KKR & Co. L.P. Announces Second Quarter 2015 Results
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Strong Investment Performance Drives Record Economic Net Income
GAAP net income (loss) attributable to KKR & Co. L.P. was $376.3 million and $646.8 million for the quarter and six months ended June 30, 2015, respectively, up from $178.2 million and $388.3 million in the comparable periods of 2014.
Total distributable earnings was $491.4 million and $1,007.9 million for the quarter and six months ended June 30, 2015, respectively, down from $701.0 million and $1,147.8 million in the comparable periods of 2014.
Distribution per common unit was $0.42 and $0.88 for the quarter and six months ended June 30, 2015, respectively, down from $0.67 and $1.10 in the comparable periods of 2014.
Economic net income (“ENI”) was $839.9 million and $1,439.4 million for the quarter and six months ended June 30, 2015, respectively, up from $501.6 million and $1,131.8 million in the comparable periods of 2014.
ENI after taxes per adjusted unit was $0.88 and $1.50 for the quarter and six months ended June 30, 2015, respectively, up from $0.57 and $1.32 in the comparable periods of 2014.
Fee and yield earnings were $180.9 million and $348.9 million for the quarter and six months ended June 30, 2015, respectively, up from $154.2 million and $317.0 million in the comparable periods of 2014.
Book value was $10.9 billion on a total reportable segment basis as of June 30, 2015 or $12.77 per adjusted unit.
Return on equity and cash return on equity were 16.6% and 17.1%, respectively.
Assets under management (“AUM”) and fee paying assets under management (“FPAUM”) totaled $101.6 billion and $83.7 billion, respectively, as of June 30, 2015.
NEW YORK--(BUSINESS WIRE)--
KKR & Co. L.P. (NYSE: KKR) today reported its second quarter 2015 results.
In April 2015, KKR held its final close for Lending Partners II, the successor fund to the predecessor Lending Partners fund. KKR closed this successor fund with over $1.3 billion of capital commitments, which surpassed the predecessor fund that had $460 million in total capital commitments.
In July 2015, KKR held its final close for Global Infrastructure Investors II, the successor fund to the predecessor Global Infrastructure Investors fund. KKR closed this successor fund with over $3.0 billion of capital commitments, which surpassed the predecessor fund that had $1.0 billion in total capital commitments.
“Our strong investment performance resulted in $840 million of Economic Net Income, a record quarterly figure for KKR,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Additionally, we continued to scale several growth areas including our infrastructure and alternative credit businesses.”
Note: Certain financial measures, including total distributable earnings, FRE, ENI, ENI after taxes, 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 B and C for a reconciliation of such measures to financial results prepared in accordance with GAAP.
GAAP RESULTS
GAAP net income (loss) for the quarter and six months ended June 30, 2015, included net income (loss) attributable to KKR & Co. L.P. of $376.3 million and $646.8 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit of $0.78 and $1.35, respectively, on a diluted basis. For the quarter and six months ended June 30, 2014, net income (loss) attributable to KKR & Co. L.P. was $178.2 million and $388.3 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit was $0.43 and $1.06, respectively, on a diluted basis. The increase in both comparable periods was primarily due to (i) an increase in investment income and (ii) an increase in KKR & Co. L.P.’s ownership percentage in the KKR business.
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SEGMENT RESULTS |
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| KEY METRICS (UNAUDITED) | ||||||||||||||||||||||||
| (Amounts in millions, except per adjusted unit amounts) | ||||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||||
| June 30, 2015 | June 30, 2014 | % Change | June 30, 2015 | June 30, 2014 | % Change | |||||||||||||||||||
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Total Distributable Earnings |
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| Fees | $ | 272 | $ | 254 | $ | 572 | $ | 582 | ||||||||||||||||
| Realized Cash Carry | 252 | 555 | 555 | 749 | ||||||||||||||||||||
| Net Realized Investment Income | 251 | 282 | 483 | 475 | ||||||||||||||||||||
| Total Cash Revenues | $ | 775 | $ | 1,091 | (29 | )% | $ | 1,610 | $ | 1,806 | (11 | )% | ||||||||||||
| Total Cash Expenses and Other | 284 | 391 | 601 | 658 | ||||||||||||||||||||
| Total Distributable Earnings | $ | 491 | $ | 700 | (30 | )% | $ | 1,009 | $ | 1,148 | (12 | )% | ||||||||||||
| Less: Estimated Current Corporate Income Taxes | (26 | ) | (19 | ) | (55 | ) | (52 | ) | ||||||||||||||||
| Distributable Earnings, net of taxes | $ | 465 | $ | 681 | (32 | )% | $ | 954 | $ | 1,096 | (13 | )% | ||||||||||||
| Distributable Earnings, net of taxes per KKR & Co. L.P. common unit | $ | 0.57 | $ | 0.85 | (33 | )% | $ | 1.17 | $ | 1.44 | (19 | )% | ||||||||||||
| Distribution per KKR & Co. L.P. common unit | $ | 0.42 | $ | 0.67 | (37 | )% | $ | 0.88 | $ | 1.10 | (20 | )% | ||||||||||||
| Payout ratio | 75 | % | 78 | % | 76 | % | 76 | % | ||||||||||||||||
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Economic Net Income |
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| Management, Monitoring and Transaction Fees, Net | $ | 266 | $ | 243 | $ | 560 | $ | 553 | ||||||||||||||||
| Performance Income | 598 | 429 | 1,046 | 785 | ||||||||||||||||||||
| Investment Income | 384 | 162 | 604 | 441 | ||||||||||||||||||||
| Total Segment Revenues | $ | 1,248 | $ | 834 | 50 | % | $ | 2,210 | $ | 1,779 | 24 | % | ||||||||||||
| Total Segment Expenses and Other | 501 | 380 | 937 | 770 | ||||||||||||||||||||
| Economic Net Income, After-Taxes | $ | 747 | $ | 454 | 65 | % | $ | 1,273 | $ | 1,009 | 26 | % | ||||||||||||
| Economic Net Income, After-Taxes per Adjusted Unit | $ | 0.88 | $ | 0.57 | 54 | % | $ | 1.50 | $ | 1.32 | 14 | % | ||||||||||||
| Fee and Yield Earnings | $ | 181 | $ | 154 | 18 | % | $ | 349 | $ | 317 | 10 | % | ||||||||||||
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Other |
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| Book Value per Adjusted Unit | $ | 12.77 | $ | 12.52 | 2 | % | ||||||||||||||||||
| Last Twelve Months Ended | ||||||||||||||||||||||||
| June 30, 2015 | June 30, 2014 | |||||||||||||||||||||||
| Return on Equity | 16.6% | 28.7% | ||||||||||||||||||||||
| Cash Return on Equity | 17.1% | 22.2% | ||||||||||||||||||||||
Private Markets
AUM was $63.1 billion as of June 30, 2015, an increase of $1.0 billion, compared to AUM of $62.1 billion as of March 31, 2015. The increase was primarily attributable to the appreciation in the fair value of our private equity portfolio and to a lesser extent new capital raised in European Fund IV and Global Infrastructure Investors II. These increases were offset by distributions to limited partners of our private equity funds arising from realizations.
FPAUM was $46.8 billion as of June 30, 2015, a decrease of $0.4 billion, compared to FPAUM of $47.2 billion as of March 31, 2015. The decrease was primarily attributable to distributions to limited partners of our private equity funds arising from realizations which were partially offset by new capital raised in European Fund IV and Global Infrastructure Investors II.
Total segment revenues were $1,004.9 million for the quarter ended June 30, 2015, an increase of $362.0 million, compared to total segment revenues of $642.9 million for the quarter ended June 30, 2014. Total segment revenues were $1,872.9 million for the six months ended June 30, 2015, an increase of $499.3 million, compared to total segment revenues of $1,373.6 million for the six months ended June 30, 2014. The increase in both comparable periods was principally attributable to (i) a higher level of investment income reflecting a higher level of appreciation in our private equity portfolio and (ii) an increase in performance income due to higher net carried interest resulting from more private equity funds earning carried interest and higher net overall appreciation in our private equity portfolio. For the three and six months ended June 30, 2015, the fair value of our private equity portfolio appreciated 7.4% and 11.8%, respectively.
ENI was $666.2 million for the quarter ended June 30, 2015, an increase of $290.0 million, compared to ENI of $376.2 million for the quarter ended June 30, 2014. The increase was primarily attributable to higher total segment revenues as described above, partially offset by higher allocations to the carry pool resulting from the higher levels of net carried interest.
Public Markets
AUM was $38.4 billion as of June 30, 2015, an increase of $1.4 billion, compared to AUM of $37.0 billion as of March 31, 2015. FPAUM was $37.0 billion as of June 30, 2015, an increase of $1.3 billion, compared to FPAUM of $35.7 billion as of March 31, 2015. For both AUM and FPAUM, the increases were primarily attributable to new capital raised, primarily in our CLOs, offset by distributions and redemptions across multiple strategies.
