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TheStreet Open House

(Graphic: Business Wire)

Stocks in this article: CG

Analysts and institutional investors may listen to the call by dialing +1-800-850-2903 (international +1-253-237-1169) and mentioning “The Carlyle Group third quarter 2012 Results 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 also will be available shortly after the live event.

About The Carlyle Group

The Carlyle Group is a global alternative asset manager with $157 billion of assets under management in 101 active funds and 63 fund of funds vehicles as of September 30, 2012. Carlyle invests across four segments – Corporate Private Equity, Real Assets, Global Market Strategies and Fund of Funds Solutions – in Africa, Asia, Australia, Europe, the Middle East, North America and South America. Carlyle has developed 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 1,300 people in 32 offices across six continents. www.carlyle.com

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 prospectus dated May 2, 2012, filed with the SEC pursuant to Rule 424(b) of the Securities Act on May 4, 2012, 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.

       
 
 

The Carlyle Group L.P. GAAP Statement of Operations (Unaudited)

 
Three Months Ended Nine Months Ended
Sept 30, 2012 Sept 30, 2011 Sept 30, 2012 Sept 30, 2011
(Dollars in millions, except unit and per unit data)
Revenues
Fund management fees $

239.8

 

$ 236.0 $ 714.1 $ 683.2
Performance fees
Realized 291.4 375.2 688.7 870.1
Unrealized   64.9     (859.1 )   88.0     (133.6 )
Total performance fees 356.3 (483.9 ) 776.7 736.5
Investment income (loss)
Realized 9.8 7.5 11.4 50.3
Unrealized   0.4     (12.9 )   27.3     6.3  
Total investment income (loss) 10.2 (5.4 ) 38.7 56.6
Interest and other income 4.5 2.5 9.9 15.6
Interest and other income of Consolidated Funds   247.7     191.2     678.4     521.6  
Total revenues 858.5 (59.6 ) 2,217.8

  2,013.5

 
Expenses
Compensation and benefits
Base compensation 177.0 101.9 433.0 277.2
Equity-based compensation 53.2 - 147.4 -
Performance fee related
Realized 121.9 51.4 188.3 136.2
Unrealized   41.5     (139.5 )   (1.4 )   (81.7 )
Total compensation and benefits 393.6 13.8 767.3 331.7
General, administrative and other expenses 92.9 80.4 268.1 224.7
Interest 4.0 15.7 20.6 48.5
Interest and other expenses of Consolidated Funds 204.1 99.1 568.1 290.0
Other non-operating expenses   10.3     9.4     6.9     30.0  
Total expenses 704.9 218.4 1,631.0 924.9
 
Other income (loss)
Net investment gains (losses) of Consolidated Funds   448.9     (341.2 )   1,707.6     (618.2 )
 
Income (Loss) before provision for income taxes 602.5 (619.2 ) 2,294.4 470.4
Provision for income taxes   5.5     12.9     27.8     25.7  
Net income (loss) 597.0 (632.1 ) 2,266.6 444.7

Net income (loss) attributable to non-controlling interests in consolidated entities

  485.4     (282.3 )   1,708.2     (473.4 )
Net income (loss) attributable to Carlyle Holdings 111.6 $

  (349.8

) 558.4 $

918.1

 

Net income attributable to non-controlling interests in Carlyle Holdings

  93.0     550.1  
Net income attributable to The Carlyle Group L.P. $ 18.6   $ 8.3  
 
 
Net income attributable to The Carlyle Group L.P. per common unit
Basic $ 0.43   $ 0.20  
Diluted (1) $ 0.40   $ 0.15  
 
Weighted-average common units
Basic   43,235,336     42,097,973  
Diluted   46,939,751     255,300,460  

(1) - Included in net income attributable to The Carlyle Group L.P. per common unit on a fully diluted basis is incremental net income from the assumed exchange of Carlyle Holdings partnership units of $31.1 million for the nine months ended September 30, 2012.

 
         
 

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
Sept 30, 2012   Sept 30, 2011   June 30, 2012 Sept 30, 2012   Sept 30, 2011
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $

233.9

 

$ 234.4 $ 235.0 $

914.9

 

$

843.0

 

Portfolio advisory fees, net 4.6 7.5 7.0 25.3 38.3
Transaction fees, net   7.2     5.4     3.7     23.5     44.8  
Total fee revenues 245.7 247.3 245.7 963.7 926.1
Performance fees
Realized 276.4 387.4 110.3 1,083.1 1,061.1
Unrealized   49.0     (894.7 )   (311.1 )   84.2     809.3  
Total performance fees 325.4 (507.3 ) (200.8 ) 1,167.3 1,870.4
Investment income (loss)
Realized 4.6 13.0 4.0 27.9 51.7
Unrealized   3.8     (17.6 )   10.0     35.4     34.8  
Total investment income (loss) 8.4 (4.6 ) 14.0 63.3 86.5
Interest and other income   4.4     1.4     2.5     10.1     20.9  
Total revenues 583.9 (263.2 ) 61.4 2,204.4 2,903.9
 
Segment Expenses
Compensation and benefits
Direct base compensation 97.9 107.2 105.8 405.9 390.9
Indirect base compensation 32.9 34.8 36.2 135.1 128.7
Equity-based compensation 0.6 - 0.6 1.2 -
Performance fee related
Realized 120.2 193.2 34.5 492.0 511.2
Unrealized   40.6     (477.2 )   (128.6 )   59.8     371.4  
Total compensation and benefits 292.2 (142.0 ) 48.5 1,094.0 1,402.2

General, administrative, and other indirect expenses

68.5 55.0 64.0 269.4 226.1
Interest expense   4.7     15.1     6.1     33.4     50.7  
Total expenses   365.4     (71.9 )   118.6     1,396.8     1,679.0  
 
