This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

KKR & Co. L.P. Announces Third Quarter 2012 Results

CONFERENCE CALL

A conference call to discuss KKR’s financial results will be held on Friday, October 26, 2012 at 10:00 a.m. EDT. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Public Investors section of KKR’s website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (855) 859-2056 (U.S. callers) and +1 (404) 537-3406 (non-U.S. callers), pass code 39815272, beginning approximately two hours after the broadcast.

From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Public Investors section of KKR’s website at http://ir.kkr.com/kkr_ir/alerts.cfm . In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Public Investors section of the website.

ABOUT KKR

Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $66.3 billion in assets under management as of September 30, 2012. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platform. KKR is publicly traded on the New York Stock Exchange (NYSE: KKR). For additional information, please visit KKR’s website at www.kkr.com.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, after-tax ENI, fee related EBITDA, committed and syndicated dollars invested, uncalled commitments, core interest expense, cash and short-term investments and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from the acquisitions such as Prisma; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on February 27, 2012, and other filings with the SEC, which are available at www.sec.gov.

       
KKR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
 
Quarter Ended Nine Months Ended
September 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Revenues
Fees $ 162,154   $ 164,808   $ 390,821   $ 514,263  
 
Expenses
Compensation and Benefits 366,350 48,948 1,019,400 677,917
Occupancy and Related Charges 14,344 13,702 43,636 39,085
General, Administrative and Other   65,825     66,180     177,480     166,866  
Total Expenses   446,519     128,830     1,240,516     883,868  

 

Investment Income (Loss)
Net Gains (Losses) from Investment Activities 2,308,613 (3,339,020 ) 6,997,166 467,278
Dividend Income 10,440 71,106 263,298 107,129
Interest Income 95,578 64,858 259,669 218,975
Interest Expense   (17,868 )   (17,742 )   (52,757 )   (52,365 )
Total Investment Income (Loss)   2,396,763     (3,220,798 )   7,467,376     741,017  
 
Income (Loss) Before Taxes 2,112,398 (3,184,820 ) 6,617,681 371,412
 
Income Taxes   9,612     11,535     37,777     67,923  
 
Net Income (Loss) 2,102,786 (3,196,355 ) 6,579,904 303,489
 
Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests 9,994 - 18,551 -
Net Income (Loss) Attributable to
Noncontrolling Interests 1,965,381 (2,952,953 ) 6,097,245 347,705
       
Net Income (Loss) Attributable to KKR & Co. L.P. $ 127,411   $ (243,402 ) $ 464,108   $ (44,216 )
 
Distributions Declared per KKR & Co. L.P. Common Unit $ 0.24 $ 0.10 $ 0.52 $ 0.42
 
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ 0.53 $ (1.09 ) $ 1.98 $ (0.20 )
Diluted (a) $ 0.49 $ (1.09 ) $ 1.86 $ (0.20 )
Weighted Average Common Units Outstanding
Basic 239,696,358 222,733,648 234,876,879 218,501,107
Diluted (a) 257,646,622 222,733,648 249,359,200 218,501,107
     
(a)   KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.’s interests in KKR’s business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange. For the three and nine months ended September 30, 2011, equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan have been excluded from the calculation of diluted earnings per common unit given the awards would have an anti-dilutive effect as a result of the net loss incurred in the respective periods.
 

 
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
               
Quarter Ended Nine Months Ended
September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Fees
Management and incentive fees:
Management fees $ 126,483 $ 129,626 $ 134,049 $ 384,752 $ 387,828
Incentive fees   17,768     4,057     -     31,495     28,159  
Management and incentive fees   144,251     133,683     134,049     416,247     415,987  
 
Monitoring and transaction fees:
Monitoring fees 29,969 27,786 20,892 83,577 141,972
Transaction fees 75,264 43,706 98,631 163,268 220,792
Fee credits   (31,707 )   (16,689 )   (28,793 )   (67,739 )   (113,996 )
Net monitoring and transaction fees   73,526     54,803     90,730     179,106     248,768  
 
Total fees   217,777     188,486     224,779     595,353     664,755  
 
Expenses
Compensation and benefits 71,340 62,746 66,663 196,810 192,913
Occupancy and related charges 13,605 13,239 12,675 41,305 36,656
Other operating expenses   42,128     42,729     47,199     123,406     134,608  
Total expenses (a)   127,073     118,714     126,537     361,521     364,177  
 
Fee Related Earnings   90,704     69,772     98,242     233,832     300,578  
 
Investment income (loss)
Gross carried interest 410,736 282,874 (366,387 ) 1,162,974 167,118
Less: allocation to KKR carry pool (169,633 ) (112,553 ) 151,191 (473,692 ) (67,915 )
Less: management fee refunds (b)   (61,499 )   (32,804 )   21,115     (135,011 )   (15,594 )
Net carried interest 179,604 137,517 (194,081 ) 554,271 83,609
Other investment income (loss)   240,876     340,103     (494,412 )   1,000,886     85,719  
Total investment income (loss)   420,480     477,620     (688,493 )   1,555,157     169,328  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 511,184 547,392 (590,251 ) 1,788,989 469,906
Income (Loss) attributable to
noncontrolling interests   1,310     1,277     1,840     5,798     4,451  
 