Total segment revenues were $188.2 million for the quarter ended June 30, 2015, an increase of $31.0 million, compared to total segment revenues of $157.2 million for the quarter ended June 30, 2014. The increase in revenues was primarily attributable to an increase in investment income across multiple strategies and the impact of yielding assets of KKR Financial Holdings LLC (“KFN”), which was acquired on April 30, 2014 but was not contributing to our investment income for one month of the second quarter of 2014.
Total segment revenues were $238.2 million for the six months ended June 30, 2015, a decrease of $64.6 million, compared to total segment revenues of $302.8 million for the six months ended June 30, 2014. The decrease was principally attributable to (i) a decrease in investment income due primarily to net unrealized losses in our CLOs and certain other Public Markets related investments and (ii) lower performance income for the period. These decreases were partially offset by an increase in net interest and dividends relating primarily to the yielding assets of KFN, which was acquired on April 30, 2014 but was not contributing to our investment income for the first four months of 2014.
ENI was $136.6 million for the quarter ended June 30, 2015, an increase of $31.0 million, compared to ENI of $105.6 million for the quarter ended June 30, 2014. The increase was principally attributable to the increase in total segment revenues as described above.
ENI was $139.4 million for the six months ended June 30, 2015, a decrease of $64.0 million, compared to ENI of $203.4 million for the six months ended June 30, 2014. The decrease was principally attributable to the decrease in total segment revenues as described above.
Capital Markets
Total segment revenues were $54.7 million for the quarter ended June 30, 2015, an increase of $20.7 million, compared to total segment revenues of $34.0 million for the quarter ended June 30, 2014. The increase in revenues primarily reflect a higher level of overall capital markets transaction activity for the quarter ended June 30, 2015.
Total segment revenues were $99.1 million for the six months ended June 30, 2015, an decrease of $4.1 million, compared to total segment revenues of $103.2 million for the six months ended June 30, 2014. The decrease in revenues primarily reflects a lower level of overall capital markets transaction activity for the six months ended June 30, 2015.
ENI was $37.2 million for the quarter ended June 30, 2015, an increase of $17.4 million, compared to ENI of $19.8 million for the quarter ended June 30, 2014. The increase primarily reflects the increase in total segment revenues as described above.
ENI was $65.3 million for the six months ended June 30, 2015, a decrease of $1.6 million, compared to ENI of $66.9 million for the six months ended June 30, 2014. The decrease primarily reflects the decrease in total segment revenues as described above, largely offset by lower compensation expense.
CAPITAL AND LIQUIDITY
As of June 30, 2015, KKR had $2.0 billion of cash and short-term investments and $3.0 billion of outstanding debt and preferred share obligations on a total reportable segment basis. This includes KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million, which are non-recourse to KKR beyond the assets of KFN. As of June 30, 2015, KKR had a $1.0 billion revolving credit facility, which was undrawn. In addition, KKR has a $500.0 million revolving credit facility for use in its capital markets business, which was undrawn as of June 30, 2015.
As of June 30, 2015, KKR’s portion of total uncalled commitments to its investment funds was $1.3 billion. See Exhibit A for details.
DISTRIBUTION
A distribution of $0.42 per common unit has been declared, comprised of (i) $0.07 per common unit from after-tax FRE, (ii) $0.18 per common unit from realized cash carry, (iii) $0.10 per common unit from KKR’s net realized investment income and (iv) $0.07 per common unit from KFN’s net realized investment income. The distribution will be paid on August 18, 2015 to unitholders of record as of the close of business on August 3, 2015.
SUPPLEMENTAL INFORMATION
A slide presentation containing supplemental commentary about the Company's financial results for the fiscal quarter ended June 30, 2015 may be accessed through the KKR Investor Relations section of the KKR website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. The presentation will be referenced on the conference call discussed below.
CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Thursday, July 23, 2015 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 80669130, 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, ENI after taxes, fee and yield earnings, fee and yield EBITDA, equity invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized 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 ; 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, 2014, filed with the SEC on February 27, 2015, quarterly reports on Form 10-Q for subsequent quarters 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, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | |||||||||||||||
| Revenues | ||||||||||||||||||
| Fees and Other | $ | 255,874 | $ | 249,370 | $ | 547,219 | $ | 552,296 | ||||||||||
| Expenses | ||||||||||||||||||
| Compensation and Benefits | 411,691 | 358,730 | 776,690 | 689,768 | ||||||||||||||
| Occupancy and Related Charges | 16,172 | 16,059 | 31,904 | 31,467 | ||||||||||||||
| General, Administrative and Other | 126,314 | 210,536 | 260,616 | 337,261 | ||||||||||||||
| Total Expenses | 554,177 | 585,325 | 1,069,210 | 1,058,496 | ||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||
| Net Gains (Losses) from Investment Activities | 3,110,604 | 1,971,850 | 5,030,429 | 3,944,030 | ||||||||||||||
| Dividend Income | 360,556 | 272,902 | 439,371 | 369,606 | ||||||||||||||
| Interest Income | 302,985 | 215,872 | 599,143 | 377,832 | ||||||||||||||
| Interest Expense | (139,427 | ) | (65,997 | ) | (251,390 | ) | (100,728 | ) | ||||||||||
| Total Investment Income (Loss) | 3,634,718 | 2,394,627 | 5,817,553 | 4,590,740 | ||||||||||||||
| Income (Loss) Before Taxes | 3,336,415 | 2,058,672 | 5,295,562 | 4,084,540 | ||||||||||||||
| Income Taxes | 30,547 | 6,176 | 46,685 | 27,878 | ||||||||||||||
| Net Income (Loss) | 3,305,868 | 2,052,496 | 5,248,877 | 4,056,662 | ||||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||||
| Redeemable Noncontrolling Interests | (891 | ) | (6,809 | ) | 1,042 | 3,828 | ||||||||||||
| Net Income (Loss) Attributable to | ||||||||||||||||||
| Noncontrolling Interests and Appropriated Capital | 2,930,453 | 1,881,090 | 4,601,022 | 3,664,578 | ||||||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. | $ | 376,306 | $ | 178,215 | $ | 646,813 | $ | 388,256 | ||||||||||
| Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit | ||||||||||||||||||
| Basic | $ | 0.84 | $ | 0.47 | $ | 1.47 | $ | 1.16 | ||||||||||
| Diluted (a) | $ | 0.78 | $ | 0.43 | $ | 1.35 | $ | 1.06 | ||||||||||
| Weighted Average Common Units Outstanding | ||||||||||||||||||
| Basic | 446,794,950 | 377,542,161 | 440,867,813 | 335,748,498 | ||||||||||||||
| Diluted (a) | 482,651,491 | 410,179,838 | 477,467,220 | 367,877,049 | ||||||||||||||
| (a) | KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships. | |
| 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, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||||||||
| Segment Revenues | ||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||||
| Management Fees | $ | 181,401 | $ | 173,780 | $ | 178,674 | $ | 355,181 | $ | 374,067 | ||||||||||||
