KKR & Co. L.P. (NYSE:KKR) today reported its second quarter 2014 results.
On April 30, 2014, KKR completed its acquisition of KKR Financial Holdings LLC (“KFN”). Through the acquisition, KKR increased the scale, liquidity, and yield profile of its balance sheet and added over $2 billion of net assets to support the continued growth of its business.
For the three, six and trailing twelve months ended June 30, 2014, the carrying value of our private equity portfolio appreciated 5.0%, 9.3%, and 23.7%, respectively.
KKR declares a distribution of $0.67 per common unit, which includes $0.41 of realized cash carry, the 17th consecutive quarter that realized cash carry has been a component of the distribution.
“Our realization activity in the second quarter drove the highest cash carry and total distributable earnings we’ve reported since going public, contributing to a quarterly distribution of $0.67. Additionally, our cash flow generation, investment performance, and balance sheet income resulted in a 29% return on equity and 22% cash return on equity over the last twelve months,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “We also closed the KFN acquisition in the second quarter, bringing us recurring cash earnings and more permanent capital to grow the firm.”
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Note: Certain financial measures, including FRE, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee and yield earnings, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP.
(1) Prospectively, KKR plans to only report ENI after taxes and equity-based charges per adjusted unit
GAAP RESULTS
GAAP results for the quarter and six months ended June 30, 2014, included net income attributable to KKR & Co. L.P. of $178.2 million and $388.3 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.43 and $1.06, respectively, on a diluted basis. For the quarter and six months ended June 30, 2013, net income attributable to KKR & Co. L.P. was $15.1 million and $208.6 million, respectively, and net income attributable to KKR & Co. L.P. per common unit was $0.05 and $0.72, respectively, on a diluted basis. The increases in both comparable periods were primarily due to (i) an increase in investment income; (ii) higher transaction fees; and (iii) an increase in KKR & Co. L.P.’s ownership percentage in the KKR business.
SEGMENT RESULTS*
Private Markets
AUM was $59.4 billion as of June 30, 2014, a decrease of $1.1 billion, or 1.8%, compared to AUM of $60.5 billion as of March 31, 2014. The decrease was primarily attributable to distributions to the limited partners of our private equity funds arising from realizations which were partially offset by appreciation in the fair value of our private equity portfolio and new capital raised.
FPAUM was $46.2 billion as of June 30, 2014, a decrease of $2.0 billion, or 4.1%, compared to FPAUM of $48.2 billion as of March 31, 2014. The decrease was primarily attributable to the bankruptcy filing of Energy Future Holdings during the second quarter, and to a lesser extent, distributions to the limited partners of our private equity funds arising from realizations. These decreases were partially offset by new capital raised.
Total segment revenues were $642.9 million for the quarter ended June 30, 2014, an increase of $445.1 million compared to total segment revenues of $197.8 million for the quarter ended June 30, 2013. Total segment revenues were $1,373.6 million for the six months ended June 30, 2014, an increase of $354.7 million compared to total segment revenues of $1,018.9 million for the six months ended June 30, 2013. The increase in both comparable periods was principally attributable to a higher level of net carried interest and total investment income reflecting a higher level of appreciation in our private equity portfolio.
ENI was $376.2 million for the quarter ended June 30, 2014, an increase of $297.7 million compared to ENI of $78.5 million for the quarter ended June 30, 2013. ENI was $861.6 million for the six months ended June 30, 2014, an increase of $217.1 million compared to ENI of $644.5 million for the six months ended June 30, 2013. The increase in both comparable periods was principally attributable to a higher level of net carried interest and total investment income reflecting a higher level of appreciation in our private equity portfolio. The increased total segment revenues were partially offset by higher total segment expenses reflecting an increase in allocations to the carry pool driven by a higher level of carried interest recognized during the 2014 periods.
Public Markets
AUM was $38.5 billion as of June 30, 2014, a decrease of $3.3 billion, or 7.9%, compared to AUM of $41.8 billion as of March 31, 2014. FPAUM was $33.5 billion as of June 30, 2014, a decrease of $1.9 billion, or 5.4%, compared to FPAUM of $35.4 billion as of March 31, 2014. For both AUM and FPAUM, the decreases were primarily attributable to the acquisition of KFN which decreased AUM by approximately $4.5 billion and FPAUM by approximately $2.7 billion, partially offset by new capital raised and appreciation in net asset values in our public markets strategies.
Total segment revenues were $157.2 million for the quarter ended June 30, 2014, an increase of $76.6 million compared to total segment revenues of $80.6 million for the quarter ended June 30, 2013. Total segment revenues were $302.8 million for the six months ended June 30, 2014, an increase of $117.0 million compared to total segment revenues of $185.8 million for the six months ended June 30, 2013. The increase in both comparable periods was principally attributable to higher total investment income primarily relating to the inclusion of KFN during the 2014 periods beginning on May 1, 2014 and to a lesser extent higher management fees reflecting new capital raised.
ENI was $105.6 million for the quarter ended June 30, 2014, an increase of $62.4 million compared to ENI of $43.2 million for the quarter ended June 30, 2013. ENI was $203.4 million for the six months ended June 30, 2014, an increase of $92.7 million compared to ENI of $110.7 million for the six months ended June 30, 2013. The increase in both comparable periods was principally attributable to higher total investment income primarily due to the income generated by KFN’s operations during the 2014 periods beginning on May 1, 2014 and to a lesser extent higher management fees reflecting new capital raised. These increases were partially offset by higher compensation expense.
Capital Markets and Other
Total segment revenues were $34.0 million for the quarter ended June 30, 2014, up slightly when compared to total segment revenues of $32.5 million for the quarter ended June 30, 2013. Total segment revenues were $103.2 million for the six months ended June 30, 2014, an increase of $45.6 million compared to total segment revenues of $57.6 million for the quarter ended June 30, 2013. The increase in total segment revenues in both comparable periods was primarily driven by higher overall capital markets transaction activity.
ENI was $19.8 million for the quarter ended June 30, 2014, a decrease of $3.0 million compared to ENI of $22.8 million for the quarter ended June 30, 2013. The decrease was principally attributable to higher compensation expense. ENI was $66.9 million for the six months ended June 30, 2014, an increase of $30.0 million compared to ENI of $36.9 million for the six months ended June 30, 2013. The increase was principally attributable to higher transaction fees driven by higher overall capital markets transaction activity, partially offset by higher compensation expense.
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* All segment financial information presented in this release reflect a new presentation as of the second quarter of 2014. For example, certain investment income previously reported in our Capital Markets and Principal Activities segment (which is now named Capital Markets and Other) is now reported in either our Private Markets or Public Markets segment, depending upon the nature of such income, and economic net income is presented as total segment revenue less total segment expenses. As a result of the revised presentation, segment information for historical periods has been restated from previously published results and, consequently, is not consistent with such previously reported information. The Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm contains historical segment financial information for the quarter ended March 31, 2014 and each of the quarterly periods in the fiscal year ended December 31, 2013, as revised to give effect to the new presentation.
CAPITAL AND LIQUIDITY
As of June 30, 2014, KKR had $3.4 billion of cash and short-term investments and $2.5 billion of outstanding debt obligations on a total reportable segment basis. In addition, with the acquisition of KFN, KKR reports KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million. KFN’s debt obligations and preferred shares are non-recourse to KKR beyond the assets of KFN. KKR’s availability for borrowings was $750.0 million (which is reduced by an outstanding letter of credit), which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of June 30, 2014.
As of June 30, 2014, KKR’s portion of total uncalled commitments to its investment funds was $976.9 million, consisting of the following (amounts in thousands):
| Uncalled Commitments | ||||
Private Markets | ||||
| Energy Income and Growth Fund | $ | 208,600 | ||
| North America Fund XI | 178,200 | |||
| Real Estate Partners Americas | 141,300 | |||
| Asian Fund II | 62,600 | |||
| European Fund III | 59,800 | |||
| 2006 Fund | 57,900 | |||
| Infrastructure | 15,000 | |||
| Natural Resources | 11,600 | |||
| Other Private Equity Funds | 7,700 | |||
| Co-Investment Vehicles | 32,200 | |||
| Total Private Markets Commitments | 774,900 | |||
Public Markets | ||||
| Special Situations Vehicles | 120,300 | |||
| Direct Lending Vehicles | 66,300 | |||
| Mezzanine Fund | 13,100 | |||
| Other Credit Vehicles | 2,300 | |||
| Total Public Markets Commitments | 202,000 | |||
| Total Uncalled Commitments | $ | 976,900 | ||
DISTRIBUTION
A distribution of $0.67 per common unit has been declared, comprised of (i) $0.09 per common unit from after-tax FRE, (ii) $0.41 per common unit from realized cash carry, (iii) $0.12 per common unit from KKR’s net realized investment income and (iv) $0.05 per common unit from KFN’s net realized investment income earned for the two months ended June 30, 2014. The distribution will be paid on August 19, 2014 to unitholders of record as of the close of business on August 4, 2014. Please refer to the distribution policy presented later in this release.
CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Thursday, July 24, 2014 at 10:00 a.m. EDT. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Center section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 71626990, beginning approximately two hours after the broadcast.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.
ABOUT KKR
KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE: KKR), please visit KKR's website at www.kkr.com.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee and yield earnings, fee and yield EBITDA, committed dollars invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized principal investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships such as Prisma, Nephila, Avoca or KFN; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2013, filed with the SEC on February 24, 2014, Quarterly Report on Form 10-Q for the quarter ended March 31, 2014 filed with the SEC on May 7, 2014 and other filings with the SEC, which are available at www.sec.gov.
| KKR | ||||||||||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED) | ||||||||||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | ||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||
| June 30, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||
| Revenues | ||||||||||||||||
| Fees | $ | 249,370 | $ | 166,376 | $ | 552,296 | $ | 317,616 | ||||||||
| Expenses | ||||||||||||||||
| Compensation and Benefits | 358,730 | 200,602 | 689,768 | 531,723 | ||||||||||||
| Occupancy and Related Charges | 16,059 | 13,878 | 31,467 | 28,399 | ||||||||||||
| General, Administrative and Other | 210,536 | 77,542 | 337,261 | 171,230 | ||||||||||||
| Total Expenses | 585,325 | 292,022 | 1,058,496 | 731,352 | ||||||||||||
| Investment Income (Loss) | ||||||||||||||||
| Net Gains (Losses) from Investment Activities | 1,971,850 | 98,537 | 3,944,030 | 2,368,354 | ||||||||||||
| Dividend Income | 272,902 | 209,486 | 369,606 | 248,955 | ||||||||||||
| Interest Income | 215,872 | 128,020 | 377,832 | 237,389 | ||||||||||||
| Interest Expense | (65,997 | ) | (24,614 | ) | (100,728 | ) | (47,637 | ) | ||||||||
| Total Investment Income (Loss) | 2,394,627 | 411,429 | 4,590,740 | 2,807,061 | ||||||||||||
| Income (Loss) Before Taxes | 2,058,672 | 285,783 | 4,084,540 | 2,393,325 | ||||||||||||
| Income Taxes | 6,176 | 8,525 | 27,878 | 17,881 | ||||||||||||
| Net Income (Loss) | 2,052,496 | 277,258 | 4,056,662 | 2,375,444 | ||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||
| Redeemable Noncontrolling Interests | (6,809 | ) | (7,800 | ) | 3,828 | 16,823 | ||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||
| Noncontrolling Interests | 1,881,090 | 269,924 | 3,664,578 | 2,150,048 | ||||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. | $ | 178,215 | $ | 15,134 | $ | 388,256 | $ | 208,573 | ||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit | ||||||||||||||||
| Basic | $ | 0.47 | $ | 0.06 | $ | 1.16 | $ | 0.79 | ||||||||
| Diluted (a) | $ | 0.43 | $ | 0.05 | $ | 1.06 | $ | 0.72 | ||||||||
| Weighted Average Common Units Outstanding | ||||||||||||||||
| Basic | 377,542,161 | 271,983,811 | 335,748,498 | 264,555,267 | ||||||||||||
| Diluted (a) | 410,179,838 | 298,078,764 | 367,877,049 | 290,104,942 | ||||||||||||
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(a) | KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.’s interests in KKR’s business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange. |
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | ||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||
June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||
| Segment Revenues | ||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||
| Management Fees | $ | 178,674 | $ | 195,393 | $ | 164,176 | $ | 374,067 | $ | 317,139 | ||||||||||
| Monitoring Fees | 29,610 | 36,363 | 28,907 | 65,973 | 60,975 | |||||||||||||||
| Transaction Fees | 84,305 | 163,516 | 62,785 | 247,821 | 103,084 | |||||||||||||||
| Fee Credits | (49,830 | ) | (84,668 | ) | (34,751 | ) | (134,498 | ) | (57,816 | ) | ||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 242,759 | 310,604 | 221,117 | 553,363 | 423,382 | |||||||||||||||
| Performance Fees | ||||||||||||||||||||
| Realized Carried Interest | 555,488 | 193,550 | 269,828 | 749,038 | 357,995 | |||||||||||||||
| Incentive Fees | 11,478 | 17,019 | 15,590 | 28,497 | 34,439 | |||||||||||||||
| Unrealized Carried Interest | (137,826 | ) | 145,647 | (206,753 | ) | 7,821 | 115,229 | |||||||||||||
| Total Performance Fees | 429,140 | 356,216 | 78,665 | 785,356 | 507,663 | |||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||
| Net Realized Gains (Losses) | 221,661 | 181,728 | 147,579 | 403,389 | 301,206 | |||||||||||||||
| Net Unrealized Gains (Losses) | (119,935 | ) | 85,759 | (139,311 | ) | (34,176 | ) | 27,731 | ||||||||||||
| Total Realized and Unrealized | 101,726 | 267,487 | 8,268 | 369,213 | 328,937 | |||||||||||||||
| Net Interest and Dividends | 60,432 | 11,164 | 2,782 | 71,596 | 2,311 | |||||||||||||||
| Total Investment Income (Loss) | 162,158 | 278,651 | 11,050 | 440,809 | 331,248 | |||||||||||||||
| Total Segment Revenues | 834,057 | 945,471 | 310,832 | 1,779,528 | 1,262,293 | |||||||||||||||
| Segment Expenses | ||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||
| Cash Compensation and Benefits | 91,444 | 108,915 | 80,436 | 200,359 | 155,598 | |||||||||||||||
| Realized Allocation to Carry Pool | 222,195 | 77,420 | 107,931 | 299,615 | 143,198 | |||||||||||||||
| Unrealized Allocation to Carry Pool | (53,435 | ) | 58,690 | (81,395 | ) | 5,255 | 52,842 | |||||||||||||
| Total Compensation and Benefits | 260,204 | 245,025 | 106,972 | 505,229 | 351,638 | |||||||||||||||
| Occupancy and related charges | 14,757 | 14,189 | 13,067 | 28,946 | 26,389 | |||||||||||||||
| Other operating expenses | 54,311 | 52,801 | 45,027 | 107,112 | 89,657 | |||||||||||||||
| Total Segment Expenses | 329,272 | 312,015 | 165,066 | 641,287 | 467,684 | |||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 3,206 | 3,202 | 1,323 | 6,408 | 2,424 | |||||||||||||||
| Economic Net Income (Loss) | $ | 501,579 | $ | 630,254 | $ | 144,443 | $ | 1,131,833 | $ | 792,185 | ||||||||||
| Provision for Income Taxes | 6,330 | 36,581 | 13,486 | 42,911 | 33,603 | |||||||||||||||
| Economic Net Income (Loss), After Taxes (a) | $ | 495,249 | $ | 593,673 | $ | 130,957 | $ | 1,088,922 | $ | 758,582 | ||||||||||
| Equity-based Charges | 40,877 | 39,353 | 25,936 | 80,230 | 53,354 | |||||||||||||||
| Economic Net Income (Loss), After Taxes and Equity-based Charges | $ | 454,372 | $ | 554,320 | $ | 105,021 | $ | 1,008,692 | $ | 705,228 | ||||||||||
| Economic Net Income (Loss), After Taxes and Equity-based Charges Per Adjusted Unit | $ | 0.57 | $ | 0.77 | $ | 0.15 | $ | 1.32 | $ | 0.99 | ||||||||||
| Weighted Average Adjusted Units (Fully Diluted Basis) (a) | 800,747,528 | 724,579,220 | 715,453,358 | 762,873,784 | 713,353,287 | |||||||||||||||
