The Carlyle Group
Carlyle Group L.P. (Form: 8-K, Received: 02/07/2018 06:34:24)



 
 
 
 
 
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 7, 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:
¨
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 February 7, 2018, 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, 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.







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 7, 2018
 
 
 
By:
 
/s/ Curtis L. Buser
 
 
 
 
Name:
 
Curtis L. Buser
 
 
 
 
Title:
 
Chief Financial Officer





Exhibit 99.1
CARLYLEBLUE300DPIJPGA16.JPG  

The Carlyle Group Announces Fourth Quarter and Full Year 2017 Financial Results

Washington, DC, February 7, 2018 – 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, 2017 .

Carlyle Co-CEOs Kewsong Lee and Glenn Youngkin said, “We concluded 2017 with great momentum in all of our businesses. We had record activity across several dimensions during 2017, deploying $22 billion into new investments and raising $43 billion of capital across the platform. Our investment performance was exceptional with 20% appreciation across our carry funds, and we realized $26 billion of proceeds for our carry fund investors.”

U.S. GAAP results for Q4 2017 and 2017 included income before provision for income taxes of $395 million and $1,132 million , and net income attributable to The Carlyle Group L.P. common unitholders of $53 million and $238 million , or net income per common unit of $0.49 and $2.38 , on a diluted basis. Total balance sheet assets were $12 billion as of December 31, 2017 .
In addition to this release, Carlyle issued a full detailed presentation of its fourth quarter and full year 2017 results, which can be viewed on the investor relations section of our website at ir.carlyle.com .

Tax Reform Impact on Financial Results

Following the passage of the Tax Cuts and Jobs Act of 2017, we revalued our net deferred tax assets and tax receivable agreement liability. This resulted in a net charge in our Q4 2017 U.S. GAAP earnings of $42 million. The revaluation of our net deferred tax assets increased our provision for income taxes by $113 million in Q4 2017, while the revaluation of our tax receivable liability resulted in $71 million of other non-operating income in the quarter. This non-cash charge did not affect Economic Income or Distributable Earnings.
Distributions
The Board of Directors has declared a quarterly distribution of $0.33 per common unit to holders of record at the close of business on February 20, 2018, payable on February 27, 2018. For full year 2017 , the Board of Directors declared $1.41 in aggregate distributions to common unitholders.
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 March 1, 2018, payable on March 15, 2018.
Conference Call
Carlyle will host a conference call at 8:30 a.m. EST on Wednesday, February 7, 2018, to announce its fourth quarter and full year 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 $195 billion of assets under management across 317 investment vehicles as of December 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 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 1,600 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
  
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

Page | 2
Exhibit 99.2

CARLYLEBLUE300DPIJPGA14.JPG

For Immediate Release
February 7, 2018

The Carlyle Group Announces Fourth Quarter and Full Year 2017 Financial Results

U.S. GAAP results included net income attributable to The Carlyle Group L.P. common unitholders of $53 million and $238 million , or $0.49 and $2.38 per common unit on a diluted basis, for Q4 2017 and 2017 , respectively
Economic Income of $366 million and $1.3 billion , and Economic Net Income of $1.01 and $3.47 per Adjusted Unit on a post-tax basis in Q4 2017 and in 2017 , respectively, driven by carry fund appreciation of 5% in Q4 2017 and 20% in 2017
Distributable Earnings of $156 million on a pre-tax basis for Q4 2017 and $670 million in 2017 ; Distributable Earnings per common unit of $0.44 in Q4 2017 and $1.88 in 2017 , on a post-tax basis
Declared a quarterly distribution of $0.33 per common unit for Q4 2017 ; Aggregate distribution of $1.41 per common unit for 2017
Net accrued performance fees of $1.7 billion as of Q4 2017 , up 60% over Q4 2016

$8.0 billion of realized proceeds in Q4 2017 and $26.0 billion realized in 2017
$7.2 billion of invested capital in Q4 2017 and a record $22.0 billion invested in 2017
$24.7 billion of new capital raised in Q4 2017 and a record $43.3 billion in 2017
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, 2017 .

