liable to us, our limited partners, including our common unitholders, or assignees for errors of judgment or for any acts or omissions unless there has been a final and non-appealable judgment by a court of competent jurisdiction determining that our general partner or its |
272
officers and directors acted in bad faith or engaged in fraud or willful misconduct. | ||
Special Provisions Regarding Affiliated Transactions. Our partnership agreement generally provides that affiliated transactions and resolutions of conflicts of interest not approved by a vote of holders of voting units (excluding voting units owned by the general partner and its affiliates) and that are not approved by the conflicts committee of the board of directors of our general partner will conclusively be deemed approved by the partnership and all partners, and will not constitute a breach of our partnership agreement or of any duty (including any fiduciary duty) existing at law, in equity or otherwise, unless our general Partner subjectively believes that the resolution or course of action in respect of such conflict of interest is opposed to the best interests of the partnership. | ||
In any proceeding brought by or on behalf of any limited partner, including our common unitholders, or our partnership or any other person bound by our partnership agreement, the person bringing or prosecuting such proceeding will have the burden of proving that the general Partner subjectively believed that such resolution or course of action was opposed to the best interests of the partnership. These standards reduce the obligations to which our general partner would otherwise be held. | ||
Rights and Remedies of Common Unitholders Restricted by Modified Standards | The Delaware Limited Partnership Act generally provides that a limited partner may institute legal action on behalf of the partnership to recover damages from a third-party where a general partner has refused to institute the action or where an effort to cause a general partner to do so is not likely to succeed. In addition, the statutory or case law of some jurisdictions may permit a limited partner to institute legal action on behalf of himself and all other similarly situated limited partners to recover damages from a general partner for violations of its fiduciary duties to the limited partners. |
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• | represents that the transferee has the capacity, power and authority to enter into our partnership agreement; | |
• | will become bound by the terms of, and will be deemed to have agreed to be bound by, our partnership agreement; | |
• | gives the consents, approvals, acknowledgements and waivers set forth in our partnership agreement, such as the approval of all transactions and agreements that we are entering into in connection with our formation and this offering. |
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THE CARLYLE GROUP L.P. PARTNERSHIP AGREEMENT
276
• | to elect the directors of our general partner in limited circumstances, | |
• | to approve some amendments to our partnership agreement, or | |
• | to take other action under our partnership agreement, |
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283
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• | our general partner; | |
• | any departing general partner; | |
• | any person who is or was a tax matters partner, officer or director of our general partner or any departing general partner; | |
• | any officer or director of our general partner or any departing general partner who is or was serving at the request of our general partner or any departing general partner as an officer, |
286
director, employee, member, partner, tax matters partner, agent, fiduciary or trustee of another person; |
• | any person who controls a general partner or departing general partner; |
• | any person who is named in the registration statement of which this prospectus forms a part as being or about to become a director of our general partner; or |
• | any person designated by our general partner in its sole discretion. |
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• | promptly after becoming available, a copy of our U.S. federal income tax returns (excluding for the avoidance of doubt, information that is specific to another partner); | |
• | a current list of the name and last known business, residence or mailing address of each record holder; and | |
• | copies of our partnership agreement, the certificate of limited partnership of the partnership, related amendments and powers of attorney under which they have been executed. |
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• | offer, pledge, sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to sell, grant any option, right or warrant to purchase, lend or otherwise transfer or dispose of, directly or indirectly, any common units or any securities convertible into or exercisable or exchangeable for common units; or | |
• | enter into any swap or other arrangement that transfers to another, in whole or in part, any of the economic consequences of ownership of the common units; |
• | during the last 17 days of the180-day restricted period we issue an earnings release or material news or a material event relating to Carlyle occurs; or | |
• | prior to the expiration of the180-day restricted period, we announce that we will release earnings results during the16-day period beginning on the last day of the180-day period, |
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Maximum | ||||
Period | Number | |||
12-18 months after the closing of this offering | Units | |||
18-24 months after the closing of this offering | Units | |||
24 months after the closing of this offering | Units |
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Number of | ||||
Underwriter | Common Units | |||
J.P. Morgan Securities LLC | ||||
Citigroup Global Markets Inc. | ||||
Credit Suisse Securities (USA) LLC | ||||
Total | ||||
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318
Paid by Us | ||||||||
No Exercise | Full Exercise | |||||||
Per common unit | $ | $ | ||||||
Total | $ | $ |
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• | our future prospects and those of our industry in general; | |
• | our revenues, earnings and other financial operating information in recent periods; | |
• | the general condition of the securities markets at the time of this offering; | |
• | an assessment of our management; | |
• | the price-earnings ratios, price revenues ratios, market prices of securities and financial and operating information of companies engaged in activities similar to ours; and | |
• | other factors deemed relevant by the underwriters and us. |
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Page | ||||
The Carlyle Group L.P.: | ||||
F-2 | ||||
F-3 | ||||
F-4 | ||||
Carlyle Group: | ||||
F-5 | ||||
Combined and Consolidated Financial Statements — December 31, 2010, 2009 and 2008: | ||||
F-6 | ||||
F-7 | ||||
F-8 | ||||
F-9 | ||||
F-10 | ||||
Unaudited Condensed Combined and Consolidated Financial Statements — September 30, 2011 and 2010: | ||||
F-65 | ||||
F-66 | ||||
F-67 | ||||
F-68 | ||||
F-69 | ||||
AlpInvest Partners N.V.: | ||||
F-126 | ||||
F-127 | ||||
F-128 |
F-1
F-2
Assets | ||||
Cash | $ | 1 | ||
Members’ Equity | ||||
Members’ Equity | $ | 1 | ||
F-3
1. | ORGANIZATION |
2. | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES |
3. | PARTNERS’ CAPITAL |
F-4
F-5
December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 616.9 | �� | $ | 488.1 | |||
Cash and cash equivalents held at Consolidated Funds | 729.5 | 52.4 | ||||||
Restricted cash | 16.5 | 14.6 | ||||||
Restricted cash and securities of Consolidated Funds | 135.5 | — | ||||||
Investments and accrued performance fees | 2,594.3 | 1,279.2 | ||||||
Investments of Consolidated Funds | 11,864.6 | 163.9 | ||||||
Due from affiliates and other receivables, net | 325.8 | 433.0 | ||||||
Due from affiliates and other receivables of Consolidated Funds, net | 239.6 | 4.9 | ||||||
Fixed assets, net | 39.6 | 37.0 | ||||||
Deposits and other | 41.3 | 23.7 | ||||||
Intangible assets, net | 448.4 | — | ||||||
Deferred tax assets | 10.8 | 12.8 | ||||||
Total assets | $ | 17,062.8 | $ | 2,509.6 | ||||
Liabilities and equity | ||||||||
Loans payable | $ | 597.5 | $ | 412.2 | ||||
Subordinated loan payable to affiliate | 494.0 | — | ||||||
Loans payable of Consolidated Funds | 10,433.5 | — | ||||||
Accounts payable, accrued expenses and other liabilities | 211.6 | 122.7 | ||||||
Accrued compensation and benefits | 520.9 | 350.4 | ||||||
Due to Carlyle partners | 948.6 | 360.9 | ||||||
Due to affiliates | 23.6 | 33.2 | ||||||
Deferred revenue | 202.2 | 190.6 | ||||||
Deferred tax liabilities | 0.2 | 0.2 | ||||||
Other liabilities of Consolidated Funds | 618.5 | 20.8 | ||||||
Accrued giveback obligations | 119.6 | 305.0 | ||||||
Total liabilities | 14,170.2 | 1,796.0 | ||||||
Commitments and contingencies | ||||||||
Redeemable non-controlling interests in consolidated entities | 694.0 | — | ||||||
Members’ equity | 929.7 | 448.5 | ||||||
Accumulated other comprehensive loss | (34.5 | ) | (11.0 | ) | ||||
Total members’ equity | 895.2 | 437.5 | ||||||
Equity appropriated for Consolidated Funds | 938.5 | — | ||||||
Non-controlling interests in consolidated entities | 364.9 | 276.1 | ||||||
Total equity | 2,198.6 | 713.6 | ||||||
Total liabilities and equity | $ | 17,062.8 | $ | 2,509.6 | ||||
F-6
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Revenues | ||||||||||||
Fund management fees | $ | 770.3 | $ | 788.1 | $ | 811.4 | ||||||
Performance fees | ||||||||||||
Realized | 266.4 | 11.1 | 59.3 | |||||||||
Unrealized | 1,215.6 | 485.6 | (944.0 | ) | ||||||||
Total performance fees | 1,482.0 | 496.7 | (884.7 | ) | ||||||||
Investment income (loss) | ||||||||||||
Realized | 11.9 | (5.2 | ) | 5.7 | ||||||||
Unrealized | 60.7 | 10.2 | (110.6 | ) | ||||||||
Total investment income (loss) | 72.6 | 5.0 | (104.9 | ) | ||||||||
Interest and other income | 21.4 | 27.3 | 38.2 | |||||||||
Interest and other income of Consolidated Funds | 452.6 | 0.7 | 18.7 | |||||||||
Total revenues | 2,798.9 | 1,317.8 | (121.3 | ) | ||||||||
Expenses | ||||||||||||
Compensation and benefits | ||||||||||||
Base compensation | 265.2 | 264.2 | 297.2 | |||||||||
Performance fee related | ||||||||||||
Realized | 46.6 | 1.1 | 23.3 | |||||||||
Unrealized | 117.2 | 83.1 | (223.1 | ) | ||||||||
Total compensation and benefits | 429.0 | 348.4 | 97.4 | |||||||||
General, administrative and other expenses | 177.2 | 236.6 | 245.1 | |||||||||
Interest | 17.8 | 30.6 | 46.1 | |||||||||
Interest and other expenses of Consolidated Funds | 233.3 | 0.7 | 6.8 | |||||||||
Loss (gain) from early extinguishment of debt, net of related expenses | 2.5 | (10.7 | ) | — | ||||||||
Equity issued for affiliate debt financing | 214.0 | — | — | |||||||||
Loss on CCC liquidation | — | — | 147.0 | |||||||||
Total expenses | 1,073.8 | 605.6 | 542.4 | |||||||||
Other income (loss) | ||||||||||||
Net investment gains (losses) of Consolidated Funds | (245.4 | ) | (33.8 | ) | 162.5 | |||||||
Income (loss) before provision for income taxes | 1,479.7 | 678.4 | (501.2 | ) | ||||||||
Provision for income taxes | 20.3 | 14.8 | 12.5 | |||||||||
Net income (loss) | 1,459.4 | 663.6 | (513.7 | ) | ||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (66.2 | ) | (30.5 | ) | 94.5 | |||||||
Net income (loss) attributable to Carlyle Group | $ | 1,525.6 | $ | 694.1 | $ | (608.2 | ) | |||||
F-7
Redeemable | ||||||||||||||||||||||||||||
Accumulated | Equity | Non-controlling | Non-controlling | |||||||||||||||||||||||||
Other | Appropriated for | Interests in | Interests in | |||||||||||||||||||||||||
Members’ | Comprehensive | Consolidated | Consolidated | Total | Consolidated | Comprehensive | ||||||||||||||||||||||
Equity | Income (Loss) | Funds | Entities | Equity | Entities | Income (Loss) | ||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Equity at December 31, 2007 | $ | 1,203.7 | $ | 52.4 | $ | — | $ | 1,103.1 | $ | 2,359.2 | $ | — | ||||||||||||||||
Deconsolidation of certain co-investment entities and Hedge Fund | — | — | — | (824.2 | ) | (824.2 | ) | — | ||||||||||||||||||||
Contributions | 347.6 | — | — | 258.6 | 606.2 | — | ||||||||||||||||||||||
Distributions due to reorganization (non-cash) | (551.2 | ) | (13.8 | ) | — | — | (565.0 | ) | — | |||||||||||||||||||
Distributions | (309.1 | ) | — | — | (319.9 | ) | (629.0 | ) | — | |||||||||||||||||||
Net income (loss) | (608.2 | ) | — | — | 94.5 | (513.7 | ) | — | $ | (513.7 | ) | |||||||||||||||||
Currency translation adjustments | — | (50.9 | ) | — | (9.2 | ) | (60.1 | ) | — | (60.1 | ) | |||||||||||||||||
Change in fair value of cash flow hedge instrument | — | (10.9 | ) | — | — | (10.9 | ) | — | (10.9 | ) | ||||||||||||||||||
Equity at December 31, 2008 | 82.8 | (23.2 | ) | — | 302.9 | 362.5 | — | $ | (584.7 | ) | ||||||||||||||||||
Consolidation of a real estate fund | — | — | — | 8.7 | 8.7 | — | ||||||||||||||||||||||
Contributions | 43.5 | — | — | 14.0 | 57.5 | — | ||||||||||||||||||||||
Distributions | (371.9 | ) | — | — | (24.4 | ) | (396.3 | ) | — | |||||||||||||||||||
Net income (loss) | 694.1 | — | — | (30.5 | ) | 663.6 | — | $ | 663.6 | |||||||||||||||||||
Currency translation adjustments | — | 9.1 | — | 5.4 | 14.5 | — | 14.5 | |||||||||||||||||||||
Change in fair value of cash flow hedge instrument | — | 3.1 | — | — | 3.1 | — | 3.1 | |||||||||||||||||||||
Equity at December 31, 2009 | 448.5 | (11.0 | ) | — | 276.1 | 713.6 | — | $ | 681.2 | |||||||||||||||||||
Adjustment relating to initial consolidation of the CLOs | — | — | 1,213.3 | — | 1,213.3 | — | ||||||||||||||||||||||
Acquisition of hedge funds | — | — | — | — | — | 694.0 | ||||||||||||||||||||||
Equity issued for affiliate debt financing | 214.0 | — | — | — | 214.0 | — | ||||||||||||||||||||||
Contributions | 51.7 | — | — | 53.1 | 104.8 | — | ||||||||||||||||||||||
Distributions | (1,310.1 | ) | — | — | (157.4 | ) | (1,467.5 | ) | — | |||||||||||||||||||
Net income (loss) | 1,525.6 | — | (256.6 | ) | 190.4 | 1,459.4 | — | $ | 1,459.4 | |||||||||||||||||||
Currency translation adjustments | — | (22.7 | ) | (18.2 | ) | 2.7 | (38.2 | ) | — | (38.2 | ) | |||||||||||||||||
Change in fair value of cash flow hedge instrument | — | (0.8 | ) | — | — | (0.8 | ) | — | (0.8 | ) | ||||||||||||||||||
Equity at December 31, 2010 | $ | 929.7 | $ | (34.5 | ) | $ | 938.5 | $ | 364.9 | $ | 2,198.6 | $ | 694.0 | $ | 1,420.4 | |||||||||||||
F-8
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 1,459.4 | $ | 663.6 | $ | (513.7 | ) | |||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 24.5 | 28.6 | 27.1 | |||||||||
Amortization of deferred financing fees | 1.6 | 2.8 | 3.2 | |||||||||
Non-cash equity issued for affiliate debt financing | 214.0 | — | — | |||||||||
Non-cash performance fees | (1,344.4 | ) | (485.6 | ) | 962.2 | |||||||
Loss (gain) on early extinguishment of debt | 2.5 | (10.7 | ) | — | ||||||||
Loss from CCC liquidation | — | — | 152.3 | |||||||||
Other non-cash amounts included in net income | (25.9 | ) | 17.6 | (47.5 | ) | |||||||
Consolidated Funds related: | ||||||||||||
Realized/unrealized (gain) loss on investments of Consolidated Funds | (502.0 | ) | 30.2 | (162.5 | ) | |||||||
Realized/unrealized loss from loans payable of Consolidated Funds | 752.4 | — | — | |||||||||
Purchases of investments by Consolidated Funds | (3,254.3 | ) | (0.9 | ) | (3.7 | ) | ||||||
Proceeds from sale of investments by Consolidated Funds | 5,432.6 | 2.5 | 503.5 | |||||||||
Non-cash interest income, net | (113.7 | ) | — | — | ||||||||
Change in cash and cash equivalents held at Consolidated Funds | 149.8 | 18.9 | 112.3 | |||||||||
Change in other receivables held at Consolidated Funds | (58.5 | ) | — | — | ||||||||
Change in other liabilities held at Consolidated Funds | 126.7 | — | — | |||||||||
Other assets and liabilities of a consolidated hedge fund | — | — | (276.8 | ) | ||||||||
Investment (income) loss | (69.0 | ) | (0.9 | ) | 99.7 | |||||||
Purchases of investments | (114.8 | ) | (24.3 | ) | (172.7 | ) | ||||||
Proceeds from the sale of investments | 41.9 | 24.8 | 167.6 | |||||||||
Proceeds from sale of trading securities and other | 7.9 | — | (30.1 | ) | ||||||||
Change in due from affiliates and other receivables | 14.5 | (11.7 | ) | 5.3 | ||||||||
Change in deposits and other | (18.7 | ) | (2.1 | ) | 6.1 | |||||||
Change in accounts payable, accrued expenses and other liabilities | 41.9 | 12.3 | (274.1 | ) | ||||||||
Change in accrued compensation and benefits | 121.8 | 91.7 | (344.0 | ) | ||||||||
Change in due to affiliates | (5.9 | ) | 17.8 | (122.7 | ) | |||||||
Change in deferred revenue | (7.3 | ) | 44.1 | (37.2 | ) | |||||||
Net cash provided by operating activities | 2,877.0 | 418.7 | 54.3 | |||||||||
Cash flows from investing activities | ||||||||||||
Change inheld-to-maturity investments, net | — | — | 21.4 | |||||||||
Change in restricted cash | (0.3 | ) | — | (0.8 | ) | |||||||
Purchases of fixed assets, net | (21.2 | ) | (27.5 | ) | (36.1 | ) | ||||||
Purchases of intangible assets (management contracts) | (58.5 | ) | — | — | ||||||||
Acquisitions, net of cash acquired | (105.6 | ) | — | — | ||||||||
Net cash used in investing activities | (185.6 | ) | (27.5 | ) | (15.5 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Proceeds from loans payable | 994.0 | 6.7 | 83.1 | |||||||||
Payments on loans payable | (411.9 | ) | (303.6 | ) | (9.1 | ) | ||||||
Net payment on loans payable of Consolidated Funds | (2,280.5 | ) | — | — | ||||||||
Contributions from members | 46.1 | 43.5 | 79.0 | |||||||||
Distributions to members | (787.8 | ) | (215.6 | ) | (253.9 | ) | ||||||
Distributions due to reorganization | — | — | (171.5 | ) | ||||||||
Contributions from non-controlling interest holders | 48.4 | 14.0 | 258.6 | |||||||||
Distributions to non-controlling interest holders | (157.4 | ) | (24.4 | ) | (319.9 | ) | ||||||
Change in due to/from affiliates financing activities | 16.4 | (105.3 | ) | (133.4 | ) | |||||||
Change in due to/from affiliates and other receivables of Consolidated Funds | (0.7 | ) | (2.6 | ) | (2.3 | ) | ||||||
Net cash used in financing activities | (2,533.4 | ) | (587.3 | ) | (469.4 | ) | ||||||
Effect of foreign exchange rate changes | (29.2 | ) | 3.4 | (3.6 | ) | |||||||
Increase (decrease) in cash and cash equivalents | 128.8 | (192.7 | ) | (434.2 | ) | |||||||
Cash and cash equivalents, beginning of period | 488.1 | 680.8 | 1,115.0 | |||||||||
Cash and cash equivalents, end of period | $ | 616.9 | $ | 488.1 | $ | 680.8 | ||||||
Supplemental disclosures | ||||||||||||
Cash paid for interest | $ | 15.8 | $ | 27.7 | $ | 42.7 | ||||||
Cash paid for income taxes | $ | 24.0 | $ | 11.9 | $ | 17.4 | ||||||
Supplemental non-cash disclosures | ||||||||||||
Net assets related to consolidation of the CLOs | $ | 1,213.3 | $ | — | $ | — | ||||||
Net assets related to acquisition of hedge funds | $ | 694.0 | $ | — | $ | — | ||||||
Non-cash contributions from members | $ | 5.6 | $ | — | $ | — | ||||||
Non-cash distributions to members | $ | 522.3 | $ | 156.3 | $ | 213.4 | ||||||
Non-cash contributions from non-controlling interest holders | $ | 4.7 | $ | 8.7 | $ | — | ||||||
Non-cash distributions due to reorganization | $ | — | $ | — | $ | 565.0 | ||||||
F-9
1. | Organization and Basis of Presentation |
F-10
2. | Summary of Significant Accounting Policies |
F-11
F-12
F-13
F-14
F-15
F-16
F-17
F-18
F-19
3. | Acquisitions and Acquired Intangible Assets |
Cash | $ | 157.8 | ||
Promissory notes | 97.5 | |||
Contingently issuable equity interest in the Company | 51.3 | |||
Contingent and other consideration | 141.0 | |||
Total | $ | 447.6 | ||
F-20
Receivables and other current assets | $ | 116.8 | ||
Net fixed assets and other noncurrent assets | 2.3 | |||
Finite-lived intangible assets — contractual rights | 389.6 | |||
Finite-lived intangible assets — trademarks | 4.0 | |||
Total identifiable assets acquired | 512.7 | |||
Other liabilities | (65.1 | ) | ||
Net assets acquired | $ | 447.6 | ||
Year Ended December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Total revenues | $ | 2,914.8 | $ | 1,489.1 | ||||
Net income attributable to Carlyle Group | $ | 1,514.9 | $ | 742.2 | ||||
F-21
2011 | $ | 50.5 | ||
2012 | 50.5 | |||
2013 | 50.5 | |||
2014 | 50.1 | |||
2015 | 47.6 | |||
Thereafter | 199.2 | |||
$ | 448.4 | |||
4. | Fair Value Measurement |