| Assets Under Management | $ | 97,957,900 | $ | 102,277,500 | $ | 83,500,900 | $ | 97,957,900 | $ | 83,500,900 | ||||||||||
| Fee Paying Assets Under Management | $ | 79,656,300 | $ | 83,611,600 | $ | 67,956,400 | $ | 79,656,300 | $ | 67,956,400 | ||||||||||
| Committed Dollars Invested and Syndicated Capital | $ | 2,345,500 | $ | 3,377,300 | $ | 1,889,400 | $ | 5,722,800 | $ | 2,713,800 | ||||||||||
| Uncalled Commitments | $ | 19,784,200 | $ | 19,985,100 | $ | 21,364,400 | $ | 19,784,200 | $ | 21,364,400 | ||||||||||
Other Information | ||||||||||||||||||||
| Fee Related Earnings | $ | 93,725 | $ | 151,718 | $ | 98,177 | $ | 245,443 | $ | 186,177 | ||||||||||
| Plus: Net interest and dividends | 60,432 | 11,164 | 2,782 | 71,596 | 2,311 | |||||||||||||||
| Fee and Yield Earnings (a) | $ | 154,157 | $ | 162,882 | $ | 100,959 | $ | 317,039 | $ | 188,488 | ||||||||||
| Plus: Depreciation and amortization | 4,140 | 4,035 | 3,708 | 8,175 | 7,389 | |||||||||||||||
| Plus: Core Interest Expense | 19,205 | 18,400 | 16,210 | 37,605 | 32,443 | |||||||||||||||
| Fee and Yield EBITDA (a) | $ | 177,502 | $ | 185,317 | $ | 120,877 | $ | 362,819 | $ | 228,320 | ||||||||||
| Total Distributable Earnings (a) | $ | 700,973 | $ | 446,808 | $ | 403,776 | $ | 1,147,781 | $ | 694,390 | ||||||||||
| GAAP interest expense | $ | 65,997 | $ | 34,731 | $ | 24,614 | $ | 100,728 | $ | 47,637 | ||||||||||
| Less: interest expense related to debt obligations | ||||||||||||||||||||
| from investment financing arrangements and KFN | 46,792 | 16,331 | 8,404 | 63,123 | 15,194 | |||||||||||||||
| Core Interest Expense (a) | $ | 19,205 | $ | 18,400 | $ | 16,210 | $ | 37,605 | $ | 32,443 | ||||||||||
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(a) | See definitions for economic net income (loss), adjusted units, fee and yield earnings, fee and yield EBITDA, total distributable earnings and core interest expense under “Notes to Reportable Segments.” |
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||
| PRIVATE MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||
| Segment Revenues | ||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||
| Management Fees | $ | 111,542 | $ | 123,039 | $ | 114,700 | $ | 234,581 | $ | 221,305 | ||||||||||
| Monitoring Fees | 29,610 | 36,363 | 28,907 | 65,973 | 60,975 | |||||||||||||||
| Transaction Fees | 45,340 | 93,020 | 25,231 | 138,360 | 41,643 | |||||||||||||||
| Fee Credits | (43,478 | ) | (80,338 | ) | (29,547 | ) | (123,816 | ) | (50,556 | ) | ||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 143,014 | 172,084 | 139,291 | 315,098 | 273,367 | |||||||||||||||
| Performance Fees | ||||||||||||||||||||
| Realized Carried Interest | 555,488 | 168,800 | 269,828 | 724,288 | 357,995 | |||||||||||||||
| Incentive Fees | - | - | - | - | - | |||||||||||||||
| Unrealized Carried Interest | (163,564 | ) | 145,776 | (217,544 | ) | (17,788 | ) | 84,039 | ||||||||||||
| Total Performance Fees | 391,924 | 314,576 | 52,284 | 706,500 | 442,034 | |||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||
| Net Realized Gains (Losses) | 207,892 | 176,198 | 148,827 | 384,090 | 297,689 | |||||||||||||||
| Net Unrealized Gains (Losses) | (122,729 | ) | 70,673 | (138,758 | ) | (52,056 | ) | 15,884 | ||||||||||||
| Total Realized and Unrealized | 85,163 | 246,871 | 10,069 | 332,034 | 313,573 | |||||||||||||||
| Net Interest and Dividends | 22,760 | (2,808 | ) | (3,868 | ) | 19,952 | (10,066 | ) | ||||||||||||
| Total Investment Income (Loss) | 107,923 | 244,063 | 6,201 | 351,986 | 303,507 | |||||||||||||||
| Total Segment Revenues | 642,861 | 730,723 | 197,776 | 1,373,584 | 1,018,908 | |||||||||||||||
| Segment Expenses | ||||||||||||||||||||
Compensation and Benefits | ||||||||||||||||||||
| Cash Compensation and Benefits | 56,522 | 66,898 | 51,516 | 123,420 | 99,517 | |||||||||||||||
| Realized Allocation to Carry Pool | 222,195 | 67,520 | 107,931 | 289,715 | 143,198 | |||||||||||||||
| Unrealized Allocation to Carry Pool | (63,730 | ) | 58,743 | (85,711 | ) | (4,987 | ) | 40,366 | ||||||||||||
| Total Compensation and Benefits | 214,987 | 193,161 | 73,736 | 408,148 | 283,081 | |||||||||||||||
| Occupancy and related charges | 11,764 | 11,560 | 11,143 | 23,324 | 22,568 | |||||||||||||||
| Other operating expenses | 39,589 | 40,059 | 33,988 | 79,648 | 67,930 | |||||||||||||||
| Total Segment Expenses | 266,340 | 244,780 | 118,867 | 511,120 | 373,579 | |||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 335 | 515 | 411 | 850 | 809 | |||||||||||||||
| Economic Net Income (Loss) | $ | 376,186 | $ | 485,428 | $ | 78,498 | $ | 861,614 | $ | 644,520 | ||||||||||
| Assets Under Management | $ | 59,417,000 | $ | 60,520,300 | $ | 54,452,400 | $ | 59,417,000 | $ | 54,452,400 | ||||||||||
| Fee Paying Assets Under Management | $ | 46,167,300 | $ | 48,211,000 | $ | 45,907,500 | $ | 46,167,300 | $ | 45,907,500 | ||||||||||
| Committed Dollars Invested | $ | 1,454,400 | $ | 2,551,800 | $ | 1,314,000 | $ | 4,006,200 | $ | 1,912,500 | ||||||||||
| Uncalled Commitments | $ | 17,109,800 | $ | 18,256,800 | $ | 19,972,800 | $ | 17,109,800 | $ | 19,972,800 | ||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||
| PUBLIC MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||
| Segment Revenues | ||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||
| Management Fees | $ | 67,132 | $ | 72,354 | $ | 49,476 | $ | 139,486 | $ | 95,834 | ||||||||||
| Monitoring Fees | - | - | - | - | - | |||||||||||||||
| Transaction Fees | 7,350 | 6,022 | 7,243 | 13,372 | 10,349 | |||||||||||||||
| Fee Credits | (6,352 | ) | (4,330 | ) | (5,204 | ) | (10,682 | ) | (7,260 | ) | ||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 68,130 | 74,046 | 51,515 | 142,176 | 98,923 | |||||||||||||||
| Performance Fees | ||||||||||||||||||||
| Realized Carried Interest | - | 24,750 | - | 24,750 | - | |||||||||||||||
| Incentive Fees | 11,478 | 17,019 | 15,590 | 28,497 | 34,439 | |||||||||||||||
| Unrealized Carried Interest | 25,738 | (129 | ) | 10,791 | 25,609 | 31,190 | ||||||||||||||
| Total Performance Fees | 37,216 | 41,640 | 26,381 | 78,856 | 65,629 | |||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||
| Net Realized Gains (Losses) | 14,284 | 5,479 | (64 | ) | 19,763 | 5,149 | ||||||||||||||
| Net Unrealized Gains (Losses) | 3,751 | 14,814 | (741 | ) | 18,565 | 9,328 | ||||||||||||||
| Total Realized and Unrealized | 18,035 | 20,293 | (805 | ) | 38,328 | 14,477 | ||||||||||||||
| Net Interest and Dividends | 33,822 | 9,577 | 3,508 | 43,399 | 6,748 | |||||||||||||||
| Total Investment Income (Loss) | 51,857 | 29,870 | 2,703 | 81,727 | 21,225 | |||||||||||||||
| Total Segment Revenues | 157,203 | 145,556 | 80,599 | 302,759 | 185,777 | |||||||||||||||
| Segment Expenses | ||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||
| Cash Compensation and Benefits | 26,904 | 26,745 | 21,990 | 53,649 | 41,690 | |||||||||||||||
| Realized Allocation to Carry Pool | - | 9,900 | - | 9,900 | - | |||||||||||||||
