Document


 
 
 
 
 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, DC 20549
 
 
 
 
 
FORM 8-K
 
 
 
 
 
CURRENT REPORT
Pursuant to Section 13 OR 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): October 31, 2018
 
 
 
 
 
The Carlyle Group L.P.
(Exact name of registrant as specified in its charter)
 
 
 
 
 

 
 
 
 
 
Delaware
 
001-35538
 
45-2832612
(State or Other Jurisdiction
of Incorporation)
 
(Commission
File Number)
 
(IRS Employer
Identification No.)
 
 
1001 Pennsylvania Avenue, NW
Washington, D.C.
 
20004-2505
(Address of Principal Executive Offices)
 
(Zip Code)
(202) 729-5626
(Registrant’s Telephone Number, Including Area Code)
Not Applicable
(Former Name or Former Address, if Changed Since Last Report)
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
¨
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
¨
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
¨
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
¨
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company ¨
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

 
 
 
 
 






Item 2.02
Results of Operations and Financial Condition.
On October 31, 2018, The Carlyle Group L.P. issued a summary press release and a detailed earnings presentation announcing financial results for its third quarter ended September 30, 2018. The summary press release and the earnings presentation are furnished as Exhibit 99.1 and Exhibit 99.2, respectively, to this Report.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and Exhibits 99.1 and 99.2 incorporated in this Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall such information or Exhibits 99.1 and 99.2 be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.
Item 9.01
Financial Statements and Exhibits.
(d)
Exhibits.
 
 
 
Exhibit No.
  
Description
 
 
99.1
  
 
 
99.2
  
 
 
 







SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
 
 
 
 
 
 
 
 
THE CARLYLE GROUP L.P.
 
 
 
 
 
 
 
 
By:
 
Carlyle Group Management L.L.C.,
 
 
 
 
 
 
its general partner
 
 
 
 
Date: October 31, 2018
 
 
 
By:
 
/s/ Curtis L. Buser
 
 
 
 
Name:
 
Curtis L. Buser
 
 
 
 
Title:
 
Chief Financial Officer





Exhibit


Exhibit 99.1
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=4 

The Carlyle Group Announces Third Quarter 2018 Financial Results
Washington, DC, October 31, 2018Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unaudited results for the third quarter ended September 30, 2018.

Carlyle Co-CEOs Kewsong Lee and Glenn Youngkin said, “During the third quarter, we remained on track or ahead of schedule for many of the goals we laid out for the year and we have good momentum for future growth. Global markets are growing increasingly volatile, but we believe Carlyle is well positioned to take advantage of market dislocations and opportunities.”
 
U.S. GAAP results for Q3 2018 included income before provision for income taxes of $61 million, and net income attributable to The Carlyle Group L.P. common unitholders of $12 million, or net income per common unit of $0.10, on a diluted basis. U.S. GAAP results for the twelve months ended September 30, 2018 included income before provision for income taxes of $834 million and net income attributable to The Carlyle Group L.P. common unitholders of $162 million. Total balance sheet assets were $13 billion as of September 30, 2018.

In addition to this release, Carlyle issued a full detailed presentation of its third quarter 2018 results, which can be viewed on the investor relations section of our website at ir.carlyle.com.
Distributions

The Board of Directors has declared a quarterly distribution of $0.42 per common unit to holders of record at the close of business on November 13, 2018, payable on November 20, 2018.

The Board of Directors has declared a quarterly distribution of $0.367188 per preferred unit to preferred unitholders of record at the close of business on December 1, 2018, payable on December 17, 2018.
Conference Call
Carlyle will host a conference call at 8:30 a.m. EDT on Wednesday, October 31, 2018, to announce its third quarter 2018 financial results. The call may be accessed by dialing +1 (800) 850-2903 (U.S.) or +1 (253) 237-1169 (international) and referencing “The Carlyle Group Financial Results Call.” The conference call will be webcast simultaneously via a link on Carlyle’s investor relations website at ir.carlyle.com and an archived replay of the webcast also will be available on the website soon after the live call.
About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $212 billion of assets under management across 339 investment vehicles as of September 30, 2018. Carlyle’s purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Credit and Investment Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has expertise in various industries, including: aerospace, defense & government services, consumer & retail, energy, financial services, healthcare, industrial, real estate, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,625 people in 31 offices across six continents.


