The Carlyle Group
Carlyle Group L.P. (Form: 8-K, Received: 02/08/2017 06:34:28)



 
 
 
 
 
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): February 8, 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:
¨
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))
 
 
 
 
 






Item 2.02
Results of Operations and Financial Condition.
On February 8, 2017, The Carlyle Group L.P. issued a summary press release and a detailed earnings presentation announcing financial results for the fourth quarter and full year ended December 31, 2016. 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 February 8, 2017.
 
 
99.2
  
Earnings presentation of The Carlyle Group L.P., dated February 8, 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: February 8, 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 February 8, 2017.
 
 
Exhibit 99.2
  
Earnings presentation of The Carlyle Group L.P., dated February 8, 2017.
 
 
 
 
  
 




Exhibit 99.1
CARLYLEBLUE300DPIJPGA06.JPG  

The Carlyle Group Announces Fourth Quarter and Full Year 2016 Financial Results

Washington, DC, February 8, 2017 – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unaudited results for the fourth quarter and full year ended December 31, 2016 .

Carlyle Co-CEO David M. Rubenstein said, “Our core business performed well in 2016, but obviously we are disappointed with the losses in our hedge fund business. We are focused on raising $100 billion in new capital over several years, scaling our global credit business, and performing well for our fund and unitholder investors.”

Carlyle Co-CEO William E. Conway, Jr. said, “We concluded an active 2016 with strong performance in the principal operating metrics of our economic model. We deployed a record amount of capital in 2016, and returned a record $30 billion to our carry fund investors. Our investment performance remained strong, as carry funds appreciated 12% during 2016, and 5% during the fourth quarter.”

U.S. GAAP results for Q4 2016 and 2016 included income before provision for income taxes of $12 million and $45 million , and net income (loss) attributable to common unitholders through The Carlyle Group L.P. of $(9) million and $6 million , or net income (loss) per common unit of $(0.16) and $(0.08) , on a diluted basis. Total balance sheet assets were $10 billion as of December 31, 2016 .
In addition to this release, Carlyle issued a full detailed presentation of its fourth quarter and full year 2016 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 $0.16 per common unit to holders of record at the close of business on February 21, 2017, payable on February 28, 2017. For full year 2016 , the Board of Directors declared $1.55 in aggregate distributions to common unitholders.
Conference Call
Carlyle will host a conference call at 8:30 a.m. EST on Wednesday, February 8, 2017, to announce its fourth quarter and full year 2016 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.

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About The Carlyle Group
The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $158 billion of assets under management across 281 investment vehicles as of December 31, 2016 . 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 1,600 people in 35 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. These statements are subject to risks, uncertainties and assumptions, including those described under the section entitled “Risk Factors” in our most recent Annual Report on Form 10-K, 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
  
Elizabeth Gill
Phone: +1 (212) 813-4527
  
Phone: +1 (202) 729-5385
daniel.harris@carlyle.com
  
elizabeth.gill@carlyle.com
 
 
Web: www.carlyle.com
  
 
Videos: www.youtube.com/onecarlyle
  
 
Tweets: www.twitter.com/onecarlyle
  
 
Podcasts: www.carlyle.com/about-carlyle/market-commentary

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Exhibit 99.2

CARLYLEBLUE300DPIJPGA07.JPG

For Immediate Release
February 8, 2017

The Carlyle Group Announces Fourth Quarter and Full Year 2016 Financial Results

Declared a quarterly distribution of $0.16 per common unit for Q4 2016; Aggregate distribution of $1.55 per common unit for 2016
$8.7 billion in realized proceeds in Q4 2016 and a record $29.6 billion realized in 2016
$6.1 billion of invested capital in Q4 2016 and a record $17.9 billion invested in 2016
$3.5 billion in gross new capital raised and $2.7 billion raised on a net basis after redemptions in Q4 2016 ; $13.9 billion in gross new capital raised and $8.2 billion on a net basis after redemptions in 2016
U.S. GAAP net income (loss) attributable to The Carlyle Group L.P. of $(9) million and $6 million , or $(0.16) and $(0.08) per common unit on a diluted basis, for Q4 2016 and 2016 , respectively
$175 million in net charges within Global Market Strategies relating to losses in Vermillion Asset Management and separation from Claren Road Asset Management; Q4 2016 Distributable Earnings impact of $175 million and Economic Net Income impact of $75 million
Distributable Earnings of $7 million on a pre-tax basis for Q4 2016 and $652 million in 2016 ; excluding the net charges in Global Market Strategies, Distributable Earnings would have been $182 million for Q4 2016 and $827 million in 2016; Distributable Earnings per common unit of $0.00 in Q4 2016 and $1.85 in 2016 , on a post-tax basis
Economic Net Income of $6 million and $306 million on a pre-tax basis and $0.02 and $0.76 million per Adjusted Unit on a post-tax basis in Q4 2016 and in 2016 , respectively, driven by carry fund appreciation of 5% in Q4 2016 and 12% in 2016
Washington, DC – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unau dited results for the fourth quarter and full year ended December 31, 2016 .

Carlyle Co-CEO David M. Rubenstein said, “Our core business performed well in 2016, but obviously we are disappointed with the losses in our hedge fund business. We are focused on raising $100 billion in new capital over several years, scaling our global credit business, and performing well for our fund and unitholder investors.”

Carlyle Co-CEO William E. Conway, Jr. said, “We concluded an active 2016 with strong performance in the principal operating metrics of our economic model. We deployed a record amount of capital in 2016, and returned a record $30 billion to our carry fund investors. Our investment performance remained strong, as carry funds appreciated 12% during 2016, and 5% during the fourth quarter.”