Carlyle Co-CEOs Kewsong Lee and Glenn Youngkin said, “We concluded 2017 with great momentum in all of our businesses. We had record activity across several dimensions during 2017, deploying $22 billion into new investments and raising $43 billion of capital across the platform. Our investment performance was exceptional with 20% appreciation across our carry funds, and we realized $26 billion of proceeds for our carry fund investors.”

U.S. GAAP results for Q4 2017 and 2017 included income before provision for income taxes of $395 million and $1,132 million , and net income attributable to The Carlyle Group L.P. common unitholders of $53 million and $238 million , or net income per common unit of $0.49 and $2.38 , on a diluted basis. Total balance sheet assets were $12 billion as of December 31, 2017 .


Note: Economic Income is the Non-GAAP financial measure that was formerly defined as “Economic Net Income.” Economic Income represents a pre-tax earnings measure, while Economic Net Income now represents earnings after-tax and after preferred unit distributions. In addition, we have updated our definition of Fee Related Earnings (“FRE”) to exclude the effects of net interest (defined as the difference between interest income and interest expense in our segment results).

Page | 1


Tax Reform Impact on Financial Results
Following the passage of the Tax Cuts and Jobs Act of 2017, we revalued our net deferred tax assets and tax receivable agreement liability. This resulted in a net charge in our Q4 2017 U.S. GAAP earnings of $42 million. The revaluation of our net deferred tax assets increased our provision for income taxes by $113 million in Q4 2017, while the revaluation of our tax receivable liability resulted in $71 million of other non-operating income in the quarter. This non-cash charge did not affect Economic Income or Distributable Earnings.

 
Distributions
The Board of Directors has declared a quarterly distribution of $0.33 per common unit to holders of record at the close of business on February 20, 2018, payable on February 27, 2018. For full year 2017 , the Board of Directors declared $1.41 in aggregate distributions to common unitholders.
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 March 1, 2018, payable on March 15, 2018.
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 Attributable to Common Unitholders 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.

Page | 2



Carlyle Consolidated GAAP Results
 
The Carlyle Group L.P.
Summary U.S. GAAP Condensed Consolidated Statements of Operations (Unaudited)
 
 
Three Months Ended           
 
Year Ended
 
 
Dec 31, 2016
Mar 31, 2017
Jun 30, 2017
Sep 30, 2017
Dec 31,
2017
 
Dec 31,
2016
Dec 31,
2017
 
 
(Dollars in millions, except per unit data)
 
 
 
 
Revenues
 
 
 
 
 
 
 
 
 
Fund management fees
 
$
259.0

$
246.3

$
238.8

$
262.5

$
279.3

 
$
1,076.1

$
1,026.9

Total performance fees
 
181.0

681.6

543.6

285.6

583.1

 
751.8

2,093.9

Total investment income
 
34.3

46.3

59.0

37.2

89.5

 
160.5

232.0

Revenue from consolidated entities
 
92.7

135.5

5.6

44.7

45.1

 
262.0

230.9

All other revenues
 
8.9

10.4

61.4

9.9

10.8

 
23.9

92.5

Total revenues
 
575.9

1,120.1

908.4

639.9

1,007.8

 
2,274.3

3,676.2

 
 
 
 
 
 
 
 
 
 
Expenses
 
 
 
 
 
 
 
 
 
Base compensation
 
176.6

146.0

151.0

174.1

181.6

 
647.1

652.7

Equity-based compensation
 
68.8

72.8

88.0

81.0

78.5

 
334.6

320.3

Total performance fee related compensation
 
76.2

317.1

257.1

137.6

276.5

 
353.1

988.3

General, administrative and other expenses
 
158.5

93.8

95.8

(18.7
)
105.9

 
521.1

276.8

Expenses from consolidated entities and loss on deconsolidation of Urbplan
 
90.9

164.8

96.9

101.7

36.7

 
336.1

400.1

Interest and other nonoperating expense (income)
 
3.0

15.0

16.6

16.9

(54.4
)
 
50.1

(5.9
)
Total expenses
 
574.0

809.5

705.4

492.6

624.8

 
2,242.1

2,632.3

 
 
 
 
 
 
 
 
 
 