Page | 1




Forward Looking Statements
This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934. These statements include, but are not limited to, statements related to our expectations regarding the performance of our business, our financial results, our liquidity and capital resources, contingencies, our distribution policy, and other non-historical statements. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks, uncertainties and assumptions. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements including, but not limited to, those described under the section entitled “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2017 filed with the SEC on February 15, 2018, as such factors may be updated from time to time in our periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in our filings with the SEC. We undertake no obligation to publicly update or review any forward-looking statements, whether as a result of new information, future developments or otherwise, except as required by applicable law.
This release does not constitute an offer for any Carlyle fund.
Contacts:
Public Market Investor Relations
  
Media
Daniel Harris
  
Christopher Ullman
Phone: +1 (212) 813-4527
  
Phone: +1 (202) 729-5450
daniel.harris@carlyle.com
  
christopher.ullman@carlyle.com
 
 
Web: www.carlyle.com
  
 
Videos: www.youtube.com/onecarlyle
  
 
Tweets: www.twitter.com/onecarlyle
  
 
Podcasts: www.carlyle.com/about-carlyle/market-commentary

Page | 2
Exhibit


Exhibit 99.2

http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=5

For Immediate Release
October 31, 2018

The Carlyle Group Announces Third Quarter 2018 Financial Results

U.S. GAAP results included net income attributable to The Carlyle Group L.P. common unitholders of $12 million, or $0.10 per common unit on a diluted basis, for Q3 2018

Economic Income of $111 million on a pre-tax basis and Economic Net Income of $0.25 per Adjusted Unit on a post-tax basis in Q3 2018, driven by 3% carry fund portfolio appreciation

Distributable Earnings of $210 million on a pre-tax basis for Q3 2018 and $0.56 per common unit on a post-tax basis in Q3 2018

Declared a quarterly distribution of $0.42 per common unit for Q3 2018

Assets Under Management of $212.3 billion as of Q3 2018, up 22% over the last twelve months

Net accrued performance revenues of $1.9 billion as of Q3 2018, up 28% over the last twelve months

$6.4 billion in realized proceeds in Q3 2018 and $27.1 billion realized over the last twelve months
$3.3 billion of invested capital in Q3 2018 and $18.0 billion invested over the last twelve months
$6.0 billion in capital raised in Q3 2018 and $50.7 billion raised over the last twelve months
Washington, DC – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unaudited results for the third quarter ended September 30, 2018.

Carlyle Co-CEOs Kewsong Lee and Glenn Youngkin said, “During the third quarter, we remained on track or ahead of schedule for many of the goals we laid out for the year and we have good momentum for future growth. Global markets are growing increasingly volatile, but we believe Carlyle is well positioned to take advantage of market dislocations and opportunities.”
 
U.S. GAAP results for Q3 2018 included income before provision for income taxes of $61 million, and net income attributable to The Carlyle Group L.P. common unitholders of $12 million, or net income per common unit of $0.10, on a diluted basis. U.S. GAAP results for the twelve months ended September 30, 2018 included income before provision for income taxes of $834 million and net income attributable to The Carlyle Group L.P. common unitholders of $162 million. Total balance sheet assets were $13 billion as of September 30, 2018.