Page | 1


U.S. GAAP results for Q4 2016 and 2016 included income before provision for income taxes of $12 million and $45 million , and net income (loss) attributable to common unitholders through The Carlyle Group L.P. of $(9) million and $6 million , or net income (loss) per common unit of $(0.16) and $(0.08) , on a diluted basis. Total balance sheet assets were $10 billion as of December 31, 2016 .

Notable Impacts on Q4 2016 and Full Year 2016 Results
Included in our Q4 2016 and full year 2016 results are several impacts from ongoing litigation, losses in Vermillion Asset Management and giveback as well as our separation from Claren Road Asset Management. Specifically:

Losses in commodities : Our 2016 earnings results include $175 million in charges within Global Market Strategies relating to losses in Vermillion Asset Management (VAM), principally resulting from the misappropriation of petroleum commodities by third parties outside the U.S. from various VAM investment vehicles. During Q4 2016 we repurchased investor interests in one of the VAM vehicles for $100 million, settling potential claims and acquiring their rights to future recoveries. In Q3 2016, we reserved $100 million against U.S. GAAP and Economic Net Income, which was not reflected in Fee-Related Earnings or Distributable Earnings until Q4 2016. In total, U.S. GAAP, Economic Net Income, Fee-Related Earnings and Distributable Earnings were all negatively impacted by $175 million in 2016.
Insurance recovery : Q4 2016 results reflect the inclusion of approximately $25 million of insurance recoveries related to ongoing legal matters.
Transfer of Carlyle’s Interest in Claren Road Asset Management Back to Founders : During the fourth quarter, we agreed with Claren Road to transfer our ownership stake in Claren Road back to its founders. This transaction closed on January 31, 2017. We incurred approximately $25 million in charges to complete this transaction and it is reflected in our Q4 2016 results. In addition, we also completed the separation from Emerging Sovereign Group in Q4 2016 and have eliminated all hedge fund AUM from our metrics as of December 31, 2016.
The above items have all been attributed to GMS in our segment reporting. Our Q3 2016 U.S. GAAP and Economic Net Income results allocated the $100 million in charges across our business segments in accordance with our allocation policies, while results in Q4 2016 attribute all of the losses to the GMS segment and reverse the charges in our other business segments.
Legacy Energy Giveback : During Q4 2016, we realized the giveback obligations related to the second and third Legacy Energy funds, thereby reducing Distributable Earnings by $36 million in the quarter. The realization of these liabilities had no impact on GAAP earnings or Economic Net Income. Legacy Energy is included in our Real Assets segment.
  
Changes to Disclosure and Presentation of Key Performance Metrics
Investment funds and vehicles advised by Alpinvest Partners B.V. and Metropolitan Real Estate Equity Management, LLC, which comprise our Investment Solutions segment, are now included in our "carry funds" definition. Accordingly, they are now included in our Invested Capital, Realized Proceeds and Fund Appreciation metrics. We have recast metrics for 2016 and conformed all prior periods, including supplemental key metrics information available on our website. In addition, we have also adjusted the methodology for recognition of Invested Capital to an investment timing basis, rather than the timing of cash flows to and from our fund investors, to better reflect capital deployed by our funds during a given period. As a result, our Q4 2016 Invested Capital reflects a true-up of approximately $0.5 billion for capital invested in prior periods that had not been called from investors as of September 30, 2016.
 
Unitholder Distribution
The Board of Directors has declared a quarterly distribution of $0.16 per common unit to holders of record at the close of business on February 21, 2017, payable on February 28, 2017. For full year 2016 , the Board of Directors declared $1.55 in aggregate distributions to common unitholders.
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, giveback 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.

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Performance Metrics
Carlyle evaluates the underlying performance of its business on four key metrics: net funds raised, invested capital, fund appreciation and realized proceeds for fund investors. The table below highlights the results of these metrics for Q4 2016 , and full year 2016 and 2015 . Beginning in Q4 2016, and conforming prior periods, we now include Investment Solutions carry fund metrics in invested capital, realized proceeds and fund appreciation. Investment funds and vehicles in the Investment Solutions segment historically were only included in net funds raised.
During Q4 2016 , Carlyle generated $2.7 billion of net funds raised. Carlyle raised gross new capital of $3.5 billion across its fund platform, which was partially offset by redemptions of $0.6 billion in our hedge fund partnerships and the return of $0.2 billion in fund investor capital related to our previously announced wind down of Diversified Global Asset Management. Carlyle raised gross new capital of $13.9 billion in 2016, compared to $22.5 billion in gross new capital raised in 2015.
During Q4 2016 , Carlyle generated realized proceeds of $8.7 billion and invested $6.1 billion . For 2016 , Carlyle generated a record $29.6 billion in realized proceeds and invested a record $17.9 billion .

Net Funds Raised
 
Invested Capital
Q4
$2.7 billion
 
Q4
$6.1 billion
 
2016:
$8.2 bn
2015:
$16.4 bn
 
 
2016:
$17.9 bn
2015:
$14.0 bn
 
 
 
 
 
 
 
 
 
 
 
Realized Proceeds
 
Fund Appreciation
Q4
$8.7 billion
 
Q4
5%
 
2016:
$29.6 bn
2015:
$28.9 bn
 
 
2016:
12%
2015:
12%

Note: Invested Capital, Realized Proceeds and Fund Appreciation reflect carry funds only. Invested Capital in Q4 2016 reflects a true-up of approximately $0.5 billion for investment activity in prior periods that had not been called from investors as of September 30, 2016.