Economic Net Income (Loss) $ 509,874   $ 546,115   $ (592,091 ) $ 1,783,191   $ 465,455  
 
Provision for Income Taxes 22,548 25,857 29,634 91,788 188,094
 
Economic Net Income (Loss), After Taxes (c) $ 487,326   $ 520,258   $ (621,725 ) $ 1,691,403   $ 277,361  
 
Economic Net Income (Loss), After Taxes per Adjusted Unit (c) $ 0.69 $ 0.74 $ (0.91 ) $ 2.42 $ 0.41
                           
Assets Under Management $ 66,278,700 $ 61,488,900 $ 58,720,800 $ 66,278,700 $ 58,720,800
Fee Paying Assets Under Management $ 50,266,000 $ 47,200,500 $ 46,221,200 $ 50,266,000 $ 46,221,200
Committed Dollars Invested and Syndicated Capital $ 926,000 $ 680,200 $ 2,653,200 $ 2,639,200 $ 4,706,100
Uncalled Commitments   $ 15,845,900     $ 10,610,300     $ 12,807,200     $ 15,845,900     $ 12,807,200  
                           

Other Information

Fee Related Earnings $ 90,704 $ 69,772 $ 98,242 $ 233,832 $ 300,578
Plus: depreciation and amortization   3,273     3,093     2,147     8,919     7,397  
Fee Related EBITDA $ 93,977   $ 72,865   $ 100,389   $ 242,751   $ 307,975  
 
Distributed Earnings $ 187,174 $ 104,548 $ 104,395 $ 403,208 $ 400,581
Plus: Net realized principal investment income   145,700     301,580     81,001     499,898     235,525  
Total Distributable Earnings (c) $ 332,874   $ 406,128   $ 185,396   $ 903,106   $ 636,106  
 
GAAP interest expense $ 17,868 $ 16,884 $ 17,742 $ 52,757 $ 52,365
Less: interest expense related to debt obligations
from investment financing arrangements   8,502     7,461     7,233     24,036     20,562  
Core Interest Expense (c) $ 9,366   $ 9,423   $ 10,509   $ 28,721   $ 31,803  
                                         
     
(a)   Excludes a $17.4 million, $14.1 million and $6.8 million charge for non-cash equity based compensation during the quarters ended September 30, 2012, June 30, 2012, and September 30, 2011, respectively, associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. Excludes a $47.8 million and $11.2 million charge for non-cash equity based compensation during the nine months ended September 30, 2012 and 2011, respectively, associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan.
(b) As of September 30, 2012, there is no carried interest subject to management fee refunds, which may reduce carried interest in future periods.
(c) See definitions for after-tax ENI, adjusted units, total distributable earnings, and core interest expense under “Notes to Reportable Segments.”
 

 
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
               
Quarter Ended Nine Months Ended
September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Fees
Management and incentive fees:
Management fees $ 105,035 $ 107,170 $ 106,748 $ 319,117 $ 323,684
Incentive fees   -     -     -     -     -  
Management and incentive fees   105,035     107,170     106,748     319,117     323,684  
 
Monitoring and transaction fees:
Monitoring fees 29,969 27,786 20,892 83,577 141,972
Transaction fees 32,788 10,768 40,196 55,223 101,506
Fee credits   (26,293 )   (15,642 )   (27,229 )   (59,641 )   (110,129 )
Net monitoring and transaction fees   36,464     22,912     33,859     79,159     133,349  
 
Total fees   141,499     130,082     140,607     398,276     457,033  
 
Expenses
Compensation and benefits 48,905 45,991 47,390 139,382 139,570
Occupancy and related charges 12,049 11,633 11,273 36,487 32,792
Other operating expenses   35,885     36,230     40,768     103,790     115,076  
Total expenses   96,839     93,854     99,431     279,659     287,438  
 
Fee Related Earnings   44,660     36,228     41,176     118,617     169,595  
 
Investment income (loss)
Gross carried interest 391,168 291,786 (360,282 ) 1,137,459 170,096
Less: allocation to KKR carry pool (161,805 ) (116,118 ) 148,749 (463,485 ) (69,106 )
Less: management fee refunds   (61,499 )   (32,804 )   21,115     (135,011 )   (15,594 )
Net carried interest 167,864 142,864 (190,418 ) 538,963 85,396
Other investment income (loss)   1,779     (3,990 )   (1,942 )   (559 )   (185 )
Total investment income (loss)   169,643     138,874     (192,360 )   538,404     85,211  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 214,303 175,102 (151,184 ) 657,021 254,806
Income (Loss) attributable to
noncontrolling interests   444     358     790     3,098     1,885  
 