Page | 1




Carlyle Consolidated GAAP Results
 
The Carlyle Group L.P.
Summary U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited)
 
 
Three Months Ended           
 
LTM
 
 
Sep 30, 2017
Dec 31, 2017
Mar 31, 2018
Jun 30, 2018
Sep 30, 2018
 
Sep 30, 2018
 
 
(Dollars in millions, except per unit data)
 
 
 
Revenues
 
 
 
 
 
 
 
 
Fund management fees
 
$
262.5

$
279.3

$
264.5

$
301.3

$
328.8

 
$
1,173.9

Incentive fees
 
10.4

8.2

6.3

7.4

6.8

 
28.7

Investment income, including performance allocations
 
312.4

664.4

362.2

503.3

258.6

 
1,788.5

Revenue from consolidated entities
 
44.7

45.1

47.3

53.6

60.5

 
206.5

All other revenues
 
9.9

10.8

22.5

28.0

24.4

 
85.7

Total revenues
 
639.9

1,007.8

702.8

893.6

679.1

 
3,283.3

 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Cash-based compensation and benefits
 
174.1

181.6

187.3

176.0

186.6

 
731.5

Equity-based compensation
 
81.0

78.5

84.9

64.9

49.7

 
278.0

Performance allocations and incentive fee related compensation
 
137.6

276.5

158.0

222.0

146.0

 
802.5

General, administrative and other expenses
 
(18.7
)
105.9

95.0

126.8

166.2

 
493.9

Expenses from consolidated entities and loss on deconsolidation of Urbplan
 
101.7

36.7

35.9

45.3

40.5

 
158.4

Interest and other non-operating expenses (income)
 
16.9

(54.4
)
18.2

18.7

26.6

 
9.1

Total expenses
 
492.6

624.8

579.3

653.7

615.6

 
2,473.4

 
 
 
 
 
 
 
 
 
Net investment gains (losses) of consolidated funds
 
18.6

12.0

2.0

12.9

(2.9
)
 
24.0

Income before provision for income taxes
 
165.9

395.0

125.5

252.8

60.6

 
833.9

Provision (benefit) for income taxes
 
(1.3
)
107.2

7.8

11.6

17.4

 
144.0

Net income
 
167.2

287.8

117.7

241.2

43.2

 
689.9

Net income attributable to non-controlling interests in consolidated entities
 
27.6

25.1

11.0

16.7

14.5

 
67.3

Net income attributable to Carlyle Holdings
 
139.6

262.7

106.7

224.5

28.7

 
622.6

Net income attributable to non-controlling interests in Carlyle Holdings
 
95.0

203.8

67.0

155.1

11.2

 
437.1

Net income attributable to The Carlyle Group L.P.
 
44.6

58.9

39.7

69.4

17.5

 
185.5

Net income attributable to Series A Preferred Unitholders
 

6.0

5.9

5.9

5.9

 
23.7

Net income attributable to The Carlyle Group L.P. Common Unitholders
 
$
44.6

$
52.9

$
33.8

$
63.5

$
11.6

 
$
161.8

 
 
 
 
 
 
 
 
 
Net income attributable to The Carlyle Group L.P. per common unit
 
 
 
 
 
 
 
 
   Basic
 
$
0.47

$
0.53

$
0.34

$
0.62

$
0.11

 
$
1.59

   Diluted
 
$
0.43

$
0.49

$
0.30

$
0.56

$
0.10

 
$
1.45

 
 
 
 
 
 
 
 
 

Income before provision for income taxes(1) was $61 million for Q3 2018, compared to $166 million for Q3 2017. The decrease in income before provision for income taxes in Q3 2018 compared to Q3 2017 was primarily due to, among other factors:

$66 million increase in fund management fees primarily due to activation of CP VII and CAP V management fees in Q2 2018;
$62 million decrease in investment income, including performance allocations, net of the related compensation primarily due to lower net performance allocations;
$31 million decrease in equity-based compensation due to the final vesting of the IPO awards in May 2018, partially offset by the increase in awards granted, including performance awards, in 2018 compared to 2017;
$185 million increase in general, administrative and other expenses primarily due to a $64 million charge in Q3 2018 related to the assignment of an existing office lease in New York, $74 million of net insurance recoveries in Q3 2017 and the $25 million reversal of a litigation reserve in Q3 2017;
$61 million decrease in expenses from consolidated entities and loss on deconsolidation of Urbplan due to a $65 million charge in Q3 2017 from the Urbplan transaction; and
$10 million increase in interest and other non-operating expenses primarily due to $8 million of debt extinguishment costs in Q3 2018

Net income attributable to The Carlyle Group L.P. Common Unitholders was $12 million, or $0.10 per common unit on a diluted basis for Q3 2018, compared to $45 million, or $0.43 per common unit on a diluted basis for Q3 2017.

