Och-Ziff Capital Management Group LLC Reports 2015 Third Quarter Results
2015 Third Quarter Dividend of $0.04 per Class A Share
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NEW YORK, NY -- (Marketwired) -- 11/03/15 -- Och-Ziff Capital Management Group LLC (NYSE: OZM) (the "Company" or "Och-Ziff") today reported GAAP net income allocated to Class A Shareholders ("GAAP Net Income") of $17.4 million, or $0.10 per basic and $0.06 per diluted Class A Share, for the third quarter ended September 30, 2015.
Summary Highlights
- Reported Distributable Earnings of $66.1 million, or $0.13 per Adjusted Class A Share, for the 2015 third quarter, 43% lower than $116.7 million, or $0.23 per Adjusted Class A Share, for the 2014 third quarter.
- Declared a cash dividend of $0.04 per Class A Share for the 2015 third quarter.
- Repurchased approximately 4.6 million vested Och-Ziff Operating Group A Units from former executive managing directors of the Company, utilizing $22.8 million of 2015 third quarter Distributable Earnings.
- Assets under management totaled $44.6 billion as of September 30, 2015, decreasing 5% year-over-year.
◦ Longer-dated assets under management, which are those subject to initial commitment periods of three years or longer, were $16.4 billion, or 37% of the Company's total assets under management as of September 30, 2015, increasing 9% year-over-year.
◦ Assets under management in the Company's dedicated credit, real estate and other single-strategy funds were $15.1 billion, comprising 34% of assets under management as of September 30, 2015, increasing 17% year-over-year.
◦ Estimated assets under management totaled $44.4 billion as of November 1, 2015.
"While challenging market conditions adversely affected the performance of the OZ Master Fund during the third quarter, we are confident in our investment process and optimistic about the prospects of our current portfolio," said Dan Och, Chairman and Chief Executive Officer of Och-Ziff. "We believe the current environment plays to our strengths as fundamental, bottoms-up investors, and will enable us to generate positive, absolute returns for our LPs.
"Our multi-strategy, credit and real estate funds are important sources of our future asset and earnings growth. We have a leading presence in the markets for each, building on our 21-year track record of delivering value to the investors in our funds. We are also pursuing a number of new business initiatives that represent significant opportunities for us to grow longer-term, high-margin assets and expand our distribution. We are focused on substantial markets where we can leverage the competitive edge that comes from our ability to invest across multiple asset classes and geographies."
(1) Please see Exhibit 7 that accompanies this press release for additional information regarding the returns of the OZ Master Fund.
GAAP NET INCOME ALLOCATED TO CLASS A SHAREHOLDERS
For the 2015 third quarter, Och-Ziff reported GAAP Net Income of $17.4 million, or $0.10 per basic and $0.06 per diluted Class A Share, compared to $23.2 million, or $0.13 per basic and $0.09 per diluted Class A Share, for the 2014 third quarter. For the first nine months of 2015, Och-Ziff reported GAAP Net Income of $48.0 million, or $0.27 per basic and $0.26 per diluted Class A Share, compared to $57.8 million, or $0.33 per basic and $0.32 per diluted Class A Share, for the first nine months of 2014.
The year-over-year decrease in the Company's third quarter GAAP results was primarily driven by higher operating expenses and lower management fees, partially offset by lower income taxes (net of a corresponding increase in expense related to our tax receivable agreement liability) and higher incentive income. The year-over-year decrease in the Company's first nine months GAAP results was primarily driven by higher income taxes (net of a corresponding reduction in our tax receivable agreement liability) and higher operating expenses, partially offset by higher incentive income. Also contributing to the decrease was a gain on the sale of an investment held by a joint venture in the first quarter of 2014 that did not reoccur in 2015.
Throughout this press release, the Company presents financial measures that are not prepared in accordance with GAAP. For a discussion of these non-GAAP measures, please see the section titled "Non-GAAP Financial Measures" at the end of this press release.
DISTRIBUTABLE EARNINGS (NON-GAAP)
The Company's Distributable Earnings for the 2015 third quarter were $66.1 million, or $0.13 per Adjusted Class A Share, 43% lower than $116.7 million, or $0.23 per Adjusted Class A Share, for the 2014 third quarter. Distributable Earnings for the first nine months of 2015 were $288.0 million, or $0.56 per Adjusted Class A Share, 14% lower than $334.9 million, or $0.66 per Adjusted Class A Share, for the first nine months of 2014.
The year-over-year decrease in Distributable Earnings for the 2015 third quarter were primarily due to lower incentive income and management fees, as well as higher Adjusted Income Taxes and operating expenses. The year-over-year decrease in Distributable Earnings for the first nine months of 2015 were primarily due to higher operating expenses and a gain on the sale of an investment held by a joint venture in 2014 that did not reoccur in 2015, partially offset by higher management fees. Please see the "Economic Income (Non-GAAP)" section of this press release for a discussion of the drivers affecting the Company's Economic Income.
Distributable Earnings is a non-GAAP measure. For reconciliations of Distributable Earnings to the respective GAAP Net Income for the periods discussed above, please see Exhibits 2 and 3 that accompanies this press release. Additionally, please see the section titled "Non-GAAP Financial Measures" at the end of this press release, including the definitions of Distributable Earnings, Adjusted Income Taxes and Adjusted Class A Shares.
ASSETS UNDER MANAGEMENT
Rounding differences may occur.
(dollars in September 30, September 30,
billions) 2015 2014
-------------- --------------
Multi-strategy funds $ 29.5 $ 33.8
Credit
Opportunistic
credit funds 4.9 5.1
Institutional
Credit Strategies 7.1 4.7
Real estate funds 1.9 2.1
Other 1.2 1.1
-------------- --------------
Total $ 44.6 $ 46.8
============== ==============
Year-Over-Year Change
-------------------------------------------------------
Distributions
(dollars in Inflows / / Other Appreciation /
billions) (Outflows) Reductions (Depreciation) Total %
----------- -------------- --------------- ------ -----
Multi-strategy funds $ (4.8) $ - $ 0.4 $(4.4) -13%
Credit
Opportunistic
credit funds 0.6 (0.8) - (0.2) -4 %
Institutional
Credit Strategies 2.3 - - 2.4 50 %
Real estate funds 0.1 (0.2) - (0.1) -6 %
Other 0.1 - - 0.1 12 %
----------- -------------- --------------- ------
Total -5
$ (1.7) $ (1.1) $ 0.5 $(2.2) %
=========== ============== =============== ======
As of September 30, 2015, assets under management totaled $44.6 billion, a decrease of $2.2 billion, or 5%, from September 30, 2014, which was driven by capital net outflows of $1.7 billion and $1.1 billion of distributions to investors in the Company's closed-end opportunistic credit and real estate funds, and other reductions. These amounts were partially offset by performance-related appreciation of $540.4 million. During the month of September, the Company had approximately $181.2 million of intra-month capital net outflows, which are included in the $44.6 billion of assets under management as of September 30, 2015.
Assets under management decreased to an estimated $44.4 billion as of November 1, 2015. This decrease reflected estimated performance-related appreciation of approximately $537.6 million in October and capital net outflows of approximately $690.8 million, which was comprised of approximately $509.0 million of capital net outflows on October 1, 2015 and approximately $181.8 million of capital net outflows from October 2, 2015 to November 1, 2015.
Please see detailed assets under management and fund information on Exhibits 6 and 7 that accompany this press release.
Multi-strategy funds
Assets under management in the Company's multi-strategy funds totaled $29.5 billion as of September 30, 2015, decreasing 13%, or $4.4 billion, year-over-year. This change was driven by net capital outflows of $4.8 billion, partially offset by performance-related appreciation of $0.4 billion.
Credit
Assets under management in the Company's dedicated credit products totaled $11.9 billion as of September 30, 2015, increasing $2.1 billion, or 22%, year-over-year. This change was driven by capital net inflows of $2.9 billion, and performance-related appreciation of $62.7 million, partially offset by $839.0 million of distributions and other reductions in the Company's closed-end opportunistic credit funds.
Opportunistic credit
The Company's opportunistic credit funds seek to generate risk-adjusted returns by capturing value in mispriced investments across disrupted, dislocated and distressed corporate, structured and private credit markets globally.
Assets under management in the Company's opportunistic credit funds totaled $4.9 billion as of September 30, 2015, decreasing 4% year-over-year. This decrease was primarily due to $839.0 million of distributions and other reductions related to the Company's closed-end opportunistic credit funds, offset by $572.7 million of capital net inflows, primarily into the OZ Credit Opportunities Master Fund, the Company's global opportunistic credit fund. Also offsetting the decrease was $49.8 million of performance-related appreciation, driven by positive investment performance across the Company's closed-end opportunistic credit funds.