Economic Net Income (Loss) $ 218.5   $ (191.3 ) $ (57.2 ) $ 807.6   $ 1,224.9  
Fee Related Earnings $ 45.5   $ 36.6   $ 35.5   $ 128.8   $ 150.6  
Net Performance Fees $ 164.6   $ (223.3 ) $ (106.7 ) $ 615.5   $ 987.8  
Realized Net Performance Fees $ 156.2   $ 194.2   $ 75.8   $ 591.1   $ 549.9  
Investment Income (Loss) $ 8.4   $ (4.6 ) $ 14.0   $ 63.3   $ 86.5  
Distributable Earnings $ 206.3   $ 243.8   $ 115.3   $ 747.8   $ 752.2  
 
 
 

Total Segment Information (Unaudited), cont

                     

Three Months Ended

Sept 30, 2012 vs.
Sept 30, 2011 Jun 30, 2012

Sept 30, 2011

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

  $     $  
Economic Net Income,

(Dollars in millions)

Total Segments
Revenues
Segment fee revenues
Fund management fees $ 234.4 $ 220.6 $

225.4

 

$ 235.0 $

233.9

 

$ (0.5 ) $ (1.1 )
Portfolio advisory fees, net 7.5 5.7 8.0 7.0 4.6 (2.9 ) (2.4 )
Transaction fees, net   5.4     9.9     2.7     3.7     7.2     1.8     3.5  
Total fee revenues 247.3 236.2 236.1 245.7 245.7 (1.6 ) -
Performance fees
Realized 387.4 414.6 281.8 110.3 276.4 (111.0 ) 166.1
Unrealized   (894.7 )   (3.4 )   349.7     (311.1 )   49.0     943.7     360.1  
Total performance fees (507.3 ) 411.2 631.5 (200.8 ) 325.4 832.7 526.2
Investment income
Realized 13.0 17.2 2.1 4.0 4.6 (8.4 ) 0.6
Unrealized   (17.6 )   0.4     21.2     10.0     3.8     21.4     (6.2 )
Total investment income (4.6 ) 17.6 23.3 14.0 8.4 13.0 (5.6 )
Interest and other income   1.4     0.6     2.6     2.5     4.4     3.0     1.9  
Total revenues (263.2 ) 665.6 893.5 61.4 583.9 847.1 522.5
 
Expenses
Compensation and benefits
Direct base compensation 107.2 101.0 101.2 105.8 97.9 (9.3 ) (7.9 )
Indirect base compensation 34.8 32.9 33.1 36.2 32.9 (1.9 ) (3.3 )
Equity-based compensation - - - 0.6 0.6 0.6 -
Performance fee related
Realized 193.2 198.2 139.1 34.5 120.2 (73.0 ) 85.7
Unrealized   (477.2 )   (9.8 )   157.6     (128.6 )   40.6     517.8     169.2  
Total compensation and benefits (142.0 ) 322.3 431.0 48.5 292.2 434.2 243.7

General, administrative, and other indirect expenses

55.0 76.3 60.6 64.0 68.5 13.5 4.5
Interest expense   15.1     12.8     9.8     6.1     4.7     (10.4 )   (1.4 )
Total expenses   (71.9 )   411.4     501.4     118.6     365.4     437.3     246.8  
 
Economic Net Income (Loss) $ (191.3 ) $ 254.2   $ 392.1   $ (57.2 ) $ 218.5   $ 409.8   $ 275.7  
Fee Related Earnings $ 36.6   $ 13.8   $ 34.0   $ 35.5   $ 45.5   $ 8.9   $ 10.0  
Net Performance Fees $ (223.3 ) $ 222.8   $ 334.8   $ (106.7 ) $ 164.6   $ 387.9   $ 271.3  
Realized Net Performance Fees $ 194.2   $ 216.4   $ 142.7   $ 75.8   $ 156.2   $ (38.0 ) $ 80.4  
Investment Income (Loss) $ (4.6 ) $ 17.6   $ 23.3   $ 14.0   $ 8.4   $ 13.0   $ (5.6 )
Distributable Earnings $ 243.8   $ 247.4   $ 178.8   $ 115.3   $ 206.3   $ (37.5 ) $ 91.0  
                   
 

Corporate Private Equity Segment Results (Unaudited)

 

Three Months Ended

Sept 30, 2012 vs.
Sept 30, 2011 Jun 30, 2012

Sept 30, 2011

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

  $     $  
Corporate Private Equity

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 128.1 $ 123.6 $

123.9

 

$ 124.0 $ 124.8 $ (3.3 ) $ 0.8
Portfolio advisory fees, net 4.8 4.3 7.0 4.9 3.1 (1.7 ) (1.8 )
Transaction fees, net   3.8     8.3     1.6     1.6     6.2     2.4     4.6  
Total fee revenues 136.7 136.2 132.5 130.5 134.1 (2.6 ) 3.6
Performance fees
Realized 333.0 262.2 223.0 80.6 241.4 (91.6 ) 160.8
Unrealized   (787.2 )   79.7     241.3     (269.7 )   72.8     860.0     342.5  
Total performance fees (454.2 ) 341.9 464.3 (189.1 ) 314.2 768.4 503.3
Investment income
Realized 8.1 8.1 0.8 1.5 (0.2 ) (8.3 ) (1.7 )
Unrealized   (14.8 )   5.9     14.5     3.7     (1.0 )   13.8     (4.7 )
Total investment income (6.7 ) 14.0 15.3 5.2 (1.2 ) 5.5 (6.4 )
Interest and other income   0.3     1.1     1.4     1.6     3.4     3.1     1.8  
Total revenues (323.9 ) 493.2 613.5 (51.8 ) 450.5 774.4 502.3
 
Expenses
Compensation and benefits
Direct base compensation 62.8 63.9 55.3 54.8 56.2 (6.6 ) 1.4
Indirect base compensation 24.1 23.7 20.8 24.1 19.9 (4.2 ) (4.2 )
Equity-based compensation - - - 0.4 0.4 0.4 -
Performance fee related
Realized 176.2 131.9 117.6 31.0 115.6 (60.6 ) 84.6
Unrealized   (444.2 )   58.0     132.0     (140.3 )   39.2     483.4     179.5  
Total compensation and benefits (181.1 ) 277.5 325.7 (30.0 ) 231.3 412.4 261.3