See Notes at end of document.

Page | 2



Non-GAAP Operating Results
Carlyle Group Summary ($ in millions, except unit and per unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
YTD
 
LTM
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
 
Q3 2018
 
Q3 2018
 
Q4 17 -
Q3 18
 
QoQ  
 
YoY
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$
202.7

 
$
366.4

 
$
169.0

 
$
272.1

 
$
110.6

 
$
551.7

 
$918.1
 
(59)%
 
(45)%
 
1%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
 
108.0

 
26.7

 
28.2

 
57.8

 
89.0

 
175.0

 
201.7
 
54%
 
(18)%
 
513%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
259.9

 
155.8

 
138.9

 
114.5

 
210.0

 
463.4

 
619.2
 
83%
 
(19)%
 
19%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income, Tax and Per Unit Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$
202.7

 
$
366.4

 
$
169.0

 
$
272.1

 
$
110.6

 
$
551.7

 
$
918.1

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less (Add): Provision (Benefit) for income taxes (1)
 
10.4

 
13.2

 
2.1

 
28.5

 
18.8

 
49.4

 
62.6

 
 
 
 
 
 
Less: Preferred unit distributions
 

 
6.0

 
5.9

 
5.9

 
5.9

 
17.7

 
23.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Economic Net Income (after taxes)
 
$
192.3

 
$
347.2

 
$
161.0

 
$
237.7

 
$
85.9

 
$
484.6

 
$
831.8

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Adjusted Units* (in millions)
 
342.8

 
343.5

 
345.9

 
345.4

 
346.5

 
348.6

 
343.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (after taxes and preferred unit
      distributions) per Adjusted Unit
 
$
0.56

 
$
1.01

 
$
0.47

 
$
0.69

 
$
0.25

 
$
1.41

 
$
2.42

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings, Tax and Per Unit Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
$
259.9

 
$
155.8

 
$
138.9

 
$
114.5

 
$
210.0

 
$
463.4

 
$
619.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Estimated foreign, state, and local taxes(2)
 
5.4

 
5.0

 
7.7

 
6.9

 
9.4

 
24.0

 
29.0

 
 
 
 
 
 
Less: Preferred unit distributions
 

 
6.0

 
5.9

 
5.9

 
5.9

 
17.7

 
23.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
Distributable Earnings (after taxes and preferred
     unit distributions)
 
$
254.5

 
$
144.8

 
$
125.3

 
$
101.7

 
$
194.7

 
$
421.7

 
$
566.5

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Allocating Distributable Earnings for only public unitholders of The Carlyle Group L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings to The Carlyle Group L.P.
 
$
74.7

 
$
43.3

 
$
38.5

 
$
31.8

 
$
62.0

 
$
132.3

 
$
175.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less: Estimated current corporate income taxes(3)
 
1.4

 
(0.5
)
 
1.1

 
1.1

 
1.2

 
3.4

 
2.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings Attributable to Common Unitholders
 
$
73.3

 
$
43.8

 
$
37.4

 
$
30.7

 
$
60.8

 
$
128.9

 
$
172.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Units in public float (in millions) **
 
98.3

 
100.5

 
103.7

 
106.2

 
108.3

 
108.3

 
104.7

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings, net, per The Carlyle
     Group L.P. common unit outstanding
 
$
0.75

 
$
0.44

 
$
0.36

 
$
0.29

 
$
0.56

 
$
1.21

 
$
1.65

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution per common unit
 
$
0.56

 
$
0.33

 
$
0.27

 
$
0.22

 
$
0.42

 
$
0.91

 
$
1.24

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
* Adjusted Units were determined as follows (in millions):
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
     The Carlyle Group L.P. common units
          outstanding
 
97.8

 
100.1

 
101.4

 
102.1

 
107.8

 
107.8

 
 
 
 
 
 
 
 
     Carlyle Holdings partnership units not held by
          The Carlyle Group L.P.
 