F-22
F-23
Level I | Level II | Level III | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Investments of Consolidated Funds: | ||||||||||||||||
Equity securities | $ | 9.5 | $ | 166.0 | $ | 36.8 | $ | 212.3 | ||||||||
Bonds | — | — | 460.3 | 460.3 | ||||||||||||
Loans | — | — | 10,433.5 | 10,433.5 | ||||||||||||
Partnership and LLC interests | — | 5.7 | 14.8 | 20.5 | ||||||||||||
Hedge funds | — | 698.5 | — | 698.5 | ||||||||||||
Other | — | 5.6 | 33.9 | 39.5 | ||||||||||||
9.5 | 875.8 | 10,979.3 | 11,864.6 | |||||||||||||
Trading securities and other | — | — | 21.8 | 21.8 | ||||||||||||
Restricted securities of Consolidated Funds | 100.7 | — | — | 100.7 | ||||||||||||
Total | $ | 110.2 | $ | 875.8 | $ | 11,001.1 | $ | 11,987.1 | ||||||||
Liabilities | ||||||||||||||||
Loans payable of the CLOs | $ | — | $ | — | $ | 10,418.5 | $ | 10,418.5 | ||||||||
Interest rate swap | — | 8.5 | — | 8.5 | ||||||||||||
Derivative instruments of the CLOs | — | — | 1.9 | 1.9 | ||||||||||||
Subordinated loan payable to affiliate | — | — | 494.0 | 494.0 | ||||||||||||
Earnouts(1) | — | — | 43.7 | 43.7 | ||||||||||||
Contingent equity(1) | — | — | 51.3 | 51.3 | ||||||||||||
Total | $ | — | $ | 8.5 | $ | 11,009.4 | $ | 11,017.9 | ||||||||
(1) | Related to acquisition of Claren Road (see Note 3) |
F-24
Level I | Level II | Level III | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Investments of Consolidated Funds: | ||||||||||||||||
Equity securities | $ | — | $ | — | $ | 98.9 | $ | 98.9 | ||||||||
Partnership and LLC interests | — | — | 50.5 | 50.5 | ||||||||||||
Other | — | — | 14.5 | 14.5 | ||||||||||||
— | — | 163.9 | 163.9 | |||||||||||||
Trading securities and other | — | — | 43.9 | 43.9 | ||||||||||||
Total | $ | — | $ | — | $ | 207.8 | $ | 207.8 | ||||||||
Liabilities | ||||||||||||||||
Interest rate swap | $ | — | $ | 7.8 | $ | — | $ | 7.8 | ||||||||
Total | $ | — | $ | 7.8 | $ | — | $ | 7.8 | ||||||||
Financial Assets | ||||||||||||||||||||||||||||||||
Year Ended December 31, 2010 | Year Ended | |||||||||||||||||||||||||||||||
Investments of Consolidated Funds | December 31, 2009 | |||||||||||||||||||||||||||||||
Partnership | Trading | Investments of | Trading | |||||||||||||||||||||||||||||
Equity | and LLC | Securities and | Consolidated | Securities and | ||||||||||||||||||||||||||||
Securities | Bonds | Loans | Interests | Other | Other | Funds | Other | |||||||||||||||||||||||||
Balance, beginning of period | $ | 98.9 | $ | — | $ | — | $ | 50.5 | $ | 14.5 | $ | 43.9 | $ | 187.0 | $ | 46.2 | ||||||||||||||||
Adjustment relating to initial consolidation of the CLOs(1) | 25.5 | 592.0 | 12,282.4 | — | 113.4 | (24.2 | ) | — | — | |||||||||||||||||||||||
Transfers out(2) | (208.1 | ) | — | — | (10.6 | ) | (10.5 | ) | — | — | — | |||||||||||||||||||||
Purchases | 4.6 | 165.7 | 3,080.0 | 6.9 | — | — | 9.6 | — | ||||||||||||||||||||||||
Sales | (34.1 | ) | (319.1 | ) | (4,886.7 | ) | (10.5 | ) | (22.3 | ) | — | (2.5 | ) | — | ||||||||||||||||||
Realized and unrealized gains (losses), net | 150.0 | 21.7 | (42.2 | ) | (21.5 | ) | (61.2 | ) | 2.1 | (30.2 | ) | (2.3 | ) | |||||||||||||||||||
Balance, end of period | $ | 36.8 | $ | 460.3 | $ | 10,433.5 | $ | 14.8 | $ | 33.9 | $ | 21.8 | $ | 163.9 | $ | 43.9 | ||||||||||||||||
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date | $ | 13.5 | $ | 35.7 | $ | 230.9 | $ | (19.1 | ) | $ | (14.3 | ) | $ | (0.7 | ) | $ | (12.1 | ) | $ | (2.3 | ) | |||||||||||
(1) | Beginning January 1, 2010, the Company consolidated the CLOs (excluding certain CLOs that were consolidated beginning in August 2010 and December 2010 upon their acquisition). The Company’s investment in these CLOs of $24.2 million has been eliminated in the combined and consolidated balance sheets on January 1, 2010. | |
(2) | Transfers out of Level III financial assets were due to changes in the observability of market inputs used in the valuation of such assets. Transfers are measured as of the beginning of the quarter in which the transfer occurs. |
F-25
Financial Liabilities Year Ended December 31, 2010 | ||||||||||||||||||||
Derivative | Subordinated | |||||||||||||||||||
Loans Payable | Instruments of | Loan Payable | Contingent | |||||||||||||||||
of the CLOs | the CLOs | to Affiliate | Earnouts | Equity | ||||||||||||||||
Balance, beginning of period | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||
Adjustment relating to initial consolidation of the CLOs | 12,410.5 | — | — | — | — | |||||||||||||||
Borrowings | 2.8 | — | — | — | — | |||||||||||||||
Paydowns | (2,275.2 | ) | (0.1 | ) | — | — | — | |||||||||||||
Issuances | — | — | 494.0 | 43.7 | 51.3 | |||||||||||||||
Realized and unrealized losses, net | 280.4 | 2.0 | — | — | — | |||||||||||||||
Balance, end of period | $ | 10,418.5 | $ | 1.9 | $ | 494.0 | $ | 43.7 | $ | 51.3 | ||||||||||
Changes in unrealized losses (gains) included in earnings related to financial liabilities still held at the reporting date | $ | 579.6 | $ | (2.5 | ) | $ | — | $ | — | $ | — | |||||||||
5. | Investments |
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Accrued performance fees | $ | 2,216.6 | $ | 999.5 | ||||
Equity method investments, excluding accrued performance fees | 355.9 | 235.8 | ||||||
Trading securities and other, at fair value | 21.8 | 43.9 | ||||||
Total investments | $ | 2,594.3 | $ | 1,279.2 | ||||
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 1,823.8 | $ | 880.6 | ||||
Real Assets | 208.3 | 117.2 | ||||||
Global Market Strategies | 184.5 | 1.7 | ||||||
Total | $ | 2,216.6 | $ | 999.5 | ||||
F-26
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | (70.2 | ) | $ | (263.4 | ) | ||
Real Assets | (48.2 | ) | (37.6 | ) | ||||
Global Market Strategies | (1.2 | ) | (4.0 | ) | ||||
Total | $ | (119.6 | ) | $ | (305.0 | ) | ||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Corporate Private Equity | $ | 1,259.0 | $ | 499.3 | $ | (732.3 | ) | |||||
Real Assets | 78.4 | (5.7 | ) | (154.7 | ) | |||||||
Global Market Strategies | 144.6 | 3.1 | 2.3 | |||||||||
Total | $ | 1,482.0 | $ | 496.7 | $ | (884.7 | ) | |||||
F-27
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 228.9 | $ | 130.0 | ||||
Real Assets | 117.5 | 103.9 | ||||||
Global Market Strategies | 9.5 | 1.9 | ||||||
Total | $ | 355.9 | $ | 235.8 | ||||
Global | ||||||||||||||||||||||||||||||||||||
Corporate Private Equity | Real Assets | Market Strategies | ||||||||||||||||||||||||||||||||||
For the Years Ended | For the Years Ended | For the Years Ended | ||||||||||||||||||||||||||||||||||
December 31, | December 31, | December 31, | ||||||||||||||||||||||||||||||||||
2010 | 2009 | 2008 | 2010 | 2009 | 2008 | 2010 | 2009 | 2008 | ||||||||||||||||||||||||||||
Statement of income information | ||||||||||||||||||||||||||||||||||||
Investment Income | $ | 733.2 | $ | 181.5 | $ | 116.4 | $ | 354.7 | $ | 341.5 | $ | 151.4 | $ | 266.3 | $ | 172.9 | $ | 170.5 | ||||||||||||||||||
Expenses | (582.8 | ) | (573.1 | ) | (548.9 | ) | (435.2 | ) | (420.9 | ) | (474.4 | ) | (42.3 | ) | (42.1 | ) | (109.5 | ) | ||||||||||||||||||
Net investment income (loss) | 150.4 | (391.6 | ) | (432.5 | ) | (80.5 | ) | (79.4 | ) | (323.0 | ) | 224.0 | 130.8 | 61.0 | ||||||||||||||||||||||
Net realized and unrealized gain (loss) | 9,911.3 | 4,185.3 | (7,182.3 | ) | 2,364.2 | 2,196.3 | 492.5 | 529.1 | 477.8 | (803.3 | ) | |||||||||||||||||||||||||
Net income (loss) | $ | 10,061.7 | $ | 3,793.7 | $ | (7,614.8 | ) | $ | 2,283.7 | $ | 2,116.9 | $ | 169.5 | $ | 753.1 | $ | 608.6 | $ | (742.3 | ) | ||||||||||||||||
Aggregate Totals | ||||||||||||
For the Years Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statement of income information | ||||||||||||
Investment Income | $ | 1,354.2 | $ | 695.9 | $ | 438.3 | ||||||
Expenses | (1,060.3 | ) | (1,036.1 | ) | (1,132.8 | ) | ||||||
Net investment income (loss) | 293.9 | (340.2 | ) | (694.5 | ) | |||||||
Net realized and unrealized gain (loss) | 12,804.6 | 6,859.4 | (7,493.1 | ) | ||||||||
Net income (loss) | $ | 13,098.5 | $ | 6,519.2 | $ | (8,187.6 | ) | |||||
F-28
Corporate | Global | Aggregate | ||||||||||||||||||||||||||||||
Private Equity | Real Assets | Market Strategies | Totals | |||||||||||||||||||||||||||||
As of December 31, | As of December 31, | As of December 31, | As of December 31, | |||||||||||||||||||||||||||||
2010 | 2009 | 2010 | 2009 | 2010 | 2009 | 2010 | 2009 | |||||||||||||||||||||||||
Balance sheet information | ||||||||||||||||||||||||||||||||
Investments | $ | 35,697.6 | $ | 26,822.6 | $ | 19,665.7 | $ | 15,831.7 | $ | 2,357.7 | $ | 1,867.0 | $ | 57,721.0 | $ | 44,521.3 | ||||||||||||||||
Total assets | 41,232.6 | 27,479.1 | 20,535.5 | 17,100.2 | 2,554.4 | 2,159.0 | 64,322.5 | 46,738.3 | ||||||||||||||||||||||||
Debt | 115.1 | 168.9 | 867.9 | 1,013.3 | — | — | 983.0 | 1,182.2 | ||||||||||||||||||||||||
Other liabilities | 444.3 | 419.5 | 504.3 | 708.5 | 43.9 | 91.6 | 992.5 | 1,219.6 | ||||||||||||||||||||||||
Total liabilities | 559.4 | 588.4 | 1,372.2 | 1,721.8 | 43.9 | 91.6 | 1,975.5 | 2,401.8 | ||||||||||||||||||||||||
Partners’ capital | 40,673.2 | 26,890.7 | 19,163.3 | 15,378.4 | 2,510.5 | 2,067.4 | 62,347.0 | 44,336.5 |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Income (loss) from equity investments | $ | 66.3 | $ | 5.3 | $ | (51.7 | ) | |||||
Income (loss) from trading securities | 2.6 | (4.4 | ) | (53.2 | ) | |||||||
Other investment income | 3.7 | 4.1 | — | |||||||||
Total | $ | 72.6 | $ | 5.0 | $ | (104.9 | ) | |||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Corporate Private Equity | $ | 49.0 | $ | 10.4 | $ | (20.6 | ) | |||||
Real Assets | 8.0 | (7.4 | ) | (29.6 | ) | |||||||
Global Market Strategies | 9.3 | 2.3 | (1.5 | ) | ||||||||
Total | $ | 66.3 | $ | 5.3 | $ | (51.7 | ) | |||||
F-29
Percentage of Investments of | ||||||||||||||||
Fair Value | Consolidated Funds | |||||||||||||||
Geographic Region/Instrument Type/Industry | December 31, | December 31, | ||||||||||||||
Description or Investment Strategy | 2010 | 2009 | 2010 | 2009 | ||||||||||||
United States | ||||||||||||||||
Equity securities: | ||||||||||||||||
Aerospace and defense | $ | 166.0 | $ | 87.0 | 1.40 | % | 53.08 | % | ||||||||
Industrial | — | 7.1 | — | 4.33 | % | |||||||||||
Financial services | — | 0.3 | — | 0.18 | % | |||||||||||
Healthcare | 0.1 | 0.1 | — | 0.04 | % | |||||||||||
Technology and business services | — | 0.1 | — | 0.09 | % | |||||||||||
Total equity securities (cost of $120.3 and $105.5 at December 31, 2010 and 2009, respectively) | 166.1 | 94.6 | 1.40 | % | 57.72 | % | ||||||||||
Partnership and LLC interests: | ||||||||||||||||
Real estate | 20.5 | 50.5 | 0.17 | % | 30.81 | % | ||||||||||
Total Partnership and LLC interests (cost of $23.1 and $34.7 at December 31, 2010 and 2009, respectively) | 20.5 | 50.5 | 0.17 | % | 30.81 | % | ||||||||||
Other: | ||||||||||||||||
Real estate | 5.6 | 14.5 | 0.05 | % | 8.85 | % | ||||||||||
Total other (cost of $3.8 and $9.0 at December 31, 2010 and 2009, respectively) | 5.6 | 14.5 | 0.05 | % | 8.85 | % | ||||||||||
Total investment in hedge funds | 698.5 | — | 5.89 | % | — | |||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | 242.1 | — | 2.04 | % | — | |||||||||||
Equity | 37.3 | — | 0.31 | % | — | |||||||||||
Loans | 7,636.0 | — | 64.36 | % | — | |||||||||||
Other | 0.2 | — | — | — | ||||||||||||
Total assets of the CLOs (cost of $8,031.2 at December 31, 2010) | 7,915.6 | — | 66.71 | % | — | |||||||||||
Total United States | $ | 8,806.3 | $ | 159.6 | 74.22 | % | 97.38 | % | ||||||||
Canada | ||||||||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | $ | 8.0 | $ | — | 0.07 | % | — | |||||||||
Loans | 51.3 | — | 0.43 | % | — | |||||||||||
Total assets of the CLOs (cost of $59.3 at December 31, 2010) | 59.3 | — | 0.50 | % | — | |||||||||||
Total Canada | $ | 59.3 | $ | — | 0.50 | % | — | |||||||||
F-30
Percentage of Investments of | ||||||||||||||||
Fair Value | Consolidated Funds | |||||||||||||||
Geographic Region/Instrument Type/Industry | December 31, | December 31, | ||||||||||||||
Description or Investment Strategy | 2010 | 2009 | 2010 | 2009 | ||||||||||||
Europe | ||||||||||||||||
Equity securities: | ||||||||||||||||
Industrial | $ | — | $ | 3.6 | — | 2.20 | % | |||||||||
Telecommunications and media | — | 0.7 | — | 0.42 | % | |||||||||||
Total equity securities (cost of $2.5 at December 31, 2009) | — | 4.3 | — | 2.62 | % | |||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | 210.1 | — | 1.77 | % | — | |||||||||||
Equity | 9.0 | — | 0.08 | % | — | |||||||||||
Loans | 2,746.2 | — | 23.15 | % | — | |||||||||||
Other | 33.7 | — | 0.28 | % | — | |||||||||||
Total assets of the CLOs (cost of $3,347.9 at December 31, 2010) | 2,999.0 | — | 25.28 | % | — | |||||||||||
Total Europe | $ | 2,999.0 | $ | 4.3 | 25.28 | % | 2.62 | % | ||||||||
Total investments in Consolidated Funds (cost of $11,585.6 and $151.7 at December 31, 2010 and 2009, respectively) | $ | 11,864.6 | $ | 163.9 | 100.00 | % | 100.00 | % | ||||||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Interest income from investments | $ | 435.5 | $ | — | $ | 12.8 | ||||||
Other income | 17.1 | 0.7 | 5.9 | |||||||||
Total | $ | 452.6 | $ | 0.7 | $ | 18.7 | ||||||
F-31
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Gains (losses) from investments of Consolidated Funds | $ | 502.0 | $ | (33.8 | ) | $ | 162.5 | |||||
Losses from liabilities of CLOs | (752.4 | ) | — | — | ||||||||
Gains on other assets of CLOs | 5.0 | — | — | |||||||||
Total | $ | (245.4 | ) | $ | (33.8 | ) | $ | 162.5 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Realized gains (losses) | $ | 74.1 | $ | (6.4 | ) | $ | 181.4 | |||||
Net change in unrealized gains (losses) | 427.9 | (27.4 | ) | (18.9 | ) | |||||||
Total | $ | 502.0 | $ | (33.8 | ) | $ | 162.5 | |||||
6. | Non-controlling Interests in Consolidated Entities |
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Non-Carlyle interests in Consolidated Funds | $ | 218.9 | $ | 179.7 | ||||
Non-Carlyle interests in majority-owned subsidiaries | 137.0 | 93.1 | ||||||
Non-controlling interest in carried interest and cash held for carried interest distributions | 9.0 | 3.3 | ||||||
Non-controlling interests in consolidated entities | $ | 364.9 | $ | 276.1 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Non-Carlyle interests in Consolidated Funds | $ | 163.8 | $ | (25.5 | ) | $ | 117.7 | |||||
Non-Carlyle interests in majority-owned subsidiaries | 20.0 | (4.3 | ) | (24.7 | ) | |||||||
Non-controlling interest in carried interest and cash held for carried interest distributions | 6.6 | (0.7 | ) | 1.5 | ||||||||
Net income (loss) attributable to other non-controlling interests in consolidated entities | 190.4 | (30.5 | ) | 94.5 | ||||||||
Net loss attributable to equity appropriated for CLOs | (256.6 | ) | — | — | ||||||||
Non-controlling interests in income (loss) of consolidated entities | $ | (66.2 | ) | $ | (30.5 | ) | $ | 94.5 | ||||
F-32
7. | Comprehensive Income (Loss) |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Net income (loss) | $ | 1,459.4 | $ | 663.6 | $ | (513.7 | ) | |||||
Change in fair value of cash flow hedge instrument | (0.8 | ) | 3.1 | (10.9 | ) | |||||||
Currency translation adjustments | (38.2 | ) | 14.5 | (60.1 | ) | |||||||
Other comprehensive income (loss) | (39.0 | ) | 17.6 | (71.0 | ) | |||||||
Comprehensive income (loss) | 1,420.4 | 681.2 | (584.7 | ) | ||||||||
Less: Comprehensive loss attributable to equity appropriated for Consolidated Funds | 274.8 | — | — | |||||||||
Less: Comprehensive (income) loss attributable to non-controlling interests in consolidated entities | (193.1 | ) | 25.1 | (85.3 | ) | |||||||
Comprehensive income (loss) attributable to Carlyle Group | $ | 1,502.1 | $ | 706.3 | $ | (670.0 | ) | |||||
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Unrealized losses on cash flow hedge instrument | $ | (8.6 | ) | $ | (7.8 | ) | ||
Currency translation adjustments | (25.9 | ) | (3.2 | ) | ||||
Total | $ | (34.5 | ) | $ | (11.0 | ) | ||
F-33
8. | Fixed Assets, Net |
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Furniture, fixtures and equipment | $ | 34.4 | $ | 33.3 | ||||
Computer hardware and software | 68.7 | 48.5 | ||||||
Leasehold improvements | 44.2 | 41.6 | ||||||
Total fixed assets | 147.3 | 123.4 | ||||||
Less: accumulated depreciation | (107.7 | ) | (86.4 | ) | ||||
Net fixed assets | $ | 39.6 | $ | 37.0 | ||||
9. | Loans Payable |
2013 | $ | 75.0 | ||
2014 | 175.0 | |||
2015 | 250.0 | |||
$ | 500.0 | |||
F-34
F-35
2011 | $ | 7.5 | ||
2012 | 7.5 | |||
2013 | 7.5 | |||
2014 | 7.5 | |||
2015 | 17.5 | |||
$ | 47.5 | |||
F-36
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Borrowing | Average | Maturity in | ||||||||||||||
Outstanding | Fair Value | Interest Rate | Years | |||||||||||||
Senior secured notes | $ | 11,037.1 | $ | 9,772.2 | 1.20 | % | 9.36 | |||||||||
Subordinated notes, Income notes and Preferred shares | 440.7 | 636.4 | n/a | (a) | 9.18 | |||||||||||
Combination notes | 11.7 | 9.9 | n/a | (b) | 12.06 | |||||||||||
Total | $ | 11,489.5 | $ | 10,418.5 | ||||||||||||
(a) | The subordinated notes, income notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs. | |
(b) | The combination notes do not have contractual interest rates and have recourse only to U.S. Treasury securities and OATS specifically held to collateralize such combination notes. |
F-37
10. | Commitments and Contingencies |
Unfunded | ||||
Commitments | ||||
(Dollars in millions) | ||||
Corporate Private Equity | $ | 838.3 | ||
Real Assets | 250.0 | |||
Global Market Strategies | 29.8 | |||
$ | 1,118.1 | |||
F-38
F-39
2011 | $ | 33.0 | ||
2012 | 34.8 | |||
2013 | 32.1 | |||
2014 | 31.8 | |||
2015 | 28.9 | |||
Thereafter | 137.4 | |||
$ | 298.0 | |||
F-40
F-41
F-42
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Balance, beginning of period | $ | 29.6 | $ | 40.9 | $ | — | ||||||
Compensation expense | 6.8 | 12.5 | 35.6 | |||||||||
Contract termination costs | 1.7 | 16.5 | 13.9 | |||||||||
Costs paid or settled | (15.0 | ) | (40.3 | ) | (8.6 | ) | ||||||
Balance, end of period | $ | 23.1 | $ | 29.6 | $ | 40.9 | ||||||
11. | Related Party Transactions |
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Unbilled receivable for giveback obligations from current and former employees | $ | 12.7 | $ | 38.3 | ||||
Unbilled receivable for giveback obligations from Carlyle’s individual partners | 26.1 | 116.6 | ||||||
Notes receivable and accrued interest from affiliates | 106.7 | 132.8 | ||||||
Other receivables from unconsolidated funds and affiliates, net | 180.3 | 145.3 | ||||||
Total | $ | 325.8 | $ | 433.0 | ||||
F-43
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Due to affiliates of Consolidated Funds | $ | 1.2 | $ | 2.1 | ||||
Due to non-consolidated joint venture partner | 13.1 | 20.7 | ||||||
Other | 9.3 | 10.4 | ||||||
Total | $ | 23.6 | $ | 33.2 | ||||
F-44
12. | Derivative Instruments in the CLOs |
F-45
December 31, 2010 | ||||||||||||
Notional | Fair Value — | Fair Value — | ||||||||||
Amount | Assets | Liabilities | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 354.4 | $ | 25.9 | $ | (5.6 | ) | |||||
Currency option(s) | 102.0 | 11.4 | — | |||||||||
Credit-related | ||||||||||||
Credit risk swap contract(s) | 9.3 | 0.1 | — | |||||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | 28.0 | 0.2 | — | |||||||||
$ | 37.6 | $ | (5.6 | ) | ||||||||
Year Ended December 31, 2010 | ||||||||||||
Change in | ||||||||||||
Realized | Unrealized | |||||||||||
Appreciation | Appreciation | |||||||||||
(Depreciation) | (Depreciation) | Total | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 22.3 | $ | (75.5 | ) | $ | (53.2 | ) | ||||
Currency option(s) | (0.1 | ) | 4.4 | 4.3 | ||||||||
Credit-related | ||||||||||||
Credit risk swap contract(s) | — | (1.2 | ) | (1.2 | ) | |||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | — | 0.1 | 0.1 | |||||||||
$ | 22.2 | $ | (72.2 | ) | $ | (50.0 | ) | |||||
F-46
13. | Income Taxes |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Current | ||||||||||||
Foreign income tax | $ | 15.4 | $ | 17.2 | $ | 15.3 | ||||||
State and local income tax (benefit) | 6.0 | 3.0 | (3.1 | ) | ||||||||
Subtotal | 21.4 | 20.2 | 12.2 | |||||||||
Deferred | ||||||||||||
Foreign income tax (benefit) | (1.1 | ) | (5.5 | ) | 0.3 | |||||||
State and local income tax | — | 0.1 | — | |||||||||
Subtotal | (1.1 | ) | (5.4 | ) | 0.3 | |||||||
Total provision for income taxes | $ | 20.3 | $ | 14.8 | $ | 12.5 | ||||||
As of December 31, | ||||||||