Institutional Credit Strategies
Institutional Credit Strategies ("ICS") is the Company's asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs and other customized solutions for clients.
Assets under management in ICS totaled $7.1 billion as of September 30, 2015, increasing $2.4 billion, or 50%, year-over-year. The increase was primarily driven by four CLOs that closed in the year-over-year period. ICS managed 12 CLOs as of September 30, 2015.
Real estate funds
Assets under management in the Company's real estate funds totaled $1.9 billion as of September 30, 2015, decreasing $127.9 million, or 6%, year-over-year. The decrease was driven by distributions and other reductions from Och-Ziff Real Estate Funds I and II, partially offset by additional commitments to Och-Ziff Real Estate Fund III. Since inception, the net IRR for Och-Ziff Real Estate Fund II (for which the investment period ended in 2014) was 22.7% through September 30, 2015. Since inception, the net IRR for Och-Ziff Real Estate Fund I (for which the investment period ended in 2010) was 15.4% through September 30, 2015.
ECONOMIC INCOME (NON-GAAP)
In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes certain adjustments that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating operating performance in any given period.
For reconciliations of Economic Income and its components to the respective GAAP measures, please see Exhibits 2 through 5 that accompany this press release. Additionally, please see the discussion of "Non-GAAP Financial Measures" at the end of this press release.
Economic Income Revenues (Non-GAAP)
Economic Income revenues for the 2015 third quarter were $202.2 million, a 12% decrease from $229.1 million for the 2014 third quarter. Management fees were $162.7 million, 3% lower than $168.3 million for the prior-year period. Incentive income was $39.0 million, 36% lower than the $60.5 million for the prior-year period.
Economic Income revenues for the first nine months of 2015 were $630.9 million, a 2% increase from $617.3 million for the first nine months of 2014. Management fees were $493.6 million, 2% higher than $482.6 million for the prior-year period. Incentive income was $135.8 million, 1% higher than the $133.9 million for the prior-year period.
The year-over-year decrease in management fees for the quarter-to-date period was driven primarily by lower assets under management in the Company's multi-strategy funds, partially offset by higher assets under management in the Company's ICS products. The year-over-year decrease in incentive income was driven by lower incentive income from the Company's opportunistic credit and real estate funds, partially offset by higher incentive income from the Company's multi-strategy funds.
The year-over-year increase in management fees for the year-to-date period was driven by higher average assets under management in the Company's ICS products, partially offset by lower average assets under management in the Company's multi-strategy funds. Higher management fees related to the launch of Och-Ziff Real Estate Fund III during 2014 also contributed to the year-over-year increase. The year-over-year increase in incentive income for the year-to-date period was driven by higher incentive income from the Company's multi-strategy funds, partially offset by lower incentive income from the Company's opportunistic credit and real estate funds.
The average management fee rate was 1.38% for the 2015 third quarter and 1.41% for the 2015 first nine months. The Company's average management fee will vary from quarter to quarter based on the mix of products that comprise its assets under management.
Compensation and Benefits (Non-GAAP)
Compensation and benefits for the 2015 third quarter totaled $35.9 million, down 15% from $42.4 million for the 2014 third quarter. Salaries and benefits were $28.7 million, 10% higher than $26.1 million in the prior-year period due to an increase in the Company's headcount globally. Bonus expense for the 2015 third quarter totaled $7.2 million, compared to $16.3 million for the prior-year period. The reduction in bonus expense was driven by lower incentive income from the Company's first domestic real estate fund.
Compensation and benefits for the first nine months of 2015 totaled $102.3 million, a 1% increase from $101.3 million for the first nine months of 2014. Salaries and benefits were $84.3 million, 10% higher than $76.8 million in the prior-year period due to an increase in the Company's headcount globally. Bonus expense for the first nine months of 2015 totaled $18.0 million, compared to $24.5 million for the prior-year period mainly due to lower incentive income from the Company's first domestic real estate fund.
The ratio of salaries and benefits to management fees was 18% for the 2015 third quarter and 17% for the first nine months of 2015, compared to 15% for the 2014 third quarter and 16% for the first nine months of 2014.
Non-Compensation Expenses (Non-GAAP)
Non-compensation expenses for the 2015 third quarter totaled $54.8 million, up 76% from $31.1 million in the prior-year period. Non-compensation expenses for the first nine months of 2015 totaled $145.8 million, up 60% from $91.1 million in the prior-year period. The year-over-year increases were driven by higher professional fees due to increased legal expenses relating to certain regulatory and legal matters, as well as higher interest expense primarily due to the issuance of the Company's Senior Notes in the 2014 fourth quarter.
The ratio of non-compensation expenses to management fees was 34% for the 2015 third quarter and 30% for the first nine months of 2015, respectively, compared to 19% for 2014 third quarter and 19% for the first nine months of 2014.
Economic Income (Non-GAAP)
Economic Income for the 2015 third quarter was $111.5 million, lower than the $155.6 million for the 2014 third quarter. Economic Income for the first nine months of 2015 was $382.8 million, lower than the $429.8 million for the first nine months of 2014.
The year-over-year decrease in Economic Income for the quarter-to-date period was primarily due to lower incentive income and management fees, as well as higher operating expenses. The year-over-year decrease in Economic Income for the year-to-date period was due to higher operating expenses and a gain on the sale of an investment held by a joint venture in the 2014 first quarter that did not reoccur in 2015, partially offset by higher management fees.
CAPITAL
As of September 30, 2015, the number of Class A Shares outstanding was 177,310,768. For purposes of calculating Distributable Earnings per Share, the Company assumes that all the interests held by its executive managing directors and Ziff Investors Partnership, L.P. II and certain of its affiliates and control persons (the "Ziffs") (until the Ziffs exchanged their remaining interests during the 2014 second quarter) in the Company's principal operating subsidiaries (the "Och-Ziff Operating Group") (collectively, "Partner Units"), as well as Class A Restricted Share Units ("RSUs") outstanding during the applicable period, have been converted on a one-to-one basis into Class A Shares ("Adjusted Class A Shares"). For the third quarter and the first nine months ended September 30, 2015, the total weighted-average Adjusted Class A Shares outstanding were 516,825,427 and 516,104,997, respectively.
DIVIDEND
The Board of Directors of Och-Ziff declared a 2015 third-quarter dividend of $0.04 per Class A Share. The dividend is payable on November 20, 2015 to holders of record as of the close of business on November 13, 2015.
For U.S. federal income tax purposes, the dividend will be treated as a partnership distribution. Based on the best information currently available, the Company estimates that when calculating withholding taxes, the entire amount of the 2015 third-quarter dividend will be treated as return of capital.
Non-U.S. holders of Class A Shares are generally subject to U.S. federal withholding tax at a rate of 30% (subject to reduction by applicable treaty or other exception) on their share of U.S. source dividends and certain other types of U.S. source income realized by the Company. With respect to interest, however, no withholding is generally required if proper certification (on an IRS Form W-8) of a beneficial owner's foreign status has been filed with the withholding agent. Non-U.S. holders must generally provide the withholding agent with a properly completed IRS Form W-8 to obtain any reduction in withholding.
The Company will host a conference call today, November 3, 2015, at 8:30 a.m. Eastern Time to discuss its 2015 third quarter results. The call will be open to the public and can be accessed by dialing +1-888-713-4214 (callers inside the U.S.) or +1-617-213-4866 (callers outside the U.S.). The number should be dialed at least ten minutes prior to the start of the call and the passcode will be 31417786. A simultaneous webcast of the call will be available to the public on a listen-only basis through the Public Investors section of the Company's website (www.ozcap.com).
For those unable to listen to the live broadcast, a replay will be available by dialing +1-888-286-8010 (callers inside the U.S.) or +1-617-801-6888 (callers outside the U.S.), passcode 18407426, beginning approximately two hours after the event for two weeks. A webcast replay of the event will also be available on the Company's website as noted above.
Non-GAAP Financial Measures
Management evaluates Economic Income for the Och-Ziff Funds segment, the Company's only reportable operating segment under GAAP, and for the Company's Other Operations. Economic Income for the Company equals the sum of Economic Income for the Och-Ziff Funds segment and the Company's Other Operations.
