Second Quarter Distribution
The Board of Directors has declared a quarterly distribution of $0.11 to common unit holders of record at the close of business on August 20, 2012, payable on August 31, 2012. The $0.11 per common unit distribution is a prorated amount based on the pricing of The Carlyle Group L.P.’s initial public offering, which occurred on May 2, 2012.
Carlyle intends to distribute $0.16 per quarter to common unit holders in each of the first three quarters of the calendar year, with a catch-up distribution announced with its fourth quarter earnings release. As noted in Carlyle’s Registration Statement on Form S-1, Carlyle intends to make the year-end catch up distribution in an amount that, taken together with the other quarterly distributions, represents substantially all of its 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 total Distributable Earnings for that year. The declaration and payment of any distribution is at the sole discretion of the General Partner, which may change the distribution policy at any time.
The Carlyle EngineCarlyle evaluates the performance of its business on four key metrics, known as the Carlyle engine (capital raised, equity invested, fund valuations and proceeds realized for fund investors). The table below highlights the results of those metrics for 2Q 2012, as well as on a year-to-date (YTD) and last twelve months (LTM) basis.
|Funds Raised||Equity Invested|
|2Q||$3.9 billion||2Q||$1.4 billion|
|YTD: $6.0 bn||LTM: $10.3 bn||YTD: $2.9 bn||LTM: $7.9 bn|
|Realized Proceeds||Carry Fund Returns|
|YTD: $6.8 bn||LTM: $13.2 bn||YTD: 8%||LTM: 9%|
|Segment||Realized Proceeds||Equity Invested|
|# ofInvestments||# of Funds||$ mn||# ofInvestments||# of Funds||$ mn|
|2Q||Corporate Private Equity||34||14||$1,514||13||8||$256|
|Global Market Strategies||33||6||$32||7||2||$116|
|YTD||Corporate Private Equity||56||19||$3,698||25||12||$928|
|Global Market Strategies||42||6||$462||11||4||$206|
|Note: columns may not sum as some investments cross segment lines but are only counted one time for Carlyle results.|
Distributable Earnings (DE): $115 million
- On a pro-forma basis, pre-tax Distributable Earnings of $117 million and $0.32 per unit on a post-tax basis, compared to $189 million and $0.57 per unit, respectively, in 1Q 2012, taking into consideration changes related to the Initial Public Offering, which priced on May 2, 2012.
- Fee-Related Earnings of $36 million increased 16% from $31 million in 2Q 2011 as fund management fees revenue increased while direct compensation increased at a slower pace.
- Net Realized Performance Fees of $76 million increased 43% from $53 million in 2Q 2011, and were positively impacted by public equity exits in Kinder Morgan and Triumph Group. Some of the proceeds returned to fund investors during 2Q 2012 were in funds not currently realizing performance fees.
- Realized Investment Income of $4 million was down from $6 million in 2Q 2011.
Economic Net Income/(Loss) (ENI): ($57) million
- On a pro forma basis, Carlyle generated a pre-tax ENI loss of ($59) million, or a loss per unit of ($0.19) on a post-tax basis, compared with ENI of $401 million, or $1.10 per unit in 1Q 2012, adjusting for the impact of our IPO.
- Economic Net Income was negatively impacted by 2% depreciation in Carlyle’s carry fund portfolio, which excludes CLOs, hedge funds and Fund of Funds Solutions Vehicles, during 2Q 2012, with increases in Real Estate and Global Market Strategies funds, offset by decreases in Energy and Buyout funds.
- Net performance fees of ($107) million were lower compared to $191 million in 2Q 2011. Year-to-date, net performance fee revenue of $228 million was 64% lower than the comparable 2011 period due to a net increase in our carry funds of 8% YTD 2012.
- In general, the private portfolio was relatively flat while the public portfolio was down 10% in 2Q 2012.