2010 | 2009 | |||||||
(Dollars in millions) | ||||||||
Deferred tax assets | ||||||||
Net operating loss | $ | 0.4 | $ | 3.4 | ||||
Depreciation and amortization | 1.2 | 0.8 | ||||||
Accrued bonuses | 6.7 | 6.4 | ||||||
Other | 2.5 | 2.2 | ||||||
Total deferred tax assets | $ | 10.8 | $ | 12.8 | ||||
Deferred tax liabilities | ||||||||
Other | $ | 0.2 | $ | 0.2 | ||||
Total deferred tax liabilities | $ | 0.2 | $ | 0.2 | ||||
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Statutory U.S. federal income tax rate | 35.00 | % | 35.00 | % | 35.00 | % | ||||||
Income passed through to Partners | (33.89 | )% | (33.00 | )% | (38.59 | )% | ||||||
Foreign income taxes | (0.15 | )% | (0.27 | )% | 0.48 | % | ||||||
State and local income taxes | 0.41 | % | 0.46 | % | 0.62 | % | ||||||
Effective income tax rate | 1.37 | % | 2.19 | % | (2.49 | )% | ||||||
F-47
14. | Segment Reporting |
F-48
F-49
December 31, 2010 and the Year Then Ended | ||||||||||||||||
Corporate | Global | |||||||||||||||
Private | Market | |||||||||||||||
Equity | Real Assets | Strategies | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Segment Revenues | ||||||||||||||||
Fund level fee revenues | ||||||||||||||||
Fund management fees | $ | 537.6 | $ | 144.0 | $ | 81.9 | $ | 763.5 | ||||||||
Portfolio advisory fees, net | 14.9 | 2.6 | 2.3 | 19.8 | ||||||||||||
Transaction fees, net | 21.5 | 8.6 | 0.1 | 30.2 | ||||||||||||
Total fund level fee revenues | 574.0 | 155.2 | 84.3 | 813.5 | ||||||||||||
Performance fees | ||||||||||||||||
Realized | 267.3 | (2.9 | ) | 9.8 | 274.2 | |||||||||||
Unrealized | 996.3 | 72.7 | 135.1 | 1,204.1 | ||||||||||||
Total performance fees | 1,263.6 | 69.8 | 144.9 | 1,478.3 | ||||||||||||
Investment income | ||||||||||||||||
Realized | 4.2 | 1.4 | 4.8 | 10.4 | ||||||||||||
Unrealized | 40.6 | 3.7 | 16.9 | 61.2 | ||||||||||||
Total investment income | 44.8 | 5.1 | 21.7 | 71.6 | ||||||||||||
Interest and other income | 14.8 | 4.9 | 2.7 | 22.4 | ||||||||||||
Total revenues | 1,897.2 | 235.0 | 253.6 | 2,385.8 | ||||||||||||
Segment Expenses | ||||||||||||||||
Direct compensation and benefits | ||||||||||||||||
Direct base compensation | 237.6 | 72.4 | 40.1 | 350.1 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 136.0 | 0.5 | 4.2 | 140.7 | ||||||||||||
Unrealized | 524.8 | (1.6 | ) | 70.6 | 593.8 | |||||||||||
Total direct compensation and benefits | 898.4 | 71.3 | 114.9 | 1,084.6 | ||||||||||||
General, administrative, and other indirect expenses | 168.1 | 69.2 | 32.1 | 269.4 | ||||||||||||
Interest | 11.4 | 3.8 | 2.6 | 17.8 | ||||||||||||
Total expenses | 1,077.9 | 144.3 | 149.6 | 1,371.8 | ||||||||||||
Economic Net Income | $ | 819.3 | $ | 90.7 | $ | 104.0 | $ | 1,014.0 | ||||||||
Fee Related Earnings | $ | 171.7 | $ | 14.7 | $ | 12.2 | $ | 198.6 | ||||||||
Net Performance Fees | $ | 602.8 | $ | 70.9 | $ | 70.1 | $ | 743.8 | ||||||||
Investment Income | $ | 44.8 | $ | 5.1 | $ | 21.7 | $ | 71.6 | ||||||||
Distributable Earnings | $ | 307.2 | $ | 12.7 | $ | 22.6 | $ | 342.5 | ||||||||
Segment assets as of December 31, 2010 | $ | 2,483.8 | $ | 738.3 | $ | 943.8 | $ | 4,165.9 | ||||||||
F-50
December 31, 2009 and the Year Then Ended | ||||||||||||||||
Corporate | Global | |||||||||||||||
Private | Market | |||||||||||||||
Equity | Real Assets | Strategies | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Segment Revenues | ||||||||||||||||
Fund level fee revenues | ||||||||||||||||
Fund management fees | $ | 536.0 | $ | 150.4 | $ | 68.8 | $ | 755.2 | ||||||||
Portfolio advisory fees, net | 15.9 | 1.6 | 0.7 | 18.2 | ||||||||||||
Transaction fees, net | 12.0 | 1.8 | 0.9 | 14.7 | ||||||||||||
Total fund level fee revenues | 563.9 | 153.8 | 70.4 | 788.1 | ||||||||||||
Performance fees | ||||||||||||||||
Realized | 3.5 | 5.9 | 1.6 | 11.0 | ||||||||||||
Unrealized | 491.8 | (13.6 | ) | 1.5 | 479.7 | |||||||||||
Total performance fees | 495.3 | (7.7 | ) | 3.1 | 490.7 | |||||||||||
Investment income | ||||||||||||||||
Realized | (2.7 | ) | 0.8 | 0.2 | (1.7 | ) | ||||||||||
Unrealized | 9.5 | 0.1 | (0.2 | ) | 9.4 | |||||||||||
Total investment income (loss) | 6.8 | 0.9 | — | 7.7 | ||||||||||||
Interest and other income | 10.8 | 14.3 | 2.2 | 27.3 | ||||||||||||
Total revenues | 1,076.8 | 161.3 | 75.7 | 1,313.8 | ||||||||||||
Segment Expenses | ||||||||||||||||
Direct compensation and benefits | ||||||||||||||||
Direct base compensation | 227.4 | 74.2 | 38.8 | 340.4 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 0.6 | 2.8 | 0.2 | 3.6 | ||||||||||||
Unrealized | 260.6 | (23.5 | ) | 1.0 | 238.1 | |||||||||||
Total direct compensation and benefits | 488.6 | 53.5 | 40.0 | 582.1 | ||||||||||||
General, administrative, and other indirect expenses | 168.0 | 84.2 | 32.6 | 284.8 | ||||||||||||
Interest | 19.8 | 6.7 | 4.1 | 30.6 | ||||||||||||
Total expenses | 676.4 | 144.4 | 76.7 | 897.5 | ||||||||||||
Economic Net Income (Loss) | $ | 400.4 | $ | 16.9 | $ | (1.0 | ) | $ | 416.3 | |||||||
Fee Related Earnings | $ | 159.5 | $ | 3.0 | $ | (2.9 | ) | $ | 159.6 | |||||||
Net Performance Fees | $ | 234.1 | $ | 13.0 | $ | 1.9 | $ | 249.0 | ||||||||
Investment Income | $ | 6.8 | $ | 0.9 | $ | — | $ | 7.7 | ||||||||
Distributable Earnings | $ | 159.7 | $ | 6.9 | $ | (1.3 | ) | $ | 165.3 | |||||||
Segment assets as of December 31, 2009 | $ | 1,516.5 | $ | 666.3 | $ | 130.1 | $ | 2,312.9 | ||||||||
F-51
Year Ended December 31, 2008 | ||||||||||||||||
Corporate | Global | |||||||||||||||
Private | Market | |||||||||||||||
Equity | Real Assets | Strategies | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Segment Revenues | ||||||||||||||||
Fund level fee revenues | ||||||||||||||||
Fund management fees | $ | 522.8 | $ | 157.0 | $ | 87.6 | $ | 767.4 | ||||||||
Portfolio advisory fees, net | 14.0 | 3.5 | 0.9 | 18.4 | ||||||||||||
Transaction fees, net | 19.9 | 5.7 | — | 25.6 | ||||||||||||
Total fund level fee revenues | 556.7 | 166.2 | 88.5 | 811.4 | ||||||||||||
Performance fees | ||||||||||||||||
Realized | 54.3 | 28.8 | 15.7 | 98.8 | ||||||||||||
Unrealized | (742.6 | ) | (192.7 | ) | (13.5 | ) | (948.8 | ) | ||||||||
Total performance fees | (688.3 | ) | (163.9 | ) | 2.2 | (850.0 | ) | |||||||||
Investment income (loss) | ||||||||||||||||
Realized | 18.6 | 5.8 | (6.7 | ) | 17.7 | |||||||||||
Unrealized | (13.8 | ) | (15.2 | ) | (55.7 | ) | (84.7 | ) | ||||||||
Total investment income (loss) | 4.8 | (9.4 | ) | (62.4 | ) | (67.0 | ) | |||||||||
Interest and other income | 19.3 | 16.7 | 2.2 | 38.2 | ||||||||||||
Total revenues | (107.5 | ) | 9.6 | 30.5 | (67.4 | ) | ||||||||||
Segment Expenses | ||||||||||||||||
Direct compensation and benefits | ||||||||||||||||
Direct base compensation | 195.0 | 68.7 | 30.6 | 294.3 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 33.3 | 16.3 | 7.3 | 56.9 | ||||||||||||
Unrealized | (417.9 | ) | (97.5 | ) | (6.6 | ) | (522.0 | ) | ||||||||
Total direct compensation and benefits | (189.6 | ) | (12.5 | ) | 31.3 | (170.8 | ) | |||||||||
General, administrative, and other indirect expenses | 188.1 | 90.3 | 38.5 | 316.9 | ||||||||||||
Interest | 32.9 | 9.9 | 3.3 | 46.1 | ||||||||||||
Total expenses | 31.4 | 87.7 | 73.1 | 192.2 | ||||||||||||
Economic Net Loss | $ | (138.9 | ) | $ | (78.1 | ) | $ | (42.6 | ) | $ | (259.6 | ) | ||||
Fee Related Earnings | $ | 160.0 | $ | 14.0 | $ | 18.3 | $ | 192.3 | ||||||||
Net Performance Fees | $ | (303.7 | ) | $ | (82.7 | ) | $ | 1.5 | $ | (384.9 | ) | |||||
Investment Income (Loss) | $ | 4.8 | $ | (9.4 | ) | $ | (62.4 | ) | $ | (67.0 | ) | |||||
Distributable Earnings | $ | 199.6 | $ | 32.3 | $ | 20.0 | $ | 251.9 | ||||||||
F-52
December 31, 2010 and the Year Then Ended | ||||||||||||||||
Total | ||||||||||||||||
Reportable | Consolidated | Carlyle | ||||||||||||||
Segments | Funds | Reconciling Items | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | $ | 2,385.8 | $ | 452.6 | $ | (39.5 | )(a) | $ | 2,798.9 | |||||||
Expenses | $ | 1,371.8 | $ | 278.0 | $ | (576.0 | )(b) | $ | 1,073.8 | |||||||
Other income (loss) | $ | — | $ | (251.5 | ) | $ | 6.1 | (c) | $ | (245.4 | ) | |||||
Economic net income | $ | 1,014.0 | $ | (76.9 | ) | $ | 542.6 | (d) | $ | 1,479.7 | ||||||
Total assets | $ | 4,165.9 | $ | 12,982.0 | $ | (85.1 | )(e) | $ | 17,062.8 |
December 31, 2009 and the Year Then Ended | ||||||||||||||||
Total | ||||||||||||||||
Reportable | Consolidated | Carlyle | ||||||||||||||
Segments | Funds | Reconciling Items | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | $ | 1,313.8 | $ | 0.7 | $ | 3.3 | (a) | $ | 1,317.8 | |||||||
Expenses | $ | 897.5 | $ | 0.7 | $ | (292.6 | )(b) | $ | 605.6 | |||||||
Other loss | $ | — | $ | (33.8 | ) | $ | — | (c) | $ | (33.8 | ) | |||||
Economic net income | $ | 416.3 | $ | (33.8 | ) | $ | 295.9 | (d) | $ | 678.4 | ||||||
Total assets | $ | 2,312.9 | $ | 230.9 | $ | (34.2 | )(e) | $ | 2,509.6 |
Year Ended December 31, 2008 | ||||||||||||||||
Total | ||||||||||||||||
Reportable | Consolidated | Carlyle | ||||||||||||||
Segments | Funds | Reconciling Items | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | $ | (67.4 | ) | $ | 18.7 | $ | (72.6 | )(a) | $ | (121.3 | ) | |||||
Expenses | $ | 192.2 | $ | 16.7 | $ | 333.5 | (b) | $ | 542.4 | |||||||
Other income | $ | — | $ | 162.5 | $ | — | (c) | $ | 162.5 | |||||||
Economic net income | $ | (259.6 | ) | $ | 164.5 | $ | (406.1 | )(d) | $ | (501.2 | ) |
(a) | The Revenues adjustment principally represents fund management and performance fees earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, and adjustments for amounts attributable to non-controlling interests in consolidated entities which were included in Revenues in the Company’s segment reporting. | |
(b) | The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Company, adjustments for partner compensation and |
F-53
charges and credits associated with Carlyle corporate actions and non-recurring items as detailed below (Dollars in millions): |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Partner compensation | $ | (768.2 | ) | $ | (339.7 | ) | $ | 134.3 | ||||
Acquisition related charges and amortization of intangibles | 11.0 | — | — | |||||||||
Equity issued for affiliate debt financing | 214.0 | — | — | |||||||||
Loss on CCC liquidation | — | — | 152.3 | |||||||||
Loss on NYAG settlement | — | 20.0 | — | |||||||||
Losses/(gains) associated with early extinguishment of debt | 2.5 | (10.7 | ) | — | ||||||||
Severance and lease terminations | 8.5 | 29.0 | 49.5 | |||||||||
Other | 0.3 | 8.8 | — | |||||||||
Elimination of expenses of the Consolidated Funds | (44.1 | ) | — | (2.6 | ) | |||||||
$ | (576.0 | ) | $ | (292.6 | ) | $ | 333.5 | |||||
(c) | The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total Other Income (Loss). | |
(d) | The following table is a reconciliation of Income (Loss) Before Provision for Income Taxes to Economic Net Income, to Fee Related Earnings, and to Distributable Earnings (Dollars in millions): |
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
Income (loss) before provision for income taxes | $ | 1,479.7 | $ | 678.4 | $ | (501.2 | ) | |||||
Adjustments: | ||||||||||||
Partner compensation(1) | (768.2 | ) | (339.7 | ) | 134.3 | |||||||
Acquisition related charges and amortization | ||||||||||||
of intangibles | 11.0 | — | — | |||||||||
Equity issued for affiliate debt financing | 214.0 | — | — | |||||||||
Loss on CCC liquidation | — | — | 152.3 | |||||||||
Loss on NYAG settlement | — | 20.0 | — | |||||||||
Losses/(gains) associated with early extinguishment of debt | 2.5 | (10.7 | ) | — | ||||||||
Non-controlling interests in consolidated entities | 66.2 | 30.5 | (94.5 | ) | ||||||||
Severance and lease terminations | 8.5 | 29.0 | 49.5 | |||||||||
Other | 0.3 | 8.8 | — | |||||||||
Economic Net Income (Loss) | $ | 1,014.0 | $ | 416.3 | $ | (259.6 | ) | |||||
Net performance fees | 743.8 | 249.0 | (384.9 | ) | ||||||||
Investment income (loss) | 71.6 | 7.7 | (67.0 | ) | ||||||||
Fee Related Earnings | $ | 198.6 | $ | 159.6 | $ | 192.3 | ||||||
Realized performance fees, net of related compensation | 133.5 | 7.4 | 41.9 | |||||||||
Investment income (loss) — realized | 10.4 | (1.7 | ) | 17.7 | ||||||||
Distributable Earnings | $ | 342.5 | $ | 165.3 | $ | 251.9 | ||||||
(1) | Adjustments for partner compensation reflect amounts due to Carlyle partners for compensation and carried interest allocated to them, which amounts were classified as partnership distributions in the combined and consolidated financial statements. |
F-54
(e) | The Total Assets adjustment represents the addition of the assets of the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total assets. |
Total Revenues | Total Assets | |||||||||||||||
Share | % | Share | % | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Year ended December 31, 2010 | ||||||||||||||||
Americas(1) | $ | 1,724.2 | 62 | % | $ | 11,551.6 | 68 | % | ||||||||
EMEA(2) | 586.1 | 21 | % | 4,264.5 | 25 | % | ||||||||||
Asia-Pacific(3) | 488.6 | 17 | % | 1,246.7 | 7 | % | ||||||||||
Total | $ | 2,798.9 | 100 | % | $ | 17,062.8 | 100 | % | ||||||||
Total Revenues | Total Assets | |||||||||||||||
Share | % | Share | % | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Year ended December 31, 2009 | ||||||||||||||||
Americas(1) | $ | 377.7 | 29 | % | $ | 1,027.1 | 41 | % | ||||||||
EMEA(2) | 208.3 | 16 | % | 357.4 | 14 | % | ||||||||||
Asia-Pacific(3) | 731.8 | 55 | % | 1,125.1 | 45 | % | ||||||||||
Total | $ | 1,317.8 | 100 | % | $ | 2,509.6 | 100 | % | ||||||||
Total Revenues | Total Assets | |||||||||||||||
Share | % | Share | % | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Year ended December 31, 2008 | ||||||||||||||||
Americas(1) | $ | 21.4 | 18 | % | $ | 1,141.7 | 55 | % | ||||||||
EMEA(2) | 126.8 | 104 | % | 340.4 | 16 | % | ||||||||||
Asia-Pacific(3) | (269.5 | ) | (222 | )% | 613.7 | 29 | % | |||||||||
Total | $ | (121.3 | ) | (100 | )% | $ | 2,095.8 | 100 | % | |||||||
(1) | Relates to investment vehicles whose primary focus is the United States, Mexico or South America. | |
(2) | Relates to investment vehicles whose primary focus is Europe, the Middle East, and Africa. | |
(3) | Relates to investment vehicles whose primary focus is Asia, including China, Japan, India and Australia. |
15. | Subsequent Events |
F-55
AlpInvest | ESG | |||||||
(Dollars in millions) | ||||||||
Acquisition-date fair value of consideration transferred | ||||||||
Cash | $ | 183.8 | $ | 45.0 | ||||
Equity interests and other contingent consideration | 15.5 | 67.4 | ||||||
Total | $ | 199.3 | $ | 112.4 | ||||
Estimated fair value of assets acquired, liabilities assumed, and non-controlling interests | ||||||||
Cash and receivables | $ | 169.0 | $ | 11.3 | ||||
Investments and accrued performance fees | 216.6 | 25.0 | ||||||
Net fixed assets and other assets | 9.6 | 0.1 | ||||||
Finite-lived intangible assets — contractual rights | 70.6 | 88.0 | ||||||
Finite-lived intangible assets — trademarks | 1.4 | 1.0 | ||||||
Goodwill | 9.8 | — | ||||||
Assets of Consolidated Funds | 8,326.0 | 398.1 | ||||||
Accounts payable, accrued compensation and other accrued liabilities | (233.3 | ) | (11.7 | ) | ||||
Deferred tax liabilities | (60.6 | ) | (3.0 | ) | ||||
Liabilities of Consolidated Funds | (62.8 | ) | (36.3 | ) | ||||
Non-controlling interests in consolidated entities | (8,247.0 | ) | (360.1 | ) | ||||
Total | $ | 199.3 | $ | 112.4 | ||||
F-56
Six Months Ended | ||||||||
June 30, | Year Ended December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Total revenues | $ | 2,272.3 | $ | 3,284.1 | ||||
Net income attributable to Carlyle Group | $ | 1,302.0 | $ | 1,551.6 | ||||
16. | Supplemental Financial Information |
F-57
As of December 31, 2010 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 616.9 | $ | — | $ | — | $ | 616.9 | ||||||||
Cash and cash equivalents held at Consolidated Funds | — | 729.5 | — | 729.5 | ||||||||||||
Restricted cash | 16.5 | — | — | 16.5 | ||||||||||||
Restricted cash and securities of Consolidated Funds | — | 135.5 | — | 135.5 | ||||||||||||
Investments and accrued performance fees | 2,669.9 | — | (75.6 | ) | 2,594.3 | |||||||||||
Investments of Consolidated Funds | — | 11,864.6 | — | 11,864.6 | ||||||||||||
Due from affiliates and other receivables, net | 329.7 | — | (3.9 | ) | 325.8 | |||||||||||
Due from affiliates and other receivables of Consolidated Funds, net | — | 245.2 | (5.6 | ) | 239.6 | |||||||||||
Fixed assets, net | 39.6 | — | — | 39.6 | ||||||||||||
Deposits and other | 34.1 | 7.2 | — | 41.3 | ||||||||||||
Intangible assets, net | 448.4 | — | — | 448.4 | ||||||||||||
Deferred tax assets | 10.8 | — | — | 10.8 | ||||||||||||
Total assets | $ | 4,165.9 | $ | 12,982.0 | $ | (85.1 | ) | $ | 17,062.8 | |||||||
Liabilities and equity | ||||||||||||||||
Loans payable | $ | 597.5 | $ | — | $ | — | $ | 597.5 | ||||||||
Subordinated loan payable to affiliate | 494.0 | — | — | 494.0 | ||||||||||||
Loans payable of Consolidated Funds | — | 10,475.9 | (42.4 | ) | 10,433.5 | |||||||||||
Accounts payable, accrued expenses and other liabilities | 211.6 | — | — | 211.6 | ||||||||||||
Accrued compensation and benefits | 520.9 | — | — | 520.9 | ||||||||||||
Due to Carlyle partners | 953.1 | — | (4.5 | ) | 948.6 | |||||||||||
Due to affiliates | 27.7 | 1.5 | (5.6 | ) | 23.6 | |||||||||||
Deferred revenue | 200.1 | 2.1 | — | 202.2 | ||||||||||||
Deferred tax liabilities | 0.2 | — | — | 0.2 | ||||||||||||
Other liabilities of Consolidated Funds | — | 622.4 | (3.9 | ) | 618.5 | |||||||||||
Accrued giveback obligations | 119.6 | — | — | 119.6 | ||||||||||||
Total liabilities | 3,124.7 | 11,101.9 | (56.4 | ) | 14,170.2 | |||||||||||
Redeemable non-controlling interests in consolidated entities | — | 694.0 | — | 694.0 | ||||||||||||
Members’ equity | 929.7 | — | — | 929.7 | ||||||||||||
Accumulated other comprehensive loss | (34.5 | ) | — | — | (34.5 | ) | ||||||||||
Total members’ equity | 895.2 | — | — | 895.2 | ||||||||||||
Equity appropriated for Consolidated Funds | — | 946.5 | (8.0 | ) | 938.5 | |||||||||||
Non-controlling interests in consolidated entities | 146.0 | 239.6 | (20.7 | ) | 364.9 | |||||||||||
Total equity | 1,041.2 | 1,186.1 | (28.7 | ) | 2,198.6 | |||||||||||
Total liabilities and equity | $ | 4,165.9 | $ | 12,982.0 | $ | (85.1 | ) | $ | 17,062.8 | |||||||
F-58
As of December 31, 2009 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 488.1 | $ | — | $ | — | $ | 488.1 | ||||||||
Cash and cash equivalents held at Consolidated Funds | — | 52.4 | — | 52.4 | ||||||||||||
Restricted cash | 14.6 | — | — | 14.6 | ||||||||||||
Investments and accrued performance fees | 1,304.8 | — | (25.6 | ) | 1,279.2 | |||||||||||
Investments of Consolidated Funds | — | 163.9 | — | 163.9 | ||||||||||||
Due from affiliates and other receivables, net | 434.5 | — | (1.5 | ) | 433.0 | |||||||||||
Due from affiliates and other receivables of Consolidated Funds, net | — | 12.0 | (7.1 | ) | 4.9 | |||||||||||
Fixed assets, net | 37.0 | — | — | 37.0 | ||||||||||||
Deposits and other | 21.1 | 2.6 | — | 23.7 | ||||||||||||
Deferred tax assets | 12.8 | — | — | 12.8 | ||||||||||||
Total assets | $ | 2,312.9 | $ | 230.9 | $ | (34.2 | ) | $ | 2,509.6 | |||||||
Liabilities and equity | ||||||||||||||||
Loans payable | $ | 412.2 | $ | — | $ | — | $ | 412.2 | ||||||||
Accounts payable, accrued expenses and other liabilities | 122.6 | 0.1 | — | 122.7 | ||||||||||||
Accrued compensation and benefits | 350.4 | — | — | 350.4 | ||||||||||||
Due to Carlyle partners | 360.9 | — | — | 360.9 | ||||||||||||
Due to affiliates | 38.8 | 3.0 | (8.6 | ) | 33.2 | |||||||||||
Deferred revenue | 188.9 | 1.7 | — | 190.6 | ||||||||||||
Deferred tax liabilities | 0.2 | — | — | 0.2 | ||||||||||||
Other liabilities of Consolidated Funds | — | 20.8 | — | 20.8 | ||||||||||||
Accrued giveback obligations | 305.0 | — | — | 305.0 | ||||||||||||
Total liabilities | 1,779.0 | 25.6 | (8.6 | ) | 1,796.0 | |||||||||||
Members’ equity | 448.5 | — | — | 448.5 | ||||||||||||
Accumulated other comprehensive loss | (11.0 | ) | — | — | (11.0 | ) | ||||||||||
Total members’ equity | 437.5 | — | — | 437.5 | ||||||||||||
Non-controlling interests in consolidated entities | 96.4 | 205.3 | (25.6 | ) | 276.1 | |||||||||||
Total equity | 533.9 | 205.3 | (25.6 | ) | 713.6 | |||||||||||
Total liabilities and equity | $ | 2,312.9 | $ | 230.9 | $ | (34.2 | ) | $ | 2,509.6 | |||||||
F-59
Year Ended December 31, 2010 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Fund management fees | $ | 813.6 | $ | — | $ | (43.3 | ) | $ | 770.3 | |||||||