| Monitoring Fees | 47,713 | 97,838 | 29,610 | 145,551 | 65,973 | |||||||||||||||||
| Transaction Fees | 92,951 | 103,286 | 84,305 | 196,237 | 247,821 | |||||||||||||||||
| Fee Credits | (56,458 | ) | (80,494 | ) | (49,830 | ) | (136,952 | ) | (134,498 | ) | ||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 265,607 | 294,410 | 242,759 | 560,017 | 553,363 | |||||||||||||||||
| Performance Income | ||||||||||||||||||||||
| Realized Carried Interest | 252,227 | 302,425 | 555,488 | 554,652 | 749,038 | |||||||||||||||||
| Incentive Fees | 5,893 | 5,665 | 11,478 | 11,558 | 28,497 | |||||||||||||||||
| Unrealized Carried Interest | 340,366 | 139,284 | (137,826 | ) | 479,650 | 7,821 | ||||||||||||||||
| Total Performance Income | 598,486 | 447,374 | 429,140 | 1,045,860 | 785,356 | |||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||
| Net Realized Gains (Losses) | 176,260 | 180,667 | 221,661 | 356,927 | 403,389 | |||||||||||||||||
| Net Unrealized Gains (Losses) | 131,984 | (10,721 | ) | (119,935 | ) | 121,263 | (34,176 | ) | ||||||||||||||
| Total Realized and Unrealized | 308,244 | 169,946 | 101,726 | 478,190 | 369,213 | |||||||||||||||||
| Net Interest and Dividends | 75,406 | 50,675 | 60,432 | 126,081 | 71,596 | |||||||||||||||||
| Total Investment Income (Loss) | 383,650 | 220,621 | 162,158 | 604,271 | 440,809 | |||||||||||||||||
| Total Segment Revenues | 1,247,743 | 962,405 | 834,057 | 2,210,148 | 1,779,528 | |||||||||||||||||
| Segment Expenses | ||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||
| Cash Compensation and Benefits | 98,871 | 107,027 | 91,444 | 205,898 | 200,359 | |||||||||||||||||
| Realized Allocation to Carry Pool | 100,891 | 120,970 | 222,195 | 221,861 | 299,615 | |||||||||||||||||
| Unrealized Allocation to Carry Pool | 136,566 | 55,631 | (53,435 | ) | 192,197 | 5,255 | ||||||||||||||||
| Total Compensation and Benefits | 336,328 | 283,628 | 260,204 | 619,956 | 505,229 | |||||||||||||||||
| Occupancy and Related Charges | 15,475 | 14,796 | 14,757 | 30,271 | 28,946 | |||||||||||||||||
| Other Operating Expenses | 51,613 | 60,946 | 54,311 | 112,559 | 107,112 | |||||||||||||||||
| Total Segment Expenses | 403,416 | 359,370 | 329,272 | 762,786 | 641,287 | |||||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 4,383 | 3,622 | 3,206 | 8,005 | 6,408 | |||||||||||||||||
| Economic Net Income (Loss) (a) | $ | 839,944 | $ | 599,413 | $ | 501,579 | $ | 1,439,357 | $ | 1,131,833 | ||||||||||||
| Provision for Income Taxes | 44,836 | 21,235 | 6,330 | 66,071 | 42,911 | |||||||||||||||||
| Equity-based Charges | 48,453 | 52,265 | 40,877 | 100,718 | 80,230 | |||||||||||||||||
| Economic Net Income (Loss), After Taxes (b) | $ | 746,655 | $ | 525,913 | $ | 454,372 | $ | 1,272,568 | $ | 1,008,692 | ||||||||||||
| Economic Net Income (Loss), After Taxes Per Adjusted Unit | $ | 0.88 | $ | 0.62 | $ | 0.57 | $ | 1.50 | $ | 1.32 | ||||||||||||
| Weighted Average Adjusted Units (Fully Diluted Basis) (a) | 852,128,762 | 848,061,661 | 800,747,528 | 850,106,448 | 762,873,784 | |||||||||||||||||
| Assets Under Management | $ | 101,569,600 | $ | 99,128,000 | $ | 97,957,900 | $ | 101,569,600 | $ | 97,957,900 | ||||||||||||
| Fee Paying Assets Under Management | $ | 83,732,800 | $ | 82,884,500 | $ | 79,656,300 | $ | 83,732,800 | $ | 79,656,300 | ||||||||||||
| Equity Invested and Syndicated Capital | $ | 2,011,100 | $ | 2,945,400 | $ | 2,345,500 | $ | 4,956,500 | $ | 5,722,800 | ||||||||||||
| Uncalled Commitments | $ | 25,906,300 | $ | 21,555,600 | $ | 19,784,200 | $ | 25,906,300 | $ | 19,784,200 | ||||||||||||
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Other Information |
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| Fee Related Earnings | $ | 105,541 | $ | 117,306 | $ | 93,725 | $ | 222,847 | $ | 245,443 | ||||||||||||
| Plus: Net Interest and Dividends | 75,406 | 50,675 | 60,432 | 126,081 | 71,596 | |||||||||||||||||
| Fee and Yield Earnings (a) | $ | 180,947 | $ | 167,981 | $ | 154,157 | $ | 348,928 | $ | 317,039 | ||||||||||||
| Plus: Depreciation and Amortization | 3,918 | 3,881 | 4,140 | 7,799 | 8,175 | |||||||||||||||||
| Plus: Core Interest Expense | 30,750 | 25,332 | 19,205 | 56,082 | 37,605 | |||||||||||||||||
| Fee and Yield EBITDA (a) | $ | 215,615 | $ | 197,194 | $ | 177,502 | $ | 412,809 | $ | 362,819 | ||||||||||||
| Total Distributable Earnings (a) | $ | 491,407 | $ | 516,531 | $ | 700,973 | $ | 1,007,938 | $ | 1,147,781 | ||||||||||||
| GAAP interest expense | $ | 139,427 | $ | 111,963 | $ | 65,997 | $ | 251,390 | $ | 100,728 | ||||||||||||
| Less: interest expense related to debt obligations | ||||||||||||||||||||||
| from investment financing arrangements and KFN | 108,677 | 86,631 | 46,792 | 195,308 | 63,123 | |||||||||||||||||
| Core Interest Expense (a) | $ | 30,750 | $ | 25,332 | $ | 19,205 | $ | 56,082 | $ | 37,605 | ||||||||||||
| (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.” | |
| (b) | Represents economic net income (loss) after reductions for income taxes and equity-based charges. | |
| KKR | ||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||
| PRIVATE MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||||||||
| Segment Revenues | ||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||||
| Management Fees | $ | 115,346 | $ | 109,276 | $ | 111,542 | $ | 224,622 | $ | 234,581 | ||||||||||||
| Monitoring Fees | 47,713 | 97,838 | 29,610 | 145,551 | 65,973 | |||||||||||||||||
| Transaction Fees | 40,321 | 46,599 | 45,340 | 86,920 | 138,360 | |||||||||||||||||
| Fee Credits | (53,286 | ) | (69,906 | ) | (43,478 | ) | (123,192 | ) | (123,816 | ) | ||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 150,094 | 183,807 | 143,014 | 333,901 | 315,098 | |||||||||||||||||
| Performance Income | ||||||||||||||||||||||
| Realized Carried Interest | 243,274 | 302,425 | 555,488 | 545,699 | 724,288 | |||||||||||||||||
| Incentive Fees | — | — | — | — | — | |||||||||||||||||
| Unrealized Carried Interest | 312,379 | 126,937 | (163,564 | ) | 439,316 | (17,788 | ) | |||||||||||||||
| Total Performance Income | 555,653 | 429,362 | 391,924 | 985,015 | 706,500 | |||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||
| Net Realized Gains (Losses) | 145,817 | 183,264 | 207,892 | 329,081 | 384,090 | |||||||||||||||||
| Net Unrealized Gains (Losses) | 145,094 | 79,363 | (122,729 | ) | 224,457 | (52,056 | ) | |||||||||||||||
| Total Realized and Unrealized | 290,911 | 262,627 | 85,163 | 553,538 | 332,034 | |||||||||||||||||
| Net Interest and Dividends | 8,234 | (7,831 | ) | 22,760 | 403 | 19,952 | ||||||||||||||||
| Total Investment Income (Loss) | 299,145 | 254,796 | 107,923 | 553,941 | 351,986 | |||||||||||||||||
| Total Segment Revenues | 1,004,892 | 867,965 | 642,861 | 1,872,857 | 1,373,584 | |||||||||||||||||
| Segment Expenses | ||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||
| Cash Compensation and Benefits | 65,939 | 73,967 | 56,522 | 139,906 | 123,420 | |||||||||||||||||
| Realized Allocation to Carry Pool | 97,310 | 120,970 | 222,195 | 218,280 | 289,715 | |||||||||||||||||
| Unrealized Allocation to Carry Pool | 125,371 | 50,693 | (63,730 | ) | 176,064 | (4,987 | ) | |||||||||||||||
| Total Compensation and Benefits | 288,620 | 245,630 | 214,987 | 534,250 | 408,148 | |||||||||||||||||
| Occupancy and Related Charges | 11,832 | 11,016 | 11,764 | 22,848 | 23,324 | |||||||||||||||||
| Other Operating Expenses | 38,125 | 42,116 | 39,589 | 80,241 | 79,648 | |||||||||||||||||
| Total Segment Expenses | 338,577 | 298,762 | 266,340 | 637,339 | 511,120 | |||||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 143 | 719 | 335 | 862 | 850 | |||||||||||||||||