The Company conducts substantially all of its business through the Och-Ziff Funds segment, which provides asset management services to its multi-strategy, opportunistic credit and equity funds, Institutional Credit Strategies and other alternative investment vehicles. The Company's Other Operations are primarily comprised of its real estate business, which provides asset management services to its real estate funds.
The Company's non-GAAP measures should not be considered as alternatives to the Company's GAAP Net Income or cash flow from operations, or as indicative of liquidity or the cash available to fund operations. The Company's non-GAAP measures may not be comparable to similarly titled measures used by other companies.
For reconciliations of the Company's non-GAAP measures to the most directly comparable GAAP measures, please see Exhibits 2 and 3 that accompany this press release.
Economic Income
In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes the adjustments described below that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating the operating performance of the Company in any given period. Management uses Economic Income as the basis on which it evaluates the financial performance of the Company and makes resource allocation and other operating decisions. Management considers it important that investors review the same operating information that it uses.
Economic Income is a measure of pre-tax operating performance that excludes the following from the Company's results on a GAAP basis:
- Income allocations to the Company's executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter) on their direct interests in the Och-Ziff Operating Group. Management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations.
- Reorganization expenses related to the Company's IPO, equity-based compensation expenses and depreciation and amortization expenses, as management does not consider these non-cash expenses to be reflective of operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement.
- Changes in the tax receivable agreement liability and net gains (losses) on investments in Och-Ziff funds, as management does not consider these items to be reflective of operating performance.
- Amounts related to the consolidated Och-Ziff funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total assets under management and fund performance. The Company also defers the recognition of incentive income allocations from the consolidated Och-Ziff funds until all clawback contingencies are resolved, consistent with the revenue recognition policy for the funds the Company does not consolidate.
In addition, expenses related to compensation and profit-sharing arrangements based on fund investment performance are recognized at the end of the relevant commitment period, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund.
As a result of the adjustments described above, as well as an adjustment to present management fees net of recurring placement and related service fees (rather than considering these fees an expense), management fees, incentive income, compensation and benefits, non-compensation expenses and net income allocated to noncontrolling interests as presented on an Economic Income basis are also non-GAAP measures.
Distributable Earnings
Distributable Earnings is a non-GAAP measure of after-tax operating performance and equals Economic Income less Adjusted Income Taxes. Adjusted Income Taxes are estimated assuming the conversion of all outstanding Partner Units into Class A Shares, on a one-to-one basis, and include the impact of payments under the tax receivable agreement. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC. Partner Units represent interests in the Och-Ziff Operating Group held by the Company's executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter), including the Och-Ziff Operating Group A Units and Och-Ziff Operating Group D Units. Distributable Earnings per Share is equal to Distributable Earnings divided by the weighted-average number of Adjusted Class A Shares.
Management believes Distributable Earnings provides useful information to investors because it uses Distributable Earnings, among other financial information, to determine the earnings available to distribute as dividends to holders of the Company's Class A Shares and to the Company's executive managing directors with respect to their Partner Units.
Forward-Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "comfortable," "assume," "remain," "maintain," "sustain," "achieve," "see," "think," "position" or the negative version of those words or other comparable words.
Any forward-looking statements contained in this press release are based upon historical information and on the Company's current plans, estimates and expectations. The inclusion of this or other forward-looking information should not be regarded as a representation by the Company or any other person that the future plans, estimates or expectations contemplated by the Company will be achieved. We caution that forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to the following: global economic, business, market and geopolitical conditions; U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; conditions impacting the alternative asset management industry; the Company's ability to successfully compete for fund investors, assets, professional talent and investment opportunities; the Company's ability to retain its active executive managing directors, managing directors and other investment professionals; the Company's successful formulation and execution of its business and growth strategies; the Company's ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to its business; and assumptions relating to the Company's operations, investment performance, financial results, financial condition, business prospects, growth strategy and liquidity.
If one or more of these or other risks or uncertainties materialize, or if the Company assumptions or estimates prove to be incorrect, its actual results may vary materially from those indicated in these statements. These factors are not and should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2014, dated February 23, 2015, and in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2015, dated May 5, 2015, as well as may be updated from time to time in the Company's other SEC filings. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not known. The forward-looking statements contained in this press release are made only as of the date of this press release. The Company does not undertake to update any forward-looking statement because of new information, future developments or otherwise.
This press release does not constitute an offer of any Och-Ziff fund.
About Och-Ziff Capital Management Group LLC
Och-Ziff Capital Management Group LLC is one of the largest institutional alternative asset managers in the world, with offices in New York, London, Hong Kong, Mumbai, Beijing, Dubai, Shanghai and Houston. Och-Ziff provides asset management services to investors globally through its multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds and other alternative investment vehicles. Och-Ziff seeks to generate consistent, positive, absolute returns across market cycles, with low volatility compared to the broader markets, and with an emphasis on preservation of capital. Och-Ziff's funds invest across multiple strategies and geographies, consistent with the investment objectives for each fund. The global investment strategies Och-Ziff employs include convertible and derivative arbitrage, corporate credit, long/short equity special situations, merger arbitrage, private investments, real estate and structured credit. As of November 1, 2015, Och-Ziff had approximately $44.4 billion in assets under management. For more information, please visit Och-Ziff's website (www.ozcap.com).
EXHIBIT 1
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------------
Three Months Ended Nine Months Ended
September 30, September 30,
--------------------------- --------------------------
2015 2014 2015 2014
------------- ------------- ------------- ------------
Revenues
Management fees $ 162,778 $ 171,906 $ 496,207 $ 494,707
Incentive income 35,615 28,011 121,262 91,022
Other revenues 579 284 1,548 931
Income of
consolidated Och-
Ziff funds 126,931 106,484 361,136 267,974
------------- ------------- ------------- ------------
Total Revenues 325,903 306,685 980,153 854,634
------------- ------------- ------------- ------------
Expenses
Compensation and
benefits 70,602 74,115 211,895 206,664
