SEC Filing | The Carlyle Group

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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K/A

Amendment No. 2

(Mark One)


☒			ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE FISCAL YEAR ENDED DECEMBER 31, 2022


☐			TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE TRANSITION PERIOD FROM TO

Commission File Number: 001-35538

The Carlyle Group Inc.

(Exact name of registrant as specified in its charter)


Delaware						45-2832612
(State or other jurisdiction of incorporation or organization)						(I.R.S. Employer Identification No.)

1001 Pennsylvania Avenue, NW

Washington, DC, 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)

Securities registered pursuant to Section 12(b) of the Act:


Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock	CG	The Nasdaq Global Select Market
4.625% Subordinated Notes due 2061 of Carlyle Finance L.L.C.	CGABL	The Nasdaq Global Select Market

Securities registered pursuant to Section 12(g) of the Act: None

Indicate by check mark if the Registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ý No ¨

Indicate by check mark if the Registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No ý

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ý No ¨

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ý No ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act

Large accelerated filer

☒

Accelerated filer

☐

Non-accelerated filer

☐

Smaller reporting company

☐

Emerging growth company

☐

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨

Indicate by check mark whether the registrant has filed a report on and attestation to its management’s assessment of the effectiveness of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered public accounting firm that prepared or issued its audit report. ☒

If securities are registered pursuant to Section 12(b) of the Act, indicate by check mark whether the financial statements of the registrant included in the filing reflect the correction of an error to previously issued financial statements. ☐

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation received by any of the registrant’s executive oﬃcers during the relevant recovery period pursuant to §240.10D-1(b). ☐

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes ☐ No ý

The aggregate market value of the common stock of the Registrant held by non-affiliates as of June 30, 2022 was $8,088,355,343.

The number of the Registrant’s shares of common stock outstanding as of February 8, 2023 was 364,219,014.

DOCUMENTS INCORPORATED BY REFERENCE

Portions of the Registrant’s definitive proxy statement relating to its 2023 annual meeting of the shareholders (the “2023 Proxy Statement”) are incorporated by reference into Part III of this Annual Report on Form 10-K where indicated. The 2023 Proxy Statement will be filed with the U.S. Securities and Exchange Commission within 120 days after the end of the fiscal year to which this report relates.

EXPLANATORY NOTE

The Carlyle Group Inc., a Delaware corporation, together with its subsidiaries, where applicable, the “Company,” which may also be referred to as “we,” “us” or “our,” filed its Annual Report on Form 10-K for the fiscal year ended December 31, 2022 on February 9, 2023 (the “Original Form 10-K”), which was amended by Amendment No. 1 to the Original Form 10-K filed on March 22, 2023 (“Amendment No. 1” and, together with the Original Form 10-K, the “Form 10-K”). The Company is filing this Amendment No. 2 on Form 10-K/A (“Amendment No. 2”) solely to amend Part II, Item 8, “Report of Independent Registered Public Accounting Firm” of the Form 10-K to correct a typographical error in the Edgarized version of Ernst & Young LLP’s (“EY”) financial statement audit opinion. The Edgarized version of the audit opinion inadvertently omitted the following statement in the description of how EY addressed the Critical Accounting Matter related to the measurement of principal equity method investments, including accrued performance allocations: “For some of the selected fund investments, we independently developed fair value estimates, with the support of valuation specialists, using investee and market information and compared them to the funds’ fair value estimates.”

Pursuant to Rule 12b-15 promulgated under the Securities Exchange Act, as amended (the “Exchange Act”), we have included the entire text of Item 8 of the Form 10-K in this Amendment No. 2. However, there have been no changes made to the text of such item other than the changes stated in the immediately preceding paragraph. As required by Rule 12b-15 under the Exchange Act, new certifications by our principal executive officer and principal financial officer are being filed as Exhibits 31.5, 31.6, 32.5 and 32.6 to this Amendment No. 2. A new consent of EY also is being filed as Exhibit 23.3.

Except as otherwise expressly noted, this Amendment No. 2 does not modify or update in any way (i) the consolidated financial position, the results of operations or cash flows of the Company, or (ii) the disclosures in or exhibits to the Form 10-K; nor does it reflect events occurring after the filing of the Form 10-K. Among other things, forward-looking statements made in the Form 10-K have not been revised to reflect events that occurred or facts that became known to us after the filing of the Form 10-K, and such forward-looking statements should be read in their historical context. Furthermore, this Amendment No. 2 should be read in conjunction with the Form 10-K and any subsequent filings with the U.S. Securities and Exchange Commission.

ITEM 8. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of The Carlyle Group Inc.

Opinion on the Financial Statements

We have audited the accompanying consolidated balance sheets of The Carlyle Group Inc. (the Company) as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes (collectively referred to as the “consolidated financial statements”). In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company at December 31, 2022 and 2021, and the results of its operations and its cash flows for each of the three years in the period ended December 31, 2022, in conformity with U.S. generally accepted accounting principles.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the Company's internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) and our report dated February 9, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion.