Net investment gains of consolidated funds
 
10.0

17.1

40.7

18.6

12.0

 
13.1

88.4

Income before provision for income taxes
 
11.9

327.7

243.7

165.9

395.0

 
45.3

1,132.3

Provision (benefit) for income taxes
 
(2.7
)
5.8

13.2

(1.3
)
107.2

 
30.0

124.9

Net income
 
14.6

321.9

230.5

167.2

287.8

 
15.3

1,007.4

Net income attributable to non-controlling interests in consolidated entities
 
70.8

3.3

16.5

27.6

25.1

 
41.0

72.5

Net income (loss) attributable to Carlyle Holdings
 
(56.2
)
318.6

214.0

139.6

262.7

 
(25.7
)
934.9

Net income (loss) attributable to non-controlling interests in Carlyle Holdings
 
(47.3
)
235.6

156.4

95.0

203.8

 
(32.1
)
690.8

Net income (loss) attributable to The Carlyle Group L.P.
 
(8.9
)
83.0

57.6

44.6

58.9

 
6.4

244.1

Net income attributable to Series A Preferred Unitholders
 




6.0

 

6.0

Net income (loss) attributable to The Carlyle Group L.P. Common Unitholders
 
$
(8.9
)
$
83.0

$
57.6

$
44.6

$
52.9

 
$
6.4

$
238.1

 
 
 
 
 
 
 
 
 
 
Net income (loss) attributable to The Carlyle Group L.P. per common unit
 
 
 
 
 
 
 
 
 
   Basic
 
$
(0.11
)
$
0.97

$
0.65

$
0.47

$
0.53

 
$
0.08

$
2.58

   Diluted
 
$
(0.16
)
$
0.90

$
0.59

$
0.43

$
0.49

 
$
(0.08
)
$
2.38

 
 
 
 
 
 
 
 
 
 

Income before provision for income taxes (1) was $395 million and $12 million for Q4 2017 and Q4 2016 , respectively, and $ 1,132 million and $ 45 million for 2017 and 2016, respectively. The increase in income before provision for income taxes in Q4 2017 compared to Q4 2016 was primarily due to a $202 million increase in net performance fees, a $55 million increase in investment income, and a $53 million decrease in general, administrative and other expenses. As it relates to the full year, the increase in income before provision for income taxes was primarily due to a $707 million increase in net performance fees, a $244 million decrease in general, administrative and other expenses, and a $72 million increase in investment income, primarily due to our investments in NGP. The variance in general, administrative and other expenses in 2017 as compared to 2016 primarily reflects $175 million in commodities charges and $25 million in insurance recoveries in 2016 as compared to the $68 million net insurance recovery and the $25 million reversal of the CCC litigation reserve in 2017. Q4 2017 and the full year 2017 also include within other non-operating income a $71 million reduction in the tax receivable liability resulting from the Tax Cuts and Jobs Act of 2017.

Net income (loss) attributable to The Carlyle Group L.P. Common Unitholders was $53 million or $0.49 per common unit on a diluted basis for Q4 2017 and $238 million or $2.38 per common unit on a diluted basis for 2017. The provision for income taxes for Q4 2017 and the full year 2017 includes $113 million related to the revaluation of the net deferred tax assets resulting from the Tax Cuts and Jobs Act of 2017.

(1) Income before provision for income taxes is the GAAP measure that is most directly comparable to Economic Income (EI) and Distributable Earnings, which management uses to measure the performance of the business.  In most periods, income before provision for income taxes will be lower than EI principally due to excluding from EI 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. Common Unitholders typically will be lower than EI as net income (loss) attributable to The Carlyle Group L.P. Common Unitholders only includes the portion of earnings (approximately 30% before taxes as of December 31, 2017) that is attributable to the public unitholders whereas the calculation of EI reflects the adjusted earnings attributable to all unitholders.  A full reconciliation is included on page 34. See "Non-GAAP Financial Information and Other Key Terms" for additional information.