Reorganization
expenses 4,018 4,023 12,052 12,065
Interest expense 5,383 1,688 16,033 5,047
General,
administrative and
other 65,484 23,160 127,332 102,303
Expenses of
consolidated Och-
Ziff funds 82,576 50,082 220,847 127,215
------------- ------------- ------------- ------------
Total Expenses 228,063 153,068 588,159 453,294
------------- ------------- ------------- ------------
Other Income (Loss)
Net gains on
investments in
Och-Ziff funds and
joint ventures (146) 76 43 5,949
Net gains (losses)
of consolidated
Och-Ziff funds (20,627) (4,769) 21,859 115,498
------------- ------------- ------------- ------------
Total Other Income
(Loss) (20,773) (4,693) 21,902 121,447
------------- ------------- ------------- ------------
Income Before Income
Taxes 77,067 148,924 413,896 522,787
Income taxes 12,422 36,110 119,607 91,029
------------- ------------- ------------- ------------
Consolidated and
Comprehensive Net
Income $ 64,645 $ 112,814 $ 294,289 $ 431,758
============= ============= ============= ============
Allocation of
Consolidated and
Comprehensive Net
Income
Class A
Shareholders $ 17,417 $ 23,202 $ 48,048 $ 57,770
Noncontrolling
interests 78,971 83,235 270,346 343,896
Redeemable
noncontrolling
interests (31,743) 6,377 (24,105) 30,092
------------- ------------- ------------- ------------
$ 64,645 $ 112,814 $ 294,289 $ 431,758
============= ============= ============= ============
Earnings Per Class A
Share
Basic $ 0.10 $ 0.13 $ 0.27 $ 0.33
============= ============= ============= ============
Diluted $ 0.06 $ 0.09 $ 0.26 $ 0.32
============= ============= ============= ============
Weighted-Average
Class A Shares
Outstanding
Basic 177,805,122 172,959,765 177,711,669 172,541,709
============= ============= ============= ============
Diluted 484,171,524 481,078,788 181,517,750 479,936,636
============= ============= ============= ============
EXHIBIT 2
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures
(Unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------------
Three Months Ended September 30, 2015
----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
-------------- --------------- ---------------
Net income allocated to Class
A Shareholders-GAAP $ 12,640 $ 4,777 $ 17,417
Net income allocated to the
Och-Ziff Operating Group A
Units 43,505 - 43,505
Equity-based compensation 26,983 564 27,547
Income taxes 12,422 - 12,422
Adjustment for incentive
income allocations from
consolidated funds subject
to clawback 642 (4,026) (3,384)
Allocations to Och-Ziff
Operating Group D Units 3,109 138 3,247
Adjustment for expenses
related to compensation and
profit-sharing arrangements
based on fund investment
performance - 3,813 3,813
Reorganization expenses 4,018 - 4,018
Changes in tax receivable
agreement liability 533 - 533
Depreciation and amortization 2,797 189 2,986
Other adjustments 131 (687) (556)
-------------- --------------- ---------------
Economic Income-Non-GAAP $ 106,780 $ 4,768 111,548
============== ===============
Adjusted Income Taxes-Non-
GAAP(1) (45,436)
---------------
Distributable Earnings-Non-
GAAP $ 66,112
===============
Weighted-Average Class A
Shares Outstanding 177,805,122
Weighted-Average Partner
Units 324,512,597
Weighted-Average Class A
Restricted Share Units
(RSUs) 14,507,708
---------------
Weighted-Average Adjusted
Class A Shares 516,825,427
===============
Distributable Earnings Per
Adjusted Class A Share-Non-
GAAP $ 0.13
===============
Three Months Ended September 30, 2014
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Net income allocated to
Class A Shareholders-GAAP $ 18,781 $ 4,421 $ 23,202
Net income allocated to the
Och-Ziff Operating Group A
Units 57,946 - 57,946
Equity-based compensation 27,987 741 28,728
Income taxes 36,111 (1) 36,110
Adjustment for incentive
income allocations from
consolidated funds subject
to clawback (2,175) 23,910 21,735
Allocations to Och-Ziff
Operating Group D Units 4,944 - 4,944
Adjustment for expenses
related to compensation and
profit-sharing arrangements
based on fund investment
performance 3,909 (5,820) (1,911)
Reorganization expenses 4,023 - 4,023
Changes in tax receivable
agreement liability (20,653) - (20,653)
Depreciation and
amortization 1,420 187 1,607
Other adjustments (76) (63) (139)
--------------- --------------- ---------------
Economic Income-Non-GAAP $ 132,217 $ 23,375 155,592
=============== ===============
Adjusted Income Taxes-Non-
GAAP(1) (38,906)
---------------
Distributable Earnings-Non-
GAAP $ 116,686
===============
Weighted-Average Class A
Shares Outstanding 172,959,765
Weighted-Average Partner
Units 320,857,917
Weighted-Average Class A
Restricted Share Units
(RSUs) 15,737,431
---------------
Weighted-Average Adjusted
Class A Shares 509,555,113
===============
Distributable Earnings Per
Adjusted Class A Share-Non-
GAAP $ 0.23
===============
(1) Presents an estimate of income tax expense by assuming the conversion
of all Partner Units into Class A Shares, on a one-to-one basis, as
well as the impact of payments under the tax receivable agreement.
Therefore, all income (loss) of the Och-Ziff Operating Group allocated
to the Partner Units is treated as if it were allocated to Och-Ziff
Capital Management Group LLC.
EXHIBIT 3
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures
(Unaudited)
(dollars in thousands, except per share amounts)
----------------------------------------------------------------------------
Nine Months Ended September 30, 2015
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Net income allocated to
Class A Shareholders-GAAP $ 4,774 $ 43,274 $ 48,048
Net income allocated to the
Och-Ziff Operating Group A
Units 175,239 - 175,239
Equity-based compensation 84,257 2,333 86,590
Income taxes 119,607 - 119,607
Adjustment for incentive
income allocations from
consolidated funds subject
to clawback (184) (40,478) (40,662)
Allocations to Och-Ziff
Operating Group D Units 13,995 701 14,696
Adjustment for expenses
related to compensation and
profit-sharing arrangements
based on fund investment
performance - 7,407 7,407
Reorganization expenses 12,052 - 12,052
Changes in tax receivable
agreement liability (47,893) - (47,893)
Depreciation and
amortization 7,575 560 8,135
Other adjustments 532 (978) (446)
--------------- --------------- ---------------
Economic Income-Non-GAAP $ 369,954 $ 12,819 382,773
=============== ===============
Adjusted Income Taxes-Non-
GAAP(1) (94,754)
---------------
Distributable Earnings-Non-
GAAP $ 288,019
===============
Weighted-Average Class A
Shares Outstanding 177,711,669
Weighted-Average Partner
Units 324,500,933
Weighted-Average Class A
Restricted Share Units
(RSUs) 13,892,395
---------------
Weighted-Average Adjusted
Class A Shares 516,104,997
===============
Distributable Earnings Per
Adjusted Class A Share-Non-
GAAP $ 0.56
===============
Nine Months Ended September 30, 2014
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Net income allocated to
Class A Shareholders-GAAP $ 56,218 $ 1,552 $ 57,770
Net income allocated to the
Och-Ziff Operating Group A
Units 180,508 - 180,508
Equity-based compensation 83,539 1,058 84,597
Income taxes 90,919 110 91,029
Adjustment for incentive
income allocations from
consolidated funds subject
to clawback (20,394) 24,006 3,612
Allocations to Och-Ziff
Operating Group D Units 14,418 - 14,418
Adjustment for expenses
related to compensation and
profit-sharing arrangements
based on fund investment
performance 7,202 (884) 6,318
Reorganization expenses 12,065 - 12,065
Changes in tax receivable
agreement liability (24,472) - (24,472)
Depreciation and
amortization 4,680 558 5,238
Other adjustments (1,059) (241) (1,300)
--------------- --------------- ---------------
Economic Income-Non-GAAP $ 403,624 $ 26,159 429,783
=============== ===============
Adjusted Income Taxes-Non-
GAAP(1) (94,850)
---------------
Distributable Earnings-Non-
GAAP $ 334,933
===============
Weighted-Average Class A
Shares Outstanding 172,541,709
Weighted-Average Partner
Units 320,804,735
Weighted-Average Class A
Restricted Share Units
(RSUs) 14,514,598
---------------
Weighted-Average Adjusted
Class A Shares 507,861,042
===============
Distributable Earnings Per
Adjusted Class A Share-Non-
GAAP $ 0.66
===============
(1) (Presents an estimate of income tax expense by assuming the conversion
of all Partner Units into Class A Shares, on a one-to-one basis, as
well as the impact of payments under the tax receivable agreement.
Therefore, all income (loss) of the Och-Ziff Operating Group allocated
to the Partner Units is treated as if it were allocated to Och-Ziff
Capital Management Group LLC.
