Form 8-K

 

 

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): August 7, 2013

 

 

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 August 7, 2013, The Carlyle Group L.P. issued a press release announcing financial results for its second quarter ended June 30, 2013. The press release is furnished as Exhibit 99.1 to this Report.

As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and the exhibit incorporated herein 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 they 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   

Press release of The Carlyle Group L.P., dated August 7, 2013.


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: August 7, 2013     By:  

/s/ Adena T. Friedman

    Name:   Adena T. Friedman
    Title:   Chief Financial Officer


EXHIBIT INDEX

 

Exhibit No.

  

Description

Exhibit 99.1   

Press release of The Carlyle Group L.P., dated August 7, 2013.

Press Release

Exhibit 99.1

 

LOGO

For Immediate Release

August 7, 2013

 

The Carlyle Group Announces Second Quarter 2013 Financial Results

 

   

$163 million of Distributable Earnings on a pre-tax basis in Q2 2013, or $0.53 per common unit on a post-tax basis

 

   

$6.9 billion in new capital raised in Q2 2013 and $19.7 billion raised over the past twelve months

 

   

$3.9 billion in realized proceeds in Q2 2013, with $19.9 billion realized over the past twelve months

 

   

$1.3 billion in equity invested in Q2 2013, and $8.8 billion invested over the past twelve months

 

   

3% portfolio appreciation in Q2 2013, driving Economic Net Income of $156 million on a pre-tax basis

 

   

Declared quarterly distribution of $0.16 per common unit for Q2 2013

 

   

U.S. GAAP net income/(loss) attributable to The Carlyle Group L.P. of ($3.3) million, or ($0.07) per common unit on a diluted basis, in Q2 2013

Washington, DC – Global alternative asset manager The Carlyle Group L.P. (NASDAQ: CG) today reported its unaudited results for the second quarter of 2013, which ended on June 30, 2013.

Carlyle Co-CEO David M. Rubenstein said, “We had a solid quarter across the firm and continued to demonstrate our ability to produce cash distributions for unitholders. Fundraising strengthened across the board, and we continue to invest in growth initiatives to build our capabilities.”

Carlyle Co-CEO William E. Conway, Jr. said, “Our global portfolio is in great shape and our pace of producing realized proceeds continues to be brisk. I am particularly pleased with the state of our U.S. buyout portfolio which is producing large amounts of cash carry and accrued carry for future distributions.”

 

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U.S. GAAP results for Q2 2013 included income before provision for income taxes of $286 million and net income/(loss) attributable to the common unitholders through The Carlyle Group L.P. of ($3.3) million, or net income/(loss) per common unit of ($0.07) on a diluted basis. Total balance sheet assets were $33.8 billion as of June 30, 2013.

 

Second Quarter 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 August 19, 2013, payable on August 30, 2013.

Year-to-date, the Board of Directors has declared $0.32 in distributions per common unit. Carlyle has generated $1.00 in year-to-date after-tax Distributable Earnings per common unit.

The Carlyle Group Distribution Policy

As further discussed in its Annual Report on Form 10-K for the year ended December 31, 2012, Carlyle currently anticipates that it will 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 $0.16 per common unit for each of the first three quarters of each year, and, for the fourth quarter of each year, to pay a distribution of at least $0.16 per common unit, that, taken together with the prior quarterly distributions in respect of that year, represents its share, net of taxes and amounts payable under the tax receivable agreement, of Carlyle’s Distributable Earnings in excess of the amount determined by the General Partner 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. Carlyle anticipates that the aggregate amount of its distributions for most years will be less than its Distributable Earnings for that year due to these funding requirements. The declaration and payment of any distributions is at the sole discretion of the General Partner, which may change the distribution policy at any time.

 

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The Carlyle Engine

Carlyle evaluates the underlying performance of its business on four key metrics known as the Carlyle Engine: funds raised, equity invested, carry fund returns and realized proceeds for fund investors. The table below highlights the results of these metrics for Q2 2013, year-to-date (YTD) and for the last twelve months (LTM)1.

 

LOGO

Note: Equity Invested and Realized Proceeds reflect carry funds only.

During Q2 2013, within its carry funds, Carlyle generated net realized proceeds of $3.9 billion from 144 different investments across 29 carry funds. Carlyle deployed $1.3 billion of equity in 75 new or follow-on investments across 19 carry funds. On an LTM basis, Carlyle realized proceeds of $19.9 billion and invested $8.8 billion.

 

        Segment        Realized Proceeds         Equity Invested
         # of Investments    # of Funds   

$ in

millions

      # of Investments    # of Funds   

$ in

millions

LOGO     Corporate Private Equity      36    12    $2,481       12    8    $817
   

Global Market Strategies

     33    5    $223       7    4    $266
   

Real Assets

     77    12    $1,173       56    7    $264
   

 

    Carlyle      144    29    $3,876       75    19    $1,347
   

 

LOGO     Corporate Private Equity      61    20    $5,468       23    11    $2,728
   

Global Market Strategies

     50    5    $614       10    4    $337
   

Real Assets

     88    12    $1,915       89    10    $779
   

 

   

Carlyle

     193    37    $7,997       121    25    $3,843
   

 

Note: The columns may not sum as some investments cross segment lines, but are only counted one time for Carlyle results.

 

 

 

 

 

1 LTM, or last twelve months, refers to the period Q3 2012 through Q2 2013. Prior LTM, or the prior rolling twelve month period, refers to the period Q3 2011 through Q2 2012.

 

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Carlyle All Segment Results

 

 

Distributable Earnings (DE): $163 million for Q2 2013 and $729 million on an LTM basis

 

  ¡  

Pre-tax Distributable Earnings were $163 million for Q2 2013, or $0.53 per common unit on a post-tax basis. On a year-to-date basis, pre-tax Distributable Earnings were $334 million, 13% higher than the first half of 2012, and Distributable Earnings per common unit were $1.00 on a post-tax basis. Distributable Earnings were $729 million on an LTM basis, which is 7% lower than the prior rolling twelve month period.

 

   

During Q2 2013, the definition of DE was modified to exclude all equity-based compensation expense. All prior periods have been recast to conform to the new definition.

 

  ¡  

Fee-Related Earnings were $26 million for Q2 2013 and declined by $10 million from $36 million in Q2 2012 due to higher fundraising costs and fee and basis step downs of several funds exiting their investment periods, offset by higher Fee-Earning Assets Under Management. Fee-Related Earnings were $163 million on an LTM basis, up 36% compared with the prior rolling twelve month period.

 

  ¡  

Realized Net Performance Fees were $118 million for Q2 2013, compared to $76 million in Q2 2012. For Q2 2013, Realized Net Performance Fees were positively impacted by exits in The Hertz Corporation, The Nielsen Company, CommScope Inc, SS&C Technologies Inc, Wesco Holdings Inc., Cobalt International Energy, Boston Private Financial Holdings Inc., among others. Realized Net Performance Fees were $543 million on an LTM basis, which was 14% lower than the prior rolling twelve month period.

 

  ¡  

Realized Investment Income was $15 million in Q2 2013, largely driven by gains on a single debt investment, with some additional gains on other balance sheet investments.

 

 

Economic Net Income (ENI): $156 million for Q2 2013 and $950 million on an LTM basis

 

  ¡  

Economic Net Income was $156 million for Q2 2013 and $950 million on an LTM basis. On a post-tax basis, Carlyle generated $0.39 in ENI per Adjusted Unit for Q2 2013.

 

  ¡  

Q2 2013 ENI was impacted by appreciation of 3% in Carlyle’s carry fund portfolio. Corporate Private Equity carry funds were up 5%, Global Market Strategies carry funds increased 8%, while Real Assets carry funds declined 2% compared to the end of Q1 2013. Carry fund appreciation was 16% on an LTM basis, compared to 9% in the prior rolling twelve month period.

 

The Carlyle Group L.P. - All Segments (Actual Results)    Period         LTM             % Change    
    

 

  

 

$ in millions, except where noted    Q2 2012     Q3 2012      Q4 2012      Q1 2013        Q2 2013      Q3 12 -Q2 13        QoQ      YoY    YTD
                                 

Revenues

   61      584     505     852     508    2,449    (40%)    727%    42%  

 

Expenses

   119      365     323     458     352    1,499    (23%)    197%    31%  

 

Economic Net Income

   (57)      219     182     394     156    950    (60%)    372%    64%  
                                             

 

Fee-Related Earnings

   36      46     55     36     26    163    (27%)    (26%)    (10%)  
                                             

 

Net Performance Fees

   (107)      165     132     355     123    774    (65%)    215%    109%  
                                             

 

Realized Net Performance Fees

   76      156     127     142     118    543    (17%)    55%    19%  
                                             

 

Distributable Earnings

   116      207     188     171     163    729    (5%)    41%    13%  
                                             

 

Total Assets Under Management ($ billion)

   156.2   157.4    170.2    176.3    180.4         2%    16%    6%  

 

Fee-Earning Assets Under Management ($ billion)

   112.0   115.1    123.1    122.9    132.0         7%    18%      7%  
                           

Note: Totals may not sum due to rounding.

 

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Assets Under Management and Remaining Fair Value of Capital

 

 

Total Assets Under Management: $180.4 billion as of Q2 2013 (+16% LTM)

 

  ¡  

Major drivers of change versus Q1 2013: New capital commitments (+$4.7 billion), market appreciation ($+3.5 billion) and net subscriptions to our hedge funds and open end structured credit funds (+$0.9 billion), offset by net distributions (-$6.0 billion).

 

  ¡  

Total Dry Powder of $49.0 billion as of Q2 2013, comprised of $20.1 billion in Corporate Private Equity, $1.8 billion in Global Market Strategies, $9.2 billion in Real Assets and $17.9 billion in Global Solutions.

 

 

Fee-Earning Assets Under Management: $132.0 billion as of Q2 2013 (+18% LTM)

 

  ¡  

Major drivers of change versus Q1 2013: Asset inflows including commitments (+$14.9 billion), net subscriptions (+$0.8 billion), and change in CLO collateral balances (+$508 million), offset by net distributions and outflows (-$7.2 billion).

 

  ¡  

Fee-Earning AUM was positively impacted by the addition of inception to date fundraising in Carlyle Partners VI (+$9.4 billion) and Carlyle Asia Partners IV (+$1.1 billion), and negatively impacted by the step down in basis in Carlyle Partners V and Carlyle Asia Partners III.

 

 

Remaining Fair Value of Capital (carry funds only) as of Q2 2013: $61.1 billion

 

  ¡  

Current Multiple of Invested Capital (MOIC) of remaining fair value of capital: 1.3x.

 

  ¡  

Remaining fair value of capital in the ground in investments made in 2009 or earlier: 50% of total fair value.

 

  ¡  

AUM in-carry ratio as of the end of Q2 2013: 61%.

 

 

LOGO

(1) Fair value of remaining carry fund capital in the ground, by vintage. Totals may not sum due to rounding.

Data as of June 30, 2013.

 

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Non-GAAP Operating Results

Carlyle’s non-GAAP results for Q2 2013 are provided in the table below:

 

Carlyle Group Summary       
$ in millions, except unit and per unit amounts       
Economic Net income    Q2 2013   

 

 

Economic Net Income (pre-tax)

     $ 155.8      

Less: Provision for income taxes (1)

     32.6      
  

 

 

 

Economic Net Income, After Taxes

     $                         123.2       
  

 

 

 

Fully diluted units (in millions)

     316.8      

Economic Net Income, After Taxes per Adjusted Unit

     $ 0.39      

Distributable Earnings

  

 

 

Distributable Earnings

     $ 163.0      

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

     6.7      
  

 

 

 

Distributable Earnings, After Taxes

     $ 156.3      
  

 

 

 

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

  

Distributable Earnings to The Carlyle Group L.P.

     $ 24.6      

Less: Estimated current corporate income taxes (benefit) (3)

     (1.2)     
  

 

 

 

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

     $ 25.8      
  

 

 

 

Units in public float (in millions)(4)

     49.0      

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

     $ 0.53      

 

 

(1) Represents the implied provision for income taxes that was calculated using a similar methodology applied in calculating the tax provision for The Carlyle Group L.P., without any reduction for noncontrolling interests.