Page | 3



Non-GAAP Operating Results
Carlyle Group Summary  ($ in millions, except unit and per unit amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Annual
 
% Change    
$ in millions, except per unit data and where noted
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Q4 2016
 
Q1 2017
 
Q2 2017
 
Q3 2017
 
Q4 2017
 
2017
 
QoQ  
 
YoY
 
Annual
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$
5.6

 
$
400.1

 
$
300.1

 
$
202.7

 
$
366.4

 
$1,269.3
 
81%
 
6,443%
 
315%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
 
(132.4
)
 
37.1

 
20.2

 
108.0

 
26.7

 
192.0
 
(75)%
 
120%
 
3,468%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Performance Fees
 
60.7

 
394.1

 
299.4

 
147.0

 
337.3

 
1,177.8
 
129%
 
456%
 
199%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Realized Net Performance Fees
 
135.6

 
35.3

 
182.1

 
216.9

 
118.3

 
552.6
 
(45)%
 
(13)%
 
(12)%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
7.4

 
55.4

 
198.9

 
259.9

 
155.8

 
670.0
 
(40)%
 
2,005%
 
3%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income, Tax and Per Unit Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Income
 
$
5.6

 
$
400.1

 
$
300.1

 
$
202.7

 
$
366.4

 
$
1,269.3

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Less (Add): Provision (Benefit) for income taxes (1)
 
(0.8
)
 
35.5

 
25.3

 
10.4

 
13.2

 
84.4

 
 
 
 
 
 
Less: Preferred unit distributions
 

 

 

 

 
6.0

 
6.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Economic Net Income (after taxes)
 
$
6.4

 
$
364.6

 
$
274.8

 
$
192.3

 
$
347.2

 
$
1,178.9

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Adjusted Units (in millions)
 
330.2

 
333.7

 
337.5

 
342.8

 
343.5

(2)
342.9

(2)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Economic Net Income (after taxes and preferred unit distributions) per Adjusted Unit
 
$
0.02

 
$
1.09

 
$
0.81

 
$
0.56

 
$
1.01

 
$
3.47

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings, Tax and Per Unit Information
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings
 
$
7.4

 
$
55.4

 
$
198.9

 
$
259.9

 
$
155.8

 
$
670.0

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

 
6.8

 
5.6

 
5.4

 
5.0

 
22.8

 
 
 
 
 
 
Less: Preferred unit distributions
 

 

 

 

 
6.0

 
6.0

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
Distributable Earnings, After Taxes and Preferred Unit
   Distributions
 
$
2.0

 
$
48.6

 
$
193.3

 
$
254.5

 
$
144.8

 
$
641.2

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

 
$
13.0

 
$
55.6

 
$
74.7

 
$
43.3

 
$
186.6

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
(Add) / Less: Estimated current corporate income taxes (4)
 
1.2

 
1.5

 
1.8

 
1.4

 
(0.5
)
 
4.2

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings Attributable to Common
   Unitholders
 
$
(0.7
)
 
$
11.5

 
$
53.8

 
$
73.3

 
$
43.8

 
$
182.4

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Units in public float (in millions)
 
85.7

 
88.1

 
96.2

 
98.3

 
100.5

(5)
100.5

(5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding
 
$
0.00

 
$
0.13

 
$
0.56

 
$
0.75

 
$
0.44

 
$
1.88

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Distribution per common unit
 
$
0.16

 
$
0.10

 
$
0.42

 
$
0.56

 
$
0.33

 
$
1.41

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
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 and without the impact of the Tax Cuts and Jobs Act of 2017.
(2) For information regarding our calculation of Adjusted Units as of December 31, 2017, please see page 35.
(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 372,864 common units issued in February 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 December 31, 2017 because they will be eligible to participate in the unitholder distribution that will be paid on the common units in February 2018.

 

Page | 4




Carry Fund Appreciation and Net Accrued Performance Fees
Carlyle's carry fund portfolio appreciated 5% during Q4 2017 and 20% in 2017 . During Q4 2017, the public portfolio in our Corporate Private Equity, Real Assets and Global Credit carry funds appreciated 9% and the private portfolio appreciated 6%. Investment Solutions carry funds appreciated 3% during Q4 2017 and 10% in 2017. Fourth quarter carry fund valuations were positively impacted by strength in our sixth U.S. Buyout fund (CP VI), fourth Asia Buyout fund (CAP IV), third Europe Buyout fund (CEP III), seventh U.S. Real Estate fund (CRP VII) and the eleventh NGP carry fund (NGP XI), all of which are currently accruing performance fees.
 