236.6

 
234.8

 
233.9

 
233.2

 
231.5

 
231.5

 
 
 
 
 
 
 
 
     Dilutive effect of unvested deferred restricted
          common units
 
7.8

 
8.0

 
10.2

 
9.7

 
6.4

 
8.8

 
 
 
 
 
 
 
 
      Issuable Carlyle Group L.P. common units
 

 

 
0.4

 
0.4

 
0.8

 
0.5

 
 
 
 
 
 
 
 
      Issuable Carlyle Holdings partnership units
 
0.6

 
0.6

 

 

 

 

 
 
 
 
 
 
 
 
Total Adjusted Units
 
342.8

 
343.5

 
345.9

 
345.4

 
346.5

 
348.6

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
** Includes approximately 0.5 million common units that will be issued in November 2018 in connection with the vesting of deferred restricted common units. For purposes of this calculation, these common units have been added to the common units outstanding as of September 30, 2018 because they will participate in the unitholder distribution that will be paid on the common units in November 2018.
Totals may not sum due to rounding. See Notes at end of document.



Page | 3



Carry Fund Appreciation and Net Accrued Performance Revenues
Carlyle's carry fund portfolio appreciated 3% during Q3 2018 and 17% over the past twelve months. Carlyle's private carry fund portfolio appreciated 3% and the public carry fund portfolio depreciated (3)% during Q3 2018, in both cases excluding Investment Solutions. As of September 30, 2018, public positions accounted for 12% of remaining fair value across our Corporate Private Equity, Real Assets and Global Credit carry funds. Carry fund valuations for Q3 2018 were most positively impacted by our fifth and sixth U.S. Buyout funds (CP V and VI), seventh U.S. Realty fund (CRP VII) and the eleventh NGP Energy fund (NGP XI), partially offset by depreciation in our fourth Asia Buyout fund (CAP IV), among others. The Net Accrued Performance Revenues balance decreased 3% during the quarter to $1.9 billion, but increased 28% over the LTM.
 
 
Carry Fund Appreciation/(Depreciation)(1)
 
LTM
 
Net Accrued
Performance Revenues(2)
  ($ in millions)
 
 
Q3 2017
 
Q4 2017
 
Q1 2018
 
Q2 2018
 
Q3 2018
 
Q4 2017 - Q3 2018
 
Q3 2018
Overall Carry Fund Appreciation/(Depreciation)
 
3%
 
5%
 
3%
 
5%
 
3%
 
17%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Private Equity
 
4%
 
8%
 
4%
 
3%
 
1%
 
16%
 
$1,215
Buyout
 
3%
 
8%
 
4%
 
3%
 
1%
 
16%
 
$1,160
Growth Capital
 
6%
 
6%
 
2%
 
3%
 
1%
 
13%
 
$55
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Assets
 
2%
 
4%
 
2%
 
7%
 
3%
 
17%
 
$570
Real Estate
 
3%
 
3%
 
1%
 
5%
 
3%
 
12%
 
$314
Natural Resources (3)
 
5%
 
8%
 
2%
 
9%
 
3%
 
26%
 
$275
Legacy Energy
 
(3)%
 
2%
 
2%
 
4%
 
4%
 
11%
 
$(19)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Credit Carry Funds
 
0%
 
1%
 
2%
 
3%
 
1%
 
10%
 
$34
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Solutions Carry Funds
 
3%
 
3%
 
4%
 
8%
 
5%
 
20%
 
$93
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Accrued Performance Revenues
 
 
 
 
 
 
 
 
 
 
 
 
 
$1,912
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 


http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=12

The sum of quarters may not equal LTM due to rounding. See Notes at end of document.