ICRPQ42016A04.JPG

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Carlyle Consolidated GAAP Results
 
Net income (loss) attributable to The Carlyle Group L.P. was $(9) million , or $(0.16) per common unit on a diluted basis, for Q4 2016 and $6 million , or $(0.08) per common unit on a diluted basis, for 2016 , as compared to $(5) million , or $(0.06) per common unit on a diluted basis, for Q4 2015 , and $(18) million , or $(0.30) per common unit on a diluted basis, for 2015 .
Income (loss) before provision for income taxes (1) was $12 million and $(158) million for Q4 2016 and Q4 2015 , respectively, and $ 45 million and $ 402 million for 2016 and 2015, respectively. The increase in income before provision for income taxes in Q4 2016 compared to Q4 2015 includes an increase in investment income of $26 million and a decrease in general, administrative and other expenses of $15 million due to intangible asset impairments in Q4 2015. As it relates to the full year, net performance fees increased $85 million, investment income increased $145 million, primarily due to our investments in NGP, and general, administrative and other expenses decreased by $192 million, primarily due to intangible asset impairment charges in 2015. These increases in income (loss) before provision for income taxes in 2016 as compared to 2015 were partially offset by charges for litigation and contingencies in 2016 in excess of charges in 2015. Both Q4 2016 and the full year 2016 saw an increase in base compensation due to the impact of the transaction with Claren Road (which is recorded in general, administrative and other indirect expenses in the segment results). Also affecting the change in both Q4 and annual periods is the deconsolidation of the fund of funds vehicles and hedge funds, as well as many of the CLOs, on January 1, 2016, as a result of the adoption of new U.S. GAAP consolidation guidance.
Net income (loss) attributable to The Carlyle Group L.P. was $(9) million or $(0.16) per common unit on a diluted basis for Q4 2016 and $6 million or $(0.08) per common unit on a diluted basis for 2016. For 2016, The Carlyle Group L.P. has $6 million of income despite a $(26) million loss attributable to Carlyle Holdings due to a benefit for income taxes attributable solely to The Carlyle Group L.P. For purposes of the diluted earnings per unit calculation, Carlyle Holdings partnership units are assumed to have converted to common units of The Carlyle Group L.P., and therefore, substantially all of the net loss of Carlyle Holdings is attributable to The Carlyle Group L.P. resulting in a diluted loss per common unit.
The Carlyle Group L.P.
Summary U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited)
 
 
Three Months Ended           
 
Year Ended
 
 
Dec 31, 2015
Mar 31, 2016
Jun 30, 2016
Sep 30, 2016
Dec 31,
2016
 
Dec 31,
2015
Dec 31,
2016
 
 
(Dollars in millions, except per unit data)
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
Fund management fees
 
$
255.1

$
289.5

$
272.5

$
255.1

$
259.0

 
$
1,085.2

$
1,076.1

Total performance fees
 
203.6

145.2

210.9

214.7

181.0

 
824.9

751.8

Total investment income (loss)
 
8.7

(9.6
)
65.3

70.5

34.3

 
15.2

160.5

Revenue from consolidated entities
 
245.7

53.3

54.3

61.7

92.7

 
1,062.3

262.0

All other revenues
 
2.7

4.7

5.0

5.3

8.9

 
18.6

23.9

Total revenues
 
715.8

483.1

608.0

607.3

575.9

 
3,006.2

2,274.3

 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
Base compensation
 
160.0

166.3

149.9

154.3

176.6

 
632.2

647.1

Equity-based compensation
 
87.0

75.4

109.0

81.4

68.8

 
378.0

334.6

Total performance fee related compensation
 
95.4

69.5

96.5

110.9

76.2

 
510.9

353.1

General, administrative and other expenses
 
173.6

82.3

91.4

188.9

158.5

 
712.8

521.1

Expenses from consolidated entities
 
267.8

46.8

84.0

114.4

90.9

 
1,183.9

336.1

Interest and other nonoperating expenses
 
18.7

19.1

16.1

11.9

3.0

 
50.6

50.1

Total expenses
 
802.5

459.4

546.9

661.8

574.0

 
3,468.4

2,242.1

 
 
 
 
 
 
 
 
 
 
Net investment gains (losses) of consolidated funds
 
(71.4
)
(8.4
)
6.7

4.8

10.0

 
864.4

13.1

Income (loss) before provision for income taxes
 
(158.1
)
15.3

67.8

(49.7
)
11.9

 
402.2

45.3

Provision (benefit) for income taxes
 
(10.3
)
7.4

24.3

1.0

(2.7
)
 
2.1

30.0

Net income (loss)
 
(147.8
)
7.9

43.5

(50.7
)
14.6

 
400.1

15.3

Net income (loss) attributable to non-controlling interests in consolidated entities
 
(119.6
)
(2.3
)
1.6

(29.1
)
70.8

 
537.9

41.0

Net income (loss) attributable to Carlyle Holdings
 
(28.2
)
10.2

41.9

(21.6
)
(56.2
)
 
(137.8
)
(25.7
)
Net income (loss) attributable to non-controlling interests in Carlyle Holdings
 
(23.6
)
1.8

35.8

(22.4
)
(47.3
)
 
(119.4
)
(32.1
)
Net income (loss) attributable to The Carlyle Group L.P.
 