(2) Represents the implied provision for current income taxes that was calculated using a similar methodology applied in calculating the current tax provision for The Carlyle Group L.P., without any reduction for noncontrolling interests.

(3) Represents current corporate income taxes payable (benefit) upon distributable earnings allocated to Carlyle Holdings I GP Inc. and estimated current Tax Receivable Agreement payments owed

(4) Includes 2.9 million common units issued in August 2013 related to the closing of the AlpInvest transaction and to vested DRUs. These units are included in this calculation because these newly-issued units will participate in the unitholder distribution that will be paid in August 2013.

 

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Corporate Private Equity (CPE)

 

 

LOGO

 

 

Distributable Earnings (DE): $84 million for Q2 2013 and $417 million on an LTM basis. The following components impacted Distributable Earnings in Q2 2013:

 

  ¡  

Fee-Related Earnings were ($6) million in Q2 2013 and were $31 million on an LTM basis, compared to $10 million in Q2 2012, with the decline driven by higher fundraising costs and fee and basis step downs in two CPE funds during 2012.

 

  ¡  

Realized Net Performance Fees were $86 million for Q2 2013 and were $377 million on an LTM basis, compared to $50 million for Q2 2012.

 

 

Economic Net Income (ENI): $106 million for Q2 2013

 

  ¡  

Economic Net Income/(Loss) of $106 million for Q2 2013 and $645 million on an LTM basis, compared to ($65) million for Q2 2012.

 

  ¡  

CPE carry fund valuations increased 5% in Q2 2013 and 24% on an LTM basis, compared with (2%) in Q2 2012.

 

  ¡  

Net Performance Fees of $109 million for Q2 2013 and $602 million on an LTM basis, compared to ($80) million for Q2 2012.

 

 

Total Assets Under Management (AUM): $57.9 billion as of Q2 2013

 

  ¡  

Total AUM increased 10% to $57.9 billion from $52.5 billion as of Q2 2012.

 

  ¡  

Funds Raised of $3.8 billion were driven by additional closings of our latest vintage U.S. and Asia buyout funds, closings in our Financial Services fund and various co-investments.

 

  ¡  

Fee-Earning Assets Under Management were $38.5 billion as of Q2 2013, up 4% from $37.1 billion as of Q2 2012, with the increase driven by $11.3 billion in inflows, and partially offset by $9.2 billion in outflows, including distributions and basis step downs.

 

Corporate Private Equity (Actual Results)    Period         LTM         % Change
    

 

  

 

$ in millions, except where noted    Q2 2012      Q3 2012      Q4 2012      Q1 2013      Q2 2013         Q3 12 - Q2 13      QoQ      YoY    YTD
                   

 

  

 

 

Economic Net Income

   (65)    177    122    239    106     645    (56%)    265%    93%
                                              

 

Fee-Related Earnings

   10    19    18    (0)    (6)     31    NM    NM    NM
                                              

 

Net Performance Fees

   (80)    159    100    235    109     602    (54%)    236%    155%
                                              

 

Realized Net Performance Fees

   50    126    54    111    86     377    (22%)    74%    27%
                                              

 

Distributable Earnings

   62    145    74    114    84     417    (26%)    36%    9%
                                              

 

Total Assets Under Management ($ in billions)

   52.5    53.2    53.3    55.1    57.9          5%    10%     

 

Fee-Earning Assets Under Management ($ in billions)

   37.1    36.9    33.8    33.2    38.5          16%    4%     
                            

Note: Totals may not sum due to rounding.

 

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Global Market Strategies (GMS)

 

 

LOGO

Note: Funds Raised excludes acquisitions, but includes hedge funds and CLOs. Equity Invested and Realized Proceeds are for carry funds only.

 

 

 

Distributable Earnings (DE): $46 million for Q2 2013 and $201 million on an LTM basis. The following components impacted Distributable Earnings in Q2 2013:

 

  ¡  

Fee-Related Earnings were $22 million in Q2 2013 and $100 million on an LTM basis, compared to $20 million in Q2 2012. The increase was driven by a net growth in hedge fund assets and the pricing of six new CLOs, partially offset by higher fundraising costs.

 

  ¡  

Realized Net Performance Fees were $11 million for Q2 2013 and $77 million on an LTM basis, compared to $1 million for Q2 2012. Realized Net Performance Fees in Q2 2013 largely were driven by carry generating exits in distressed debt carry funds.

 

  ¡  

Realized Investment Income of $12 million was driven by the sale of a single debt investment.

 

 

Economic Net Income (ENI): $47 million for Q2 2013

 

  ¡  

Economic Net Income of $47 million for Q2 2013 and $246 million on an LTM basis, compared to $32 million for Q2 2012.

 

  ¡  

GMS carry fund valuations increased 8% in Q2 2013, compared to 3% in Q2 2012.

 

  ¡  

Net Performance Fees of $25 million for Q2 2013 and $129 million on an LTM basis, compared to $4 million for Q2 2012.

 

 

Total Assets Under Management (AUM): $34.7 billion as of Q2 2013

 

  ¡  

Total AUM of $34.7 billion as of Q2 2013 increased 20% versus Q2 2012, while Fee-Earning AUM of $33.1 billion increased 19% versus Q2 2012.

 

  ¡  

Total hedge fund AUM was $13.6 billion as of Q2 2013.

 

  ¡  

Carlyle priced two new CLOs during Q2 2013 totaling $1.0 billion in assets, and secured $250 million of new funding for the Carlyle GMS Finance business development company (BDC).

 

  ¡  

GMS carry fund AUM ended Q2 2013 at $3.6 billion.

 

  ¡  

Total Structured Credit AUM ended Q2 2013 at $17.4 billion.

 

Global Markets Strategies (Actual Results)    Period    LTM    % Change

 

  

 

  

 

$ in millions, except where noted    Q2 2012    Q3 2012    Q4 2012    Q1 2013      Q2 2013      Q3 12 -Q2 13    QoQ   YoY   YTD
                 

 

  

 

 

Economic Net Income

   32    36    59    104     47     246    (55%)   47%   116%  
                                            

 

Fee-Related Earnings

   20    22    31    25     22     100    (9%)   11%   32%  
                                            

 

Net Performance Fees

   4    8    23    73     25     129    (66%)   459%   341%  
                                            

 

Realized Net Performance Fees

   1    1    50    14     11     77    (22%)   1767%   68%  
                                            

 

Distributable Earnings

   24    28    86    41     46     201    12%   97%   59%  
                                            

 

Total Assets Under Management ($ in billions)

   29.0    30.1    32.5    33.1     34.7          5%   20%    

 

 

Fee-Earning Assets Under Management ($ in billions)

   27.7    28.5    31.0    31.4     33.1          5%   19%    

 

    

                                          

 

Funds Raised, excluding hedge funds ($ in billions)

   0.8    0.8    1.2    1.3     1.5     4.8    19%   90%    

 

Hedge Fund Net Inflows ($ in billions)

   0.7    0.4    0.0    0.0     0.8     1.2    NM   12%    
                          

Note: Totals may not sum due to rounding. Funds Raised excludes the impact of acquisitions.

 

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Real Assets (RA)

 

 

LOGO

Note: Equity Invested and Realized Proceeds are for carry funds only. Funds Raised excludes acquisitions.

 

 

Distributable Earnings (DE): $25 million for Q2 2013 and $91 million on an LTM basis. The following components impacted Distributable Earnings in Q2 2013:

 

  ¡  

Fee-Related Earnings were $4 million in Q2 2013 and $14 million on an LTM basis, compared to $3 million in Q2 2012. The increase largely was driven by earnings from our equity interest in NGP Energy Capital Management, offset by a lower invested capital basis in the real estate funds.

 

  ¡  

Realized Net Performance Fees were $19 million for Q2 2013 and $86 million on an LTM basis, compared to $26 million for Q2 2012.

 

  ¡  

Realized Investment Income/(Loss) of $1 million during Q2 2013 and ($12) million LTM.

 

 

Economic Net Income/(Loss) (ENI): ($11) million for Q2 2013

 

  ¡  

Economic Net Income/(Loss) of ($11) million for Q2 2013 and $26 million on an LTM basis compared to ($29) million for Q2 2012. The ENI loss in Q2 2013 was largely driven by unrealized losses on the legacy energy carry fund portfolio.

 

  ¡  

RA carry fund valuations declined 2% in Q2 2013, compared to a 3% decline in Q2 2012.

 

  ¡  

Net Performance Fees of ($17) million for Q2 2013 and $27 million on an LTM basis, compared to ($33) million for Q2 2012.

 

 

Total Assets Under Management (AUM): $39.8 billion as of Q2 2013

 

  ¡  

Total AUM of $39.8 billion increased 33% versus Q2 2012, driven largely by the acquisition of an equity interest in NGP Energy Capital Management, partially offset by fund distributions.

 

  ¡  

Fee-Earning AUM of $28.7 billion was up 47% versus Q2 2012, with the increase driven largely by the AUM associated with NGP Energy Capital Management, partially offset by distributions and step downs in basis for funds at the end of their original investment period.

 

Real Assets (Actual Results)    Period    LTM    % Change
    

 

  

 

$ in millions, except where noted    Q2 2012    Q3 2012    Q4 2012    Q1 2013    Q2 2013    Q3 12 - Q2 13    QoQ    YoY    YTD  
                   

 

  

 

 

Economic Net Income

   (29)    2    (7)    42    (11)    26    (125%)    63%    (57%)  
                                              

 

Fee-Related Earnings

   3    1    0    9    4    14    (49%)    59%    574%  
                                              

 

Net Performance Fees

   (33)    (4)    6    42    (17)    27    (141%)    47%    (63%)  
                                              

 

Realized Net Performance Fees

   26    29    22    16    19    86    19%    (25%)    (27%)  
                                              

 

Distributable Earnings

   28    31    23    12    25    91    110%    (10%)    (25%)  
                                              

 

Total Assets Under Management ($ in billions)

   30.0    29.5    40.2    40.3    39.8         (1%)    33%     

 

Fee-Earning Assets Under Management ($ in billions)

   19.5    19.6    29.3    29.4    28.7         (2%)    47%     
                            

Note: Totals may not sum due to rounding.

 

Page  |  9


Global Solutions

 

 

Distributable Earnings (DE): $8 million for Q2 2013 and $21 million on an LTM basis

 

  ¡  

Fee-Related Earnings were $6 million for Q2 2013 and $17 million on an LTM basis.

 

  ¡  

Realized Net Performance Fees were $1 million for Q2 2013 and $3 million on an LTM basis.

 

 

Economic Net Income (ENI): $13 million for Q2 2013 and $33 million on an LTM basis, compared to $4 million in Q2 2012.

 

 

Total Assets Under Management (AUM): $48.0 billion as of Q2 2013

 

  ¡  

Total AUM of $48.0 billion was up 8% compared to Q2 2012.

 

  ¡  

Fee-Earning AUM of $31.8 billion increased 15% versus Q2 2012, with the increase driven primarily due to an increase in the fee basis of certain funds and inflows, partially offset by outflows and fee basis step downs.

 

  ¡  

AlpInvest attracted $249 million in new commitments for its secondaries fund and $155 million in capital commitments to manage an existing external account during Q2 2013.

 

 

On August 1, 2013, Carlyle acquired the remaining 40% equity interest in AlpInvest from the AlpInvest management holders. Had the transaction closed on January 1, 2013, Carlyle would have realized increased Fee-Related Earnings of $10 million for the first half of 2013.