EXHIBIT 4
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Components of Economic Income and Reconciliation of These Non-GAAP Measures
to the Respective GAAP Measures (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Three Months Ended September 30, 2015
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Management fees-GAAP $ 157,421 $ 5,357 $ 162,778
Adjustment to management
fees(1) (75) - (75)
--------------- --------------- ---------------
Management Fees-Economic
Income Basis-Non-GAAP 157,346 5,357 162,703
--------------- --------------- ---------------
Incentive income-GAAP 35,615 - 35,615
Adjustment to incentive
income(2) 1,292 2,046 3,338
--------------- --------------- ---------------
Incentive Income-Economic
Income Basis-Non-GAAP 36,907 2,046 38,953
--------------- --------------- ---------------
Other revenues 572 7 579
--------------- --------------- ---------------
Total Revenues-Economic
Income Basis-Non-GAAP $ 194,825 $ 7,410 $ 202,235
=============== =============== ===============
Compensation and benefits-
GAAP $ 63,912 $ 6,690 $ 70,602
Adjustment to compensation
and benefits(3) (30,163) (4,514) (34,677)
--------------- --------------- ---------------
Compensation and Benefits-
Economic Income Basis-Non-
GAAP $ 33,749 $ 2,176 $ 35,925
=============== =============== ===============
Interest expense and
general, administrative and
other expenses-GAAP $ 70,212 $ 655 $ 70,867
Adjustment to interest
expense and general,
administrative and other
expenses(4) (15,913) (189) (16,102)
--------------- --------------- ---------------
Non-Compensation Expenses-
Economic Income Basis-Non-
GAAP $ 54,299 $ 466 $ 54,765
=============== =============== ===============
Net gains (losses) on
investments in Och-Ziff
funds and joint ventures-
GAAP $ (146) $ - $ (146)
Adjustment to net gains on
investments in Och-Ziff
funds and joint ventures(5) 146 - 146
--------------- --------------- ---------------
Net Gains on Joint Ventures-
GAAP $ - $ - $ -
=============== =============== ===============
Net income allocated to
noncontrolling interests-
GAAP $ 45,962 $ 33,009 $ 78,971
Adjustment to net income
allocated to noncontrolling
interests(6) (45,965) (33,009) (78,974)
--------------- --------------- ---------------
Net Loss Allocated to
Noncontrolling Interests-
Economic Income Basis-Non-
GAAP $ (3) $ - $ (3)
=============== =============== ===============
Three Months Ended September 30, 2014
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Management fees-GAAP $ 166,837 $ 5,069 $ 171,906
Adjustment to management
fees(1) (3,569) - (3,569)
--------------- --------------- ---------------
Management Fees-Economic
Income Basis-Non-GAAP 163,268 5,069 168,337
--------------- --------------- ---------------
Incentive income-GAAP 28,011 - 28,011
Adjustment to incentive
income(2) 3,100 29,355 32,455
--------------- --------------- ---------------
Incentive Income-Economic
Income Basis-Non-GAAP 31,111 29,355 60,466
--------------- --------------- ---------------
Other revenues 277 7 284
--------------- --------------- ---------------
Total Revenues-Economic
Income Basis-Non-GAAP $ 194,656 $ 34,431 $ 229,087
=============== =============== ===============
Compensation and benefits-
GAAP $ 69,461 $ 4,654 $ 74,115
Adjustment to compensation
and benefits(3) (36,841) 5,080 (31,761)
--------------- --------------- ---------------
Compensation and Benefits-
Economic Income Basis-Non-
GAAP $ 32,620 $ 9,734 $ 42,354
=============== =============== ===============
Interest expense and
general, administrative and
other expenses-GAAP $ 23,337 $ 1,511 $ 24,848
Adjustment to interest
expense and general,
administrative and other
expenses(4) 6,487 (189) 6,298
--------------- --------------- ---------------
Non-Compensation Expenses-
Economic Income Basis-Non-
GAAP $ 29,824 $ 1,322 $ 31,146
=============== =============== ===============
Net gains (losses) on
investments in Och-Ziff
funds and joint ventures-
GAAP $ 76 $ - $ 76
Adjustment to net gains on
investments in Och-Ziff
funds and joint ventures(5) (76) - (76)
--------------- --------------- ---------------
Net Gains on Joint Ventures-
GAAP $ - $ - $ -
=============== =============== ===============
Net income allocated to
noncontrolling interests-
GAAP $ 44,385 $ 38,850 $ 83,235
Adjustment to net income
allocated to noncontrolling
interests(6) (44,390) (38,850) (83,240)
--------------- --------------- ---------------
Net Loss Allocated to
Noncontrolling Interests-
Economic Income Basis-Non-
GAAP $ (5) $ - $ (5)
=============== =============== ===============
(1) Adjustment to present management fees net of recurring placement and
related service fees, as management considers these fees a reduction
in management fees, not an expense. The impact of eliminations related
to the consolidated Och-Ziff funds is also removed.
(2) Adjustment to exclude the impact of eliminations related to the
consolidated Och-Ziff funds.
(3) Adjustment to exclude equity-based compensation, as management does
not consider these non-cash expenses to be reflective of the operating
performance of the Company. However, the fair value of RSUs that are
settled in cash to employees or executive managing directors is
included as an expense at the time of settlement. Further, expenses
related to compensation and profit-sharing arrangements based on fund
investment performance are recognized at the end of the relevant
commitment period, as management reviews the total compensation
expense related to these arrangements in relation to any incentive
income earned by the relevant fund. Distributions to the Och-Ziff
Operating Group D Units are also excluded, as management reviews
operating performance at the Och-Ziff Operating Group level, where
substantially all of the Company's operations are performed, prior to
making any income allocations.
(4) Adjustment to exclude depreciation, amortization and changes in the
tax receivable agreement liability, as management does not consider
these items to be reflective of the operating performance of the
Company. Additionally, recurring placement and related service fees
are excluded, as management considers these fees a reduction in
management fees, not an expense.
(5) Adjustment to exclude net gains on investments in Och-Ziff funds, as
management does not consider these gains to be reflective of the
operating performance of the Company.
(6) Adjustment to exclude amounts allocated to the executive managing
directors and the Ziffs (until they exchanged their remaining
interests during the 2014 second quarter) on their interests in the
Och-Ziff Operating Group, as management reviews the operating
performance of the Company at the Och-Ziff Operating Group level. The
Company conducts substantially all of its activities through the Och-
Ziff Operating Group. Additionally, the impact of the consolidated
Och-Ziff funds, including the allocation of earnings to investors in
those funds, is also removed.
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Components of Economic Income and Reconciliation of These Non-GAAP Measures
to the Respective GAAP Measures (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Nine Months Ended September 30, 2015
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Management fees-GAAP $ 481,249 $ 14,958 $ 496,207
Adjustment to management
fees(1) (2,652) - (2,652)
--------------- --------------- ---------------
Management Fees-Economic
Income Basis-Non-GAAP 478,597 14,958 493,555
--------------- --------------- ---------------
Incentive income-GAAP 121,262 - 121,262
Adjustment to incentive
income(2) 8,710 5,801 14,511
--------------- --------------- ---------------
Incentive Income-Economic
Income Basis-Non-GAAP 129,972 5,801 135,773
--------------- --------------- ---------------
Other revenues 1,523 25 1,548
--------------- --------------- ---------------
Total Revenues-Economic
Income Basis-Non-GAAP $ 610,092 $ 20,784 $ 630,876
=============== =============== ===============
Compensation and benefits-
GAAP $ 194,931 $ 16,964 $ 211,895
Adjustment to compensation
and benefits(3) (99,111) (10,440) (109,551)
--------------- --------------- ---------------
Compensation and Benefits-
Economic Income Basis-Non-
GAAP $ 95,820 $ 6,524 $ 102,344
=============== =============== ===============
Interest expense and
general, administrative and
other expenses-GAAP $ 141,363 $ 2,002 $ 143,365
Adjustment to interest
expense and general,
administrative and other
expenses(4) 2,965 (561) 2,404
--------------- --------------- ---------------
Non-Compensation Expenses-
Economic Income Basis-Non-
GAAP $ 144,328 $ 1,441 $ 145,769
=============== =============== ===============
Net gains on investments in
Och-Ziff funds and joint
ventures-GAAP $ 41 $ 2 $ 43
Adjustment to net gains on
investments in Och-Ziff
funds and joint ventures(5) (41) (2) (43)
--------------- --------------- ---------------
Net Gains on Joint Ventures-
GAAP $ - $ - $ -
=============== =============== ===============
Net income allocated to
noncontrolling interests-
GAAP $ 194,563 $ 75,783 $ 270,346
Adjustment to net income
allocated to noncontrolling
interests(6) (194,573) (75,783) (270,356)
--------------- --------------- ---------------
Net Loss Allocated to
Noncontrolling Interests-
Economic Income Basis-Non-
GAAP $ (10) $ - $ (10)
=============== =============== ===============
Nine Months Ended September 30, 2014
-----------------------------------------------
Och-Ziff Other Total
Funds Segment Operations Company
--------------- --------------- ---------------
Management fees-GAAP $ 484,396 $ 10,311 $ 494,707
Adjustment to management
fees(1) (12,156) - (12,156)
--------------- --------------- ---------------
Management Fees-Economic
Income Basis-Non-GAAP 472,240 10,311 482,551
--------------- --------------- ---------------
Incentive income-GAAP 91,022 - 91,022
Adjustment to incentive
income(2) 13,476 29,355 42,831
--------------- --------------- ---------------
Incentive Income-Economic
Income Basis-Non-GAAP 104,498 29,355 133,853
--------------- --------------- ---------------
Other revenues 910 21 931
--------------- --------------- ---------------
Total Revenues-Economic
Income Basis-Non-GAAP $ 577,648 $ 39,687 $ 617,335
=============== =============== ===============
Compensation and benefits-
GAAP $ 194,614 $ 12,050 $ 206,664
Adjustment to compensation
and benefits(3) (105,159) (174) (105,333)
--------------- --------------- ---------------
Compensation and Benefits-
Economic Income Basis-Non-
GAAP $ 89,455 $ 11,876 $ 101,331
=============== =============== ===============
Interest expense and
general, administrative and
other expenses-GAAP $ 105,138 $ 2,212 $ 107,350
Adjustment to interest
expense and general,
administrative and other
expenses(4) (15,689) (560) (16,249)
--------------- --------------- ---------------
Non-Compensation Expenses-
Economic Income Basis-Non-
GAAP $ 89,449 $ 1,652 $ 91,101
=============== =============== ===============
Net gains on investments in
Och-Ziff funds and joint
ventures-GAAP $ 5,949 $ - $ 5,949
Adjustment to net gains on
investments in Och-Ziff
funds and joint ventures(5) (1,075) - (1,075)
--------------- --------------- ---------------
Net Gains on Joint Ventures-
GAAP $ 4,874 $ - $ 4,874
=============== =============== ===============
Net income allocated to
noncontrolling interests-
GAAP $ 235,917 $ 107,979 $ 343,896
Adjustment to net income
allocated to noncontrolling
interests(6) (235,923) (107,979) (343,902)
--------------- --------------- ---------------
Net Loss Allocated to
Noncontrolling Interests-
Economic Income Basis-Non-
GAAP $ (6) $ - $ (6)
=============== =============== ===============
(1) Adjustment to present management fees net of recurring placement and
related service fees, as management considers these fees a reduction
in management fees, not an expense. The impact of eliminations related
to the consolidated Och-Ziff funds is also removed.