Performance fees | ||||||||||||||||
Realized | 275.1 | — | (8.7 | ) | 266.4 | |||||||||||
Unrealized | 1,209.7 | — | 5.9 | 1,215.6 | ||||||||||||
Total performance fees | 1,484.8 | — | (2.8 | ) | 1,482.0 | |||||||||||
Investment income (loss) | ||||||||||||||||
Realized | 13.6 | — | (1.7 | ) | 11.9 | |||||||||||
Unrealized | 78.0 | — | (17.3 | ) | 60.7 | |||||||||||
Total investment income (loss) | 91.6 | — | (19.0 | ) | 72.6 | |||||||||||
Interest and other income | 22.4 | — | (1.0 | ) | 21.4 | |||||||||||
Interest and other income of Consolidated Funds | — | 452.6 | — | 452.6 | ||||||||||||
Total revenues | 2,412.4 | 452.6 | (66.1 | ) | 2,798.9 | |||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Base compensation | 265.2 | — | — | 265.2 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 46.6 | — | — | 46.6 | ||||||||||||
Unrealized | 117.2 | — | — | 117.2 | ||||||||||||
Total compensation and benefits | 429.0 | — | — | 429.0 | ||||||||||||
General, administrative and other expenses | 176.6 | — | 0.6 | 177.2 | ||||||||||||
Interest | 17.8 | — | — | 17.8 | ||||||||||||
Interest and other expenses of Consolidated Funds | — | 278.0 | (44.7 | ) | 233.3 | |||||||||||
Loss from early extinguishment of debt, net of related expenses | 2.5 | — | — | 2.5 | ||||||||||||
Equity issued for affiliate debt financing | 214.0 | — | — | 214.0 | ||||||||||||
Total expenses | 839.9 | 278.0 | (44.1 | ) | 1,073.8 | |||||||||||
Other income (loss) | ||||||||||||||||
Net investment gains (losses) of Consolidated Funds | — | (251.5 | ) | 6.1 | (245.4 | ) | ||||||||||
Income (loss) before provision for income taxes | 1,572.5 | (76.9 | ) | (15.9 | ) | 1,479.7 | ||||||||||
Provision for income taxes | 20.3 | — | — | 20.3 | ||||||||||||
Net income (loss) | 1,552.2 | (76.9 | ) | (15.9 | ) | 1,459.4 | ||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | 26.6 | — | (92.8 | ) | (66.2 | ) | ||||||||||
Net income (loss) attributable to Carlyle Group | $ | 1,525.6 | $ | (76.9 | ) | $ | 76.9 | $ | 1,525.6 | |||||||
F-60
Year Ended December 31, 2009 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Fund management fees | $ | 788.1 | $ | — | $ | — | $ | 788.1 | ||||||||
Performance fees | ||||||||||||||||
Realized | 11.1 | — | — | 11.1 | ||||||||||||
Unrealized | 478.9 | — | 6.7 | 485.6 | ||||||||||||
Total performance fees | 490.0 | — | 6.7 | 496.7 | ||||||||||||
Investment income (loss) | ||||||||||||||||
Realized | (6.7 | ) | — | 1.5 | (5.2 | ) | ||||||||||
Unrealized | 10.1 | — | 0.1 | 10.2 | ||||||||||||
Total investment income (loss) | 3.4 | — | 1.6 | 5.0 | ||||||||||||
Interest and other income | 27.3 | — | — | 27.3 | ||||||||||||
Interest and other income of Consolidated Funds | — | 0.7 | — | 0.7 | ||||||||||||
Total revenues | 1,308.8 | 0.7 | 8.3 | 1,317.8 | ||||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Base compensation | 264.2 | — | — | 264.2 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 1.1 | — | — | 1.1 | ||||||||||||
Unrealized | 83.1 | — | — | 83.1 | ||||||||||||
Total compensation and benefits | 348.4 | — | — | 348.4 | ||||||||||||
General, administrative and other expenses | 236.6 | — | — | 236.6 | ||||||||||||
Interest | 30.6 | — | — | 30.6 | ||||||||||||
Interest and other expenses of Consolidated Funds | — | 0.7 | — | 0.7 | ||||||||||||
Gain from early extinguishment of debt, net of related expenses | (10.7 | ) | — | — | (10.7 | ) | ||||||||||
Total expenses | 604.9 | 0.7 | — | 605.6 | ||||||||||||
Other income (loss) | ||||||||||||||||
Net investment losses of Consolidated Funds | — | (33.8 | ) | — | (33.8 | ) | ||||||||||
Income (loss) before provision for income taxes | 703.9 | (33.8 | ) | 8.3 | 678.4 | |||||||||||
Provision for income taxes | 14.8 | — | — | 14.8 | ||||||||||||
Net income (loss) | 689.1 | (33.8 | ) | 8.3 | 663.6 | |||||||||||
Net loss attributable to non-controlling interests in consolidated entities | (5.0 | ) | — | (25.5 | ) | (30.5 | ) | |||||||||
Net income (loss) attributable to Carlyle Group | $ | 694.1 | $ | (33.8 | ) | $ | 33.8 | $ | 694.1 | |||||||
F-61
Year Ended December 31, 2008 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Fund management fees | $ | 811.4 | $ | — | $ | — | $ | 811.4 | ||||||||
Performance fees | ||||||||||||||||
Realized | 104.9 | — | (45.6 | ) | 59.3 | |||||||||||
Unrealized | (953.5 | ) | — | 9.5 | (944.0 | ) | ||||||||||
Total performance fees | (848.6 | ) | — | (36.1 | ) | (884.7 | ) | |||||||||
Investment income (loss) | ||||||||||||||||
Realized | 19.1 | — | (13.4 | ) | 5.7 | |||||||||||
Unrealized | (110.7 | ) | — | 0.1 | (110.6 | ) | ||||||||||
Total investment income (loss) | (91.6 | ) | — | (13.3 | ) | (104.9 | ) | |||||||||
Interest and other income | 38.2 | — | — | 38.2 | ||||||||||||
Interest and other income of Consolidated Funds | — | 18.7 | — | 18.7 | ||||||||||||
Total revenues | (90.6 | ) | 18.7 | (49.4 | ) | (121.3 | ) | |||||||||
Expenses | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Base compensation | 294.4 | 2.8 | — | 297.2 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 23.3 | — | — | 23.3 | ||||||||||||
Unrealized | (223.1 | ) | — | — | (223.1 | ) | ||||||||||
Total compensation and benefits | 94.6 | 2.8 | — | 97.4 | ||||||||||||
General, administrative and other expenses | 240.6 | 5.4 | (0.9 | ) | 245.1 | |||||||||||
Interest | 46.1 | — | — | 46.1 | ||||||||||||
Interest and other expenses of Consolidated Funds | — | 8.5 | (1.7 | ) | 6.8 | |||||||||||
Loss on CCC liquidation | 147.0 | — | — | 147.0 | ||||||||||||
Total expenses | 528.3 | 16.7 | (2.6 | ) | 542.4 | |||||||||||
Other income | ||||||||||||||||
Net investment gains of Consolidated Funds | — | 162.5 | — | 162.5 | ||||||||||||
Income (loss) before provision for income taxes | (618.9 | ) | 164.5 | (46.8 | ) | (501.2 | ) | |||||||||
Provision for income taxes | 12.5 | — | — | 12.5 | ||||||||||||
Net income (loss) | (631.4 | ) | 164.5 | (46.8 | ) | (513.7 | ) | |||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (23.2 | ) | — | 117.7 | 94.5 | |||||||||||
Net income (loss) attributable to Carlyle Group | $ | (608.2 | ) | $ | 164.5 | $ | (164.5 | ) | $ | (608.2 | ) | |||||
F-62
Year Ended December 31, | ||||||||||||
2010 | 2009 | 2008 | ||||||||||
(Dollars in millions) | ||||||||||||
Cash flows from operating activities | ||||||||||||
Net income (loss) | $ | 1,552.2 | $ | 689.1 | $ | (631.4 | ) | |||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||||||
Depreciation and amortization | 24.5 | 28.6 | 26.8 | |||||||||
Amortization of deferred financing fees | 1.6 | 2.8 | 3.2 | |||||||||
Non-cash equity issued for affiliate debt financing | 214.0 | — | — | |||||||||
Non-cash performance fees | (1,338.5 | ) | (478.9 | ) | 950.4 | |||||||
Loss (gain) on early extinguishment of debt | 2.5 | (10.7 | ) | — | ||||||||
Loss from CCC liquidation | — | — | 152.3 | |||||||||
Other non-cash amounts included in net income | (25.9 | ) | 17.6 | (47.5 | ) | |||||||
Investment (income) loss | (87.9 | ) | 0.8 | 86.4 | ||||||||
Purchases of investments | (114.8 | ) | (24.3 | ) | (173.2 | ) | ||||||
Proceeds from the sale of investments | 46.9 | 27.0 | 183.6 | |||||||||
Proceeds from sale of trading securities and other | 7.9 | — | (30.1 | ) | ||||||||
Change in due from affiliates and other receivables | 14.5 | (11.7 | ) | 5.3 | ||||||||
Change in deposits and other | (14.2 | ) | (3.2 | ) | (3.1 | ) | ||||||
Change in accounts payable, accrued expenses and other liabilities | 41.9 | 12.4 | (44.8 | ) | ||||||||
Change in accrued compensation and benefits | 121.8 | 91.7 | (344.0 | ) | ||||||||
Change in due to affiliates | (5.9 | ) | 17.8 | (122.7 | ) | |||||||
Change in deferred revenue | (7.3 | ) | 43.8 | (46.6 | ) | |||||||
Net cash provided by (used in) operating activities | 433.3 | 402.8 | (35.4 | ) | ||||||||
Cash flows from investing activities | ||||||||||||
Change inheld-to-maturity investments, net | — | — | 21.4 | |||||||||
Change in restricted cash and securities | (0.3 | ) | — | (0.8 | ) | |||||||
Purchases of fixed assets, net | (21.2 | ) | (27.5 | ) | (36.1 | ) | ||||||
Purchases of intangible assets (management contracts) | (58.5 | ) | — | — | ||||||||
Acquisitions, net of cash acquired | (105.6 | ) | — | — | ||||||||
Net cash used in investing activities | (185.6 | ) | (27.5 | ) | (15.5 | ) | ||||||
Cash flows from financing activities | ||||||||||||
Proceeds from loans payable | 994.0 | 6.7 | 83.1 | |||||||||
Payments on loans payable | (411.9 | ) | (303.6 | ) | (9.1 | ) | ||||||
Contributions from members | 46.1 | 43.5 | 79.0 | |||||||||
Distributions to members | (787.8 | ) | (215.6 | ) | (253.9 | ) | ||||||
Distributions due to reorganization | — | — | (171.5 | ) | ||||||||
Contributions from non-controlling interest holders | 48.1 | 13.9 | 42.1 | |||||||||
Distributions to non-controlling interest holders | (25.2 | ) | (10.3 | ) | (13.0 | ) | ||||||
Change in due to/from affiliates financing activities | 19.0 | (105.3 | ) | (133.4 | ) | |||||||
Net cash used in financing activities | (117.7 | ) | (570.7 | ) | (376.7 | ) | ||||||
Effect of foreign exchange rate changes | (1.2 | ) | 2.7 | (6.6 | ) | |||||||
Increase (decrease) in cash and cash equivalents | 128.8 | (192.7 | ) | (434.2 | ) | |||||||
Cash and cash equivalents, beginning of period | 488.1 | 680.8 | 1,115.0 | |||||||||
Cash and cash equivalents, end of period | $ | 616.9 | $ | 488.1 | $ | 680.8 | ||||||
F-63
F-64
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
Assets | ||||||||
Cash and cash equivalents | $ | 712.6 | $ | 616.9 | ||||
Cash and cash equivalents held at Consolidated Funds | 678.3 | 729.5 | ||||||
Restricted cash | 32.8 | 16.5 | ||||||
Restricted cash and securities of Consolidated Funds | 92.7 | 135.5 | ||||||
Investments and accrued performance fees | 2,589.9 | 2,594.3 | ||||||
Investments of Consolidated Funds | 20,148.0 | 11,864.6 | ||||||
Due from affiliates and other receivables, net | 263.1 | 325.8 | ||||||
Due from affiliates and other receivables of Consolidated Funds, net | 181.0 | 239.6 | ||||||
Fixed assets, net | 48.0 | 39.6 | ||||||
Deposits and other | 68.7 | 41.3 | ||||||
Intangible assets, net | 608.3 | 448.4 | ||||||
Deferred tax assets | 16.9 | 10.8 | ||||||
Total assets | $ | 25,440.3 | $ | 17,062.8 | ||||
Liabilities and equity | ||||||||
Loans payable | $ | 698.5 | $ | 597.5 | ||||
Subordinated loan payable to affiliate | 520.0 | 494.0 | ||||||
Loans payable of Consolidated Funds | 10,100.8 | 10,433.5 | ||||||
Accounts payable, accrued expenses and other liabilities | 203.4 | 211.6 | ||||||
Accrued compensation and benefits | 544.4 | 520.9 | ||||||
Due to Carlyle partners | 1,109.7 | 948.6 | ||||||
Due to affiliates | 26.1 | 23.6 | ||||||
Deferred revenue | 213.2 | 202.2 | ||||||
Deferred tax liabilities | 57.5 | 0.2 | ||||||
Other liabilities of Consolidated Funds | 433.8 | 618.5 | ||||||
Accrued giveback obligations | 148.7 | 119.6 | ||||||
Total liabilities | 14,056.1 | 14,170.2 | ||||||
Commitments and contingencies | ||||||||
Redeemable non-controlling interests in consolidated entities | 1,796.8 | 694.0 | ||||||
Members’ equity | 772.6 | 929.7 | ||||||
Accumulated other comprehensive loss | (31.7 | ) | (34.5 | ) | ||||
Total members’ equity | 740.9 | 895.2 | ||||||
Equity appropriated for Consolidated Funds | 648.8 | 938.5 | ||||||
Non-controlling interests in consolidated entities | 8,197.7 | 364.9 | ||||||
Total equity | 9,587.4 | 2,198.6 | ||||||
Total liabilities and equity | $ | 25,440.3 | $ | 17,062.8 | ||||
F-65
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
Revenues | ||||||||
Fund management fees | $ | 683.2 | $ | 566.2 | ||||
Performance fees | ||||||||
Realized | 870.1 | 92.4 | ||||||
Unrealized | (133.6 | ) | 220.8 | |||||
Total performance fees | 736.5 | 313.2 | ||||||
Investment income (loss) | ||||||||
Realized | 50.3 | (0.8 | ) | |||||
Unrealized | 6.3 | 44.1 | ||||||
Total investment income | 56.6 | 43.3 | ||||||
Interest and other income | 15.6 | 15.7 | ||||||
Interest and other income of Consolidated Funds | 521.6 | 318.4 | ||||||
Total revenues | 2,013.5 | 1,256.8 | ||||||
Expenses | ||||||||
Compensation and benefits | ||||||||
Base compensation | 277.2 | 221.5 | ||||||
Performance fee related | ||||||||
Realized | 136.2 | (0.1 | ) | |||||
Unrealized | (81.7 | ) | 40.5 | |||||
Total compensation and benefits | 331.7 | 261.9 | ||||||
General, administrative and other expenses | 224.7 | 105.4 | ||||||
Interest | 48.5 | 13.5 | ||||||
Interest and other expenses of Consolidated Funds | 290.0 | 162.8 | ||||||
Other non-operating expenses | 30.0 | — | ||||||
Total expenses | 924.9 | 543.6 | ||||||
Other income (loss) | ||||||||
Net investment gains (losses) of Consolidated Funds | (618.2 | ) | 173.7 | |||||
Income before provision for income taxes | 470.4 | 886.9 | ||||||
Provision for income taxes | 25.7 | 14.5 | ||||||
Net income | 444.7 | 872.4 | ||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | (473.4 | ) | 301.3 | |||||
Net income attributable to Carlyle Group | $ | 918.1 | $ | 571.1 | ||||
F-66
Redeemable | ||||||||||||||||||||||||||||
Equity | Non- | Non- | ||||||||||||||||||||||||||
Accumulated | Appropriated | controlling | controlling | |||||||||||||||||||||||||
Other | for | Interests in | Interests in | |||||||||||||||||||||||||
Members’ | Comprehensive | Consolidated | Consolidated | Consolidated | Comprehensive | |||||||||||||||||||||||
Equity | Income (Loss) | Funds | Entities | Total Equity | Entities | Income | ||||||||||||||||||||||
(Unaudited) | ||||||||||||||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||||||||||
Equity at December 31, 2010 | $ | 929.7 | $ | (34.5 | ) | $ | 938.5 | $ | 364.9 | $ | 2,198.6 | $ | 694.0 | |||||||||||||||
Acquisition of CLOs | — | — | 41.6 | — | 41.6 | — | ||||||||||||||||||||||
Acquisition of fund of funds | — | — | — | 8,476.5 | 8,476.5 | — | ||||||||||||||||||||||
Acquisition and initial consolidation of hedge funds | — | — | — | — | — | 516.8 | ||||||||||||||||||||||
Issuance of equity related to acquisitions | 7.1 | — | — | — | 7.1 | — | ||||||||||||||||||||||
Contributions | 9.6 | — | — | 96.5 | 106.1 | 694.7 | ||||||||||||||||||||||
Distributions | (1,091.9 | ) | — | — | (407.9 | ) | (1,499.8 | ) | (216.4 | ) | ||||||||||||||||||
Net income (loss) | 918.1 | — | (349.4 | ) | (231.7 | ) | 337.0 | 107.7 | $ | 444.7 | ||||||||||||||||||
Currency translation adjustments | — | (0.1 | ) | 18.1 | (100.6 | ) | (82.6 | ) | — | (82.6 | ) | |||||||||||||||||
Change in fair value of cash flow hedge instrument | — | 2.9 | — | — | 2.9 | — | 2.9 | |||||||||||||||||||||
Equity at September 30, 2011 | $ | 772.6 | $ | (31.7 | ) | $ | 648.8 | $ | 8,197.7 | $ | 9,587.4 | $ | 1,796.8 | $ | 365.0 | |||||||||||||
F-67
Nine Months | ||||||||
Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Unaudited) | ||||||||
(Dollars in millions) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 444.7 | $ | 872.4 | ||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 61.6 | 17.6 | ||||||
Amortization of deferred financing fees | 0.8 | 1.3 | ||||||
Non-cash performance fees | 130.4 | (212.7 | ) | |||||
Other non-cash amounts | 41.7 | (41.6 | ) | |||||
Consolidated Funds related: | ||||||||
Realized/unrealized loss (gain) on investments of Consolidated Funds | 447.8 | (291.0 | ) | |||||
Realized/unrealized loss from loans payable of Consolidated Funds | 149.2 | 121.3 | ||||||
Purchases of investments by Consolidated Funds | (5,451.9 | ) | (1,915.9 | ) | ||||
Proceeds from sale and settlements of investments by Consolidated Funds | 6,269.3 | 4,004.8 | ||||||
Non-cash interest income, net | (78.7 | ) | (86.2 | ) | ||||
Change in cash and cash equivalents held at Consolidated Funds | 128.4 | 152.5 | ||||||
Change in other receivables held at Consolidated Funds | 99.8 | (24.4 | ) | |||||
Change in other liabilities held at Consolidated Funds | (172.7 | ) | 13.5 | |||||
Investment income | (53.5 | ) | (39.7 | ) | ||||
Purchases of investments | (73.5 | ) | (65.9 | ) | ||||
Proceeds from the sale of investments | 272.6 | 29.6 | ||||||
Change in due from affiliates and other receivables | 17.4 | 13.4 | ||||||
Change in deposits and other | (19.4 | ) | (13.5 | ) | ||||
Change in accounts payable, accrued expenses and other liabilities | (61.2 | ) | (26.9 | ) | ||||
Change in accrued compensation and benefits | (185.7 | ) | 7.7 | |||||
Change in due to affiliates | (0.1 | ) | (15.4 | ) | ||||
Change in deferred revenue | 14.0 | 24.0 | ||||||
Net cash provided by operating activities | 1,981.0 | 2,524.9 | ||||||
Cash flows from investing activities | ||||||||
Change in restricted cash | (15.7 | ) | (0.3 | ) | ||||
Purchases of fixed assets, net | (25.8 | ) | (20.1 | ) | ||||
Purchases of intangible assets | (8.1 | ) | (46.5 | ) | ||||
Acquisitions, net of cash acquired | (71.5 | ) | — | |||||
Net cash used in investing activities | (121.1 | ) | (66.9 | ) | ||||
Cash flows from financing activities | ||||||||
Borrowings under credit facility | 125.0 | — | ||||||
Payments on loans payable | (24.0 | ) | (41.6 | ) | ||||
Net payment on loans payable of Consolidated Funds | (1,022.4 | ) | (2,090.2 | ) | ||||
Contributions from members | 9.6 | 13.5 | ||||||
Distributions to members | (1,040.9 | ) | (194.9 | ) | ||||
Contributions from non-controlling interest holders | 696.2 | 30.9 | ||||||
Distributions to non-controlling interest holders | (582.9 | ) | (141.2 | ) | ||||
Change in due to/from affiliates financing activities | 60.9 | (17.3 | ) | |||||
Change in due to/from affiliates and other receivables of Consolidated Funds | 5.8 | (10.5 | ) | |||||
Net cash used in financing activities | (1,772.7 | ) | (2,451.3 | ) | ||||
Effect of foreign exchange rate changes | 8.5 | (1.9 | ) | |||||
Increase in cash and cash equivalents | 95.7 | 4.8 | ||||||
Cash and cash equivalents, beginning of period | 616.9 | 488.1 | ||||||
Cash and cash equivalents, end of period | $ | 712.6 | $ | 492.9 | ||||
Supplemental non-cash disclosures | ||||||||
Non-cash AlpInvest acquisition | $ | 8,434.7 | $ | — | ||||
Non-cash ESG acquisition | �� | $ | 510.1 | $ | — | |||
Net assets related to consolidation of the CLOs | $ | 41.6 | $ | 1,123.5 | ||||
Non-cash distributions to members | $ | 51.0 | $ | 133.0 | ||||
Non-cash contributions from members | $ | — | $ | 21.8 | ||||
Non-cash contributions from non-controlling interest holders | $ | 95.0 | $ | 4.7 | ||||
Non-cash distributions to non-controlling interest holders | $ | 41.4 | $ | — | ||||
F-68
1. | Organization and Basis of Presentation |
F-69
2. | Summary of Significant Accounting Policies |
F-70
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Investments | $ | 2.3 | $ | 1.1 | ||||
Receivables | 112.9 | 73.8 | ||||||
Maximum Exposure to Loss | $ | 115.2 | $ | 74.9 | ||||
F-71
F-72
F-73
F-74
F-75
F-76
F-77
F-78
3. | Acquisitions and Acquired Intangible Assets |
F-79
AlpInvest | ESG | |||||||
(Dollars in millions) | ||||||||
Acquisition-date fair value of consideration transferred | ||||||||
Cash | $ | 183.8 | $ | 45.0 | ||||
Equity interests and other contingent consideration | 15.5 | 67.4 | ||||||
Total | $ | 199.3 | $ | 112.4 | ||||
Estimated fair value of assets acquired, liabilities assumed, and non-controlling interests | ||||||||
Cash and receivables | $ | 169.0 | $ | 11.3 | ||||
Investments and accrued performance fees | 216.6 | 25.0 | ||||||
Net fixed assets and other assets | 9.6 | 0.1 | ||||||
Finite-lived intangible assets — contractual rights | 70.6 | 88.0 | ||||||
Finite-lived intangible assets — trademarks | 1.4 | 1.5 | ||||||
Goodwill(1) | 9.8 | 28.0 | ||||||
Assets of Consolidated Funds | 8,555.5 | 398.1 | ||||||
Accrued expenses and accrued compensation and benefits | (233.3 | ) | (11.7 | ) | ||||
Deferred tax liabilities | (60.6 | ) | (1.1 | ) | ||||
Liabilities of Consolidated Funds | (62.8 | ) | (36.3 | ) | ||||
Due to Carlyle partners | — | (23.6 | ) | |||||
Redeemable non-controlling interest in consolidated entities | — | (366.9 | ) | |||||
Non-controlling interest in consolidated entities | (8,476.5 | ) | — | |||||
Total | $ | 199.3 | $ | 112.4 | ||||
(1) | Goodwill recognized in connection with the acquisitions reflects the excess of the purchase price over the fair value of the tangible assets acquired and liabilities assumed and is not deductible for tax purposes. The goodwill arising from the AlpInvest and ESG acquisitions is included in the Company’s Fund of Funds Solutions and Global Market Strategies segments, respectively. |
F-80
Nine Months | ||||||||
Ended | Year Ended | |||||||