General, administrative, and other indirect expenses

32.4 46.5 38.0 39.2 39.5 7.1 0.3
Interest expense   9.8     7.5     5.9     3.5     2.5     (7.3 )   (1.0 )
Total expenses   (138.9 )   331.5     369.6     12.7     273.3     412.2     260.6  
 
Economic Net Income (Loss) $ (185.0 ) $ 161.7   $ 243.9   $ (64.5 ) $ 177.2   $ 362.2   $ 241.7  
Fee Related Earnings $ 7.9   $ (4.3 ) $ 13.9   $ 10.1   $ 19.0   $ 11.1   $ 8.9  
Net Performance Fees $ (186.2 ) $ 152.0   $ 214.7   $ (79.8 ) $ 159.4   $ 345.6   $ 239.2  
Realized Net Performance Fees $ 156.8   $ 130.3   $ 105.4   $ 49.6   $ 125.8   $ (31.0 ) $ 76.2  
Investment Income (Loss) $ (6.7 ) $ 14.0   $ 15.3   $ 5.2   $ (1.2 ) $ 5.5   $ (6.4 )
Distributable Earnings $ 172.8   $ 134.1   $ 120.1   $ 61.2   $ 144.6   $ (28.2 ) $ 83.4  
                   
 

Global Market Strategies Segment Results (Unaudited)

 

Three Months Ended

Sept 30, 2012 vs.
Sept 30, 2011 Jun 30, 2012

Sept 30, 2011

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

  $     $  
Global Market Strategies

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 50.4 $ 44.9 $

48.6

 

$

59.5

 

$ 58.2 $ 7.8 $ (1.3 )
Portfolio advisory fees, net 0.8 0.8 0.7 0.5 0.8 - 0.3
Transaction fees, net   -     -     -     -     0.3     0.3     0.3  
Total fee revenues 51.2 45.7 49.3 60.0 59.3 8.1 (0.7 )
Performance fees
Realized 6.1 108.5 32.4 1.3 0.9 (5.2 ) (0.4 )
Unrealized   (6.8 )   (101.0 )   12.7     4.0     5.7     12.5     1.7  
Total performance fees (0.7 ) 7.5 45.1 5.3 6.6 7.3 1.3
Investment income
Realized 3.1 9.3 1.3 2.8 4.6 1.5 1.8
Unrealized   (2.1 )   (4.7 )   3.7     4.8     0.8     2.9     (4.0 )
Total investment income 1.0 4.6 5.0 7.6 5.4 4.4 (2.2 )
Interest and other income   1.4     (0.4 )   0.6     0.4     0.5     (0.9 )   0.1  
Total revenues 52.9 57.4 100.0 73.3 71.8 18.9 (1.5 )
 
Expenses
Compensation and benefits
Direct base compensation 16.9 13.9 19.7 25.2 17.4 0.5 (7.8 )
Indirect base compensation 4.0 3.9 4.9 4.5 5.9 1.9 1.4
Equity-based compensation - - - 0.1 - - (0.1 )
Performance fee related
Realized (0.7 ) 41.8 17.8 0.7 0.2 0.9 (0.5 )
Unrealized   (10.7 )   (37.5 )   9.7     0.2     (1.8 )   8.9     (2.0 )
Total compensation and benefits 9.5 22.1 52.1 30.7 21.7 12.2 (9.0 )

General, administrative, and other indirect expenses

6.8 10.1 8.1 9.7 12.8 6.0 3.1
Interest expense   2.4     3.0     1.7     0.9     1.3     (1.1 )   0.4  
Total expenses   18.7     35.2     61.9     41.3     35.8     17.1     (5.5 )
 
Economic Net Income $ 34.2   $ 22.2   $ 38.1   $ 32.0   $ 36.0   $ 1.8   $ 4.0  
Fee Related Earnings $ 22.5   $ 14.4   $ 15.5   $ 20.0   $ 22.4   $ (0.1 ) $ 2.4  
Net Performance Fees $ 10.7   $ 3.2   $ 17.6   $ 4.4   $ 8.2   $ (2.5 ) $ 3.8  
Realized Net Performance Fees $ 6.8   $ 66.7   $ 14.6   $ 0.6   $ 0.7   $ (6.1 ) $ 0.1  
Investment Income $ 1.0   $ 4.6   $ 5.0   $ 7.6   $ 5.4   $ 4.4   $ (2.2 )
Distributable Earnings $ 32.4   $ 90.4   $ 31.4   $ 23.4   $ 27.7   $ (4.7 ) $ 4.3  
-
                 
 

Real Assets Segment Results (Unaudited)

 

Three Months Ended

Sept 30, 2012 vs.
Sept 30, 2011 Jun 30, 2012
Sept 30,

2011

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

  $     $  
Real Assets

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 37.2 $ 35.8 $ 36.6 $ 34.1 $ 34.4 $ (2.8 ) $ 0.3
Portfolio advisory fees, net 1.9 0.6 0.3 1.6 0.7 (1.2 ) (0.9 )
Transaction fees, net   1.6     1.6     1.1     2.1     0.7     (0.9 )   (1.4 )
Total fee revenues 40.7 38.0 38.0 37.8 35.8 (4.9 ) (2.0 )
Performance fees
Realized 29.1 16.9 23.2 27.0 31.9 2.8 4.9
Unrealized   (78.2 )   50.8     82.4     (56.0 )   (27.7 )   50.5     28.3  
Total performance fees (49.1 ) 67.7 105.6 (29.0 ) 4.2 53.3 33.2
Investment income
Realized 1.8 (0.2 ) - (0.3 ) 0.2 (1.6 ) 0.5
Unrealized   (0.7 )   (0.8 )   3.0     1.5     4.0     4.7     2.5  
Total investment income 1.1 (1.0 ) 3.0 1.2 4.2 3.1 3.0
Interest and other income   (0.5 )   (0.2 )   0.4     0.4     0.4     0.9     -  
Total revenues (7.8 ) 104.5 147.0 10.4 44.6 52.4 34.2
 