(2) Adjustment to exclude the impact of eliminations related to the
consolidated Och-Ziff funds.
(3) Adjustment to exclude equity-based compensation, as management does
not consider these non-cash expenses to be reflective of the operating
performance of the Company. However, the fair value of RSUs that are
settled in cash to employees or executive managing directors is
included as an expense at the time of settlement. Further, expenses
related to compensation and profit-sharing arrangements based on fund
investment performance are recognized at the end of the relevant
commitment period, as management reviews the total compensation
expense related to these arrangements in relation to any incentive
income earned by the relevant fund. Distributions to the Och-Ziff
Operating Group D Units are also excluded, as management reviews
operating performance at the Och-Ziff Operating Group level, where
substantially all of the Company's operations are performed, prior to
making any income allocations.
(4) Adjustment to exclude depreciation, amortization and changes in the
tax receivable agreement liability, as management does not consider
these items to be reflective of the operating performance of the
Company. Additionally, recurring placement and related service fees
are excluded, as management considers these fees a reduction in
management fees, not an expense.
(5) Adjustment to exclude net gains on investments in Och-Ziff funds, as
management does not consider these gains to be reflective of the
operating performance of the Company.
(6) Adjustment to exclude amounts allocated to the executive managing
directors and the Ziffs (until they exchanged their remaining
interests during the 2014 second quarter) on their interests in the
Och-Ziff Operating Group, as management reviews the operating
performance of the Company at the Och-Ziff Operating Group level. The
Company conducts substantially all of its activities through the Och-
Ziff Operating Group. Additionally, the impact of the consolidated
Och-Ziff funds, including the allocation of earnings to investors in
those funds, is also removed.
EXHIBIT 6
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Summary Of Changes In Assets Under Management(1) (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Three Months Ended September 30, 2015
-----------------------------------------------
Distributions
Inflows / / Other
June 30, 2015 (Outflows) Reductions
--------------- --------------- ---------------
Multi-strategy funds $ 32,990,458 $ (1,583,355) $ -
Credit
Opportunistic credit funds 5,084,611 7,860 (99,100)
Institutional Credit
Strategies 6,567,980 489,567 -
Real estate funds 2,003,552 13,246 (72,363)
Other 1,323,313 (3,475) -
--------------- --------------- ---------------
Total $ 47,969,914 $ (1,076,157) $ (171,463)
=============== =============== ===============
Three Months Ended
September 30, 2015
-------------------------------
Appreciation /
(Depreciation) September 30,
(2) 2015
--------------- ---------------
Multi-strategy funds $ (1,926,127) $ 29,480,976
Credit
Opportunistic credit funds (136,027) 4,857,344
Institutional Credit
Strategies 2,571 7,060,118
Real estate funds (3,678) 1,940,757
Other (81,092) 1,238,746
--------------- ---------------
Total $ (2,144,353) $ 44,577,941
=============== ===============
Three Months Ended September 30, 2014
-----------------------------------------------
Distributions
Inflows / / Other
June 30, 2014 (Outflows) Reductions
--------------- --------------- ---------------
Multi-strategy funds $ 33,968,915 $ (292,243) $ -
Credit
Opportunistic credit funds 4,974,067 68,947 (69,400)
Institutional Credit
Strategies 4,027,910 666,858 -
Real estate funds 1,833,471 261,329 (18,208)
Other 1,079,841 22,057 -
--------------- --------------- ---------------
Total $ 45,884,204 $ 726,948 $ (87,608)
=============== =============== ===============
Three Months Ended
September 30, 2014
-------------------------------
Appreciation /
(Depreciation) September 30,
(2) 2014
--------------- ---------------
Multi-strategy funds $ 164,498 $ 33,841,170
Credit
Opportunistic credit funds 100,216 5,073,830
Institutional Credit
Strategies 3,488 4,698,256
Real estate funds (7,968) 2,068,624
Other (331) 1,101,567
--------------- ---------------
Total $ 259,903 $ 46,783,447
=============== ===============
Nine Months Ended September 30, 2015
-----------------------------------------------
Distributions
December 31, Inflows / / Other
2014 (Outflows) Reductions
--------------- --------------- ---------------
Multi-strategy funds $ 34,100,390 $ (4,184,040) $ -
Credit
Opportunistic credit funds 5,098,600 424,314 (636,290)
Institutional Credit
Strategies 5,166,734 1,884,714 -
Real estate funds 2,022,399 77,247 (155,304)
Other 1,146,292 87,657 (1)
--------------- --------------- ---------------
Total $ 47,534,415 $ (1,710,108) $ (791,595)
=============== =============== ===============
Nine Months Ended
September 30, 2015
-------------------------------
Appreciation /
(Depreciation) September 30,
(2) 2015
--------------- ---------------
Multi-strategy funds $ (435,374) $ 29,480,976
Credit
Opportunistic credit funds (29,280) 4,857,344
Institutional Credit
Strategies 8,670 7,060,118
Real estate funds (3,585) 1,940,757
Other 4,798 1,238,746
--------------- ---------------
Total $ (454,771) $ 44,577,941
=============== ===============
Nine Months Ended September 30, 2014
----------------------------------------------
Distributions
December 31, Inflows / / Other
2013 (Outflows) Reductions
--------------- -------------- ---------------
Multi-strategy funds $ 31,768,578 $ 1,446,150 $ -
Credit
Opportunistic credit funds 4,305,438 600,734 (299,265)
Institutional Credit
Strategies 2,605,628 2,089,696 -
Real estate funds 970,568 1,465,069 (363,633)
Other 588,600 496,191 -
--------------- -------------- ---------------
Total $ 40,238,812 $ 6,097,840 $ (662,898)
=============== ============== ===============
Nine Months Ended
September 30, 2014
------------------------------
Appreciation /
(Depreciation) September 30,
(2) 2014
--------------- --------------
Multi-strategy funds $ 626,442 $ 33,841,170
Credit
Opportunistic credit funds 466,923 5,073,830
Institutional Credit
Strategies 2,932 4,698,256
Real estate funds (3,380) 2,068,624
Other 16,776 1,101,567
--------------- --------------
Total $ 1,109,693 $ 46,783,447
=============== ==============
(1) Includes amounts invested by the Company, its executive managing
directors, employees and certain other related parties for which the
Company charged no management fees and received no incentive income
for the periods presented. Amounts presented in this table are not the
amounts used to calculate management fees and incentive income for the
respective periods.
(2) Appreciation (depreciation) reflects the aggregate net capital
appreciation (depreciation) for the entire period and is presented on
a total return basis, net of all fees and expenses (except incentive
income on unrealized gains attributable to investments in certain
funds that the Company, as investment manager, determines lack a
readily ascertainable fair value, are illiquid or otherwise should be
held until the resolution of a special event or circumstance that
could reduce returns on these investments at the time of realization),
and includes the reinvestment of all dividends and other income.
Management fees and incentive income vary by product.