Critical Audit Matter

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that: (1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments. The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Measurement of principal equity method investments, including accrued performance allocations


Description of the matter			At December 31, 2022, the carrying value of the Company’s investments totaled approximately $10.8 billion and included principal equity method investments in sponsored unconsolidated funds (collectively, the “funds” or each, a “fund”) of approximately $3.7 billion and accrued performance allocations of approximately $7.1 billion. As discussed in Notes 3 and 6 to the consolidated financial statements, a significant input to the measurement of the Company’s principal equity method investments in the funds, including accrued performance allocations, is management’s estimate of the fair value of the investments held by each fund. Management estimates the fair value of the funds’ investments, including investments in the equity of private operating companies, real estate properties and certain debt positions, by applying the methodologies outlined in Notes 3 and 6 and using significant unobservable inputs and assumptions. Auditing management’s estimates of the fair value of the funds’ investments, valued using significant unobservable inputs and assumptions, was complex and highly judgmental because these investments exhibit higher estimation uncertainty.
How we addressed the matter in our audit			We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the funds’ investment valuation process. This included management's review controls over the assessment of the methodologies, significant inputs and assumptions included in the fair value estimates, as well as management’s review around the completeness, accuracy and reasonableness of the data used in these estimates. Our audit procedures related to valuations using significant unobservable inputs included, among others, assessing whether the valuation methodologies used were appropriate and testing the mathematical accuracy of the valuation models. For a sample of investments, we obtained management’s valuation models and compared objective inputs used in the models to agreements or underlying source documents provided by the Company. We also assessed the appropriateness of the unobservable inputs and assumptions used in the fair value estimates by comparing them to underlying support or available market data and evaluating the appropriateness of any significant adjustments. Our procedures varied based on the nature of the fund investment selected for testing. For example, for certain investments in the equity of private operating companies, we assessed the appropriateness of management’s determination of public market comparable companies and similar transactions. For these selected investments, we also evaluated significant adjustments applied to the selected earnings before interest, taxes, depreciation and amortization (EBITDA) multiple or discount rate derived from the comparable companies by considering investee specific and relevant market information. For some of the selected fund investments, we independently developed fair value estimates, with the support of valuation specialists, using investee and market information and compared them to the funds’ fair value estimates. For a sample of investments that were sold during the year, we performed procedures to assess the historical reasonableness of management’s estimates. We also reviewed management’s assessment of subsequent events and transactions and considered whether they corroborated or contradicted the year-end estimates.

/s/ Ernst & Young LLP

We have served as the Company’s auditor since 2002.

Tysons, VA

February 9, 2023

Report of Independent Registered Public Accounting Firm

To the Shareholders and Board of Directors of The Carlyle Group Inc.

Opinion on Internal Control over Financial Reporting

We have audited The Carlyle Group Inc.’s internal control over financial reporting as of December 31, 2022, based on criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework) (the COSO criteria). In our opinion, The Carlyle Group Inc. (the Company) maintained, in all material respects, effective internal control over financial reporting as of December 31, 2022, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States) (PCAOB), the consolidated balance sheets of the Company as of December 31, 2022 and 2021, the related consolidated statements of operations, comprehensive income, changes in equity, and cash flows for each of the three years in the period ended December 31, 2022, and the related notes and our report dated February 9, 2023 expressed an unqualified opinion thereon.

Basis for Opinion

The Company’s management is responsible for maintaining effective internal control over financial reporting and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Management’s Report on Internal Control Over Financial Reporting. Our responsibility is to express an opinion on the Company’s internal control over financial reporting based on our audit. We are a public accounting firm registered with the PCAOB and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects.

Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

Definition and Limitations of Internal Control Over Financial Reporting

A company’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A company’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the company; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the company’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

/s/ Ernst & Young LLP

Tysons, VA

February 9, 2023

The Carlyle Group Inc.

Consolidated Balance Sheets

(Dollars in millions)


	December 31,
	2022		2021
Assets
Cash and cash equivalents	$	1,360.7	$	2,469.5
Cash and cash equivalents held at Consolidated Funds	209.0		147.8
Restricted cash	0.8		5.6

Corporate treasury investments	20.0		—

Investments, including accrued performance allocations of $7,117.7 and $8,133.0 as of December 31, 2022 and 2021, respectively	10,767.9		10,832.0
Investments of Consolidated Funds	6,894.4		6,661.0
Due from affiliates and other receivables, net	579.4		379.6
Due from affiliates and other receivables of Consolidated Funds, net	101.9		138.8

Fixed assets, net	139.9		143.9
Lease right-of-use assets, net	337.0		361.1
Deposits and other	78.4		61.7

Intangible assets, net	897.8		34.9
Deferred tax assets	15.8		14.5
Total assets	$	21,403.0	$	21,250.4
Liabilities and equity
Debt obligations	$	2,271.7	$	2,071.6
Loans payable of Consolidated Funds	5,905.2		5,890.0