 
2015
 
2016
 
2017
 
Net Accrued
Performance Fees
Fund Valuations ($ in millions)
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
Q1
 
Q2
 
Q3
 
Q4
 
Q4 2017
Overall Carry Fund Appreciation / (Depreciation) (1)
 
8%
 
3%
 
(1)%
 
2%
 
0%
 
4%
 
3%
 
5%
 
6%
 
5%
 
3%
 
5%
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Corporate Private Equity (2)
 
8%
 
5%
 
(3)%
 
3%
 
1%
 
4%
 
3%
 
4%
 
9%
 
8%
 
4%
 
8%
 
$1,140
Buyout
 
9%
 
4%
 
(3)%
 
3%
 
1%
 
4%
 
3%
 
4%
 
9%
 
9%
 
3%
 
8%
 
$1,098
Growth Capital
 
3%
 
11%
 
0%
 
0%
 
(2)%
 
3%
 
0%
 
3%
 
7%
 
4%
 
6%
 
6%
 
$42
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Real Assets (2)
 
2%
 
0%
 
(5)%
 
0%
 
1%
 
7%
 
4%
 
4%
 
5%
 
6%
 
2%
 
4%
 
$476
Real Estate
 
11%
 
4%
 
6%
 
6%
 
8%
 
8%
 
0%
 
3%
 
5%
 
6%
 
3%
 
3%
 
$312
Natural Resources (3)
 
1%
 
0%
 
(4)%
 
0%
 
(2)%
 
11%
 
12%
 
0%
 
7%
 
6%
 
5%
 
8%
 
$180
Legacy Energy
 
(3)%
 
(3)%
 
(17)%
 
(7)%
 
(3)%
 
3%
 
1%
 
9%
 
3%
 
4%
 
(3)%
 
2%
 
$(16)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Global Credit Carry Funds (2)
 
3%
 
2%
 
(9)%
 
(4)%
 
(12)%
 
(2)%
 
0%
 
2%
 
7%
 
0%
 
0%
 
1%
 
$27
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Investment Solutions Carry Funds  (2)
 
13%
 
4%
 
4%
 
2%
 
0%
 
3%
 
2%
 
7%
 
3%
 
1%
 
3%
 
3%
 
$74
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Net Accrued Performance Fees
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
$1,717

Q417PFRFNAPFA01.JPG

(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) We generally earn performance fees (or carried interest) from our carry funds representing a 20% allocation of profits generated on third-party capital, and on 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 also include the impact of certain commitments that 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 Information and Other Key Terms" for more information.
(3) Natural Resources is comprised of NGP, infrastructure, power and international energy funds.
(4) Other primarily reflects the impact of foreign exchange translation.

Page | 5




Carlyle All Segment Results

Economic Income was $366 million in Q4 2017, driven by 5% carry fund appreciation in the quarter. Economic Income for 2017 of $1.3 billion increased 315% compared to 2016, supported by 20% annual appreciation in our carry funds.
Distributable Earnings of $156 million in Q4 2017 included $27 million in Fee Related Earnings and $118 million in net realized performance fees. DE per common unit was $0.44 for Q4 2017 and $1.88 for 2017.
Fee Related Earnings were $27 million in Q4 2017 and $192 million in 2017. Excluding net insurance recoveries in Global Credit, 2017 FRE would have been $124 million. Q4 2017 management fees of $290 million increased 9% versus Q4 2016. Q4 2017 fundraising expenses were $34 million compared to $14 million in Q4 2016, and are included in indirect compensation expense for our internal costs and in general and administrative expenses for our external costs.
Total Assets Under Management ("AUM") of $195 billion increased 24% compared to Q4 2016 through a combination of $43 billion in fundraising and fund appreciation, partially offset by $26 billion in realized proceeds to fund investors.
Fee Earning AUM of $125 billion increased 8% from Q4 2016. As of year-end 2017, there was $22 billion in pending Fee Earning AUM that will turn on fees either through the activation of the underlying fund or additional capital deployment.
Business Drivers
 
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
Fundraising
 
$2.7
 
$24.7
 
$8.2
 
$43.3
 
 
 
 
 
 
 
 
 
 
Invested Capital 1
 
6.1
 
7.2
 
17.9
 
22.0
 
 
 
 
 
 
 
 
 
 
Realized Proceeds 1
 
8.5
 
8.0
 
29.4
 
26.0
 
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation 1
 
5%
 
5%
 
12%
 
20%
 
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
 
$ in millions
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$(132)
 
$27
 
$33
 
$192
 
 
 
