NEW YORK--(BUSINESS WIRE)--Assets under management (“AUM”) totaled $54.4 billion as of June 30, 2010, up from $46.9 billion as of June 30, 2009.
Economic net income (“ENI”) was $433.1 million for the second quarter of 2010, down from pro forma2 ENI of $613.5 million for the second quarter of 2009. ENI was $1,107.9 million for the first six months of 2010, up from pro forma ENI of $616.0 million for the first six months of 2009.
Fee related earnings (“FRE”) were $63.3 million and $153.7 million for the second quarter and the first six months of 2010, respectively, up from pro forma fee related earnings of $53.3 million and $92.9 million in the comparable periods of 2009.
GAAP net income attributable to KKR & Co. L.P. was $29.9 million and $143.7 million for the second quarter and first six months of 2010, respectively3.
Book value was $5.0 billion on a segment basis representing $7.37 per unit as of June 30, 2010.
KKR declares a second quarter distribution of $0.08 per common unit.
KKR received an A rating from Fitch and an A- rating from Standard & Poor's, in each case with a stable outlook.
Consolidated Results
KKR’s consolidated GAAP results for the quarter and six months ended June 30, 2010 included net income attributable to KKR & Co. L.P. of $29.9 million and $143.7 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.15 and $0.70, respectively. For the quarter and six months ended June 30, 2009, net income attributable to KKR & Co. L.P. was $365.8 million and $311.2 million, respectively. The decrease from both prior periods was primarily due to the following factors that were not applicable to the quarter and six months ended June 30, 2009 as a result of the Business Combination that occurred on October 1, 2009: (i) the allocation of approximately 70% of the earnings of KKR to KKR Holdings L.P., (ii) the issuance of equity-based awards which resulted in the recognition of non-cash compensation charges, and (iii) the recognition of corporate income tax expense.
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1 Certain financial measures contained herein, including fee related earnings and economic net income, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See page 7 for a reconciliation of such measures to financial results prepared in accordance with GAAP.
Information contained herein relating to KKR’s reportable segments are presented prior to giving effect to the allocation of income between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total.
2 On October 1, 2009 KKR and KKR & Co. (Guernsey) L.P. completed a transaction to combine their businesses (the “Business Combination”). Amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to KKR’s unaudited reportable segments on page 23 of this press release for a summary of the applicable adjustments as a result of the Business Combination.
3 For the second quarter and first six months of 2009, GAAP Net income attributable to KKR & Co. L.P. was $365.8 million and $311.2 million, respectively. The 2010 and 2009 GAAP periods are not directly comparable as GAAP financial information prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination. See “Consolidated Results”.
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Total Reportable Segments
Management makes operating decisions, assesses performance and allocates resources based on financial and operating data and measures that are presented without giving effect to the consolidation of any of the funds that KKR manages. In addition, there are other components of KKR’s reportable segment results that differ from the equivalent GAAP results on a consolidated basis. These differences are described in the Notes to the Unaudited Reportable Segments on page 23.
AUM was $54.4 billion as of June 30, 2010, a decrease of $0.3 billion or 0.6% compared to AUM of $54.7 billion as of March 31, 2010. The decrease was primarily due to distributions and redemptions, partially offset by an increase in the fair value of KKR’s private equity portfolio.
Fee paying assets under management (“FPAUM”) were $41.6 billion as of June 30, 2010, a decrease of $0.9 billion or 2.1% compared to FPAUM of $42.5 billion as of March 31, 2010. The decrease was primarily due to changes in foreign exchange related to Euro denominated commitments and invested capital in KKR’s private equity funds as well as distributions and redemptions.
FRE was $63.3 million for the quarter ended June 30, 2010, an increase of $10.1 million or 18.9% compared to pro forma FRE of $53.3 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $153.7 million, an increase of $60.8 million or 65.4% compared to pro forma FRE of $92.9 million for the six months ended June 30, 2009. The increase over both comparative periods was due primarily to (i) higher transaction fees in the private markets segment as a result of the closing of more fee generating investments, (ii) higher capital markets fees as a result of increased activity within the capital markets and principal activities segment, and (iii) incentive fees earned in the public markets segment. These increases were partially offset by higher compensation expense as a result of improved performance and increased other operating expenses in connection with the expansion of KKR’s business.
For the quarter ended June 30, 2010, ENI was $433.1 million, a decrease of $180.4 million or 29.4% compared to pro forma ENI of $613.5 million for the quarter ended June 30, 2009. The decrease primarily reflects lower investment income resulting from lower levels of gains relating to KKR’s principal investments and lower net carried interest in its private equity portfolio. While the fair value of KKR’s investments increased during the second quarter of 2010, the amount of net unrealized gains was lower than the amount recorded during the second quarter of 2009.
For the six months ended June 30, 2010, ENI was $1.1 billion, an increase of $491.9 million or 79.8% compared to pro forma ENI of $616.0 million for the six months ended June 30, 2009. The increase reflects higher investment income resulting from higher levels of gains relating to KKR’s principal investments and higher net carried interest in its private equity portfolio.
Private Markets
AUM in the private markets segment was $41.0 billion as of June 30, 2010, an increase of $0.1 billion or 0.2% compared to AUM of $40.9 billion as of March 31, 2010. The increase was primarily due to an increase in the fair value of KKR’s private equity portfolio, partially offset by distributions as a result of realizations.
FPAUM in the private markets segment was $35.3 billion as of June 30, 2010, a decrease of $0.6 billion or 1.6% compared to FPAUM of $35.9 billion as of March 31, 2010. The decrease was primarily due to changes in foreign exchange related to Euro denominated commitments and invested capital in KKR’s private equity funds as well as distributions as a result of realizations, partially offset by new capital raised.
FRE in the private markets segment was $42.1 million for the quarter ended June 30, 2010, a decrease of $9.2 million or 18.0% compared to pro forma FRE of $51.3 million for the quarter ended June 30, 2009. The decrease was due primarily to higher compensation expense and other operating expenses in connection with the expansion of KKR’s business, partially offset by higher transaction fees as a result of the closing of more fee generating investments.
FRE in the private markets segment was $98.3 million for the six months ended June 30, 2010, an increase of $4.9 million or 5.3% compared to pro forma FRE of $93.4 million for the six months ended June 30, 2009. The increase was due primarily to higher transaction fees as a result of the closing of more fee generating investments, partially offset by higher compensation expense and other operating expenses in connection with the expansion of KKR’s business.
ENI in the private markets segment was $155.1 million for the quarter ended June 30, 2010, a decrease of $67.8 million or 30.4% compared to pro forma ENI of $223.0 million for the quarter ended June 30, 2009. The decrease was due primarily to lower net carried interest. Greater unrealized gains in KKR’s private equity portfolio this quarter drove higher gross carried interest, however, this increase was more than offset by increases in the allocation to the carry pool and management fee refunds as a result of certain funds becoming carry-earning in 2010.
ENI in the private markets segment was $348.9 million for the six months ended June 30, 2010, an increase of $136.6 million or 64.3% compared to pro forma ENI of $212.3 million for the six months ended June 30, 2009. The increase was due primarily to higher gross carried interest driven by greater unrealized gains in KKR’s private equity portfolio. This increase was partially offset by increases in the allocation to the carry pool and management fee refunds. As of June 30, 2010, the amount subject to management fee refunds, which may reduce carried interest in future periods, totaled $68.8 million.
Public Markets
AUM in the public markets segment was $13.4 billion as of June 30, 2010, a decrease of $0.4 billion or 2.9% compared to AUM of $13.8 billion as of March 31, 2010. The decrease was primarily due to redemptions, partially offset by new capital raised during the quarter.
FPAUM in the public markets segment was $6.3 billion as of June 30, 2010, a decrease of $0.3 billion or 4.5% compared to FPAUM of $6.6 billion as of March 31, 2010. The decrease was primarily due to redemptions, partially offset by new capital raised during the quarter.
FRE in the public markets segment was $11.8 million for the quarter ended June 30, 2010, an increase of $9.8 million compared to pro forma FRE of $1.9 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $27.4 million, an increase of $24.8 million compared to pro forma FRE of $2.7 million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to incentive fees earned from KKR Financial Holdings LLC (“KFN”) as a result of KFN’s financial performance exceeding certain required benchmarks in the 2010 periods. No such fees were earned in the corresponding periods in 2009.