September 30, | December 31, | |||||||
2011(1) | 2010 | |||||||
(Dollars in millions) | ||||||||
Total revenues | $ | 2,212.7 | $ | 3,284.1 | ||||
Net income attributable to Carlyle Group | $ | 951.4 | $ | 1,550.0 | ||||
(1) | Total revenues and net income attributable to Carlyle include $79.8 million and $31.8 million, respectively, from AlpInvest and ESG since the acquisition dates. |
F-81
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Acquired contractual rights | $ | 610.6 | $ | 448.0 | ||||
Acquired trademarks | 6.9 | 4.0 | ||||||
Accumulated amortization | (46.5 | ) | (3.6 | ) | ||||
Finite-lived intangible assets, net | 571.0 | 448.4 | ||||||
Goodwill(1) | 37.3 | — | ||||||
Intangible assets, net | $ | 608.3 | $ | 448.4 | ||||
(1) | Included in this balance is goodwill of €6.8 million as of September 30, 2011, related to the acquisition of AlpInvest. |
F-82
2011 | $ | 60.8 | ||
2012 | 71.2 | |||
2013 | 71.2 | |||
2014 | 70.9 | |||
2015 | 68.3 | |||
Thereafter | 271.5 | |||
$ | 613.9 | |||
4. | Fair Value Measurement |
F-83
F-84
F-85
Level I | Level II | Level III | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Investments of Consolidated Funds: | ||||||||||||||||
Equity securities | $ | 969.8 | $ | 1.9 | $ | 1,903.3 | $ | 2,875.0 | ||||||||
Bonds | — | — | 551.1 | 551.1 | ||||||||||||
Loans | — | — | 10,486.0 | 10,486.0 | ||||||||||||
Partnership and LLC interests(1) | 8.6 | — | 4,382.7 | 4,391.3 | ||||||||||||
Hedge funds | — | 1,806.7 | — | 1,806.7 | ||||||||||||
Other | — | 6.3 | 31.6 | 37.9 | ||||||||||||
$ | 978.4 | $ | 1,814.9 | $ | 17,354.7 | $ | 20,148.0 | |||||||||
Trading securities and other | — | — | 27.4 | 27.4 | ||||||||||||
Restricted securities of Consolidated Funds | 59.4 | — | — | 59.4 | ||||||||||||
Total | $ | 1,037.8 | $ | 1,814.9 | $ | 17,382.1 | $ | 20,234.8 | ||||||||
Liabilities | ||||||||||||||||
Loans payable of the CLOs | $ | — | $ | — | $ | 10,098.9 | $ | 10,098.9 | ||||||||
Interest rate swap | — | 5.7 | — | 5.7 | ||||||||||||
Derivative instruments of the CLOs | — | — | 0.2 | 0.2 | ||||||||||||
Subordinated loan payable to affiliate | — | — | 520.0 | 520.0 | ||||||||||||
Earnouts(2) | — | — | 117.9 | 117.9 | ||||||||||||
Contingent equity(3) | — | — | 48.2 | 48.2 | ||||||||||||
Total | $ | — | $ | 5.7 | $ | 10,785.2 | $ | 10,790.9 | ||||||||
(1) | Included in this balance are investments totaling $4,378.4 million related to Fund Investments that the Company consolidates one fiscal quarter in arrears. |
(2) | Related to the acquisitions of Claren Road and ESG (see Note 3). |
(3) | Related to the acquisition of Claren Road (see Note 3). |
F-86
Level I | Level II | Level III | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Investments of Consolidated Funds: | ||||||||||||||||
Equity securities | $ | 9.5 | $ | 166.0 | $ | 36.8 | $ | 212.3 | ||||||||
Bonds | — | — | 460.3 | 460.3 | ||||||||||||
Loans | — | — | 10,433.5 | 10,433.5 | ||||||||||||
Partnership and LLC interests | — | 5.7 | 14.8 | 20.5 | ||||||||||||
Hedge funds | — | 698.5 | — | 698.5 | ||||||||||||
Other | — | 5.6 | 33.9 | 39.5 | ||||||||||||
$ | 9.5 | $ | 875.8 | $ | 10,979.3 | $ | 11,864.6 | |||||||||
Trading securities and other | — | — | 21.8 | 21.8 | ||||||||||||
Restricted securities of Consolidated Funds | 100.7 | — | — | 100.7 | ||||||||||||
Total | $ | 110.2 | $ | 875.8 | $ | 11,001.1 | $ | 11,987.1 | ||||||||
Liabilities | ||||||||||||||||
Loans payable of the CLOs | $ | — | $ | — | $ | 10,418.5 | $ | 10,418.5 | ||||||||
Interest rate swap | — | 8.5 | — | 8.5 | ||||||||||||
Derivative instruments of the CLOs | — | — | 1.9 | 1.9 | ||||||||||||
Subordinated loan payable to affiliate | — | — | 494.0 | 494.0 | ||||||||||||
Earnouts(1) | — | — | 43.7 | 43.7 | ||||||||||||
Contingent equity(1) | — | — | 51.3 | 51.3 | ||||||||||||
Total | $ | — | $ | 8.5 | $ | 11,009.4 | $ | 11,017.9 | ||||||||
(1) | Related to acquisition of Claren Road (see Note 3). |
F-87
Financial Assets | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||||||
Investments of Consolidated Funds | ||||||||||||||||||||||||||||
Partnership | Trading | |||||||||||||||||||||||||||
Equity | and LLC | Securities and | ||||||||||||||||||||||||||
Securities | Bonds | Loans | Interests | Other | Other | Total | ||||||||||||||||||||||
Balance, beginning of period | $ | 36.8 | $ | 460.3 | $ | 10,433.5 | $ | 14.8 | $ | 33.9 | $ | 21.8 | $ | 11,001.1 | ||||||||||||||
Initial consolidation of the CLOs and AlpInvest | 2,336.4 | 13.6 | 1,286.9 | 4,378.4 | — | 0.4 | 8,015.7 | |||||||||||||||||||||
Transfers out(1) | (4.4 | ) | — | — | (8.3 | ) | — | — | (12.7 | ) | ||||||||||||||||||
Purchases | 81.2 | 361.8 | 4,423.6 | — | — | 2.5 | 4,869.1 | |||||||||||||||||||||
Sales | (22.4 | ) | (282.2 | ) | (1,805.6 | ) | (0.2 | ) | (14.2 | ) | (0.2 | ) | (2,124.8 | ) | ||||||||||||||
Settlements | (10.7 | ) | (2.8 | ) | (3,642.9 | ) | — | — | — | (3,656.4 | ) | |||||||||||||||||
Realized and unrealized gains (losses), net | (513.6 | ) | 0.4 | (209.5 | ) | (2.0 | ) | 11.9 | 2.9 | (709.9 | ) | |||||||||||||||||
Balance, end of period | $ | 1,903.3 | $ | 551.1 | $ | 10,486.0 | $ | 4,382.7 | $ | 31.6 | $ | 27.4 | $ | 17,382.1 | ||||||||||||||
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date | $ | (270.2 | ) | $ | (11.4 | ) | $ | (396.5 | ) | $ | (1.9 | ) | $ | 12.4 | $ | 2.9 | $ | (664.7 | ) | |||||||||
Financial Assets | ||||||||||||||||||||||||||||
Nine Months Ended September 30, 2010 | ||||||||||||||||||||||||||||
Investments of Consolidated Funds | ||||||||||||||||||||||||||||
Partnership | Trading | |||||||||||||||||||||||||||
Equity | and LLC | Securities and | ||||||||||||||||||||||||||
Securities | Bonds | Loans | Interests | Other | Other | Total | ||||||||||||||||||||||
Balance, beginning of period | $ | 98.9 | $ | — | $ | — | $ | 50.5 | $ | 14.5 | $ | 43.9 | $ | 207.8 | ||||||||||||||
Initial consolidation of the CLOs(2) | 21.7 | 577.2 | 11,247.8 | — | 113.4 | (19.0 | ) | 11,941.1 | ||||||||||||||||||||
Transfers out(1) | (208.1 | ) | — | — | (10.6 | ) | (10.5 | ) | — | (229.2 | ) | |||||||||||||||||
Purchases | 3.9 | 106.3 | 1,785.9 | 6.9 | — | — | 1,903.0 | |||||||||||||||||||||
Sales | (22.7 | ) | (255.7 | ) | (3,514.6 | ) | (10.1 | ) | (28.3 | ) | (7.8 | ) | (3,839.2 | ) | ||||||||||||||
Realized and unrealized gains (losses), net | 152.0 | 5.3 | (157.5 | ) | (19.6 | ) | (54.7 | ) | 3.9 | (70.6 | ) | |||||||||||||||||
Balance, end of period | $ | 45.7 | $ | 433.1 | $ | 9,361.6 | $ | 17.1 | $ | 34.4 | $ | 21.0 | $ | 9,912.9 | ||||||||||||||
Changes in unrealized gains (losses) included in earnings related to financial assets still held at the reporting date | $ | 28.9 | $ | (14.6 | ) | $ | 149.7 | $ | (15.5 | ) | $ | (38.9 | ) | $ | 1.3 | $ | 110.9 | |||||||||||
1) | Transfers out of Level III financial assets were due to changes in the observability of market inputs used in the valuation of such assets. Transfers are measured as of the beginning of the quarter in which the transfer occurs. |
F-88
2) | Beginning January 1, 2010, the Company consolidated the CLOs (excluding certain CLOs that were consolidated beginning in August 2010 and December 2010 upon their acquisition). The Company’s investment in these CLOs of $19.0 million has been eliminated in the condensed combined and consolidated balance sheets on January 1, 2010. |
Financial Liabilities | ||||||||||||||||||||||||
Nine Months Ended September 30, 2011 | ||||||||||||||||||||||||
Derivative | Subordinated | |||||||||||||||||||||||
Loans Payable | Instruments of | Loan Payable | Contingent | |||||||||||||||||||||
of the CLOs | the CLOs | to Affiliate | Earnouts | Equity | Total | |||||||||||||||||||
Balance, beginning of period | $ | 10,418.5 | $ | 1.9 | $ | 494.0 | $ | 43.7 | $ | 51.3 | $ | 11,009.4 | ||||||||||||
Initial consolidation of the CLOs | 453.0 | — | — | — | — | 453.0 | ||||||||||||||||||
Issuances | — | — | — | 60.4 | — | 60.4 | ||||||||||||||||||
Borrowings | 510.5 | — | — | — | — | 510.5 | ||||||||||||||||||
Paydowns | (1,517.7 | ) | (0.1 | ) | — | — | — | (1,517.8 | ) | |||||||||||||||
Sales | — | (3.0 | ) | — | — | — | (3.0 | ) | ||||||||||||||||
Realized and unrealized (gains) losses, net | 234.6 | 1.4 | 26.0 | 13.8 | (3.1 | ) | 272.7 | |||||||||||||||||
Balance, end of period | $ | 10,098.9 | $ | 0.2 | $ | 520.0 | $ | 117.9 | $ | 48.2 | $ | 10,785.2 | ||||||||||||
Changes in unrealized (gains) losses included in earnings related to financial liabilities still held at the reporting date | $ | 44.2 | $ | (0.1 | ) | $ | 26.0 | $ | 4.0 | $ | — | $ | 74.1 | |||||||||||
Financial Liabilities | ||||||||||||||||||||||||
Nine Months Ended September 30, 2010 | ||||||||||||||||||||||||
Derivative | Subordinated | |||||||||||||||||||||||
Loans Payable | Instruments of | Loan Payable | Contingent | |||||||||||||||||||||
of the CLOs | the CLOs | to Affiliate | Earnouts | Equity | Total | |||||||||||||||||||
Balance, beginning of period | $ | — | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
Initial consolidation of the CLOs | 11,372.6 | — | — | — | — | 11,372.6 | ||||||||||||||||||
Borrowings | 1.5 | — | — | — | — | 1.5 | ||||||||||||||||||
Paydowns | (2,085.2 | ) | (0.1 | ) | — | — | — | (2,085.3 | ) | |||||||||||||||
Realized and unrealized (gains) losses, net | (261.4 | ) | 1.7 | — | — | — | (259.7 | ) | ||||||||||||||||
Balance, end of period | $ | 9,027.5 | $ | 1.6 | $ | — | $ | — | $ | — | $ | 9,029.1 | ||||||||||||
Changes in unrealized losses included in earnings related to financial liabilities still held at the reporting date | $ | 2.5 | $ | 2.3 | $ | — | $ | — | $ | — | $ | 4.8 | ||||||||||||
F-89
5. | Investments |
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Accrued performance fees | $ | 2,149.1 | $ | 2,216.6 | ||||
Equity method investments, excluding accrued performance fees | 413.4 | 355.9 | ||||||
Trading securities, at fair value | 27.4 | 21.8 | ||||||
Total investments | $ | 2,589.9 | $ | 2,594.3 | ||||
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 1,536.2 | $ | 1,823.8 | ||||
Real Assets | 213.3 | 208.3 | ||||||
Global Market Strategies | 202.9 | 184.5 | ||||||
Fund of Funds Solutions | 196.7 | — | ||||||
Total | $ | 2,149.1 | $ | 2,216.6 | ||||
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | (96.8 | ) | $ | (70.2 | ) | ||
Real Assets | (50.7 | ) | (48.2 | ) | ||||
Global Market Strategies | (1.2 | ) | (1.2 | ) | ||||
Total | $ | (148.7 | ) | $ | (119.6 | ) | ||
F-90
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 509.7 | $ | 243.9 | ||||
Real Assets | 83.0 | 8.6 | ||||||
Global Market Strategies | 143.7 | 60.7 | ||||||
Fund of Funds Solutions | 0.1 | — | ||||||
Total | $ | 736.5 | $ | 313.2 | ||||
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 224.8 | $ | 228.9 | ||||
Real Assets | 176.6 | 117.5 | ||||||
Global Market Strategies | 12.0 | 9.5 | ||||||
Total | $ | 413.4 | $ | 355.9 | ||||
F-91
Corporate | Global | |||||||||||||||||||||||||||||||
Private Equity | Real Assets | Market Strategies | Aggregate Totals | |||||||||||||||||||||||||||||
For the Nine Months | For the Nine Months | For the Nine Months | For the Nine Months | |||||||||||||||||||||||||||||
Ended September 30, | Ended September 30, | Ended September 30, | Ended September 30, | |||||||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
Statement of income information | ||||||||||||||||||||||||||||||||
Investment income | $ | 253.7 | $ | 306.0 | $ | 393.3 | $ | 355.0 | $ | 90.2 | $ | 49.9 | $ | 737.2 | $ | 710.9 | ||||||||||||||||
Expenses | 368.0 | 444.0 | 299.2 | 299.0 | 30.9 | 11.3 | 698.1 | 754.3 | ||||||||||||||||||||||||
Net investment income (loss) | (114.3 | ) | (138.0 | ) | 94.1 | 56.0 | 59.3 | 38.6 | 39.1 | (43.4 | ) | |||||||||||||||||||||
Net realized and unrealized gain | 2,583.3 | 5,056.0 | 1,063.3 | 903.0 | 19.1 | 141.7 | 3,665.7 | 6,100.7 | ||||||||||||||||||||||||
Net income | $ | 2,469.0 | $ | 4,918.0 | $ | 1,157.4 | $ | 959.0 | $ | 78.4 | $ | 180.3 | $ | 3,704.8 | $ | 6,057.3 | ||||||||||||||||
Corporate | Global | |||||||||||||||||||||||||||||||
Private Equity | Real Assets | Market Strategies | Aggregate Totals | |||||||||||||||||||||||||||||
September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | September 30, | December 31, | |||||||||||||||||||||||||
2011 | 2010 | 2011 | 2010 | 2011 | 2010 | 2011 | 2010 | |||||||||||||||||||||||||
Balance sheet information | ||||||||||||||||||||||||||||||||
Investments | $ | 33,610.0 | $ | 35,697.6 | $ | 19,732.7 | $ | 19,665.7 | $ | 1,903.1 | $ | 2,357.7 | $ | 55,245.8 | $ | 57,721.0 | ||||||||||||||||
Total assets | $ | 35,113.9 | $ | 41,232.6 | $ | 20,464.4 | $ | 20,535.5 | $ | 2,074.6 | $ | 2,554.4 | $ | 57,652.9 | $ | 64,322.5 | ||||||||||||||||
Debt | $ | 75.2 | $ | 115.1 | $ | 1,468.4 | $ | 867.9 | $ | 70.0 | $ | — | $ | 1,613.6 | $ | 983.0 | ||||||||||||||||
Other liabilities | $ | 188.5 | $ | 444.3 | $ | 591.1 | $ | 504.3 | $ | 43.1 | $ | 43.9 | $ | 822.7 | $ | 992.5 | ||||||||||||||||
Total liabilities | $ | 263.7 | $ | 559.4 | $ | 2,059.5 | $ | 1,372.2 | $ | 113.1 | $ | 43.9 | $ | 2,436.3 | $ | 1,975.5 | ||||||||||||||||
Partners’ capital | $ | 34,850.2 | $ | 40,673.2 | $ | 18,404.9 | $ | 19,163.3 | $ | 1,961.5 | $ | 2,510.5 | $ | 55,216.6 | $ | 62,347.0 |
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Income from equity investments | $ | 51.7 | $ | 38.0 | ||||
Income from trading securities | 4.7 | 2.6 | ||||||
Other investment income | 0.2 | 2.7 | ||||||
Total | $ | 56.6 | $ | 43.3 | ||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Corporate Private Equity | $ | 40.0 | $ | 33.8 | ||||
Real Assets | 11.1 | 2.5 | ||||||
Global Market Strategies | 0.6 | 1.7 | ||||||
Total | $ | 51.7 | $ | 38.0 | ||||
F-92
Percentage of | ||||||||||||||||
Investments of | ||||||||||||||||
Fair Value | Consolidated Funds | |||||||||||||||
Geographic Region/Instrument Type/Industry | September 30, | December 31, | September 30, | December 31, | ||||||||||||
Description or Investment Strategy | 2011 | 2010 | 2011 | 2010 | ||||||||||||
(Dollars in millions) | ||||||||||||||||
United States | ||||||||||||||||
Equity securities: | ||||||||||||||||
Aerospace and defense | $ | 135.2 | $ | 166.0 | 0.67 | % | 1.40 | % | ||||||||
Healthcare | 47.1 | 0.1 | 0.23 | % | 0.00 | % | ||||||||||
Manufacturing | 394.8 | — | 1.96 | % | 0.00 | % | ||||||||||
Retail trade | 147.9 | — | 0.73 | % | 0.00 | % | ||||||||||
Technology | 588.1 | — | 2.92 | % | 0.00 | % | ||||||||||
Other | 349.0 | — | 1.73 | % | 0.00 | % | ||||||||||
Total equity securities (cost of $2,336.2 and $120.3 at September 30, 2011 and December 31, 2010, respectively) | 1,662.1 | 166.1 | 8.24 | % | 1.40 | % | ||||||||||
Partnership and LLC interests: | ||||||||||||||||
Real estate | 12.9 | 20.5 | 0.06 | % | 0.17 | % | ||||||||||
Fund investments | 2,683.0 | — | 13.32 | % | 0.00 | % | ||||||||||
Total Partnership and LLC interests (cost of $2,653.9 and $23.1 at September 30, 2011 and December 31, 2010, respectively) | 2,695.9 | 20.5 | 13.38 | % | 0.17 | % | ||||||||||
Loans: | ||||||||||||||||
Manufacturing | 128.0 | — | 0.64 | % | 0.00 | % | ||||||||||
Other | 267.5 | — | 1.33 | % | 0.00 | % | ||||||||||
Total loans (cost of $439.9 at September 30, 2011) | 395.5 | — | 1.97 | % | 0.00 | % | ||||||||||
Other: | ||||||||||||||||
Real estate | 6.3 | 5.6 | 0.03 | % | 0.05 | % | ||||||||||
Total other (cost of $3.8 at September 30, 2011 and December 31, 2010) | 6.3 | 5.6 | 0.03 | % | 0.05 | % | ||||||||||
Total investment in hedge funds | 1,806.7 | 698.5 | 8.97 | % | 5.89 | % | ||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | 252.0 | 242.1 | 1.25 | % | 2.04 | % | ||||||||||
Equity | 29.5 | 37.3 | 0.15 | % | 0.31 | % | ||||||||||
Loans | 7,118.1 | 7,636.0 | 35.33 | % | 64.36 | % | ||||||||||
Other | 0.1 | 0.2 | 0.00 | % | 0.00 | % | ||||||||||
Total assets of the CLOs (cost of $7,845.7 and $8,031.2 at September 30, 2011 and December 31, 2010, respectively) | 7,399.7 | 7,915.6 | 36.73 | % | 66.71 | % | ||||||||||
Total United States | $ | 13,966.2 | $ | 8,806.3 | 69.32 | % | 74.22 | % | ||||||||
F-93
Percentage of | ||||||||||||||||
Investments of | ||||||||||||||||
Fair Value | Consolidated Funds | |||||||||||||||
Geographic Region/Instrument Type/Industry | September 30, | December 31, | September 30, | December 31, | ||||||||||||
Description or Investment Strategy | 2011 | 2010 | 2011 | 2010 | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Canada | ||||||||||||||||
Equity securities: | ||||||||||||||||
Other | $ | 9.0 | $ | — | 0.04 | % | 0.00 | % | ||||||||
Total equity securities (cost of $6.4 at September 30, 2011) | 9.0 | — | 0.04 | % | 0.00 | % | ||||||||||
Partnership and LLC interests: | ||||||||||||||||
Fund investments | 50.7 | — | 0.25 | % | 0.00 | % | ||||||||||
Total Partnership and LLC interests (cost of $118.6 at September 30, 2011) | 50.7 | — | 0.25 | % | 0.00 | % | ||||||||||
Loans: | ||||||||||||||||
Transportation and Warehousing | 8.8 | — | 0.04 | % | 0.00 | % | ||||||||||
Total loans (cost of $10.0 at September 30, 2011) | 8.8 | — | 0.04 | % | 0.00 | % | ||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | 13.5 | 8.0 | 0.07 | % | 0.07 | % | ||||||||||
Loans | 81.2 | 51.3 | 0.40 | % | 0.43 | % | ||||||||||
Total assets of the CLOs (cost of $98.9 and $59.3 at September 30, 2011 and December 31, 2010, respectively) | 94.7 | 59.3 | 0.47 | % | 0.50 | % | ||||||||||
Total Canada | $ | 163.2 | $ | 59.3 | 0.80 | % | 0.50 | % | ||||||||
Europe | ||||||||||||||||
Equity securities: | ||||||||||||||||
Manufacturing | $ | 390.0 | $ | — | 1.94 | % | 0.00 | % | ||||||||
Retail trade | 139.5 | — | 0.69 | % | 0.00 | % | ||||||||||
Information | 113.4 | — | 0.56 | % | 0.00 | % | ||||||||||
Professional, Scientific, Technical Services | 113.1 | — | 0.56 | % | 0.00 | % | ||||||||||
Adm. Support, Waste Mgmt, Remediate Services | 108.6 | — | 0.54 | % | 0.00 | % | ||||||||||
Other | 211.8 | — | 1.05 | % | 0.00 | % | ||||||||||
Total equity securities (cost of $1,357.9 at September 30, 2011) | 1,076.4 | — | 5.34 | % | 0.00 | % | ||||||||||
Partnership and LLC interests: | ||||||||||||||||
Fund investments | 1,157.8 | — | 5.75 | % | 0.00 | % | ||||||||||
Total Partnership and LLC interests (cost of $1,147.7 at September 30, 2011) | $ | 1,157.8 | $ | — | 5.75 | % | 0.00 | % |
F-94
Percentage of | ||||||||||||||||
Investments of | ||||||||||||||||
Fair Value | Consolidated Funds | |||||||||||||||
Geographic Region/Instrument Type/Industry | September 30, | December 31, | September 30, | December 31, | ||||||||||||
Description or Investment Strategy | 2011 | 2010 | 2011 | 2010 | ||||||||||||
(Dollars in millions) | ||||||||||||||||
Europe | ||||||||||||||||
Loans: | ||||||||||||||||
Manufacturing | $ | 120.0 | $ | — | 0.60 | % | 0.00 | % | ||||||||
Other | 189.0 | — | 0.94 | % | 0.00 | % | ||||||||||
Total loans (cost of $487.2 at September 30, 2011) | 309.0 | — | 1.54 | % | 0.00 | % | ||||||||||
Assets of the CLOs | ||||||||||||||||
Bonds | 285.6 | 210.1 | 1.42 | % | 1.77 | % | ||||||||||
Equity | 9.1 | 9.0 | 0.05 | % | 0.08 | % | ||||||||||
Loans | 2,573.4 | 2,746.2 | 12.76 | % | 23.15 | % | ||||||||||
Other | 31.5 | 33.7 | 0.16 | % | 0.28 | % | ||||||||||
Total assets of the CLOs (cost of $3,313.7 and $3,347.9 at September 30, 2011 and December 31, 2010, respectively) | 2,899.6 | 2,999.0 | 14.39 | % | 25.28 | % | ||||||||||
Total Europe | $ | 5,442.8 | $ | 2,999.0 | 27.02 | % | 25.28 | % | ||||||||
Global | ||||||||||||||||
Equity securities: | ||||||||||||||||
Manufacturing | $ | 88.9 | $ | — | 0.44 | % | 0.00 | % | ||||||||
Total equity securities (cost of $89.7 at September 30, 2011) | 88.9 | — | 0.44 | % | 0.00 | % | ||||||||||
Partnership and LLC interests: | ||||||||||||||||
Fund investments | 486.9 | — | 2.42 | % | 0.00 | % | ||||||||||
Total Partnership and LLC interests (cost of $436.4 at September 30, 2011) | 486.9 | — | 2.42 | % | 0.00 | % | ||||||||||
Total Global | $ | 575.8 | $ | — | 2.86 | % | 0.00 | % | ||||||||
Total investments in Consolidated Funds (cost of $20,346.0 and $11,585.6 at September 30, 2011 and December 31, 2010, respectively) | $ | 20,148.0 | $ | 11,864.6 | 100.00 | % | 100.00 | % | ||||||||
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Interest income from investments | $ | 436.2 | $ | 303.2 | ||||
Other income | 85.4 | 15.2 | ||||||
Total | $ | 521.6 | $ | 318.4 | ||||
F-95
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Gains (losses) from investments of Consolidated Funds | $ | (472.1 | ) | $ | 292.2 | |||