 
 
 
 
 
 
 
+
Net Realized Performance Fees
 
136
 
118
 
625
 
553
 
 
 
 
 
 
 
 
 
 
+
Realized Investment Income/(Loss)
 
17
 
22
 
45
 
(26)
 
 
 
 
 
 
 
 
 
 
+
Net Interest
 
(13)
 
(12)
 
(51)
 
(49)
 
 
 
 
 
 
 
 
 
 
=
Distributable Earnings (DE)
 
$7
 
$156
 
$652
 
$670
 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$(132)
 
$27
 
$33
 
$192
 
 
 
 
 
 
 
 
 
 
+
Net Performance Fees
 
61
 
337
 
394
 
1,178
 
 
 
 
 
 
 
 
 
 
+
Investment Income/(Loss)
 
15
 
41
 
50
 
47
 
 
 
 
 
 
 
 
 
 
Equity-based Compensation
 
24
 
27
 
120
 
124
 
 
 
 
 
 
 
 
 
 
Net Interest
 
13
 
12
 
51
 
49
 
 
 
 
 
 
 
 
 
 
Other 2
 
(100)
 
 
 
(25)
 
 
 
 
 
 
 
 
 
 
=
Economic Income
 
$6
 
$366
 
$306
 
$1,269
 
 
 
 
 
 
 
 
 
 
Q417FIRMWIDETOTALAUMA04.JPG
(1) For carry funds only.
(2) Includes a $100 million reserve for ongoing litigation and contingencies taken in FRE in Q4 2016, which had been taken in EI in a prior period and which was allocated to the segments in the following manner: Corporate Private Equity ($50 million), Real Assets ($21 million), Global Credit ($19 million) and Investment Solutions ($10 million). Additionally, includes the reduction of a $25 million reserve for ongoing litigation and contingencies in 2017, which was allocated to the segments in the following manner: Corporate Private Equity ($(13) million), Real Assets ($(6) million), Global Credit ($(4) million) and Investment Solutions ($(2) million).

Page | 6



Corporate Private Equity (CPE)

Corporate Private Equity carry funds appreciated 8% in the quarter, driving net performance fees of $260 million . For the year, CPE carry funds appreciated 32% and generated $878 million in net performance fees.
Economic Income was $249 million in Q4 2017 and $896 million for 2017, 300% higher than 2016.
Fee Related Earnings were ($17) million in Q4 2017, with the loss primarily attributable to fundraising expense of $31 million due to record quarterly fundraising of $19.1 billion, with associated management fees not yet activated. As of year-end, CPE had $18 billion in pending Fee-Earning AUM that had not yet activated fees.
Distributable Earnings of $73 million in Q4 2017 reflect $85 million in net realized performance fees, $10 million in realized investment income and the loss in Fee Related Earnings. Realizations of $3.4 billion in Q4 2017 were slightly lower than Q4 2016. Net realized performance fees of $85 million declined versus Q4 2016 as a lower proportion of exits produced realized performance fees compared to prior periods. For the year, CPE Distributable Earnings of $488 million were lower than 2016.
Invested $3.6 billion in Q4 2017 into 31 different investments. For 2017 overall, CPE invested a record $11.1 billion, 41% higher than 2016. Notable investments during Q4 2017 include SBI Card (CAP IV), TCW Group (CGP), BenefitMall (CSFSP II), MedRisk HoldCo (CP VI), Net Health Systems (CEOF II), and ADB SafeGate and Praesidiad (CEP IV).
Assets Under Management reached a record $72.6 billion and increased 43% compared to Q4 2016. During the fourth quarter, we held first closes on our latest vintage U.S. Buyout funds and Asia Buyout funds totaling $18.8 billion.

