The Carlyle Group
Carlyle Group L.P. (Form: 8-K, Received: 05/03/2017 06:38:00)


 
 
 
 
 
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): May 3, 2017
 
 
 
 
 
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 May 3, 2017, The Carlyle Group L.P. issued a summary press release and a detailed earnings presentation announcing financial results for its first quarter ended March 31, 2017. 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
  
Summary earnings press release of The Carlyle Group L.P., dated May 3, 2017.
 
 
99.2
  
Earnings presentation of The Carlyle Group L.P., dated May 3, 2017.
 
 
 







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: May 3, 2017
 
 
 
By:
 
/s/ Curtis L. Buser
 
 
 
 
Name:
 
Curtis L. Buser
 
 
 
 
Title:
 
Chief Financial Officer






EXHIBIT INDEX
 
 
 
 
Exhibit No.
  
Description
 
 
Exhibit 99.1
  
Summary earnings press release of The Carlyle Group L.P., dated May 3, 2017.
 
 
Exhibit 99.2
  
Earnings presentation of The Carlyle Group L.P., dated May 3, 2017.
 
 
 




Exhibit 99.1
CARLYLEBLUE300DPIJPGA05.JPG  

The Carlyle Group Announces First Quarter 2017 Financial Results
Washington, DC, May 3, 2017 – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unaudited results for the first quarter ended March 31, 2017 .

Carlyle Co-CEO David M. Rubenstein said, “Carlyle produced its second strongest value creation quarter since going public five years ago.  Our portfolio performed well in virtually every sector and every region, appreciating by 6% and leading to a 34% increase in our net accrued carry in the first quarter. The long term strength of the underlying portfolio supports our goal to raise $100 billion in new capital by the end of 2019.”

Carlyle Co-CEO William E. Conway, Jr. said, “We deployed capital at a strong pace in the first quarter, with $4.4 billion of capital invested despite a difficult environment.  We believe we are well positioned to continue this strong pace. We have already announced substantial new investments and almost $4 billion of exits that we expect to close in the coming quarters.”

U.S. GAAP results for Q1 2017 included income before provision for income taxes of $ 328 million , and net income attributable to the common unitholders through The Carlyle Group L.P. of $83 million , or net income per common unit of $0.90 , on a diluted basis. U.S. GAAP results for the twelve months ended March 31, 2017 included income before provision for income taxes of $358 million and net income attributable to The Carlyle Group L.P. of $81 million. Total balance sheet assets were $10 billion as of March 31, 2017 .

In addition to this release, Carlyle issued a full detailed presentation of its first quarter 2017 results, which can be viewed on the investor relations section of our website at ir.carlyle.com .
Distribution
The Board of Directors has declared a quarterly distribution of $0.10 per common unit to holders of record at the close of business on May 15, 2017, payable on May 22, 2017.
Conference Call
Carlyle will host a conference call at 8:30 a.m. EDT on Wednesday, May 3, 2017, to announce its first quarter 2017 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.

Page | 1



About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $162 billion of assets under management across 287 investment vehicles as of March 31, 2017 . 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 Market Strategies 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 1,550 people in 31 offices across six continents.

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, 2016 filed with the SEC on February 16, 2017, 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
  
Jordan DeJarnette
Phone: +1 (212) 813-4527
  
Phone: +1 (202) 729-5025
daniel.harris@carlyle.com
  
jordan.dejarnette@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 99.2

CARLYLEBLUE300DPIJPGA05.JPG

For Immediate Release
May 3, 2017

The Carlyle Group Announces First Quarter 2017 Financial Results

U.S. GAAP net income attributable to The Carlyle Group L.P. of $83 million , or $0.90 per common unit on a diluted basis, for Q1 2017 and $81 million over the last twelve months

Economic Net Income of $400 million on a pre-tax basis and $1.09 per Adjusted Unit on a post-tax basis in Q1 2017 , driven by 6% carry fund portfolio appreciation

Net accrued performance fees of $1.4 billion as of Q1 2017 , up 34% from $1.1 billion at year-end 2016

$55 million of Distributable Earnings on a pre-tax basis for Q1 2017 and $579 million over the last twelve months; $0.13 per common unit on a post-tax basis in Q1 2017