Expenses
Compensation and benefits
Direct base compensation 19.4 17.0 18.2 16.9 16.1 (3.3 ) (0.8 )
Indirect base compensation 6.7 5.3 6.4 5.6 5.7 (1.0 ) 0.1
Equity-based compensation - - - 0.1 0.2 0.2 0.1
Performance fee related
Realized 2.4 0.3 0.9 1.5 2.5 0.1 1.0
Unrealized   (4.3 )   0.5     5.9     2.1     5.3     9.6     3.2  
Total compensation and benefits 24.2 23.1 31.4 26.2 29.8 5.6 3.6

General, administrative, and other indirect expenses

12.8 15.2 12.7 11.8 12.5 (0.3 ) 0.7
Interest expense   2.9     2.3     1.9     1.1     0.7     (2.2 )   (0.4 )
Total expenses   39.9     40.6     46.0     39.1     43.0     3.1     3.9  
 
Economic Net Income (Loss) $ (47.7 ) $ 63.9   $ 101.0   $ (28.7 ) $ 1.6   $ 49.3   $ 30.3  
Fee Related Earnings $ (1.6 ) $ (2.0 ) $ (0.8 ) $ 2.7   $ 1.0   $ 2.6   $ (1.7 )
Net Performance Fees $ (47.2 ) $ 66.9   $ 98.8   $ (32.6 ) $ (3.6 ) $ 43.6   $ 29.0  
Realized Net Performance Fees $ 26.7   $ 16.6   $ 22.3   $ 25.5   $ 29.4   $ 2.7   $ 3.9  
Investment Income (Loss) $ 1.1   $ (1.0 ) $ 3.0   $ 1.2   $ 4.2   $ 3.1   $ 3.0  
Distributable Earnings $ 26.9   $ 14.4   $ 21.5   $ 27.9   $ 30.6   $ 3.7   $ 2.7  
             
 

Fund of Funds Solutions Segment Results (Unaudited)

 

Three Months Ended

Sept 30, 2012 vs.
Sept 30, 2011 Jun 30, 2012

Sept 30, 2011

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30,

2012

  $     $  
Fund of Funds Solutions

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 18.7 $ 16.3 $

16.3

 

$

17.4

 

$ 16.5 $ (2.2 ) $ (0.9 )
Portfolio advisory fees, net - - - - - - -
Transaction fees, net   -     -     -     -     -     -     -  
Total fee revenues 18.7 16.3 16.3 17.4 16.5 (2.2 ) (0.9 )
Performance fees
Realized 19.2 27.0 3.2 1.4 2.2 (17.0 ) 0.8
Unrealized   (22.5 )   (32.9 )   13.3     10.6     (1.8 )   20.7     (12.4 )
Total performance fees (3.3 ) (5.9 ) 16.5 12.0 0.4 3.7 (11.6 )
Investment income
Realized - - - - - - -
Unrealized   -     -     -     -     -     -     -  
Total investment income - - - - - - -
Interest and other income   0.2     0.1     0.2     0.1     0.1     (0.1 )   -  
Total revenues 15.6 10.5 33.0 29.5 17.0 1.4 (12.5 )
 
Expenses
Compensation and benefits
Direct base compensation 8.1 6.2 8.0 8.9 8.2 0.1 (0.7 )
Indirect base compensation - - 1.0 2.0 1.4 1.4 (0.6 )
Equity-based compensation - - - - - - -
Performance fee related
Realized 15.3 24.2 2.8 1.3 1.9 (13.4 ) 0.6
Unrealized   (18.0 )   (30.8 )   10.0     9.4     (2.1 )   15.9     (11.5 )
Total compensation and benefits 5.4 (0.4 ) 21.8 21.6 9.4 4.0 (12.2 )

General, administrative, and other indirect expenses

3.0 4.5 1.8 3.3 3.7 0.7 0.4
Interest expense   -     -     0.3     0.6     0.2     0.2     (0.4 )
Total expenses   8.4     4.1     23.9     25.5     13.3     4.9     (12.2 )
 
Economic Net Income $ 7.2   $ 6.4   $ 9.1   $ 4.0   $ 3.7   $ (3.5 ) $ (0.3 )
Fee Related Earnings $ 7.8   $ 5.7   $ 5.4   $ 2.7   $ 3.1   $ (4.7 ) $ 0.4  
Net Performance Fees $ (0.6 ) $ 0.7   $ 3.7   $ 1.3   $ 0.6   $ 1.2   $ (0.7 )
Realized Net Performance Fees $ 3.9   $ 2.8   $ 0.4   $ 0.1   $ 0.3   $ (3.6 ) $ 0.2  
Investment Income $ -   $ -   $ -   $ -   $ -   $ -   $ -  
Distributable Earnings $ 11.7   $ 8.5   $ 5.8   $ 2.8   $ 3.4   $ (8.3 ) $ 0.6  
                             
 

Total Assets Under Management Roll Forward (Unaudited)

 
Corporate Private Equity Global Market Strategies (8) Real Assets Fund of Funds (7) 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 - - - - - - - - - - - - - - -
Commitments (1) 2,048 - 2,048 222 - 222 132 - 132 (30 ) - (30 ) 2,372 - 2,372
Capital Called, net (2) (1,858 ) 1,725 (133 ) (249 ) 229 (20 ) (690 ) 637 (53 ) (1,154 ) 1,044 (110 ) (3,951 ) 3,635 (316 )
Distributions (3) 52 (3,411 ) (3,359 ) 23 (45 ) (22 ) 523 (1,262 ) (739 ) 125 (1,484 ) (1,359 ) 723 (6,202 ) (5,479 )
Subscriptions, net of Redemptions (4) - - - - 379 379 - - - - - - - 379 379
Changes in CLO collateral balances - - - - 506 506 - - - - - - - 506 506
Market Appreciation/(Depreciation) (5) - 1,868 1,868 - (89 ) (89 ) - 50 50 - 1,069 1,069 - 2,898 2,898
Foreign exchange (6)   42       181       223     -       109       109     13       76       89     209       217       426     264       583       847  
Balance, As of September 30, 2012 $ 15,576     $ 37,595     $ 53,171   $ 1,277     $ 28,854     $ 30,131   $ 7,037     $ 22,446     $ 29,483   $ 15,518     $ 29,062     $ 44,580   $ 39,408     $ 117,957     $ 157,365  
 