Gains (losses) from liabilities of CLOs | (149.2 | ) | (121.3 | ) | ||||
Gains on other assets of CLOs | 3.1 | 2.8 | ||||||
Total | $ | (618.2 | ) | $ | 173.7 | |||
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Realized gains (losses) | $ | 474.0 | $ | (7.2 | ) | |||
Net change in unrealized gains (losses) | (946.1 | ) | 299.4 | |||||
Total | $ | (472.1 | ) | $ | 292.2 | |||
6. | Non-controlling Interests in Consolidated Entities |
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Non-Carlyle interests in Consolidated Funds | $ | 8,002.3 | $ | 218.9 | ||||
Non-Carlyle interests in majority-owned subsidiaries | 183.3 | 137.0 | ||||||
Non-controlling interest in carried interest and cash held for carried interest distributions | 12.1 | 9.0 | ||||||
Non-controlling interests in consolidated entities | $ | 8,197.7 | $ | 364.9 | ||||
F-96
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Non-Carlyle interests in Consolidated Funds | $ | (254.0 | ) | $ | 145.0 | |||
Non-Carlyle interests in majority-owned subsidiaries | 15.8 | 7.7 | ||||||
Non-controlling interest in carried interest and cash held for carried interest distributions | 6.5 | 13.6 | ||||||
Net income (loss) attributable to other non- controlling interests in consolidated entities | (231.7 | ) | 166.3 | |||||
Net income (loss) attributable to equity appropriated for CLOs | (349.4 | ) | 135.0 | |||||
Net income attributable to redeemable non-controlling interests in consolidated entities | 107.7 | — | ||||||
Non-controlling interests in income (loss) of consolidated entities | $ | (473.4 | ) | $ | 301.3 | |||
7. | Comprehensive Income (Loss) |
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Net income | $ | 444.7 | $ | 872.4 | ||||
Change in fair value of cash flow hedge instrument | 2.9 | (2.7 | ) | |||||
Currency translation adjustments | (82.6 | ) | (21.9 | ) | ||||
Other comprehensive loss | (79.7 | ) | (24.6 | ) | ||||
Comprehensive income | 365.0 | 847.8 | ||||||
Add: Comprehensive (income) loss attributable to equity appropriated for Consolidated Funds | 331.3 | (125.1 | ) | |||||
Add: Comprehensive (income) loss attributable to non-controlling interests in consolidated entities | 332.3 | (161.0 | ) | |||||
Add: Comprehensive income attributable to redeemable non-controlling interests in consolidated entities | (107.7 | ) | — | |||||
Comprehensive income attributable to Carlyle Group | $ | 920.9 | $ | 561.7 | ||||
F-97
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Unrealized losses on cash flow hedge instrument | $ | (5.7 | ) | $ | (8.6 | ) | ||
Currency translation adjustments | (26.0 | ) | (25.9 | ) | ||||
Total | $ | (31.7 | ) | $ | (34.5 | ) | ||
8. | Fixed Assets, Net |
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Furniture, fixtures and equipment | $ | 37.6 | $ | 34.4 | ||||
Computer hardware and software | 88.6 | 68.7 | ||||||
Leasehold improvements | 48.2 | 44.2 | ||||||
Total fixed assets | 174.4 | 147.3 | ||||||
Less: accumulated depreciation | (126.4 | ) | (107.7 | ) | ||||
Net fixed assets | $ | 48.0 | $ | 39.6 | ||||
9. | Loans Payable |
F-98
2014 | $ | 75.0 | ||
2015 | 175.0 | |||
2016 | 250.0 | |||
$ | 500.0 | |||
F-99
F-100
2011 | $ | 7.5 | ||
2012 | 7.5 | |||
2013 | 7.5 | |||
2014 | 7.5 | |||
2015 | 17.5 | |||
$ | 47.5 | |||
F-101
As of September 30, 2011 | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Borrowing | Average | Maturity in | ||||||||||||||
Outstanding | Fair Value | Interest Rate | Years | |||||||||||||
Senior secured notes | $ | 10,609.9 | $ | 9,358.2 | 1.32 | % | 9.07 | |||||||||
Subordinated notes, Income notes and Preferred shares | 337.9 | 731.2 | N/A | (a) | 8.82 | |||||||||||
Combination notes | 10.8 | 9.5 | N/A | (b) | 10.18 | |||||||||||
Total | $ | 10,958.6 | $ | 10,098.9 | ||||||||||||
As of December 31, 2010 | ||||||||||||||||
Weighted | ||||||||||||||||
Average | ||||||||||||||||
Weighted | Remaining | |||||||||||||||
Borrowing | Average | Maturity in | ||||||||||||||
Outstanding | Fair Value | Interest Rate | Years | |||||||||||||
Senior secured notes | $ | 11,037.1 | $ | 9,772.2 | 1.20 | % | 9.36 | |||||||||
Subordinated notes, Income notes and Preferred shares | 440.7 | 636.4 | N/A | (a) | 9.22 | |||||||||||
Combination notes | 11.7 | 9.9 | N/A | (b) | 10.72 | |||||||||||
Total | $ | 11,489.5 | $ | 10,418.5 | ||||||||||||
(a) | The subordinated notes, income notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs. |
F-102
(b) | The combination notes do not have contractual interest rates and have recourse only to U.S. Treasury securities and OATS specifically held to collateralize such combination notes. |
10. | Commitments and Contingencies |
Unfunded | ||||
Commitments | ||||
Corporate Private Equity | $ | 932.7 | ||
Real Assets | 276.1 | |||
Global Market Strategies | 80.5 | |||
$ | 1,289.3 | |||
F-103
F-104
2011 | $ | 9.4 | ||
2012 | 38.3 | |||
2013 | 34.9 | |||
2014 | 34.3 | |||
2015 | 30.6 | |||
Thereafter | 138.3 | |||
$ | 285.8 | |||
F-105
F-106
F-107
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Balance, beginning of period | $ | 23.1 | $ | 29.6 | ||||
Compensation expense | 2.9 | 3.9 | ||||||
Contract termination costs | 3.4 | 0.2 | ||||||
Costs paid or settled | (11.2 | ) | (9.4 | ) | ||||
Balance, end of period | $ | 18.2 | $ | 24.3 | ||||
11. | Related Party Transactions |
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Unbilled receivable for giveback obligations from current and former employees | $ | 6.4 | $ | 12.7 | ||||
Unbilled receivable for giveback obligations from Carlyle’s individual partners | 47.2 | 26.1 | ||||||
Notes receivable and accrued interest from affiliates | 68.9 | 106.7 | ||||||
Other receivables from unconsolidated funds and affiliates, net | 140.6 | 180.3 | ||||||
Total | $ | 263.1 | $ | 325.8 | ||||
F-108
As of | ||||||||
September 30, | December 31, | |||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Due to affiliates of Consolidated Funds | $ | 2.0 | $ | 1.2 | ||||
Due to non-consolidated affiliates | 6.4 | 13.1 | ||||||
Other | 17.7 | 9.3 | ||||||
Total | $ | 26.1 | $ | 23.6 | ||||
F-109
12. | Derivative Instruments in the CLOs |
F-110
September 30, 2011 | ||||||||||||
Notional | Fair Value - | Fair Value - | ||||||||||
Amount | Assets | Liabilities | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 363.9 | $ | 27.9 | $ | (3.5 | ) | |||||
Currency option(s) | 104.7 | 6.8 | — | |||||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | 32.0 | 0.1 | — | |||||||||
$ | 34.8 | $ | (3.5 | ) | ||||||||
December 31, 2010 | ||||||||||||
Notional | Fair Value - | Fair Value - | ||||||||||
Amount | Assets | Liabilities | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 354.4 | $ | 25.9 | $ | (5.6 | ) | |||||
Currency option(s) | 102.0 | 11.4 | — | |||||||||
Credit-related | ||||||||||||
Credit risk swap contract(s) | 9.3 | 0.1 | — | |||||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | 28.0 | 0.2 | — | |||||||||
$ | 37.6 | $ | (5.6 | ) | ||||||||
Nine Months Ended September 30, 2011 | ||||||||||||
Change in | ||||||||||||
Unrealized | ||||||||||||
Realized | Appreciation | |||||||||||
Appreciation | (Depreciation) | Total | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 11.1 | $ | 3.7 | $ | 14.8 | ||||||
Currency option(s) | — | (4.9 | ) | (4.9 | ) | |||||||
Credit-related | ||||||||||||
Credit risk swap contract(s) | — | (0.1 | ) | (0.1 | ) | |||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | — | (0.1 | ) | (0.1 | ) | |||||||
$ | 11.1 | $ | (1.4 | ) | $ | 9.7 | ||||||
F-111
Nine Months Ended September 30, 2010 | ||||||||||||
Change in | ||||||||||||
Unrealized | ||||||||||||
Realized | Appreciation | |||||||||||
Appreciation | (Depreciation) | Total | ||||||||||
Currency-related | ||||||||||||
Cross-currency swap contract(s) | $ | 28.2 | $ | (75.8 | ) | $ | (47.6 | ) | ||||
Currency option(s) | — | 4.7 | 4.7 | |||||||||
Credit-related | ||||||||||||
Credit risk swap contract(s) | — | (1.2 | ) | (1.2 | ) | |||||||
Interest-related | ||||||||||||
Interest rate cap contract(s) | — | — | — | |||||||||
$ | 28.2 | $ | (72.3 | ) | $ | (44.1 | ) | |||||
13. | Income Taxes |
F-112
14. | Segment Reporting |
F-113
F-114
September 30, 2011 and the Nine Months Then Ended | ||||||||||||||||||||
Corporate | Global | Fund of | ||||||||||||||||||
Private | Market | Funds | ||||||||||||||||||
Equity | Real Assets | Strategies | Solutions | Total | ||||||||||||||||
(Dollars in millions) | ||||||||||||||||||||
Segment Revenues | ||||||||||||||||||||
Fund level fee revenues | ||||||||||||||||||||
Fund management fees | $ | 387.7 | $ | 114.9 | $ | 128.6 | $ | 18.7 | $ | 649.9 | ||||||||||
Portfolio advisory fees, net | 27.0 | 2.6 | 2.2 | — | 31.8 | |||||||||||||||
Transaction fees, net | 26.4 | 1.9 | — | — | 28.3 | |||||||||||||||
Total fee revenues | 441.1 | 119.4 | 130.8 | 18.7 | 710.0 | |||||||||||||||
Performance fees | ||||||||||||||||||||
Realized | 690.7 | 81.1 | 95.7 | 19.2 | 886.7 | |||||||||||||||
Unrealized | (179.0 | ) | 1.7 | 8.1 | (22.5 | ) | (191.7 | ) | ||||||||||||
Total performance fees | 511.7 | 82.8 | 103.8 | (3.3 | ) | 695.0 | ||||||||||||||
Investment income (loss) | ||||||||||||||||||||
Realized | 35.1 | 2.3 | 11.0 | — | 48.4 | |||||||||||||||
Unrealized | (5.6 | ) | 3.5 | 17.5 | — | 15.4 | ||||||||||||||
Total investment income | 29.5 | 5.8 | 28.5 | — | 63.8 | |||||||||||||||
Interest and other income | 8.1 | 2.2 | 4.4 | 0.2 | 14.9 | |||||||||||||||
Total revenues | 990.4 | 210.2 | 267.5 | 15.6 | 1,483.7 | |||||||||||||||
Segment Expenses | ||||||||||||||||||||
Direct compensation and benefits | ||||||||||||||||||||
Direct base compensation | 189.2 | 58.3 | 47.8 | 8.1 | 303.4 | |||||||||||||||
Performance fee related | ||||||||||||||||||||
Realized | 355.6 | 8.1 | 46.6 | 15.3 | 425.6 | |||||||||||||||
Unrealized | (105.1 | ) | (4.4 | ) | (10.7 | ) | (18.0 | ) | (138.2 | ) | ||||||||||
Direct compensation and benefits | 439.7 | 62.0 | 83.7 | 5.4 | 590.8 | |||||||||||||||
General, administrative, and other indirect expenses | 168.3 | 59.3 | 37.0 | 3.0 | 267.6 | |||||||||||||||
Interest expense | 30.0 | 8.9 | 7.5 | — | 46.4 | |||||||||||||||
Total expenses | 638.0 | 130.2 | 128.2 | 8.4 | 904.8 | |||||||||||||||
Economic Net Income | $ | 352.4 | $ | 80.0 | $ | 139.3 | $ | 7.2 | $ | 578.9 | ||||||||||
Fee Related Earnings | $ | 61.7 | $ | (4.9 | ) | $ | 42.9 | $ | 7.8 | $ | 107.5 | |||||||||
Net Performance Fees | $ | 261.2 | $ | 79.1 | $ | 67.9 | $ | (0.6 | ) | $ | 407.6 | |||||||||
Investment Income | $ | 29.5 | $ | 5.8 | $ | 28.5 | $ | — | $ | 63.8 | ||||||||||
Distributable Earnings | $ | 431.9 | $ | 70.4 | $ | 103.0 | $ | 11.7 | $ | 617.0 | ||||||||||
Segment assets as of September 30, 2011 | $ | 2,318.1 | $ | 504.1 | $ | 1,178.7 | $ | 467.8 | $ | 4,468.7 | ||||||||||
F-115
Nine Months Ended September 30, 2010 | ||||||||||||||||
Corporate | Global | |||||||||||||||
Private | Market | |||||||||||||||
Equity | Real Assets | Strategies | Total | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Segment Revenues | ||||||||||||||||
Fund level fee revenues | ||||||||||||||||
Fund management fees | $ | 401.2 | $ | 107.5 | $ | 61.7 | $ | 570.4 | ||||||||
Portfolio advisory fees, net | 10.1 | 1.6 | 1.6 | 13.3 | ||||||||||||
Transaction fees, net | 5.5 | 8.1 | 0.1 | 13.7 | ||||||||||||
Total fee revenues | 416.8 | 117.2 | 63.4 | 597.4 | ||||||||||||
Performance fees | ||||||||||||||||
Realized | 97.8 | 0.1 | 1.9 | 99.8 | ||||||||||||
Unrealized | 144.0 | 0.3 | 58.8 | 203.1 | ||||||||||||
Total performance fees | 241.8 | 0.4 | 60.7 | 302.9 | ||||||||||||
Investment income (loss) | ||||||||||||||||
Realized | 2.0 | 1.7 | 3.4 | 7.1 | ||||||||||||
Unrealized | 31.5 | (0.9 | ) | 11.2 | 41.8 | |||||||||||
Total investment income (loss) | 33.5 | 0.8 | 14.6 | 48.9 | ||||||||||||
Interest and other income | 10.1 | 4.1 | 2.2 | 16.4 | ||||||||||||
Total revenues | 702.2 | 122.5 | 140.9 | 965.6 | ||||||||||||
Segment Expenses | ||||||||||||||||
Direct compensation and benefits | ||||||||||||||||
Direct base compensation | 175.1 | 55.8 | 31.7 | 262.6 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 54.7 | (0.1 | ) | 0.5 | 55.1 | |||||||||||
Unrealized | 60.6 | (6.8 | ) | 30.4 | 84.2 | |||||||||||
Direct compensation and benefits | 290.4 | 48.9 | 62.6 | 401.9 | ||||||||||||
General, administrative, and other indirect expenses | 118.0 | 44.1 | 20.1 | 182.2 | ||||||||||||
Interest expense | 8.5 | 2.9 | 2.1 | 13.5 | ||||||||||||
Total expenses | 416.9 | 95.9 | 84.8 | 597.6 | ||||||||||||
Economic Net Income | $ | 285.3 | $ | 26.6 | $ | 56.1 | $ | 368.0 | ||||||||
Fee Related Earnings | $ | 125.3 | $ | 18.5 | $ | 11.7 | $ | 155.5 | ||||||||
Net Performance Fees | $ | 126.5 | $ | 7.3 | $ | 29.8 | $ | 163.6 | ||||||||
Investment Income | $ | 33.5 | $ | 0.8 | $ | 14.6 | $ | 48.9 | ||||||||
Distributable Earnings | $ | 170.4 | $ | 20.4 | $ | 16.5 | $ | 207.3 | ||||||||
F-116
September 30, 2011 and the Nine Months Then Ended | ||||||||||||||||
Total | ||||||||||||||||
Reportable | Consolidated | Carlyle | ||||||||||||||
Segments | Funds | Reconciling Items | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | $ | 1,483.7 | $ | 521.6 | $ | 8.2 | (a) | $ | 2,013.5 | |||||||
Expenses | $ | 904.8 | $ | 382.8 | $ | (362.7 | )(b) | $ | 924.9 | |||||||
Other income (loss) | $ | — | $ | (630.5 | ) | $ | 12.3 | (c) | $ | (618.2 | ) | |||||
Economic net income (loss) | $ | 578.9 | $ | (491.7 | ) | $ | 383.2 | (d) | $ | 470.4 | ||||||
Total assets | $ | 4,468.7 | $ | 21,116.0 | $ | (144.4 | )(e) | $ | 25,440.3 |
Nine Months Ended September 30, 2010 | ||||||||||||||||
Total | ||||||||||||||||
Reportable | Consolidated | Carlyle | ||||||||||||||
Segments | Funds | Reconciling Items | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | $ | 965.6 | $ | 318.4 | $ | (27.2 | )(a) | $ | 1,256.8 | |||||||
Expenses | $ | 597.6 | $ | 194.8 | $ | (248.8 | )(b) | $ | 543.6 | |||||||
Other income | $ | — | $ | 173.6 | $ | 0.1 | (c) | $ | 173.7 | |||||||
Economic net income | $ | 368.0 | $ | 297.2 | $ | 221.7 | (d) | $ | 886.9 |
(a) | The Revenues adjustment principally represents fund management and performance fees earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities and adjustments to reflect the Company’s ownership interests in Claren Road and ESG which were included in Revenues in the Company’s segment reporting. |
(b) | The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Company, adjustments for partner compensation, charges and credits associated with Carlyle corporate actions and non-recurring items, and adjustments to reflect the Company’s ownership interests in Claren Road and ESG as detailed below (Dollars in millions): |
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
Partner compensation | $ | (458.3 | ) | $ | (222.8 | ) | ||
Acquisition related charges and amortization of intangibles | 57.1 | 1.5 | ||||||
Other non-operating expenses | 30.0 | — | ||||||
Severance and lease terminations | 6.3 | 4.1 | ||||||
Amounts attributable to Claren Road and ESG Founders | 95.9 | — | ||||||
Other adjustments | — | (0.4 | ) | |||||
Elimination of expenses of Consolidated Funds and other adjustments | (93.7 | ) | (31.2 | ) | ||||
$ | (362.7 | ) | $ | (248.8 | ) | |||
(c) | The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total Other Income (Loss). |
F-117
(d) | The following table is a reconciliation of Income Before Provision for Income Taxes to Economic Net Income, to Fee Related Earnings, and to Distributable Earnings: |
Nine Months Ended | ||||||||
September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Income before provision for income taxes | $ | 470.4 | $ | 886.9 | ||||
Adjustments: | ||||||||
Partner compensation(1) | (458.3 | ) | (222.8 | ) | ||||
Acquisition related charges and amortization of intangibles | 57.1 | 1.5 | ||||||
Other non-operating expenses | 30.0 | — | ||||||
Non-controlling interests in Consolidated entities | 473.4 | (301.3 | ) | |||||
Severance and lease terminations | 6.3 | 4.1 | ||||||
Other adjustments | —— | (0.4 | ) | |||||
Economic Net Income | $ | 578.9 | $ | 368.0 | ||||
Net performance fees(2) | 407.6 | 163.6 | ||||||
Investment income(2) | 63.8 | 48.9 | ||||||
Fee Related Earnings | $ | 107.5 | $ | 155.5 | ||||
Realized performance fees, net of related compensation(2) | 461.1 | 44.7 | ||||||
Investment income — realized(2) | 48.4 | 7.1 | ||||||
Distributable Earnings | $ | 617.0 | $ | 207.3 | ||||
(1) | Adjustments for partner compensation reflect amounts due to Carlyle partners for compensation and carried interest allocated to them, which amounts were classified as partnership distributions in the condensed combined and consolidated financial statements. |
(2) | See reconciliation to most directly comparable U.S. GAAP measure below: |
Nine Months Ended September 30, 2011 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 870.1 | $ | 16.6 | $ | 886.7 | ||||||
Unrealized | (133.6 | ) | (58.1 | ) | (191.7 | ) | ||||||
Total performance fees | 736.5 | (41.5 | ) | 695.0 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | 136.2 | 289.4 | 425.6 | |||||||||
Unrealized | (81.7 | ) | (56.5 | ) | (138.2 | ) | ||||||
Total performance fee related compensation expense | 54.5 | 232.9 | 287.4 | |||||||||
Net performance fees | ||||||||||||
Realized | 733.9 | (272.8 | ) | 461.1 | ||||||||
Unrealized | (51.9 | ) | (1.6 | ) | (53.5 | ) | ||||||
Total net performance fees | $ | 682.0 | $ | (274.4 | ) | $ | 407.6 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | 50.3 | $ | (1.9 | ) | $ | 48.4 | |||||
Unrealized | 6.3 | 9.1 | 15.4 | |||||||||
Total investment income | $ | 56.6 | $ | 7.2 | $ | 63.8 | ||||||
F-118
Nine Months Ended September 30, 2010 | ||||||||||||
Total | ||||||||||||
Carlyle | Reportable | |||||||||||
Consolidated | Adjustments(3) | Segments | ||||||||||
(Dollars in millions) | ||||||||||||
Performance fees | ||||||||||||
Realized | $ | 92.4 | $ | 7.4 | $ | 99.8 | ||||||
Unrealized | 220.8 | (17.7 | ) | 203.1 | ||||||||
Total performance fees | 313.2 | (10.3 | ) | 302.9 | ||||||||
Performance fee related compensation expense | ||||||||||||
Realized | (0.1 | ) | 55.2 | 55.1 | ||||||||
Unrealized | 40.5 | 43.7 | 84.2 | |||||||||
Total performance fee related compensation expense | 40.4 | 98.9 | 139.3 | |||||||||
Net performance fees | ||||||||||||
Realized | 92.5 | (47.8 | ) | 44.7 | ||||||||
Unrealized | 180.3 | (61.4 | ) | 118.9 | ||||||||
Total net performance fees | $ | 272.8 | $ | (109.2 | ) | $ | 163.6 | |||||
Investment income (loss) | ||||||||||||
Realized | $ | (0.8 | ) | $ | 7.9 | $ | 7.1 | |||||
Unrealized | 44.1 | (2.3 | ) | 41.8 | ||||||||
Total investment income (loss) | $ | 43.3 | $ | 5.6 | $ | 48.9 | ||||||
(3) | Adjustments to performance fees and investment income (loss) relate to amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, and amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results. Adjustments to performance fee related compensation expense relate to the inclusion of partner compensation in the segment results. Adjustments are also included in these financial statement captions to reflect the Company’s 55% economic interest in Claren Road and ESG in the segment results. |
(e) | The Total Assets adjustment represents the addition of the assets of the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total assets. |
15. | Subsequent Events |
F-119
16. | Supplemental Financial Information |
As of September 30, 2011 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 712.6 | $ | — | $ | — | $ | 712.6 | ||||||||
Cash and cash equivalents held at Consolidated Funds | — | 678.3 | — | 678.3 | ||||||||||||
Restricted cash | 32.8 | — | — | 32.8 | ||||||||||||
Restricted cash and securities of Consolidated Funds | — | 92.7 | — | 92.7 | ||||||||||||
Investments and accrued performance fees | 2,717.2 | — | (127.3 | ) | 2,589.9 | |||||||||||
Investments of Consolidated Funds | — | 20,148.0 | — | 20,148.0 | ||||||||||||
Due from affiliates and other receivables, net | 279.1 | — | (16.0 | ) | 263.1 | |||||||||||
Due from affiliates and other receivables of Consolidated Funds, net | — | 182.1 | (1.1 | ) | 181.0 | |||||||||||
Fixed assets, net | 48.0 | — | — | 48.0 | ||||||||||||
Deposits and other | 53.8 | 14.9 | — | 68.7 | ||||||||||||
Intangible assets, net | 608.3 | — | — | 608.3 | ||||||||||||
Deferred tax assets | 16.9 | — | — | 16.9 | ||||||||||||
Total assets | $ | 4,468.7 | $ | 21,116.0 | $ | (144.4 | ) | $ | 25,440.3 | |||||||
Liabilities and equity | ||||||||||||||||
Loans payable | $ | 698.5 | $ | — | $ | — | $ | 698.5 | ||||||||