$
(4.6
)
$
8.4

$
6.1

$
0.8

$
(8.9
)
 
$
(18.4
)
$
6.4

 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to The Carlyle Group L.P. per common unit
 
 
 
 
 
 
 
 
 
   Basic
 
$
(0.06
)
$
0.10

$
0.07

$
0.01

$
(0.11
)
 
$
(0.24
)
$
0.08

   Diluted
 
$
(0.06
)
$
0.01

$
0.07

$
(0.02
)
$
(0.16
)
 
$
(0.30
)
$
(0.08
)
 
 
 
 
 
 
 
 
 
 
(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, metrics 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 equity 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 December 31, 2016) 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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Carlyle All Segment Results
 
Distributable Earnings (DE): $7 million for Q4 2016 and $652 million for 2016
Distributable Earnings were $7 million for Q4 2016 , or $0.00 per common unit on a post-tax basis, compared to $145 million for Q4 2015 . Reducing Q4 2016 DE is the $175 million in net charges within Global Market Strategies (GMS) relating to losses in our commodities business and separation from Claren Road Asset Management, as well as the $36 million realized giveback for two Legacy Energy funds. DE was $652 million for 2016 , 29% lower than 2015 . Excluding the impact of the GMS charges, 2016 DE would have been $827 million.
Fee-Related Earnings (FRE) were $(145) million for Q4 2016 relative to $43 million in Q4 2015 , with the decline due primarily to the impact of the $175 million in net charges charges within GMS. Excluding the GMS charges, Q4 2016 FRE would have been $30 million compared to $43 million in Q4 2015 , with the decline primarily attributable to lower management fees in CPE due to significant realization activities. FRE was $(19) million in 2016 , or $156 million excluding the impact of GMS charges, 21% lower than 2015, primarily owing to a $64 million decline in catch-up management fees compared to 2015 due to the absence of large funds in fundraising during 2016.
Realized Net Performance Fees were $136 million for Q4 2016 , compared to $100 million for Q4 2015 , due to strong public market exit activity. For Q4 2016 , net realized performance fees included fees related to full or partial exits in Booz Allen, CommScope, Zodiac Pool and CVC, among others. Realized Net Performance Fees were $625 million in 2016 , 21% lower than 2015 .
Realized Investment Income was $17 million in Q4 2016 and $45 million in 2016 , with gains in U.S. Buyout, Natural Resources and U.S. Structured Credit, partially offset by realized losses in Urbplan Desenvolvimento Urbano S.A. ("Urbplan").
Economic Net Income (ENI): $6 million for Q4 2016 and $306 million in 2016 . Excluding the impact of the GMS charges relating to our commodities business, pre-tax ENI would have been $481 million for 2016 .
Q4 2016 ENI was positively impacted by strong appreciation in our Europe Buyout and U.S. Real Estate funds. Net performance fees were $61 million in Q4 2016 compared to $109 million in Q4 2015 .
Carlyle generated $0.02 on a post-tax ENI basis for Q4 2016
The Carlyle Group L.P. - All Segments
Quarter
 
Annual
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
2015
 
2016
 
QoQ  
 
YoY
 
Annual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Revenues
 
491
 
451
 
533
 
540
 
436
 
2,132
 
1,959
 
(19)%
 
(11)%
 
(8)%
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Expenses
 
418
 
363
 
374
 
486
 
430
 
1,736
 
1,653
 
(12)%
 
3%
 
(5)%
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Economic Net Income
 
73
 
89
 
158
 
54
 
6
 
397
 
306
 
(90)%
 
(92)%
 
(23)%
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Fee-Related Earnings
 
43
 
51
 
45
 
31
 
(145)
 
199
 
(19)
 
NM
 
NM
 
NM
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Net Performance Fees
 
109
 
75
 
115
 
142
 
61
 
392
 
394
 
(57)%
 
(44)%
 
1%
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Realized Net Performance Fees
 
100
 
70
 
233
 
186
 
136
 
789
 
625
 
(27)%
 
35%
 
(21)%
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 

 

Distributable Earnings
 
145
 
129
 
288
 
228
 
7
 
923
 
652
 
(97)%
 
(95)%
 
(29)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Distributable Earnings per common unit (after taxes)
 
$0.38
 
$0.35
 
$0.84
 
$0.66
 
$0.00
 
$2.73
 
$1.85
 
 
 

 

Distribution per common unit
 
$0.29
 
$0.26
 
$0.63
 
$0.50
 
$0.16
 
$2.07
 
$1.55
 
 
 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 

 

Total Assets Under Management ($ in billions)
 
182.6
 
178.1
 
175.6
 
169.1
 
157.6
 
 
 
 
 
(7)%
 
(14)%
 
(14)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 

Fee-Earning Assets Under Management ($ in billions)
 
131.0
 
130.3
 
125.3
 
123.8
 
115.0
 
 
 
 
 
(7)%
 
(12)%
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Totals may not sum due to rounding.