| Unrealized Allocation to Carry Pool | 10,295 | (53 | ) | 4,316 | 10,242 | 12,476 | ||||||||||||||
| Total Compensation and Benefits | 37,199 | 36,592 | 26,306 | 73,791 | 54,166 | |||||||||||||||
| Occupancy and related charges | 2,544 | 2,172 | 1,615 | 4,716 | 3,157 | |||||||||||||||
| Other operating expenses | 11,474 | 8,507 | 9,147 | 19,981 | 16,973 | |||||||||||||||
| Total Segment Expenses | 51,217 | 47,271 | 37,068 | 98,488 | 74,296 | |||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 385 | 522 | 378 | 907 | 733 | |||||||||||||||
| Economic Net Income (Loss) | $ | 105,601 | $ | 97,763 | $ | 43,153 | $ | 203,364 | $ | 110,748 | ||||||||||
| Assets Under Management | $ | 38,540,900 | $ | 41,757,200 | $ | 29,048,500 | $ | 38,540,900 | $ | 29,048,500 | ||||||||||
| Fee Paying Assets Under Management | $ | 33,489,000 | $ | 35,400,600 | $ | 22,048,900 | $ | 33,489,000 | $ | 22,048,900 | ||||||||||
| Committed Dollars Invested | $ | 724,400 | $ | 734,100 | $ | 370,800 | $ | 1,458,500 | $ | 535,700 | ||||||||||
| Uncalled Commitments | $ | 2,674,400 | $ | 1,728,300 | $ | 1,391,600 | $ | 2,674,400 | $ | 1,391,600 | ||||||||||
| Gross Dollars Invested | $ | 768,200 | $ | 989,700 | $ | 847,300 | $ | 1,757,900 | $ | 1,225,300 | ||||||||||
| KKR | |||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | |||||||||||||||||||
| CAPITAL MARKETS AND OTHER SEGMENT (UNAUDITED) | |||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| Quarter Ended | Six Months Ended | ||||||||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | |||||||||||||||
| Segment Revenues | |||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | |||||||||||||||||||
| Management Fees | $ | - | $ | - | $ | - | $ | - | $ | - | |||||||||
| Monitoring Fees | - | - | - | - | - | ||||||||||||||
| Transaction Fees | 31,615 | 64,474 | 30,311 | 96,089 | 51,092 | ||||||||||||||
| Fee Credits | - | - | - | - | - | ||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 31,615 | 64,474 | 30,311 | 96,089 | 51,092 | ||||||||||||||
| Performance Fees | |||||||||||||||||||
| Realized Carried Interest | - | - | - | - | - | ||||||||||||||
| Incentive Fees | - | - | - | - | - | ||||||||||||||
| Unrealized Carried Interest | - | - | - | - | - | ||||||||||||||
| Total Performance Fees | - | - | - | - | - | ||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||
| Net Realized Gains (Losses) | (515 | ) | 51 | (1,184 | ) | (464 | ) | (1,632 | ) | ||||||||||
| Net Unrealized Gains (Losses) | (957 | ) | 272 | 188 | (685 | ) | 2,519 | ||||||||||||
| Total Realized and Unrealized | (1,472 | ) | 323 | (996 | ) | (1,149 | ) | 887 | |||||||||||
| Net Interest and Dividends | 3,850 | 4,395 | 3,142 | 8,245 | 5,629 | ||||||||||||||
| Total Investment Income (Loss) | 2,378 | 4,718 | 2,146 | 7,096 | 6,516 | ||||||||||||||
| Total Segment Revenues | 33,993 | 69,192 | 32,457 | 103,185 | 57,608 | ||||||||||||||
| Segment Expenses | |||||||||||||||||||
| Compensation and Benefits | |||||||||||||||||||
| Cash Compensation and Benefits | 8,018 | 15,272 | 6,930 | 23,290 | 14,391 | ||||||||||||||
| Realized Allocation to Carry Pool | - | - | - | - | - | ||||||||||||||
| Unrealized Allocation to Carry Pool | - | - | - | - | - | ||||||||||||||
| Total Compensation and Benefits | 8,018 | 15,272 | 6,930 | 23,290 | 14,391 | ||||||||||||||
| Occupancy and related charges | 449 | 457 | 309 | 906 | 664 | ||||||||||||||
| Other operating expenses | 3,248 | 4,235 | 1,892 | 7,483 | 4,754 | ||||||||||||||
| Total Segment Expenses | 11,715 | 19,964 | 9,131 | 31,679 | 19,809 | ||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 2,486 | 2,165 | 534 | 4,651 | 882 | ||||||||||||||
| Economic Net Income (Loss) | $ | 19,792 | $ | 47,063 | $ | 22,792 | $ | 66,855 | $ | 36,917 | |||||||||
| Syndicated Capital | $ | 166,700 | $ | 91,400 | $ | 204,600 | $ | 258,100 | $ | 265,600 | |||||||||
| KKR | |||||||||||
| BALANCE SHEET | |||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | |||||||||||
| (Amounts in thousands, except per unit amounts) | |||||||||||
| As of June 30, 2014 | As of December 31, 2013 | ||||||||||
| Cash and short-term investments | $ | 3,375,164 | $ | 2,161,097 | |||||||
| Investments | 8,125,042 | (a) | 4,980,265 | ||||||||
| Unrealized carry | 1,207,172 | (b) | 1,179,338 | (b) | |||||||
| Other assets | 746,828 | 662,357 | |||||||||
| Total assets | $ | 13,454,206 | $ | 8,983,057 | |||||||
| Debt obligations - KKR | $ | 1,500,000 | $ | 1,000,000 | |||||||
| Debt obligations - KFN | 657,310 | - | |||||||||
| Preferred shares - KFN | 373,750 | - | |||||||||
| Other liabilities | 356,874 | 149,196 | |||||||||
| Total liabilities | 2,887,934 | 1,149,196 | |||||||||
| Noncontrolling interests | 122,686 | 71,261 | |||||||||
| Book value | $ | 10,443,586 | $ | 7,762,600 | |||||||
| Book value per adjusted unit | $ | 12.52 | $ | 10.83 | |||||||
| (a) See schedule of investments that follows on the next page. | |||||||||||
(b) Unrealized Carry | As of June 30, 2014 | As of December 31, 2013 | |||||||||
| Private Markets | $ | 1,129,463 | $ | 1,116,996 | |||||||
| Public Markets | 77,709 | 62,342 | |||||||||
| Total | $ | 1,207,172 | $ | 1,179,338 | |||||||
| KKR | |||||||||||
| SCHEDULE OF INVESTMENTS | |||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | |||||||||||
| (Amounts in thousands, except percentage amounts) | |||||||||||
| As of June 30, 2014 | |||||||||||
| Investments | Cost | Fair Value | Fair Value as a | ||||||||
| Private Equity Co-Investments | $ | 1,522,326 | $ | 2,032,431 | 25 | % | |||||
| Private Equity Funds | 970,662 | 1,190,723 | 15 | % | |||||||
| Private Equity Total | 2,492,988 | 3,223,154 | 40 | % | |||||||
| Energy | 794,981 | 787,389 | 10 | % | |||||||
| Real Estate | 280,432 | 293,896 | 3 | % | |||||||
| Infrastructure | 49,545 | 53,916 | 1 | % | |||||||
| Real Assets Total | 1,124,958 | 1,135,201 | 14 | % | |||||||
| Other | 137,000 | 145,346 | 2 | % | |||||||
| Private Markets Total | 3,754,946 | 4,503,701 | 56 | % | |||||||
| Special Situations | 575,752 | 625,272 | 8 | % | |||||||
| Mezzanine | 123,455 | 129,458 | 1 | % | |||||||
| Direct Lending | 52,920 | 58,883 | 1 | % | |||||||
| Alternative Credit | 752,127 | 813,613 | 10 | % | |||||||
| CLOs | 1,590,350 | 1,595,038 | 20 | % | |||||||
| Liquid Credit | 307,869 | 339,196 | 3 | % | |||||||
| Credit Total | 2,650,346 | 2,747,847 | 33 | % | |||||||
| Other | 58,623 | 59,242 | 1 | % | |||||||
| Public Markets Total | 2,708,969 | 2,807,089 | 34 | % | |||||||
| Specialty Finance | 256,219 | 260,790 | 3 | % | |||||||
| Other | 513,793 | 553,462 | 7 | % | |||||||
| Capital Markets and Other Total | 770,012 | 814,252 | 10 | % | |||||||
| Total Investments | $ | 7,233,927 | $ | 8,125,042 | 100 | % | |||||
| Significant Aggregate Portfolio Company Investments: (a) | |||||||||||
| Alliance Boots GmbH | $ | 228,769 | $ | 743,446 | 9 | % | |||||
| First Data Corporation | 327,212 | 265,062 | 3 | % | |||||||
| Biomet, Inc. | 164,644 | 213,245 | 3 | % | |||||||