Economic Net Income (Loss) $ 213,859   $ 174,744   $ (151,974 ) $ 653,923   $ 252,921  
 
 
Assets Under Management $ 49,771,000 $ 45,528,100 $ 43,744,400 $ 49,771,000 $ 43,744,400
Fee Paying Assets Under Management $ 40,354,200 $ 37,858,300 $ 37,936,800 $ 40,354,200 $ 37,936,800
Committed Dollars Invested $ 623,000 $ 606,300 $ 1,654,900 $ 1,805,500 $ 2,884,900
Uncalled Commitments $ 14,594,700 $ 9,304,500 $ 11,243,600 $ 14,594,700 $ 11,243,600
 

 
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
             
Quarter Ended Nine Months Ended
September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Fees
Management and incentive fees:
Management fees $ 21,448 $ 22,456 $ 27,301 $ 65,635 $ 64,144
Incentive fees   17,768     4,057     -     31,495     28,159  
Management and incentive fees   39,216     26,513     27,301     97,130     92,303  
 
Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 8,780 1,319 3,760 12,521 7,845
Fee credits   (5,414 )   (1,047 )   (1,564 )   (8,098 )   (3,867 )
Net monitoring and transaction fees   3,366     272     2,196     4,423     3,978  
 
Total fees   42,582     26,785     29,497     101,553     96,281  
 
Expenses
Compensation and benefits 13,997 9,229 12,144 34,608 33,967
Occupancy and related charges 1,343 1,366 1,097 4,127 2,870
Other operating expenses   3,897     3,880     3,807     11,754     11,649  
Total expenses   19,237     14,475     17,048     50,489     48,486  
 
Fee Related Earnings   23,345     12,310     12,449     51,064     47,795  
 
Investment income (loss)
Gross carried interest 19,568 (8,912 ) (6,105 ) 25,515 (2,978 )
Less: allocation to KKR carry pool (7,828 ) 3,565 2,442 (10,207 ) 1,191
Less: management fee refunds   -     -     -     -     -  
Net carried interest 11,740 (5,347 ) (3,663 ) 15,308 (1,787 )
Other investment income (loss)   25     (12 )   288     (10 )   598  
Total investment income (loss)   11,765     (5,359 )   (3,375 )   15,298     (1,189 )
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 35,110 6,951 9,074 66,362 46,606
Income (Loss) attributable to
noncontrolling interests   233     123     164     787     480  
 
Economic Net Income (Loss) $ 34,877   $ 6,828   $ 8,910   $ 65,575   $ 46,126  
 
Assets Under Management $ 16,507,700 $ 15,960,800 $ 14,976,400 $ 16,507,700 $ 14,976,400
Fee Paying Assets Under Management $ 9,911,800 $ 9,342,200 $ 8,284,400 $ 9,911,800 $ 8,284,400
Committed Dollars Invested $ 278,300 $ 73,900 $ 152,300 $ 558,400 $ 546,500
Uncalled Commitments $ 1,251,200 $ 1,305,800 $ 1,563,600 $ 1,251,200 $ 1,563,600
 

 
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)
(Amounts in thousands)
             
Quarter Ended Nine Months Ended
September 30, 2012 June 30, 2012 September 30, 2011 September 30, 2012 September 30, 2011
Fees
Management and incentive fees:
Management fees $

-

$ - $ - $ - $ -
Incentive fees   -   -   -     -   -
Management and incentive fees   -   -   -     -   -
 
Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 33,696 31,619 54,675 95,524 111,441
Fee credits   -   -   -     -   -
Net monitoring and transaction fees   33,696   31,619   54,675     95,524   111,441
 
Total fees   33,696   31,619   54,675     95,524   111,441
 
Expenses
Compensation and benefits 8,438 7,526 7,129 22,820 19,376
Occupancy and related charges 213 240 305 691 994
Other operating expenses   2,346   2,619   2,624     7,862   7,883
Total expenses   10,997   10,385   10,058     31,373   28,253
 
Fee Related Earnings   22,699   21,234   44,617     64,151   83,188
 
Investment income (loss)
Gross carried interest - - - - -
Less: allocation to KKR carry pool - - - - -
Less: management fee refunds   -   -   -     -   -
Net carried interest - - - - -
Other investment income (loss)   239,072   344,105   (492,758 )   1,001,455   85,306
Total investment income (loss)   239,072   344,105   (492,758 )   1,001,455   85,306
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 261,771 365,339 (448,141 ) 1,065,606 168,494
Income (Loss) attributable to
noncontrolling interests   633   796   886     1,913   2,086
 
Economic Net Income (Loss) $ 261,138 $ 364,543 $ (449,027 ) $ 1,063,693 $ 166,408
 
 
Syndicated Capital $ 24,700 $ - $ 846,000 $ 275,300 $ 1,274,700
 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended September 30, 2012
(Amounts in thousands)
             
Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments
 
Fees
Management and incentive fees:
Management fees $ 105,035 $ 21,448 $ - $ 126,483
Incentive fees   -     17,768     -   17,768  
Management and incentive fees   105,035     39,216     -   144,251  
 