Page | 5



Carry Fund Performance and Net Accrued Performance Fees
Carlyle's carry fund portfolio valuation increased 5% during Q4 2016 and 12% in 2016 . Across our Corporate Private Equity, Real Assets and Global Market Strategies carry funds, the public and private portfolio both appreciated 4% during Q4 2016 . The Investment Solutions carry funds appreciated 7% during Q4 2016 . Fourth quarter carry fund valuations were positively impacted by strength in our second and third Europe Buyout funds, our fifth U.S. Buyout fund and our latest U.S. Real Estate fund, offset by 1% depreciation in our sixth U.S. Buyout fund (CP VI). The modest quarterly depreciation in CP VI is primarily attributable to the deployment of over $1.0 billion in new capital during the quarter at or below investment cost to account for transaction fees. CP VI appreciated 29% during 2016 and is now approximately 64% invested or committed.
As of December 31, 2016 , net accrued performance fees of $1.1 billion were down from $1.2 billion at September 30, 2016 and $1.3 billion at December 31, 2015. The decline compared to Q4 2015 is primarily due to strong exit activity in Corporate Private Equity funds that realized carry throughout 2016.
 
 
 
2014
 
2015
 
2016
 
Net Accrued
Performance Fees
Fund Valuations
($ in millions)
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
Q4 2016
Overall Carry Fund Appreciation / (Depreciation) (1,2)
 
6%
 
5%
 
5%
 
3%
 
8%
 
3%
 
(1)%
 
2%
 
0%
 
4%
 
3%
 
5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Private Equity (3)
 
8%
 
5%
 
3%
 
7%
 
8%
 
5%
 
(3)%
 
3%
 
1%
 
4%
 
3%
 
4%
 
$706
Buyout
 
8%
 
5%
 
3%
 
7%
 
9%
 
4%
 
(3)%
 
3%
 
1%
 
4%
 
3%
 
4%
 
$669
Growth Capital
 
0%
 
13%
 
8%
 
1%
 
3%
 
11%
 
0%
 
0%
 
(2)%
 
3%
 
0%
 
3%
 
$37
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Assets (3)
 
2%
 
3%
 
2%
 
(8)%
 
2%
 
0%
 
(5)%
 
0%
 
1%
 
7%
 
4%
 
4%
 
$285
Real Estate
 
2%
 
4%
 
4%
 
8%
 
11%
 
4%
 
6%
 
6%
 
8%
 
8%
 
0%
 
3%
 
$250
Natural Resources (4)
 
 
 
 
 
3%
 
(8)%
 
1%
 
0%
 
(4)%
 
0%
 
(2)%
 
11%
 
12%
 
0%
 
$52
Legacy Energy
 
1%
 
2%
 
0%
 
(17)%
 
(3)%
 
(3)%
 
(17)%
 
(7)%
 
(3)%
 
3%
 
1%
 
9%
 
$(17)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Market Strategies Carry Funds (3)
 
3%
 
12%
 
6%
 
(2)%
 
3%
 
2%
 
(9)%
 
(4)%
 
(12)%
 
(2)%
 
0%
 
2%
 
$35
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Solutions Carry Funds  (3)
 
6%
 
6%
 
9%
 
4%
 
13%
 
4%
 
4%
 
2%
 
0%
 
3%
 
2%
 
7%
 
$45
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Accrued Performance Fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$1,071
(1) Appreciation/(Depreciation) represents unrealized gain/(loss) for the period on a total return basis before fees and expenses. The percentage of return is calculated as: ending remaining investment fair market value plus net investment outflow (sales proceeds minus net purchases) minus beginning remaining investment fair market value divided by beginning remaining investment fair market value. Fund only, does not include co-investment.
(2) “Carry funds” generally refers to closed-end investment vehicles, in which commitments are drawn down over a specified investment period, and in which the general partner receives a special residual allocation of income from limited partners, which we refer to as carried interest, in the event that specified investment returns are achieved by the fund. Disclosures referring to carry funds will also include the impact of certain commitments which do not earn carried interest, but are either part of, or associated with our carry funds. The rate of carried interest, as well as the share of carried interest allocated to Carlyle, may vary across the carry fund platform. See "Non-GAAP Financial Info and Other Key Terms" for more information.
(3) We generally earn performance fees (or carried interest) from our carry funds representing a 20% allocation of profits generated on third-party capital after returning the invested capital, the allocation of preferred returns of generally 7% to 9% and return of certain fund costs. Our net interest in the performance fees after allocations to our investment professionals or other parties varies based on each fund. For our Corporate Private Equity, Global Market Strategies, Real Estate and Natural Resources carry funds (excluding NGP) our net interest in performance fees is generally 55%. Our net interest in the performance fees from the NGP carry funds ranges from 40% to 47.5%. Our net interest in the performance fees from our Legacy Energy carry funds generally ranges from 16% to 40%, with a weighted average of 18% based on remaining fair value invested as of December 31, 2016 .
(4) Natural Resources is comprised of NGP, infrastructure, power and international energy funds.