Page | 4



Carlyle All Segment Results

Fee Related Earnings were $89 million in Q3 2018 compared to $108 million in Q3 2017, which included $74 million in net insurance recoveries. Fund Management Fees of $355 million for Q3 2018 increased 28% versus Q3 2017, slightly higher than the 21% increase in Fee-Earning AUM over the same period. Catch-up management fees were $8 million in Q3 2018 compared to $1 million in Q3 2017.
Distributable Earnings of $210 million in Q3 2018 include $89 million in Fee Related Earnings and $124 million in Realized Net Performance Revenues. During Q3 2018, Realized Net Performance Revenues benefited from public equity sales in Focus Media (CAP III) and Coresite (CRP III), and private company sale of Expereo (CETP III), among others. We continue to expect full year 2018 Realized Net Performance Revenues to be lower than full year 2017.
Economic Income was $111 million in Q3 2018, driven by 3% carry fund appreciation in the quarter, consistent with the overall appreciation in Q3 2017, although appreciation in Corporate Private Equity and Natural Resources were below the year-ago levels. Economic Income of $918 million over the LTM was generally in line with the prior LTM.
Total Assets Under Management (AUM) of $212.3 billion as of Q3 2018 increased 22% compared to Q3 2017 due to a combination of $50.7 billion in fundraising and $17.7 billion in market appreciation, partially offset by $27.1 billion in realized proceeds to fund investors.
Fee-Earning AUM of $147.4 billion increased 21% compared to Q3 2017. As of Q3 2018, there was $11.4 billion in pending Fee-Earning AUM that will turn on fees either through activation of the underlying fund or additional capital deployment.
Business Drivers
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fundraising
 
$7.1
 
$6.0
 
$18.6
 
$26.0
 
$21.3
 
$50.7
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Invested Capital (carry funds)
 
6.9
 
3.3
 
14.8
 
10.8
 
20.8
 
18.0
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Proceeds (carry funds)
 
8.4
 
6.4
 
18.0
 
19.1
 
26.5
 
27.1
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation
 
3%
 
3%
 
14%
 
12%
 
19%
 
17%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in millions
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$108
 
$89
 
$165
 
$175
 
$33
 
$202
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Net Performance Revenues
 
217
 
124
 
434
 
277
 
570
 
395
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Principal Investment Income
 
(53)
 
7
 
(48)
 
43
 
(31)
 
66
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
Net Interest
 
(12)
 
(10)
 
(37)
 
(32)
 
(50)
 
(43)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings (DE)
 
$260
 
$210
 
$514
 
$463
 
$522
 
$619
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$108
 
$89
 
$165
 
$175
 
$33
 
$202
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
Net Performance Revenues
 
147
 
69
 
841
 
479
 
901
 
816
 
 
 
 
 
 
 
 
 
 
 
 
 
 
+
Principal Investment Income
 
(35)
 
14
 
7
 
69
 
21
 
110
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
30
 
52
 
97
 
139
 
122
 
166
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Interest
 
12
 
10
 
37
 
32
 
50
 
43
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Other1
 
(25)
 
 
(25)
 
 
(125)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Economic Income
 
$203
 
$111
 
$903
 
$552
 
$909
 
$918
 
 
 
 
 
 
 
 
 
 
 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=8

LTM, or last twelve months, refers to the period Q4 2017 through Q3 2018. Prior LTM, or the prior rolling 12-month period, refers to the period Q4 2016 through Q3 2017. Totals may not sum due to rounding. See Notes at end of document.

Page | 5



Corporate Private Equity (CPE)