Monitoring and transaction fees:
Monitoring fees 29,969 - - 29,969
Transaction fees 32,788 8,780 33,696 75,264
Fee credits   (26,293 )   (5,414 )   -   (31,707 )
Net monitoring and transaction fees   36,464     3,366     33,696   73,526  
 
Total fees   141,499     42,582     33,696   217,777  
 
Expenses
Compensation and benefits 48,905 13,997 8,438 71,340
Occupancy and related charges 12,049 1,343 213 13,605
Other operating expenses   35,885     3,897     2,346   42,128  
Total expenses   96,839     19,237     10,997   127,073  
 
Fee Related Earnings   44,660     23,345     22,699   90,704  
 
Investment income (loss)
Gross carried interest 391,168 19,568 - 410,736
Less: allocation to KKR carry pool (161,805 ) (7,828 ) - (169,633 )
Less: management fee refunds   (61,499 )   -     -   (61,499 )
Net carried interest 167,864 11,740 - 179,604
Other investment income (loss)   1,779     25     239,072   240,876  
Total investment income (loss)   169,643     11,765     239,072   420,480  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 214,303 35,110 261,771 511,184
Income (Loss) attributable to
noncontrolling interests 444 233 633 1,310
       
Economic Net Income (Loss) $ 213,859   $ 34,877   $ 261,138 $ 509,874  
 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended June 30, 2012
(Amounts in thousands)
             
Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments
 
Fees
Management and incentive fees:
Management fees $ 107,170 $ 22,456 $ - $ 129,626
Incentive fees   -     4,057     -   4,057  
Management and incentive fees   107,170     26,513     -   133,683  
 
Monitoring and transaction fees:
Monitoring fees 27,786 - - 27,786
Transaction fees 10,768 1,319 31,619 43,706
Fee credits   (15,642 )   (1,047 )   -   (16,689 )
Net monitoring and transaction fees   22,912     272     31,619   54,803  
 
Total fees   130,082     26,785     31,619   188,486  
 
Expenses
Compensation and benefits 45,991 9,229 7,526 62,746
Occupancy and related charges 11,633 1,366 240 13,239
Other operating expenses   36,230     3,880     2,619   42,729  
Total expenses   93,854     14,475     10,385   118,714  
 
Fee Related Earnings   36,228     12,310     21,234   69,772  
 
Investment income (loss)
Gross carried interest 291,786 (8,912 ) - 282,874
Less: allocation to KKR carry pool (116,118 ) 3,565 - (112,553 )
Less: management fee refunds   (32,804 )   -     -   (32,804 )
Net carried interest 142,864 (5,347 ) - 137,517
Other investment income (loss)   (3,990 )   (12 )   344,105   340,103  
Total investment income (loss)   138,874     (5,359 )   344,105   477,620  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 175,102 6,951 365,339 547,392
Income (Loss) attributable to
noncontrolling interests 358 123 796 1,277
       
Economic Net Income (Loss) $ 174,744   $ 6,828   $ 364,543 $ 546,115  
 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended September 30, 2011
(Amounts in thousands)
             
Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments
 
Fees
Management and incentive fees:
Management fees $ 106,748 $ 27,301 $ - $ 134,049
Incentive fees   -     -     -     -  
Management and incentive fees   106,748     27,301     -     134,049  
 
Monitoring and transaction fees:
Monitoring fees 20,892 - - 20,892
Transaction fees 40,196 3,760 54,675 98,631
Fee credits   (27,229 )   (1,564 )   -     (28,793 )
Net monitoring and transaction fees   33,859     2,196     54,675     90,730  
 
Total fees   140,607     29,497     54,675     224,779  
 
Expenses
Compensation and benefits 47,390 12,144 7,129 66,663
Occupancy and related charges 11,273 1,097 305 12,675
Other operating expenses   40,768     3,807     2,624     47,199  
Total expenses   99,431     17,048     10,058     126,537  
 
Fee Related Earnings   41,176     12,449     44,617     98,242  
 
Investment income (loss)
Gross carried interest (360,282 ) (6,105 ) - (366,387 )
Less: allocation to KKR carry pool 148,749 2,442 - 151,191
Less: management fee refunds   21,115     -     -     21,115  
Net carried interest (190,418 ) (3,663 ) - (194,081 )
Other investment income (loss)   (1,942 )   288     (492,758 )   (494,412 )
Total investment income (loss)   (192,360 )   (3,375 )   (492,758 )   (688,493 )
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities (151,184 ) 9,074 (448,141 ) (590,251 )
Income (Loss) attributable to
noncontrolling interests 790 164 886 1,840
       
Economic Net Income (Loss) $ (151,974 ) $ 8,910   $ (449,027 ) $ (592,091 )
 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Nine Months Ended September 30, 2012
(Amounts in thousands)
             
Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments
 
Fees
Management and incentive fees:
Management fees $ 319,117 $ 65,635 $ - $ 384,752
Incentive fees   -     31,495     -   31,495  
Management and incentive fees   319,117     97,130     -   416,247  
 
Monitoring and transaction fees:
Monitoring fees 83,577 - - 83,577
Transaction fees 55,223 12,521 95,524 163,268
Fee credits   (59,641 )   (8,098 )   -   (67,739 )
Net monitoring and transaction fees   79,159     4,423     95,524   179,106  
 
Total fees   398,276     101,553     95,524   595,353  
 
Expenses
Compensation and benefits 139,382 34,608 22,820 196,810
Occupancy and related charges 36,487 4,127 691 41,305
Other operating expenses   103,790     11,754     7,862   123,406  
Total expenses   279,659     50,489     31,373   361,521  
 
Fee Related Earnings   118,617     51,064     64,151   233,832  
 
Investment income (loss)
Gross carried interest 1,137,459 25,515 - 1,162,974
Less: allocation to KKR carry pool (463,485 ) (10,207 ) - (473,692 )
Less: management fee refunds   (135,011 )   -     -   (135,011 )
Net carried interest 538,963 15,308 - 554,271
Other investment income (loss)   (559 )   (10 )   1,001,455   1,000,886  
Total investment income (loss)   538,404     15,298     1,001,455   1,555,157  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 657,021 66,362 1,065,606 1,788,989
Income (Loss) attributable to
noncontrolling interests 3,098 787 1,913 5,798
       
Economic Net Income (Loss) $ 653,923   $ 65,575   $ 1,063,693 $ 1,783,191  
 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Nine Months Ended September 30, 2011
(Amounts in thousands)
           
Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments
 
Fees
Management and incentive fees:
Management fees $ 323,684 $ 64,144 $ - $ 387,828
Incentive fees   -     28,159     -   28,159  
Management and incentive fees   323,684     92,303     -   415,987  
 
Monitoring and transaction fees:
Monitoring fees 141,972 - - 141,972
Transaction fees 101,506 7,845 111,441 220,792
Fee credits   (110,129 )   (3,867 )   -   (113,996 )
Net monitoring and transaction fees   133,349     3,978     111,441   248,768  
 
Total fees   457,033     96,281     111,441   664,755  
 
Expenses
Compensation and benefits 139,570 33,967 19,376 192,913
Occupancy and related charges 32,792 2,870 994 36,656
Other operating expenses   115,076     11,649     7,883   134,608  
Total expenses   287,438     48,486     28,253   364,177  
 
Fee Related Earnings   169,595     47,795     83,188   300,578  
 
Investment income (loss)
Gross carried interest 170,096 (2,978 ) - 167,118
Less: allocation to KKR carry pool (69,106 ) 1,191 - (67,915 )
Less: management fee refunds   (15,594 )   -     -   (15,594 )
Net carried interest 85,396 (1,787 ) - 83,609
Other investment income (loss)   (185 )   598     85,306   85,719  
Total investment income (loss)   85,211     (1,189 )   85,306   169,328  
 
Income (Loss) before noncontrolling interests
in Income of consolidated entities 254,806 46,606 168,494 469,906
Income (Loss) attributable to
noncontrolling interests 1,885 480 2,086 4,451
       
Economic Net Income (Loss) $ 252,921   $ 46,126   $ 166,408 $ 465,455  
 

 
KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
     
As of September 30, 2012
Capital
Markets and
Private Public Principal Total
Markets Markets Activities Reportable
Segment

 

Segment

 

Segment Segments
 
Cash and short-term investments $ 309,703 $ 23,188 $ 1,105,414 $ 1,438,305
Investments - - 5,077,688 (a) 5,077,688
Unrealized carry 716,512 16,755 - 733,267
Other assets   202,256     72,721   63,021   337,998
Total assets $ 1,228,471   $ 112,664 $ 6,246,123 $ 7,587,258
 
Debt obligations $ - $ - $ 500,000 $ 500,000
Other liabilities   122,520     29,242   20,146   171,908
Total liabilities   122,520     29,242   520,146   671,908
 
Noncontrolling interests 1,340 602 18,627 20,569
       
Book value $ 1,104,611   $ 82,820 $ 5,707,350 $ 6,894,781
 
Book value per adjusted unit $ 1.57 $ 0.12 $ 8.13 $ 9.82
 
 
As of December 31, 2011
Capital
Markets and
Private Public Principal Total
Markets Markets Activities Reportable
Segment Segment Segment Segments
 
Cash and short-term investments $ 296,717 $ 8,087 $ 684,637 $ 989,441
Investments - - 4,743,406 4,743,406
Unrealized carry 419,523 1,447 - 420,970
Other assets   139,432     58,360   63,799   261,591
Total assets $ 855,672   $ 67,894 $ 5,491,842 $ 6,415,408
 
Debt obligations $ - $ - $ 500,000 $ 500,000
Other liabilities   128,590     8,153   49,329   186,072
Total liabilities   128,590     8,153   549,329   686,072
 
Noncontrolling interests (1,358 ) 729 19,381 18,752
       
Book value $ 728,440   $ 59,012 $ 4,923,132 $ 5,710,584
 
Book value per adjusted unit $ 1.06 $ 0.09 $ 7.14 $ 8.29
     
(a)   See Capital Markets and Principal Activities segment schedule of investments that follows.
 