- As a result, Corporate Private Equity Funds and Energy Funds, which have a greater public company composition, experienced larger declines in valuation as compared to those funds with a greater percentage of investments in private companies.
|Carlyle Group - All Segments||Period||LTM||% Change|
|$ in millions, except where noted||2Q2011||3Q2011||4Q2011||1Q2012||2Q2012||3Q11 - 2Q12||QoQ||YoY||YTD|
|Economic Net Income||237||(191)||254||392||(57)||398||(115%)||(124%)||(57%)|
|Net Performance Fees||191||(223)||223||335||(107)||228||(132%)||(156%)||(64%)|
|Net Realized Performance Fees||53||194||216||143||76||629||(47%)||43%||(18%)|
|Total Assets Under Management ($ billion)||108.0||148.6||147.0||159.2||156.2||(2%)||45%|
|Fee-Earning Assets Under Management ($ billion)||80.3||112.6||111.0||117.0||112.0||(4%)||39%|
|Note: Totals may not sum due to rounding.|
Total Assets Under Management: $156.2 billion
- Changes versus 1Q 2012: Net Distributions (-$4.8 billion), Foreign Exchange impact (-$2.0 billion), new capital commitments (+$2.7 billion), hedge fund subscriptions (+$659 million), and market appreciation (+$557 million). Strong market appreciation recorded for Fund of Funds owes to its standard one quarter lag on reporting market appreciation.
- Increases versus 2Q 2011 were primarily due to acquisitions over the past 12 months.
- Dry Powder: $40.0 billion: CPE ($15.3 billion), Global Market Strategies ($1.3 billion), Real Assets ($7.1 billion), and Fund of Funds Solutions ($16.4 billion).
Fee-Earning Assets Under Management: $112.0 billion
- Changes versus 1Q 2012: Net Distributions and Outflows (-$5.8 billion), foreign exchange impact (-$2.1 billion), fee earning asset inflows (+$1.6 billion), and hedge fund subscriptions (+$654 million).
- Increases versus 2Q 2011 were primarily due to acquisitions over the past 12 months.
- New funds raised in Carlyle Partners VI will not increase Fee-Earning AUM until the predecessor fund (Carlyle Partners V) is substantially invested.
Remaining Fair Value of Capital (carry funds only): $62 billion
- Changes versus 1Q 2012: Equity invested (+$1.4 billion), Distributions (-$4.2 billion), and Market Depreciation (-2%).
- The current MOIC of remaining fair value of capital is 1.25x.
- 55% of remaining fair value of capital in the ground is in investments made in 2008 or earlier.
- The AUM in-carry ratio as of the second quarter end was 65%.
- In addition, Carlyle and its partners manage $9.6 billion in hedge fund net assets.
|Pro Forma Operating Results|
|On a pro forma basis, taking into consideration changes related to the IPO, Carlyle’s non-GAAP results for 2Q 2012 are provided in the table below:|
|Carlyle Group Pro Forma Summary $ in millions, except per unit amounts|
|Economic Net income||Second Quarter 2012|
|Economic Net Income (pre-tax)||$||(58.9||)|
|Less (Add): Provision (Benefit) for Income Taxes (1)||(1.2||)|
|Pro Forma Economic Net Income, After Taxes||(57.7||)|
|Fully diluted units (in millions)||304.5|
|Pro Forma Economic Net Income, After Taxes per Adjusted Unit||$||(0.19||)|
|Pro Forma Distributable Earnings||$||116.7|
|Less: Estimated foreign, state, and local taxes (2)||14.8|
|Pro Forma Distributable Earnings, After Taxes||101.9|
|Allocating Distributable Earnings for only public unit holders of The Carlyle Group L.P.|
|Pro Forma Distributable Earnings to The Carlyle Group L.P.||14.5|
|Less: Estimated current corporate income taxes (3)||0.8|
|Pro Forma Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes||13.7|
|Units in public float (in millions)||43.2|
|Pro Forma Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding||$||0.32|
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