Subordinated loan payable to affiliate | 520.0 | — | — | 520.0 | ||||||||||||
Loans payable of Consolidated Funds | — | 10,156.0 | (55.2 | ) | 10,100.8 | |||||||||||
Accounts payable, accrued expenses and other liabilities | 203.4 | — | — | 203.4 | ||||||||||||
Accrued compensation and benefits | 544.4 | — | — | 544.4 | ||||||||||||
Due to Carlyle partners | 1,109.7 | — | — | 1,109.7 | ||||||||||||
Due to affiliates | 31.9 | 2.0 | (7.8 | ) | 26.1 | |||||||||||
Deferred revenue | 211.2 | 2.0 | — | 213.2 | ||||||||||||
Deferred tax liabilities | 57.5 | — | — | 57.5 | ||||||||||||
Other liabilities of Consolidated Funds | — | 456.2 | (22.4 | ) | 433.8 | |||||||||||
Accrued giveback obligations | 148.7 | — | — | 148.7 | ||||||||||||
Total liabilities | 3,525.3 | 10,616.2 | (85.4 | ) | 14,056.1 | |||||||||||
Redeemable non-controlling interests in consolidated entities | 7.1 | 1,789.8 | (0.1 | ) | 1,796.8 | |||||||||||
Members’ equity | 772.6 | 25.0 | (25.0 | ) | 772.6 | |||||||||||
Accumulated other comprehensive loss | (31.7 | ) | — | — | (31.7 | ) | ||||||||||
Total members’ equity | 740.9 | 25.0 | (25.0 | ) | 740.9 | |||||||||||
Equity appropriated for Consolidated Funds | — | 658.3 | (9.5 | ) | 648.8 | |||||||||||
Non-controlling interests in consolidated entities | 195.4 | 8,026.7 | (24.4 | ) | 8,197.7 | |||||||||||
Total equity | 936.3 | 8,710.0 | (58.9 | ) | 9,587.4 | |||||||||||
Total liabilities and equity | $ | 4,468.7 | $ | 21,116.0 | $ | (144.4 | ) | $ | 25,440.3 | |||||||
F-120
As of December 31, 2010 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Assets | ||||||||||||||||
Cash and cash equivalents | $ | 616.9 | $ | — | $ | — | $ | 616.9 | ||||||||
Cash and cash equivalents held at Consolidated Funds | — | 729.5 | — | 729.5 | ||||||||||||
Restricted cash | 16.5 | — | — | 16.5 | ||||||||||||
Restricted cash and securities of Consolidated Funds | — | 135.5 | — | 135.5 | ||||||||||||
Investments and accrued performance fees | 2,669.9 | — | (75.6 | ) | 2,594.3 | |||||||||||
Investments of Consolidated Funds | — | 11,864.6 | — | 11,864.6 | ||||||||||||
Due from affiliates and other receivables, net | 329.7 | — | (3.9 | ) | 325.8 | |||||||||||
Due from affiliates and other receivables of Consolidated Funds, net | — | 245.2 | (5.6 | ) | 239.6 | |||||||||||
Fixed assets, net | 39.6 | — | — | 39.6 | ||||||||||||
Deposits and other | 34.1 | 7.2 | — | 41.3 | ||||||||||||
Intangible assets, net | 448.4 | — | — | 448.4 | ||||||||||||
Deferred tax assets | 10.8 | — | — | 10.8 | ||||||||||||
Total assets | $ | 4,165.9 | $ | 12,982.0 | $ | (85.1 | ) | $ | 17,062.8 | |||||||
Liabilities and equity | ||||||||||||||||
Loans payable | $ | 597.5 | $ | — | $ | — | $ | 597.5 | ||||||||
Subordinated loan payable to affiliate | 494.0 | — | — | 494.0 | ||||||||||||
Loans payable of Consolidated Funds | — | 10,475.9 | (42.4 | ) | 10,433.5 | |||||||||||
Accounts payable, accrued expenses and other liabilities | 211.6 | — | — | 211.6 | ||||||||||||
Accrued compensation and benefits | 520.9 | — | — | 520.9 | ||||||||||||
Due to Carlyle partners | 953.1 | — | (4.5 | ) | 948.6 | |||||||||||
Due to affiliates | 27.7 | 1.5 | (5.6 | ) | 23.6 | |||||||||||
Deferred revenue | 200.1 | 2.1 | — | 202.2 | ||||||||||||
Deferred tax liabilities | 0.2 | — | — | 0.2 | ||||||||||||
Other liabilities of Consolidated Funds | — | 622.4 | (3.9 | ) | 618.5 | |||||||||||
Accrued giveback obligations | 119.6 | — | — | 119.6 | ||||||||||||
Total liabilities | 3,124.7 | 11,101.9 | (56.4 | ) | 14,170.2 | |||||||||||
Redeemable non-controlling interests in consolidated entities | — | 694.0 | — | 694.0 | ||||||||||||
Members’ equity | 929.7 | — | — | 929.7 | ||||||||||||
Accumulated other comprehensive loss | (34.5 | ) | — | — | (34.5 | ) | ||||||||||
Total members’ equity | 895.2 | — | — | 895.2 | ||||||||||||
Equity appropriated for Consolidated Funds | — | 946.5 | (8.0 | ) | 938.5 | |||||||||||
Non-controlling interests in consolidated entities | 146.0 | 239.6 | (20.7 | ) | 364.9 | |||||||||||
Total equity | 1,041.2 | 1,186.1 | (28.7 | ) | 2,198.6 | |||||||||||
Total liabilities and equity | $ | 4,165.9 | $ | 12,982.0 | $ | (85.1 | ) | $ | 17,062.8 | |||||||
F-121
Nine Months Ended September 30, 2011 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Fund management fees | $ | 757.7 | $ | — | $ | (74.5 | ) | $ | 683.2 | |||||||
Performance fees | ||||||||||||||||
Realized | 909.4 | — | (39.3 | ) | 870.1 | |||||||||||
Unrealized | (160.0 | ) | — | 26.4 | (133.6 | ) | ||||||||||
Total performance fees | 749.4 | — | (12.9 | ) | 736.5 | |||||||||||
Investment income | ||||||||||||||||
Realized | 60.8 | — | (10.5 | ) | 50.3 | |||||||||||
Unrealized | 19.3 | — | (13.0 | ) | 6.3 | |||||||||||
Total investment income | 80.1 | — | (23.5 | ) | 56.6 | |||||||||||
Interest and other income | 14.9 | — | 0.7 | 15.6 | ||||||||||||
Interest and other income of Consolidated Funds | — | 521.6 | — | 521.6 | ||||||||||||
Total revenues | 1,602.1 | 521.6 | (110.2 | ) | 2,013.5 | |||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Base compensation | 277.2 | — | — | 277.2 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | 136.2 | — | — | 136.2 | ||||||||||||
Unrealized | (81.7 | ) | — | — | (81.7 | ) | ||||||||||
Total compensation and benefits | 331.7 | — | — | 331.7 | ||||||||||||
General, administrative and other expenses | 225.6 | — | (0.9 | ) | 224.7 | |||||||||||
Interest | 48.5 | — | — | 48.5 | ||||||||||||
Interest and other expenses of Consolidated Funds | — | 382.8 | (92.8 | ) | 290.0 | |||||||||||
Other non-operating expenses | 30.0 | — | — | 30.0 | ||||||||||||
Total expenses | 635.8 | 382.8 | (93.7 | ) | 924.9 | |||||||||||
Other loss | ||||||||||||||||
Net investment losses of Consolidated Funds | — | (630.5 | ) | 12.3 | (618.2 | ) | ||||||||||
Income (loss) before provision for income taxes | 966.3 | (491.7 | ) | (4.2 | ) | 470.4 | ||||||||||
Provision for income taxes | 25.7 | — | — | 25.7 | ||||||||||||
Net income (loss) | 940.6 | (491.7 | ) | (4.2 | ) | 444.7 | ||||||||||
Net income (loss) attributable to non-controlling interests in consolidated entities | 22.5 | — | (495.9 | ) | (473.4 | ) | ||||||||||
Net income (loss) attributable to Carlyle Group | $ | 918.1 | $ | (491.7 | ) | $ | 491.7 | $ | 918.1 | |||||||
F-122
Nine Months Ended September 30, 2010 | ||||||||||||||||
Consolidated | ||||||||||||||||
Operating | Consolidated | |||||||||||||||
Entities | Funds | Eliminations | Consolidated | |||||||||||||
(Dollars in millions) | ||||||||||||||||
Revenues | ||||||||||||||||
Fund management fees | $ | 597.4 | $ | — | $ | (31.2 | ) | $ | 566.2 | |||||||
Performance fees | ||||||||||||||||
Realized | 100.6 | — | (8.2 | ) | 92.4 | |||||||||||
Unrealized | 215.9 | — | 4.9 | 220.8 | ||||||||||||
Total performance fees | 316.5 | — | (3.3 | ) | 313.2 | |||||||||||
Investment income (loss) | ||||||||||||||||
Realized | 7.0 | — | (7.8 | ) | (0.8 | ) | ||||||||||
Unrealized | 49.6 | — | (5.5 | ) | 44.1 | |||||||||||
Total investment income (loss) | 56.6 | — | (13.3 | ) | 43.3 | |||||||||||
Interest and other income | 16.4 | — | (0.7 | ) | 15.7 | |||||||||||
Interest and other income of Consolidated Funds | — | 318.4 | — | 318.4 | ||||||||||||
Total revenues | 986.9 | 318.4 | (48.5 | ) | 1,256.8 | |||||||||||
Expenses | ||||||||||||||||
Compensation and benefits | ||||||||||||||||
Base compensation | 221.5 | — | — | 221.5 | ||||||||||||
Performance fee related | ||||||||||||||||
Realized | (0.1 | ) | — | — | (0.1 | ) | ||||||||||
Unrealized | 40.5 | — | — | 40.5 | ||||||||||||
Total compensation and benefits | 261.9 | — | — | 261.9 | ||||||||||||
General, administrative and other expenses | 104.6 | — | 0.8 | 105.4 | ||||||||||||
Interest | 13.5 | — | — | 13.5 | ||||||||||||
Interest and other expenses of Consolidated Funds | — | 194.8 | (32.0 | ) | 162.8 | |||||||||||
Total expenses | 380.0 | 194.8 | (31.2 | ) | 543.6 | |||||||||||
Other income | ||||||||||||||||
Net investment income of Consolidated Funds | — | 173.6 | 0.1 | 173.7 | ||||||||||||
Income before provision for income taxes | 606.9 | 297.2 | (17.2 | ) | 886.9 | |||||||||||
Provision for income taxes | 14.5 | — | — | 14.5 | ||||||||||||
Net income | 592.4 | 297.2 | (17.2 | ) | 872.4 | |||||||||||
Net income attributable to non-controlling interests in consolidated entities | 21.3 | — | 280.0 | 301.3 | ||||||||||||
Net income attributable to Carlyle Group | $ | 571.1 | $ | 297.2 | $ | (297.2 | ) | $ | 571.1 | |||||||
F-123
Nine Months Ended September 30, | ||||||||
2011 | 2010 | |||||||
(Dollars in millions) | ||||||||
Cash flows from operating activities | ||||||||
Net income | $ | 940.6 | $ | 592.4 | ||||
Adjustments to reconcile net income to net cash flows from operating activities: | ||||||||
Depreciation and amortization | 61.6 | 17.6 | ||||||
Amortization of deferred financing fees | 0.8 | 1.3 | ||||||
Non-cash performance fees | 158.7 | (215.9 | ) | |||||
Other non-cash amounts | 41.7 | (18.9 | ) | |||||
Investment income | (67.3 | ) | (53.9 | ) | ||||
Purchases of investments | (75.2 | ) | (65.9 | ) | ||||
Proceeds from the sale of investments | 273.0 | 35.1 | ||||||
Proceeds from the sale of trading securities | 0.2 | 7.9 | ||||||
Change in due from affiliates and other receivables | 15.1 | 13.4 | ||||||
Change in deposits and other | (19.8 | ) | (6.6 | ) | ||||
Change in accounts payable, accrued expenses and other liabilities | (61.2 | ) | (26.8 | ) | ||||
Change in accrued compensation and benefits | (185.7 | ) | 7.6 | |||||
Change in due to affiliates | (0.6 | ) | (15.4 | ) | ||||
Change in deferred revenue | 14.0 | 24.0 | ||||||
Net cash provided by operating activities | 1,095.9 | 295.9 | ||||||
Cash flows from investing activities | ||||||||
Change in restricted cash | (15.7 | ) | (0.3 | ) | ||||
Purchases of fixed assets, net | (25.8 | ) | (20.1 | ) | ||||
Purchases of intangible assets | (8.1 | ) | (46.5 | ) | ||||
Acquisitions, net of cash acquired | (71.5 | ) | — | |||||
Net cash used in investing activities | (121.1 | ) | (66.9 | ) | ||||
Cash flows from financing activities | ||||||||
Borrowings under credit facility | 125.0 | — | ||||||
Payments on loans payable | (24.0 | ) | (41.6 | ) | ||||
Contributions from members | 9.6 | 13.5 | ||||||
Distributions to members | (1,040.9 | ) | (194.9 | ) | ||||
Contributions from non-controlling interest holders | 25.3 | 30.6 | ||||||
Distributions to non-controlling interest holders | (33.6 | ) | (16.4 | ) | ||||
Change in due to/from affiliates financing activities | 56.7 | (13.5 | ) | |||||
Net cash used in financing activities | (881.9 | ) | (222.3 | ) | ||||
Effect of foreign exchange rate changes | 2.8 | (1.9 | ) | |||||
Increase in cash and cash equivalents | 95.7 | 4.8 | ||||||
Cash and cash equivalents, beginning of period | 616.9 | 488.1 | ||||||
Cash and cash equivalents, end of period | $ | 712.6 | $ | 492.9 | ||||
F-124
F-125
F-126
June 30, 2011 | ||||||||
(€ thousands) | ||||||||
Assets | ||||||||
Fixed assets | ||||||||
Tangible fixed assets,4.1 | ||||||||
Other fixed assets | 781 | |||||||
Financial fixed assets | ||||||||
Participation in investments,4.2 | 314 | |||||||
€ | 1,095 | |||||||
Current assets | ||||||||
Pensions | 459 | |||||||
Accounts receivable | ||||||||
Receivables | 228 | |||||||
Receivables from related parties,4.3 | 5,688 | |||||||
Other tax and social security receivables | 21 | |||||||
Corporate income tax receivables,4.4 | 1,446 | |||||||
Prepayments and accrued income,4.6 | 1,189 | |||||||
Short-term deposits | 7,526 | |||||||
16,557 | ||||||||
Cash and cash equivalents,4.7 | ||||||||
Call deposits | 97,000 | |||||||
Cash | 498 | |||||||
97,498 | ||||||||
Total assets | € | 115,150 | ||||||
Liabilities and equity | ||||||||
Group Equity | ||||||||
Equity attributable to shareholders of the parent company,4.8 | 84,803 | |||||||
Equity attributable to other shareholders,4.9 | 2,929 | |||||||
€ | 87,732 | |||||||
Provisions | ||||||||
Other long-term employee benefits,4.10 | 102 | |||||||
Current liabilities | ||||||||
Creditors | 348 | |||||||
Liabilities to related parties | 8 | |||||||
Other tax and social security payables | 420 | |||||||
Corporate income tax liabilities | 12,999 | |||||||
Forward contracts,4.5 | 292 | |||||||
Other short-term liabilities,4.11 | 13,249 | |||||||
27,316 | ||||||||
Total liabilities and equity | € | 115,150 | ||||||
F-127
Notes to the Consolidated Balance Sheet
1. | Organization and presentation |
F-128
• | An investment in AlpInvest Partners Later Stage Co-Investments II C.V. by Betacom XLII B.V. (note 4.2); | |
• | Carried interest related receivables (note 4.3); | |
• | Short term loans from the company to the investment entities managed by the company or any of its Group companies (note 4.3); | |
• | Recharge of certain cost/revenue paid respectively invoiced by the company or any of its Group companies on behalf of the investment entities as accounted for under Prepayments and accrued income or Other short-term liabilities (note 4.6 and 4.11); and | |
• | Other shareholder interests in Group companies of which (former) employees, among which Directors of the company, are the ultimate beneficial owners (note 4.9). |
2. | Accounting policies for the consolidated balance sheet |
F-129
• | The basis for the defined benefit scheme is final pay; | |
• | The salary in the defined benefit scheme is capped; | |
• | Above the cap the pension scheme becomes defined contribution; | |
• | Pensions and deferred pension rights of former employees can be increased yearly with a percentage to be determined by the employer; and | |
��� | The pensions have been insured with an outside insurance company. |
F-130
F-131
3. | Financial Instruments and Risk Management |
F-132
4. | Account Balance Details |
Furniture | ||||||||||||||||
Computers | and Other | Leasehold | ||||||||||||||
and | Office | Improve- | ||||||||||||||
Tangible Fixed Assets | Software | Equipment | ments | Total | ||||||||||||
Balance on June 30, 2011 | ||||||||||||||||
Cost | € | 6,030 | € | 1,538 | € | 3,015 | € | 10,583 | ||||||||
Accumulated impairment and depreciation | (5,708 | ) | (1,291 | ) | (2,803 | ) | (9,802 | ) | ||||||||
Book value | € | 322 | € | 247 | € | 212 | € | 781 | ||||||||
June 30, | ||||
2011 | ||||
Related party | ||||
Stichting Pensioenfonds ABP | € | 3,187 | ||
Stichting Pensioenfonds Zorg en Welzijn | 2,439 | |||
5,626 | ||||
Investment entities | 62 | |||
Total | € | 5,688 | ||
F-133
June 30, | ||||
2011 | ||||
Prepaid rent | € | 258 | ||
Accrued interest | 143 | |||
Prepaid management fee | 96 | |||
Other receivables and prepaid items | 692 | |||
Total | € | 1,189 | ||
June 30, | ||||
2011 | ||||
Discount rate at end of period | 6.10 | % | ||
General increase in salaries | 2.00 | % |
F-134
June 30, | ||||
2011 | ||||
Personnel related items | € | 10,123 | ||
Carried interest related bonus | 1,620 | |||
Holiday leave provision | 213 | |||
Accrued expenses | 1,057 | |||
Rent | 168 | |||
Directors’ fee payable to related parties | 68 | |||
Total | € | 13,249 | ||
F-135
5. | Supplementary Information |
Registered | ||||||
Name of Company | Office | % Ownership | Core Activities | |||
AlpInvest Partners Holding Inc | New York | 100 | Advisory and management services | |||
AlpInvest Partners Inc | New York | 100 through AlpInvest Partners Holding Inc | Advisory and management services | |||
AlpInvest Partners Ltd | Hong Kong | 100 | Advisory and management services | |||
AlpInvest Partners UK limited | London | 100 | Advisory and management Services | |||
AlpInvest Partners Later Stage Co-Investments Custodian II B.V. | Amsterdam | 100 | Acts as custodian of AlpInvest Partners Later Stage Co-Investments II C.V. | |||
AlpInvest Partners Later Stage Co-Investments Custodian IIA B.V. | Amsterdam | 100 | Acts as custodian of AlpInvest Partners Later Stage Co-Investments IIA C.V. | |||
AlpInvest Partners Fund of Funds Custodian IIA B.V. | Amsterdam | 100 | Acts as custodian of AlpInvest Partners Fund of Funds IIA C.V. | |||
AlpInvest Private Equity Partners B.V. ** | Amsterdam | 100 | Acts as general partner of AlpInvest Private Equity Fund C.V. and does everything in connection therewith or ancillary thereto. | |||
Betacom XLII B.V. | Amsterdam | 100 | Provides risk bearing capital in any form, such as equity, or convertible loans to existing and new enterprises. | |||
AlpInvest Partners Later Stage Co-Investments II C.V. | Amsterdam | 0.99 through Betacom XLII B.V. | Acts as limited partner of AlpInvest Partners Later Stage Co-Investments II C.V. | |||
Betacom XLV B.V. ** | Amsterdam | 100 | Enters into and acts as general partner of limited partnerships which aim at making investments and acting as limited partner in limited partnerships. | |||
Betacom Beheer 2004 B.V. ** | Amsterdam | 100 | Manages limited partnerships. | |||
AlpInvest Partners Direct Investments B.V. ** | Amsterdam | 40.90 * | Holding company | |||
AlpInvest Partners Co-Investments B.V. ** | Amsterdam | 56.22 * | Holding company | |||
AlpInvest Partners Direct Secondary Investments B.V. | Amsterdam | 56.93 * | Acts as advisor and intermediary of investors in relation to the investment in funds in general, and in particular in relation to making investments and divestments in private equity funds. | |||
AlpInvest Partners Later Stage Co-Investments Management II B.V. ** | Amsterdam | 45.90 * | Acts as general partner of AlpInvest Partners Later Stage Co-Investments II C.V. |
F-136
Registered | ||||||
Name of Company | Office | % Ownership | Core Activities | |||
AlpInvest Partners Fund Investments B.V. ** | Amsterdam | 64.27 * | Acts as advisor and intermediary of investors in relation to the investment in funds in general and in particular in relation to the making of investments and divestments in private equity funds. | |||
AlpInvest Partners Later Stage Co-Investments Management IIA B.V. ** | Amsterdam | 100 * | Acts as general partner of AlpInvest Partners Later Stage Co-Investments IIA C.V. and holding and financing company. | |||
AlpInvest Partners Fund of Funds Management IIA B.V. ** | Amsterdam | 100 * | Acts as general partner of AlpInvest Partners Fund of Funds IIA C.V., holding and financing company. | |||
AlpInvest Partners European Mezzanine Investments B.V. | Amsterdam | 100 * | Makes mezzanine investments and performs all direct and indirect activities in connection therewith. | |||
AlpInvest Partners US Mezzanine Investments B.V. ** | Amsterdam | 62.90 * | Makes investments in general and in particular investments and divestments in mezzanine funds, and everything ancillary thereto. | |||
AlpInvest Partners Direct Investments 2003 B.V. ** | Amsterdam | 0 * | Holding and financing company. | |||
AlpInvest Partners Fund Investments 2003 B.V. ** | Amsterdam | 28.76 * | Acts as advisor and intermediary of investors and in relation to the investment in funds in general and especially in relation to making investments in private equity funds. | |||
AlpInvest Partners 2003 B.V. ** | Amsterdam | 28.76 * | Holding and financing company | |||
AlpInvest Partners Mezzanine Investments 2005/2006 B.V. | Amsterdam | 100 * | Invests funds, including making investments and divestments in mezzanine funds and everything directly or indirectly related, as well as provides financial (advisory) services. | |||
AlpInvest Partners Fund Investments 2006 B.V. ** | Amsterdam | 100 * | Acts as general partner of one or more limited partnership(s). | |||
AlpInvest Partners 2006 B.V. ** | Amsterdam | 100 * | Holding and financing company. | |||
AlpInvest Partners 2009 B.V. ** | Amsterdam | 100 | Acts as general partner of one or more limited partnership(s) | |||
AlpInvest Partners Fund Investments 2009 B.V. ** | Amsterdam | 100 | Acts as general partner of one or more limited partnership(s) | |||
AlpInvest Partners Beheer 2006 B.V. ** | Amsterdam | 100 | Incorporates, participates in (in any form), manages, supervises and/or finances enterprises, companies and partnerships. |
F-137
Registered | ||||||
Name of Company | Office | % Ownership | Core Activities | |||
AlpInvest Beheer 2006 Ltd ** | Cayman Islands | 100 through AlpInvest Partners Beheer 2006 B.V. | Acts as general partner of AlpInvest Partners Beheer 2006 LP | |||
AlpInvest Partners Mezzanine Investments 2007/2009 B.V.** | Amsterdam | 100 * | Holding and financing company. | |||
AlpInvest Partners Clean Technology Investments2007-2009 B.V.** | Amsterdam | 100 * | Acts as general partner of one or more limited partnerships and holding companies. | |||