 

Global Solutions (Actual Results)    Period    LTM    % Change
    

 

  

 

$ in millions, except where noted    Q2 2012    Q3 2012    Q4 2012    Q1 2013    Q2 2013    Q3 12 - Q2 13    QoQ    YoY    YTD  
                   

 

  

 

 

Economic Net Income

   4    4    8    9    13    33    45%    223%    66%  
                                              

 

Fee-Related Earnings

   3    3    5    3    6    17    91%    133%    19%  
                                              

 

Net Performance Fees

   1    1    3    6    7    16    14%    400%    144%  
                                              

 

Realized Net Performance Fees

   0    0    1    1    1    3    160%    1200%    260%  
                                              

 

Distributable Earnings

   3    3    6    4    8    21    97%    175%    35%  
                                              

 

Total Assets Under Management ($ in billions)

   44.6    44.6    44.1    47.8    48.0         1%    8%     

 

Fee-Earning Assets Under Management ($ in billions)

   27.6    30.2    28.9    28.9    31.8         10%    15%     
                            

Note: Totals may not sum due to rounding.

 

Page  |  10


Balance Sheet Highlights

The amounts presented below exclude the effect of U.S. GAAP consolidation eliminations on investments and accrued performance fees, as well as cash and debt associated with Carlyle’s consolidated funds. All data is as of June 30, 2013.

 

 

Cash and Cash Equivalents of $573 million.

 

On-balance sheet investments attributable to unitholders of $262 million, excluding the equity investment by Carlyle in NGP Energy Capital Management.

 

Net Accrued Performance Fees attributable to unitholders of $1,454 million. These performance fees are comprised of Gross Accrued Performance Fees of $2,681 million less $59 million in accrued giveback obligation and $1,168 million in accrued performance fee compensation and non-controlling interest.

 

Loans payable and senior notes totaling $923 million.

 

Conference Call

Carlyle will host a conference call on August 7, 2013 at 8:00 a.m. EDT to discuss Q2 2013 financial results and industry trends. Immediately following the prepared remarks, there will be a question and answer session for analysts and institutional investors.

Analysts and institutional investors may listen to the call by dialing +1-800-850-2903 (international +1-253-237-1169) and referencing “Carlyle Group Second Quarter 2013 Earnings Conference Call.” The conference call will be webcast simultaneously to the public through a link on the investor relations section of The Carlyle Group web site at ir.carlyle.com. An archived replay of the webcast will be available soon after the live call.

 

Page  |  11


About The Carlyle Group

The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $180 billion of assets under management across 118 funds and 81 fund of funds vehicles as of June 30, 2013. 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 Global 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, technology & business services, telecommunications & media and transportation. The Carlyle Group employs more than 1,400 people in 34 offices across six continents.

Web: www.carlyle.com

Videos: www.youtube.com/onecarlyle

Tweets: www.twitter.com/onecarlyle

Podcasts: www.carlyle.com/about-carlyle/market-commentary

Contacts:

Public Market Investor Relations   Media
Daniel Harris   Elizabeth Gill
Phone: 212-813-4527   Phone: 202-729-5385
daniel.harris@carlyle.com   elizabeth.gill@carlyle.com

 

Page  |  12


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 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 Annual Report on Form 10-K for the year ended December 31, 2012 filed with the SEC on March 14, 2013, 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.

 

Page  |  13


The Carlyle Group L.P.

GAAP Statement of Operations (Unaudited)

 

               Three Months Ended                                     Six Months Ended             
     Jun 30,
2013
     Jun 30,
2012
               Jun 30,
2013
     Jun 30,
2012
 
     (Dollars in millions, except unit and per unit data)  

Revenues

                 

Fund management fees

     $ 242.2           $ 239.9                 $ 473.6           $ 474.3     

Performance fees

                 

Realized

     203.2           116.7                 456.0           397.3     

Unrealized

     55.9           (337.1)                445.5           23.1     
  

 

 

    

 

 

          

 

 

    

 

 

 

Total performance fees

     259.1           (220.4)                901.5           420.4     

Investment income (loss)

                 

Realized

     12.7           2.4                 8.5           1.6     

Unrealized

     (1.7)          4.6                 2.9           26.9     
  

 

 

    

 

 

          

 

 

    

 

 

 

Total investment income (loss)

     11.0           7.0                 11.4           28.5     

Interest and other income

     4.1           2.7                 6.5           5.4     

Interest and other income of Consolidated Funds

     252.9           219.2                 521.3           430.7     
  

 

 

    

 

 

          

 

 

    

 

 

 

Total revenues

     769.3           248.4                 1,914.3           1,359.3     

Expenses

                 

Compensation and benefits

                 

Base compensation

     173.6           149.9                 352.1           256.0     

Equity-based compensation

     126.0           94.2                 178.3           94.2     

Performance fee related

                 

Realized

     78.1           32.1                 186.8           66.4     

Unrealized

     66.0           (97.7)                261.0           (42.9)    
  

 

 

    

 

 

          

 

 

    

 

 

 

Total compensation and benefits

     443.7           178.5                 978.2           373.7     

General, administrative and other expenses

     120.3           84.0                 231.7           175.2     

Interest

     11.6           6.2                 22.1           16.6     

Interest and other expenses of Consolidated Funds

     201.7           179.5                 451.8           364.0     

Other non-operating (income) expense

     (3.3)          0.7                 (5.7)          (3.4)    
  

 

 

    

 

 

          

 

 

    

 

 

 

Total expenses

     774.0           448.9                 1,678.1           926.1     

Other income

                 

Net investment gains of Consolidated Funds

     290.6           386.6                 502.1           1,258.7     
  

 

 

    

 

 

          

 

 

    

 

 

 

Income before provision for income taxes

     285.9           186.1                 738.3           1,691.9     

Provision for income taxes

     16.6           10.6                 41.5           22.3     
  

 

 

    

 

 

          

 

 

    

 

 

 

Net income

     269.3           175.5                 696.8           1,669.6     

Net income attributable to non-controlling interests in consolidated entities

     300.0           357.9                 468.0           1,222.8     
  

 

 

    

 

 

          

 

 

    

 

 

 

Net income (loss) attributable to Carlyle Holdings

     (30.7)          (182.4)                228.8           446.8     

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

     (27.4)          (172.1)                198.3           457.1     
  

 

 

    

 

 

          

 

 

    

 

 

 

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

     $ (3.3)          $ (10.3)                $ 30.5           $ (10.3)    
  

 

 

    

 

 

          

 

 

    

 

 

 

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

                 

Basic

     $ (0.07)          $ (0.26)                $ 0.69           $ (0.26)    
  

 

 

    

 

 

          

 

 

    

 

 

 

Diluted

     $ (0.07)          $ (0.26)                $ 0.61           $ (0.26)    
  

 

 

    

 

 

          

 

 

    

 

 

 

Weighted-average common units

                 

Basic

     45,145,793           40,160,245                 44,249,510           40,160,245     
  

 

 

    

 

 

          

 

 

    

 

 

 

Diluted

     45,145,793           40,160,245                 49,881,397           40,160,245     
  

 

 

    

 

 

          

 

 

    

 

 

 

 

Page  |  14


Total Segment Information (Unaudited)

The following table sets forth information in the format used by management when making resource deployment decisions and in assessing the performance of our segments. The information below is the aggregate results of our four segments.

 

     Three Months Ended        Twelve Months Ended  
          Jun 30,                Jun 30,                Mar 31,                  Jun 30,                Jun 30,       
     2013      2012      2013        2013      2012  
     (Dollars in millions)  

Segment Revenues

                

Fund level fee revenues

                

Fund management fees

     $ 249.9           $ 235.0           $ 240.1             $ 972.8           $ 915.4     

Portfolio advisory fees, net

     5.7           7.0           4.6             17.3           28.2     

Transaction fees, net

     6.8           3.7           10.4             38.3           21.7     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total fee revenues

     262.4           245.7           255.1             1,028.4           965.3     

Performance fees

                

Realized

     192.6           110.3           248.9             918.5           1,194.1     

Unrealized

     42.1           (311.1)          342.7             473.1           (859.5)    
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total performance fees

     234.7           (200.8)          591.6             1,391.6           334.6     

Investment income (loss)

                

Realized

     14.6           4.0           (9.3)            15.5           36.3     

Unrealized

     (7.7)          10.0           12.3             (1.4)          14.0     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total investment income (loss)

     6.9           14.0           3.0             14.1           50.3     

Interest and other income

     4.0           2.5           2.4             15.0           7.1     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total revenues

     508.0           61.4           852.1             2,449.1           1,357.3     

Segment Expenses

                

Compensation and benefits

                

Direct base compensation

     101.0           105.8           108.0             419.4           415.2     

Indirect base compensation

     35.0           36.2           33.6             143.8           137.0     

Equity-based compensation

     4.2           0.6           2.6             8.0           0.6     

Performance fee related

                

Realized

     74.8           34.5           107.4             375.6           565.0     

Unrealized

     37.4           (128.6)          129.5             242.3           (458.0)    
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total compensation and benefits

     252.4           48.5           381.1             1,189.1           659.8     

General, administrative, and other indirect expenses

     82.0           60.0           62.3             256.1           236.7     

Depreciation and amortization expense

     6.2           4.0           6.3             24.8           19.2     

Interest expense

     11.6           6.1           8.5             28.7           43.8     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Total expenses

     352.2           118.6           458.2             1,498.7           959.5     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

Economic Net Income (Loss)

     $ 155.8           $ (57.2)          $ 393.9             $ 950.4           $ 397.8     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

(-) Net Performance Fees

     122.5           (106.7)          354.7             773.7           227.6     

(-) Investment Income

     6.9           14.0           3.0             14.1           50.3     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

(=) Fee Related Earnings

     $ 26.4           $ 35.5           $ 36.2             $ 162.6           $ 119.9     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

(+) Realized Net Performance Fees

     117.8           75.8           141.5             542.9           629.1     

(+) Realized Investment Income (Loss)

     14.6           4.0           (9.3)            15.5           36.3     

(+) Equity based compensation

     4.2           0.6           2.6             8.0           0.6     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

(=) Distributable Earnings

     $ 163.0           $ 115.9           $ 171.0             $ 729.0           $ 785.9     
  

 

 

    

 

 

    

 

 

      

 

 

    

 

 

 

 

Page  |  15


Total Segment Information (Unaudited), cont

 

     Three Months Ended  
                                        Jun 30, 2013 vs.  
     Jun 30,
2012
     Sept 30,
2012
     Dec 31,
2012
     Mar 31,
2013
     Jun 30,
2013
     Jun 30, 2012      Mar 31, 2013  
     (Dollars in millions)  

Economic Net Income, Total Segments

                    

Revenues

                    

Segment fee revenues

                    

Fund management fees

     $ 235.0           $ 233.9           $ 248.9           $ 240.1           $ 249.9           $ 14.9           $ 9.8     

Portfolio advisory fees, net

     7.0           4.6           2.4           4.6           5.7           (1.3)          1.1     

Transaction fees, net

     3.7           7.2           13.9           10.4           6.8           3.1           (3.6)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total fee revenues

     245.7           245.7           265.2           255.1           262.4           16.7           7.3     

Performance fees

                    

Realized

     110.3           276.4           200.6           248.9           192.6           82.3           (56.3)    

Unrealized

     (311.1)          49.0           39.3           342.7           42.1           353.2           (300.6)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total performance fees

     (200.8)          325.4           239.9           591.6           234.7           435.5           (356.9)    

Investment income (loss)

                    

Realized

     4.0           4.6           5.6           (9.3)          14.6           10.6           23.9     

Unrealized

     10.0           3.8           (9.8)          12.3           (7.7)          (17.7)          (20.0)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income (loss)

     14.0           8.4           (4.2)          3.0           6.9           (7.1)          3.9     

Interest and other income

     2.5           4.4           4.2           2.4           4.0           1.5           1.6     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     61.4           583.9           505.1           852.1           508.0           446.6           (344.1)    

Expenses

                    

Compensation and benefits

                    

Direct base compensation

     105.8           97.9           112.5           108.0           101.0           (4.8)          (7.0)    

Indirect base compensation

     36.2           32.9           42.3           33.6           35.0           (1.2)          1.4     

Equity-based compensation

     0.6           0.6           0.6           2.6           4.2           3.6           1.6     

Performance fee related

                    

Realized

     34.5           120.2           73.2           107.4           74.8           40.3           (32.6)    

Unrealized

     (128.6)          40.6           34.8           129.5           37.4           166.0           (92.1)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total compensation and benefits