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information(1) (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management as of
September 30,
-----------------------------
2015 2014
-------------- --------------
Multi-strategy funds
OZ Master Fund(2) $ 24,307,461 $ 27,584,128
OZ Asia Master Fund 1,135,619 1,359,197
OZ Europe Master Fund 886,764 1,220,374
OZ Enhanced Master Fund 1,116,080 1,036,392
Och-Ziff European Multi-Strategy UCITS Fund 373,139 479,974
Other funds 1,661,913 2,161,105
-------------- --------------
29,480,976 33,841,170
-------------- --------------
Credit
Opportunistic credit funds:
OZ Credit Opportunities Master Fund 1,527,555 1,056,161
Customized Credit Focused Platform 1,775,852 1,744,240
Closed-end opportunistic credit funds 1,013,205 1,771,969
Other funds 540,732 501,460
-------------- --------------
4,857,344 5,073,830
Institutional Credit Strategies 7,060,118 4,698,256
-------------- --------------
11,917,462 9,772,086
-------------- --------------
Real estate funds 1,940,757 2,068,624
Other 1,238,746 1,101,567
-------------- --------------
Total $ 44,577,941 $ 46,783,447
============== ==============
Returns for the Nine Annualized Returns
Months Ended September 30, Since Inception
--------------------------- Through September 30,
2015 2014 2015
------------- ------------- ---------------------
Gross Net Gross Net Gross Net
------ ------ ------ ------ ------ ------
Multi-strategy funds
OZ Master Fund(2) -0.7% -2.1% 4.9% 2.8% 17.5% (2) 12.2% (2)
OZ Asia Master Fund 4.6% 2.8% -2.0% -3.5% 9.6% 5.5%
OZ Europe Master Fund 5.9% 3.7% 0.7% -0.7% 12.1% 8.0%
OZ Enhanced Master Fund -2.7% -4.1% 5.6% 3.3% 12.1% 7.6%
Och-Ziff European Multi-
Strategy UCITS Fund 6.7% 4.1% -4.6% -6.1% 6.2% 3.2%
Other funds n/m n/m n/m n/m n/m n/m
Credit
Opportunistic credit
funds:
OZ Credit Opportunities
Master Fund -1.8% -2.5% 11.2% 8.1% 18.6% 13.6%
Customized Credit
Focused Platform 0.8% 0.4% 15.3% 11.5% 20.3% 15.4%
Closed-end opportunistic See the following page for information on the
credit funds Company's closed-end opportunistic credit funds.
Other funds n/m n/m n/m n/m n/m n/m
Institutional Credit See the following page for information on the
Strategies Company's institutional credit strategies.
Real estate funds See the second following page for information on
the Company's real estate funds.
Other n/m n/m n/m n/m n/m n/m
n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - continued (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management as of
September 30,
-----------------------------
2015 2014
-------------- --------------
Closed-end Opportunistic Credit Funds
(Investment Period)
OZ European Credit Opportunities Fund (2012-
2015) $ 283,881 $ 566,792
OZ Structured Products Domestic Fund II (2011-
2014)(7) 307,138 504,560
OZ Structured Products Offshore Fund II (2011-
2014)(7) 274,577 428,369
OZ Structured Products Offshore Fund I (2010-
2013)(7) 25,365 31,898
OZ Structured Products Domestic Fund I (2010-
2013)(7) 15,534 21,749
Other funds 106,710 218,601
-------------- --------------
$ 1,013,205 $ 1,771,969
============== ==============
Inception to Date as of September 30, 2015
-------------------------------------------------
IRR
-------------
Total
Total Invested Gross Net Gross
Commitments Capital (3) (4) (5) MOIC (6)
------------ ------------ ------ ------ ---------
Closed-end Opportunistic
Credit Funds (Investment
Period)
OZ European Credit
Opportunities Fund (2012-
2015) $ 459,600 $ 305,487 17.7% 13.3% 1.4x
OZ Structured Products
Domestic Fund II (2011-
2014)(7) 326,850 326,850 21.0% 16.2% 1.8x
OZ Structured Products
Offshore Fund II (2011-
2014)(7) 304,531 304,531 18.1% 13.7% 1.6x
OZ Structured Products
Offshore Fund I (2010-
2013)(7) 155,098 155,098 24.1% 19.3% 2.1x
OZ Structured Products
Domestic Fund I (2010-
2013)(7) 99,986 99,986 23.0% 18.3% 2.0x
Other funds 298,250 268,250 n/m n/m n/m
------------ ------------
$ 1,644,315 $ 1,460,202
============ ============
n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
Assets Under Management
as of September 30,
-----------------------
Initial
Closing Date Deal Size 2015 2014
------------------ ----------- ----------- -----------
Institutional Credit
Strategies
CLOs:
OZLM I July 19, 2012 $ 510,700 $ 506,324 $ 467,617
OZLM II November 1, 2012 560,100 517,966 516,428
OZLM III February 20, 2013 653,250 614,150 612,559
OZLM IV June 27, 2013 600,000 543,673 542,083
OZLM V December 17, 2013 501,250 471,084 469,575
OZLM VI April 16, 2014 621,250 593,404 591,865
OZLM VII June 26, 2014 824,750 796,767 796,271
OZLM VIII September 9, 2014 622,250 596,580 596,858
OZLM IX December 22, 2014 510,208 495,900 -
OZLM XI March 12, 2015 510,500 491,450 -
OZLM XII May 28, 2015 565,650 546,435 -
OZLM XIII August 6, 2015 511,600 493,012 -
----------- ----------- -----------
6,991,508 6,666,745 4,593,256
Other funds n/a n/a 393,373 105,000
----------- ----------- -----------
$ 6,991,508 $ 7,060,118 $ 4,698,256
=========== =========== ===========
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - continued (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management as of
September 30,
-----------------------------
2015 2014
-------------- --------------
Real Estate Funds (Investment Period)
Och-Ziff Real Estate Fund I (2005-2010)(7) $ 35,664 $ 50,909
Och-Ziff Real Estate Fund II (2011-2014)(7) 349,860 446,068
Och-Ziff Real Estate Fund III (2014-2019)(13) 1,447,096 1,438,000
Other funds 108,137 133,647
-------------- --------------
$ 1,940,757 $ 2,068,624
============== ==============
Inception to Date as of September 30, 2015
----------------------------------------------------------
Total Investments
----------------------------------------------
Gross Net Gross
Total Invested Total IRR IRR MOIC
Commitments Capital (9) Value (10) (11) (5) (12)
----------- ----------- ----------- ------ ------ --------
Real Estate Funds
(Investment
Period)
Och-Ziff Real
Estate Fund I
(2005-2010)(7) $ 408,081 $ 384,868 $ 773,452 25.1% 15.4% 2.0x
Och-Ziff Real
Estate Fund II
(2011-2014)(7) 839,508 723,770 1,235,158 35.5% 22.7% 1.7x
Och-Ziff Real
Estate Fund III
(2014-2019)(13) 1,500,000 213,265 224,969 n/m n/m n/m
Other funds 229,507 118,234 167,349 n/m n/m n/m
----------- ----------- -----------
$ 2,977,096 $ 1,440,137 $ 2,400,928
=========== =========== ===========
Inception to Date as of September 30, 2015
------------------------------------------
Realized/Partially Realized Investments
(8)
------------------------------------------
Gross
Invested Total Gross MOIC
Capital Value IRR (11) (12)
----------- ----------- -------- --------
Real Estate Funds (Investment
Period)
Och-Ziff Real Estate Fund I
(2005-2010)(7) $ 359,360 $ 765,870 28.0% 2.1x
Och-Ziff Real Estate Fund II
(2011-2014)(7) 492,355 935,096 41.3% 1.9x
Och-Ziff Real Estate Fund III
(2014-2019)(13) - - n/m n/m
Other funds 22,419 26,483 n/m n/m
----------- -----------
$ 874,134 $ 1,727,449
=========== ===========
Unrealized Investments
as of September 30, 2015
--------------------------------
Invested Total Gross
Capital Value MOIC(12)
----------- ----------- --------
Real Estate Funds (Investment Period)
Och-Ziff Real Estate Fund I (2005-2010)(7) $ 25,508 $ 7,582 0.3x
Och-Ziff Real Estate Fund II (2011-2014)(7) 231,415 300,062 1.3x
Och-Ziff Real Estate Fund III (2014-
2019)(13) 213,265 224,969 n/m
Other funds 95,815 140,866 n/m
----------- -----------
$ 566,003 $ 673,479
=========== ===========
n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - Footnotes
----------------------------------------------------------------------------
(1) The return information reflected in these tables represents, where
applicable, the composite performance of all feeder funds that
comprise each of the master funds presented. Gross return information
is generally calculated using the total return of all feeder funds,
net of all fees and expenses except management fees and incentive
income of such feeder funds and master funds and the returns of each
feeder fund include the reinvestment of all dividends and other
income. Net return information is generally calculated as the gross
returns less management fees and incentive income (except incentive
income on unrealized gains attributable to investments in certain
funds that the Company, as investment manager, determines lack a
readily ascertainable fair value, are illiquid or otherwise should be
held until the resolution of a special event or circumstance ("Special
Investments") that could reduce returns on these investments at the
time of realization). Return information also includes realized and
unrealized gains and losses attributable to Special Investments and
initial public offering investments that are not allocated to all
investors in the feeder funds. Investors that were not allocated
Special Investments and/or initial public offering investments may
experience materially different returns. The performance calculation
for the OZ Master Fund excludes realized and unrealized gains and
losses attributable to currency hedging specific to certain investors
investing in OZ Master Fund in currencies other than the U.S. Dollar.