 
Balance, As of December 31, 2011 $ 13,328 $ 37,737 $ 51,065 $ 1,079 $ 23,434 $ 24,513 $ 8,278 $ 22,394 $ 30,672 $ 14,840 $ 25,879 $ 40,719 $ 37,525 $ 109,444 $ 146,969
Acquisitions - - - - 2,903 2,903 - - - - - - - 2,903 2,903
Commitments (1) 4,636 - 4,636 636 - 636 273 - 273 3,253 - 3,253 8,798 - 8,798
Capital Called, net (2) (2,851 ) 2,486 (365 ) (480 ) 432 (48 ) (2,458 ) 2,442 (16 ) (2,868 ) 2,901 33 (8,657 ) 8,261 (396 )
Distributions (3) 476 (6,981 ) (6,505 ) 42 (545 ) (503 ) 948 (3,915 ) (2,967 ) 295 (4,285 ) (3,990 ) 1,761 (15,726 ) (13,965 )
Subscriptions, net of Redemptions (4) - - - - 1,748 1,748 - - - - - - - 1,748 1,748
Changes in CLO collateral balances - - - - 864 864 - - - - - - - 864 864
Market Appreciation/(Depreciation) (5) - 4,383 4,383 - 150 150 - 1,496 1,496 - 3,996 3,996 - 10,025 10,025
Foreign exchange (6)   (13 )     (30 )     (43 )   -       (132 )     (132 )   (4 )     29       25     (2 )     571       569     (19 )     438       419  
Balance, As of September 30, 2012 $ 15,576     $ 37,595     $ 53,171   $ 1,277     $ 28,854     $ 30,131   $ 7,037     $ 22,446     $ 29,483   $ 15,518     $ 29,062     $ 44,580   $ 39,408     $ 117,957     $ 157,365  
(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 investment 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) Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments and changes in the net asset value of our hedge funds.
(6) 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) 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 June 30, 2012) as provided by their general partners, plus the net cash flows since the latest valuation, up to September 30, 2012.
(8) Ending balance is comprised of approximately $16.9 billion from our structured credit funds (including $0.1 billion of Available Capital), $9.8 billion in our hedge funds, and $3.5 billion (including $1.2 billion of Available Capital) in our carry funds.
   
 

Fee Earning Assets Under Management Roll Forward (Unaudited)

 
For the Three Months Ended September 30, 2012
(USD in millions)

Corporate Private Equity

 

Global Market Strategies

 

Real Assets (6)

 

Fund of Funds Solutions

  Total
Fee-Earning AUM      
Balance, Beginning of Period $ 37,129 $ 27,740 $ 19,528 $ 27,576 $ 111,973
Acquisitions - - - - -
Inflows, including Commitments(1) 285 203 327 2,945 3,760
Outflows, including Distributions(2) (669 ) (46 ) (347 ) (674 ) (1,736 )
Subscriptions, net of Redemptions (3) - 407 - - 407
Changes in CLO collateral balances - 171 - - 171
Market Appreciation/(Depreciation) (4) - (131 ) - 1 (130 )
Foreign exchange and other (5)   202       106       63       308       679  
Balance, End of Period $ 36,947     $ 28,450     $ 19,571     $ 30,156     $ 115,124  
 
For the Nine Months Ended September 30, 2012
(USD in millions)

Corporate Private Equity

 

Global Market Strategies

 

Real Assets (6)

 

Fund of Funds Solutions

  Total
Fee-Earning AUM
Balance, Beginning of Period $ 37,996 $ 23,186 $ 22,172 $ 27,671 $ 111,025
Acquisitions - 2,866 - - 2,866
Inflows, including Commitments(1) 698 705 1,504 6,143 9,050
Outflows, including Distributions(2) (1,707 ) (428 ) (4,126 ) (4,291 ) (10,552 )
Subscriptions, net of Redemptions (3) - 1,778 - - 1,778
Changes in CLO collateral balances - 675 - - 675
Market Appreciation/(Depreciation) (4) - (200 ) - 680 480
Foreign exchange and other (5)   (40 )     (132 )     21       (47 )     (198 )
Balance, End of Period $ 36,947     $ 28,450     $ 19,571     $ 30,156     $ 115,124  
(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) Market Appreciation/(Depreciation) represents changes in the net asset value of our hedge funds and of our fund of funds vehicles based on the lower of cost or fair value.
(5) 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.
(6) Carlyle/Riverstone Global Energy and Power, L.P., Carlyle/Riverstone Global Energy and Power II, L.P. Carlyle/Riverstone Global Energy and Power III, L.P., Riverstone/Carlyle Global Energy and Power IV, L.P., Carlyle/Riverstone Renewable Energy Infrastructure, L.P. and Riverstone/Carlyle Renewable Energy Infrastructure II, L.P. (collectively, the “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 Energy Funds. With the exception of Riverstone/Carlyle Global Energy and Power IV, L.P. and Riverstone/Carlyle Renewable Energy Infrastructure II, L.P., where Carlyle has a minority representation on the funds’ management committees, management of each of the 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 September 30, 2012, the Energy Funds had, in the aggregate, approximately $15 billion in AUM and $9 billion in fee-earning AUM, respectively.
 