     48.5           292.2           263.4           381.1           252.4           203.9           (128.7)    

General, administrative, and other indirect expenses

     60.0           62.3           49.5           62.3           82.0           22.0           19.7     

Depreciation and amortization expense

     4.0           6.2           6.1           6.3           6.2           2.2           (0.1)    

Interest expense

     6.1           4.7           3.9           8.5           11.6           5.5           3.1     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     118.6           365.4           322.9           458.2           352.2           233.6           (106.0)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Economic Net Income (Loss)

     $ (57.2)          $ 218.5           $ 182.2           $ 393.9           $ 155.8           $ 213.0           $ (238.1)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(-) Net Performance Fees

     (106.7)          164.6           131.9           354.7           122.5           229.2           (232.2)    

(-) Investment Income (Loss)

     14.0           8.4           (4.2)          3.0           6.9           (7.1)          3.9     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Fee Related Earnings

     $         35.5           $         45.5           $         54.5           $         36.2           $         26.4           $ (9.1)          $         (9.8)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(+) Realized Net Performance Fees

     75.8           156.2           127.4           141.5           117.8           42.0           (23.7)    

(+) Realized Investment Income (Loss)

     4.0           4.6           5.6           (9.3)          14.6           10.6           23.9     

(+) Equity based compensation

     0.6           0.6           0.6           2.6           4.2           3.6           1.6     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Distributable Earnings

     $ 115.9           $ 206.9         $ 188.1           $ 171.0           $ 163.0           $         47.1           $ (8.0)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page  |  16


Corporate Private Equity Segment Results (Unaudited)

 

     Three Months Ended  
                                        Jun 30, 2013 vs.  
     Jun 30,
2012
     Sept 30,
2012
     Dec 31,
2012
     Mar 31,
2013
     Jun 30,
2013
       Jun 30, 2012          Mar 31, 2013    
Corporate Private Equity    (Dollars in millions)  

Revenues

                    

Segment fee revenues

                    

Fund management fees

     $     124.0           $     124.8           $     123.5           $     108.3           $     108.8           $     (15.2)          $             0.5     

Portfolio advisory fees, net

     4.9           3.1           2.8           4.1           4.9           -               0.8     

Transaction fees, net

     1.6           6.2           9.6           10.4           4.0           2.4           (6.4)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total fee revenues

     130.5           134.1           135.9           122.8           117.7           (12.8)          (5.1)    

Performance fees

                    

Realized

     80.6           241.4           94.5           212.3           151.4           70.8           (60.9)    

Unrealized

     (269.7)          72.8           86.4           207.6           31.2           300.9           (176.4)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total performance fees

     (189.1)          314.2           180.9           419.9           182.6           371.7           (237.3)    

Investment income (loss)

                    

Realized

     1.5           (0.2)          1.2           1.8           1.7           0.2           (0.1)    

Unrealized

     3.7           (1.0)          3.3           2.8           2.4           (1.3)          (0.4)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income (loss)

     5.2           (1.2)          4.5           4.6           4.1           (1.1)          (0.5)    

Interest and other income

     1.6           3.4           2.6           1.0           1.7           0.1           0.7     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     (51.8)          450.5           323.9           548.3           306.1           357.9           (242.2)    

Expenses

                    

Compensation and benefits

                    

Direct base compensation

     54.8           56.2           59.9           55.0           50.0           (4.8)          (5.0)    

Indirect base compensation

     24.1           19.9           27.7           20.0           21.8           (2.3)          1.8     

Equity-based compensation

     0.4           0.4           0.4           1.5           2.3           1.9           0.8     

Performance fee related

                    

Realized

     31.0           115.6           40.5           101.6           65.1           34.1           (36.5)    

Unrealized

     (140.3)          39.2           40.8           83.6           8.8           149.1           (74.8)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total compensation and benefits

     (30.0)          231.3           169.3           261.7           148.0           178.0           (113.7)    

General, administrative, and other indirect expenses

     36.9           36.0           26.3           39.0           41.6           4.7           2.6     

Depreciation and amortization expense

     2.3           3.5           3.5           3.5           3.4           1.1           (0.1)    

Interest expense

     3.5           2.5           2.4           4.9           6.7           3.2           1.8     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     12.7           273.3           201.5           309.1           199.7           187.0           (109.4)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Economic Net Income (Loss)

     $ (64.5)          $ 177.2           $ 122.4           $ 239.2           $ 106.4           $ 170.9           $ (132.8)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(-) Net Performance Fees

     (79.8)          159.4           99.6           234.7           108.7           188.5           (126.0)    

(-) Investment Income (Loss)

     5.2           (1.2)          4.5           4.6           4.1           (1.1)          (0.5)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Fee Related Earnings

     $ 10.1           $ 19.0           $ 18.3           $ (0.1)          $ (6.4)          $ (16.5)          $ (6.3)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(+) Realized Net Performance Fees

     49.6           125.8           54.0           110.7           86.3           36.7           (24.4)    

(+) Realized Investment Income (Loss)

     1.5           (0.2)          1.2           1.8           1.7           0.2           (0.1)    

(+) Equity based compensation

     0.4           0.4           0.4           1.5           2.3           1.9           0.8     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Distributable Earnings

     $ 61.6           $ 145.0           $ 73.9           $ 113.9           $ 83.9           $ 22.3           $ (30.0)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page  |  17


Global Market Strategies Segment Results (Unaudited)

 

     Three Months Ended  
                                        Jun 30, 2013 vs.  
     Jun 30,
2012
     Sept 30,
2012
     Dec 31,
2012
     Mar 31,
2013
     Jun 30,
2013
       Jun 30, 2012          Mar 31, 2013    
Global Market Strategies    (Dollars in millions)  

Revenues

                    

Segment fee revenues

                    

Fund management fees

     $       59.5           $       58.2           $       70.9           $       66.3           $       73.8           $ 14.3           $ 7.5     

Portfolio advisory fees, net

     0.5           0.8           0.5           0.2           0.5           -               0.3     

Transaction fees, net

     -               0.3           3.2           -               0.1           0.1           0.1     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total fee revenues

     60.0           59.3           74.6           66.5           74.4           14.4           7.9     

Performance fees

                    

Realized

     1.3           0.9           77.8           24.1           17.9           16.6           (6.2)    

Unrealized

     4.0           5.7           (43.6)          64.3           23.0           19.0           (41.3)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total performance fees

     5.3           6.6           34.2           88.4           40.9           35.6           (47.5)    

Investment income (loss)

                    

Realized

     2.8           4.6           4.4           1.9           12.2           9.4           10.3     

Unrealized

     4.8           0.8           0.3           5.1           (11.9)          (16.7)          (17.0)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total investment income (loss)

     7.6           5.4           4.7           7.0           0.3           (7.3)          (6.7)    

Interest and other income

     0.4           0.5           0.8           1.1           1.5           1.1           0.4     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total revenues

     73.3           71.8           114.3           163.0           117.1           43.8           (45.9)    

Expenses

                    

Compensation and benefits

                    

Direct base compensation

     25.2           17.4           24.0           25.7           24.9           (0.3)          (0.8)    

Indirect base compensation

     4.5           5.9           6.0           4.8           5.5           1.0           0.7     

Equity-based compensation

     0.1           -               0.1           0.4           0.6           0.5           0.2     

Performance fee related

                    

Realized

     0.7           0.2           27.5           9.7           6.7           6.0           (3.0)    

Unrealized

     0.2           (1.8)          (16.5)          6.2           9.6           9.4           3.4     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total compensation and benefits

     30.7           21.7           41.1           46.8           47.3           16.6           0.5     

General, administrative, and other indirect expenses

     9.1           11.7           12.5           9.5           19.5           10.4           10.0     

Depreciation and amortization expense

     0.6           1.1           1.0           1.2           1.1           0.5           (0.1)    

Interest expense

     0.9           1.3           0.6           1.5           2.1           1.2           0.6     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Total expenses

     41.3           35.8           55.2           59.0           70.0           28.7           11.0     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

Economic Net Income

     $ 32.0           $ 36.0           $ 59.1           $ 104.0           $ 47.1           $ 15.1           $ (56.9)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(-) Net Performance Fees

     4.4           8.2           23.2           72.5           24.6           20.2           (47.9)    

(-) Investment Income

     7.6           5.4           4.7           7.0           0.3           (7.3)          (6.7)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Fee Related Earnings

     $ 20.0           $ 22.4           $ 31.2           $ 24.5           $ 22.2           $ 2.2           $ (2.3)    
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(+) Realized Net Performance Fees

     0.6           0.7           50.3           14.4           11.2           10.6           (3.2)    

(+) Realized Investment Income

     2.8           4.6           4.4           1.9           12.2           9.4           10.3     

(+) Equity based compensation

     0.1           -               0.1           0.4           0.6           0.5           0.2     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

(=) Distributable Earnings

     $ 23.5           $ 27.7           $ 86.0           $ 41.2           $ 46.2           $ 22.7           $ 5.0     
  

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

    

 

 

 

 

Page  |  18


Real Assets Segment Results (Unaudited)

 

    Three Months Ended  
                                  Jun 30, 2013 vs.  
    Jun 30,
2012
    Sept 30,
2012
    Dec 31,
2012
    Mar 31,
2013
    Jun 30,
2013
      Jun 30, 2012         Mar 31, 2013    
Real Assets   (Dollars in millions)  

Revenues

             

Segment fee revenues

             

Fund management fees

    $         34.1          $ 34.4          $ 35.9          $ 47.0          $ 46.4          $ 12.3          $ (0.6)    

Portfolio advisory fees, net

    1.6          0.7          (0.9)         0.3          0.3          (1.3)         -         

Transaction fees, net

    2.1          0.7          1.1          -              2.7          0.6          2.7     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total fee revenues

    37.8          35.8          36.1          47.3          49.4          11.6          2.1     

Performance fees

             

Realized

    27.0          31.9          24.5          11.0          20.6          (6.4)         9.6     

Unrealized

    (56.0)         (27.7)         (11.9)         49.5          (33.4)         22.6          (82.9)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total performance fees

    (29.0)         4.2          12.6          60.5          (12.8)         16.2          (73.3)    

Investment income (loss)

             

Realized

    (0.3)         0.2          -              (13.0)         0.7          1.0          13.7     

Unrealized

    1.5          4.0          (13.4)         4.5          1.7          0.2          (2.8)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income (loss)

    1.2          4.2          (13.4)         (8.5)         2.4          1.2          10.9     

Interest and other income

    0.4          0.4          0.5          0.3          0.6          0.2          0.3     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    10.4          44.6          35.8          99.6          39.6          29.2          (60.0)    

Expenses

             

Compensation and benefits

             

Direct base compensation

    16.9          16.1          19.9          17.9          18.2          1.3          0.3     

Indirect base compensation

    5.6          5.7          6.8          7.5          6.4          0.8          (1.1)    

Equity-based compensation

    0.1          0.2          0.1          0.6          1.2          1.1          0.6     

Performance fee related

             

Realized

    1.5          2.5          2.4          (4.9)         1.6          0.1          6.5     

Unrealized

    2.1          5.3          4.0          23.6          2.9          0.8          (20.7)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total compensation and benefits

    26.2          29.8          33.2          44.7          30.3          4.1          (14.4)    

General, administrative, and other indirect expenses

    11.1          11.4          7.7          10.4          16.5          5.4          6.1     

Depreciation and amortization expense

    0.7          1.1          1.1          1.1          1.2          0.5          0.1     

Interest expense

    1.1          0.7          0.7          1.6          2.2          1.1          0.6     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    39.1          43.0          42.7          57.8          50.2          11.1          (7.6)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Economic Net Income (Loss)

    $ (28.7)         $ 1.6          $ (6.9)         $ 41.8          $ (10.6)         $ 18.1          $ (52.4)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(-) Net Performance Fees

    (32.6)         (3.6)         6.2          41.8          (17.3)         15.3          (59.1)    

(-) Investment Income (Loss)

    1.2          4.2          (13.4)         (8.5)         2.4          1.2          10.9     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(=) Fee Related Earnings