Fee Related Earnings were $44 million in Q3 2018, compared to $8 million in Q3 2017. Fund Management Fees increased 49% in Q3 2018 versus Q3 2017 due to strong fundraising activity in our latest vintage U.S. and Asia buyout funds, and was partially offset by a 12% increase in cash-based compensation expense and higher general and administrative expenses. Catch up management fees were $3 million in Q3 2018 compared with $0 in Q3 2017.
Distributable Earnings were $121 million in Q3 2018 compared to $207 million in Q3 2017, and includes $78 million in Realized Net Performance Revenues, $4 million in Realized Investment Income and $44 million in Fee Related Earnings. Realized proceeds of $1.5 billion in Q3 2018 were lower than Q3 2017, driving lower Realized Net Performance Revenues.
CPE carry funds appreciated 1% in the quarter, driving Net Performance Revenues of $28 million, as compared to 4% appreciation in Q3 2017 resulting in Net Performance Revenues of $81 million.
Economic Income was $47 million in Q3 2018 and $509 million for the LTM, a decrease of 29% from the prior LTM, generally due to lower carry fund appreciation of 16% in the LTM compared to 27% for the prior LTM.
Invested $1.1 billion in Q3 2018 into new and follow-on investments, including Du Xiaoman Financial (CAP V), One Medical (CP VII), and LPG Systems and HGH Infared Systems (CETP III). As of the end of Q3 2018, CPE had also announced transactions with over $7.0 billion of additional equity commitments, including Nouryon (formerly AkzoNobel Specialty Chemicals) which closed in October, and Sedgwick which is expected to close over the next few quarters.
Assets Under Management reached a record $81.6 billion in Q3 2018, an increase of 46% compared to Q3 2017, positively impacted by $33.6 billion in fundraising and $5.8 billion in market appreciation, partially offset by $10.5 billion in realized proceeds.

Business Drivers
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fundraising
 
$0.9
 
$1.8
 
$1.4
 
$14.5
 
$1.4
 
$33.6
 
 
 
 
 
 
 
 
 
 
 
 
 
Invested Capital (carry funds)
 
3.6
 
1.1
 
7.5
 
3.4
 
10.1
 
7.0
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Proceeds (carry funds)
 
4.0
 
1.5
 
7.7
 
7.1
 
11.4
 
10.5
 
 
 
 
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation
 
4%
 
1%
 
23%
 
8%
 
27%
 
16%
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in millions
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$118
 
$176
 
$352
 
$438
 
$474
 
$557
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Revenues
 
198
 
78
 
373
 
203
 
532
 
288
Net Performance Revenues
 
81
 
28
 
617
 
281
 
617
 
541
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Principal Investment Income
 
7
 
4
 
16
 
24
 
29
 
34
Principal Investment Income
 
11
 
4
 
39
 
27
 
54
 
51
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$8
 
$44
 
$44
 
$35
 
$69
 
$17
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings (DE)
 
$207
 
$121
 
$415
 
$248
 
$607
 
$320
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$92
 
$47
 
$647
 
$261
 
$718
 
$509
 
 
 
 
 
 
 
 
 
 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=6

Totals may not sum due to rounding.


Page | 6



Real Assets

Fee Related Earnings were $26 million in Q3 2018, compared to $16 million in Q3 2017, with Fund Management Fees increasing 7% and cash-based compensation declining 14%. Over the LTM, Fee Related Earnings of $118 million increased 293% relative to the prior LTM. Catch-up management fees were $3 million in Q3 2018, up from $1 million in Q3 2017.
Distributable Earnings were $66 million in Q3 2018 and $202 million over the LTM, higher relative to a loss of $(45) million in the prior LTM which included a realized investment loss in Q3 2017 related to Urbplan Desenvolvimento Urbano. Realized Net Performance Revenues were a quarterly record $42 million in Q3 2018 driven by realized proceeds of $1.7 billion.
Real Assets carry funds appreciated 3% in the quarter with strong appreciation in the seventh U.S. real estate fund, eleventh NGP energy fund and our international energy fund, driving Net Performance Revenues of $35 million, compared with appreciation of 2% and Net Performance Revenue of $50 million in Q3 2017 due to higher appreciation in Natural Resources.
Economic Income was $51 million in Q3 2018 and $324 million for the LTM, an increase of 70% from the prior LTM, driven by significant growth in Fee Related Earnings over the same period.
Invested $0.8 billion in the quarter and $5.2 billion over the LTM.
Assets Under Management of $46.0 billion increased 16% compared to Q3 2017, largely driven by $6.3 billion in fundraising and $4.2 billion in market appreciation, partially offset by $5.6 billion in realized proceeds. Fundraising of $1.1 billion in Q3 2018 included the final close of our eighth U.S. Realty fund, and additional closes in our Europe real estate, core plus real estate (CPI) funds and the latest vintage NGP energy fund, along with several coinvestment vehicles.