Page | 6




Assets Under Management and Remaining Fair Value of Capital
 
Total Assets Under Management: $157.6 billion as of Q4 2016 ( -14% in 2016 )
Major drivers of change versus Q3 2016 : Distributions ( -$8.8 billion ), divestments of Claren Road and ESG ( -$4.7 billion ), foreign exchange impact ( -$3.3 billion ) and net redemptions ( -$0.7 billion ), partially offset by market appreciation ( +$4.5 billion ) and commitments, net of expired capital ( +$1.8 billion ).
Total Dry Powder of $50.1 billion as of Q4 2016 , comprised of $17.5 billion in Corporate Private Equity, $11.6 billion in Real Assets, $6.8 billion in Global Market Strategies and $14.3 billion in Investment Solutions.
Fee-Earning Assets Under Management: $115.0 billion as of Q4 2016 ( -12% in 2016 )
Major drivers of change versus Q3 2016 : Net distributions and outflows ( -$5.8 billion ), divestments of Claren Road and ESG ( -$4.4 billion ), foreign exchange impact ( -$2.3 billion ), net redemptions ( -$1.1 billion ) and changes in CLO collateral balance ( -$0.3 billion ), partially offset by inflows, including fee-paying commitments ( +$3.8 billion ) and market appreciation ( +$1.4 billion ).
Remaining Fair Value of Capital was $107.5 billion as of Q4 2016 , which includes:
$56.1 billion across our Corporate Private Equity, Real Assets and Global Market Strategies carry funds
$28.8 billion in our Investment Solutions carry funds, which includes fund, secondaries and co-investment strategies
$20.4 billion in non-carry fund credit vehicles, which includes CLOs and our business development companies
AUMRFV4Q2016A06.JPG
Note: Data as of December 31, 2016 . Totals may not sum due to rounding.
(1) Comprised of Structured Credit ($18.6 billion) and BDC ($1.8 billion).
(2) Comprised primarily of NGP Management Fee Funds ($2.1 billion).
(3) Reflects percentage of remaining fair value attributable to investments originated in 2012 or prior.
(4) Reflects percentage of remaining fair value attributable to funds or vehicles in an accrued carry position as of December 31, 2016 .

Page | 7




Non-GAAP Operating Results
Carlyle’s non-GAAP results for Q4 2016 are provided in the table below:
 
Carlyle Group Summary
 
 
$ in millions, except unit and per unit amounts
 
 
 
 
 
Economic Net Income
Q4 2016
 
 
 
Economic Net Income (Loss) (pre-tax)
$
5.6

 
Less (Add): Provision (Benefit) for income taxes (1)
(0.8
)
 
 
 
 
Economic Net Income (Loss), After Taxes
$
6.4

 
 
 
 
Adjusted Units (in millions) (2)
330.2

 
 
 
 
Economic Net Income (Loss), After Taxes per Adjusted Unit
$
0.02

 
 
 
 
Distributable Earnings
 
 
 
 
Distributable Earnings
$
7.4

 
Less: Estimated foreign, state, and local taxes (3)
5.4

 
 
 
 
Distributable Earnings, After Taxes
$
2.0

 
 
 
 
Allocating Distributable Earnings for only public unitholders of The Carlyle Group L.P.
 
 
 
 
 
Distributable Earnings to The Carlyle Group L.P.
$
0.5

 
Less: Estimated current corporate income taxes (4)
1.2

 
 
 
 
Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes
$
(0.7
)
 
 
 
 
Units in public float (in millions) (5)
85.7

 
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding
$
0.00

(6)
 
 
(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, 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 1,053,249 common units issued in February 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 December 31, 2016 because they will be eligible to participate in the unitholder distribution. This amount does not reflect the repurchase of 11,490 common units that were pending settlement as of December 31, 2016 and have been subtracted from the common units outstanding for purposes of this calculation.
(6) Amount rounded to zero for presentation purposes.
 

Page | 8




Corporate Private Equity (CPE)
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q4
$0.0 billion
 
Q4
$2.6 billion
 
Q4
$3.6 billion
 
Q4
4%
2016:
$0.8 bn
2015:
$8.0 bn
 
2016:
$7.9 bn
2015:
$5.3 bn
 
2016:
$14.8 bn
2015:
$12.8 bn
 
2016:
11%
2015:
13%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Invested capital, realized proceeds, and fund appreciation are for carry funds only.

Distributable Earnings (DE): $191 million for Q4 2016 and $739 million for 2016 , compared to $798 million in 2015 .
Fee-Related Earnings (FRE) were $19 million for Q4 2016 , compared to $17 million for Q4 2015 . The increase in Q4 2016 was primarily driven by a $9 million decline in fee revenues, offset by a $7 million decrease in cash compensation expense and lower general and administrative expenses. FRE was $91 million for 2016 , compared to $106 million for 2015 , with the decrease primarily driven by a decrease in catch-up management fees.
Realized Net Performance Fees were $159 million for Q4 2016 , compared to $62 million for Q4 2015 , with the increase primarily driven by higher realized proceeds of $3.6 billion in Q4 2016 relative to $2.3 billion in Q4 2015 . Carlyle Partners V, Carlyle Europe Partners III and Carlyle Europe Partners II generated the majority of CPE's realized net performance fees in Q4 2016 . Realized Net Performance Fees were $588 million for 2016 , compared to $669 million for 2015 .
Realized Investment Income was $14 million for Q4 2016 , compared to $1 million for Q4 2015 . Results for Q4 2016 were primarily driven by realized gains on U.S. Buyout investments. Realized Investment Income was $60 million for 2016 , compared to $23 million for 2015 .

Economic Net Income (ENI): $71 million for Q4 2016 and $224 million for 2016 , compared to $400 million for 2015 . The 2016 decline relative to 2015 was largely attributable to lower fund appreciation of 11% in 2016 compared to 13% in 2015, and modestly lower FRE. A significant amount of fund appreciation in 2016 occurred in funds not yet in carry or funds within their catch up periods, limiting the overall impact on performance fees.
CPE carry fund valuations increased 4% in Q4 2016 and increased 11% in 2016 , compared to an increase of 3% in Q4 2015 and an increase of 13% in 2015 .
Net Performance Fees were $0 million for Q4 2016 , compared to $87 million for Q4 2015 . Net Performance Fees were $154 million for 2016 , compared t o $367 million for 2015 . During Q4 2016, our latest vintage U.S. Buyout fund depreciated modestly, which offset appreciation in other CPE funds and led to lower performance fees relative to prior periods.