    $ 2.7          $         1.0          $         0.3          $         8.5          $         4.3          $         1.6          $ (4.2)    
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(+) Realized Net Performance Fees

    25.5          29.4          22.1          15.9          19.0          (6.5)         3.1     

(+) Realized Investment Income (Loss)

    (0.3)         0.2          -              (13.0)         0.7          1.0          13.7     

(+) Equity based compensation

    0.1          0.2          0.1          0.6          1.2          1.1          0.6     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(=) Distributable Earnings

    $ 28.0          $ 30.8          $ 22.5          $ 12.0          $ 25.2          $ (2.8)         $ 13.2     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page  |  19


Global Solutions Segment Results (Unaudited)

 

    Three Months Ended  
                                  Jun 30, 2013 vs.  
    Jun 30,
2012
    Sept 30,
2012
    Dec 31,
2012
    Mar 31,
2013
    Jun 30,
2013
    Jun 30, 2012       Mar 31, 2013    
Global Solutions   (Dollars in millions)  

Revenues

             

Segment fee revenues

             

Fund management fees

    $         17.4          $         16.5          $         18.6          $         18.5          $         20.9          $         3.5          $         2.4     

Portfolio advisory fees, net

    -              -              -              -              -              -              -         

Transaction fees, net

    -              -              -              -              -              -              -         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total fee revenues

    17.4          16.5          18.6          18.5          20.9          3.5          2.4     

Performance fees

             

Realized

    1.4          2.2          3.8          1.5          2.7          1.3          1.2     

Unrealized

    10.6          (1.8)         8.4          21.3          21.3          10.7          -         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total performance fees

    12.0          0.4          12.2          22.8          24.0          12.0          1.2     

Investment income (loss)

             

Realized

    -              -              -              -              -              -              -         

Unrealized

    -              -              -              (0.1)         0.1          0.1          0.2     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total investment income (loss)

    -              -              -              (0.1)         0.1          0.1          0.2     

Interest and other income

    0.1          0.1          0.3          -              0.2          0.1          0.2     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total revenues

    29.5          17.0          31.1          41.2          45.2          15.7          4.0     

Expenses

             

Compensation and benefits

             

Direct base compensation

    8.9          8.2          8.7          9.4          7.9          (1.0)         (1.5)    

Indirect base compensation

    2.0          1.4          1.8          1.3          1.3          (0.7)         -         

Equity-based compensation

    -              -              -              0.1          0.1          0.1          -         

Performance fee related

             

Realized

    1.3          1.9          2.8          1.0          1.4          0.1          0.4     

Unrealized

    9.4          (2.1)         6.5          16.1          16.1          6.7          -         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total compensation and benefits

    21.6          9.4          19.8          27.9          26.8          5.2          (1.1)    

General, administrative, and other indirect expenses

    2.9          3.2          3.0          3.4          4.4          1.5          1.0     

Depreciation and amortization expense

    0.4          0.5          0.5          0.5          0.5          0.1          -         

Interest expense

    0.6          0.2          0.2          0.5          0.6          -              0.1     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Total expenses

    25.5          13.3          23.5          32.3          32.3          6.8          -         
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Economic Net Income

    $ 4.0          $ 3.7          $ 7.6          $ 8.9          $ 12.9          $ 8.9          $ 4.0     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(-) Net Performance Fees

    1.3          0.6          2.9          5.7          6.5          5.2          0.8     

(-) Investment Income (Loss)

    -              -              -              (0.1)         0.1          0.1          0.2     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(=) Fee Related Earnings

    $ 2.7          $ 3.1          $ 4.7          $ 3.3          $ 6.3          $ 3.6          $ 3.0     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(+) Realized Net Performance Fees

    0.1          0.3          1.0          0.5          1.3          1.2          0.8     

(+) Realized Investment Income

    -              -              -              -              -              -              -         

(+) Equity based compensation

    -              -              -              0.1          0.1          0.1          0.0     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(=) Distributable Earnings

    $ 2.8          $ 3.4          $ 5.7          $ 3.9          $ 7.7          $ 4.9          $ 3.8     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

 

Page  |  20


Total Assets Under Management Roll Forward (Unaudited)

 

    Corporate Private Equity     Global Market Strategies (8)     Real Assets (9)     Global Solutions (10)     Total  
(USD in
millions)
  Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
   

Total

AUM

 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, As of March 31, 2013

    $     17,062        $ 38,057        $ 55,119          $ 1,762       $ 31,326        $     33,088          $ 9,521        $ 30,819        $     40,340          $ 17,853        $ 29,913        $     47,766          $ 46,198        $     130,115        $     176,313     

Commitments (1)

    3,823          -              3,823          285         -              285          296          -              296          333          -              333          4,737          -              4,737     

Capital Called, net (2)

    (997)         1,042          45          (278)         320          42          (827)         767          (60)         (523)         619          96          (2,625)         2,748          123     

Distributions (3)

    206          (2,959)         (2,753)         28         (420)         (392)         191          (1,160)         (969)         129          (2,023)         (1,894)         554          (6,562)         (6,008)    

Subscriptions, net of Redemptions (4)

    -              -              -              -              869          869          -              -              -              -              -              -              -              869          869     

Changes in CLO collateral balances (5)

    -              -              -              -              540          540          -              -              -              -              -              -              -              540          540     

Market Appreciation/(Depreciation) (6)

    -              1,624          1,624          -              227          227          -              224          224          -              1,421          1,421          -              3,496          3,496     

Foreign exchange and other (7)

    4          30          34          -              84          84          8          (70)         (62)         139          183          322          151          227          378     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, As of
June 30, 2013

    $ 20,098        $ 37,794        $ 57,892          $ 1,797       $ 32,946        $ 34,743          $ 9,189        $ 30,580        $ 39,769          $ 17,931        $ 30,113        $ 48,044          $ 49,015        $ 131,433        $ 180,448     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 
    Corporate Private Equity     Global Market Strategies (8)     Real Assets (9)     Global Solutions (10)     Total  
(USD in
millions)
  Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
    Total
AUM
    Available
Capital
    Fair Value
of Capital
   

Total

AUM

 
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, As of
June 30, 2012

    $ 15,292        $ 37,232        $ 52,524          $ 1,281       $ 27,765        $ 29,046          $ 7,059        $ 22,945        $ 30,004          $ 16,368        $ 28,216        $ 44,584          $ 40,000        $ 116,158        $ 156,158     

Acquisitions

    -              -              -              -              2,275          2,275          4,000          8,106          12,106          -              -              -              4,000          10,381          14,381     

Commitments (1)

    10,225          -              10,225          1,061         -              1,061          532          -              532          4,816          -              4,816          16,634          -              16,634     

Capital Called, net (2)

    (6,418)         6,081          (337)         (758)         735          (23)         (3,498)         3,324          (174)         (3,961)         3,914          (47)         (14,635)         14,054          (581)    

Distributions (3)

    1,031          (13,581)         (12,550)         213         (1,236)         (1,023)         1,077          (4,967)         (3,890)         483          (7,364)         (6,881)         2,804          (27,148)         (24,344)    

Subscriptions, net of Redemptions (4)

    -              -              -              -              1,265          1,265          -              -              -              -              -              -              -              1,265          1,265     

Changes in CLO collateral balances (5)

    -              -              -              -              994          994          -              -              -              -              -              -              -              994          994     

Market Appreciation/(Depreciation) (6)

    -              8,217          8,217          -              977          977          -              1,200          1,200          -              5,138          5,138          -              15,532          15,532     

Foreign exchange and other (7)

    (32)         (155)         (187)         -              171          171          19          (28)         (9)         225          209          434          212          197          409     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

Balance, As of
June 30, 2013

    $ 20,098        $ 37,794        $ 57,892          $ 1,797       $ 32,946        $ 34,743          $ 9,189        $ 30,580        $ 39,769          $ 17,931        $ 30,113        $ 48,044          $ 49,015        $ 131,433        $ 180,448     
 

 

 

   

 

 

   

 

 

   

 

 

   

 

 

 

(1) Represents capital raised by our carry funds and fund of funds vehicles, net of expired available capital.

(2) Represents capital called by our carry funds and fund of funds vehicles, net of fund fees and expenses. Equity Invested amounts may vary from Capital Called due to timing differences between acquisition and capital call dates.

(3) Represents distributions from our carry funds and fund of funds vehicles, net of amounts recycled. Distributions are based on when proceeds are actually distributed to investors, which may differ from when they are realized.

(4) Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds.

(5) Represents the change in the aggregate collateral balance and principal cash at par of the CLOs.

(6) Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments and changes in the net asset value of our hedge funds.

(7) Includes onboarding of fully committed existing funds from another manager and represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds and other changes in Total AUM. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

(8) Ending balance is comprised of approximately $17.4 billion from our structured credit funds (including $0.1 billion of Available Capital), $13.6 billion in our hedge funds, $3.6 billion (including $1.7 billion of Available Capital) in our carry funds and $0.1 billion from our business development company.

(9) Amounts related to the NGP Funds are based on the latest available information (in most cases as of March 31, 2013).

(10) The fair market values for AlpInvest primary fund investments and secondary investment funds are based on the latest available valuations of the underlying limited partnership interests (in most cases as of March 31, 2013) as provided by their general partners, plus the net cash flows since the latest valuation, up to June 30, 2013.

 

Page  |  21


Fee-Earning AUM Roll Forward (Unaudited)

 

     For the Three Months Ended June 30, 2013  
(USD in millions)   

  Corporate  
Private

Equity

     Global
Market
  Strategies  
    

  Real

  Assets (7)  

     Global
  Solutions  
       Total    
  

 

 

 

Fee-Earning AUM

              

Balance, As of March 31, 2013

   $ 33,195         $ 31,436         $ 29,419         $ 28,854         $ 122,904     

Inflows, including Commitments (1)

     10,170           281           755           3,677           14,883     

Outflows, including Distributions (2)

     (4,255)          (155)          (1,432)          (1,391)          (7,233)    

Subscriptions, net of Redemptions (3)

        812                 812     

Changes in CLO collateral balances (4)

        508                 508     

Market Appreciation/(Depreciation) (5)

        94              131           225     

Foreign exchange and other (6)

     (603)          81           (57)          504           (75)    
  

 

 

 

Balance, As of June 30, 2013

     $ 38,507         $ 33,057         $ 28,685         $ 31,775         $ 132,024     
  

 

 

 
     For the Twelve Months Ended June 30, 2013  
(USD in millions)   

  Corporate  
Private

Equity

     Global
Market
  Strategies  
    

Real

  Assets (7)  

     Global
  Solutions  
       Total    
  

 

 

 

Fee-Earning AUM

              

Balance, As of June 30, 2012

   $ 37,129         $ 27,740         $ 19,528         $ 27,576         $ 111,973     

Acquisitions

        2,260           10,307              12,567     

Inflows, including Commitments (1)

     11,299           1,115           1,827           9,203           23,444     

Outflows, including Distributions (2)

     (9,207)          (496)          (2,968)          (6,482)          (19,153)    

Subscriptions, net of Redemptions (3)

        1,172                 1,172     

Changes in CLO collateral balances (4)

        611                 611     

Market Appreciation/(Depreciation) (5)

        488              747           1,235     

Foreign exchange and other (6)

     (714)          167           (9)          731           175     
  

 

 

 

Balance, As of June 30, 2013

     $         38,507         $         33,057         $         28,685         $         31,775         $         132,024     
  

 

 

 

(1) Inflows represent limited partner capital raised by our carry funds and fund of funds vehicles and capital invested by our carry funds and fund of funds vehicles outside the investment period.

(2) Outflows represent limited partner distributions from our carry funds and fund of funds vehicles and changes in basis for our carry funds and fund of funds vehicles where the investment period has expired.

(3) Represents the net result of subscriptions to and redemptions from our hedge funds and open-end structured credit funds.

(4) Represents the change in the aggregate fee-earning collateral balances at par of our CLOs, as of the quarterly cut-off dates.