ENI in the public markets segment was $12.2 million for the quarter ended June 30, 2010, an increase of $11.7 million compared to pro forma ENI of $0.5 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, ENI was $28.4 million, an increase of $27.9 million compared to pro forma ENI of $0.6 million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to incentive fees earned from KFN as a result of KFN’s financial performance exceeding certain required benchmarks in the 2010 periods. No such fees were earned in the corresponding periods in 2009.
Capital Markets and Principal Activities
FRE in the capital markets and principal activities segment was $9.5 million for the quarter ended June 30, 2010, an increase of $9.4 million compared to pro forma FRE of less than $0.1 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $27.9 million, an increase of $31.1 million compared to pro forma FRE of $(3.1) million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to an increase in overall capital markets transaction activity resulting from an improvement in the capital markets environment from the prior period as well as the continued buildout of this business.
ENI in the capital markets and principal activities segment was $265.8 million for the quarter ended June 30, 2010, a decrease of $124.3 million or 31.9% compared to pro forma ENI of $390.1 million for the quarter ended June 30, 2009. The decrease was due primarily to lower levels of net unrealized appreciation of KKR’s principal investments when compared to the prior period.
ENI in the capital markets and principal activities segment was $730.5 million for the six months ended June 30, 2010, an increase of $327.4 million or 81.2% compared to pro forma ENI of $403.1 million for the six months ended June 30, 2009. The increase was due primarily to higher levels of net unrealized appreciation of KKR’s principal investments when compared to the prior period.
CAPITAL AND LIQUIDITY
As of June 30, 2010, KKR had an available cash balance of $508.1 million and $314.1 million of outstanding debt obligations. As of June 30, 2010, KKR’s availability for further borrowings was approximately $1.6 billion (which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of June 30, 2010).
KKR recently received an A rating from Fitch and an A- rating from Standard & Poor’s, in each case with a stable outlook.
As of June 30, 2010, KKR’s portion of total uncalled commitments to its investment funds was $1,070.8 million, consisting of the following (amounts in thousands):
| Commitments | |||
|
Private Markets |
|||
| 2006 Fund | $ | 414,634 | |
| European III Fund | 384,080 | ||
| Asian Fund | 171,254 | ||
| E2 Investors (Annex Fund) | 29,295 | ||
| Natural Resources I | 7,500 | ||
| Other Private Markets Commitments | 348 | ||
| Total Private Markets Commitments | 1,007,111 | ||
|
Public Markets |
|||
| Mezzanine Fund | 45,000 | ||
| Capital Solutions Vehicles | 18,700 | ||
| Total Public Markets Commitments | 63,700 | ||
| Total Uncalled Commitments | $ | 1,070,811 | |
DISTRIBUTION
A distribution of $0.08 per common unit will be paid on September 8, 2010 to unitholders of record as of the close of business on August 24, 2010.
SUBSEQUENT EVENTS
KKR has elected not to proceed with the proposed public offering of $500 million in KKR common units and has applied to withdraw the related registration statement with the U.S. Securities and Exchange Commission.
CONFERENCE CALL
A conference call to discuss KKR’s financial results will be on held Tuesday, August 10, 2010 at 10:00 AM EDT. The conference call may be accessed by dialing (888) 661-5167 (U.S. callers) or +1 (913) 981-5520 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Relations section of KKR’s website at http://www.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (888) 203-1112 (U.S. callers) and +1 (719) 457-0820 (non-U.S. callers) / pass code 4833378, beginning approximately two hours after the broadcast.
From time to time we may use our Web site as a channel of distribution of material company information. Financial and other important information regarding the Company is routinely posted on and accessible at the Investor Relations section for KKR at www.kkr.com. In addition, you may automatically receive email alerts and other information about us by enrolling your email by visiting the “Email Alerts” area in KKR’s Investment Relations section.
ABOUT KKR
Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global alternative asset manager with $54.4 billion in assets under management as of June 30, 2010. With over 600 people and 14 offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platforms. KKR is publicly traded on the New York Stock Exchange (NYSE: KKR). For additional information, please visit KKR's website at www.kkr.com.
FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to them. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR's business, financial condition, liquidity and results of operations, including but not limited to assets under management, fee paying assets under management, fee related earnings, economic net income, committed dollars invested, uncalled commitments and book value, may vary 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 risk that the anticipated benefits of the business combination with KKR & Co. (Guernsey) L.P. may not be achieved; the general volatility of the capital markets; changes in KKR's business strategy; 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 Registration Statement on Form S-1 (Reg. No. 333-165414) and other filings with the SEC, which are available at www.sec.gov.
* * * * *
| KKR | ||||||||||||||
| CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED) | ||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | ||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||
|
June 30, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
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| Revenues | ||||||||||||||
| Fees | $ | 87,070 | $ | 51,482 | $ | 193,101 | $ | 90,552 | ||||||
| Expenses | ||||||||||||||
| Employee Compensation and Benefits | 348,621 | 47,907 | 714,152 | 93,449 | ||||||||||
| Occupancy and Related Charges | 9,510 | 9,781 | 19,195 | 18,666 | ||||||||||
| General, Administrative and Other | 58,046 | 28,477 | 135,770 | 65,880 | ||||||||||
| Fund Expenses | 14,409 | 11,557 | 24,777 | 24,485 | ||||||||||
| Total Expenses | 430,586 | 97,722 | 893,894 | 202,480 | ||||||||||
| Investment Income (Loss) | ||||||||||||||
| Net Gains (Losses) from Investment Activities | 1,031,568 | 2,218,980 | 3,318,121 | 1,498,131 | ||||||||||
| Dividend Income | 147,373 | 76,942 | 590,280 | 77,642 | ||||||||||
| Interest Income | 56,152 | 31,780 | 104,455 | 58,862 | ||||||||||
| Interest Expense | (10,134) | (20,092) | (23,961) | (42,370) | ||||||||||
| Total Investment Income (Loss) | 1,224,959 | 2,307,610 | 3,988,895 | 1,592,265 | ||||||||||
| Income (Loss) Before Taxes | 881,443 | 2,261,370 | 3,288,102 | 1,480,337 | ||||||||||
| Income Taxes | 31,283 | 159 | 44,735 | 1,690 | ||||||||||
| Net Income (Loss) | 850,160 | 2,261,211 | 3,243,367 | 1,478,647 | ||||||||||
| Less: Net Income (Loss) Attributable to | ||||||||||||||
| Noncontrolling Interests in Consolidated Entities | 676,816 | 1,895,385 | 2,663,946 | 1,167,404 | ||||||||||
| Less: Net Income (Loss) Attributable to | ||||||||||||||
| Noncontrolling Interests Held by KKR Holdings L.P. | 143,437 | - | 435,678 | - | ||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. | $ | 29,907 | $ | 365,826 | $ | 143,743 | $ | 311,243 | ||||||
| Net Income Attributable to KKR & Co. L.P. Per Common Unit (a) | ||||||||||||||
| Basic | $ | 0.15 | $ | 0.70 | ||||||||||
| Diluted (b) | $ | 0.15 | $ | 0.70 | ||||||||||
| Weighted Average Common Units | ||||||||||||||
| Basic | 204,902,226 | 204,902,226 | ||||||||||||
| Diluted (b) | 204,902,226 | 204,902,226 | ||||||||||||
(a) Prior to the Business Combination, KKR’s business was conducted through a large number of entities as to which there was no single holding entity and no single capital structure upon which to calculate historical earnings per common unit information. Accordingly, earnings per common unit information has not been presented for historical periods prior to the Business Combination.