AlpInvest Partners Clean Technology Investments2010-2011 B.V. | Amsterdam | 100 | Acts as general partner of one or more limited partnerships and holding companies | |||
AlpInvest Partners 2008 B.V.** | Amsterdam | 100 * | Holding and participation company | |||
Oeral Investments B.V. | Zeist | 100 | Holding company | |||
AP Private Equity Investments I B.V. | Amsterdam | 100 through Oeral Investments B.V. | Management and financing services | |||
AP Private Equity Investments IV B.V. | Amsterdam | 100 through Oeral Investments B.V. | Management and financing services | |||
AlpInvest Partners 2011 B.V. ** | Amsterdam | 100 | Acts as general partner of one or more limited partnership(s) | |||
Newport Support Services B.V. | Amsterdam | 100 | Management and financing services | |||
Greenbird Support Services B.V. | Amsterdam | 100 | Management and financing services |
* | AlpInvest Partners N.V. controls and consolidates all these entities as it holds one priority share in each of the entities. Stichting Admininistratie Kantoor AlpInvest Partners holds 100% of the ordinary shares in these entities. AlpInvest Partners N.V. holds the indicated percentage of the certificates issued by Stichting Admininistratie Kantoor AlpInvest Partners. | |
** | These companies act as General Partner of CV’s and hence are liable for the debts of these CV’s to the extent of the BV’s own equity. |
F-138
6. | Reconciliation of the Consolidated Balance Sheet to US GAAP |
AlpInvest | AlpInvest | AlpInvest | AlpInvest | |||||||||||||||||||||
Partners NV | Partners NV | Consolidated | Eliminations | Partners NV | Partners NV | |||||||||||||||||||
Consolidated | US GAAP | Funds | for | Consolidated | Consolidated | |||||||||||||||||||
Dutch GAAP | Adjustments | US GAAP | Consolidation | US GAAP | US GAAP | |||||||||||||||||||
Notes 7.2, 7.3, 7.4 | Note 7.1 | Note 7.1 | ||||||||||||||||||||||
EUR’000 | EUR’000 | EUR’000 | EUR’000 | EUR’000 | USD’000 | |||||||||||||||||||
Assets | ||||||||||||||||||||||||
Fixed assets | ||||||||||||||||||||||||
Tangible fixed assets | ||||||||||||||||||||||||
Other fixed assets | € | 781 | € | — | € | — | € | — | € | 781 | $ | 1,124 | ||||||||||||
Financial fixed assets | ||||||||||||||||||||||||
Pensions | 3,227 | 3,227 | 4,644 | |||||||||||||||||||||
Participation in investments | 314 | 314 | 452 | |||||||||||||||||||||
Investments of consolidated funds | 5,716,317 | 5,716,317 | 8,226,352 | |||||||||||||||||||||
1,095 | 3,227 | 5,716,317 | 5,720,639 | 8,232,572 | ||||||||||||||||||||
Current assets | ||||||||||||||||||||||||
Pensions | 459 | (459 | ) | — | — | |||||||||||||||||||
Accounts receivable | ||||||||||||||||||||||||
Receivables | 228 | 228 | 328 | |||||||||||||||||||||
Receivables from related parties | 5,688 | 184,920 | 8 | (40,375 | ) | 150,241 | 216,212 | |||||||||||||||||
Tax and social security receivables | 21 | 21 | 30 | |||||||||||||||||||||
Corporate income tax receivables | 1,446 | 5,717 | 7,163 | 10,308 | ||||||||||||||||||||
Prepayments and accrued income | 1,189 | 35,352 | 36,541 | 52,586 | ||||||||||||||||||||
Other receivables of consolidated funds | 23,764 | 23,764 | 34,199 | |||||||||||||||||||||
Short-term deposits | 7,526 | 2,167 | 9,693 | 13,949 | ||||||||||||||||||||
16,557 | 184,461 | 67,008 | (40,375 | ) | 227,651 | 327,612 | ||||||||||||||||||
Cash and cash equivalents | ||||||||||||||||||||||||
Call deposits | 97,000 | 97,000 | 139,593 | |||||||||||||||||||||
Cash | 498 | 2,252 | 2,750 | 3,957 | ||||||||||||||||||||
97,498 | 2,252 | 99,750 | 143,550 | |||||||||||||||||||||
Total assets | € | 115,150 | € | 187,688 | € | 5,785,577 | € | (40,375 | ) | € | 6,048,040 | $ | 8,703,734 | |||||||||||
F-139
AlpInvest | AlpInvest | AlpInvest | AlpInvest | |||||||||||||||||||||
Partners NV | Partners NV | Consolidated | Eliminations | Partners NV | Partners NV | |||||||||||||||||||
Consolidated | US GAAP | Funds | for | Consolidated | Consolidated | |||||||||||||||||||
Dutch GAAP | Adjustments | US GAAP | Consolidation | US GAAP | US GAAP | |||||||||||||||||||
Notes 7.2, 7.3, 7.4 | Note 7.1 | Note 7.1 | ||||||||||||||||||||||
EUR’000 | EUR’000 | EUR’000 | EUR’000 | EUR’000 | USD’000 | |||||||||||||||||||
Liabilities and equity | ||||||||||||||||||||||||
Equity | ||||||||||||||||||||||||
Equity attributable to shareholders of the parent company | € | 84,803 | € | 25,136 | € | — | € | — | € | 109,939 | $ | 158,212 | ||||||||||||
Equity of consolidated funds | 5,701,594 | (5,701,594 | ) | — | — | |||||||||||||||||||
Equity attributable to other shareholders | 2,929 | (2,929 | ) | 5,701,594 | 5,701,594 | 8,205,163 | ||||||||||||||||||
87,732 | 22,207 | 5,701,594 | — | 5,811,533 | 8,363,375 | |||||||||||||||||||
Provisions | ||||||||||||||||||||||||
Other long-term employee benefits | 102 | 102 | 147 | |||||||||||||||||||||
Other accrued compensation | 131,818 | 131,818 | 189,700 | |||||||||||||||||||||
Deferred tax liabilities | 30,734 | 30,734 | 44,229 | |||||||||||||||||||||
Long-term liabilities | ||||||||||||||||||||||||
Due to affiliates | 83,716 | (40,375 | ) | 43,341 | 62,371 | |||||||||||||||||||
Current liabilities | ||||||||||||||||||||||||
Creditors | 348 | 348 | 501 | |||||||||||||||||||||
Liabilities to related parties | 8 | 8 | 12 | |||||||||||||||||||||
Tax and social security payables | 420 | 420 | 604 | |||||||||||||||||||||
Corporate income tax liabilities | 12,999 | 12,999 | 18,708 | |||||||||||||||||||||
Forward contracts | 292 | 292 | 420 | |||||||||||||||||||||
Other short-term liabilities | 13,249 | 2,929 | 16,178 | 23,282 | ||||||||||||||||||||
Other liabilities of consolidated funds | 267 | 267 | 385 | |||||||||||||||||||||
27,316 | 2,929 | 267 | 30,512 | 43,912 | ||||||||||||||||||||
Total liabilities and equity | € | 115,150 | € | 187,688 | € | 5,785,577 | € | (40,375 | ) | € | 6,048,040 | $ | 8,703,734 | |||||||||||
7. | Notes to the Reconciliation of the Consolidated Balance Sheet to US GAAP |
F-140
(a) | Unquoted Securities |
(b) | Quoted Securities |
(c) | Non EUR Denominated Securities |
F-141
(d) | Estimates |
June 30, | June 30, | |||||||||||
2011 | US GAAP | 2011 | ||||||||||
Dutch GAAP | Adjustment | US GAAP | ||||||||||
Total net obligation for pensions | € | (459 | ) | € | (2,768 | ) | € | (3,227 | ) | |||
Total net obligation for other long-term employee benefits | 102 | — | 102 | |||||||||
Increase in deferred tax liabilities | 692 | 692 | ||||||||||
Increase in equity attributable to shareholders of the parent company | 2,076 | 2,076 | ||||||||||
Total | € | (357 | ) | € | — | € | (357 | ) | ||||
F-142
June 30, | ||||
2011 | ||||
Present value existing pension rights (Defined Benefit Obligations) | € | 25,135 | ||
Market value investments | (28,362 | ) | ||
Total net obligation for pensions and other long-term employee benefits | € | (3,227 | ) | |
F-143
US GAAP | ||||
Adjustment | ||||
Assets | ||||
Increase in Receivables from related parties | € | 184,920 | ||
Liabilities and Equity | ||||
Increase in Other accrued compensation | € | 131,818 | ||
Increase in Deferred tax liabilities | 30,042 | |||
Increase in Equity attributable to shareholders of the parent company | 23,060 | |||
€ | 184,920 | |||
US GAAP | ||||
Adjustment | ||||
Equity | ||||
Equity attributable to other shareholders | € | (2,929 | ) | |
Current Liabilities | ||||
Other short-term liabilities | 2,929 | |||
Total | € | — | ||
F-144
Page | ||||
ARTICLE I DEFINITIONS | A-1 | |||
Section 1.1. | Definitions. | A-1 | ||
Section 1.2. | Construction | A-9 | ||
ARTICLE II ORGANIZATION | A-9 | |||
Section 2.1. | Formation. | A-9 | ||
Section 2.2. | Name. | A-10 | ||
Section 2.3. | Registered Office; Registered Agent; Principal Office; Other Offices. | A-10 | ||
Section 2.4. | Purpose and Business. | A-10 | ||
Section 2.5. | Powers. | A-10 | ||
Section 2.6. | Power of Attorney. | A-10 | ||
Section 2.7. | Term. | A-12 | ||
Section 2.8. | Title to Partnership Assets. | A-12 | ||
Section 2.9. | Certain Undertakings Relating to the Separateness of the Partnership. | A-12 | ||
ARTICLE III RIGHTS OF LIMITED PARTNERS | A-12 | |||
Section 3.1. | Limitation of Liability. | A-12 | ||
Section 3.2. | Management of Business. | A-13 | ||
Section 3.3. | Outside Activities of the Limited Partners. | A-13 | ||
Section 3.4. | Rights of Limited Partners. | A-13 | ||
ARTICLE IV CERTIFICATES; RECORD HOLDERS; TRANSFER OF PARTNERSHIP INTERESTS; REDEMPTION OF PARTNERSHIP INTERESTS | A-14 | |||
Section 4.1. | Certificates. | A-14 | ||
Section 4.2. | Mutilated, Destroyed, Lost or Stolen Certificates. | A-14 | ||
Section 4.3. | Record Holders. | A-15 | ||
Section 4.4. | Transfer Generally. | A-15 | ||
Section 4.5. | Registration and Transfer of Limited Partner Interests. | A-15 | ||
Section 4.6. | Transfer of the General Partner’s General Partner Interest. | A-16 | ||
Section 4.7. | Restrictions on Transfers. | A-16 | ||
Section 4.8. | Citizenship Certificates; Non-citizen Assignees. | A-17 | ||
Section 4.9. | Redemption of Partnership Interests of Non-citizen Assignees. | A-17 | ||
ARTICLE V CAPITAL CONTRIBUTIONS AND ISSUANCE OF PARTNERSHIP INTERESTS | A-19 | |||
Section 5.1. | Organizational Issuances. | A-19 | ||
Section 5.2. | Contributions by the General Partner and its Affiliates. | A-19 | ||
Section 5.3. | Issuances and Cancellations of Special Voting Units. | A-19 | ||
Section 5.4. | Contributions by the Underwriters. | A-19 | ||
Section 5.5. | Interest and Withdrawal. | A-20 | ||
Section 5.6. | Issuances of Additional Partnership Securities. | A-20 | ||
Section 5.7. | Preemptive Rights. | A-21 | ||
Section 5.8. | Splits and Combinations. | A-21 | ||
Section 5.9. | Fully Paid and Non-Assessable Nature of Limited Partner Interests. | A-21 | ||
ARTICLE VI ALLOCATIONS AND DISTRIBUTIONS | A-22 | |||
Section 6.1. | Establishment and Maintenance of Capital Accounts. | A-22 | ||
Section 6.2. | Allocations. | A-22 | ||
Section 6.3. | Requirement and Characterization of Distributions; Distributions to Record Holders. | A-23 |
A-i
Page | ||||
ARTICLE VII MANAGEMENT AND OPERATION OF BUSINESS | A-23 | |||
Section 7.1. | Management. | A-23 | ||
Section 7.2. | Certificate of Limited Partnership. | A-25 | ||
Section 7.3. | Partnership Group Assets; General Partner’s Authority. | A-25 | ||
Section 7.4. | Reimbursement of the General Partner. | A-26 | ||
Section 7.5. | Outside Activities. | A-27 | ||
Section 7.6. | Loans from the General Partner; Loans or Contributions from the Partnership; Contracts with the General Partner and its Affiliates; Certain Restrictions on the General Partner. | A-28 | ||
Section 7.7. | Indemnification. | A-28 | ||
Section 7.8. | Liability of Indemnitees. | A-30 | ||
Section 7.9. | Modification of Duties; Standards of Conduct; Resolution of Conflicts of Interest | A-31 | ||
Section 7.10. | Other Matters Concerning the General Partner. | A-33 | ||
Section 7.11. | Purchase or Sale of Partnership Securities. | A-33 | ||
Section 7.12. | Reliance by Third Parties. | A-34 | ||
Section 7.13. | Board of Directors | A-34 | ||
ARTICLE VIII BOOKS, RECORDS AND ACCOUNTING | A-34 | |||
Section 8.1. | Records and Accounting. | A-34 | ||
Section 8.2. | Fiscal Year. | A-35 | ||
ARTICLE IX TAX MATTERS | A-35 | |||
Section 9.1. | Tax Returns and Information. | A-35 | ||
Section 9.2. | Tax Elections. | A-35 | ||
Section 9.3. | Tax Controversies. | A-35 | ||
Section 9.4. | Withholding. | A-35 | ||
Section 9.5. | Election to be Treated as a Corporation. | A-36 | ||
ARTICLE X ADMISSION OF PARTNERS | A-36 | |||
Section 10.1. | Admission of Initial Limited Partners. | A-36 | ||
Section 10.2. | Admission of Additional Limited Partners. | A-36 | ||
Section 10.3. | Admission of Successor General Partner. | A-37 | ||
Section 10.4. | Amendment of Agreement and Certificate of Limited Partnership to Reflect the Admission of Partners. | A-37 | ||
ARTICLE XI WITHDRAWAL OR REMOVAL OF PARTNERS | A-37 | |||
Section 11.1. | Withdrawal of the General Partner. | A-37 | ||
Section 11.2. | No Removal of the General Partner. | A-38 | ||
Section 11.3. | Interest of Departing General Partner and Successor General Partner. | A-38 | ||
Section 11.4. | Withdrawal of Limited Partners. | A-39 | ||
ARTICLE XII DISSOLUTION AND LIQUIDATION | A-39 | |||
Section 12.1. | Dissolution. | A-39 | ||
Section 12.2. | Continuation of the Business of the Partnership After Event of Withdrawal. | A-40 | ||
Section 12.3. | Liquidator. | A-40 | ||
Section 12.4. | Liquidation. | A-41 | ||
Section 12.5. | Cancellation of Certificate of Limited Partnership. | A-41 | ||
Section 12.6. | Return of Contributions. | A-42 | ||
Section 12.7. | Waiver of Partition. | A-42 | ||
Section 12.8. | Capital Account Restoration. | A-42 |
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ARTICLE XIII AMENDMENT OF PARTNERSHIP AGREEMENT; MEETINGS; RECORD DATE | A-42 | |||
Section 13.1. | Amendments to be Adopted Solely by the General Partner. | A-42 | ||
Section 13.2. | Amendment Procedures. | A-43 | ||
Section 13.3. | Amendment Requirements. | A-44 | ||
Section 13.4. | Meetings. | A-44 | ||
Section 13.5. | Notice of a Meeting. | A-49 | ||
Section 13.6. | Record Date. | A-49 | ||
Section 13.7. | Adjournment. | A-50 | ||
Section 13.8. | Waiver of Notice; Approval of Meeting; Approval of Minutes. | A-50 | ||
Section 13.9. | Quorum. | A-50 | ||
Section 13.10. | Conduct of a Meeting. | A-51 | ||
Section 13.11. | Action Without a Meeting. | A-51 | ||
Section 13.12. | Voting and Other Rights. | A-51 | ||
Section 13.13. | Participation of Special Voting Units in All Actions Participated in by Common Units. | A-52 | ||
ARTICLE XIV MERGER | A-53 | |||
Section 14.1. | Authority. | A-53 | ||
Section 14.2. | Procedure for Merger, Consolidation or Other Business Combination. | A-53 | ||
Section 14.3. | Approval by Limited Partners of Merger, Consolidation or Other Business Combination; Conversion of the Partnership into another Limited Liability Entity. | A-54 | ||
Section 14.4. | Certificate of Merger or Consolidation. | A-55 | ||
Section 14.5. | Amendment of Partnership Agreement. | A-55 | ||
Section 14.6. | Effect of Merger. | A-55 | ||
Section 14.7. | Merger of Subsidiaries | A-55 | ||
ARTICLE XV RIGHT TO ACQUIRE LIMITED PARTNER INTERESTS | A-56 | |||
Section 15.1. | Right to Acquire Limited Partner Interests. | A-56 | ||
ARTICLE XVI GENERAL PROVISIONS | A-57 | |||
Section 16.1. | Addresses and Notices. | A-57 | ||
Section 16.2. | Further Action. | A-58 | ||
Section 16.3. | Binding Effect. | A-58 | ||
Section 16.4. | Integration. | A-58 | ||
Section 16.5. | Creditors. | A-58 | ||
Section 16.6. | Waiver. | A-58 | ||
Section 16.7. | Counterparts. | A-58 | ||
Section 16.8. | Applicable Law. | A-58 | ||
Section 16.9. | Dispute Resolution | A-58 | ||
Section 16.10. | Invalidity of Provisions. | A-60 | ||
Section 16.11. | Consent of Partners. | A-61 | ||
Section 16.12. | Facsimile Signatures. | A-61 |
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OF
THE CARLYLE GROUP L.P.
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By: |
Title: |
By: |
Title: |
By: |
Title: |
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ITEM 13. | OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION. |
Filing Fee — Securities and Exchange Commission | $ | 11,600 | ||
Fee — Financial Industry Regulatory Authority | $ | 10,500 | ||
Listing Fee — | * | |||
Fees and Expenses of Counsel | * | |||
Printing Expenses | * | |||
Fees and Expenses of Accountants | * | |||
Transfer Agent and Registrar’s Fees | * | |||
Miscellaneous Expenses | * | |||
Total | * | |||
* | To be provided by amendment. |
ITEM 14. | INDEMNIFICATION OF DIRECTORS AND OFFICERS. |
ITEM 15. | RECENT SALES OF UNREGISTERED SECURITIES. |
ITEM 16. | EXHIBITS AND FINANCIAL STATEMENT SCHEDULES. |
1 | .1 | Underwriting Agreement.* | ||
3 | .1 | Certificate of Limited Partnership of the Registrant.** | ||
3 | .2 | Form of Amended and Restated Agreement of Limited Partnership of the Registrant (included as Appendix A to the prospectus). | ||
5 | .1 | Opinion of Simpson Thacher & Bartlett LLP regarding validity of the common units registered.* |
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8 | .1 | Opinion of Simpson Thacher & Bartlett LLP regarding certain tax matters.* | ||
10 | .1 | Form of Limited Partnership Agreement of Carlyle Holdings I L.P.* | ||
10 | .2 | Form of Limited Partnership Agreement of Carlyle Holdings II L.P.* | ||
10 | .3 | Form of Limited Partnership Agreement of Carlyle Holdings III L.P.* | ||
10 | .4 | Form of Tax Receivable Agreement.* | ||
10 | .5 | Form of Exchange Agreement.* | ||
10 | .6 | Form of Registration Rights Agreement with Senior Carlyle Professionals.* | ||
10 | .7 | Registration Rights Agreement with MDC/TCP Investments (Cayman) I, Ltd., MDC/TCP Investments (Cayman) II, Ltd., MDC/TCP Investments (Cayman) III, Ltd., MDC/TCP Investments (Cayman) IV, Ltd., MDC/TCP Investments (Cayman) V, Ltd., MDC/TCP Investments (Cayman) VI, Ltd., and Five Overseas Investment L.L.C.* | ||
10 | .8 | Registration Rights Agreement with California Public Employees’ Retirement System.* | ||
10 | .9 | Form of Equity Incentive Plan.* | ||
10 | .10 | Noncompetition Agreement with William E. Conway, Jr.* | ||
10 | .11 | Noncompetition Agreement with Daniel A. D’Aniello.* | ||
10 | .12 | Noncompetition Agreement with David M. Rubenstein.* | ||
10 | .13 | Amended and Restated Employment Agreement with Adena T. Friedman.* | ||
10 | .14 | Note And Unit Subscription Agreement, dated as of December 16, 2010, by and among TC Group, L.L.C., TC Group Cayman, L.P., TC Group Investment Holdings, L.P., TC Group Cayman Investment Holdings, L.P., TCG Holdings, L.L.C., TCG Holdings Cayman, L.P., TCG Holdings II, L.P., TCG Holdings Cayman II, L.P., Fortieth Investment Company L.L.C., MDC/TCP Investments (Cayman) I, Ltd., MDC/TCP Investments (Cayman) II, Ltd., MDC/TCP Investments (Cayman) III, Ltd., MDC/TCP Investments (Cayman) IV, Ltd., MDC/TCP Investments (Cayman) V, Ltd., MDC/TCP Investments (Cayman) VI, Ltd., and Five Overseas Investment L.L.C. | ||
10 | .15 | Lease, dated January 10, 2011, between Commonwealth Tower, L.P. and Carlyle Investment Management L.L.C.** | ||
10 | .16 | Lease, dated April 16, 2010, between Teachers Insurance and Annuity Association of America and Carlyle Investment Management L.L.C.** | ||
10 | .17 | First Amendment to Deed of Lease, dated November 8, 2011, between Commonwealth Tower, L.P. and Carlyle Investment Management L.L.C. | ||
10 | .18 | Non-Exclusive Aircraft Lease Agreement, dated as of June 27, 2011, between Falstaff Partners LLC as Lessor and Carlyle Investment Management L.L.C. as Lessee. | ||
10 | .19 | Non-Exclusive Aircraft Lease Agreement, dated as of February 11, 2011, between Westwind Acquisition Company, L.L.C. as Lessor and Carlyle Investment Management L.L.C. as Lessee. | ||
10 | .20 | Non-Exclusive Aircraft Lease Agreement, dated as of June 30, 2007, between Orange Crimson Aviation, L.L.C. as Lessor and TC Group, L.L.C. as Lessee, as amended by Amendment No. 1 thereto, dated as of December 30, 2010, between Oranage Crimson Aviation L.L.C. as Lessor and Carlyle Investment Management L.L.C as Lessee and the Assignment and Consent, dated as of June 30, 2007, by and among TC Group L.L.C. as Assignor, Carlyle Investment Management L.L.C. as Assignee and Orange Crimson Aviation L.L.C. | ||
21 | .1 | Subsidiaries of the Registrant* | ||
23 | .1 | Consent of Ernst & Young LLP. | ||
23 | .2 | Consent of Ernst & Young Accountants LLP. | ||
23 | .3 | Consent of Simpson Thacher & Bartlett LLP (included as part of Exhibit 5.1).* | ||
24 | .1 | Power of Attorney** |
* | To be filed by amendment. | |
** | Previously filed. |
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ITEM 17. | UNDERTAKINGS |
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By: | Carlyle Group Management L.L.C., |
By: | /s/ Adena T. Friedman |
Signature | Title | |||
* William E. Conway, Jr. | Co-Chief Executive Officer and Director (co-principal executive officer) | |||
* Daniel A. D’Aniello | Chairman and Director (co-principal executive officer) | |||
* David M. Rubenstein | Co-Chief Executive Officer and Director (co-principal executive officer) | |||
/s/ Adena T. Friedman Adena T. Friedman | Chief Financial Officer (principal financial officer) | |||
* Curtis L. Buser | Chief Accounting Officer (principal accounting officer) | |||
* By: | /s/ Adena T. Friedman Attorney-in-fact |
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