(5) Market Appreciation/(Depreciation) represents changes in the net asset value of our hedge funds and our fund of funds vehicles based on the lower of cost or fair value.

(6) Includes funds with fees based on gross asset value, onboarding of fully committed existing funds from another manager and represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end.

(7) Energy I, Energy II, Energy III, Energy IV, Renew I, and Renew II (collectively, the “Legacy Energy Funds”), are managed with Riverstone Holdings LLC and its affiliates. Affiliates of both Carlyle and Riverstone act as investment advisers to each of the Legacy Energy Funds. With the exception of Energy IV and Renew II, where Carlyle has a minority representation on the funds’ management committees, management of each of the Legacy Energy Funds is vested in committees with equal representation by Carlyle and Riverstone, and the consent of representatives of both Carlyle and Riverstone are required for investment decisions. As of June 30, 2013, the Legacy Energy Funds had, in the aggregate, approximately $13.7 billion in AUM and $8.9 billion in Fee-Earning AUM. NGP VII, NGP VIII, NGP IX, NGP X, or in the case of NGP M&R, NGP ETP I, NGP ETP II, and NGPC, certain affiliated entities (collectively, the “NGP management fee funds”), are managed by NGP Energy Capital Management. As of June 30, 2013, the NGP management fee funds had, in the aggregate, approximately $12.5 billion in AUM and $9.7 billion in Fee-Earning AUM.

 

Page  |  22


Corporate Private Equity and Real Assets Fund Performance (Unaudited)

The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group L.P. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group L.P. is not an investment in any of our funds. There can be no assurance that any of our existing or future funds will achieve similar returns.

 

              TOTAL INVESTMENTS   REALIZED/PARTIALLY REALIZED
INVESTMENTS (5)
     

 

 

 

 

 

              as of June 30, 2013   as of June 30, 2013
     

 

 

 

 

 

   

  Fund

 

  Inception

 

  Date (1)

 

Committed

 

Capital

   

  Cumulative

 

  Invested

 

  Capital (2)

   

Total Fair

 

Value (3)

   

MOIC

 

(4)

   

Gross

 

IRR (7)

   

Net

 

IRR (8)

 

 

  Cumulative

  Invested   
Capital (2)

   

Total Fair

 

Value (3)

   

MOIC

 

(4)

    Gross  
IRR (7)  
 

 

 

 

 

Corporate Private Equity       (Reported in Local Currency, in Millions)   (Reported in Local Currency, in Millions)

Fully Invested Funds (6)

                     

CP II

  10/1994   $ 1,331.1        $ 1,362.4      $ 4,071.5        3.0x        34%      25%     $ 1,362.4      $ 4,071.5        3.0x      34%

CP III

  2/2000   $ 3,912.7        $ 4,031.6      $ 10,146.3        2.5x        27%      21%     $ 4,031.6      $ 10,146.3        2.5x      27%

CP IV

  12/2004   $ 7,850.0        $ 7,612.6      $ 16,387.7        2.2x        16%      13%     $ 5,063.6      $ 12,297.8        2.4x      19%

CP V

  5/2007   $ 13,719.7        $ 12,152.0      $ 19,081.5        1.6x        18%      12%     $ 3,033.8      $ 7,114.4        2.3x      28%

CEP I

  12/1997   1,003.6        € 981.6      2,126.5        2.2x        18%      11%     € 981.6      2,126.5        2.2x      18%

CEP II

  9/2003   1,805.4        € 2,046.5      3,773.5        1.8x        38%      21%     € 1,230.8      3,052.3        2.5x      61%

CAP I

  12/1998   $ 750.0        $ 627.7      $ 2,491.0        4.0x        25%      18%     $ 627.7      $ 2,491.0        4.0x      25%

CAP II

  2/2006   $ 1,810.0        $ 1,626.1      $ 2,822.4        1.7x        12%      8%     $ 587.7      $ 1,759.4        3.0x      27%

CAP III

  5/2008   $ 2,551.6        $ 2,112.3      $ 2,584.9        1.2x        11%      5%     $ 373.5      $ 588.2        1.6x      17%

CJP I

  10/2001   ¥ 50,000.0        ¥ 47,291.4      ¥ 133,763.5        2.8x        61%      37%     ¥ 39,756.6      ¥ 130,976.9        3.3x      65%

CGFSP I

  9/2008   $ 1,100.2        $ 1,007.2      $ 1,379.0        1.4x        15%      9%     $ 184.3      $ 414.2        2.2x      26%

All Other Funds (9)

  Various       $ 3,395.3      $ 5,027.0        1.5x        17%      6%     $ 2,396.6      $ 4,129.2        1.7x      21%

Coinvestments and Other (10)

  Various       $ 7,412.8      $ 17,946.2        2.4x        36%      33%     $ 4,653.4      $ 14,438.6        3.1x      36%
     

 

 

 

 

 

Total Fully Invested Funds

        $ 45,754.3      $ 90,957.5        2.0x        27%      20%     $ 25,592.2      $ 65,504.6        2.6x      30%
     

 

 

 

 

 

Funds in the Investment Period (6)

                     

CP VI

  5/2012   $ 9,420.8        $ -            n/a        n/a        n/a      n/a        

CEP III

  12/2006   5,294.9        € 4,521.8      6,118.1        1.4x        10%      7%        

CAP IV

  11/2012   $ 1,132.3        $ -            n/a        n/a        n/a      n/a        

CJP II

  7/2006   ¥ 165,600.0        ¥ 135,239.7      ¥ 142,884.5        1.1x        2%      (3%)        

CAGP IV

  6/2008   $ 1,041.4        $ 568.4      $ 685.6        1.2x        10%      0%        

CEOF I

  5/2011   $ 1,119.1        $ 304.6      $ 372.6        1.2x        24%      8%        

All Other Funds (11)

  Various       $ 1,325.8      $ 1,623.4        1.2x        10%      1%        
     

 

 

 

 

 

Total Funds in the Investment Period

        $ 9,441.1      $ 12,076.9        1.3x        9%      5%     $ 1,266.8      $ 2,406.9        1.9x      20%
     

 

 

 

 

 

TOTAL CORPORATE PRIVATE EQUITY (12)

  

    $ 55,195.4      $ 103,034.5        1.9x        26%      18%     $ 26,859.0      $ 67,911.5        2.5x      30%
     

 

 

 

 

 

              TOTAL INVESTMENTS   REALIZED/PARTIALLY REALIZED
INVESTMENTS (5)
     

 

 

 

 

 

              as of June 30, 2013   as of June 30, 2013
     

 

 

 

 

 

   

  Fund

 

  Inception

 

  Date (1)

 

Committed

 

Capital

   

  Cumulative

 

  Invested

 

  Capital (2)

   

Total Fair

 

Value (3)

   

MOIC

 

(4)

   

Gross

 

IRR (7)

   

Net  

 

IRR (8)  

 

 

  Cumulative

  Invested
  Capital (2)

   

Total Fair

 

Value (3)

   

MOIC

 

(4)

   

Gross  

 

IRR (7)  

 

 

 

 

 

Real Assets             (Reported in Local Currency, in Millions)   (Reported in Local Currency, in Millions)

Fully Invested Funds (6)

                     

CRP III

  11/2000   $ 564.1        $ 522.5      $ 1,379.9        2.6x        44%      30%     $ 522.5      $ 1,379.9        2.6x      44%

CRP IV

  12/2004   $ 950.0        $ 1,186.2      $ 1,207.1        1.0x        0%      (3%)     $ 441.9      $ 467.7        1.1x      10%

CRP V

  11/2006   $ 3,000.0        $ 3,235.3      $ 4,464.4        1.4x        10%      7%     $ 2,078.2      $ 2,966.1        1.4x      13%

CEREP I

  3/2002   426.6        € 517.0      741.6        1.4x        13%      7%     € 441.2      753.4        1.7x      19%

CEREP II

  4/2005   762.7        € 826.9      115.9        0.1x        n/a      n/a     € 416.6      125.8        0.3x      n/a

CEREP III

  5/2007   2,229.5        € 1,821.0      1,870.1        1.0x        1%      (4%)     € 63.3      30.9        0.5x      (20%)

Energy II

  7/2002   $ 1,100.0        $ 1,334.8      $ 3,637.3        2.7x        81%      54%     $ 827.4      $ 3,377.8        4.1x      105%

Energy III

  10/2005   $ 3,800.0        $ 3,559.9      $ 6,783.2        1.9x        15%      11%     $ 1,545.4      $ 4,450.9        2.9x      28%

Energy IV

  12/2007   $ 5,979.1        $ 5,197.6      $ 8,203.8        1.6x        21%      14%     $ 1,710.6      $ 3,528.2        2.1x      31%

All Other Funds (13)

  Various       $ 2,289.6      $ 2,287.5        1.0x        0%      (6%)     $ 1,484.1      $ 1,702.9        1.1x      8%

Coinvestments and Other (10)

  Various       $ 4,257.3      $ 7,034.0        1.7x        20%      15%     $ 1,729.2      $ 3,851.2        2.2x      29%
     

 

 

 

 

 

Total Fully Invested Funds

        $ 25,699.4      $ 38,544.5        1.5x        16%      9%     $ 11,537.2      $ 22,908.3        2.0x      27%
     

 

 

 

 

 

Funds in the Investment Period (6)

                   

CRP VI

  9/2010   $ 2,340.0        $ 932.7      $ 1,246.7        1.3x        33%      16%        

CIP

  9/2006   $ 1,143.7        $ 855.5      $ 873.8        1.0x        1%      (4%)        

Renew II

  3/2008   $ 3,417.5        $ 2,718.9      $ 3,570.8        1.3x        12%      7%        

All Other Funds (14)

  Various       $ 204.3      $ 254.3        1.2x        29%      21%        
     

 

 

 

 

 

Total Funds in the Investment Period

        $ 4,711.4      $ 5,945.6        1.3x        11%      6%     $ 839.7      $ 904.3        1.1x      3%
     

 

 

 

 

 

TOTAL REAL ASSETS (12)

        $ 30,410.9      $ 44,490.1        1.5x        15%      9%     $ 12,376.8      $ 23,812.5        1.9x      27%
     

 

 

 

 

 

 

Page  |  23


Global Markets Strategies Carry Funds and Global Solutions (Unaudited)

 

              TOTAL INVESTMENTS
     

 

 

              as of June 30, 2013
   

  Fund

 

  Inception

 

  Date (1)

  Fund Size    

Cumulative

 

Invested Capital

 

(15)

   

Total Fair

 

Value (3)

    MOIC (4)   Gross IRR (7)   Net IRR (8)  
 

 

                             (Reported in Local Currency, in Millions)
Global Market Strategies              

CSP II

  6/2007   $ 1,352.3      $ 1,352.3      $ 2,429.2      1.8x   19%   13%

CEMOF I

  12/2010   $ 1,382.5      $ 481.7      $ 567.3      1.2x   29%   10%
              TOTAL INVESTMENTS
     

 

 

              as of June 30, 2013
     

 

 

   

  Vintage

 

  Year

  Fund Size    

Cumulative

 

Invested Capital

 

  (2)(18)

   

Total Fair

 

Value (3)(18)

    MOIC (4)   Gross IRR (7)   Net IRR (8)  
 

 

Global Solutions (16)                            (Reported in Local Currency, in Millions)

    Fully Committed Funds (17)

             