Declared a quarterly distribution of $0.10 per common unit for Q1 2017

$3.5 billion in realized proceeds in Q1 2017 and $28.5 billion realized over the last twelve months
$4.4 billion of invested capital in Q1 2017 and $17.0 billion invested over the last twelve months
$3.0 billion in gross and net new capital raised in Q1 2017 ; $14.7 billion in gross new capital raised and $11.1 billion on a net basis after redemptions 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 first quarter ended March 31, 2017 .
Carlyle Co-CEO David M. Rubenstein said, “Carlyle produced its second strongest value creation quarter since going public five years ago.  Our portfolio performed well in virtually every sector and every region, appreciating by 6% and leading to a 34% increase in our net accrued carry in the first quarter. The long term strength of the underlying portfolio supports our goal to raise $100 billion in new capital by the end of 2019.”
 
Carlyle Co-CEO William E. Conway, Jr. said, “We deployed capital at a strong pace in the first quarter, with $4.4 billion of capital invested despite a difficult environment.  We believe we are well positioned to continue this strong pace. We have already announced substantial new investments and almost $4 billion of exits that we expect to close in the coming quarters.”



Page | 1




U.S. GAAP results for Q1 2017 included income before provision for income taxes of $ 328 million , and net income attributable to the common unitholders through The Carlyle Group L.P. of $83 million , or net income per common unit of $0.90 , on a diluted basis. U.S. GAAP results for the twelve months ended March 31, 2017 included income before provision for income taxes of $358 million and net income attributable to The Carlyle Group L.P. of $81 million. Total balance sheet assets were $10 billion as of March 31, 2017 .

 
First Quarter Distribution
The Board of Directors has declared a quarterly distribution of $0.10 per common unit to holders of record at the close of business on May 15, 2017, payable on May 22, 2017.
Distribution Policy
It is Carlyle’s intention to cause Carlyle Holdings to make quarterly distributions to its partners, including The Carlyle Group L.P.’s wholly owned subsidiaries, that will enable The Carlyle Group L.P. to pay a quarterly distribution of approximately 75% of Distributable Earnings per common unit, net of taxes and amounts payable under the tax receivable agreement, for the quarter. Carlyle’s general partner may adjust the distribution for amounts determined to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its funds or to comply with applicable law or any of its financing agreements, or to provide for future cash requirements such as tax-related payments, clawback obligations and distributions to unitholders for any ensuing quarter. The amount to be distributed could also be adjusted upward in any one quarter. The declaration and payment of any distributions is at the sole discretion of Carlyle’s general partner, which may change or eliminate the distribution policy at any time.




Page | 2




Carlyle Consolidated GAAP Results
 
The Carlyle Group L.P.
Summary U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited)
 
 
Three Months Ended           
 
LTM
 
 
Mar 31, 2016
Jun 30, 2016
Sep 30, 2016
Dec 31, 2016
Mar 31,
2017
 
Mar 31,
2017
 
 
(Dollars in millions, except per unit data)
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
Fund management fees
 
$
289.5

$
272.5

$
255.1

$
259.0

$
246.3

 
$
1,032.9

Total performance fees
 
145.2

210.9

214.7

181.0

681.6

 
1,288.2

Total investment income (loss)
 
(9.6
)
65.3

70.5

34.3

46.3

 
216.4

Revenue from consolidated entities
 
53.3

54.3

61.7

92.7

135.5

 
344.2

All other revenues
 
4.7

5.0

5.3

8.9

10.4

 
29.6

Total revenues
 
483.1

608.0

607.3

575.9

1,120.1

 
2,911.3

 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
Base compensation
 
166.3

149.9

154.3

176.6

146.0

 
626.8

Equity-based compensation
 
75.4

109.0

81.4

68.8

72.8

 
332.0

Total performance fee related compensation
 
69.5

96.5

110.9

76.2

317.1

 
600.7

General, administrative and other expenses
 
82.3

91.4

188.9

158.5

93.8

 
532.6

Expenses from consolidated entities
 
46.8

84.0

114.4

90.9

164.8

 
454.1

Interest and other nonoperating expenses
 
19.1

16.1

11.9

3.0

15.0

 
46.0

Total expenses
 
459.4

546.9

661.8

574.0

809.5

 
2,592.2

 
 
 
 
 
 
 
 