(2) The annualized returns since inception are those of the Och-Ziff
Multi-Strategy Composite, which represents the composite performance
of all accounts that were managed in accordance with the Company's
broad multi-strategy mandate that were not subject to portfolio
investment restrictions or other factors that limited the Company's
investment discretion since inception on April 1, 1994. Performance is
calculated using the total return of all such accounts net of all
investment fees and expenses of such accounts, except incentive income
on unrealized gains attributable to Special Investments that could
reduce returns in these investments at the time of realization, and
the returns include the reinvestment of all dividends and other
income. For the period from April 1, 1994 through December 31, 1997,
the returns are gross of certain overhead expenses that were
reimbursed by the accounts. Such reimbursement arrangements were
terminated at the inception of the OZ Master Fund on January 1, 1998.
The size of the accounts comprising the composite during the time
period shown vary materially. Such differences impacted the Company's
investment decisions and the diversity of the investment strategies
followed. Furthermore, the composition of the investment strategies
the Company follows is subject to its discretion and have varied
materially since inception and are expected to vary materially in the
future. As of September 30, 2015, the gross and net annualized returns
since the OZ Master Fund's inception on January 1, 1998 were 13.4% and
9.1%, respectively.
(3) Represents funded capital commitments net of recallable distributions
to investors.
(4) Gross internal rate of return ("IRR") for the Company's closed-end
opportunistic credit funds represents the estimated, unaudited,
annualized return based on the timing of cash inflows and outflows for
the fund as of September 30, 2015, including the fair value of
unrealized investments as of such date, together with any appreciation
or depreciation from related hedging activity. Gross IRR does not
include the effects of management fees or incentive income, which
would reduce the return, and includes the reinvestment of all fund
income.
(5) Net IRR is calculated as described in footnotes (4) and (11), but is
reduced by all management fees and for the real estate funds other
fund-level fees and expenses not adjusted for in the calculation of
gross IRR. Net IRR is further reduced by accrued and paid incentive
income, which will be payable upon the distribution of each fund's
capital in accordance with the terms of the relevant fund. Accrued
incentive income may be higher or lower at such time. The net IRR
represents a composite rate of return for a fund and does not reflect
the net IRR specific to any individual investor.
(6) Gross multiple of invested capital ("MOIC") for the Company's closed-
end opportunistic credit funds is calculated by dividing the sum of
the net asset value of the fund, accrued incentive income, life-to-
date incentive income and management fees paid and any non-recallable
distributions made from the fund by the invested capital.
(7) These funds have concluded their investment periods, and therefore the
Company expects assets under management for these funds to decrease as
investments are sold and the related proceeds are distributed to the
investors in these funds.
(8) An investment is considered partially realized when the total amount
of proceeds received, including dividends, interest or other
distributions of income and return of capital, represents at least 50%
of invested capital.
(9) Invested capital represents total aggregate contributions made for
investments by the fund.
(10) Total value represents the sum of realized distributions and the fair
value of unrealized and partially realized investments as of September
30, 2015. Total value will be impacted (either positively or
negatively) by future economic and other factors. Accordingly, the
total value ultimately realized will likely be higher or lower than
the amounts presented as of September 30, 2015.
(11) Gross IRR for the Company's real estate funds represents the
estimated, unaudited, annualized return based on the timing of cash
inflows and outflows for the aggregated investments as of September
30, 2015, including the fair value of unrealized and partially
realized investments as of such date, together with any unrealized
appreciation or depreciation from related hedging activity. Gross IRR
is not adjusted for estimated management fees, incentive income or
other fees or expenses to be paid by the fund, which would reduce the
return.
(12) Gross MOIC for the Company's real estate funds is calculated by
dividing the value of a fund's investments by the invested capital,
prior to adjustments for incentive income, management fees or other
expenses to be paid by the fund.
(13) This fund recently launched and has only invested a small portion of
its committed capital; therefore, IRR and MOIC information is not
presented, as it is not meaningful.
EXHIBIT 8
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Longer-Term Assets Under Management (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
As of September 30, 2015, approximately 37% of the Company's assets under management were subject to initial commitment periods of three years or longer. The Company earns incentive income on these assets based on the cumulative investment performance generated over this commitment period. The table below presents the amount of these assets under management, as well as the amount of incentive income accrued at the fund level but for which the commitment period has not concluded. These amounts have not yet been recognized in our revenues, as the Company recognizes incentive income at the end of the commitment period when amounts are no longer subject to clawback. Further, these amounts may ultimately not be recognized as revenue by the Company in the event of future losses in the respective funds.
September 30, 2015
-----------------------------
Longer-Term Accrued
Assets Under Unrecognized
Management Incentive
-------------- --------------
Multi-strategy funds $ 3,494,526 $ 38,360
Credit
Opportunistic credit funds 3,676,514 133,047
Institutional Credit Strategies 7,000,002 -
Real estate funds 1,940,757 109,053
Other 284,026 -
-------------- --------------
$ 16,395,825 $ 280,460
============== ==============
The Company recognizes incentive income on its longer-term assets under management in multi-strategy funds and open-end opportunistic credit funds at the end of their respective commitment periods, which are generally three to five years. The Company expects the commitment period with respect to approximately 18% of the longer-term assets under management in the multi-strategy funds to mature during the remainder of 2015. The Company does not expect the initial commitment period for a significant amount of longer-term assets under management in its open-end opportunistic credit funds to expire during the remainder of 2015. Incentive income related to assets under management in the Company's closed-end opportunistic credit funds and its real estate funds is generally recognized at or near the end of the life of each fund. These funds generally begin to make distributions after the conclusion of their respective investment period, as presented in the tables in Exhibit 7. However, these investment periods may generally be extended for an additional one to two years.
EXHIBIT 9
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Financial Supplement (Unaudited)
As of October 1, 2015
----------------------------------------------------------------------------
OZ Master Fund by Investment Investors by Type(1)
Strategy
Long/Short Equity Special Pensions 32%
Situations 66%
Structured Credit 12% Private Banks 17%
Convertible and Derivative Fund-of-Funds 13%
Arbitrage 9%
Merger Arbitrage 6% Corporate, Institutional and
Other 13%
Corporate Credit 6% Foundations and Endowments 12%
Private Investments 1% Related Parties 7%
Family Offices and Individuals 6%
Assets Under Management by Investors by Geography(1)
Geography(2)
North America 75% North America 74%
Europe 16% Europe 15%
Asia 9% Asia and Other 11%
(1) Presents the composition of the Company's fund investor base across
its funds excluding investors in its CLOs.
(2) The North American exposure includes the United States, Canada,
Central America and South America. The European exposure includes
Africa and the Middle East. The Asian exposure includes Australia and
New Zealand.
EXHIBIT 10
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Assets Under Management Trends (Unaudited)
(dollars in thousands)
----------------------------------------------------------------------------
Assets Under Management as of
-----------------------------------------------------------
September 30, December 31, December 31, December 31,
2015 2014 2013 2012
-------------- -------------- -------------- --------------
Total Assets
Under
Management $ 44,577,941 $ 47,534,415 $ 40,238,812 $ 32,603,930
Year-over-Year
Growth -5% 18% 23% 13%
Longer-Term
Assets Under
Management(1) $ 16,395,825 $ 15,150,049 $ 10,640,836 $ 6,947,746
% of Total
Assets Under
Management 37% 32% 26% 21%
Assets Under
Management by
Product
Multi-strategy
funds 66% 72% 79% 85%
Credit
Opportunistic
credit funds 11% 11% 11% 7%
Institutional
Credit
Strategies 16% 11% 6% 3%
Real estate
funds 4% 4% 2% 3%
Other 3% 2% 2% 2%
-------------- -------------- -------------- --------------
Total assets
under
management in
credit, real
estate and
other funds 34% 28% 21% 15%
(1) Longer-term assets under management are those subject to initial
commitment periods of three years or longer. Please see Exhibit 8 for
additional information.
Investor Relations Contact:Tina MadonManaging DirectorHead of Public Markets Investor RelationsOch-Ziff Capital Management Group [email protected] Relations Contact:George Sard or Jonathan GasthalterSard Verbinnen & Co+1-212-687-8080
Source: Och-Ziff Capital Management Group LLC
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