Main Fund I - Fund Investments

  2000   5,174.6        € 3,932.3      6,307.6      1.6x   12%   12%

Main Fund II - Fund Investments

  2003   4,545.0        € 4,424.2      6,411.3      1.4x   10%   9%

Main Fund III - Fund Investments

  2005         11,500.0        € 10,181.3      12,649.1      1.2x   7%   6%

Main Fund IV - Fund Investments

  2009   4,880.0        € 1,631.3      1,718.5      1.1x   4%   3%

Main Fund I - Secondary Investments

  2002   519.4        € 459.2      865.3      1.9x   55%   51%

Main Fund II - Secondary Investments

  2003   998.4        € 930.0      1,654.6      1.8x   28%   26%

Main Fund III - Secondary Investments

  2006   2,250.0        € 2,092.0      2,811.7      1.3x   10%   9%

Main Fund IV - Secondary Investments

  2010   1,856.4        € 1,642.0      2,200.4      1.3x   20%   19%

Main Fund II - Co-Investments

  2003   1,090.0        € 867.8      2,330.9      2.7x   45%   43%

Main Fund III - Co-Investments

  2006   2,760.0        € 2,469.0      3,077.4      1.2x   5%   4%

Main Fund IV - Co-Investments

  2010   1,475.0        € 1,244.0      1,723.9      1.4x   19%   17%

Main Fund II - Mezzanine Investments

  2004   700.0        € 706.6      951.5      1.3x   8%   7%

Main Fund III - Mezzanine Investments

  2006   2,000.0        € 1,408.8      1,797.7      1.3x   10%   8%

All Other Funds (19)

  Various       € 1,344.2      1,951.2      1.5x   18%   14%
     

 

 

    Total Fully Committed Funds

        € 33,332.6      46,451.1      1.4x   11%   11%
     

 

 

    Funds in the Commitment Period

             

Main Fund V - Fund Investments

  2012   4,830.4        € 67.8      59.0      0.9x   (47%)   (63%)

Main Fund V - Secondary Investments

  2011   2,665.3        € 615.1      814.6      1.3x   46%   42%

Main Fund V - Co-Investments

  2012   1,228.0        € 320.2      344.4      1.1x   20%   17%

All Other Funds (19)

  Various       € 129.0      149.4      1.2x   34%   22%
     

 

 

    Total Funds in the Commitment Period

        € 1,132.0      1,367.3      1.2x   38%   32%
     

 

 

TOTAL GLOBAL SOLUTIONS

        € 34,464.7      47,818.5      1.4x   12%   11%
     

 

 

TOTAL GLOBAL SOLUTIONS (USD) (20)

        $ 44,823.4      $ 62,190.7      1.4x    
     

 

 

   

 

Page  |  24


(1) The data presented herein that provides “inception to date” performance results of our segments relates to the period following the formation of the first fund within each segment. For our Corporate Private Equity segment our first fund was formed in 1990. For our Real Assets segment our first fund was formed in 1997. For our Global Market Strategies segment, CSP II and CEMOF I were formed in June 2007 and December 2010, respectively.

(2) Represents the original cost of all capital called for investments since inception of the fund.

(3) Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest.

(4) Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital.

(5) An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, represents at least 85% of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. We do not present Realized/Partially Realized performance information separately for funds that are still in the investment period because of the relatively insignificant level of realizations for funds of this type. However, to the extent such funds have had realizations, they are included in the Realized/Partially Realized performance information presented for Total Corporate Private Equity and Total Real Assets.

(6) Fully Invested funds are past the expiration date of the investment period as defined in the respective limited partnership agreement. In instances where a successor fund has had its first capital call, the predecessor fund is categorized as fully invested.

(7) Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value before management fees, expenses and carried interest.

(8) Net Internal Rate of Return (“Net IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest.

(9) Aggregate includes the following funds: CP I, CMG, CVP I, CVP II, CEVP, CETP I, CAVP I, CAVP II, CAGP III, CUSGF III and Mexico.

(10) Includes co-investments, prefund investments and certain other stand-alone investments arranged by us.

(11) Aggregate includes the following funds: MENA, CGFSP II, CSABF, CETP II, CBPF, CSSAF and CPF I.

(12) For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate.

(13) Aggregate includes the following funds: CRP I, CRP II, CAREP I, CAREP II, Energy I and Renew I.

(14) Aggregate includes the following fund: CRCP I.

(15) Represents the original cost of investments net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC.

(16) Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team. Excluded from the performance information shown are a) investments that were not originated by AlpInvest and b) Direct Investments, which was spun off from AlpInvest in 2005. As of June 30, 2013, these excluded investments represent $0.7 billion of AUM.

(17) Fully Committed funds are past the expiration date of the commitment period as defined in the respective limited partnership agreement.

(18) To exclude the impact of FX, all foreign currency cash flows have been converted to Euro at the reporting period spot rate.

(19) Aggregate includes Main Fund I - Co-Investments, Main Fund I - Mezzanine Investments, AlpInvest CleanTech Funds and funds which are not included as part of a main fund.

(20) Represents the U.S. dollar equivalent balance translated at the spot rate as of period end.

 

Page  |  25


Reconciliation for Economic Net Income and Distributable Earnings (Unaudited)

 

    Three Months Ended     Six Months Ended  
          June 30,      

 

2013

          June 30,      

 

2012

          June 30,      

 

2013

 
    (Dollars in millions)  

Income before provision for income taxes

    $ 285.9          $ 186.1          $ 738.3     

Adjustments:

     

Partner compensation

    -              5.6          -         

Equity-based compensation issued in conjunction with the IPO and strategic investments

    123.1          93.6          175.2     

Acquisition related charges and amortization of intangibles

    52.5          21.5          115.0     

Losses associated with debt refinancing activities

    -              -              1.9     

Other non-operating (income) expenses

    (3.3)         0.7          (5.7)    

Net income attributable to non-controlling interests in consolidated entities

    (300.0)         (357.9)         (468.0)    

Provision for income taxes attributable to non-controlling interests in consolidated entities

    (5.7)         (5.7)         (11.7)    

Severance and lease terminations

    3.5          1.7          4.0     

Other adjustments

    (0.2)         (2.8)         0.7     
 

 

 

   

 

 

   

 

 

 

Economic Net Income (Loss)

    $ 155.8          $ (57.2)         $ 549.7     
 

 

 

   

 

 

   

 

 

 

Net performance fees

    122.5          (106.7)         477.2     

Investment income

    6.9          14.0          9.9     
 

 

 

   

 

 

   

 

 

 

Fee Related Earnings

    $ 26.4          $ 35.5          $ 62.6     
 

 

 

   

 

 

   

 

 

 

Realized performance fees, net of related compensation

    117.8          75.8          259.3     

Investment income - realized

    14.6          4.0          5.3     

Equity-based compensation

    4.2          0.6          6.8     
 

 

 

   

 

 

   

 

 

 

Distributable Earnings

    $ 163.0          $ 115.9          $ 334.0     
 

 

 

   

 

 

   

 

 

 

Depreciation and amortization expense

    6.2          4.0          12.5     

Interest expense

    11.6          6.1          20.1     
 

 

 

   

 

 

   

 

 

 

Adjusted EBITDA

    $ 180.8          $ 126.0          $ 366.6     
 

 

 

   

 

 

   

 

 

 

 

 

 

 

 

 

Page  |  26


Reconciliation for Economic Net income and Distributable Earnings, cont.

(Unaudited)

 

 

         Three Months    
Ended
         Six Months    
Ended
 
             June 30,                      June 30,          
     2013      2013  
     (Dollars in millions, except unit and per unit amounts)  

Economic Net Income

     $                     155.8           $                     549.7     

Less: Provision for Income Taxes

     32.6           106.9     
  

 

 

    

 

 

 

Economic Net Income, After Taxes

     $ 123.2           $ 442.8     
  

 

 

    

 

 

 

Economic Net Income, After Taxes per Adjusted Unit(1)

     $ 0.39           $ 1.39     
  

 

 

    

 

 

 

Distributable Earnings

     $ 163.0           $ 334.0     

Less: Estimated foreign, state, and local taxes

     6.7           17.7     
  

 

 

    

 

 

 

Distributable Earnings, After Taxes

     $ 156.3           $ 316.3     
  

 

 

    

 

 

 

Distributable Earnings to The Carlyle Group L.P.

     $ 24.6           $ 49.7     

Less: Estimated current corporate income taxes (benefit) and TRA payments

     (1.2)          0.7     
  

 

 

    

 

 

 

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

     $ 25.8           $ 49.0     
  

 

 

    

 

 

 

Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding(2)

     $ 0.53           $ 1.00     
  

 

 

    

 

 

 

 

(1) Adjusted Units were determined as follows:

 

The Carlyle Group L.P. common units outstanding

     46,109,886             46,109,886     

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

                       262,873,250                               262,873,250     

Common units issued in August 2013 related to the AlpInvest acquisition

     2,887,970             2,887,970     

Dilutive effect of unvested deferred restricted common units

     3,997,956             4,700,069     

Contingently issuable Carlyle Holdings partnership units

     931,818             931,818     
  

 

 

       

 

 

 

Total Adjusted Units

     316,800,880             317,502,993     
  

 

 

       

 

 

 

 

(2) As of June 30, 2013, there are 46,109,886 outstanding common units of The Carlyle Group L.P. In August 2013, an additional 2,918,461 common units were issued that relate to the closing of the AlpInvest transaction and to vested deferred restricted common units. For purposes of this calculation, those common units have been added to the common units outstanding as of June 30, 2013, resulting in total common units of 49,028,347.

 

Page  |  27


GAAP for 12-Month Rolling Summary (Unaudited)

 

     Twelve Months Ended  
        June 30,  
2013
        June 30,  
2012
 
     (Dollars in millions)  

Revenues

     

Fund management fees

     $ 976.9         $ 942.6     

Performance fees

     

Realized

     966.2           1,209.8     

Unrealized

     556.0           (888.2)    
  

 

 

    

 

 

 

Total performance fees

     1,522.2           321.6     

Investment income (loss)

     

Realized

     23.2           23.9     

Unrealized

     (3.9)          21.0     
  

 

 

    

 

 

 

Total investment income (loss)

     19.3           44.9     

Interest and other income

     15.6           8.1     

Interest and other income of Consolidated Funds

     994.1           814.3     
  

 

 

    

 

 

 

Total revenues

     3,528.1           2,131.5     

Expenses

     

Compensation and benefits

     

Base compensation

     720.6           455.2     

Equity-based compensation

     285.8           94.2     

Performance fee related

     

Realized

     405.9           207.3     

Unrealized

     336.1           (223.0)    
  

 

 

    

 

 

 

Total compensation and benefits

     1,748.4           533.7     

General, administrative and other expenses

     414.0           354.4     

Interest

     30.1           44.4     

Interest and other expenses of Consolidated Funds

     845.9           626.2     

Other non-operating expenses

     4.8           8.0     
  

 

 

    

 

 

 

Total expenses

     3,043.2           1,566.7     

Other income

     

Net investment gains of Consolidated Funds

     1,001.4           1,212.4     

Gain on business acquisition

     -                7.9     
  

 

 

    

 

 

 

Income before provision for income taxes

     1,486.3           1,785.1     

Provision for income taxes

     59.6           38.0     
  

 

 

    

 

 

 

Net income

     1,426.7           1,747.1     

Net income attributable to non-controlling interests in consolidated entities

     1,001.9           1,211.3     
  

 

 

    

 

 

 

Net income attributable to Carlyle Holdings

     424.8           535.8     

Net income attributable to non-controlling interests in Carlyle Holdings

     363.7           546.1     
  

 

 

    

 

 

 

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

     $ 61.1           $ (10.3)    
  

 

 

    

 

 

 

 

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Reconciliation of Non-GAAP to GAAP for 12-Month Rolling Summary (Unaudited)

 

     Twelve Months Ended  
           June 30,                  June 30,        
     2013      2012  
     (Dollars in millions)  

Income before provision for income taxes

     $         1,486.3           $         1,785.1     

Adjustments:

     

Partner compensation

     -               (367.5)    

Equity-based compensation issued in conjunction with the IPO and strategic investments

     281.7           93.6     

Acquisition related charges and amortization of intangibles

     197.7           102.6     

Losses associated with debt refinancing activities

     1.9           -         

Gain on business acquisition

     -               (7.9)    

Other non-operating expenses

     4.8           8.0     

Net income attributable to non-controlling interests in consolidated entities

     (1,001.9)          (1,211.3)    

Provision for income taxes attributable to non-controlling interests in consolidated entities

     (25.5)          (5.7)    

Severance and lease terminations

     5.8           4.3     

Other adjustments

     (0.4)          (3.4)    
  

 

 

    

 

 

 

Economic Net Income

     $ 950.4           $ 397.8     
  

 

 

    

 

 

 

Net performance fees

     773.7           227.6     

Investment income

     14.1           50.3     
  

 

 

    

 

 

 

Fee Related Earnings

     $ 162.6           $ 119.9     
  

 

 

    

 

 

 

Realized performance fees, net of related compensation

     542.9           629.1     

Investment income - realized

     15.5           36.3     

Equity-based compensation

     8.0           0.6     
  

 

 

    

 

 

 

Distributable Earnings

     $ 729.0           $ 785.9     
  

 

 

    

 

 

 

Depreciation and amortization expense

     24.8           19.2     

Interest expense

     28.7           43.8     
  

 

 

    

 

 

 

Adjusted EBITDA

     $ 782.5           $ 848.9     
  

 

 

    

 

 

 

 

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The Carlyle Group L.P.