Accounts payable, accrued expenses and other liabilities	369.2		379.7
Accrued compensation and benefits	4,320.9		4,955.0
Due to affiliates	362.5		388.1
Deferred revenue	126.4		120.8
Deferred tax liabilities	402.7		487.1
Other liabilities of Consolidated Funds	279.3		683.9

Lease liabilities	502.9		537.8
Accrued giveback obligations	40.9		30.2

Total liabilities	14,581.7		15,544.2
Commitments and contingencies



Common stock, $0.01 par value, 100,000,000,000 shares authorized (362,298,650 and 355,367,876 shares issued and outstanding as of December 31, 2022 and December 31, 2021, respectively)	3.6		3.6
Additional paid-in capital	3,138.5		2,717.6
Retained earnings	3,401.1		2,805.3
Accumulated other comprehensive loss	(322.2)		(247.5)

Non-controlling interests in consolidated entities	600.3		427.2

Total equity	6,821.3		5,706.2
Total liabilities and equity	$	21,403.0	$	21,250.4

See accompanying notes.

The Carlyle Group Inc.

Consolidated Statements of Operations

(Dollars in millions, except share and per share data)


	Year Ended December 31,
	2022		2021		2020
Revenues
Fund management fees	$	2,030.1	$	1,667.5	$	1,486.0
Incentive fees	63.7		48.8		37.0
Investment income
Performance allocations	1,327.5		6,084.6		1,635.9


Principal investment income (loss)	570.5		637.3		(540.7)


Total investment income	1,898.0		6,721.9		1,095.2
Interest and other income	135.9		90.7		89.6
Interest and other income of Consolidated Funds	311.0		253.2		226.8

Total revenues	4,438.7		8,782.1		2,934.6
Expenses
Compensation and benefits
Cash-based compensation and benefits	1,052.0		908.0		849.6
Equity-based compensation	154.0		163.1		105.0
Performance allocations and incentive fee related compensation	719.9		2,961.0		779.1


Total compensation and benefits	1,925.9		4,032.1		1,733.7
General, administrative and other expenses	575.8		431.7		349.3
Interest	110.4		113.3		94.0
Interest and other expenses of Consolidated Funds	211.6		178.5		163.5

Other non-operating expenses (income)	1.0		1.5		(7.2)
Total expenses	2,824.7		4,757.1		2,333.3
Other income (loss)
Net investment gains (losses) of Consolidated Funds	(41.5)		2.5		(21.3)
Income before provision for income taxes	1,572.5		4,027.5		580.0
Provision for income taxes	287.8		982.3		197.2
Net income	1,284.7		3,045.2		382.8
Net income attributable to non-controlling interests in consolidated entities	59.7		70.5		34.6





Net income attributable to The Carlyle Group Inc. Common Stockholders	$	1,225.0	$	2,974.7	$	348.2
Net income attributable to The Carlyle Group Inc. per common share (see Note 14)
Basic	$	3.39	$	8.37	$	0.99
Diluted	$	3.35	$	8.20	$	0.97
Weighted-average common shares
Basic	361,278,064		355,241,653		350,464,315
Diluted	365,707,722		362,574,564		358,393,802

Substantially all revenue is earned from affiliates of the Company. See accompanying notes.

The Carlyle Group Inc.

Consolidated Statements of Comprehensive Income

(Dollars in millions)


	Year Ended December 31,
	2022		2021		2020
Net income	$	1,284.7	$	3,045.2	$	382.8
Other comprehensive income (loss), net of tax
Foreign currency translation adjustments, net of income tax (benefit) expense of $(16.0), $1.2 and $(33.5) for the years ended December 31, 2022, 2021 and 2020, respectively	(107.8)		(56.3)		49.6
Unrealized losses on Fortitude available-for-sale securities, net of income tax benefit of $(5.3) for the year ended December 31, 2020	—		—		(20.0)



Defined benefit plans, net
Unrealized net income (loss) for the period, net of income tax (benefit) expense of $4.6, $2.9 and $(2.3) for the years ended December 31, 2022, 2021 and 2020, respectively	14.5		9.5		(9.0)
Less: reclassification adjustment for unrecognized gain during the period included in base compensation expense, net of income tax (benefit) expense of $0.3, $0.7 and $0.6 for the years ended December 31, 2022, 2021 and 2020, respectively	1.0		2.1		1.8
Other comprehensive income (loss)	(92.3)		(44.7)		22.4
Comprehensive income	1,192.4		3,000.5		405.2

Comprehensive income attributable to non-controlling interests in consolidated entities	42.1		64.6		37.6



Comprehensive income attributable to The Carlyle Group Inc.	$	1,150.3	$	2,935.9	$	367.6

See accompanying notes.

The Carlyle Group Inc.

Consolidated Statements of Changes in Equity

(Dollars and shares in millions)

Common
Units

Common Shares

Partners’
Capital

Common Stock

Additional Paid-in Capital

Retained Earnings (Deficit)

Accumulated
Other
Comprehensive
Income (Loss)

Non-controlling Interests in Consolidated Entities

Non-
controlling
Interests in
Carlyle
Holdings

Total
Equity