| HCA Inc. | 35,583 | 172,072 | 2 | % | |||||||
| The Nielsen Company B.V. | 52,900 | 171,818 | 2 | % | |||||||
| 809,108 | 1,565,643 | 19 | % | ||||||||
| Other Investments | 6,424,819 | 6,559,399 | 81 | % | |||||||
| Total Investments | $ | 7,233,927 | $ | 8,125,042 | 100 | % | |||||
____________________________________________________________________________________________
(a) | The significant aggregate portfolio company investments include the top five investments in portfolio companies based on their fair market value as of June 30, 2014. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company. |
| KKR | ||||||||||||||
| ASSETS UNDER MANAGEMENT* (UNAUDITED) | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
Private | Public | Total | ||||||||||||
Quarter Ended June 30, 2014 | ||||||||||||||
| March 31, 2014 | $ | 60,520,300 | $ | 41,757,200 | $ | 102,277,500 | ||||||||
| New Capital Raised | 1,114,200 | 1,945,800 | 3,060,000 | |||||||||||
| KFN Acquisition (a) | - | (4,511,900 | ) | (4,511,900 | ) | |||||||||
| Distributions | (4,445,200 | ) | (1,061,300 | ) | (d) | (5,506,500 | ) | |||||||
| Change in Value | 2,227,700 | 411,100 | 2,638,800 | |||||||||||
| June 30, 2014 | $ | 59,417,000 | $ | 38,540,900 | $ | 97,957,900 | ||||||||
Six Months Ended June 30, 2014 | ||||||||||||||
| December 31, 2013 | $ | 61,242,900 | $ | 33,077,400 | $ | 94,320,300 | ||||||||
| New Capital Raised | 1,703,100 | 3,066,800 | 4,769,900 | |||||||||||
| Acquisitions (b) | - | 8,423,000 | 8,423,000 | |||||||||||
| KFN Acquisition (a) | - | (4,511,900 | ) | (4,511,900 | ) | |||||||||
| Distributions | (6,634,800 | ) | (2,387,600 | ) | (e) | (9,022,400 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (c) | (933,800 | ) | - | (933,800 | ) | |||||||||
| Change in Value | 4,039,600 | 873,200 | 4,912,800 | |||||||||||
| June 30, 2014 | $ | 59,417,000 | $ | 38,540,900 | $ | 97,957,900 | ||||||||
Trailing Twelve Months Ended June 30, 2014 | ||||||||||||||
| June 30, 2013 | $ | 54,452,400 | $ | 29,048,500 | $ | 83,500,900 | ||||||||
| New Capital Raised | 7,668,000 | 7,412,300 | 15,080,300 | |||||||||||
| Acquisitions (b) | - | 8,423,000 | 8,423,000 | |||||||||||
| KFN Acquisition (a) | - | (4,511,900 | ) | (4,511,900 | ) | |||||||||
| Distributions | (11,315,300 | ) | (3,675,000 | ) | (f) | (14,990,300 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (c) | (933,800 | ) | - | (933,800 | ) | |||||||||
| Change in Value | 9,545,700 | 1,844,000 | 11,389,700 | |||||||||||
| June 30, 2014 | $ | 59,417,000 | $ | 38,540,900 | $ | 97,957,900 | ||||||||
______________________________________________________________________________________________
* | Exclude those assets managed by entities where KKR holds less than a 50% ownership interest. | ||
(a) | Certain assets that were externally managed prior to the acquisition of KFN are now reported on the balance sheet and excluded from AUM. | ||
(b) | Represents the AUM of Avoca. | ||
(c) | Represents the impact of certain funds entering the post-investment period. | ||
(d) | Includes $745.9 million of redemptions by fund investors. | ||
(e) | Includes $1,288.4 million of redemptions by fund investors. | ||
(f) | Includes $1,771.0 million of redemptions by fund investors. |
| KKR | ||||||||||||||||
| FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED) | ||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||
Private | Public | Total | ||||||||||||||
Quarter Ended June 30, 2014 | ||||||||||||||||
| March 31, 2014 | $ | 48,211,000 | $ | 35,400,600 | $ | 83,611,600 | ||||||||||
| New Capital Raised | 921,700 | 1,649,100 | 2,570,800 | |||||||||||||
| KFN Acquisition (a) | - | (2,684,700 | ) | (2,684,700 | ) | |||||||||||
| Distributions | (2,940,400 | ) | (b) | (1,094,600 | ) | (e) | (4,035,000 | ) | ||||||||
| Change in Value | (25,000 | ) | 218,600 | 193,600 | ||||||||||||
| June 30, 2014 | $ | 46,167,300 | $ | 33,489,000 | $ | 79,656,300 | ||||||||||
Six Months Ended June 30, 2014 | ||||||||||||||||
| December 31, 2013 | $ | 50,156,300 | $ | 27,241,200 | $ | 77,397,500 | ||||||||||
| New Capital Raised | 1,357,000 | 2,759,300 | 4,116,300 | |||||||||||||
| Acquisitions (c) | - | 7,971,000 | 7,971,000 | |||||||||||||
| KFN Acquisition (a) | - | (2,684,700 | ) | (2,684,700 | ) | |||||||||||
| Distributions | (4,366,900 | ) | (b) | (2,330,100 | ) | (f) | (6,697,000 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (d) | (964,700 | ) | - | (964,700 | ) | |||||||||||
| Change in Value | (14,400 | ) | 532,300 | 517,900 | ||||||||||||
| June 30, 2014 | $ | 46,167,300 | $ | 33,489,000 | $ | 79,656,300 | ||||||||||
Trailing Twelve Months Ended June 30, 2014 | ||||||||||||||||
| June 30, 2013 | $ | 45,907,500 | $ | 22,048,900 | $ | 67,956,400 | ||||||||||
| New Capital Raised | 7,193,700 | 7,952,500 | 15,146,200 | |||||||||||||
| Acquisitions (c) | - | 7,971,000 | 7,971,000 | |||||||||||||
| KFN Acquisition (a) | - | (2,684,700 | ) | (2,684,700 | ) | |||||||||||
| Distributions | (6,276,700 | ) | (b) | (3,232,300 | ) | (g) | (9,509,000 | ) | ||||||||
| Net Changes in Fee Base of Certain Funds (d) | (964,700 | ) | - | (964,700 | ) | |||||||||||
| Change in Value | 307,500 | 1,433,600 | 1,741,100 | |||||||||||||
| June 30, 2014 | $ | 46,167,300 | $ | 33,489,000 | $ | 79,656,300 | ||||||||||
______________________________________________________________________________________________
* | Exclude those assets managed by entities where KKR holds less than a 50% ownership interest. | ||
(a) | Certain assets that were externally managed prior to the acquisition of KFN are now reported on the balance sheet and excluded from AUM. | ||
(b) | Includes the reduction in FPAUM attributed to the invested capital of Energy Future Holdings due to its bankruptcy. | ||
(c) | Represents the FPAUM of Avoca. | ||
(d) | Represents the impact of certain funds entering the post-investment period. | ||
(e) | Includes $745.9 million of redemptions by fund investors. | ||
(f) | Includes $1,288.4 million of redemptions by fund investors. | ||
(g) | Includes $1,771.0 million of redemptions by fund investors. |
| KKR | ||||||||||||||||||||||||||
| INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED) | ||||||||||||||||||||||||||
| As of June 30, 2014 | ||||||||||||||||||||||||||
| (Amounts in millions, except percentages) | ||||||||||||||||||||||||||
| Investment Period | Amount | |||||||||||||||||||||||||
Commencement | End Date | Commitment | Uncalled | Percentage | Invested | Realized | Remaining | Remaining | ||||||||||||||||||
Private Markets | ||||||||||||||||||||||||||
| Private Equity Funds | ||||||||||||||||||||||||||
| Asian Fund II | 4/2013 | 4/2019 | $ | 5,825.0 | $ | 4,889.8 | 1.3 | % | $ | 935.2 | $ | - | $ | 935.2 | $ | 1,012.1 | ||||||||||
| North America Fund XI | 9/2012 | 9/2018 | 8,718.4 | 4,712.4 | 2.9 | % | 4,006.0 | 95.4 | 4,006.0 | 4,583.7 | ||||||||||||||||
| China Growth Fund | 11/2010 | 11/2016 | 1,010.0 | 560.2 | 1.0 | % | 449.8 | 32.6 | 432.4 | 512.9 | ||||||||||||||||