 
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS
(Amounts in thousands, except percentage amounts)
     
As of September 30, 2012

 

 

Fair Value as
Fair a Percentage of

Investment

Cost

Value Total Investments
 
Co-Investments in Portfolio Companies of
Private Equity Investment Vehicles:
HCA Inc. 171,227 502,908 9.9 %
Dollar General Corporation 78,220 445,973 8.8 %
Alliance Boots GmbH 195,640 401,769 7.9 %
The Nielsen Company B.V. 134,603 268,254 5.3 %
NXP B.V. 207,963 197,067 3.9 %
Samson Resources Corporation 237,514 190,012 3.7 %
US Foods 100,000 140,000 2.8 %
KION Group GmbH 128,058 133,854 2.6 %
Biomet, Inc. 151,444 121,155 2.4 %
ProSiebenSat.1 Media AG 226,913 103,626 2.0 %
First Data Corporation 135,258 94,681 1.9 %
Energy Future Holdings Corp. 200,000 10,000 0.2 %
PagesJaunes Groupe S.A.   235,201   - 0.0 %
  2,202,041   2,609,299 51.4 %
 
Private Equity Investment Vehicles
KKR 2006 Fund L.P. 768,248 835,730 16.5 %
KKR European Fund III L.P. 187,339 211,126 4.2 %
KKR Millennium Fund L.P. 141,384 152,528 3.0 %
KKR Asian Fund L.P. 101,759 139,888 2.8 %
KKR European Fund II L.P. 85,140 78,651 1.5 %
KKR European Fund L.P. 60,922 38,430 0.8 %
KKR E2 Investors, L.P. 12,187 21,415 0.3 %
KKR China Growth Fund L.P. 3,611 4,511 0.1 %
Co-Investment Vehicles   528   574 0.0 %
  1,361,118   1,482,853 29.2 %
 
Private Equity Total   3,563,159   4,092,152 80.6 %
 
Energy & Infrastructure Investment Vehicles
Royalties and Drilling 87,734 87,568 1.7 %
Infrastructure Fund 18,466 18,968 0.4 %
Co-Investment Vehicles 10,477 12,159 0.2 %
Natural Resources   9,802   7,560 0.1 %
Energy & Infrastructure Total   126,479   126,255 2.4 %
 
Private Markets Total   3,689,638   4,218,407 83.0 %
 
Public Markets Investment Vehicles
Liquid Credit SMAs/Funds 170,300 192,926 3.8 %
Long/Short Equities Funds 100,000 100,268 2.0 %
Credit Relative Value Fund 50,000 51,275 1.0 %
Direct Lending 37,049 39,567 0.8 %
Special Situations Vehicles 17,498 18,875 0.4 %
Mezzanine Fund   14,834   16,708 0.3 %
Public Markets Total   389,681   419,619 8.3 %
 
Other   445,051   439,662 8.7 %
 
Total Investments $ 4,524,370 $ 5,077,688 100.0 %
 

 
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED
(Amounts in thousands, except percentage amounts)
     

 

As of September 30, 2012

 

 

Fair Value as

 

a Percentage

Fair

of Total
Investment Cost Value   Investments
 
Significant Aggregate Investments: (a)
HCA Inc. $ 217,011 $ 619,641 12.2 %
Dollar General Corporation 108,539 590,330 11.6 %
Alliance Boots GmbH 228,769 463,417 9.1 %
The Nielsen Company B.V.   148,337   293,051 5.8 %
  702,656   1,966,439 38.7 %
 
Other investments   3,821,714   3,111,249 61.3 %
Total Investments $ 4,524,370 $ 5,077,688 100.0 %
 
 
Investments by Geography:
North America $ 2,879,868 $ 3,576,476 70.5 %
Europe 1,413,961 1,255,870 24.7 %
Asia-Pacific   230,541   245,342 4.8 %
Total Investments $ 4,524,370 $ 5,077,688 100.0 %
 
 
Investments by Industry:
Healthcare 701,501 1,293,013 25.5 %
Financial Services 1,206,380 1,150,483 22.7 %
Retail 363,406 865,917 17.0 %
Media/Telecom 753,184 533,645 10.5 %
Technology 385,564 396,436 7.8 %
Energy 699,463 366,875 7.2 %
Industrial 255,732 294,278 5.8 %
Consumer Products 91,635 97,255 1.9 %
Other   67,505   79,786 1.6 %
Total Investments $ 4,524,370 $ 5,077,688 100.0 %
     
(a)   The significant aggregate investments include investments in portfolio companies with individual fair values of 5% or more of the Capital Markets and Principal Activities segment investments balance as of September 30, 2012. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.