Business Drivers
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fundraising
 
$2.4
 
$1.1
 
$7.0
 
$3.1
 
$7.3
 
$6.3
 
 
 
 
 
 
 
 
 
 
 
 
 
Invested Capital (carry funds)
 
1.3
 
0.8
 
2.8
 
3.6
 
4.9
 
5.2
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Proceeds (carry funds)
 
1.7
 
1.7
 
3.2
 
4.2
 
5.2
 
5.6
 
 
 
 
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation
 
2%
 
3%
 
14%
 
12%
 
18%
 
17%
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in millions
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$71
 
$76
 
$186
 
$229
 
$245
 
$307
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Revenues
 
11
 
42
 
40
 
64
 
11
 
75
Net Performance Revenues
 
50
 
35
 
180
 
161
 
232
 
224
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Principal Investment Income/(Loss)
 
(65)
 
1
 
(72)
 
12
 
(72)
 
21
Principal Investment Income/(Loss)
 
(52)
 
5
 
(48)
 
29
 
(52)
 
40
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$16
 
$26
 
$17
 
$84
 
$30
 
$118
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings (DE)
 
$(41)
 
$66
 
$(26)
 
$151
 
$(45)
 
$202
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$8
 
$51
 
$118
 
$227
 
$190
 
$324
 
 
 
 
 
 
 
 
 
 
 
 
 
http://api.tenkwizard.com/cgi/image?quest=1&rid=23&ipage=12520652&doc=13

Totals may not sum due to rounding.


Page | 7



Global Credit

Fee Related Earnings were $9 million in Q3 2018 compared to $77 million in Q3 2017, which included $74 million in net insurance recoveries. Fund Management Fees increased 27% year over year, partially offset by higher compensation expense related to the continuing build out of our credit platform.
Distributable Earnings were $10 million in Q3 2018 and $58 million over the LTM, higher relative to a loss of $(64) million over the prior LTM, which included losses related to our former commodities and hedge fund businesses.
Economic Income was $1 million in Q3 2018 and $22 million for the LTM, higher relative to a $(51) million Economic loss in the prior LTM. Global Credit carry funds appreciated 1% in the quarter and 10% over the LTM.
Invested $0.1 billion in Global Credit carry funds in the quarter and $1.5 billion for the LTM. Direct Lending originated gross new loans of approximately $508 million in the quarter and approximately $2.1 billion for the LTM. We raised $1.2 billion of CLO par value of in the quarter and $4.8 billion for the LTM.
Assets Under Management of $37.4 billion increased 17% compared to Q3 2017, largely driven by $6.5 billion of fundraising, partially offset by $0.9 billion in realized proceeds. Fundraising of $2.0 billion for Q3 2018 included two new CLOs and several CLO resets, as well as additional capital raised for our opportunistic fund, and several managed accounts. Fee Earning AUM of $30.1 billion increased 16% compared to Q3 2017.
On October 15, 2018, Carlyle announced an agreement to acquire Apollo Aviation Group, a global commercial aviation investment and servicing firm with $5.6 billion in Assets Under Management. Apollo Aviation will operate as a new business line within Global Credit upon its closing, which is expected no later than January 31, 2019.

Business Drivers
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fundraising
 
$1.8
 
$2.0
 
$4.9
 
$4.8
 
$6.2
 
$6.5
 
 
 
 
 
 
 
 
 
 
 
 
 
Invested Capital (carry funds)
 
0.7
 
0.1
 
1.3
 
0.7
 
1.6
 
1.5
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Proceeds (carry funds)
 
0.2
 
0.1
 
0.4
 
0.6
 
0.4
 
0.9
 
 
 
 
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation
 
0%
 
1%
 
9%
 
7%
 
11%
 
10%
 
 
 
 
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
 
 
 
 
$ in millions
 
Q3 2017
 
Q3 2018
 
Prior
YTD
 
YTD
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$48
 
$60
 
$141
 
$179
 
$189
 
$230
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Revenues
 
8
 
 
20
 
3
 
25
 
24
Net Performance Revenues
 
10
 
 
28
 
9
 
32