| Economic Net Income (Loss) | $ | 666,172 | $ | 568,484 | $ | 376,186 | $ | 1,234,656 | $ | 861,614 | ||||||||||||
| Assets Under Management | $ | 63,129,200 | $ | 62,139,400 | $ | 59,417,000 | $ | 63,129,200 | $ | 59,417,000 | ||||||||||||
| Fee Paying Assets Under Management | $ | 46,758,800 | $ | 47,161,900 | $ | 46,167,300 | $ | 46,758,800 | $ | 46,167,300 | ||||||||||||
| Equity Invested | $ | 1,258,200 | $ | 2,047,400 | $ | 1,454,400 | $ | 3,305,600 | $ | 4,006,200 | ||||||||||||
| Uncalled Commitments | $ | 21,078,400 | $ | 18,690,000 | $ | 17,109,800 | $ | 21,078,400 | $ | 17,109,800 | ||||||||||||
| KKR | ||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||
| PUBLIC MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||||||||
| Segment Revenues | ||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||||
| Management Fees | $ | 66,055 | $ | 64,504 | $ | 67,132 | $ | 130,559 | $ | 139,486 | ||||||||||||
| Monitoring Fees | — | — | — | — | — | |||||||||||||||||
| Transaction Fees | 3,873 | 13,430 | 7,350 | 17,303 | 13,372 | |||||||||||||||||
| Fee Credits | (3,172 | ) | (10,588 | ) | (6,352 | ) | (13,760 | ) | (10,682 | ) | ||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 66,756 | 67,346 | 68,130 | 134,102 | 142,176 | |||||||||||||||||
| Performance Income | ||||||||||||||||||||||
| Realized Carried Interest | 8,953 | — | — | 8,953 | 24,750 | |||||||||||||||||
| Incentive Fees | 5,893 | 5,665 | 11,478 | 11,558 | 28,497 | |||||||||||||||||
| Unrealized Carried Interest | 27,987 | 12,347 | 25,738 | 40,334 | 25,609 | |||||||||||||||||
| Total Performance Income | 42,833 | 18,012 | 37,216 | 60,845 | 78,856 | |||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||
| Net Realized Gains (Losses) | 31,192 | 684 | 14,284 | 31,876 | 19,763 | |||||||||||||||||
| Net Unrealized Gains (Losses) | (11,988 | ) | (87,877 | ) | 3,751 | (99,865 | ) | 18,565 | ||||||||||||||
| Total Realized and Unrealized | 19,204 | (87,193 | ) | 18,035 | (67,989 | ) | 38,328 | |||||||||||||||
| Net Interest and Dividends | 59,390 | 51,872 | 33,822 | 111,262 | 43,399 | |||||||||||||||||
| Total Investment Income (Loss) | 78,594 | (35,321 | ) | 51,857 | 43,273 | 81,727 | ||||||||||||||||
| Total Segment Revenues | 188,183 | 50,037 | 157,203 | 238,220 | 302,759 | |||||||||||||||||
| Segment Expenses | ||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||
| Cash Compensation and Benefits | 22,785 | 24,005 | 26,904 | 46,790 | 53,649 | |||||||||||||||||
| Realized Allocation to Carry Pool | 3,581 | — | — | 3,581 | 9,900 | |||||||||||||||||
| Unrealized Allocation to Carry Pool | 11,195 | 4,938 | 10,295 | 16,133 | 10,242 | |||||||||||||||||
| Total Compensation and Benefits | 37,561 | 28,943 | 37,199 | 66,504 | 73,791 | |||||||||||||||||
| Occupancy and Related Charges | 2,977 | 3,122 | 2,544 | 6,099 | 4,716 | |||||||||||||||||
| Other Operating Expenses | 10,617 | 14,954 | 11,474 | 25,571 | 19,981 | |||||||||||||||||
| Total Segment Expenses | 51,155 | 47,019 | 51,217 | 98,174 | 98,488 | |||||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 478 | 175 | 385 | 653 | 907 | |||||||||||||||||
| Economic Net Income (Loss) | $ | 136,550 | $ | 2,843 | $ | 105,601 | $ | 139,393 | $ | 203,364 | ||||||||||||
| Assets Under Management | $ | 38,440,400 | $ | 36,988,600 | $ | 38,540,900 | $ | 38,440,400 | $ | 38,540,900 | ||||||||||||
| Fee Paying Assets Under Management | $ | 36,974,000 | $ | 35,722,600 | $ | 33,489,000 | $ | 36,974,000 | $ | 33,489,000 | ||||||||||||
| Equity Invested | $ | 320,800 | $ | 649,300 | $ | 724,400 | $ | 970,100 | $ | 1,458,500 | ||||||||||||
| Uncalled Commitments | $ | 4,827,900 | $ | 2,865,600 | $ | 2,674,400 | $ | 4,827,900 | $ | 2,674,400 | ||||||||||||
| Gross Dollars Invested | $ | 1,110,100 | $ | 1,210,800 | $ | 768,200 | $ | 2,320,900 | $ | 1,757,900 | ||||||||||||
| KKR | ||||||||||||||||||||||
| STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION | ||||||||||||||||||||||
| CAPITAL MARKETS SEGMENT (UNAUDITED) | ||||||||||||||||||||||
| (Amounts in thousands) | ||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||||||||
| Segment Revenues | ||||||||||||||||||||||
| Management, Monitoring and Transaction Fees, Net | ||||||||||||||||||||||
| Management Fees | $ | — | $ | — | $ | — | $ | — | $ | — | ||||||||||||
| Monitoring Fees | — | — | — | — | — | |||||||||||||||||
| Transaction Fees | 48,757 | 43,257 | 31,615 | 92,014 | 96,089 | |||||||||||||||||
| Fee Credits | — | — | — | — | — | |||||||||||||||||
| Total Management, Monitoring and Transaction Fees, Net | 48,757 | 43,257 | 31,615 | 92,014 | 96,089 | |||||||||||||||||
| Performance Income | ||||||||||||||||||||||
| Realized Carried Interest | — | — | — | — | — | |||||||||||||||||
| Incentive Fees | — | — | — | — | — | |||||||||||||||||
| Unrealized Carried Interest | — | — | — | — | — | |||||||||||||||||
| Total Performance Income | — | — | — | — | — | |||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||
| Net Realized Gains (Losses) | (749 | ) | (3,281 | ) | (515 | ) | (4,030 | ) | (464 | ) | ||||||||||||
| Net Unrealized Gains (Losses) | (1,122 | ) | (2,207 | ) | (957 | ) | (3,329 | ) | (685 | ) | ||||||||||||
| Total Realized and Unrealized | (1,871 | ) | (5,488 | ) | (1,472 | ) | (7,359 | ) | (1,149 | ) | ||||||||||||
| Net Interest and Dividends | 7,782 | 6,634 | 3,850 | 14,416 | 8,245 | |||||||||||||||||
| Total Investment Income (Loss) | 5,911 | 1,146 | 2,378 | 7,057 | 7,096 | |||||||||||||||||
| Total Segment Revenues | 54,668 | 44,403 | 33,993 | 99,071 | 103,185 | |||||||||||||||||
| Segment Expenses | ||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||
| Cash Compensation and Benefits | 10,147 | 9,055 | 8,018 | 19,202 | 23,290 | |||||||||||||||||
| Realized Allocation to Carry Pool | — | — | — | — | — | |||||||||||||||||
| Unrealized Allocation to Carry Pool | — | — | — | — | — | |||||||||||||||||
| Total Compensation and Benefits | 10,147 | 9,055 | 8,018 | 19,202 | 23,290 | |||||||||||||||||
| Occupancy and Related Charges | 666 | 658 | 449 | 1,324 | 906 | |||||||||||||||||
| Other Operating Expenses | 2,871 | 3,876 | 3,248 | 6,747 | 7,483 | |||||||||||||||||
| Total Segment Expenses | 13,684 | 13,589 | 11,715 | 27,273 | 31,679 | |||||||||||||||||
| Income (Loss) attributable to noncontrolling interests | 3,762 | 2,728 | 2,486 | 6,490 | 4,651 | |||||||||||||||||
| Economic Net Income (Loss) | $ | 37,222 | $ | 28,086 | $ | 19,792 | $ | 65,308 | $ | 66,855 | ||||||||||||
| Syndicated Capital | $ | 432,100 | $ | 248,700 | $ | 166,700 | $ | 680,800 | $ | 258,100 | ||||||||||||
| KKR | ||||||||||||||
| BALANCE SHEET | ||||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | ||||||||||||||
| (Amounts in thousands, except per unit amounts) | ||||||||||||||
| As of | As of | |||||||||||||
| June 30, 2015 | December 31, 2014 | |||||||||||||
| Cash and short-term investments | $ | 2,025,779 | $ | 1,121,385 | ||||||||||
| Investments | 9,743,800 | (a) | 9,807,606 | |||||||||||
| Unrealized carry (b) | 1,579,405 | (b) | 1,283,022 | (b) | ||||||||||
| Other assets | 1,025,889 | 999,654 | ||||||||||||
| Total assets | $ | 14,374,873 | $ | 13,211,667 | ||||||||||
| Debt obligations - KKR (ex-KFN) | $ | 2,000,000 | $ | 1,527,000 | ||||||||||
| Debt obligations - KFN | 657,310 | 657,310 | ||||||||||||
| Preferred shares - KFN | 373,750 | 373,750 | ||||||||||||
| Other liabilities | 334,426 | 413,808 | ||||||||||||
| Total liabilities | 3,365,486 | 2,971,868 | ||||||||||||
| Noncontrolling interests | 126,140 | 121,574 | ||||||||||||
| Book value | $ | 10,883,247 | $ | 10,118,225 | ||||||||||
| Book value per adjusted unit | $ | 12.77 | $ | 12.07 | ||||||||||