GAAP Balance Sheet (Unaudited)

 

     As of June 30, 2013  
     Consolidated
Operating
Entities
     Consolidated
Funds
     Eliminations      Consolidated  
     (Dollars in millions)  

Assets

           

Cash and cash equivalents

     $         572.9           $         -               $         -               $         572.9     

Cash and cash equivalents held at Consolidated Funds

     -               2,205.5           -               2,205.5     

Restricted cash

     41.0           -               -               41.0     

Restricted cash and securities of Consolidated Funds

     -               29.2           -               29.2     

Accrued performance fees

     2,680.8           -               (33.9)          2,646.9     

Investments

     892.5           -               (81.3)          811.2     

Investments of Consolidated Funds

     -               26,068.1           -               26,068.1     

Due from affiliates and other receivables, net

     195.8           -               (10.9)          184.9     

Due from affiliates and other receivables of Consolidated Funds, net

     -               431.6           -               431.6     

Fixed assets, net

     62.7           -               -               62.7     

Deposits and other

     44.2           3.7           -               47.9     

Intangible assets, net

     624.6           -               -               624.6     

Deferred tax assets

     60.7           -               -               60.7     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total assets

     $ 5,175.2           $ 28,738.1           $ (126.1)          $ 33,787.2     
  

 

 

    

 

 

    

 

 

    

 

 

 

Liabilities and partners’ capital

           

Loans payable

     $ 25.0           $ -               $ -               $ 25.0     

3.875% Senior Notes due 2023

     499.8           -               -               499.8     

5.625% Senior Notes due 2043

     398.4           -               -               398.4     

Loans payable of Consolidated Funds

     -               15,089.3           (69.5)          15,019.8     

Accounts payable, accrued expenses and other liabilities

     223.7           -               -               223.7     

Accrued compensation and benefits

     1,554.0           -               -               1,554.0     

Due to affiliates

     282.9           59.4           (0.5)          341.8     

Deferred revenue

     55.6           1.5           -               57.1     

Deferred tax liabilities

     78.2           -               -               78.2     

Other liabilities of Consolidated Funds

     -               1,781.8           (51.6)          1,730.2     

Accrued giveback obligations

     59.3           -               (9.7)          49.6     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities

     3,176.9           16,932.0           (131.3)          19,977.6     

Redeemable non-controlling interests in consolidated entities

     7.1           3,934.4           -               3,941.5     

Total partners’ capital

     1,991.2           7,871.7           5.2           9,868.1     
  

 

 

    

 

 

    

 

 

    

 

 

 

Total liabilities and partners’ capital

     $ 5,175.2           $ 28,738.1           $ (126.1)          $ 33,787.2     
  

 

 

    

 

 

    

 

 

    

 

 

 

 

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The Carlyle Group L.P.

Non-GAAP Financial Information and Other Key Terms

Non-GAAP Financial Information

Carlyle discloses in this press release the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America:

 

   

Economic net income or “ENI,” represents segment net income which excludes the impact of income taxes, acquisition-related items including amortization of acquired intangibles and contingent consideration taking the form of earn-outs, charges associated with equity-based compensation issued in Carlyle’s initial public offering or in acquisitions or strategic investments, corporate actions and infrequently occurring or unusual events. Carlyle believes the exclusion of these items provides investors with a meaningful indication of its core operating performance. For segment reporting purposes, revenues and expenses, and accordingly segment net income, are presented on a basis that deconsolidates certain Carlyle funds, related co-investment entities and CLOs (referred to collectively as the “Consolidated Funds”) that Carlyle consolidates in its consolidated financial statements pursuant to U.S. GAAP. For periods prior to its Initial Public Offering, ENI also reflects pro forma compensation expense for compensation to senior Carlyle professionals, which Carlyle has accounted for as distributions from equity rather than as employee compensation for periods prior to its Initial Public Offering. Total Segment ENI equals the aggregate of ENI for all segments. ENI is evaluated regularly by management in making resource deployment decisions and in assessing performance of Carlyle’s four segments and for compensation. Carlyle believes that reporting ENI is helpful to understanding its business and that investors should review the same supplemental financial measure that management uses to analyze its segment performance.

 

   

Fee-Related Earnings is a component of ENI and is used to measure Carlyle’s operating profitability exclusive of performance fees, investment income from investments in Carlyle’s funds and performance Fee Related compensation. Accordingly, Fee-Related Earnings reflect the ability of the business to cover direct base compensation and operating expenses from fee revenues other than performance fees. For periods prior to its Initial Public Offering, Fee-Related Earnings also reflects pro forma compensation expense for compensation to senior Carlyle professionals, which Carlyle has accounted for as distributions from equity rather than as employee compensation for periods prior to its Initial Public Offering. Fee-Related Earnings are reported as part of Carlyle’s segment results. Carlyle uses Fee-Related Earnings from operations to measure its profitability from fund management fees.

 

   

Distributable Earnings is a component of ENI representing total ENI less net performance fees and investment income plus realized net performance fees and realized investment income and excluding equity-based compensation. Distributable Earnings is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. Distributable Earnings is derived from Carlyle’s segment reported results and is an additional measure to assess performance and amounts potentially available for distribution from Carlyle Holdings to its equity holders.

 

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Adjusted EBITDA is a component of ENI and is used to measure Carlyle’s ability to cover recurring operating expenses from cash earnings. Adjusted EBITDA is computed as ENI excluding unrealized performance fees, unrealized performance fee compensation, unrealized investment income, depreciation and amortization expense, interest expense and equity-based compensation.

Income before provision for income taxes is the GAAP financial measure most comparable to ENI, Fee-Related Earnings, Distributable Earnings, and Adjusted EBITDA. Reconciliations of these non-GAAP financial measures to income before provision for income taxes are included within this press release. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with U.S. GAAP.

Other Key Terms

Assets under management” or “AUM” refers to the assets managed by Carlyle. AUM equals the sum of the following:

(a) the fair value of the capital invested in Carlyle carry funds, co-investment vehicles, NGP management fee funds and fund of funds vehicles plus the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital commitments to those funds and vehicles;

(b) the amount of aggregate collateral balance and principal cash at par of our CLOs (inclusive of all positions) and the reference portfolio notional amount of our synthetic CLOs;

(c) the net asset value (pre-redemptions and subscriptions) of Carlyle’s long/short credit, emerging markets, multi-product macroeconomic and other hedge funds and certain structured credit funds; and

(d) the gross assets (including assets acquired with leverage) of our Business Development Company.

AUM includes certain energy and renewable resources funds that Carlyle jointly advises with Riverstone Holdings L.L.C. (“Riverstone”) and certain NGP management fee funds advised by NGP Energy Capital Management. In addition, Carlyle’s calculation of AUM (but not Fee-Earning AUM) includes uncalled commitments to, and the fair value of invested capital in, investment funds from Carlyle and its personnel, regardless of whether such commitments or invested capital are subject to management or performance fees.

Available capital,” commonly known as “dry powder,” for Carlyle’s carry funds and NGP management fee funds refers to the amount of capital commitments available to be called for investments. Amounts previously called may be added back to available capital following certain distributions.

 

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Carlyle funds,” “our funds” and “our investment funds” refer to the investment funds and vehicles advised by Carlyle.

Carry funds” refers to those investment funds that Carlyle advises, including the buyout funds, growth capital funds, real estate funds, infrastructure funds, certain energy funds and distressed debt and mezzanine funds (but excluding Carlyle’s structured credit funds, hedge funds and fund of funds vehicles as well as the NGP management fee funds), where Carlyle receives a special residual allocation of income, which is referred to as a “carried interest,” in the event that specified investment returns are achieved by the fund.

Expired available capital” occurs when a fund has passed the investment and follow-on periods and can no longer invest capital into new or existing deals. Any remaining available capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that are not drawn, can only be called for fees and expenses and is therefore removed from the total AUM calculation.

Fee-Earning assets under management” or “Fee-Earning AUM” refers to the assets managed by Carlyle from which Carlyle derives recurring fund management fees. Fee-Earning AUM generally equals the sum of:

(a) for carry funds and certain co-investment vehicles where the investment period has not expired, the amount of limited partner capital commitments, for fund of funds vehicles, the amount of external investor capital commitments during the commitment period, and for NGP management fee funds, the amount of investor capital commitments before the first investment realization;

(b) for substantially all carry funds and certain co-investment vehicles where the investment period has expired, the remaining amount of limited partner invested capital and for NGP management fee funds where the first investment has been realized, the amount of partner commitments less realized and written-off investments;

(c) the amount of aggregate Fee-Earning collateral balance at par of our collateralized loan obligations (“CLOs”), as defined in the fund indentures (typically exclusive of equities and defaulted positions) as of the quarterly cut-off date for each CLO, and the reference portfolio notional amount of our synthetic collateralized loan obligations (“synthetic CLOs”);

(d) the external investor portion of the net asset value (pre-redemptions and subscriptions) of our long/short credit, emerging markets, multi-product macroeconomic and other hedge funds and certain structured credit funds; and

(e) for fund of funds vehicles where the commitment fee period has expired and certain carry funds where the investment period has expired, the lower of cost or fair value of invested capital.

 

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Fee-Earning AUM includes certain energy and renewable resources funds that Carlyle jointly advises with Riverstone and certain NGP management fee funds advised by NGP Energy Capital Management.

For Carlyle’s carry funds, co-investment vehicles, NGP management fee funds and fund of funds vehicles, total AUM includes the fair value of the capital invested, whereas Fee-Earning AUM includes the amount of capital commitments or the remaining amount of invested capital at cost, depending on whether the investment period for the fund has expired. As such, Fee-Earning AUM may be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments.

Fund of funds vehicles” refer to those funds, accounts and vehicles advised by AlpInvest Partners B.V., formerly known as AlpInvest Partners N.V.

NGP management fee funds” refers to those funds advised by NGP Energy Capital Management. In December 2012, Carlyle acquired an equity interest in NGP Energy Capital Management that entitles Carlyle to an allocation of income equal to 47.5% of the management Fee Related revenues of the NGP Energy Capital Management entities that serve as the advisors to certain private equity funds.

Net performance fees” refers to the performance fees from Carlyle funds and fund of funds vehicles net of the portion allocated to Carlyle investment professionals which is reflected as performance fee related compensation expense.

Performance fees” consist principally of carried interest from carry funds and fund of funds vehicles and incentive fees or allocations from certain of our Global Market Strategies funds. Carlyle is generally entitled to a 20% allocation (or 1.8% to 10% in the case of most of the fund of funds vehicles) of the net realized income or gain as a carried interest after returning the invested capital, the allocation of preferred returns of generally 8% to 9% and the return of certain fund costs (subject to catch-up provisions as set forth in the fund limited partnership agreement). Carried interest revenue, which is a component of performance fees in Carlyle’s consolidated financial statements, is recognized by Carlyle upon appreciation of the valuation of the applicable funds’ investments above certain return hurdles as set forth in each respective partnership agreement and is based on the amount that would be due to Carlyle pursuant to the fund partnership agreement at each period end as if the funds were liquidated at such date.

 

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Realized net performance fees” refers to the realized performance fees from Carlyle funds and fund of funds vehicles net of the portion allocated to Carlyle investment professionals which is reflected as realized performance fee related compensation expense.

 

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