 

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 September 30, 2012 as of September 30, 2012

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 $ 4,070.9 3.0x 34% 25% $ 1,362.4 $ 4,070.9 3.0x 34%
CP III 2/2000 $ 3,912.7 $ 4,031.6 $ 10,124.7 2.5x 27% 21% $ 4,007.9 $ 10,110.5 2.5x 27%
CP IV 12/2004 $ 7,850.0 $ 7,612.6 $ 15,091.9 2.0x 15% 12% $ 3,950.1 $ 10,158.4 2.6x 23%
CEP I 12/1997

1,003.6

972.0

2,119.5

2.2x 18% 11%

972.0

2,119.5

2.2x 18%
CEP II 9/2003

1,805.4

2,046.5

3,693.4

1.8x 38% 21%

1,016.5

2,742.2

2.7x 72%
CAP I 12/1998 $ 750.0 $ 627.7 $ 2,442.4 3.9x 25% 18% $ 627.7 $ 2,442.4 3.9x 25%
CAP II 2/2006 $ 1,810.0 $ 1,611.3 $ 2,712.2 1.7x 12% 8% $ 390.1 $ 1,325.0 3.4x 33%
CJP I 10/2001

¥

50,000.0

¥

47,291.4

¥

123,727.1

2.6x 61% 37%

¥

30,009.4

¥

104,486.3

3.5x 72%
All Other Funds (9) Various $ 3,384.0 $ 4,993.6 1.5x 17% 7% $ 2,194.8 $ 3,871.3 1.8x 22%
Coinvestments and Other (10) Various $ 6,844.3   $ 16,643.7   2.4x   36%   33% $ 4,311.4   $ 13,298.6   3.1x   36%
Total Fully Invested Funds $ 29,967.4   $ 65,151.8   2.2x   28%   21% $ 19,789.8   $ 52,877.7   2.7x   31%

Funds in the Investment Period (6)

CP V 5/2007 $ 13,719.7 $ 9,219.7 $ 13,648.1 1.5x 15% 10%
CEP III 12/2006

5,294.9

4,182.5

5,042.0

1.2x 8% 4%
CAP III 5/2008 $ 2,551.6 $ 1,764.8 $ 1,800.6 1.0x 1% (5%)
CJP II 7/2006

¥

165,600.0

¥

126,739.7

¥

126,859.5

1.0x 0% (5%)
CGFSP I 9/2008 $ 1,100.2 $ 809.6 $ 1,109.5 1.4x 16% 9%
CAGP IV 6/2008 $ 1,041.4 $ 525.2 $ 600.7 1.1x 8% (2%)
All Other Funds (11) Various $ 1,196.9   $ 1,421.1   1.2x   10%   0%                  
Total Funds in the Investment Period $ 20,528.1   $ 26,699.9   1.3x   11%   6% $ 4,273.5   $ 8,627.8   2.0x   25%
TOTAL CORPORATE PRIVATE EQUITY (12) $ 50,495.4   $ 91,851.7   1.8x   26%   18% $ 24,063.2   $ 61,505.5   2.6x   31%
 
 
TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS (5)
as of September 30, 2012 as of September 30, 2012

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 $ 1,335.9 2.6x 44% 30% $ 522.5 $ 1,335.9 2.6x 44%
CRP IV 12/2004 $ 950.0 $ 1,186.1 $ 1,110.0 0.9x (1%) (6%) $ 379.8 $ 459.9 1.2x 15%
CRP V 11/2006 $ 3,000.0 $ 3,133.6 $ 4,115.3 1.3x 10% 6% $ 1,526.0 $ 1,889.2 1.2x 9%
CEREP I 3/2002

426.6

517.0

741.6

1.4x 13% 7%

441.2

748.7

1.7x 19%
CEREP II 4/2005

762.7

826.9

306.9

0.4x (24%) (24%)

329.3

174.0

0.5x (22%)
CEREP III 5/2007

2,229.5

1,570.0

1,838.8

1.2x 6% 1%

-

3.5

n/a n/a
Energy II 7/2002 $ 1,100.0 $ 1,313.8 $ 3,544.2 2.7x 81% 55% $ 827.4 $ 3,277.4 4.0x 105%
Energy III 10/2005 $ 3,800.0 $ 3,530.1 $ 6,624.8 1.9x 16% 12% $ 1,504.9 $ 4,190.0 2.8x 28%
Energy IV 12/2007 $ 5,979.1 $ 4,815.5 $ 7,618.3 1.6x 24% 15% $ 1,622.5 $ 3,351.1 2.1x 31%
All Other Funds (13) Various $ 1,726.3 $ 1,724.8 1.0x (1%) (9%) $ 1,286.7 $ 1,544.4 1.2x 10%
Coinvestments and Other (10) Various $ 3,977.6   $ 6,778.9   1.7x   21%   16% $ 1,521.9   $ 3,780.2   2.5x   31%
Total Fully Invested Funds $ 23,957.6   $ 36,561.7   1.5x   17%   11% $ 10,183.7   $ 21,020.6   2.1x   29%

Funds in the Investment Period (6)

CRP VI 9/2010 $ 2,340.0 $ 650.1 $ 769.3 1.2x 31% 13%
CIP 9/2006 $ 1,143.7 $ 733.7 $ 705.8 1.0x (1%) (7%)
Renew II 3/2008 $ 3,417.5 $ 2,522.3 $ 3,451.3 1.4x 16% 9%
All Other Funds (14) Various $ 690.4   $ 687.8   1.0x   1%   (3%)                  
Total Funds in the Investment Period $ 4,596.6   $ 5,614.2   1.2x   11%   4% $ 739.1   $ 961.7   1.3x   12%
TOTAL REAL ASSETS (12) $ 28,554.2   $ 42,175.9   1.5x   16%   10% $ 10,922.9   $ 21,982.3   2.0x   28%
 
 
             

Global Markets Strategies Carry Funds and Fund of Funds Solutions (Unaudited)

 
TOTAL INVESTMENTS
as of September 30, 2012  

Inception to September 30, 2012

Fund Inception Date (1)

  Fund Size  

Cumulative Invested Capital (15)

 

Total Fair Value (3)

