Exhibit 99.1
THE CARLYLE GROUP INC.
UNAUDITED PRO FORMA FINANCIAL INFORMATION
On January 1, 2020, The Carlyle Group Inc. (the “Company”) completed its conversion (the “Conversion”) from a Delaware limited partnership named The Carlyle Group L.P. to a Delaware corporation.
The following unaudited pro forma financial information is based on the consolidated financial statements of the Company and is intended to provide information about how the Conversion may have affected the Company’s consolidated financial statements if the Conversion had occurred on December 31, 2019 for the Pro Forma Consolidated Balance Sheet and if the Conversion had occurred January 1, 2019 for the Pro Forma Consolidated Statement of Operations. The unaudited pro forma financial information and the pro forma adjustments described in the footnotes to this unaudited pro forma financial information should be read in conjunction with the Company’s annual report on Form 10-K for the year ended December 31, 2019. The unaudited Pro Forma Statement of Operations for the year ended December 31, 2019 does not reflect the one-time tax benefits to record the initial deferred tax assets that were recognized upon Conversion.
The unaudited pro forma financial information is based on available information and assumptions that the Company believes are reasonable. The unaudited pro forma information is for illustrative and informational purposes only and is not intended to represent or be indicative of what the Company’s financial condition or results of operations would have been had the Conversion occurred on January 1, 2019, nor should it be considered indicative of the Company’s future financial condition or results of operations. No pro forma presentation of the Company’s non-GAAP segment information is presented herein.
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THE CARLYLE GROUP INC.
PRO FORMA CONSOLIDATED BALANCE SHEET
(UNAUDITED)
(Dollars in millions)
As of December 31 2019 | |||||||||||
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
Assets | |||||||||||
Cash and cash equivalents | $ | 793.4 | $ | — | $ | 793.4 | |||||
Cash and cash equivalents held at Consolidated Funds | 122.4 | — | 122.4 | ||||||||
Restricted cash | 34.6 | — | 34.6 | ||||||||
Investments, including accrued performance allocations | 6,804.4 | — | 6,804.4 | ||||||||
Investments of Consolidated Funds | 5,007.3 | — | 5,007.3 | ||||||||
Due from affiliates and other receivables, net | 273.9 | — | 273.9 | ||||||||
Due from affiliates and other receivables of Consolidated Funds, net | 74.4 | — | 74.4 | ||||||||
Fixed assets, net | 108.2 | — | 108.2 | ||||||||
Lease right-of-use assets, net | 203.8 | — | 203.8 | ||||||||
Deposits and other | 54.0 | — | 54.0 | ||||||||
Intangible assets, net | 62.3 | — | 62.3 | ||||||||
Deferred tax assets | 270.1 | (119.5 | ) | (1) | 150.6 | ||||||
Total assets | $ | 13,808.8 | $ | (119.5 | ) | $ | 13,689.3 | ||||
Liabilities and equity | |||||||||||
Debt obligations | $ | 1,976.3 | $ | — | $ | 1,976.3 | |||||
Loans payable of Consolidated Funds | 4,706.7 | — | 4,706.7 | ||||||||
Accounts payable, accrued expenses and other liabilities | 354.9 | 8.0 | (2) | 362.9 | |||||||
Accrued compensation and benefits | 2,496.5 | — | 2,496.5 | ||||||||
Due to affiliates | 542.1 | — | 542.1 | ||||||||
Deferred revenue | 71.0 | — | 71.0 | ||||||||
Deferred tax liabilities | 65.2 | — | 65.2 | ||||||||
Other liabilities of Consolidated Funds | 316.1 | — | 316.1 | ||||||||
Lease liabilities | 288.2 | — | 288.2 | ||||||||
Accrued giveback obligations | 22.2 | — | 22.2 | ||||||||
Total liabilities | 10,839.2 | 8.0 | 10,847.2 | ||||||||
Commitments and contingencies | |||||||||||
Partners’ capital | 703.8 | (703.8 | ) | (3) | — | ||||||
Common stock, $0.01 par | — | 3.5 | (3) | 3.5 | |||||||
All other equity accounts | (85.2 | ) | 2,590.3 | 2,505.1 | |||||||
Non-controlling interests in consolidated entities | 333.5 | — | 333.5 | ||||||||
Non-controlling interests in Carlyle Holdings | 2,017.5 | (2,017.5 | ) | (4) | — | ||||||
Total equity | 2,969.6 | (127.5 | ) | 2,842.1 | |||||||
Total liabilities and equity | $ | 13,808.8 | $ | (119.5 | ) | $ | 13,689.3 |
See notes at end of document.
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THE CARLYLE GROUP INC.
PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS
(UNAUDITED)
(Dollars in millions, except share data)
For the Year Ended December 31, 2019 | |||||||||||
As Reported | Pro Forma Adjustments | Pro Forma | |||||||||
Revenues | |||||||||||
Fund management fees | $ | 1,476.2 | $ | — | $ | 1,476.2 | |||||
Incentive fees | 35.9 | — | 35.9 | ||||||||
Investment income | 1,568.4 | — | 1,568.4 | ||||||||
Interest and other income | 97.3 | — | 97.3 | ||||||||
Interest and other income of Consolidated Funds | 199.2 | — | 199.2 | ||||||||
Total revenues | 3,377.0 | — | 3,377.0 | ||||||||
Expenses | |||||||||||
Compensation and benefits | |||||||||||
Cash-based compensation and benefits | 833.4 | — | 833.4 | ||||||||
Equity-based compensation | 140.0 | — | 140.0 | ||||||||
Performance allocations and incentive fee related compensation | 436.7 | — | 436.7 | ||||||||
Total compensation and benefits | 1,410.1 | — | 1,410.1 | ||||||||
General, administrative and other expenses | 494.4 | (23.0 | ) | (2) | 471.4 | ||||||
Interest | 82.1 | — | 82.1 | ||||||||
Interest and other expenses of Consolidated Funds | 131.8 | — | 131.8 | ||||||||
Other non-operating expenses | 1.3 | — | 1.3 | ||||||||
Total expenses | 2,119.7 | (23.0 | ) | 2,096.7 | |||||||
Other income | |||||||||||
Net investment gains of Consolidated Funds | (23.9 | ) | — | (23.9 | ) | ||||||
Income before provision for income taxes | 1,233.4 | 23.0 | 1,256.4 | ||||||||
Provision for income taxes | 49.0 | 314.5 | (5) | 363.5 | |||||||
Net income | 1,184.4 | (291.5 | ) | 892.9 | |||||||
Net income attributable to non-controlling interests in consolidated entities | 36.6 | — | 36.6 | ||||||||
Net income attributable to The Carlyle Group Inc. Common Stockholders | 1,147.8 | (291.5 | ) | 856.3 | |||||||
Net income attributable to non-controlling interests in Carlyle Holdings | 766.9 | (766.9 | ) | (6) | — | ||||||
Net income attributable to The Carlyle Group Inc. | 380.9 | 475.4 | 856.3 | ||||||||
Net income attributable to Series A Preferred Unitholders | 19.1 | — | 19.1 | ||||||||
Series A Preferred Units redemption premium | 16.5 | — | 16.5 | ||||||||
Net income attributable to The Carlyle Group Inc. Common Stockholders | $ | 345.3 | $ | 475.4 | $ | 820.7 | |||||
Net income attributable to The Carlyle Group Inc. per common share | |||||||||||
Basic | $ | 3.05 | $ | (0.66 | ) | (7) | $ | 2.39 | |||
Diluted | $ | 2.82 | $ | (0.49 | ) | (7) | $ | 2.33 | |||
Weighted-average common shares | |||||||||||
Basic | 113,082,733 | 230,213,627 | (7) | 343,296,360 | |||||||
Diluted | 122,632,889 | 230,213,627 | (7) | 352,846,516 |
See notes at end of document.
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The following pro forma adjustments are to:
(1) Record the estimated decrease in the net deferred tax asset that would have been recorded upon Conversion, had the Conversion occurred on December 31, 2019, based on the best information available to reflect (in millions):
The effect of the Conversion on new and existing deferred tax assets and liabilities | $ | (371.5 | ) |
The tax basis step-up upon Conversion | 252.0 | ||
$ | (119.5 | ) |
The effect of the Conversion on new and existing deferred tax assets and liabilities is primarily due to all of the net income attributable to The Carlyle Group Inc. being subject to U.S. federal (and state and local) corporate income taxes following the Conversion, whereas only a portion of the income attributable to the Company was subject to U.S. federal, state and local corporation income taxes prior to the Conversion. Actual amounts used in determining the Conversion’s impact on existing deferred tax attributes and the step-up in tax basis could differ materially from these estimated amounts. This estimate also assumes no valuation allowance against the pro forma deferred tax assets and a 28% blended statutory federal, state and local tax rate.
(2) | Remove from earnings non-recurring expenses associated with the Conversion of $23.0 million and adds an $8.0 million accrual related to the costs of the Conversion on the balance sheet as of December 31, 2019. |
(3) | Reallocate partners’ capital to common stock, additional paid-in capital, and retained earnings upon Conversion. |
(4) Reallocate the equity of the non-controlling interests held by the former Carlyle Holdings unitholders to stockholders’ equity (within additional paid-in capital, retained earnings, and accumulated other comprehensive loss).
(5) Record the additional income tax expense that would have been incurred had the Company been a corporation rather than a partnership during 2019. The adjustment assumes a 28% blended statutory federal, state and local tax rate for the current and deferred tax provision and excludes the one-time tax benefit to record the initial deferred tax assets that were recognized upon the Conversion, and may not be indicative of the Company’s actual blended tax rate in future periods.
(6) Reallocate earnings previously allocated to non-controlling interests in Carlyle Holdings to common stockholders of The Carlyle Group Inc.
(7) Reflect the estimated impact of the pro forma adjustments on earnings per share, including the effect of a single class of shares.
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