| (a) See schedule of investments that follows on the next page. | ||||||||||||||
| As of | As of | |||||||||||||
|
(b) Unrealized Carry |
June 30, 2015 | December 31, 2014 | ||||||||||||
| Private Markets | $ | 1,468,815 | $ | 1,196,633 | ||||||||||
| Public Markets | 110,590 | 86,389 | ||||||||||||
| Total | $ | 1,579,405 | $ | 1,283,022 | ||||||||||
| KKR | |||||||||||||
| SCHEDULE OF INVESTMENTS | |||||||||||||
| TOTAL REPORTABLE SEGMENTS (UNAUDITED) | |||||||||||||
| (Amounts in thousands, except percentage amounts) | |||||||||||||
| As of June 30, 2015 | |||||||||||||
| Investments | Cost |
Fair
Value |
Fair Value as a
Percentage of Total Investments |
||||||||||
| Private Equity Co-Investments | $ | 2,285,974 | $ | 2,909,238 | 29.9 | % | |||||||
| Private Equity Funds | 822,314 | 1,103,850 | 11.3 | % | |||||||||
| Private Equity Total | 3,108,288 | 4,013,088 | 41.2 | % | |||||||||
| Energy | 969,845 | 721,413 | 7.4 | % | |||||||||
| Real Estate | 729,454 | 775,054 | 8.0 | % | |||||||||
| Infrastructure | 172,138 | 180,351 | 1.9 | % | |||||||||
| Real Assets Total | 1,871,437 | 1,676,818 | 17.3 | % | |||||||||
| Private Markets Total | 4,979,725 | 5,689,906 | 58.5 | % | |||||||||
| Special Situations | 769,487 | 832,958 | 8.5 | % | |||||||||
| Direct Lending | 126,019 | 124,702 | 1.3 | % | |||||||||
| Mezzanine | 89,287 | 96,125 | 0.9 | % | |||||||||
| Alternative Credit | 984,793 | 1,053,785 | 10.7 | % | |||||||||
| CLOs | 1,493,080 | 1,309,936 | 13.4 | % | |||||||||
| Liquid Credit | 177,781 | 181,120 | 1.9 | % | |||||||||
| Credit Total | 2,655,654 | 2,544,841 | 26.0 | % | |||||||||
| Specialty Finance | 282,648 | 250,893 | 2.6 | % | |||||||||
| Public Markets Total | 2,938,302 | 2,795,734 | 28.6 | % | |||||||||
| Other | 1,251,224 | 1,258,160 | 12.9 | % | |||||||||
| Total Investments | $ | 9,169,251 | $ | 9,743,800 | 100.0 | % | |||||||
| Significant Aggregate Portfolio Company Investments: (a) | |||||||||||||
| First Data Corporation | $ | 1,061,332 | $ | 1,309,329 | 13.4 | % | |||||||
| Walgreens Boots Alliance | 165,776 | 615,574 | 6.3 | % | |||||||||
| HCA Inc. | 29,455 | 226,780 | 2.3 | % | |||||||||
| Zimmer Biomet Holdings Inc. | 68,572 | 100,485 | 1.0 | % | |||||||||
| U.S. Foodservice, Inc. | 80,000 | 96,000 | 1.0 | % | |||||||||
| 1,405,135 | 2,348,168 | 24.0 | % | ||||||||||
| Other Investments | 7,764,116 | 7,395,632 | 76.0 | % | |||||||||
| Total Investments | $ | 9,169,251 | $ | 9,743,800 | 100.0 | % | |||||||
| (a) | The significant aggregate portfolio company investments include the top five private equity investments in portfolio companies (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair market value as of June 30, 2015. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying portfolio company. | |
| KKR | ||||||||||||||
| ASSETS UNDER MANAGEMENT* (UNAUDITED) | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
|
Private
Markets Segment |
Public
Markets Segment |
Total
Reportable Segments |
||||||||||||
|
Quarter Ended June 30, 2015 |
||||||||||||||
| March 31, 2015 | $ | 62,139,400 | $ | 36,988,600 | $ | 99,128,000 | ||||||||
| New Capital Raised | 1,142,700 | 2,201,700 | 3,344,400 | |||||||||||
| Distributions | (3,447,000 | ) | (1,385,300 | ) | (b) | (4,832,300 | ) | |||||||
| Change in Value | 3,294,100 | 635,400 | 3,929,500 | |||||||||||
| June 30, 2015 | $ | 63,129,200 | $ | 38,440,400 | $ | 101,569,600 | ||||||||
|
Six Months Ended June 30, 2015 |
||||||||||||||
| December 31, 2014 | $ | 61,505,800 | $ | 37,106,700 | $ | 98,612,500 | ||||||||
| New Capital Raised | 2,733,800 | 4,449,600 | 7,183,400 | |||||||||||
| Distributions | (6,414,000 | ) | (3,233,900 | ) | (c) | (9,647,900 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (238,600 | ) | (238,600 | ) | |||||||||
| Change in Value | 5,303,600 | 356,600 | 5,660,200 | |||||||||||
| June 30, 2015 | $ | 63,129,200 | $ | 38,440,400 | $ | 101,569,600 | ||||||||
|
Trailing Twelve Months Ended June 30, 2015 |
||||||||||||||
| June 30, 2014 | $ | 59,417,000 | $ | 38,540,900 | $ | 97,957,900 | ||||||||
| New Capital Raised | 7,086,700 | 8,635,800 | 15,722,500 | |||||||||||
| Distributions | (10,504,000 | ) | (8,117,500 | ) | (d) | (18,621,500 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (238,600 | ) | (238,600 | ) | |||||||||
| Change in Value | 7,129,500 | (380,200 | ) | 6,749,300 | ||||||||||
| June 30, 2015 | $ | 63,129,200 | $ | 38,440,400 | $ | 101,569,600 | ||||||||
| * |
Excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest. |
|
| (a) | Represents the impact of certain funds entering the post-investment period. | |
| (b) | Includes $463.7 million of redemptions by fund investors. | |
| (c) | Includes $1,116.9 million of redemptions by fund investors. | |
| (d) | Includes $3,132.4 million of redemptions by fund investors. | |
| KKR | ||||||||||||||
| FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED) | ||||||||||||||
| (Amounts in thousands) | ||||||||||||||
|
Private
Markets Segment |
Public
Markets Segment |
Total
Reportable Segments |
||||||||||||
|
Quarter Ended June 30, 2015 |
||||||||||||||
| March 31, 2015 | $ | 47,161,900 | $ | 35,722,600 | $ | 82,884,500 | ||||||||
| New Capital Raised | 1,123,600 | 2,023,200 | 3,146,800 | |||||||||||
| Distributions | (1,723,600 | ) | (1,193,800 | ) | (b) | (2,917,400 | ) | |||||||
| Change in Value | 196,900 | 422,000 | 618,900 | |||||||||||
| June 30, 2015 | $ | 46,758,800 | $ | 36,974,000 | $ | 83,732,800 | ||||||||
|
Six Months Ended June 30, 2015 |
||||||||||||||
| December 31, 2014 | $ | 47,262,500 | $ | 35,783,900 | $ | 83,046,400 | ||||||||
| New Capital Raised | 2,444,100 | 4,217,000 | 6,661,100 | |||||||||||
| Distributions | (2,684,700 | ) | (2,780,200 | ) | (c) | (5,464,900 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (325,200 | ) | (325,200 | ) | |||||||||
| Change in Value | (263,100 | ) | 78,500 | (184,600 | ) | |||||||||
| June 30, 2015 | $ | 46,758,800 | $ | 36,974,000 | $ | 83,732,800 | ||||||||
|
Trailing Twelve Months Ended June 30, 2015 |
||||||||||||||
| June 30, 2014 | $ | 46,167,300 | $ | 33,489,000 | $ | 79,656,300 | ||||||||
| New Capital Raised | 6,385,600 | 10,371,500 | 16,757,100 | |||||||||||
| Distributions | (5,151,600 | ) | (5,683,500 | ) | (d) | (10,835,100 | ) | |||||||
| Net Changes in Fee Base of Certain Funds (a) | — | (325,200 | ) | (325,200 | ) | |||||||||
| Change in Value | (642,500 | ) | (877,800 | ) | (1,520,300 | ) | ||||||||
| June 30, 2015 | $ | 46,758,800 | $ | 36,974,000 | $ | 83,732,800 | ||||||||
| * | Excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest. | |
| (a) | Represents the impact of certain funds entering the post-investment period. | |
| (b) | Includes $463.7 million of redemptions by fund investors. | |
| (c) | Includes $1,116.9 million of redemptions by fund investors. | |
| (d) | Includes $3,132.4 million of redemptions by fund investors. | |
| KKR | ||||||||||||||||||||||||||||||
| INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED) | ||||||||||||||||||||||||||||||
| As of June 30, 2015 | ||||||||||||||||||||||||||||||
| (Amounts in millions, except percentages) | ||||||||||||||||||||||||||||||
| Investment Period | Amount | |||||||||||||||||||||||||||||
|
Commencement
Date |
End Date | Commitment |
Uncalled
Commitments |
Percentage
Committed by General Partner |
Invested | Realized |
Remaining
Cost |
Remaining Fair
Value |
||||||||||||||||||||||
|
Private Markets |
||||||||||||||||||||||||||||||
| Private Equity Funds | ||||||||||||||||||||||||||||||
| European Fund IV | 12/2014 | 12/2020 | $ | 2,670.1 | $ | 2,509.1 | 7.4% | $ | 161.0 | $ | — | $ | 161.0 | $ | 206.6 | |||||||||||||||