(b) For the quarter and six months ended June 30, 2010, 478,105,194 of KKR Holdings units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.’s interests in KKR’s business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange.
| KKR | |||||||||||
| RECONCILIATION OF TOTAL REPORTABLE SEGMENTS FEE RELATED EARNINGS AND ECONOMIC NET INCOME | |||||||||||
| TO NET INCOME ATTRIBUTABLE TO KKR & CO L.P. (GAAP BASIS - UNAUDITED) | |||||||||||
| (Amounts in thousands) | |||||||||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2010 | June 30, 2010 | ||||||||||
| Total reportable segments fee related earnings | $ | 63,336 | $ | 153,725 | |||||||
| Investment income | 370,589 | 955,380 | |||||||||
| Less: Income attributable to noncontrolling interests | (874 | ) | (1,250 | ) | |||||||
| Economic net income (loss) | 433,051 | 1,107,855 | |||||||||
| Income taxes | (31,283 | ) | (44,735 | ) | |||||||
| Amortization of intangibles and other, net | (1,341 | ) | (3,857 | ) | |||||||
| Non-cash equity based charges | (227,083 | ) | (479,842 | ) | |||||||
| Allocation to noncontrolling | - | ||||||||||
| interests held by KKR Holdings L.P. | (143,437 | ) | (435,678 | ) | |||||||
| Net income attributable to KKR & Co. L.P. | $ | 29,907 | $ | 143,743 | |||||||
| Quarter Ended | Six Months Ended | ||||||||||
| June 30, 2009 (a) | June 30, 2009 (a) | ||||||||||
| Total pro forma reportable segments fee related earnings | $ | 53,265 | $ | 92,917 | |||||||
| Investment income | 560,788 | 523,950 | |||||||||
| Less: Income attributable to noncontrolling interests | (566 | ) | (873 | ) | |||||||
| Pro forma economic net income (loss) | 613,487 | 615,994 | |||||||||
| Allocation to carry pool | 22,741 | 22,433 | |||||||||
| Carry allocated to former KKR principals | 38,144 | 29,262 | |||||||||
|
Income on capital invested by or on behalf of KKR principals prior to completion of the Business Combination |
38,734 | 14,836 | |||||||||
| Economic interests associated with the KKR 1996 Fund | 36,889 | 26,569 | |||||||||
| Elimination of management fees paid by KPE prior to completion of Business Combination | 9,409 | 17,641 | |||||||||
| Financial results of KPE | (388,753 | ) | (404,334 | ) | |||||||
| Certain compensation adjustments | (4,251 | ) | (8,502 | ) | |||||||
| Income attributable to noncontrolling interests | 532 | 928 | |||||||||
| Total actual economic net income (loss) | $ | 366,932 | $ | 314,827 | |||||||
| Income taxes | (159 | ) | (1,690 | ) | |||||||
| Amortization of intangibles and other, net | (947 | ) | (1,894 | ) | |||||||
| Net income attributable to KKR & Co. L.P. | $ | 365,826 | $ | 311,243 | |||||||
(a) The 2009 segment financial information is presented on a pro forma basis to give effect to the Business Combination and related transactions as if they were completed on January 1, 2009 whereas the 2009 GAAP financial information is presented on an actual basis. Accordingly, the reconciliations of segment financial information to GAAP financial information for the 2009 periods is presented in two parts: (i) a reconciliation of 2009 pro forma segment financial information to 2009 actual segment financial information, and (ii) a reconciliation of 2009 actual segment financial information to 2009 actual GAAP information.
| KKR | ||||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| Actual | Actual | Pro Forma* | Actual | Pro Forma* | ||||||||||||||||||||
|
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
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| Fees | ||||||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||||||
| Management fees | $ | 110,669 | $ | 111,029 | $ | 109,019 | $ | 221,698 | $ | 216,657 | ||||||||||||||
| Incentive fees | 8,350 | 12,500 | - | 20,850 | - | |||||||||||||||||||
| Management and incentive fees | 119,019 | 123,529 | 109,019 | 242,548 | 216,657 | |||||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||||||
| Monitoring fees | 20,512 | 22,532 | 20,954 | 43,044 | 42,914 | |||||||||||||||||||
| Transaction fees | 37,441 | 55,534 | 14,376 | 92,975 | 14,567 | |||||||||||||||||||
| Fee credits | (15,278 | ) | (14,267 | ) | (8,794 | ) | (29,545 | ) | (10,516 | ) | ||||||||||||||
| Net monitoring and transaction fees | 42,675 | 63,799 | 26,536 | 106,474 | 46,965 | |||||||||||||||||||
| Total fees | 161,694 | 187,328 | 135,555 | 349,022 | 263,622 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Employee compensation and benefits | 49,431 | 52,253 | 38,684 | 101,684 | 78,705 | |||||||||||||||||||
| Other operating expenses | 48,927 | 44,686 | 43,606 | 93,613 | 92,000 | |||||||||||||||||||
| Total expenses | 98,358 | 96,939 | 82,290 | 195,297 | 170,705 | |||||||||||||||||||
| Fee Related Earnings | 63,336 | 90,389 | 53,265 | 153,725 | 92,917 | |||||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||||||
| Gross carried interest | 229,494 | 323,211 | 195,213 | 552,705 | 145,070 | |||||||||||||||||||
| Less: allocation to KKR carry pool | (96,029 | ) | (99,382 | ) | (27,606 | ) | (195,411 | ) | (28,303 | ) | ||||||||||||||
| Less: management fee refunds | (17,907 | ) | (83,740 | ) | - | (101,647 | ) | - | ||||||||||||||||
| Net carried interest | 115,558 | 140,089 | 167,607 | 255,647 | 116,767 | |||||||||||||||||||
| Other investment income (loss) | 255,031 | 444,702 | 393,181 | 699,733 | 407,183 | |||||||||||||||||||
| Total investment income (loss) | 370,589 | 584,791 | 560,788 | 955,380 | 523,950 | |||||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
433,925 | 675,180 | 614,053 | 1,109,105 | 616,867 | |||||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
874 | 376 | 566 | 1,250 | 873 | |||||||||||||||||||
| Economic Net Income (Loss) | $ | 433,051 | $ | 674,804 | $ | 613,487 | $ | 1,107,855 | $ | 615,994 | ||||||||||||||
| Assets Under Management | $ | 54,398,300 | $ | 54,708,700 | $ | 46,865,800 | $ | 54,398,300 | $ | 46,865,800 | ||||||||||||||
| Fee Paying Assets Under Management | $ | 41,643,400 | $ | 42,528,900 | $ | 41,994,700 | $ | 41,643,400 | $ | 41,994,700 | ||||||||||||||
| Committed Dollars Invested | $ | 1,113,200 | $ | 1,142,700 | $ | 562,900 | $ | 2,255,900 | $ | 580,900 | ||||||||||||||
| Uncalled Commitments | $ | 13,264,200 | $ | 14,234,800 | $ | 14,695,766 | $ | 13,264,200 | $ | 14,695,766 | ||||||||||||||
|
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to KKR's unaudited reportable segments on page 23 of this press release. |
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| KKR | ||||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||||
| PRIVATE MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| Actual | Actual | Pro Forma | Actual | Pro Forma | ||||||||||||||||||||
|
June 30, 2010 |
March 31, 2010 |
June 30, 2009 |
June 30, 2010 |
June 30, 2009 |
||||||||||||||||||||
| Fees | ||||||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||||||
| Management fees | $ | 97,046 | $ | 98,160 | $ | 97,089 | $ | 195,206 | $ | 192,698 | ||||||||||||||
| Incentive fees | - | - | - | - | - | |||||||||||||||||||
| Management and incentive fees | 97,046 | 98,160 | 97,089 | 195,206 | 192,698 | |||||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||||||
| Monitoring fees | 20,512 | 22,532 | 20,954 | 43,044 | 42,914 | |||||||||||||||||||
| Transaction fees | 20,128 | 25,114 | 10,400 | 45,242 | 10,400 | |||||||||||||||||||
| Fee credits | (13,872 | ) | (10,077 | ) | (8,794 | ) | (23,949 | ) | (10,516 | ) | ||||||||||||||