Business Drivers
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fundraising
 
$0.0
 
$19.1
 
$0.8
 
$20.5
 
 
 
 
 
 
 
 
 
Invested Capital 1
 
2.6
 
3.6
 
7.9
 
11.1
 
 
 
 
 
 
 
 
 
Realized Proceeds 1
 
3.6
 
3.4
 
14.8
 
11.2
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation 1
 
4%
 
8%
 
11%
 
32%
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
$ in millions
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$122
 
$119
 
$499
 
$471
 
 
 
 
 
 
 
 
 
Net Realized Performance Fees
 
159
 
85
 
588
 
459
Net Performance Fees
 
 
260
 
154
 
878
 
 
 
 
 
 
 
 
 
Realized Investment Income
 
14
 
10
 
60
 
25
Investment Income
 
15
 
24
 
49
 
62
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$25
 
$(17)
 
$116
 
$26
 
 
 
 
 
 
 
 
 
Distributable Earnings (DE)
 
$191
 
$73
 
$739
 
$488
 
 
 
 
 
 
 
 
 
Economic Income
 
$71
 
$249
 
$224
 
$896
 
 
 
 
 
 
 
 
 
Q417CPETOTALAUMA04.JPG


(1) For carry funds only.


Page | 7



Real Assets

Real Assets carry funds appreciated 4% in the quarter, driving net performance fees of $63 million . For the year, Real Assets carry funds appreciated 19%. Natural Resources appreciated 30% and Real Estate funds appreciated 17% leading to $243 million in net performance fees.
Economic Income was $98 million in Q4 2017 and $215 million in 2017, driven by strong appreciation and growth in Fee Related Earnings. Excluding a charge in Q3 2017 related to our disposal of Urbplan Desenvolvimento Urbano S.A., Economic Income would have been $280 million for 2017.
Fee Related Earnings were $34 million in Q4 2017, more than double Q4 2016 as management fees increased 32% due to new capital raised, primarily in the latest vintage NGP carry fund and our latest vintage U.S. Real Estate fund.
Distributable Earnings were $50 million in Q4 2017 and $25 million in 2017. Excluding the Urbplan charge, Distributable Earnings would have been $115 million for 2017. Net realized performance fees were $10 million in Q4 2017. Realizations of $1.4 billion and $4.6 billion in Q4 2017 and 2017, respectively, were lower than the prior year.
Invested $1.6 billion in the quarter $4.4 billion in 2017, slightly lower than 2016. During Q4 2017, Real Estate invested $0.5 billion and Natural Resources invested $1.1 billion.
Assets Under Management of $42.9 billion increased 25% compared to Q4 2016, driven by a combination of appreciation and capital raised. Fundraising of $3.2 billion in Q4 2017 includes closes in the latest vintage NGP carry fund and our U.S. Real Estate carry funds. Fundraising totaled $10.2 billion for 2017.

Business Drivers
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fundraising
 
$0.3
 
$3.2
 
$1.2
 
$10.2
 
 
 
 
 
 
 
 
 
Invested Capital 1
 
2.2
 
1.6
 
5.1
 
4.4
 
 
 
 
 
 
 
 
 
Realized Proceeds 1
 
2.0
 
1.4
 
5.6
 
4.6
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation 1
 
4%
 
4%
 
18%
 
19%
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
$ in millions
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$59
 
$78
 
$251
 
$264
 
 
 
 
 
 
 
 
 
Net Realized Performance Fees
 
(30)
 
10
 
16
 
50
Net Performance Fees
 
52
 
63
 
208
 
243
 
 
 
 
 
 
 
 
 
Realized Investment Income/(Loss)
 
1
 
9
 
(21)
 
(63)
Investment Income/(Loss)
 
(4)
 
12
 
(19)
 
(37)
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$13
 
$34
 
$69
 
$52
 
 
 
 
 
 
 
 
 
Distributable Earnings (DE)
 
$(20)
 
$50
 
$49
 
$25
 
 
 
 
 
 
 
 
 
Economic Income
 
$73
 
$98
 
$217
 
$215
 
 
 
 
 
 
 
 
 
Q417RATOTALAUMA09.JPG


(1) For carry funds only.