 
KKR
ASSETS UNDER MANAGEMENT
(Amounts in thousands)
       
     
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Quarter Ended September 30, 2012

 
June 30, 2012 $ 45,528,100 $ 15,960,800 $ 61,488,900
New Capital Raised 5,969,100 435,200 6,404,300
Distributions (2,639,800 ) (205,700 ) (2,845,500 )
Net Changes in Fee Base of Certain Funds (a) (1,327,900 ) - (1,327,900 )
Foreign Exchange 61,800 - 61,800
Change in Value   2,179,700     317,400     2,497,100  
September 30, 2012 $ 49,771,000   $ 16,507,700   $ 66,278,700  
 
 
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Nine Months Ended September 30, 2012

 
December 31, 2011 $ 43,627,900 $ 15,380,700 $ 59,008,600
New Capital Raised 6,426,000 1,425,600 7,851,600
Distributions (5,926,800 ) (1,057,600 ) (b) (6,984,400 )
Net Changes in Fee Base of Certain Funds (a) (1,327,900 ) - (1,327,900 )
Foreign Exchange (1,400 ) - (1,400 )
Change in Value   6,973,200     759,000     7,732,200  
September 30, 2012 $ 49,771,000   $ 16,507,700   $ 66,278,700  
 
 
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Trailing Twelve Months Ended September 30, 2012

 
September 30, 2011 $ 43,744,400 $ 14,976,400 $ 58,720,800
New Capital Raised 7,784,100 1,849,200 9,633,300
Distributions (7,970,600 ) (1,306,400 ) (c) (9,277,000 )
Net Changes in Fee Base of Certain Funds (a) (1,327,900 ) - (1,327,900 )
Foreign Exchange (71,600 ) - (71,600 )
Change in Value   7,612,600     988,500     8,601,100  
September 30, 2012 $ 49,771,000   $ 16,507,700   $ 66,278,700  
                           
(a)   Represents the impact of including certain funds entering the post-investment period including KKR 2006 Fund L.P.
(b) Includes $250.0 million of redemptions.
(c) Includes $450.0 million of redemptions.
 

 
KKR
FEE PAYING ASSETS UNDER MANAGEMENT
(Amounts in thousands)
       
     
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Quarter Ended September 30, 2012

 
June 30, 2012 $ 37,858,300 $ 9,342,200 $ 47,200,500
New Capital Raised 5,725,100 434,100 6,159,200
Distributions (255,100 ) (91,400 ) (346,500 )
Net Changes in Fee Base of Certain Funds (a) (3,205,400 ) - (3,205,400 )
Foreign Exchange 210,100 - 210,100
Change in Value   21,200     226,900     248,100  
September 30, 2012 $ 40,354,200   $ 9,911,800   $ 50,266,000  
 
 
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Nine Months Ended September 30, 2012

 
December 31, 2011 $ 37,869,700 $ 8,527,600 $ 46,397,300
New Capital Raised 6,179,700 1,440,100 7,619,800
Distributions (538,300 ) (594,200 ) (b) (1,132,500 )
Net Changes in Fee Base of Certain Funds (a) (3,205,400 ) - (3,205,400 )
Foreign Exchange 16,000 - 16,000
Change in Value   32,500     538,300     570,800  
September 30, 2012 $ 40,354,200   $ 9,911,800   $ 50,266,000  
 
 
Private Public Total
Markets Markets Reportable
Segment Segment Segments

Trailing Twelve Months Ended September 30, 2012

 
September 30, 2011 $ 37,936,800 $ 8,284,400 $ 46,221,200
New Capital Raised 7,457,400 1,762,400 9,219,800
Distributions (1,681,200 ) (838,000 ) (c) (2,519,200 )
Net Changes in Fee Base of Certain Funds (a) (3,205,400 ) - (3,205,400 )
Foreign Exchange (197,000 ) - (197,000 )
Change in Value   43,600     703,000     746,600  
September 30, 2012 $ 40,354,200   $ 9,911,800   $ 50,266,000  
                           
(a)   Represents the impact of including certain funds entering the post-investment period including KKR 2006 Fund L.P.
(b) Includes $250.0 million of redemptions.
(c) Includes $450.0 million of redemptions.
 