Total Assets Under Management (AUM): $51 billion as of Q4 2016 ( -19% in 2016 ).
Fee-Earning Assets Under Management of $36 billion were down 4% versus Q3 2016 and down 11% versus Q4 2015 . Major drivers of change versus Q3 2016: Outflows, including distributions and basis step downs
( -$1.6 billion ) and foreign exchange impact ( -$0.6 billion ), partially offset by inflows, including fee-paying commitments ( +$0.6 billion ) and market appreciation ( +$0.1 billion ).
Corporate Private Equity
Quarter
 
Annual
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
2015
 
2016
 
QoQ  
 
YoY
 
Annual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income
 
63
 
32
 
58
 
63
 
71
 
400
 
224
 
12%
 
13%
 
(44)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
17
 
32
 
23
 
17
 
19
 
106
 
91
 
12%
 
11%
 
(15)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
87
 
19
 
33
 
101
 
0
 
367
 
154
 
(100)%
 
(100)%
 
(58)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
62
 
68
 
195
 
168
 
159
 
669
 
588
 
(5)%
 
155%
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
81
 
105
 
235
 
209
 
191
 
798
 
739
 
(8)%
 
137%
 
(7)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
63.1
 
61.1
 
57.6
 
54.6
 
50.9
 
 
 
 
 
(7)%
 
(19)%
 
(19)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
40.9
 
40.9
 
38.9
 
37.8
 
36.3
 
 
 
 
 
(4)%
 
(11)%
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Totals may not sum due to rounding.

Page | 9





Real Assets
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q4
$0.3 billion
 
Q4
$2.2 billion
 
Q4
$2.2 billion
 
Q4
4%
2016:
$1.2 bn
2015:
$3.9 bn
 
2016:
$5.1 bn
2015:
$3.1 bn
 
2016:
$5.8 bn
2015:
$4.8 bn
 
2016:
18%
2015:
(3)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Net funds raised excludes acquisitions. Invested capital, realized proceeds, and fund appreciation are for carry funds only. Invested capital in Q4 2016 reflects a true-up of approximately $0.5 billion for investment activity in prior periods that had not been called from investors as of September 30, 2016.

Distributable Earnings (DE): $(20) million for Q4 2016 and $49 million for 2016 , compared to $153 million for 2015 , excluding the impact of the Q1 2015 French tax judgment of $(80) million.
Fee-Related Earnings (FRE) were $9 million for Q4 2016 , compared to $22 million for Q4 2015 . The decrease in Q4 2016 FRE is due to lower catch up management fees of $4 million and higher cash compensation and G&A expense as compared to Q4 2015 . FRE was $54 million for 2016 , compared to $72 million for 2015 , with the decline largely owing to a $15 million decline in catch up management fees in 2016.
Realized Net Performance Fees were $(30) million for Q4 2016 , compared to $28 million for Q4 2015 . The decrease in Q4 2016 is primarily due to the realization of $36 million in accrued giveback in two of our Legacy Energy funds and lower realized performance fees in our U.S. Real Estate funds. Realized Net Performance Fees were $16 million for 2016 , compared to $95 million for 2015 .
Realized Investment Income (Loss) was $1 million for Q4 2016 , compared to $1 million for Q4 2015 . Results for Q4 2016 were positively impacted by gains in NGP Energy and Asia Real Estate, offset by losses in Urbplan. Realized loss was $(21) million in 2016 , compared to $(14) million in 2015 , excluding the impact of the Q1 2015 French tax judgment. The realized losses for both 2016 and 2015 were primarily attributable to losses in Urbplan.

Economic Net Income (ENI): $73 million for Q4 2016 and $217 million for 2016 , compared to $68 million for 2015 , excluding the impact of the Q1 2015 French tax judgment. The 2016 increase in ENI relative to 2015 was largely attributable to higher net performance fees in our Natural Resources carry funds.
Real Assets carry fund valuations appreciated 4% in Q4 2016 and 18% for 2016 . Real Estate valuations appreciated 19% during 2016, and Natural Resource carry fund valuations increased 24% during 2016.
Net Performance Fees were $52 million for Q4 2016 , compared to $26 million for Q4 2015 . Net performance fees for Q4 2016 were positively impacted by appreciation in U.S. and Asia Real Estate funds, as well as a $23 million reduction in our Legacy Energy giveback accrual. Net Performance Fees were $208 million for 2016 , compared to $26 million for 2015 .

Total Assets Under Management (AUM): $34 billion for Q4 2016 ( -10% in 2016 ).
Funds Raised in Q4 2016 of $0.3 billion were driven by a follow-on closing in our new Core Plus real estate fund in addition to small inflows into certain international real estate funds and vehicles.
Fee-Earning Assets Under Management of $27 billion in Q4 2016 declined by 5% versus Q3 2016 and decreased 11% versus Q4 2015 . Major drivers of change versus Q3 2016: Outflows, including distributions ( -$1.8 billion ), partially offset by inflows, including fee-paying commitments ( +$0.4 billion ).
Real Assets
Quarter
 
Annual
 
% Change
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
2015
 
2016
 
QoQ  
 
YoY
 
Annual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (1)
 
39
 
62
 
79
 
4
 
73
 
68
 
217
 
1,808%
 
85%
 
221%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
22
 
16
 
15
 
14
 
9
 
72
 
54
 
(34)%
 
(58)%
 
(24)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
26
 
54
 
74
 
28
 
52
 
26
 
208
 
84%
 
99%
 
702%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
28
 
1
 
34
 
11
 
(30)
 
95
 
16
 
NM
 
NM
 
(84)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings (1)
 
51
 
20
 
39
 
10
 
(20)
 
153
 
49
 
NM
 
NM
 
(68)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
38.0
 
36.7
 
37.5
 
35.7
 
34.3
 
 
 
 
 
(4)%
 
(10)%
 
(10)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
30.9
 
30.7
 
30.4
 
28.9
 
27.5
 
 
 
 
 
(5)%
 
(11)%
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(1) The YoY comparison excludes the impact of the Q1 2015 French tax judgment on Economic Net Income and Distributable Earnings.
Note: Totals may not sum due to rounding.