Page | 8



Global Credit

Economic Income of $2 million in Q4 2017 was higher relative to a loss in Q4 2016. Economic Income was $107 million in 2017 which included $68 million in insurance recoveries in excess of related commodities charges. Global Credit carry funds appreciated 1% in the quarter and 11% for 2017.
Fee Related Earnings were $1 million in Q4 2017 and $82 million for 2017, which included the positive impact of the net insurance recoveries. Q4 2017 fund management fees of $51 million increased 20% year over year when excluding the impact of catch-up management fees and hedge fund related revenue in Q4 2016.
Distributable Earnings of $23 million in Q4 2017 include net realized performance fees of $21 million from our carry funds. Realized Proceeds were $0.3 billion in Q4 2017 and $0.6 billion for 2017.
Invested $0.8 billion in Global Credit carry funds in the quarter and $2.1 billion in 2017, both higher than prior periods. Direct lending originated gross new loans of approximately $500 million in the quarter and $1.9 billion in 2017. Our structured credit team raised CLO par value of $1.2 billion in the quarter and $4.2 billion in 2017.
Assets Under Management of $33.3 billion increased 13% compared to Q4 2016, driven by fundraising, foreign exchange and carry fund appreciation. Q4 2017 fundraising of $1.7 billion includes four CLOs, follow-on closes in our new private BDCs, Structured Credit fund, and managed accounts. Fundraising totaled $6.6 billion for 2017. Fee-Earning Assets Under Management of $27.3 billion increased 13% compared to Q4 2016.

Business Drivers
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fundraising
 
$1.3
 
$1.7
 
$3.5
 
$6.6
 
 
 
 
 
 
 
 
 
Invested Capital 1
 
0.4
 
0.8
 
0.7
 
2.1
 
 
 
 
 
 
 
 
 
Realized Proceeds 1
 
0.1
 
0.3
 
0.4
 
0.6
 
 
 
 
 
 
 
 
 
Carry Fund Appreciation 1
 
2%
 
1%
 
(11)%
 
11%
 
 
 
 
 
 
 
 
 
Financial Metrics
 
 
 
 
 
 
 
 
 
$ in millions
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fund Management Fees
 
$48
 
$51
 
$196
 
$192
 
 
 
 
 
 
 
 
 
Net Realized Performance Fees
 
6
 
21
 
19
 
40
Net Performance Fees
 
4
 
3
 
20
 
31
 
 
 
 
 
 
 
 
 
Realized Investment Income
 
2
 
3
 
5
 
12
Investment Income
 
3
 
4
 
20
 
17
 
 
 
 
 
 
 
 
 
Fee Related Earnings (FRE)
 
$(175)
 
$1
 
$(175)
 
$82
 
 
 
 
 
 
 
 
 
Distributable Earnings (DE)
 
$(169)
 
$23
 
$(157)
 
$127
 
 
 
 
 
 
 
 
 
Economic Income
 
$(155)
 
$2
 
$(159)
 
$107
 
 
 
 
 
 
 
 
 
Q417GCTOTALAUMA04.JPG

(1) For carry funds only.


Page | 9



Investment Solutions

Investment Solutions carry funds appreciated 3% in the quarter and 10% for the year. Excluding the impact of foreign exchange translation, Investment Solutions carry funds appreciated 5% in Q4 2017 and 19% for 2017.
Economic Income was $18 million in Q4 2017 and $51 million for 2017, up 111% from 2016. Fund appreciation drove record quarterly and annual net performance fees of $11 million and $25 million , respectively, in Q4 2017 and 2017.
Fee Related Earnings were $9 million in Q4 2017, up 107% compared to Q4 2016, as higher Fee Earning AUM drove a 14% increase in management fees and expenses declined. For 2017, FRE of $32 million increased 38% compared to 2016.
Distributable Earnings were $10 million in Q4 2017 and $30 million in 2017, up 49% compared to 2016.
Invested $1.2 billion in Investment Solutions carry funds and vehicles during Q4 2017 and $4.4 billion in 2017, slightly higher than 2016.
Assets Under Management of $46.3 billion increased 7% compared to Q4 2016, largely attributable to market appreciation and the impact of foreign exchange. Fundraising of $0.7 billion in Q4 2017 included closings in AlpInvest Co-Investment, Mezzanine and Fund vehicles, and fundraising was a record $5.9 billion for 2017. Fee-Earning Assets Under Management of $30.2 billion were up 11% compared to Q4 2016.

Business Drivers
 
 
 
 
 
 
 
 
 
$ in billions, unless noted
 
Q4 2016
 
Q4 2017
 
Prior LTM
 
LTM
 
 
 
 
 
 
 
 
 
Fundraising 1
 
$1.1
 
$0.7
 
$2.8
 
$5.9
 
 
 
 
 
 
 
 
 
Invested Capital 2
 
0.9
 
1.2
 
4.3
 
4.4