| E2 Investors (Annex Fund) | 8/2009 | 11/2013 | 209.4 | 13.6 | 4.5 | % | 195.8 | 144.4 | 54.5 | 302.6 | ||||||||||||||||
| European Fund III | 3/2008 | 3/2014 | 6,229.8 | 816.3 | 4.6 | % | 5,413.5 | 1,494.3 | 4,620.7 | 6,601.4 | ||||||||||||||||
| Asian Fund | 7/2007 | 4/2013 | 3,983.3 | 57.5 | 2.5 | % | 3,925.8 | 3,864.7 | 2,585.1 | 3,618.5 | ||||||||||||||||
| 2006 Fund | 9/2006 | 9/2012 | 17,642.2 | 1,067.9 | 2.1 | % | 16,574.3 | 12,881.7 | 9,538.5 | 15,500.0 | ||||||||||||||||
| European Fund II | 11/2005 | 10/2008 | 5,750.8 | - | 2.1 | % | 5,750.8 | 5,352.4 | 1,655.9 | 3,207.1 | ||||||||||||||||
| Millennium Fund | 12/2002 | 12/2008 | 6,000.0 | - | 2.5 | % | 6,000.0 | 11,246.2 | 1,320.8 | 2,265.5 | ||||||||||||||||
| European Fund | 12/1999 | 12/2005 | 3,085.4 | - | 3.2 | % | 3,085.4 | 8,736.6 | - | 40.8 | ||||||||||||||||
| Total Private Equity Funds | 58,454.3 | 12,117.7 | 46,336.6 | 43,848.3 | 25,149.1 | 37,644.6 | ||||||||||||||||||||
| Co-Investment Vehicles | Various | Various | 2,903.9 | 780.3 | Various | 2,123.6 | 1,005.1 | 1,814.0 | 2,393.7 | |||||||||||||||||
| Total Private Equity | 61,358.2 | 12,898.0 | 48,460.2 | 44,853.4 | 26,963.1 | 40,038.3 | ||||||||||||||||||||
| Real Assets | ||||||||||||||||||||||||||
| Energy Income and Growth Fund | 9/2013 | 9/2018 | 1,974.2 | 1,617.7 | 12.8 | % | 356.5 | 22.2 | 339.1 | 351.2 | ||||||||||||||||
| Natural Resources Fund | Various | Various | 893.8 | 320.9 | Various | 572.9 | 95.1 | 496.4 | 312.8 | |||||||||||||||||
| Global Energy Opportunities | Various | Various | 1,028.4 | 894.2 | Various | 134.2 | 6.1 | 134.2 | 108.5 | |||||||||||||||||
| Infrastructure Fund | Various | Various | 1,042.2 | 259.9 | 4.8 | % | 782.3 | 34.1 | 782.3 | 819.7 | ||||||||||||||||
| Infrastructure Co-Investments | Various | Various | 1,355.3 | 250.8 | Various | 1,104.5 | 261.6 | 1,104.5 | 1,395.2 | |||||||||||||||||
| Real Estate Partners Americas | 5/2013 | 12/2016 | 1,229.1 | 868.3 | 16.0 | % | 360.8 | 129.2 | 360.4 | 402.2 | ||||||||||||||||
| Real Assets | 7,523.0 | 4,211.8 | 3,311.2 | 548.2 | 3,216.9 | 3,389.6 | ||||||||||||||||||||
| Private Markets Total | 68,881.2 | 17,109.8 | 51,771.4 | 45,401.6 | 30,180.0 | 43,427.9 | ||||||||||||||||||||
Public Markets | ||||||||||||||||||||||||||
| Special Situations Vehicles | Various | Various | 4,713.8 | 1,939.7 | Various | 2,774.1 | 981.4 | 2,231.4 | 2,660.6 | |||||||||||||||||
| Mezzanine Fund | 3/2010 | 8/2015 | 987.0 | 287.3 | 4.6 | % | 699.7 | 198.5 | 611.1 | 721.7 | ||||||||||||||||
| Direct Lending Vehicles | Various | Various | 1,001.9 | 447.4 | Various | 554.5 | 51.0 | 554.5 | 604.3 | |||||||||||||||||
| Public Markets Total | 6,702.7 | 2,674.4 | 4,028.3 | 1,230.9 | 3,397.0 | 3,986.6 | ||||||||||||||||||||
| Grand Total | $ | 75,583.9 | $ | 19,784.2 | $ | 55,799.7 | $ | 46,632.5 | $ | 33,577.0 | $ | 47,414.5 | ||||||||||||||
_____________________________________________________________________________________________
(a) | Reflects investment vehicles for which KKR has the ability to earn carried interest. |
| KKR | ||||||||||||||||||||
| DISTRIBUTION CALCULATION (UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | ||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | June 30, 2014 | June 30, 2013 | ||||||||||||||||
| Cash Revenues | ||||||||||||||||||||
| Fees | $ | 254,237 | $ | 327,623 | $ | 236,707 | $ | 581,860 | $ | 457,821 | ||||||||||
| Realized cash carry | 555,488 | 193,550 | 269,828 | 749,038 | 357,995 | |||||||||||||||
| Net realized investment income - KKR | 245,711 | 192,892 | 150,361 | 438,603 | 303,517 | |||||||||||||||
| Net realized investment income - KFN | 36,382 | - | - | 36,382 | - | |||||||||||||||
| Total Cash Revenue | 1,091,818 | 714,065 | 656,896 | 1,805,883 | 1,119,333 | |||||||||||||||
| Cash Expenses | ||||||||||||||||||||
| Compensation and benefits | 91,444 | 108,915 | 80,436 | 200,359 | 155,598 | |||||||||||||||
| Realized cash carry allocated to carry pool | 222,195 | 77,420 | 107,931 | 299,615 | 143,198 | |||||||||||||||
| Occupancy and related charges | 14,757 | 14,189 | 13,067 | 28,946 | 26,389 | |||||||||||||||
| Other operating expenses | 54,311 | 52,801 | 45,027 | 107,112 | 89,657 | |||||||||||||||
| Total Cash Expenses | 382,707 | 253,325 | 246,461 | 636,032 | 414,842 | |||||||||||||||
| Cash income (loss) before noncontrolling interests and local taxes | 709,111 | 460,740 | 410,435 | 1,169,851 | 704,491 | |||||||||||||||
| Less: local income taxes | (4,932 | ) | (10,730 | ) | (5,336 | ) | (15,662 | ) | (7,677 | ) | ||||||||||
| Less: noncontrolling interests | (3,206 | ) | (3,202 | ) | (1,323 | ) | (6,408 | ) | (2,424 | ) | ||||||||||
| Total Distributable Earnings | 700,973 | 446,808 | 403,776 | 1,147,781 | 694,390 | |||||||||||||||
| Less: estimated current corporate income taxes | (19,025 | ) | (33,445 | ) | (25,138 | ) | (52,470 | ) | (41,865 | ) | ||||||||||
| Distributable Earnings, net of taxes | 681,948 | 413,363 | 378,638 | 1,095,311 | 652,525 | |||||||||||||||
| Less: Undistributed net realized investment income - KKR | (147,427 | ) | (115,735 | ) | (90,217 | ) | (263,162 | ) | (182,110 | ) | ||||||||||
| Distributed Earnings | $ | 534,521 | $ | 297,628 | $ | 288,421 | $ | 832,149 | $ | 470,415 | ||||||||||
| Distributable Earnings, net of taxes per KKR & Co. L.P. common unit | $ | 0.85 | $ | 0.59 | $ | 0.55 | $ | 1.44 | $ | 0.95 | ||||||||||
| Distribution per KKR & Co. L.P. common unit | $ | 0.67 | $ | 0.43 | $ | 0.42 | $ | 1.10 | $ | 0.69 | ||||||||||
Components of Distribution per KKR & Co. L.P. Common unit | ||||||||||||||||||||
| After-tax FRE | $ | 0.09 | $ | 0.15 | $ | 0.10 | $ | 0.24 | $ | 0.20 | ||||||||||
| Realized Cash Carry | $ | 0.41 | $ | 0.17 | $ | 0.23 | $ | 0.58 | $ | 0.31 | ||||||||||
| Distributed Net Realized Investment Income - KKR | $ | 0.12 | $ | 0.11 | $ | 0.09 | $ | 0.23 | $ | 0.18 | ||||||||||
| Distributed Net Realized Investment Income - KFN | $ | 0.05 | $ | - | $ | - | $ | 0.05 | $ | - | ||||||||||
| Fee and yield earnings distribution per KKR & Co. L.P. common unit | $ | 0.15 | $ | 0.16 | $ | 0.10 | $ | 0.31 | $ | 0.20 | ||||||||||
| Adjusted Units Eligible For Distribution | 803,719,050 | 696,070,615 | 689,795,274 | |||||||||||||||||
| Payout Ratio | 78.4 | % | 72.0 | % | 76.2 | % | 76.0 | % | 72.1 | % | ||||||||||
DISTRIBUTION POLICY
KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of the KKR’s investment management business, 40% of the net realized investment income of KKR (other than KFN), and 100% of the net realized investment income of KFN, in each case in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other obligations. For purposes of KKR’s distribution policy, its distributions are expected to consist of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, (iii) 40% of the net realized investment income from KKR (other than KFN) and (iv) 100% of the net realized investment income from KFN. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.