| Asian Fund II (b) | 4/2013 | 4/2019 | 5,825.0 | 4,045.0 | 1.3% | 2,052.0 | 272.0 | 1,779.9 | 3,032.7 | |||||||||||||||||||||
| North America Fund XI (b) | 9/2012 | 9/2018 | 8,718.4 | 4,512.6 | 2.9% | 5,024.4 | 1,024.2 | 4,205.7 | 6,331.8 | |||||||||||||||||||||
| China Growth Fund | 11/2010 | 11/2016 | 1,010.0 | 448.1 | 1.0% | 561.9 | 61.1 | 544.5 | 782.5 | |||||||||||||||||||||
| E2 Investors (Annex Fund) | 8/2009 | 11/2013 | 195.8 | — | 4.9% | 195.8 | 195.7 | 18.1 | 77.2 | |||||||||||||||||||||
| European Fund III | 3/2008 | 3/2014 | 6,141.0 | 789.1 | 4.6% | 5,351.9 | 4,269.1 | 3,338.3 | 4,520.4 | |||||||||||||||||||||
| Asian Fund | 7/2007 | 4/2013 | 3,983.3 | 147.5 | 2.5% | 3,835.8 | 5,343.1 | 1,954.9 | 2,699.1 | |||||||||||||||||||||
| 2006 Fund | 9/2006 | 9/2012 | 17,642.2 | 525.6 | 2.1% | 17,116.6 | 16,154.9 | 8,760.3 | 14,972.7 | |||||||||||||||||||||
| European Fund II | 11/2005 | 10/2008 | 5,750.8 | — | 2.1% | 5,750.8 | 6,574.3 | 841.1 | 1,722.1 | |||||||||||||||||||||
| Millennium Fund | 12/2002 | 12/2008 | 6,000.0 | — | 2.5% | 6,000.0 | 11,699.6 | 1,219.7 | 2,232.2 | |||||||||||||||||||||
| European Fund | 12/1999 | 12/2005 | 3,085.4 | — | 3.2% | 3,085.4 | 8,736.6 | — | 44.5 | |||||||||||||||||||||
| Total Private Equity Funds | 61,022.0 | 12,977.0 | 49,135.6 | 54,330.6 | 22,823.5 | 36,621.8 | ||||||||||||||||||||||||
| Co-Investment Vehicles (b) | Various | Various | 5,506.1 | 2,531.1 | Various | 3,072.4 | 1,710.8 | 2,243.2 | 3,265.0 | |||||||||||||||||||||
| Total Private Equity | 66,528.1 | 15,508.1 | 52,208.0 | 56,041.4 | 25,066.7 | 39,886.8 | ||||||||||||||||||||||||
| Real Assets | ||||||||||||||||||||||||||||||
| Energy Income and Growth Fund | 9/2013 | 9/2018 | 1,974.2 | 1,217.7 | 12.8% | 756.5 | 109.9 | 691.0 | 582.6 | |||||||||||||||||||||
| Natural Resources Fund | Various | Various | 887.4 | 2.9 | Various | 884.5 | 96.6 | 809.9 | 340.1 | |||||||||||||||||||||
| Global Energy Opportunities (b) | Various | Various | 1,026.4 | 809.6 | Various | 250.2 | 53.6 | 218.4 | 146.0 | |||||||||||||||||||||
| Global Infrastructure Investors (b) | 9/2011 | 10/2014 | 1,040.1 | 132.8 | 4.8% | 935.2 | 123.8 | 907.2 | 975.3 | |||||||||||||||||||||
| Global Infrastructure Investors II | 10/2014 | 10/2020 | 2,838.7 | 2,788.4 | 4.4% | 50.3 | — | 50.3 | 53.7 | |||||||||||||||||||||
| Infrastructure Co-Investments | Various | Various | 1,125.0 | — | Various | 1,125.0 | 338.3 | 1,125.0 | 1,560.2 | |||||||||||||||||||||
| Real Estate Partners Americas (b) | 5/2013 | 12/2016 | 1,229.1 | 618.9 | 16.3% | 718.3 | 257.3 | 609.8 | 688.1 | |||||||||||||||||||||
| Real Assets | 10,120.9 | 5,570.3 | 4,720.0 | 979.5 | 4,411.6 | 4,346.0 | ||||||||||||||||||||||||
| Private Markets Total | 76,649.0 | 21,078.4 | 56,928.0 | 57,020.9 | 29,478.3 | 44,232.8 | ||||||||||||||||||||||||
|
Public Markets |
||||||||||||||||||||||||||||||
| Special Situations Fund | 12/2012 | 12/2015 | 2,144.0 | 168.4 | 11.6% | 1,975.6 | 144.0 | 1,975.6 | 2,348.4 | |||||||||||||||||||||
| Special Situations Fund II | 12/2014 | (c) | 1,694.5 | 1,609.4 | 8.9% | 85.1 | — | 85.0 | 97.6 | |||||||||||||||||||||
| Mezzanine Fund | 3/2010 | 3/2015 | 1,022.8 | 165.5 | 4.4% | 857.3 | 354.1 | 708.6 | 789.1 | |||||||||||||||||||||
| Lending Partners | 12/2011 | 12/2014 | 460.2 | 81.9 | 15.2% | 378.3 | 140.3 | 349.5 | 347.4 | |||||||||||||||||||||
| Lending Partners II | 06/2014 | 06/2017 | 1,335.9 | 902.6 | 3.7% | 433.3 | — | 433.3 | 469.1 | |||||||||||||||||||||
| Lending Partners Europe | 03/2015 | 03/2018 | 556.6 | 525.2 | 7.3% | 31.4 | — | 31.4 | 36.7 | |||||||||||||||||||||
| Other Alternative Credit Vehicles | Various | Various | 3,650.3 | 1,374.9 | Various | 2,275.4 | 1,242.8 | 1,537.6 | 1,814.9 | |||||||||||||||||||||
| Public Markets Total | 10,864.3 | 4,827.9 | 6,036.4 | 1,881.2 | 5,121.0 | 5,903.2 | ||||||||||||||||||||||||
| Grand Total | $ | 87,513.3 | $ | 25,906.3 | $ | 62,964.4 | $ | 58,902.1 | $ | 34,599.3 | $ | 50,136.0 | ||||||||||||||||||
| (a) | Reflects investment vehicles for which KKR has the ability to earn carried interest. | |
| (b) | The “Invested” and “Realized” columns include the amounts of any realized investments that restored the unused capital commitments of the fund investors. | |
| (c) | Three years from final close. | |
| KKR | ||||||||||||||||||||||
| DISTRIBUTION CALCULATION (UNAUDITED) | ||||||||||||||||||||||
| (Amounts in thousands, except unit and per unit amounts) | ||||||||||||||||||||||
| Quarter Ended | Six Months Ended | |||||||||||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | June 30, 2015 | June 30, 2014 | ||||||||||||||||||
| Cash Revenues | ||||||||||||||||||||||
| Fees | $ | 271,500 | $ | 300,075 | $ | 254,237 | $ | 571,575 | $ | 581,860 | ||||||||||||
| Realized cash carry | 252,227 | 302,425 | 555,488 | 554,652 | 749,038 | |||||||||||||||||
| Net realized investment income - KKR (ex-KFN) | 195,408 | 191,477 | 245,711 | 386,885 | 438,603 | |||||||||||||||||
| Net realized investment income - KFN | 56,258 | 39,865 | 36,382 | 96,123 | 36,382 | |||||||||||||||||
| Total Cash Revenues | 775,393 | 833,842 | 1,091,818 | 1,609,235 | 1,805,883 | |||||||||||||||||
| Cash Expenses | ||||||||||||||||||||||
| Cash compensation and benefits | 98,871 | 107,027 | 91,444 | 205,898 | 200,359 | |||||||||||||||||
| Realized cash carry allocated to carry pool | 100,891 | 120,970 | 222,195 | 221,861 | 299,615 | |||||||||||||||||
| Occupancy and related charges | 15,475 | 14,796 | 14,757 | 30,271 | 28,946 | |||||||||||||||||
| Other operating expenses | 51,613 | 60,946 | 54,311 | 112,559 | 107,112 | |||||||||||||||||
| Total Cash Expenses | 266,850 | 303,739 | 382,707 | 570,589 | 636,032 | |||||||||||||||||
| Cash income (loss) before noncontrolling interests and local taxes | 508,543 | 530,103 | 709,111 | 1,038,646 | 1,169,851 | |||||||||||||||||
| Less: local income taxes | (12,753 | ) | (9,950 | ) | (4,932 | ) | (22,703 | ) | (15,662 | ) | ||||||||||||
| Less: noncontrolling interests | (4,383 | ) | (3,622 | ) | (3,206 | ) | (8,005 | ) | (6,408 | ) | ||||||||||||
| Total Distributable Earnings | 491,407 | 516,531 | 700,973 | 1,007,938 | 1,147,781 | |||||||||||||||||
| Less: estimated current corporate income taxes | (26,155 | ) | (28,855 | ) | (19,025 | ) | (55,010 | ) | (52,470 | ) | ||||||||||||
| Distributable Earnings, net of taxes | 465,252 | 487,676 | 681,948 | 952,928 | 1,095,311 | |||||||||||||||||
| Less: Undistributed net realized investment income - KKR (ex-KFN) | (117,245 | ) | (114,886 | ) | (147,427 | ) | (232,131 | ) | (263,162 | ) | ||||||||||||
| Distributed Earnings | $ | 348,007 | $ | 372,790 | $ | 534,521 | $ | 720,797 | $ | 832,149 | ||||||||||||
| Distributable Earnings, net of taxes per KKR & Co. L.P. common unit | $ | 0.57 | $ | 0.60 | $ | 0.85 | $ | 1.17 | $ | 1.44 | ||||||||||||
| Distribution per KKR & Co. L.P. common unit | $ | 0.42 | $ | 0.46 | $ | 0.67 | $ | 0.88 | $ | 1.10 | ||||||||||||
|
Components of Distribution per KKR & Co. L.P. Common Unit |
||||||||||||||||||||||
| After-tax FRE | $ | 0.07 | $ | 0.10 | $ | 0.09 | $ | 0.17 | $ | 0.24 | ||||||||||||
| Realized Cash Carry | $ | 0.18 | $ | 0.22 | $ | 0.41 | $ | 0.40 | $ | 0.58 | ||||||||||||
| Distributed Net Realized Investment Income - KKR (ex-KFN) | $ | 0.10 | $ | 0.09 | $ | 0.12 | $ | 0.19 | $ | 0.23 | ||||||||||||
| Distributed Net Realized Investment Income - KFN | $ | 0.07 | $ | 0.05 | $ | 0.05 | $ | 0.12 | $ | 0.05 | ||||||||||||
| Fee and yield earnings distribution per KKR & Co. L.P. common unit | $ | 0.15 | $ | 0.15 | $ | 0.15 | $ | 0.30 | $ | 0.31 | ||||||||||||
| Adjusted Units Eligible For Distribution | 820,963,434 | 813,796,584 | 803,719,050 | |||||||||||||||||||