  MOIC (4)   Gross IRR (7)   Net IRR (8)
Global Market Strategies (Reported in Local Currency, in Millions)
CSP II 6/2007

$

1,352.3

$

1,352.3

$

2,192.2 1.6x 17% 12%
 
 
 
TOTAL INVESTMENTS
as of September 30, 2012  

Inception to September 30, 2012

Vintage Year

  Fund Size  

Cumulative Invested Capital (2)(18)

 

Total Fair Value (3)(18)

  MOIC (4)   Gross IRR (7)   Net IRR (8)
Fund of Funds Solutions (16) (Reported in Local Currency, in Millions)

Fully Committed Funds (17)

Main Fund I - Fund Investments 2000

5,174.6

3,965.6

6,339.6

1.6x 12% 12%
Main Fund II - Fund Investments 2003

4,545.0

4,424.4

6,190.7

1.4x 9% 9%
Main Fund III - Fund Investments 2005

11,500.0

9,620.8

10,996.0

1.1x 5% 4%
Main Fund I - Secondary Investments 2002

519.4

470.1

885.0

1.9x 55% 51%
Main Fund II - Secondary Investments 2003

998.4

933.5

1,644.7

1.8x 28% 26%
Main Fund III - Secondary Investments 2006

2,250.0

2,091.4

2,717.8

1.3x 9% 9%
Main Fund IV - Secondary Investments 2010

1,856.4

1,553.9

1,962.6

1.3x 22% 20%
Main Fund II - Co-Investments 2003

1,090.0

884.0

2,340.3

2.6x 45% 43%
Main Fund III - Co-Investments 2006

2,760.0

2,506.7

2,773.7

1.1x 2% 2%
Main Fund II - Mezzanine Investments 2004

700.0

711.9

933.6

1.3x 8% 7%
Main Fund III - Mezzanine Investments 2006

2,000.0

1,378.6

1,731.6

1.3x 10% 9%
All Other Funds (19) Various

1,278.1

 

1,888.1

  1.5x   18%   15%
Total Fully Committed Funds

29,818.8

 

40,403.6

  1.4x   11%   10%

Funds in the Commitment Period

Main Fund IV - Fund Investments 2009

4,880.0

1,099.3

1,092.6

1.0x (1%) (3%)
Main Fund V - Fund Investments 2012

4,151.1

1.0

0.7

n/m n/m n/m
Main Fund V - Secondary Investments 2011

2,377.3

297.3

324.4

1.1x 33% 27%
Main Fund IV - Co-Investments 2010

1,575.0

1,151.8

1,324.1

1.1x 11% 9%
Main Fund V - Co-Investments 2012

1,127.3

38.4

38.4

n/m n/m n/m
All Other Funds (19) Various

52.0

 

52.8

  1.0x   6%   (0%)
Total Funds in the Commitment Period

2,639.7

 

2,833.0

  1.1x   7%   5%
TOTAL FUND OF FUNDS SOLUTIONS

32,458.6

 

43,236.7

  1.3x   11%   10%
TOTAL FUND OF FUNDS SOLUTIONS (USD) (20)

$

41,795.6  

$

55,674.1   1.3x
(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 was formed in 2007.
(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 ("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 ("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, CUSGF III, CEVP, CETP I, CAVP I, CAVP II, CAGP 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, CSABF, CSSAF, CETP II, CBPF, and CEOF 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, ENERGY I and RENEW I.
(14) Aggregate includes the following funds: CAREP II and 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 September 30, 2012, 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.
       
 

Reconciliation for Economic Net Income and Distributable Earnings (Unaudited)

 
Three Months Ended
September 30, 2012 September 30, 2011

(Dollars in millions)

 
Income (loss) before provision for income taxes $ 602.5 $ (619.2 )
Adjustments:
Partner compensation - 111.6
Equity-based compensation issued in conjunction with the IPO 52.6 -
Acquisition related charges and amortization of intangibles 43.4 22.6
Other non-operating expenses 10.3 9.4

Net income attributable to non-controlling interests in consolidated entities

(485.4 ) 282.3

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

(4.0 ) -
Severance and lease terminations 0.9 2.0
Other adjustments   (1.8 )   -  
Economic Net Income (Loss) $ 218.5   $ (191.3 )
Net performance fees 164.6 (223.3 )
Investment income (loss)   8.4     (4.6 )
Fee Related Earnings $ 45.5   $ 36.6  
Realized performance fees, net of related compensation 156.2 194.2
Investment income - realized   4.6     13.0  
Distributable Earnings $ 206.3   $ 243.8  
       
 

Reconciliation for Economic Net income and Distributable Earnings, cont (Unaudited)

 

For the Three Months Ended

September 30, 2012
(Dollars in millions, except unit and per unit amounts)
 
 
Economic Net Income $

218.5

 

Less: Provision for Income Taxes   14.9  
Economic Net Income, After Taxes $ 203.6  
 
Economic Net Income, After Taxes per Adjusted Unit (1) $ 0.66  
 
 
Distributable Earnings $ 206.3
Less: Estimated foreign, state, and local taxes   10.6  
Distributable Earnings, After Taxes $ 195.7  
 
Distributable Earnings to The Carlyle Group L.P. $ 27.8
Less: Estimated current corporate income taxes   0.7  
Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes $ 27.1  
 
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding (2) $ 0.63  
 
 
(1) Adjusted Units were determined as follows:
 
The Carlyle Group L.P. common units outstanding 43,221,452
Carlyle Holdings partnership units held by the existing owners 260,773,995
Dilutive effect of unvested deferred restricted common units 2,267,863
Contingently issuable Carlyle Holdings partnership units   1,436,552  
Total Adjusted Units   307,699,862  
 
(2) As of September 30, 2012, there are 43,221,452 outstanding common units of The Carlyle Group L.P.
             