 
KKR
INVESTMENT VEHICLE SUMMARY* (UNAUDITED)
As of September 30, 2012
(Amounts in millions, except percentages)
                 
 
Investment Period Amount
Percentage
Committed by
Commencement Uncalled General Remaining Remaining
Date   End Date Commitment   Commitments   Partner   Invested   Realized   Cost   Fair Value

Private Markets

 
Private Equity Funds
North America Fund XI 9/2012 9/2018 $ 5,941.5 $ 5,941.5 4.1 % $ - $ - $ - $ -
China Growth Fund 11/2010 11/2016 1,010.0 674.9 1.0 % 335.1 - 335.1 404.5
E2 Investors (Annex Fund) 8/2009 11/2012 535.8 381.6 4.2 % 154.2 - 154.2 280.2
European Fund III 3/2008 3/2014 5,901.5 2,926.9 4.6 % 2,974.6 - 2,974.6 3,298.9
Asian Fund 7/2007 7/2013 3,983.2 860.5 2.5 % 3,122.7 732.0 2,612.9 4,551.2
2006 Fund 9/2006 9/2012 17,642.2 1,315.2 2.1 % 16,327.0 7,539.4 11,887.2 15,798.2
European Fund II 11/2005 10/2008 5,750.8 - 2.1 % 5,750.8 2,140.0 4,223.2 4,508.4
Millennium Fund 12/2002 12/2008 6,000.0 - 2.5 % 6,000.0 7,391.9 3,239.0 4,897.6
European Fund 12/1999 12/2005   3,085.4     - 3.2 %   3,085.4     8,325.6   95.2     466.0
Total Private Equity Funds 49,850.4 12,100.6 37,749.8 26,128.9 25,521.4 34,205.0
 
Co-Investment Vehicles Various Various   2,133.5     220.5 Various   1,913.0     1,574.7   1,431.5     2,268.3
Total Private Equity   51,983.9     12,321.1   39,662.8     27,703.6   26,952.9     36,473.3
 
Energy & Infrastructure
Natural Resources Various Various 1,222.9 802.1 Various 420.8 26.3 412.1 322.7
Infrastructure Various Various 1,041.2 791.7 4.8 % 249.5 1.7 249.5 257.1
Co-Investment Vehicles Various Various   1,862.4     679.8 Various   1,182.6     131.2   1,182.6     1,367.7
Energy & Infrastructure Total   4,126.5     2,273.6   1,852.9     159.2   1,844.2     1,947.5
                 
Private Markets Total   56,110.4     14,594.7   41,515.7     27,862.8   28,797.1     38,420.8
 

Public Markets

 
Special Situations Vehicles Various Various 1,858.1 439.6 Various 1,418.5 152.7 1,418.5 1,573.7
Mezzanine Fund 3/2010 8/2015 987.0 653.6 4.6 % 333.4 23.5 333.4 368.6
Lending Partners 12/2011 12/2014 286.8 158.0 29.0 % 128.8 - 128.8 137.6
                 
Public Markets Total   3,131.9     1,251.2   1,880.7     176.2   1,880.7     2,079.9
 
Grand Total $ 59,242.3   $ 15,845.9 $ 43,396.4   $ 28,039.0 $ 30,677.8   $ 40,500.7
 
 
* Reflects investment vehicles for which KKR has the ability to earn carried interest.
 

 

KKR

DISTRIBUTION CALCULATION

(Amounts in thousands, except unit and per unit amounts)

 

       
 
Quarter Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
  2012     2012     2011     2012     2011  
 
FRE (a) $ 90,704 $ 69,772 $ 98,242 $ 233,832 $ 300,578
Realized cash carry 100,145 39,360 12,937 184,432 118,889
Net realized principal investment income 145,700 301,580 81,001 499,898 235,525
Less: local income taxes (2,365 ) (3,307 ) (4,944 ) (9,258 ) (14,435 )
Less: noncontrolling interests   (1,310 )   (1,277 )   (1,840 )   (5,798 )   (4,451 )
Total Distributable Earnings   332,874     406,128     185,396     903,106     636,106  
 
Less: net realized principal investment income (145,700 ) (301,580 ) (81,001 ) (499,898 ) (235,525 )
         
Distributed Earnings   187,174     104,548     104,395     403,208     400,581  
 
Distributed Earnings to KKR & Co. L.P. (b) 66,015 36,401 34,075 140,216 128,817
 
Less: estimated current corporate income taxes (6,890 ) (4,268 ) (11,035 ) (15,180 ) (34,124 )
         
Distributed Earnings to KKR & Co. L.P., After Taxes $ 59,125   $ 32,133   $ 23,040   $ 125,036   $ 94,693  
 
Distribution per KKR & Co. L.P. common unit 0.24 0.13 0.10 0.52 0.42
 

Outstanding KKR & Co. L.P. common units

241,407,805 238,155,157 222,944,668
     
(a)   See Exhibit A for a reconciliation of such measure to financial results prepared in accordance with GAAP.
(b) Represents the amount of distributed earnings allocable to KKR & Co. L.P. based on its ownership in the KKR business as of September 30, 2012.
 

DISTRIBUTION POLICY

KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its investment management business each year in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other agreements. KKR does not intend to distribute net realized principal investment income, other than certain additional distributions that KKR may determine to make. These additional distributions, if any, are intended to cover certain tax liabilities, as calculated by KKR. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships. For purposes of KKR’s distribution policy, its distributions are expected to consist of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, and (iii) any additional distributions for certain taxes as described above. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.

7 of 9

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 17,001.22 -38.27 -0.22%
S&P 500 1,988.40 -3.97 -0.20%
NASDAQ 4,538.5510 +6.4470 0.14%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs