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
See Cramer's multi-million dollar portfolio for FREE and get his new book Get Rich Carefully! Learn More

Oaktree Capital Group, LLC Announces Third Quarter 2012 Financial Results

Segment Results (Unaudited)

Our business is comprised of one segment, our investment management segment, which consists of the investment management services that we provide to our clients.

Adjusted Net Income

Adjusted net income and adjusted net income-OCG, as well as per unit data, for the three and nine months ended September 30, 2012 and 2011, are set forth below:

  Three Months Ended   Nine Months Ended
September 30, September 30,
  2012       2011     2012       2011  
(in thousands, except per unit data)
Revenues:
Management fees $ 182,587 $ 173,585 $ 562,692 $ 538,256
Incentive income 59,174 33,697 250,861 271,906
Investment income (loss)   62,801     (86,059 )   150,382     (19,496 )
Total revenues   304,562     121,223     963,935     790,666  
Expenses:
Compensation and benefits (83,208 ) (65,860 ) (247,915 ) (228,079 )
Incentive income compensation expense (29,546 ) (16,377 ) (118,268 ) (111,372 )
General, administrative and other expenses   (26,330 )   (28,111 )   (79,238 )   (74,741 )
Total expenses   (139,084 )   (110,348 )   (445,421 )   (414,192 )
Adjusted net income before interest and other income (expense) 165,478 10,875 518,514 376,474
Interest expense, net of interest income (1) (7,687 ) (7,888 ) (23,914 ) (25,192 )
Other income (expense), net   (59 )   314     2,274     395  
Adjusted net income 157,732 3,301 496,874 351,677
Adjusted net income attributable to OCGH non-controlling interest (126,092 ) (2,797 ) (406,575 ) (298,071 )
Non-Operating Group other income - - 6,260

(2)

 

-
Non-Operating Group expenses   (115 )   37     (393 )   (404 )
Adjusted net income-OCG before income taxes 31,525 541 96,166 53,202
Income taxes-OCG   (4,835 )   (747 )   (22,782 )

(2)

 

  (11,845 )
Adjusted net income-OCG $ 26,690   $ (206 ) $ 73,384   $ 41,357  
Adjusted net income-OCG per Class A unit $ 0.88   $ (0.01 )

$

2.67

  $ 1.82  
Weighted average number of Class A units outstanding   30,181     22,677     27,494     22,677  
(1)   Interest income was $0.8 million and $1.0 million for the three months ended September 30, 2012 and 2011, respectively, and $1.9 million and $2.2 million for the nine months ended September 30, 2012 and 2011, respectively.
(2) A one-time adjustment in the second quarter of 2012 had the effect of increasing income taxes-OCG by $(7,134) and increasing non-Operating Group other income by $6,260, for a net effect of additional after-tax OCG expense of $(874). This adjustment stemmed from reductions in deferred tax assets and the liability for amounts due to affiliates. The effective income tax rate applicable to adjusted net income-OCG before income taxes for the nine months ended September 30, 2012 was 18% without the $(7,134) one-time expense and 23% with it.
 

Investment Income (Loss)

   
Three Months Ended Nine Months Ended
September 30, September 30,
  2012       2011     2012     2011  
(in thousands)
Income (loss) from investments in funds:
Oaktree funds:
Distressed debt $ 33,861 $ (66,711 ) $ 85,653 $ (20,891 )
Corporate debt 4,867 (1,233 ) 10,209 (276 )
Control investing 9,885 (15,497 ) 21,051 (2,990 )
Convertible securities 50 (113 ) 114 (88 )
Real estate 5,857 (1,673 ) 13,201 244
Listed equities (18 ) (2,448 ) 2,129 (2,505 )
Non-Oaktree 1,100 1,219 1,712 6,381
 
Income (loss) from investments in companies:
DoubleLine Capital and other   7,199     397     16,313   629  
Total investment income (loss) $ 62,801   $ (86,059 ) $ 150,382 $ (19,496 )
 

Fee-Related Earnings

Fee-related earnings and fee-related earnings-OCG, as well as per unit data, for the three and nine months ended September 30, 2012 and 2011, are set forth below:

  Three Months Ended   Nine Months Ended
September 30, September 30,
  2012       2011     2012       2011  
(in thousands, except per unit data)
 
Management fees:
Closed-end funds $ 140,056 $ 131,668 $ 439,836 $ 407,735
Open-end funds 32,888 30,973 94,336 96,891
Evergreen funds   9,643     10,944     28,520     33,630  
Total management fees   182,587     173,585     562,692     538,256  
Expenses:
Compensation and benefits (83,208 ) (65,860 ) (247,915 ) (228,079 )
General, administrative and other expenses   (26,330 )   (28,111 )   (79,238 )   (74,741 )
Total expenses   (109,538 )   (93,971 )   (327,153 )   (302,820 )
Fee-related earnings 73,049 79,614 235,539 235,436
Fee-related earnings attributable to OCGH non-controlling interest (58,397 ) (67,459 ) (192,649 ) (199,527 )
Non-Operating Group other income - - 6,260

(1)

 

-
Non-Operating Group expenses   (115 )   36     (391 )   (405 )
Fee-related earnings-OCG before income taxes 14,537 12,191 48,759 35,504
Fee-related earnings - OCG income taxes   (2,324 )   (3,410 )   (15,158 )

(1)

 

  (10,951 )
Fee-related earnings-OCG $ 12,213   $ 8,781   $ 33,601   $ 24,553  
Fee-related earnings-OCG per Class A unit $ 0.40   $ 0.39   $ 1.22   $ 1.08  
Weighted average number of Class A units outstanding   30,181     22,677     27,494     22,677  
(1)   A one-time adjustment in the second quarter of 2012 had the effect of increasing income taxes-OCG by $(7,134) and increasing non-Operating Group other income by $6,260, for a net effect of additional after-tax OCG expense of $(874). This adjustment stemmed from reductions in deferred tax assets and the liability for amounts due to affiliates. The effective income tax rate applicable to fee-related earnings-OCG before income taxes for the nine months ended September 30, 2012 was 20% without the $(7,134) one-time expense and 29% with it.
 