| Payout Ratio | 74.8 | % | 76.4 | % | 78.4 | % | 75.6 | % | 76.0 | % | ||||||||||||
KKR
Notes to Reportable Segments (Unaudited)
The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.
Fee related earnings (“FRE”) is comprised of (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. It is a measure of the operating earnings of KKR and its business segments before carried interest and related carry pool allocations and investment income and comprises a portion of KKR's quarterly distribution. 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 (“Equity Incentive Plan”); (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items. After tax FRE represents FRE after deductions for current corporate and local income taxes and noncontrolling interests.
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 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 non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the Equity Incentive Plan and other securities that are exchangeable for common units of KKR & Co. L.P.; (v) the exclusion of certain non-recurring items; (vi) the exclusion of investment income (loss) relating to noncontrolling interests; and (vii) 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 (ex-KFN) 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 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.
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 (ex-KFN) 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 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. AUM excludes those assets managed by entities where KKR does not hold more than a 50% ownership interest. 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 management 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 or CLOs, for only those funds or CLOs 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.
Equity invested is the aggregate amount of equity capital that has 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 investments among its investment funds and carry-yielding co-investment vehicles and replaces committed dollars invested. 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, including investments made using investment financing arrangements.
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 a portion of KKR’s Public Markets segment in a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of capital across private credit non-liquid strategies for all the investment vehicles in the Public Markets segment. 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 and its 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 equity 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 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. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.
Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the Equity Incentive Plan), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. 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, equity awards issued under the Equity Incentive Plan 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 investment 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 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 Distributable Earnings, net of taxes on a trailing twelve-month basis by the average book value during the period.
| KKR | |||||
|
EXHIBIT A |
|||||
| KKR'S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS | |||||
| (Amounts in thousands) | |||||
|
Uncalled
Commitments |
|||||
|
Private Markets |
|||||
| European Fund IV | $ | 184,700 | |||
| North America Fund XI | 166,900 | ||||
| Energy Income and Growth Fund | 157,200 | ||||
| Global Infrastructure Investors II | 121,600 | ||||
| Real Estate Partners Americas | 100,700 | ||||
| European Fund III | 63,500 | ||||
| Asian Fund II | 51,800 | ||||
| 2006 Fund | 22,700 | ||||
| Co-Investment Vehicles | 69,700 | ||||
| Other Private Markets Funds | 13,500 | ||||
| Total Private Markets Commitments | 952,300 | ||||
|
Public Markets |
|||||
| Special Situations Fund | 19,600 | ||||
| Special Situations Fund II | 142,900 | ||||
| Mezzanine Fund | 7,000 | ||||
| Lending Partners | 12,500 | ||||
| Lending Partners II | 33,800 | ||||
| Lending Partners Europe | 33,800 | ||||
| Other Alternative Credit Vehicles | 65,600 | ||||
| Total Public Markets Commitments | 315,200 | ||||
| Total Uncalled Commitments | $ | 1,267,500 | |||
| KKR | |||||||||||||
|
EXHIBIT B |
|||||||||||||
| RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT - BASIC (GAAP BASIS) | |||||||||||||
| TO ENI AFTER TAXES PER ADJUSTED UNIT (UNAUDITED) | |||||||||||||
| (Amounts in thousands, except common unit and per common unit amounts) | |||||||||||||
| Quarter Ended | |||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | |||||||||||
| Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic | $ | 0.84 | $ | 0.62 | $ | 0.47 | |||||||
| Weighted Average Common Units Outstanding - Basic | 446,794,950 | 434,874,820 | 377,542,161 | ||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | 376,306 | 270,507 | 178,215 | ||||||||||
|
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P. |
325,703 | 239,008 | 186,776 | ||||||||||
| Plus: Non-cash equity-based charges | 69,478 | 76,550 | 92,957 | ||||||||||
| Plus: Amortization of intangibles and other, net | 37,910 | (2,790 | ) | 37,455 | |||||||||
| Plus: Income taxes | 30,547 | 16,138 | 6,176 | ||||||||||
| Economic net income (loss) | 839,944 | 599,413 | 501,579 | ||||||||||
| Less: Provision for income taxes | 44,836 | 21,235 | 6,330 | ||||||||||
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | 48,453 | 52,265 | 40,877 | ||||||||||
| Economic net income (loss) after taxes | 746,655 | 525,913 | 454,372 | ||||||||||
| Weighted Average Adjusted Units | 852,128,762 | 848,061,661 | 800,747,528 | ||||||||||
| Economic net income (loss) after taxes per adjusted unit | $ | 0.88 | $ | 0.62 | $ | 0.57 | |||||||
| Six Months Ended | |||||||||||||
| June 30, 2015 | June 30, 2014 | ||||||||||||
| Net income (loss) attributable to KKR & Co. L.P. per common unit - Basic | $ | 1.47 | $ | 1.16 | |||||||||
| Weighted Average Common Units Outstanding - Basic | 440,867,813 | 335,748,498 | |||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | 646,813 | 388,256 | |||||||||||
|
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P. |
564,711 | 487,590 | |||||||||||
| Plus: Non-cash equity-based charges | 146,028 | 170,485 | |||||||||||
| Plus: Amortization of intangibles and other, net | 35,120 | 57,624 | |||||||||||
| Plus: Income taxes | 46,685 | 27,878 | |||||||||||
| Economic net income (loss) | 1,439,357 | 1,131,833 | |||||||||||
| Less: Provision for income taxes | 66,071 | 42,911 | |||||||||||
| Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan | 100,718 | 80,230 | |||||||||||
| Economic net income (loss) after taxes | 1,272,568 | 1,008,692 | |||||||||||
| Weighted Average Adjusted Units | 850,106,448 | 762,873,784 | |||||||||||
| Economic net income (loss) after taxes per adjusted unit | $ | 1.50 | $ | 1.32 | |||||||||
| KKR | ||||||||||||
|
EXHIBIT B (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, TOTAL DISTRIBUTABLE EARNINGS, AND TOTAL EBITDA (UNAUDITED) | ||||||||||||
| (Amounts in thousands) | ||||||||||||
| Quarter Ended | ||||||||||||
| June 30, 2015 | March 31, 2015 | June 30, 2014 | ||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 376,306 | $ | 270,507 | $ | 178,215 | ||||||
|
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P. |
325,703 | 239,008 | 186,776 | |||||||||
| Plus: Non-cash equity-based charges | 69,478 | 76,550 | 92,957 | |||||||||