 
Net investment gains (losses) of consolidated funds
 
(8.4
)
6.7

4.8

10.0

17.1

 
38.6

Income (loss) before provision for income taxes
 
15.3

67.8

(49.7
)
11.9

327.7

 
357.7

Provision (benefit) for income taxes
 
7.4

24.3

1.0

(2.7
)
5.8

 
28.4

Net income (loss)
 
7.9

43.5

(50.7
)
14.6

321.9

 
329.3

Net income (loss) attributable to non-controlling interests in consolidated entities
 
(2.3
)
1.6

(29.1
)
70.8

3.3

 
46.6

Net income (loss) attributable to Carlyle Holdings
 
10.2

41.9

(21.6
)
(56.2
)
318.6

 
282.7

Net income (loss) attributable to non-controlling interests in Carlyle Holdings
 
1.8

35.8

(22.4
)
(47.3
)
235.6

 
201.7

Net income (loss) attributable to The Carlyle Group L.P.
 
$
8.4

$
6.1

$
0.8

$
(8.9
)
$
83.0

 
$
81.0

 
 
 
 
 
 
 
 
 
Net income (loss) attributable to The Carlyle Group L.P. per common unit
 
 
 
 
 
 
 
 
   Basic
 
$
0.10

$
0.07

$
0.01

$
(0.11
)
$
0.97

 
 
   Diluted
 
$
0.01

$
0.07

$
(0.02
)
$
(0.16
)
$
0.90

 
 
 
 
 
 
 
 
 
 
 

Income (loss) before provision for income taxes (1) was $ 328 million for Q1 2017 , compared to $ 15 million for Q1 2016 . The increase in income before provision for income taxes in Q1 2017 compared to Q1 2016 was primarily due to a $289 million increase in net performance fees and an increase in investment income of $56 million, which was partially offset by losses from consolidated entities.

Net income (loss) attributable to The Carlyle Group L.P. was $83 million , or $0.90 per common unit on a diluted basis for Q1 2017 , compared to $8 million , or $0.01 per common unit on a diluted basis for Q1 2016 .

(1) Income (loss) before provision for income taxes is the GAAP measure that is most directly comparable to Economic Net Income (ENI) and Distributable Earnings, which management uses to measure the performance of the business.  In most periods, income (loss) before provision for income taxes will be lower than ENI principally due to excluding from ENI equity compensation from awards issued in conjunction with the initial public offering, acquisitions and strategic investments, as well as other acquisition-related charges, including amortization of intangibles and impairment.  In periods of positive earnings, net income (loss) attributable to The Carlyle Group L.P. typically will be lower than ENI as net income (loss) attributable to The Carlyle Group L.P. only includes the portion of earnings (approximately 26% before taxes as of March 31, 2017 ) that is attributable to the public unitholders whereas the calculation of ENI reflects the adjusted earnings attributable to all unitholders.  A full reconciliation is included on page 33. See "Non-GAAP Financial Information and Other Key Terms" for additional information.





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Non-GAAP Operating Results
Carlyle Group Summary  ($ in millions, except unit and per unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (pre-tax)
 
$
88.5

 
$
158.3

 
$
53.5

 
$
5.6

 
$
400.1

 
Less (Add): Provision (Benefit) for income taxes (1)
 
30.3

 
43.2

 
(16.2
)
 
(0.8
)
 
35.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income, After Taxes
 
$
58.2

 
$
115.1

 
$
69.7

 
$
6.4

 
$
364.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Adjusted Units (in millions)
 
326.1

 
328.6

 
330.2

 
330.2

 
333.7

(2)
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income, After Taxes per Adjusted Unit
 
$
0.18

 
$
0.35

 
$
0.21

 
$
0.02

 
$
1.09

 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
$
128.6

 
$
287.5

 
$
228.2

 
$
7.4

 
$
55.4

 
Less: Estimated foreign, state, and local taxes (3)
 
8.2

 
6.6

 
5.6

 
5.4

 
6.8

 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings, After Taxes
 
$
120.4

 
$
280.9

 
$
222.6

 
$
2.0

 
$
48.6

 
 
 
 
 
 
 
 
 
 
 
 
 
Allocating Distributable Earnings for only public unitholders of The Carlyle Group L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings to The Carlyle Group L.P.
 
$
30.7

 
$
72.9

 
$
57.8

 
$
0.5

 
$
13.0

 
Less: Estimated current corporate income taxes (4)
 
1.4

 
1.4

 
1.4

 
1.2

 
1.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes
 
$
29.3

 
$
71.5

 
$
56.4

 
$
(0.7
)
 
$
11.5

 
 
 
 
 
 
 
 
 
 
 
 
 
Units in public float (in millions)
 
83.4

 
85.1

 
85.0

 
85.7

 
88.1

(5)
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding
 
$
0.35

 
$
0.84

 
$
0.66

 
$
0.00

 
$
0.13

 
 
 
 
 
 
 
 
 
 
 

 
 
Quarter
 
LTM
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 16 - Q1 17
 
QoQ  
 
YoY
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income
 
89
 
158
 
54
 
6
 
400
 
618
 
7,045%
 
352%
 
191%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
51
 
45
 
31
 
(145)
 
26
 
(44)
 
118%
 
(50)%
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
75
 
115
 
142
 
61
 
394
 
713
 
549%
 
423%
 
285%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
70
 
233
 
186
 
136
 
35
 
591
 
(74)%
 
(50)%
 
(13)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
129
 
288
 
228
 
7
 
55
 
579
 
649%
 
(57)%
 
(36)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings per common unit (after taxes)
 
$0.35
 
$0.84
 
$0.66
 
$0.00
 
$0.13
 
 
 
 
 
 
 
 
Distribution per common unit
 
$0.26
 
$0.63
 
$0.50
 
$0.16
 
$0.10
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
178.1
 
175.6
 
169.1
 
157.6
 
161.9
 
 
 
3%
 
(9)%
 
(9)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
130.3
 
125.3
 
123.8
 
115.0
 
114.9
 
 
 
0%
 
(12)%
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Totals may not sum due to rounding. 

(1) Represents the implied provision for income taxes that was calculated using a similar methodology as that used in calculating the provision for income taxes for The Carlyle Group L.P., without any reduction for non-controlling interests.
(2) For information regarding our calculation of Adjusted Units as of March 31, 2017, please see page 34.
(3) Represents the implied provision for current income taxes that was calculated using a similar methodology as that used in calculating the provision for current income taxes for The Carlyle Group L.P., without any reduction for non-controlling interests.
(4) Represents current corporate income taxes payable on Distributable Earnings allocated to Carlyle Holdings I GP Inc. and estimated current Tax Receivable Agreement payments owed.
(5) Includes 2,248,040 common units that were issued in May 2017 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 March 31, 2017 because they will participate in the unitholder distribution that will be paid on the common units in May 2017.

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Carlyle All Segment Results
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q1
$3.0 billion
 
Q1
$4.4 billion
 
Q1
$3.5 billion
 
Q1
6%
YTD:
$3.0 bn
LTM:
$11.1 bn
 
YTD:
$4.4 bn
LTM:
$17.0 bn
 
YTD:
$3.5 bn
LTM:
$28.5 bn
 
YTD:
6%
LTM:
18%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

$ in millions, unless noted
 
Q1 2016
 
Q1 2017
 
Prior LTM
 
LTM
 
Commentary
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$51
 
$26
 
$199
 
$(44)
 
The decline in FRE compared to Q1 2016 was driven by a $36 million decline in fee revenues attributable to lower transaction and portfolio advisory fees and lower Fee- Earning AUM, offset by a $14 million decrease in cash compensation expense. The decline compared to the prior LTM was primarily due to the $175 million in net charges taken within Global Market Strategies (GMS) in Q4 2016.

Net Realized Performance Fees in Q1 2017 were primarily driven by secondary sales in Bank of Butterfield (Financial Services I) and Focus Media (Carlyle Asia Partners III), and the strategic sale of ITRS in Europe (Carlyle Europe Technology II).

Realized Investment Loss in Q1 2017 was due primarily to losses in Urbplan in Real Assets. The decline relative to Q1 2016 was driven by higher Urbplan Desenvolvimento Urbano S.A. ("Urbplan") losses and fewer investment realizations.
 
 
 
 
 
 
 
 
 
 
 
+
Net Realized Performance Fees
 
70
 
35
 
680
 
591
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Investment Income/(Loss)
 
8
 
(5)
 
25
 
32
 
 
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings
 
$129
 
$55
 
$904
 
$579
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$51
 
$26
 
$199
 
$(44)
 
Net Performance Fees were driven by carry fund appreciation of 6% in the quarter and 18% for the LTM. Approximately 65% of Q1 2017 Net Performance Fees were generated by our current generation of carry funds that continue to invest new capital and approximately 35% was driven by fully invested funds that are actively realizing investments.

Investment Income was driven by gains in our Europe and Asia buyout fund investments, investments in NGP funds, and structured credit and GMS carry funds, offset by losses at Urbplan.

Equity-based compensation was generally consistent the past two years, at approximately $30 million per quarter.
 
 
 
 
 
 
 
 
 
 
 
+
Net Performance Fees
 
75
 
394
 
185
 
713
 
 
 
 
 
 
 
 
 
 
 
 
+
Investment Income/(Loss)
 
(6)
 
11
 
(1)
 
67
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
31
 
30
 
121
 
118
 
 
 
 
 
 
 
 
 
 
 
 
Other 1
 
 
 
50
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Economic Net Income
 
$89
 
$400
 
$212
 
$618
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management
($ bn)
 
$130.3
 
$114.9
 
 
 
 
 
Fee-Earning AUM declined relative to Q1 2016 primarily due to strong realizations across the portfolio, the impact of approximately $7 billion in hedge fund platform related outflows and redemptions, and the negative impact of foreign exchange. Funds raised during the quarter include final closings in our new distressed credit fund and the AlpInvest Secondaries program.
 
 
 
 
 
 
 
 
 
 
 
 

Note: LTM, or last twelve months, refers to the period Q2 2016 through Q1 2017 . Prior LTM, or the prior rolling 12-month period, refers to the period Q2 2015 through Q1 2016 .
(1) Includes a $50 million reserve for ongoing litigation and contingencies taken in Q4 2015, that was allocated to the segments in the following manner: Corporate Private Equity ($27 million), Real Assets ($9 million), Global Market Strategies ($9 million) and Investment Solutions ($5 million).


Page | 5




Corporate Private Equity (CPE)
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q1
$0.2 billion
 
Q1
$2.5 billion
 
Q1
$1.0 billion
 
Q1
9%
YTD:
$0.2 bn
LTM:
$0.8 bn
 
YTD:
$2.5 bn
LTM:
$7.1 bn
 
YTD:
$1.0 bn
LTM:
$13.4 bn
 
YTD:
9%
LTM:
18%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

$ in millions, unless noted
 
Q1 2016
 
Q1 2017
 
Prior LTM
 
LTM
 
Commentary
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$32
 
$10
 
$116
 
$68
 
The decline in FRE compared to Q1 2016 was driven by a $23 million decline in fee revenue, with $12 million of the decline attributable to lower transaction and portfolio advisory fees and $11 million of the decline was attributable to lower management fees related to lower Fee- Earning AUM, partially offset by a $5 million decline in cash compensation.

CPE Net Realized Performance Fees in Q1 2017 were primarily driven by exits in Global Financial Services I, Carlyle Asia Partners III, and Carlyle Europe Technology II.

 
 
 
 
 
 
 
 
 
 
 
+
Net Realized Performance Fees
 
68
 
25
 
567
 
546
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Investment Income
 
5
 
 
25
 
56
 
 
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings
 
$105
 
$35
 
$709
 
$670
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$32
 
$10
 
$116
 
$68
 
Net Performance Fees were driven by fund appreciation in CPE of 9% in the quarter and 18% over the LTM.

During the quarter, Carlyle Partners V and VI appreciated 21% and 7% respectively, Carlyle Asia Partners IV appreciated 25%, and Carlyle Europe Technology Partners II appreciated 34%. Each of these funds is in accrued carry and positively impacted Net Performance Fees and Accrued Performance Fees for the quarter.



 
 
 
 
 
 
 
 
 
 
 
+
Net Performance Fees
 
19
 
313
 
112
 
447
 
 
 
 
 
 
 
 
 
 
 
 
+
Investment Income/(Loss)
 
(2)
 
6
 
6
 
57
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
18
 
15
 
66
 
67
 
 
 
 
 
 
 
 
 
 
 
 
Other 1
 
 
 
27
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Economic Net Income
 
$32
 
$313
 
$143
 
$505
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management
($ bn)
 
$40.9
 
$36.9
 
 
 
 
 
Fee-Earning AUM declined relative to Q1 2016 primarily due to a strong level of realizations and limited net funds raised. Funds raised during the quarter include capital for our latest vintage Asia Growth fund and certain co-investment vehicles.
 
 
 
 
 
 
 
 
 
 
 
 
(1) For a description of the "Other" amount, please see page 5.
Corporate Private Equity
 
 
 
LTM
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 16 - Q1 17
 
QoQ  
 
YoY
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income
 
32
 
58
 
63
 
71
 
313
 
505
 
343%
 
873%
 
254%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
32
 
23
 
17
 
19
 
10
 
68
 
(47)%
 
(69)%
 
(41)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
19
 
33
 
101
 
0
 
313
 
447
 
100%
 
1,529%
 
298%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
68
 
195
 
168
 
159
 
25
 
546
 
(84)%
 
(63)%
 
(4)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
105
 
235
 
209
 
191
 
35
 
670
 
(81)%
 
(66)%
 
(5)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
61.1
 
57.6
 
54.6
 
50.9
 
53.0
 
 
 
4%
 
(13)%
 
(13)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
40.9
 
38.9
 
37.8
 
36.3
 
36.9
 
 
 
2%
 
(10)%
 
(10)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Totals may not sum due to rounding.


Page | 6




Real Assets
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q1
$1.0 billion
 
Q1
$0.7 billion
 
Q1
$0.6 billion
 
Q1
5%
YTD:
$1.0 bn
LTM:
$2.0 bn
 
YTD:
$0.7 bn
LTM:
$5.2 bn
 
YTD:
$0.6 bn
LTM:
$5.4 bn
 
YTD:
5%
LTM:
23%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Invested capital, realized proceeds, and fund appreciation are for carry funds only.
$ in millions, unless noted
 
Q1 2016
 
Q1 2017
 
Prior LTM
 
LTM
 
Commentary
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$16
 
$5
 
$69
 
$43
 
The FRE decline compared to Q1 2016 was driven by a $9 million decline in fee revenues partially owing to a $4 million decline in catch-up management fees as well as lower Fee-Earning AUM. The decrease compared to the prior LTM was primarily driven by a decrease in catch-up management fees.

Net Realized Performance Fees in Q1 2017 were primarily driven by our U.S. and Europe Real Estate funds.

Realized Investment Loss in Q1 2017 was driven by losses in Urbplan.
 
 
 
 
 
 
 
 
 
 
 
+
Net Realized Performance Fees
 
1
 
7
 
90
 
21
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Investment Income (Loss)
 
2
 
(8)
 
(5)
 
(31)
 
 
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings (DE)
 
$20
 
$4
 
$154
 
$33
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$16
 
$5
 
$69
 
$43
 
Net Performance Fees were driven by fund appreciation in Real Assets of 5% in the quarter and 23% over the LTM.

U.S. Real Estate funds CRP VII and CRP V appreciated 4% and 6%, respectively, while NGP XI appreciated 16% in Q1 2017.

The investment loss in Q1 2017 is primarily attributable to losses in Urbplan, and partially offset by appreciation in investments in NGP funds.


 
 
 
 
 
 
 
 
 
 
 
+
Net Performance Fees
 
54
 
66
 
89
 
220
 
 
 
 
 
 
 
 
 
 
 
 
+
Investment Income/(Loss)
 
(3)
 
(3)
 
3
 
(20)
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
6
 
9
 
24
 
29
 
 
 
 
 
 
 
 
 
 
 
 
Other 1
 
 
 
9
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Economic Net Income
 
$62
 
$59
 
$128
 
$214
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management
($ bn)
 
$30.7
 
$27.2
 
 
 
 
 
Fee-Earning AUM declined relative to Q1 2016 primarily due to significant realizations, partially offset by net funds raised. Funds raised during the quarter primarily owed to new capital for our first Core Plus real estate fund and several co-investment vehicles.
 
 
 
 
 
 
 
 
 
 
 
 
(1) For a description of the "Other" amount, please see page 5.

Real Assets
 
 
 
LTM
 
% Change
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 16 - Q1 17
 
QoQ  
 
YoY
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income
 
62
 
79
 
4
 
73
 
59
 
214
 
(18)%
 
(3)%
 
68%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
16
 
15
 
14
 
9
 
5
 
43
 
(46)%
 
(69)%
 
(38)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
54
 
74
 
28
 
52
 
66
 
220
 
27%
 
23%
 
148%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
1
 
34
 
11
 
(30)
 
7
 
21
 
123%
 
570%
 
(76)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
20
 
39
 
10
 
(20)
 
4
 
33
 
118%
 
(82)%
 
(78)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
36.7
 
37.5
 
35.7
 
34.3
 
35.6
 
 
 
4%
 
(3)%
 
(3)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
30.7
 
30.4
 
28.9
 
27.5
 
27.2
 
 
 
(1)%
 
(11)%
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Totals may not sum due to rounding.

Page | 7




Global Market Strategies (GMS)
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q1
$0.4 billion
 
Q1
$0.3 billion
 
Q1
$0.1 billion
 
Q1
7%
YTD:
$0.4 bn
LTM:
$4.4 bn
 
YTD:
$0.3 bn
LTM:
$0.9 bn
 
YTD:
$0.1 bn
LTM:
$0.5 bn
 
YTD:
7%
LTM:
8%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Invested capital, realized proceeds, and fund appreciation are for carry funds only.
$ in millions, unless noted
 
Q1 2016
 
Q1 2017
 
Prior LTM
 
LTM
 
Commentary
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$(1)
 
$3
 
$6
 
$(178)
 
The FRE increase compared to Q1 2016 was driven by an $8 million decline in cash compensation, partially offset by a $3 million decline in fee revenues. Catch-up management fees in Q1 2017 were $3 million due to the final close of our latest vintage distressed debt fund. The decline in LTM FRE compared to the prior LTM was primarily driven by the impact of the net charges associated with the commodities business taken in 2016.

Net Realized Performance Fees in Q1 2017 were primarily driven by realized gains in our business development company.


 
 
 
 
 
 
 
 
 
 
 
+
Net Realized Performance Fees
 
1
 
3
 
20
 
21
 
 
 
 
 
 
 
 
 
 
 
 
+
Realized Investment Income
 
1
 
2
 
5
 
7
 
 
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings (DE)
 
$1
 
$8
 
$31
 
$(150)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings (FRE)
 
$(1)
 
$3
 
$6
 
$(178)
 
Net Performance Fees were driven by fund appreciation in GMS of 7% in the quarter and 8% over the LTM.

Our latest vintage distressed debt fund, Carlyle Strategic Partners IV, appreciated 26% in the quarter and the two predecessor funds also exhibited strong appreciation.

Investment Income was positively impacted by our CLOs and direct fund investments in our distressed debt funds.
 
 
 
 
 
 
 
 
 
 
 
+
Net Performance Fees
 
2
 
11
 
(25)
 
28
 
 
 
 
 
 
 
 
 
 
 
 
+
Investment Income/(Loss)
 
(1)
 
7
 
(9)
 
28
 
 
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
5
 
4
 
19
 
17
 
 
 
 
 
 
 
 
 
 
 
 
Other 1
 
 
 
9
 
 
 
 
 
 
 
 
 
 
 
 
 
=
Economic Net Income
 
$(6)
 
$15
 
$(55)
 
$(138)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management
($ bn)
 
$28.6
 
$24.4
 
 
 
 
 
Fee-Earning AUM declined relative to Q1 2016 primarily due to $6 billion in outflows and the wind down of prior hedge fund interests, partially offset by final closes in our latest vintage distressed debt and energy mezzanine funds. During the quarter, we had a final close in our latest vintage distressed credit fund, CSP IV, and a follow-on closing in a new structured credit fund.
 
 
 
 
 
 
 
 
 
 
 
 
(1) For a description of the "Other" amount, please see page 5.
Global Market Strategies
 
 
 
LTM
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
Q1 2017
 
Q2 16 - Q1 17
 
QoQ  
 
YoY
 
LTM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (Loss)
 
(6)
 
12
 
(11)
 
(155)
 
15
 
(138)
 
110%
 
380%
 
(149)%