Distributable Earnings and Distribution Calculation

Distributable earnings and the calculations of the distributions attributable to the three and nine months ended September 30, 2012 and 2011, are set forth below:

  Three Months Ended   Nine Months Ended
September 30, September 30,
  2012       2011     2012       2011  
(in thousands, except per unit data)
Distributable Earnings:
Fee-related earnings $ 73,049 $ 79,614 $ 235,539 $ 235,436
Incentive income, net of incentive income compensation expense 29,628 17,320 132,593 160,534
Receipts of investment income (loss) (1) 26,640 20,711 93,276 72,747
Interest expense, net of interest income (7,687 ) (7,888 ) (23,914 ) (25,192 )
Operating Group income taxes (1,208 ) (686 ) (5,721 ) (4,808 )
Other income (expense), net   (59 )   314     2,274     395  
Distributable earnings $ 120,363   $ 109,385   $ 434,047   $ 439,112  
 
Distribution Calculation:
Operating Group distribution with respect to the period $ 97,810 $ 80,211 $ 349,349 $ 277,735
 
Distribution per Operating Group unit $ 0.65 $ 0.54 $ 2.32 $ 1.87
Adjustments per Class A unit:
Distributable earnings-OCG income taxes (0.04 ) (0.18 ) (0.24 ) (0.59 )
Tax receivable agreements (0.05 ) (0.04 ) (0.16 ) (0.12 )
Non-Operating Group expenses (0.01 ) (0.01 ) (0.03 ) (0.03 )

Other adjustments (2)

  -     (0.02 )   -     0.31  
Distribution per Class A unit (3) $ 0.55   $ 0.29   $ 1.89   $ 1.44  
(1)   This adjustment characterizes a portion of the distributions received from Oaktree and non-Oaktree funds and other investments as receipts of investment income or loss. In general, the income or loss component of a distribution from a fund is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends.
(2) This adjustment reflects inter-quarter timing differences.
(3) With respect to the quarter ended September 30, 2012, announced on November 6, 2012 and payable on November 20, 2012.
 

Units Outstanding

 
 

 

Three Months Ended Nine Months Ended
September 30, September 30,
2012   2011 2012   2011
(in thousands)
Weighted Average Units:
OCGH 120,283 125,862 123,070 125,990
Class A 30,181 22,677 27,494 22,677
Total 150,464 148,539 150,564 148,667
 
Units Eligible for Fiscal Period Distribution:
OCGH 120,296 125,862
Class A 30,181 22,677
Total 150,477 148,539
 

Segment Statements of Financial Condition (Unaudited)

   
 
As of
September 30,

2012

December 31, 2011

September 30,

2011

(in thousands)
Assets:
Cash and cash-equivalents $ 310,854 $ 297,230 $ 340,964
U.S. Treasury and government agency securities 360,839 381,697 407,456
Management fees receivable 24,010 23,207 23,898
Incentive income receivable 30,195 28,892 3,306
Corporate investments, at equity 1,236,710 1,159,287 1,088,047
Deferred tax assets 168,110 72,986 76,619
Other assets   135,770   120,609   129,364
Total assets $ 2,266,488 $ 2,083,908 $ 2,069,654
Liabilities and Capital:
Liabilities:
Accounts payable and accrued expenses $ 236,536 $ 250,191 $ 222,458
Due to affiliates 140,311 57,574 59,928
Debt obligations   618,929   652,143   659,643
Total liabilities   995,776   959,908   942,029
 
Capital:
OCGH non-controlling interest in consolidated subsidiaries 988,942 935,858 940,301
Unitholders’ capital attributable to Oaktree Capital Group, LLC   281,770   188,142   187,324
Total capital   1,270,712   1,124,000   1,127,625
Total liabilities and capital $ 2,266,488 $ 2,083,908 $ 2,069,654
 

Corporate Investments, at Equity

   
 
 
As of
September 30,

2012

December 31, 2011

September 30,

2011

(in thousands)
Investments in funds:
Oaktree funds:
Distressed debt $ 533,715 $ 542,539 $ 523,004
Corporate debt 134,587 141,972 127,091
Control investing 270,001 239,706 212,082
Convertible securities 1,365 1,251 1,241
Real estate 112,880 81,502 69,898
Listed equities 61,925 39,262 41,311
Non-Oaktree 98,000 91,520 93,291
 
Investments in companies:
DoubleLine Capital and other   24,237   21,535   20,129
Total corporate investments, at equity $ 1,236,710 $ 1,159,287 $ 1,088,047
 

Fund Data

Certain information regarding our closed-end, open-end and evergreen funds is set forth below.

Stock quotes in this article: OAK 

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.
DOW 16,408.54 -16.31 -0.10%
S&P 500 1,864.85 +2.54 0.14%
NASDAQ 4,095.5160 +9.2910 0.23%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto
Advertising Partners

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