| Net monitoring and transaction fees | 26,768 | 37,569 | 22,560 | 64,337 | 42,798 | |||||||||||||||||||
| Total fees | 123,814 | 135,729 | 119,649 | 259,543 | 235,496 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Employee compensation and benefits | 38,463 | 40,841 | 30,811 | 79,304 | 63,430 | |||||||||||||||||||
| Other operating expenses | 43,237 | 38,671 | 37,498 | 81,908 | 78,678 | |||||||||||||||||||
| Total expenses | 81,700 | 79,512 | 68,309 | 161,212 | 142,108 | |||||||||||||||||||
| Fee Related Earnings | 42,114 | 56,217 | 51,340 | 98,331 | 93,388 | |||||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||||||
| Gross carried interest | 228,413 | 322,840 | 195,213 | 551,253 | 145,070 | |||||||||||||||||||
| Less: allocation to KKR carry pool | (95,597 | ) | (99,233 | ) | (27,606 | ) | (194,830 | ) | (28,303 | ) | ||||||||||||||
| Less: management fee refunds | (17,907 | ) | (83,740 | ) | - | (101,647 | ) | - | ||||||||||||||||
| Net carried interest | 114,909 | 139,867 | 167,607 | 254,776 | 116,767 | |||||||||||||||||||
| Other investment income (loss) | (1,462 | ) | (2,594 | ) | 4,520 | (4,056 | ) | 3,089 | ||||||||||||||||
| Total investment income (loss) | 113,447 | 137,273 | 172,127 | 250,720 | 119,856 | |||||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
155,561 | 193,490 | 223,467 | 349,051 | 213,244 | |||||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
436 | (250 | ) | 513 | 186 | 933 | ||||||||||||||||||
| Economic Net Income (Loss) | $ | 155,125 | $ | 193,740 | $ | 222,954 | $ | 348,865 | $ | 212,311 | ||||||||||||||
| Assets Under Management | $ | 41,031,100 | $ | 40,943,100 | $ | 33,686,100 | $ | 41,031,100 | $ | 33,686,100 | ||||||||||||||
| Fee Paying Assets Under Management | $ | 35,317,500 | $ | 35,901,900 | $ | 36,813,800 | $ | 35,317,500 | $ | 36,813,800 | ||||||||||||||
| Committed Dollars Invested | $ | 1,055,500 | $ | 995,500 | $ | 562,900 | $ | 2,051,000 | $ | 580,900 | ||||||||||||||
| Uncalled Commitments | $ | 11,901,100 | $ | 12,844,300 | $ | 14,695,766 | $ | 11,901,100 | $ | 14,695,766 | ||||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||||||
| KKR | ||||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||||
| PUBLIC MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| Actual | Actual | Pro Forma | Actual | Pro Forma | ||||||||||||||||||||
| June 30, 2010 | March 31, 2010 | June 30, 2009 | June 30, 2010 | June 30, 2009 | ||||||||||||||||||||
| Fees | ||||||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||||||
| Management fees | $ | 13,623 | $ | 12,869 | $ | 11,930 | $ | 26,492 | $ | 23,959 | ||||||||||||||
| Incentive fees | 8,350 | 12,500 | - | 20,850 | - | |||||||||||||||||||
| Management and incentive fees | 21,973 | 25,369 | 11,930 | 47,342 | 23,959 | |||||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||||||
| Monitoring fees | - | - | - | - | - | |||||||||||||||||||
| Transaction fees | 2,330 | 5,823 | - | 8,153 | - | |||||||||||||||||||
| Fee credits | (1,406 | ) | (4,190 | ) | - | (5,596 | ) | - | ||||||||||||||||
|
Net monitoring and transaction fees |
924 | 1,633 | - | 2,557 | - | |||||||||||||||||||
| Total fees | 22,897 | 27,002 | 11,930 | 49,899 | 23,959 | |||||||||||||||||||
| Expenses | ||||||||||||||||||||||||
| Employee compensation and benefits | 7,474 | 7,142 | 5,426 | 14,616 | 10,579 | |||||||||||||||||||
| Other operating expenses | 3,673 | 4,165 | 4,603 | 7,838 | 10,724 | |||||||||||||||||||
| Total expenses | 11,147 | 11,307 | 10,029 | 22,454 | 21,303 | |||||||||||||||||||
| Fee Related Earnings | 11,750 | 15,695 | 1,901 | 27,445 | 2,656 | |||||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||||||
| Gross carried interest | 1,081 | 371 | - | 1,452 | - | |||||||||||||||||||
| Less: allocation to KKR carry pool | (432 | ) | (149 | ) | - | (581 | ) | - | ||||||||||||||||
| Less: management fee refunds | - | - | - | - | - | |||||||||||||||||||
| Net carried interest | 649 | 222 | - | 871 | - | |||||||||||||||||||
| Other investment income (loss) | (126 | ) | 508 | (1,411 | ) | 382 | (2,071 | ) | ||||||||||||||||
| Total investment income (loss) | 523 | 730 | (1,411 | ) | 1,253 | (2,071 | ) | |||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
12,273 | 16,425 | 490 | 28,698 | 585 | |||||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
110 | 145 | 19 | 255 | 27 | |||||||||||||||||||
| Economic Net Income (Loss) | $ | 12,163 | $ | 16,280 | $ | 471 | $ | 28,443 | $ | 558 | ||||||||||||||
| Assets Under Management | $ | 13,367,200 | $ | 13,765,600 | $ | 13,179,700 | $ | 13,367,200 | $ | 13,179,700 | ||||||||||||||
| Fee Paying Assets Under Management | $ | 6,325,900 | $ | 6,627,000 | $ | 5,180,900 | $ | 6,325,900 | $ | 5,180,900 | ||||||||||||||
| Committed Dollars Invested | $ | 57,700 | $ | 147,200 | $ | - | $ | 204,900 | $ | - | ||||||||||||||
| Uncalled Commitments | $ | 1,363,100 | $ | 1,390,500 | $ | - | $ | 1,363,100 | $ | - | ||||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED) | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||
| Actual | Actual | Pro Forma | Actual | Pro Forma | ||||||||||||||||
| June 30, 2010 | March 31, 2010 | June 30, 2009 | June 30, 2010 | June 30, 2009 | ||||||||||||||||
| Fees | ||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||
| Management fees | $ | - | $ | - | $ | - | $ | - | $ | - | ||||||||||
| Incentive fees | - | - | - | - | - | |||||||||||||||
| Management and incentive fees | - | - | - | - | - | |||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||
| Monitoring fees | - | - | - | - | - | |||||||||||||||
| Transaction fees | 14,983 | 24,597 | 3,976 | 39,580 | 4,167 | |||||||||||||||
| Fee credits | - | - | - | - | - | |||||||||||||||
| Net monitoring and transaction fees | 14,983 | 24,597 | 3,976 | 39,580 | 4,167 | |||||||||||||||
| Total fees | 14,983 | 24,597 | 3,976 | 39,580 | 4,167 | |||||||||||||||
| Expenses | ||||||||||||||||||||
| Employee compensation and benefits | 3,494 | 4,270 | 2,447 | 7,764 | 4,696 | |||||||||||||||
| Other operating expenses | 2,017 | 1,850 | 1,505 | 3,867 | 2,598 | |||||||||||||||
| Total expenses | 5,511 | 6,120 | 3,952 | 11,631 | 7,294 | |||||||||||||||
| Fee Related Earnings | 9,472 | 18,477 | 24 | 27,949 | (3,127 | ) | ||||||||||||||
| Investment income (loss) | ||||||||||||||||||||
| Gross carried interest | - | - | - | - | - | |||||||||||||||
| Less: allocation to KKR carry pool | - | - | - | - | - | |||||||||||||||
| Less: management fee refunds | - | - | - | - | - | |||||||||||||||
| Net carried interest | - | - | - | - | - | |||||||||||||||
| Other investment income (loss) | 256,619 | 446,788 | 390,072 | 703,407 | 406,165 | |||||||||||||||
| Total investment income (loss) | 256,619 | 446,788 | 390,072 | 703,407 | 406,165 | |||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
266,091 | 465,265 | 390,096 | 731,356 | 403,038 | |||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
328 | 481 | 34 | 809 | (87 | ) | ||||||||||||||
| Economic Net Income (Loss) | $ | 265,763 | $ | 464,784 | $ | 390,062 | $ | 730,547 | $ | 403,125 | ||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED) | ||||||||||||||||||||
| Quarter Ended June 30, 2010 | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
|
Private Markets Segment |
Public Markets Segment |
Capital Markets and Principal Activities Segment |
Total Reportable Segments |
|||||||||||||||||
| Fees | ||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||
| Management fees | $ | 97,046 | $ | 13,623 | $ | - | $ | 110,669 | ||||||||||||
| Incentive fees | - | 8,350 | $ | - | 8,350 | |||||||||||||||
| Management and incentive fees | 97,046 | 21,973 | - | 119,019 | ||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||
| Monitoring fees | 20,512 | - | - | 20,512 | ||||||||||||||||
| Transaction fees | 20,128 | 2,330 | 14,983 | 37,441 | ||||||||||||||||
| Fee credits | (13,872 | ) | (1,406 | ) | - | (15,278 | ) | |||||||||||||
| Net monitoring and transaction fees | 26,768 | 924 | 14,983 | 42,675 | ||||||||||||||||
| Total fees | 123,814 | 22,897 | 14,983 | 161,694 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Employee compensation and benefits | 38,463 | 7,474 | 3,494 | 49,431 | ||||||||||||||||
| Other operating expenses | 43,237 | 3,673 | 2,017 | 48,927 | ||||||||||||||||
| Total expenses | 81,700 | 11,147 | 5,511 | 98,358 | ||||||||||||||||
| Fee Related Earnings | 42,114 | 11,750 | 9,472 | 63,336 | ||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||
| Gross carried interest | 228,413 | 1,081 | - | 229,494 | ||||||||||||||||
| Less: allocation to KKR carry pool | (95,597 | ) | (432 | ) | - | (96,029 | ) | |||||||||||||
| Less: management fee refunds | (17,907 | ) | - | - | (17,907 | ) | ||||||||||||||
| Net carried interest | 114,909 | 649 | - | 115,558 | ||||||||||||||||
| Other investment income (loss) | (1,462 | ) | (126 | ) | 256,619 | 255,031 | ||||||||||||||
| Total investment income (loss) | 113,447 | 523 | 256,619 | 370,589 | ||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
155,561 | 12,273 | 266,091 | 433,925 | ||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
436 | 110 | 328 | 874 | ||||||||||||||||
| Economic Net Income (Loss) | $ | 155,125 | $ | 12,163 | $ | 265,763 | $ | 433,051 | ||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED) | ||||||||||||||||||||
| Quarter Ended March 31, 2010 | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
|
|
|
|||||||||||||||||||
|
Private Markets Segment |
Public Markets Segment |
Capital Markets and Principal Activities Segment |
Total Reportable Segments |
|||||||||||||||||
| Fees | ||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||
| Management fees | $ | 98,160 | $ | 12,869 | $ | - | $ | 111,029 | ||||||||||||
| Incentive fees | - | 12,500 | - | 12,500 | ||||||||||||||||
| Management and incentive fees | 98,160 | 25,369 | - | 123,529 | ||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||
| Monitoring fees | 22,532 | - | - | 22,532 | ||||||||||||||||
| Transaction fees | 25,114 | 5,823 | 24,597 | 55,534 | ||||||||||||||||
| Fee credits | (10,077 | ) | (4,190 | ) | - | (14,267 | ) | |||||||||||||
| Net monitoring and transaction fees | 37,569 | 1,633 | 24,597 | 63,799 | ||||||||||||||||
| Total fees | 135,729 | 27,002 | 24,597 | 187,328 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Employee compensation and benefits | 40,841 | 7,142 | 4,270 | 52,253 | ||||||||||||||||
| Other operating expenses | 38,671 | 4,165 | 1,850 | 44,686 | ||||||||||||||||
| Total expenses | 79,512 | 11,307 | 6,120 | 96,939 | ||||||||||||||||
| Fee Related Earnings | 56,217 | 15,695 | 18,477 | 90,389 | ||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||
| Gross carried interest | 322,840 | 371 | - | 323,211 | ||||||||||||||||
| Less: allocation to KKR carry pool | (99,233 | ) | (149 | ) | - | (99,382 | ) | |||||||||||||
| Less: management fee refunds | (83,740 | ) | - | - | (83,740 | ) | ||||||||||||||
| Net carried interest | 139,867 | 222 | - | 140,089 | ||||||||||||||||
| Other investment income (loss) | (2,594 | ) | 508 | 446,788 | 444,702 | |||||||||||||||
| Total investment income (loss) | 137,273 | 730 | 446,788 | 584,791 | ||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
193,490 | 16,425 | 465,265 | 675,180 | ||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
(250 | ) | 145 | 481 | 376 | |||||||||||||||
| Economic Net Income (Loss) | $ | 193,740 | $ | 16,280 | $ | 464,784 | $ | 674,804 | ||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS - PRO FORMA (UNAUDITED) | ||||||||||||||||||||
| Quarter Ended June 30, 2009 | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
|
Private Markets Segment |
Public Markets Segment |
Capital Markets and Principal Activities Segment |
Total Reportable Segments |
|||||||||||||||||
| Fees | ||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||
| Management fees | $ | 97,089 | $ | 11,930 | $ | - | $ | 109,019 | ||||||||||||
| Incentive fees | - | - | - | - | ||||||||||||||||
| Management and incentive fees | 97,089 | 11,930 | - | 109,019 | ||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||
| Monitoring fees | 20,954 | - | - | 20,954 | ||||||||||||||||
| Transaction fees | 10,400 | - | 3,976 | 14,376 | ||||||||||||||||
| Fee credits | (8,794 | ) | - | - | (8,794 | ) | ||||||||||||||
| Net monitoring and transaction fees | 22,560 | - | 3,976 | 26,536 | ||||||||||||||||
| Total fees | 119,649 | 11,930 | 3,976 | 135,555 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Employee compensation and benefits | 30,811 | 5,426 | 2,447 | 38,684 | ||||||||||||||||
| Other operating expenses | 37,498 | 4,603 | 1,505 | 43,606 | ||||||||||||||||
| Total expenses | 68,309 | 10,029 | 3,952 | 82,290 | ||||||||||||||||
| Fee Related Earnings | 51,340 | 1,901 | 24 | 53,265 | ||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||
| Gross carried interest | 195,213 | - | - | 195,213 | ||||||||||||||||
| Less: allocation to KKR carry pool | (27,606 | ) | - | - | (27,606 | ) | ||||||||||||||
| Less: management fee refunds | - | - | - | - | ||||||||||||||||
| Net carried interest | 167,607 | - | - | 167,607 | ||||||||||||||||
| Other investment income (loss) | 4,520 | (1,411 | ) | 390,072 | 393,181 | |||||||||||||||
| Total investment income (loss) | 172,127 | (1,411 | ) | 390,072 | 560,788 | |||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
223,467 | 490 | 390,096 | 614,053 | ||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
513 | 19 | 34 | 566 | ||||||||||||||||
| Economic Net Income (Loss) | $ | 222,954 | $ | 471 | $ | 390,062 | $ | 613,487 | ||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||
| KKR | ||||||||||||||||||||
| STATEMENTS OF OPERATIONS | ||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED) | ||||||||||||||||||||
| Six Months Ended June 30, 2010 | ||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||
|
|
|
|
|
|||||||||||||||||
|
Private Markets Segment |
Public Markets Segment |
Capital Markets and Principal Activities Segment |
Total Reportable Segments |
|||||||||||||||||
| Fees | ||||||||||||||||||||
| Management and incentive fees: | ||||||||||||||||||||
| Management fees | $ | 195,206 | $ | 26,492 | $ | - | $ | 221,698 | ||||||||||||
| Incentive fees | - | 20,850 | - | 20,850 | ||||||||||||||||
| Management and incentive fees | 195,206 | 47,342 | - | 242,548 | ||||||||||||||||
| Monitoring and transaction fees: | ||||||||||||||||||||
| Monitoring fees | 43,044 | - | - | 43,044 | ||||||||||||||||
| Transaction fees | 45,242 | 8,153 | 39,580 | 92,975 | ||||||||||||||||
| Fee credits | (23,949 | ) | (5,596 | ) | - | (29,545 | ) | |||||||||||||
| Net monitoring and transaction fees | 64,337 | 2,557 | 39,580 | 106,474 | ||||||||||||||||
| Total fees | 259,543 | 49,899 | 39,580 | 349,022 | ||||||||||||||||
| Expenses | ||||||||||||||||||||
| Employee compensation and benefits | 79,304 | 14,616 | 7,764 | 101,684 | ||||||||||||||||
| Other operating expenses | 81,908 | 7,838 | 3,867 | 93,613 | ||||||||||||||||
| Total expenses | 161,212 | 22,454 | 11,631 | 195,297 | ||||||||||||||||
| Fee Related Earnings | 98,331 | 27,445 | 27,949 | 153,725 | ||||||||||||||||
| Investment income (loss) | ||||||||||||||||||||
| Gross carried interest | 551,253 | 1,452 | - | 552,705 | ||||||||||||||||
| Less: allocation to KKR carry pool | (194,830 | ) | (581 | ) | - | (195,411 | ) | |||||||||||||
| Less: management fee refunds | (101,647 | ) | - | - | (101,647 | ) | ||||||||||||||
| Net carried interest | 254,776 | 871 | - | 255,647 | ||||||||||||||||
| Other investment income (loss) | (4,056 | ) | 382 | 703,407 | 699,733 | |||||||||||||||
| Total investment income (loss) | 250,720 | 1,253 | 703,407 | 955,380 | ||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
349,051 | 28,698 | 731,356 | 1,109,105 | ||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
186 | 255 | 809 | 1,250 | ||||||||||||||||
| Economic Net Income (Loss) | $ | 348,865 | $ | 28,443 | $ | 730,547 | $ | 1,107,855 | ||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | ||||||||||||||||||||
| KKR | |||||||||||||||||||||
| STATEMENTS OF OPERATIONS | |||||||||||||||||||||
| TOTAL REPORTABLE SEGMENTS - PRO FORMA (UNAUDITED) | |||||||||||||||||||||
| Six Months Ended June 30, 2009 | |||||||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||||
|
|
|
|
|
||||||||||||||||||
|
Private Markets Segment |
Public Markets Segment |
Capital Markets and Principal Activities Segment |
Total Reportable Segments |
||||||||||||||||||
| Fees | |||||||||||||||||||||
| Management and incentive fees: | |||||||||||||||||||||
| Management fees | $ | 192,698 | $ | 23,959 | $ | - | $ | 216,657 | |||||||||||||
| Incentive fees | - | - | - | - | |||||||||||||||||
| Management and incentive fees | 192,698 | 23,959 | - | 216,657 | |||||||||||||||||
| Monitoring and transaction fees: | |||||||||||||||||||||
| Monitoring fees | 42,914 | - | - | 42,914 | |||||||||||||||||
| Transaction fees | 10,400 | - | 4,167 | 14,567 | |||||||||||||||||
| Fee credits | (10,516 | ) | - | - | (10,516 | ) | |||||||||||||||
| Net monitoring and transaction fees | 42,798 | - | 4,167 | 46,965 | |||||||||||||||||
| Total fees | 235,496 | 23,959 | 4,167 | 263,622 | |||||||||||||||||
| Expenses | |||||||||||||||||||||
| Employee compensation and benefits | 63,430 | 10,579 | 4,696 | 78,705 | |||||||||||||||||
| Other operating expenses | 78,678 | 10,724 | 2,598 | 92,000 | |||||||||||||||||
| Total expenses | 142,108 | 21,303 | 7,294 | 170,705 | |||||||||||||||||
| Fee Related Earnings | 93,388 | 2,656 | (3,127 | ) | 92,917 | ||||||||||||||||
| Investment income (loss) | |||||||||||||||||||||
| Gross carried interest | 145,070 | - | - | 145,070 | |||||||||||||||||
| Less: allocation to KKR carry pool | (28,303 | ) | - | - | (28,303 | ) | |||||||||||||||
| Less: management fee refunds | - | - | - | - | |||||||||||||||||
| Net carried interest | 116,767 | - | - | 116,767 | |||||||||||||||||
| Other investment income (loss) | 3,089 | (2,071 | ) | 406,165 | 407,183 | ||||||||||||||||
| Total investment income (loss) | 119,856 | (2,071 | ) | 406,165 | 523,950 | ||||||||||||||||
|
Income (Loss) before noncontrolling interests in Income of consolidated entities |
213,244 | 585 | 403,038 | 616,867 | |||||||||||||||||
|
Income (Loss) attributable to noncontrolling interests |
933 | 27 | (87 | ) | 873 | ||||||||||||||||
| Economic Net Income (Loss) | $ | 212,311 | $ | 558 | $ | 403,125 | $ | 615,994 | |||||||||||||
| See notes to KKR's unaudited reportable segments on page 23 of this press release. | |||||||||||||||||||||
| KKR | |||||||||||||||
| BALANCE SHEETS | |||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | |||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | |||||||||||||||
| As of June 30, 2010 | |||||||||||||||
| Private Markets Segment | Public Markets Segment |
Capital Markets |
Total Reportable Segments | ||||||||||||
| Cash and cash equivalents | $ | 159,131 | $ | 13,844 | $ | 335,151 | $ | 508,126 | |||||||
| Investments | - | - | 4,450,147 | (a) | 4,450,147 | ||||||||||
| Unrealized carry | 360,520 | 872 | - | 361,392 | |||||||||||
| Other assets | 124,223 | 56,066 | 30,621 | 210,910 | |||||||||||
| Total assets | $ | 643,874 | $ | 70,782 | $ | 4,815,919 | $ | 5,530,575 | |||||||
| Debt obligations | $ | - | $ | - | $ | 314,051 | $ | 314,051 | |||||||
| Other liabilities | 123,604 | 11,570 | 31,426 | 166,600 | |||||||||||
| Total liabilities | 123,604 | 11,570 | 345,477 | 480,651 | |||||||||||
| Noncontrolling interests | (1,057 | ) | 222 | 19,414 | 18,579 | ||||||||||
| Partners' capital | $ | 521,327 | $ | 58,990 | $ | 4,451,028 | $ | 5,031,345 | |||||||
| Book value per unit (b) | $ | 0.76 | $ | 0.09 | $ | 6.52 | $ | 7.37 | |||||||
| As of December 31, 2009 | ||||||||||||
| Private Markets Segment | Public Markets Segment | Capital Markets and Principal Activities Segment | Total Reportable Segments | |||||||||
| Cash and cash equivalents | $ | 51,015 | $ | 9,089 | $ | 496,554 | $ | 556,658 | ||||
| Investments | - | - | 4,108,359 | 4,108,359 | ||||||||
| Unrealized carry | 156,149 | - | - | 156,149 | ||||||||
| Other assets | 154,964 | 53,319 | 55,219 | 263,502 | ||||||||
| Total assets | $ | 362,128 | $ | 62,408 | $ | 4,660,132 | $ | 5,084,668 | ||||
| Debt obligations | $ | - | $ | - | $ | 733,697 | $ | 733,697 | ||||
| Other liabilities | 84,936 | 12,300 | 85,802 | 183,038 | ||||||||
| Total liabilities | 84,936 | 12,300 | 819,499 | 916,735 | ||||||||
| Noncontrolling interests | 130 | 527 | 14,392 | 15,049 | ||||||||
| Partners' capital | $ | 277,062 | $ | 49,581 | $ | 3,826,241 | $ | 4,152,884 | ||||
| Book value per unit (b) | $ | 0.41 | $ | 0.07 | $ | 5.60 | $ | 6.08 | ||||
| (a) See Capital Markets and Principal Activities segment schedule of investments that follows in this press release | ||||||||||||
|
(b) Book value per unit is based on 683,007,420 units on a fully diluted basis giving effect to the common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units. |
||||||||||||
| KKR | |||||||||
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT - SCHEDULE OF INVESTMENTS | |||||||||
| (Amounts in thousands, except percentage amounts) | |||||||||
|
|
As of June 30, 2010 |
||||||||
|
|
|
Fair Value as | |||||||
| Fair | a Percentage | ||||||||
|
Investment |
Cost |
Value | of Investments | ||||||
| Private Equity Investments: | |||||||||
|
Co-investments in portfolio companies of private equity funds: |
|||||||||
| Dollar General Corporation | $ | 183,332 | $ | 577,233 | 13.0 | % | |||
| HCA Inc. | 201,444 | 455,037 | 10.2 | ||||||
| Alliance Boots GmbH. | 301,352 | 268,913 | 6.0 | ||||||
| The Nielsen Company B.V. | 156,839 | 219,574 | 4.9 | ||||||
| Biomet, Inc. | 151,443 | 151,443 | 3.4 | ||||||
| NXP B.V. | 250,000 | 125,000 | 2.8 | ||||||
| U.S. Foodservice, Inc. | 100,000 | 90,000 | 2.0 | ||||||
| First Data Corporation | 135,258 | 81,155 | 1.8 | ||||||
| Energy Future Holdings Corp. | 200,000 | 60,000 | 1.3 | ||||||
| ProSiebenSat.1 Media AG | 226,913 | 42,592 | 1.0 | ||||||
| KION Group GmbH. | 128,058 | 26,975 | 0.6 | ||||||
| PagesJaunes Groupe S.A. | 235,201 | 25,681 | 0.6 | ||||||
| Capmark Financial Group Inc. | 137,321 | — | — | ||||||
| 2,407,161 | 2,123,603 | 47.7 | |||||||
| Private equity funds: | |||||||||
| KKR 2006 Fund L.P. | 1,176,414 | 1,239,622 | 27.9 | ||||||
| KKR Millennium Fund L.P. | 197,664 | 178,721 | 4.0 | ||||||