Page | 10




Global Market Strategies (GMS)
Net Funds Raised
 
Invested Capital
 
Realized Proceeds
 
Fund Appreciation
Q4
$1.3 billion
 
Q4
$0.4 billion
 
Q4
$0.1 billion
 
Q4
2%
2016:
$3.5 bn
2015:
$2.9 bn
 
2016:
$0.7 bn
2015:
$0.6 bn
 
2016:
$0.4 bn
2015:
$0.5 bn
 
2016:
(11)%
2015:
(8)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Note: Net funds raised excludes acquisitions, but includes hedge funds and CLOs/other structured products. Invested capital, realized proceeds, and fund appreciation are for carry funds only.

During Q4 2016, GMS incurred $175 million in DE and FRE net charges associated with our commodities business and our separation from Claren Road Asset Management. See Page 2 for a full description of these charges.

Distributable Earnings (DE): $(169) million for Q4 2016 and $(157) million for 2016 , compared to $39 million for 2015 . Excluding the charges for 2016, DE was $6 million for Q4 2016 and $18 million for 2016 .
Fee-Related Earnings (FRE) were $(177) million , or $(2) million excluding charges for Q4 2016 , compared to $3 million for Q4 2015 . FRE was $(182) million , or $(7) million excluding charges for 2016 , compared to $12 million for 2015 . We expect FRE improvement in GMS in 2017 as a result of activating fees in recently raised carry funds and cost reductions related to the hedge funds, tempered by continued investment in building our global credit business.
Realized Net Performance Fees were $6 million for Q4 2016 , compared to $8 million for Q4 2015 . Realized Net Performance Fees were $19 million for 2016 , compared to $21 million for 2015 .
Realized Investment Income (Loss) was $2 million for Q4 2016 , compared to $(1) million for Q4 2015 . Realized Investment Income was $5 million for 2016 , in line with 2015 .

Economic Net Income (Loss) (ENI): $(155) million for Q4 2016 and $(159) million for 2016 , compare d to $(40) million for 2015 , with the 2016 decline primarily due to the $175 million in net charges related to the commodities business and Claren Road separation, and lower FRE due to lower Fee Earning Assets Under Management in our hedge fund business.
GMS carry fund valuations appreciated 2% in Q4 2016 and depreciated 11% in 2016 , as compared to 4% depreciation in Q4 2015 and 8% depreciation in 2015 .
Net Performance Fees of $4 million for Q4 2016 , compared to $(6) million for Q4 2015 . Net Performance Fees were $20 million for 2016 , compared to $(14) million for 2015 .

Total Assets Under Management (AUM) : $29 billion as of Q4 2016 ( -17% in 2016 ).
Fee-Earning AUM of $24 billion declined 17% versus Q3 2016 and declined 22% versus Q4 2015 .
GMS carry fund AUM ended Q4 2016 at $9.0 billion , an increase from $8.2 billion in Q3 2016. During the quarter, we had follow-on closings in Carlyle Structured Credit and our fourth Distressed Credit fund.
Total structured credit AUM ended Q4 2016 at $18.6 billion , down from $19.0 billion in Q3 2016.
Total AUM reflects no material amounts for hedge funds at the end of Q4 2016 , versus $5.2 billion at Q3 2016 and $8.3 billion at Q4 2015 . Total AUM as of December 31, 2016 reflects the return of $0.6 billion in gross redemptions to fund investors during Q4 2016 , as well as $4.7 billion in divestments related to the transfer of Carlyle's ownership interests in both ESG and Claren Road back to their respective founders.
Global Market Strategies
Quarter
 
Annual
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2015
 
Q1 2016
 
Q2 2016
 
Q3 2016
 
Q4 2016
 
2015
 
2016
 
QoQ  
 
YoY
 
Annual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (Loss)
 
(22)
 
(6)
 
12
 
(11)
 
(155)
 
(40)
 
(159)
 
NM
 
NM
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Related Earnings
 
3
 
(1)
 
1
 
(5)
 
(177)
 
12
 
(182)
 
NM
 
NM
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
(6)
 
2
 
5
 
10
 
4
 
(14)
 
20
 
(60)%
 
167%
 
240%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
8
 
1
 
5
 
8
 
6
 
21
 
19
 
(27)%
 
(32)%
 
(11)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
11
 
1
 
7
 
4
 
(169)
 
39
 
(157)
 
NM
 
NM
 
NM
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Total Assets Under Management ($ in billions)
 
35.3
 
34.0
 
34.7
 
34.1
 
29.4
 
 
 
 
 
(14)%
 
(17)%
 
(17)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee-Earning Assets Under Management ($ in billions)
 
31.0
 
28.6
 
28.7
 
29.0
 
24.1
 
 
 
 
 
(17)%
 
(22)%
 
(22)%