| Plus: Amortization of intangibles and other, net | 37,910 | (2,790 | ) | 37,455 | ||||||||
| Plus: Income taxes | 30,547 | 16,138 | 6,176 | |||||||||
| Economic net income (loss) | 839,944 | 599,413 | 501,579 | |||||||||
| Plus: Income attributable to segment noncontrolling interests | 4,383 | 3,622 | 3,206 | |||||||||
| Less: Total investment income (loss) | 383,650 | 220,621 | 162,158 | |||||||||
| Less: Net carried interest | 355,136 | 265,108 | 248,902 | |||||||||
| Fee related earnings | 105,541 | 117,306 | 93,725 | |||||||||
| Plus: Net interest and dividends | 75,406 | 50,675 | 60,432 | |||||||||
| Fee and yield earnings | 180,947 | 167,981 | 154,157 | |||||||||
| Plus: Depreciation and amortization | 3,918 | 3,881 | 4,140 | |||||||||
| Plus: Core interest expense | 30,750 | 25,332 | 19,205 | |||||||||
| Fee and yield EBITDA | 215,615 | 197,194 | 177,502 | |||||||||
| Less: Depreciation and amortization | 3,918 | 3,881 | 4,140 | |||||||||
| Less: Core interest expense | 30,750 | 25,332 | 19,205 | |||||||||
| Less: Net interest and dividends | 75,406 | 50,675 | 60,432 | |||||||||
| Plus: Realized cash carry, net of realized cash carry allocated to carry pool | 151,336 | 181,455 | 333,293 | |||||||||
| Plus: Net realized investment income - KKR (ex-KFN) | 195,408 | 191,477 | 245,711 | |||||||||
| Plus: Net realized investment income - KFN | 56,258 | 39,865 | 36,382 | |||||||||
| Less: Local income taxes and noncontrolling interests | 17,136 | 13,572 | 8,138 | |||||||||
| Total distributable earnings | 491,407 | 516,531 | 700,973 | |||||||||
| Plus: Depreciation and amortization | 3,918 | 3,881 | 4,140 | |||||||||
| Plus: Core interest expense | 30,750 | 25,332 | 19,205 | |||||||||
| Plus: Local income taxes and noncontrolling interests | 17,136 | 13,572 | 8,138 | |||||||||
| Total EBITDA | $ | 543,211 | $ | 559,316 | $ | 732,456 | ||||||
| Six Months Ended | ||||||||||||
| June 30, 2015 | June 30, 2014 | |||||||||||
| Net income (loss) attributable to KKR & Co. L.P. | $ | 646,813 | $ | 388,256 | ||||||||
|
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P. |
564,711 | 487,590 | ||||||||||
| Plus: Non-cash equity-based charges | 146,028 | 170,485 | ||||||||||
| Plus: Amortization of intangibles and other, net | 35,120 | 57,624 | ||||||||||
| Plus: Income taxes | 46,685 | 27,878 | ||||||||||
| Economic net income (loss) | 1,439,357 | 1,131,833 | ||||||||||
| Plus: Income attributable to segment noncontrolling interests | 8,005 | 6,408 | ||||||||||
| Less: Total investment income (loss) | 604,271 | 440,809 | ||||||||||
| Less: Net carried interest | 620,244 | 451,989 | ||||||||||
| Fee related earnings | 222,847 | 245,443 | ||||||||||
| Plus: Net interest and dividends | 126,081 | 71,596 | ||||||||||
| Fee and yield earnings | 348,928 | 317,039 | ||||||||||
| Plus: Depreciation and amortization | 7,799 | 8,175 | ||||||||||
| Plus: Core interest expense | 56,082 | 37,605 | ||||||||||
| Fee and yield EBITDA | 412,809 | 362,819 | ||||||||||
| Less: Depreciation and amortization | 7,799 | 8,175 | ||||||||||
| Less: Core interest expense | 56,082 | 37,605 | ||||||||||
| Less: Net interest and dividends | 126,081 | 71,596 | ||||||||||
| Plus: Realized cash carry, net of realized cash carry allocated to carry pool | 332,791 | 449,423 | ||||||||||
| Plus: Net realized investment income - KKR (ex-KFN) | 386,885 | 438,603 | ||||||||||
| Plus: Net realized investment income - KFN | 96,123 | 36,382 | ||||||||||
| Less: Local income taxes and noncontrolling interests | 30,708 | 22,070 | ||||||||||
| Total distributable earnings | 1,007,938 | 1,147,781 | ||||||||||
| Plus: Depreciation and amortization | 7,799 | 8,175 | ||||||||||
| Plus: Core interest expense | 56,082 | 37,605 | ||||||||||
| Plus: Local income taxes and noncontrolling interests | 30,708 | 22,070 | ||||||||||
| Total EBITDA | $ | 1,102,527 | $ | 1,215,631 | ||||||||
| KKR | |||||||||
|
EXHIBIT B (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, 2015 | December 31, 2014 | ||||||||
| KKR & Co. L.P. partners’ capital | $ | 5,947,415 | $ | 5,382,691 | |||||
| Noncontrolling interests held by KKR Holdings L.P. | 4,827,384 | 4,661,679 | |||||||
| Equity impact of KKR Management Holdings Corp. and other | 108,448 | 73,855 | |||||||
| Book value | 10,883,247 | 10,118,225 | |||||||
| Adjusted units | 852,145,905 | 838,020,974 | |||||||
| Book value per adjusted unit | $ | 12.77 | $ | 12.07 | |||||
| RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS) | |||||||||
| TO CASH AND SHORT-TERM INVESTMENTS (UNAUDITED) | |||||||||
| (Amounts in thousands) | |||||||||
| As of | As of | ||||||||
| June 30, 2015 | December 31, 2014 | ||||||||
| Cash and cash equivalents | $ | 1,824,686 | $ | 918,080 | |||||
| Liquid short-term investments | 201,093 | 203,305 | |||||||
| Cash and short-term investments | $ | 2,025,779 | $ | 1,121,385 | |||||
| KKR | ||||||||
|
EXHIBIT C |
||||||||
| RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING - BASIC 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, 2015 | March 31, 2015 | June 30, 2014 | ||||||
| Weighted Average GAAP Common Units Outstanding - Basic | 446,794,950 | 434,874,820 | 377,542,161 | |||||
| Adjustments: | ||||||||
| Weighted Average Unvested Common Units and Other Securities (a) | 35,856,541 | 37,350,524 | 32,637,677 | |||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 482,651,491 | 472,225,344 | 410,179,838 | |||||
| Adjustments: | ||||||||
| Weighted Average KKR Holdings Units (b) | 369,477,271 | 375,836,317 | 390,567,690 | |||||
| Weighted Average Adjusted Units | 852,128,762 | 848,061,661 | 800,747,528 | |||||
| Six Months Ended | ||||||||
| June 30, 2015 | June 30, 2014 | |||||||
| Weighted Average GAAP Common Units Outstanding - Basic | 440,867,813 | 335,748,498 | ||||||
| Adjustments: | ||||||||
| Weighted Average Unvested Common Units and Other Securities (a) | 36,599,407 | 32,128,551 | ||||||
| Weighted Average GAAP Common Units Outstanding - Diluted | 477,467,220 | 367,877,049 | ||||||
| Adjustments: | ||||||||
| Weighted Average KKR Holdings Units (b) | 372,639,228 | 394,996,735 | ||||||
| Weighted Average Adjusted Units | 850,106,448 | 762,873,784 | ||||||
| RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING - BASIC TO ADJUSTED UNITS AND ADJUSTED UNITS ELIGIBLE FOR DISTRIBUTION (UNAUDITED) | ||||||||
| The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units and Adjusted Units Eligible for Distribution. | ||||||||
| As of | As of | |||||||
| June 30, 2015 | December 31, 2014 | |||||||
| GAAP Common Units Outstanding - Basic | 450,396,361 | 433,330,540 | ||||||
| Unvested Common Units and Other Securities (a) | 34,262,715 | 27,493,685 | ||||||
| GAAP Common Units Outstanding - Diluted | 484,659,076 | 460,824,225 | ||||||
| Adjustments: | ||||||||
| KKR Holdings Units (b) | 367,486,829 | 377,196,749 | ||||||
| Adjusted Units | 852,145,905 | 838,020,974 | ||||||
| Adjustments: | ||||||||
| Unvested Common Units and Unvested Other Securities (a) | (31,182,471 | ) | (24,373,441 | ) | ||||
| Adjusted Units Eligible For Distribution | 820,963,434 | 813,647,533 | ||||||
| (a) | Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan and other securities that are exchangeable into KKR & Co. L.P common units. The issuance of common units of KKR & Co. L.P. pursuant to such equity awards or other securities 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. |
View source version on businesswire.com: http://www.businesswire.com/news/home/20150723005353/en/
Kohlberg Kravis Roberts & Co. L.P.
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Source: Kohlberg Kravis Roberts & Co. L.P.
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