| KKR European Fund, Limited Partnership | 160,690 | 165,796 | 3.7 | ||||||
| KKR European Fund III, Limited Partnership | 156,810 | 152,976 | 3.4 | ||||||
| KKR Asian Fund L.P. | 123,382 | 140,372 | 3.2 | ||||||
| KKR European Fund II, Limited Partnership | 96,387 | 68,161 | 1.5 | ||||||
| KKR E2 Investors, L.P. | 10,961 | 12,723 | 0.3 | ||||||
| 1,922,308 | 1,958,371 | 44.0 | |||||||
| Other Investments | 411,179 | 368,173 | 8.3 | ||||||
| Total Investments | $ | 4,740,648 | $ | 4,450,147 | 100.0 | % | |||
| KKR | |||||||||
| CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT - SCHEDULE OF INVESTMENTS (CONTINUED) | |||||||||
| (Amounts in thousands, except percentage amounts) | |||||||||
|
|
As of June 30, 2010 |
||||||||
|
|
|
Fair Value as | |||||||
| Fair | a Percentage | ||||||||
|
Investment |
Cost |
Value | of Investments | ||||||
| Significant Aggregate Investments: (a) | |||||||||
| Dollar General Corporation | $ | 264,880 | $ | 798,952 | 18.0 | % | |||
| HCA Inc. | 260,920 | 574,420 | 12.9 | ||||||
| Alliance Boots GmbH | 443,114 | 407,054 | 9.1 | ||||||
| Biomet, Inc. | 256,358 | 256,358 | 5.8 | ||||||
| The Nielsen Company B.V. | 172,841 | 240,698 | 5.4 | ||||||
| 1,398,113 | 2,277,482 | 51.2 | |||||||
| Other Portfolio Companies (b) | 2,931,356 | 1,804,492 | 40.5 | ||||||
| Other Investments | 411,179 | 368,173 | 8.3 | ||||||
| Total Investments | $ | 4,740,648 | $ | 4,450,147 | 100.0 | % | |||
| Investments by Geography: | |||||||||
| North America | $ | 2,559,013 | $ | 2,995,747 | 67.3 | % | |||
| Europe | 1,771,306 | 1,029,109 | 23.1 | ||||||
| Asia Pacific | 410,329 | 425,291 | 9.6 | ||||||
| Total Investments | $ | 4,740,648 | $ | 4,450,147 | 100.0 | % | |||
| Investments by Industry: | |||||||||
| Healthcare | $ | 1,019,662 | $ | 1,290,725 | 29.0 | % | |||
| Retail | 600,909 | 1,072,761 | 24.1 | ||||||
| Financial Services | 901,688 | 569,798 | 12.8 | ||||||
| Media/Telecom | 763,570 | 409,289 | 9.2 | ||||||
| Technology | 467,304 | 372,520 | 8.4 | ||||||
| Industrial | 338,061 | 268,244 | 6.0 | ||||||
| Energy | 456,923 | 267,954 | 6.0 | ||||||
| Consumer Products | 171,290 | 177,822 | 4.0 | ||||||
| Other | 21,241 | 21,034 | 0.5 | ||||||
| Total Investments | $ | 4,740,648 | $ | 4,450,147 | 100.0 | % | |||
| (a) The significant aggregate private equity investments include the co-investment in the underlying portfolio company and the limited partner and/or general partner interests equal to the pro rata share of KKR's private equity fund investment with fair values in excess of 5% of the Capital Markets and Principal Activities Segment investments balance as of June 30, 2010. | |||||||||
| (b) Other portfolio companies include aggregate private equity investments in portfolio companies with individual fair values less than 5% of the Capital Markets and Principal Activities Segment investments balance as of June 30, 2010. | |||||||||
| KKR | ||||||||||||||
| ASSETS UNDER MANAGEMENT AND FEE PAYING ASSETS UNDER MANAGEMENT | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
| Assets Under Management | ||||||||||||||
| Private Markets Segment | Public Markets Segment | Total Reportable Segments | ||||||||||||
| AUM as of March 31, 2010 | $ | 40,943,100 | $ | 13,765,600 | 54,708,700 | |||||||||
| New Capital Raised | 184,900 | 144,700 | 329,600 | |||||||||||
| Distributions | (811,800 | ) | (512,500 | ) | (1,324,300 | ) | ||||||||
| Foreign Exchange | (299,400 | ) | - | (299,400 | ) | |||||||||
| Change in Value | 1,014,300 | (30,600 | ) | 983,700 | ||||||||||
| AUM as of June 30, 2010 | $ | 41,031,100 | $ | 13,367,200 | $ | 54,398,300 | ||||||||
| Fee Paying Assets Under Management | ||||||||||||||
| Private Markets Segment | Public Markets Segment | Total Reportable Segments | ||||||||||||
| FPAUM as of March 31, 2010 | $ | 35,901,900 | $ | 6,627,000 | $ | 42,528,900 | ||||||||
| New Capital Raised | 184,500 | 144,300 | 328,800 | |||||||||||
| Distributions | (110,300 | ) | (512,500 | ) | (622,800 | ) | ||||||||
| Foreign Exchange | (660,100 | ) | - | (660,100 | ) | |||||||||
| Change in Value | 1,500 | 67,100 | 68,600 | |||||||||||
| FPAUM as of June 30, 2010 | $ | 35,317,500 | $ | 6,325,900 | $ | 41,643,400 | ||||||||
| KKR | ||||||||||||||||||||||||
| INVESTMENT VEHICLE SUMMARY (UNAUDITED) | ||||||||||||||||||||||||
| As of June 30, 2010 | ||||||||||||||||||||||||
| (Amounts in millions, except percentages) | ||||||||||||||||||||||||
| Investment Period | Amount | |||||||||||||||||||||||
|
Private Markets |
Commencement
Date |
End
Date |
Commitment | Uncalled
Commitments |
Percentage Committed by General Partner |
Invested |
Realized | Remaining
Cost |
Fair Value | |||||||||||||||
| Traditional Funds | ||||||||||||||||||||||||
| E2 Investors (Annex Fund) | 8/2009 | 11/2011 | $ | 523.8 | $ | 389.0 | 4.3% | $ | 134.8 | $ | - | $ | 134.8 | $ | 155.1 | |||||||||
| European Fund III | 3/2008 | 3/2014 | 5,721.4 | 3,878.5 | 4.7% | 1,842.9 | - | 1,842.9 | 1,723.2 | |||||||||||||||
| Asian Fund | 7/2007 | 7/2013 | 4,000.0 | 2,306.9 | 2.5% | 1,693.1 | - | 1,693.1 | 1,988.5 | |||||||||||||||
| 2006 Fund | 9/2006 | 9/2012 | 17,642.2 | 4,636.7 | 2.1% | 13,005.5 | 711.7 | 12,303.2 | 13,885.9 | |||||||||||||||
| European Fund II | 11/2005 | 10/2008 | 5,750.8 | - | 2.1% | 5,750.8 | 658.3 | 5,439.1 | 3,598.9 | |||||||||||||||
| Millennium Fund | 12/2002 | 12/2008 | 6,000.0 | - | 2.5% | 6,000.0 | 5,523.1 | 4,385.3 | 5,509.6 | |||||||||||||||
| European Fund | 12/1999 | 12/2005 | 3,085.4 | - | 3.2% | 3,085.4 | 6,214.3 | 565.6 | 1,929.3 | |||||||||||||||
| Total Traditional Funds | 42,723.6 | 11,211.1 | 31,512.5 | 13,107.4 | 26,364.0 | 28,790.5 | ||||||||||||||||||
| Co-Investment and Other | ||||||||||||||||||||||||
| Co-Investment Vehicles | Various | Various | 1,847.7 | 432.5 | Various | 1,415.2 | 189.9 | 1,357.7 | 1,874.5 | |||||||||||||||
| Natural Resources I | 3/2010 | (1) | 257.5 | 257.5 | 2.9% | - | - | - | - | |||||||||||||||
| Total Co-Investment and Other | 2,105.2 | 690.0 | 1,415.2 | 189.9 | 1,357.7 | 1,874.5 | ||||||||||||||||||
| Private Markets Total | 44,828.8 | 11,901.1 | 32,927.7 | 13,297.3 | 27,721.7 | 30,665.0 | ||||||||||||||||||
|
Public Markets |
||||||||||||||||||||||||
| Capital Solutions Vehicles | Various | Various | 1,187.7 | 934.5 | Various | 253.2 | - | 253.2 | 264.7 | |||||||||||||||
| Mezzanine Fund | 3/2010 | 3/2015 | 428.6 | 428.6 | 10.5% | - | - | - | - | |||||||||||||||
| Public Markets Total | 1,616.3 | 1,363.1 | 253.2 | - | 253.2 | 264.7 | ||||||||||||||||||
| Total | $ | 46,445.1 | $ | 13,264.2 | $ | 33,180.9 | $ | 13,297.3 | $ | 27,974.9 | $ | 30,929.7 | ||||||||||||
|
(1) Third anniversary of the first acquisition. |
||||||||||||||||||||||||
| KKR | ||||
| DISTRIBUTION CALCULATION | ||||
| (Amounts in thousands, except unit and per unit amounts) | ||||
| Quarter Ended | ||||
| June 30, 2010 | ||||
| FRE | $ | 63,336 | ||
| Realized cash carry | 16,343 | |||
| Less: local income taxes | (1,720 | ) | ||
| Less: noncontrolling interests | (874 | ) | ||
| Gross distributable earnings | 77,085 | |||
| Earnings attributable to KKR & Co. L.P. (30%) | 23,126 | |||
| Less: estimated current corporate income taxes | (6,990 | ) | ||
| Plus: tax distribution | - | |||
| Net cash available for distribution | 16,136 | |||
| Outstanding KKR & Co. L.P. units | 204,902,226 | |||
| Distribution per KKR & Co. L.P. unit | $ | 0.08 | ||