 

The Carlyle Group L.P. GAAP for 12-Month Rolling Summary (Unaudited)

 
Twelve Months Ended
Sept. 30, 2012 Sept. 30, 2011
(Dollars in millions)
Revenues
Fund management fees $ 946.4 $ 887.3
Performance fees
Realized 1,126.0 1,044.1
Unrealized   35.8     861.2  
Total performance fees 1,161.8 1,905.3
Investment income
Realized 26.2 63.0
Unrealized   34.3     22.9  
Total investment income 60.5 85.9
Interest and other income 10.1 21.3
Interest and other income of Consolidated Funds   870.8     655.8  
Total revenues 3,049.6 3,555.6
 
Expenses
Compensation and benefits
Base compensation 530.3 320.9
Equity-based compensation 147.4 -
Performance fee related
Realized 277.8 182.9
Unrealized   (42.0 )   (5.0 )
Total compensation and benefits 913.5 498.8
General, administrative and other expenses 366.9 296.5
Interest 32.7 52.8
Interest and other expenses of Consolidated Funds 731.2 360.5
Other non-operating expenses 8.9 30.0

Loss from early extinguishment of debt, net of related expenses

- 2.5
Equity issued for affiliate debt financing   -     214.0  
Total expenses 2,053.2 1,455.1
 
Other income (loss)
Net investment income (losses) of Consolidated Funds 2,002.5 (1,037.3 )
Gain on business acquisition   7.9     -  
 
Income before provision for income taxes 3,006.8 1,063.2
Provision for income taxes   30.6     31.5  
Net income 2,976.2 1,031.7

Net income (loss) attributable to non-controlling interests in consolidated entities

  1,979.0     (840.9 )

Net income attributable to Carlyle Holdings

997.2 $ 1,872.6  

Net income attributable to non-controlling interests in Carlyle Holdings

  988.9  
Net income attributable to The Carlyle Group L.P. $ 8.3  
     
 

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

 
Twelve Months Ended
Sept. 30, 2012 Sept. 30, 2011
(Dollars in millions)
 
Income before provision for income taxes $ 3,006.8 $ 1,063.2
Adjustments:
Partner compensation (479.1 ) (1,003.6 )
Equity-based compensation issued in conjunction with IPO 146.2 -
Acquisition related charges and amortization of intangibles 123.4 66.6
Gain on business acquisition (7.9 ) -
Other non-operating expenses 8.9 30.0
Losses associated with early extinguishment of debt - 2.5
Equity issued for affiliate debt financing - 214.0

Net income attributable to non-controlling interests in consolidated entities

(1,979.0 ) 840.9

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

(9.7 ) -
Severance and lease terminations 3.2 10.7
Other adjustments   (5.2 )   0.6  
Economic Net Income $ 807.6   $ 1,224.9  
Net performance fees 615.5 987.8
Investment income   63.3     86.5  
Fee Related Earnings $ 128.8   $ 150.6  
Realized performance fees, net of related compensation 591.1 549.9
Investment income - realized   27.9     51.7  
Distributable Earnings $ 747.8   $ 752.2  
       
 

The Carlyle Group L.P. GAAP Balance Sheet (Unaudited)

 
As of September 30, 2012

Consolidated Operating Entities

Consolidated Funds

Eliminations Consolidated
(Dollars in millions)
Assets
Cash and cash equivalents $

769.2

 

$ - $ - $

769.2

 

Cash and cash equivalents held at Consolidated Funds -

1,425.1

 

- 1,425.1
Restricted cash 28.5 - - 28.5
Restricted cash and securities of Consolidated Funds - 36.7 - 36.7
Accrued performance fees 2,155.4 - (2.4 ) 2,153.0
Investments 458.9 - (48.4 ) 410.5
Investments of Consolidated Funds - 23,994.7 - 23,994.7
Due from affiliates and other receivables, net 254.8 - (12.0 ) 242.8

Due from affiliates and other receivables of Consolidated Funds, net

- 234.9 - 234.9
Fixed assets, net 62.9 - - 62.9
Deposits and other 48.8 3.5 - 52.3
Intangible assets, net 577.3 - - 577.3
Deferred tax assets   56.1     -     -     56.1  
Total assets $ 4,411.9   $ 25,694.9   $ (62.8 ) $ 30,044.0  
 
Liabilities and partners' capital
Loans payable $ 500.0 $ - $ - $ 500.0
Loans payable of Consolidated Funds - 13,091.1 (46.8 ) 13,044.3
Accounts payable, accrued expenses and other liabilities 212.2 - - 212.2
Accrued compensation and benefits 1,302.7 - - 1,302.7
Due to affiliates 216.1 39.7 (0.1 ) 255.7
Deferred revenue 185.1 1.7 (0.3 ) 186.5
Deferred tax liabilities 69.6 - - 69.6
Other liabilities of Consolidated Funds - 970.0 (13.8 ) 956.2
Accrued giveback obligations   86.1     -     -     86.1  
Total liabilities 2,571.8 14,102.5 (61.0 ) 16,613.3
 
Redeemable non-controlling interests in consolidated entities 4.8 2,728.1 - 2,732.9
 
Total partners' capital   1,835.3     8,864.3     (1.8 )   10,697.8  
Total liabilities and partners' capital $ 4,411.9   $ 25,694.9   $ (62.8 ) $ 30,044.0  
         
 

Sampling of Third Quarter Announced Transactions

   
Closed in Q3 Pending/Closed Post-Q3
Target   Fund(s) Target   Fund(s)
Walbro Engine Management CJP II Genesee & Wyoming 1 CP V
Philadelphia Energy CEOF / CEMOF Getty Images 1 CP V
Orguel CSABF Landmark Aviation 1 CP V
Service King CEOF / CSP III Penti MENA
Meinian Onehealth   CBPF vwd Group CETP II
Tok&Stok CSABF
Cogentrix Energy LLC CIP
DuPont Performance Coatings CP V / CEP III
TCW Group CP V / CGFSP I
Hamilton Sunstrand   CP V
 
(1) Closed in Q4 2012

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 future acquisitions, 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 combined and 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. 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.

Income before provision for income taxes is the GAAP financial measure most comparable to ENI, Fee Related Earnings and Distributable Earnings. 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.

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