The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P., which may change the distribution policy at any time, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR & Co. L.P. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships.
KKR
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Fee related earnings (“FRE”) is comprised (i) total management, monitoring and transaction fees, net, plus incentive fees, less (ii) cash compensation and benefits, occupancy and related charges and other operating expenses. This measure is used by management as an alternative measurement of the operating earnings of KKR and its business segments before carried interest and related carry pool allocations and investment income. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan; (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items.
Economic net income (loss) (“ENI”) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of carried interest and related carry pool allocations and investment income. ENI is comprised of total segment revenues; less total segment expenses and certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income (loss) relating to noncontrolling interests; and (iii) the exclusion of income taxes.
Fee and Yield Earnings is comprised of FRE and net interest and dividends from KKR’s business segments. This measure is used by management as a measure of the cash earnings of KKR and its business segments investment income. We believe this measure is useful to unitholders as it provides insight into the amount of KKR’s cash earnings, significant portions of which tend to be more recurring than realized carried interest and net realized gains from quarter to quarter.
Fee and Yield EBITDA is comprised of Fee and Yield Earnings before the impact of depreciation of fixed assets and core interest expense. This is used by management as another measure of the cash earnings of KKR and its business segments investment income. We believe this measure is also useful to unitholders as it provides insight into the amount of KKR’s cash earnings before the impact of interest expense, significant portions of which tend to be more recurring than realized carried interest and realized investment income from quarter to quarter.
Net realized investment income – KKR refers to net cash income from (i) realized investment gains and losses excluding certain realized investment losses to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009, (ii) dividend income, and (iii) interest income net of interest expense less certain compensation and general and administrative expenses incurred in the generation of net realized investment income in each case generated by KKR (excluding KFN). This term describes a portion of KKR’s quarterly distribution and excludes net realized investment income of KFN.
Net realized investment income – KFN refers to net cash income from (i) realized investment gains and losses, (ii) dividend income and (iii) interest income net of interest expense less certain general and administrative expenses incurred in the generation of net realized investment income in each case generated by KFN. This term describes a portion of KKR’s quarterly distribution and excludes net realized investment income of KKR.
Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
Total distributable earnings is the sum of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, (iii) net realized investment income – KKR and (iv) net realized investment income – KFN; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and also assess amounts available for distribution to KKR unitholders. However, total distributable earnings is not a measure that calculates actual distributions under KKR’s current distribution policy.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR’s capital raising activities and the overall activity in its investment funds. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR's fixed income products; (iv) the value of outstanding CLOs (excluding CLOs wholly owned by KKR); and (v) the fair value of other assets managed by KKR. KKR’s definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR’s capital raising activities and the overall activity in its investment funds, for only those funds, where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR’s investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of committed capital. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR’s investment funds.
Gross dollars invested is the aggregate amount of capital that has been invested by all of KKR’s Public Markets investment vehicles in our private credit non-liquid strategies and is used as a measure of investment activity for KKR’s Public Markets in a given period. We believe this measure is useful to unitholders as it provides additional insight into KAM’s investment of capital across its private credit non-liquid strategies for all the investment vehicles which it manages. Such amounts include capital invested by fund investors and co-investors with respect to which KKR’s Public Markets business is entitled to a fee or carried interest.
Syndicated capital is generally the aggregate amount of capital in transactions originated by KKR investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in committed dollars invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR’s Capital Markets and Other segment and across its investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds to make future investments.
Adjusted units are used as a measure of the total equity ownership of KKR that is held primarily by KKR & Co. L.P. and KKR Holdings and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units and other exchangeable securities had been exchanged for common units of KKR & Co. L.P.
Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s private equity funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN are non-recourse to KKR beyond the assets of KFN. On a segment basis, interest expense is included in net interest and dividends within total investment income. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN.
Book value is a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of KKR’s investment portfolio, including carried interest, as well as KKR’s overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from KKR & Co. L.P. Partners’ Capital on a GAAP basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.
Return on equity measures the amount of net income generated as a percentage of capital invested in KKR’s business. Return on equity is calculated by dividing Economic Net Income (Loss), After Taxes and Equity-based Charges on a trailing twelve-month basis by the average book value during the period.
Cash return on equity measures the amount of cash income generated as a percentage of capital invested in KKR’s business. Cash return on equity is calculated by dividing Total Distributable Earnings on a trailing twelve-month basis by the average book value during the period.
| KKR | |||||||||
EXHIBIT A | |||||||||
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT (GAAP BASIS) | |||||||||
| TO ENI AFTER TAXES AND EQUITY-BASED CHARGES PER ADJUSTED UNIT (UNAUDITED) | |||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | |||||||||
| Quarter Ended | |||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||
| Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic | $ | 0.47 | $ | 0.72 | $ | 0.06 | |||
| Weighted Average Common Units Outstanding - Basic | 377,542,161 | 293,490,461 | 271,983,811 | ||||||
| Net income (loss) attributable to KKR & Co. L.P. | 178,215 | 210,041 | 15,134 | ||||||
| Plus: Net income (loss) attributable to noncontrolling | |||||||||
| interests held by KKR Holdings L.P. | 186,776 | 300,814 | 28,106 | ||||||
| Plus: Non-cash equity based charges | 92,957 | 77,528 | 80,318 | ||||||
| Plus: Amortization of intangibles and other, net | 37,455 | 20,169 | 12,360 | ||||||
| Plus: Income taxes | 6,176 | 21,702 | 8,525 | ||||||
| Economic net income (loss) | 501,579 | 630,254 | 144,443 | ||||||
| Less: Provision for income taxes | 6,330 | 36,581 | 13,486 | ||||||
| Economic net income (loss) after taxes | 495,249 | 593,673 | 130,957 | ||||||
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | 40,877 | 39,353 | 25,936 | ||||||
| Economic net income (loss) after taxes and equity-based charges | 454,372 | 554,320 | 105,021 | ||||||
| Weighted Average Adjusted Units | 800,747,528 | 724,579,220 | 715,453,358 | ||||||
| Economic net income (loss) after taxes and equity-based charges per adjusted unit | $ | 0.57 | $ | 0.77 | $ | 0.15 | |||
| Six Months Ended | |||||||||
| June 30, 2014 | June 30, 2013 | ||||||||
| Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic | $ | 1.16 | $ | 0.79 | |||||
| Weighted Average Common Units Outstanding - Basic | 335,748,498 | 264,555,267 | |||||||
| Net income (loss) attributable to KKR & Co. L.P. | 388,256 | 208,573 | |||||||
| Plus: Net income (loss) attributable to noncontrolling | |||||||||
| interests held by KKR Holdings L.P. | 487,590 | 362,218 | |||||||
| Plus: Non-cash equity based charges | 170,485 | 161,968 | |||||||
| Plus: Amortization of intangibles and other, net | 57,624 | 41,545 | |||||||
| Plus: Income taxes | 27,878 | 17,881 | |||||||
| Economic net income (loss) | 1,131,833 | 792,185 | |||||||
| Less: Provision for income taxes | 42,911 | 33,603 | |||||||
| Economic net income (loss) after taxes | 1,088,922 | 758,582 | |||||||
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | 80,230 | 53,354 | |||||||
| Economic net income (loss) after taxes and equity-based charges | 1,008,692 | 705,228 | |||||||
| Weighted Average Adjusted Units | 762,873,784 | 713,353,287 | |||||||
| Economic net income (loss) after taxes and equity-based charges per adjusted unit | $ | 1.32 | $ | 0.99 | |||||
| KKR | |||||||||
EXHIBIT A (CONTINUED) | |||||||||
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS) | |||||||||
| TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE AND YIELD EARNINGS, FEE AND YIELD EBITDA, AND TOTAL DISTRIBUTABLE EARNINGS (UNAUDITED) | |||||||||
| (Amounts in thousands) | |||||||||
| Quarter Ended | |||||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 178,215 | $ | 210,041 | $ | 15,134 | |||
| Plus: Net income (loss) attributable to noncontrolling | |||||||||
| interests held by KKR Holdings L.P. | 186,776 | 300,814 | 28,106 | ||||||
| Plus: Non-cash equity based charges | 92,957 | 77,528 | 80,318 | ||||||
| Plus: Amortization of intangibles and other, net | 37,455 | 20,169 | 12,360 | ||||||
| Plus: Income taxes | 6,176 | 21,702 | 8,525 | ||||||
| Economic net income (loss) | 501,579 | 630,254 | 144,443 | ||||||
| Plus: Income attributable to segment noncontrolling interests | 3,206 | 3,202 | 1,323 | ||||||
| Less: Total investment income (loss) | 162,158 | 278,651 | 11,050 | ||||||
| Less: Net carried interest | 248,902 | 203,087 | 36,539 | ||||||
| Fee related earnings | 93,725 | 151,718 | 98,177 | ||||||
| Plus: Net interests and dividends | 60,432 | 11,164 | 2,782 | ||||||
| Fee and yield earnings | $ | 154,157 | $ | 162,882 | $ | 100,959 | |||
| Plus: Depreciation and amortization | 4,140 | 4,035 | 3,708 | ||||||
| Plus: Core interest expense | 19,205 | 18,400 | 16,210 | ||||||
| Fee and yield EBITDA | $ | 177,502 | $ | 185,317 | $ | 120,877 | |||
| Less: Depreciation and amortization | 4,140 | 4,035 | 3,708 | ||||||
| Less: Core interest expense | 19,205 | 18,400 | 16,210 | ||||||
| Less: Net interests and dividends | 60,432 | 11,164 | 2,782 | ||||||
| Plus: Realized cash carry, net of realized cash carry allocated to carry pool | 333,293 | 116,130 | 161,897 | ||||||
| Plus: Net realized investment income - KKR | 245,711 | 192,892 | 150,361 | ||||||
| Plus: Net realized investment income - KFN | 36,382 | - | - | ||||||
| Less: Local income taxes and noncontrolling interests | 8,138 | 13,932 | 6,659 | ||||||
| Total distributable earnings | $ | 700,973 | $ | 446,808 | $ | 403,776 | |||
| Plus: Depreciation and amortization | 4,140 | 4,035 | 3,708 | ||||||
| Plus: Core interest expense | 19,205 | 18,400 | 16,210 | ||||||
| Plus: Local income taxes and noncontrolling interests | 8,138 | 13,932 | 6,659 | ||||||
| Total EBITDA | $ | 732,456 | $ | 483,175 | $ | 430,353 | |||
| Six Months Ended | |||||||||
| June 30, 2014 | June 30, 2013 | ||||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 388,256 | $ | 208,573 | |||||
| Plus: Net income (loss) attributable to noncontrolling | |||||||||
| interests held by KKR Holdings L.P. | 487,590 | 362,218 | |||||||
| Plus: Non-cash equity based charges | 170,485 | 161,968 | |||||||
| Plus: Amortization of intangibles and other, net | 57,624 | 41,545 | |||||||
| Plus: Income taxes | 27,878 | 17,881 | |||||||
| Economic net income (loss) | 1,131,833 | 792,185 | |||||||
| Plus: Income attributable to segment noncontrolling interests | 6,408 | 2,424 | |||||||
| Less: Total investment income (loss) | 440,809 | 331,248 | |||||||
| Less: Net carried interest | 451,989 | 277,184 | |||||||
| Fee related earnings | 245,443 | 186,177 | |||||||
| Plus: Net interests and dividends | 71,596 | 2,311 | |||||||
| Fee and yield earnings | $ | 317,039 | $ | 188,488 | |||||
| Plus: Depreciation and amortization | 8,175 | 7,389 | |||||||
| Plus: Core interest expense | 37,605 | 32,443 | |||||||
| Fee and yield EBITDA | $ | 362,819 | $ | 228,320 | |||||
| Less: Depreciation and amortization | 8,175 | 7,389 | |||||||
| Less: Core interest expense | 37,605 | 32,443 | |||||||
| Less: Net interests and dividends | 71,596 | 2,311 | |||||||
| Plus: Realized cash carry, net of realized cash carry allocated to carry pool | 449,423 | 214,797 | |||||||
| Plus: Net realized investment income - KKR | 438,603 | 303,517 | |||||||
| Plus: Net realized investment income - KFN | 36,382 | - | |||||||
| Less: Local income taxes and noncontrolling interests | 22,070 | 10,101 | |||||||
| Total distributable earnings | $ | 1,147,781 | $ | 694,390 | |||||
| Plus: Depreciation and amortization | 8,175 | 7,389 | |||||||
| Plus: Core interest expense | 37,605 | 32,443 | |||||||
| Plus: Local income taxes and noncontrolling interests | 22,070 | 10,101 | |||||||
| Total EBITDA | $ | 1,215,631 | $ | 744,323 | |||||
| KKR | ||||||||
EXHIBIT A (CONTINUED) | ||||||||
| RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS) | ||||||||
| TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED) | ||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | ||||||||
| As of | As of | |||||||
| June 30, 2014 | December 31, 2013 | |||||||
| KKR & Co. L.P. partners’ capital | $ | 5,491,877 | $ | 2,722,010 | ||||
| Noncontrolling interests held by KKR Holdings L.P. | 5,082,655 | 5,116,761 | ||||||
| Equity impact of KKR Management Holdings Corp. and other | (130,946 | ) | (76,171 | ) | ||||
| Book value | 10,443,586 | 7,762,600 | ||||||
| Adjusted units | 833,951,053 | 716,676,699 | ||||||
| Book value per adjusted unit | $ | 12.52 | $ | 10.83 | ||||
| RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS) | ||||||||
| TO CASH AND SHORT-TERM INVESTMENTS (SEGMENT BASIS) (UNAUDITED) | ||||||||
| (Amounts in thousands) | ||||||||
| As of | As of | |||||||
| June 30, 2014 | December 31, 2013 | |||||||
| Cash and cash equivalents | $ | 2,504,205 | $ | 1,306,383 | ||||
| Liquid short-term investments | 870,959 | 854,714 | ||||||
| Cash and short-term investments | $ | 3,375,164 | $ | 2,161,097 | ||||
| KKR | |||||||
EXHIBIT B | |||||||
| RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS (UNAUDITED) | |||||||
| The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units. | |||||||
| Quarter Ended | |||||||
| June 30, 2014 | March 31, 2014 | June 30, 2013 | |||||
| Weighted Average GAAP Common Units Outstanding - Basic | 377,542,161 | 293,490,461 | 271,983,811 | ||||
| Adjustments: | |||||||
| Weighted Average Unvested Common Units(a) | 27,536,748 | 29,379,509 | 26,094,953 | ||||
| Weighted Average Other Exchangeable Securities | 5,100,929 | 2,234,259 | - | ||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 410,179,838 | 325,104,229 | 298,078,764 | ||||
| Adjustments: | |||||||
| Weighted Average KKR Holdings Units (b) | 390,567,690 | 399,474,991 | 417,374,594 | ||||
| Weighted Average Adjusted Units | 800,747,528 | 724,579,220 | 715,453,358 | ||||
| Six Months Ended | |||||||
| June 30, 2014 | June 30, 2013 | ||||||
| Weighted Average GAAP Common Units Outstanding - Basic | 335,748,498 | 264,555,267 | |||||
| Adjustments: | |||||||
| Weighted Average Unvested Common Units(a) | 28,453,038 | 25,549,675 | |||||
| Weighted Average Other Exchangeable Securities | 3,675,513 | - | |||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 367,877,049 | 290,104,942 | |||||
| Adjustments: | |||||||
| Weighted Average KKR Holdings Units (b) | 394,996,735 | 423,248,345 | |||||
| Weighted Average Adjusted Units | 762,873,784 | 713,353,287 | |||||
| RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS (UNAUDITED) | |||||||
| The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units. | |||||||
| As of | As of | ||||||
| June 30, 2014 | December 31, 2013 | ||||||
| GAAP Common Units Outstanding - Basic | 415,469,452 | 288,143,327 | |||||
| Unvested Common Units(a) | 27,395,289 | 24,164,354 | |||||
| Other Exchangeable Securities | 5,195,584 | - | |||||
| GAAP Common Units Outstanding - Diluted | 448,060,325 | 312,307,681 | |||||
| Adjustments: | |||||||
| KKR Holdings Units (b) | 385,890,728 | 404,369,018 | |||||
| Adjusted Units | 833,951,053 | 716,676,699 | |||||
| Adjustments: | |||||||
| Unvested Common Units | (27,395,289 | ) | (24,164,354 | ) | |||
| Unvested Other Exchangeable Securities | (2,836,714 | ) | - | ||||
| Adjusted Units Eligible For Distribution | 803,719,050 | 692,512,345 | |||||
________________________________________________________________________________________________
(a) | Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business. | ||
(b) | Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units. |
Contacts:
Investor Relations:
Craig
Larson
+1 877-610-4910 (U.S.) / +1 212-230-9410
investor-relations@kkr.com
or
Media:
Kristi
Huller, +1 212-750-8300
media@kkr.com