During the second quarter of 2010, $0.0290 of U.S. federal tax withholding per KKR common unit was withheld on behalf of KKR unitholders by various entities through which KKR operates its businesses as required under U.S. tax laws. This amount will be reported as a distribution in each KKR unitholder’s 2010 Schedule K-1 for U.S. federal tax reporting purposes.
Prior to July 15, 2010, distributions made to KKR & Co. (Guernsey) L.P. (a Guernsey limited partnership formerly listed on Euronext Amsterdam), by KKR Management Holdings Corp. (a Delaware corporation) were subject to U.S. federal tax withholding at a rate of 30%. By July 15, 2010, KKR & Co. L.P. (a Delaware limited partnership) was listed on the New York Stock Exchange in replacement of KKR & Co. (Guernsey) L.P. as the relevant publicly traded partnership of KKR’s unitholders, and KKR & Co. L.P. became the successor of KKR & Co. (Guernsey) L.P. for U.S. federal tax reporting purposes. Because distributions between U.S. entities generally do not give rise to a withholding obligation, distributions by KKR Management Holdings Corp. to KKR & Co. L.P. are not subject to U.S. federal tax withholding.
To the extent the distribution for the quarter ended June 30, 2010 by KKR & Co. L.P. to its unitholders is allocable to non-U.S. persons for U.S. federal tax reporting purposes, withholding is expected to be imposed by the intermediaries through which those unitholders own their KKR & Co. L.P. units based upon the Qualified Notice to be issued by KKR & Co. L.P. prior to the time of such distribution.
DISTRIBUTION POLICY
For the purposes of KKR’s distribution policy, its distributions are expected to consist of an amount initially consisting of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, and (iii) certain tax distributions, if any. This amount is expected to be reduced by (i) corporate and applicable local taxes if any, (ii) noncontrolling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.
The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P. and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that such distributions will be sufficient to pay any particular KKR unitholder’s actual U.S. or non-U.S. tax liability.
Notes to the Unaudited Reportable Segments
The reportable segments are presented prior to giving effect to the allocation of income between KKR & Co. L.P. and KKR Holdings L.P. and as such represents the business in total. KKR’s allocable portion of FRE and ENI would be calculated as approximately 30% of the amounts presented less applicable income taxes.
The FRE and ENI previously reported for periods prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination, which include items such as:
- the exclusion of approximately 40% of the carry allocated to KKR principals pursuant to its carry pool;
- the exclusion of carry allocated to former KKR principals;
- the exclusion of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Business Combination and any returns thereon;
- the exclusion of the economic interests associated with the KKR 1996 Fund;
- the elimination of management fees paid by KKR & Co. (Guernsey) L.P. formerly known as KKR Private Equity Investors, L.P. (“KPE”), prior to the Business Combination, to KKR’s management companies;
- the inclusion of the financial results of KPE; and
- certain compensation adjustments including: (a) the exclusion of bonuses earned by certain of KKR’s principals which will not be borne by public investors and (b) the inclusion of salaries for KKR’s senior principals.
Given the significance of these adjustments, the comparisons to all periods prior to October 1, 2009 in this press release are on a pro forma basis giving effect to the adjustments above. For a further discussion of adjustments related to the Business Combination please refer to KKR’s registration statement on Form S-1 (Registration No. 333-165414), which is available at the SEC’s website at www.sec.gov.
Key performance measures used in evaluating KKR’s reportable business segments are summarized below. These measures are used by management for its segments in making resource deployment and other operational decisions.
Fee related earnings (“FRE”) is comprised of segment operating revenues, less segment operating expenses. The components of FRE on a segment basis differ from the equivalent U.S. GAAP amounts on a combined basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of expenses of consolidated funds; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges; (vi) the exclusion of certain reimbursable expenses and (vii) the exclusion of certain non-recurring items.
Economic net income (“ENI”) is a measure of profitability for KKR’s reportable segments and is comprised of: (i) FRE; plus (ii) segment investment income, which is reduced for carry pool allocations and management fee refunds; less (iii) certain economic interests in KKR’s segments held by third parties. ENI differs from net income on a U.S. GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income relating to noncontrolling interests; and (iii) the exclusion of income taxes.
Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR’s fixed income products; and (iv) the value of outstanding structured finance vehicles. You should note that KKR’s calculation of AUM may differ from the calculations of other asset managers and, as a result, its measurements of AUM may not be comparable to similar measures presented by other asset managers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in the agreements governing the investment funds, vehicles or accounts that it manages.
Notes to KKR’s Unaudited Reportable Segments (Continued)
Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest); and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR’s investment funds and carry-yielding co-investment vehicles during a given period. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR.
Uncalled commitments represent unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments.
The following should be considered when reviewing KKR’s reportable segments:
Fee Credits require KKR to share a portion of any monitoring and transaction fees received from portfolio companies with limited partners in certain of its investment funds. Fee credits exclude fees that are not attributable to a fund’s investment in a portfolio company and generally amount to 80% of monitoring and transaction fees after fund related expenses are recovered.
KKR Carry Pool represents a portion of the carried interest earned in relation to certain of KKR’s active and future investment funds and co-investment vehicles that will be allocated to its principals, other professionals and selected other individuals.
Management Fee Refunds represent 20% of any cash management fees earned from limited partners in the event that certain of KKR’s investment funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, carried interest is reduced, not to exceed 20% of management fees earned.
Noncontrolling interests represent economic interests that will (i) allocate to a former principal an aggregate of 1% of profits and losses of its management companies until a future date and (ii) allocate to a third party investor an aggregate of 2% of the equity in its capital markets business.
Contacts
Kohlberg Kravis Roberts & Co. L.P.
Investor Relations:
Jonathan Levin, +1-877-610-4910 (U.S.) / +1-212-230-9410
investor-relations@kkr.com
or
Media:
Peter McKillop or Kristi Huller, + 1-212-750-8300
media@kkr.com