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(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 “Carlyle Group Fourth 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 on the website shortly after the live event.

About The Carlyle Group

The Carlyle Group (NASDAQ: CG) is a global alternative asset manager with $170 billion of assets under management across 113 funds and 67 fund of fund vehicles as of December 31, 2012. Carlyle's purpose is to invest wisely and create value on behalf of its investors, many of whom are public pensions. 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 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 1,400 people in 33 offices across six continents.

Web: www.carlyle.com

Videos: www.youtube.com/onecarlyle

Tweets: www.twitter.com/onecarlyle

Podcasts: www.carlyle.com/about-carlyle/market-commentary

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 Year Ended
Dec 31, 2012   Dec 31, 2011 Dec 31, 2012 Dec 31, 2011
(Dollars in millions, except unit and per unit data)
Revenues
Fund management fees $ 263.5 $ 232.3 $

977.6

 

$ 915.5
Performance fees
Realized 218.8 437.3 907.5 1,307.4
Unrealized   45.6     (52.2 )   133.6     (185.8 )
Total performance fees 264.4 385.1 1,041.1 1,121.6
Investment income (loss)
Realized 4.9 14.8 16.3 65.1
Unrealized   (7.2 )   7.0     20.1     13.3  
Total investment income (loss) (2.3 ) 21.8 36.4 78.4
Interest and other income 4.6 0.2 14.5 15.8
Interest and other income of Consolidated Funds   225.1     192.4     903.5     714.0  
Total revenues 755.3 831.8 2,973.1 2,845.3
 
Expenses
Compensation and benefits
Base compensation 191.5 97.3 624.5 374.5
Equity-based compensation 54.3 - 201.7 -
Performance fee related
Realized 97.2 89.5 285.5 225.7
Unrealized   33.6     (40.6 )   32.2     (122.3 )
Total compensation and benefits 376.6 146.2 1,143.9 477.9
General, administrative and other expenses 89.4 98.8 357.5 323.5
Interest 4.0 12.1 24.6 60.6
Interest and other expenses of Consolidated Funds 190.0 163.1 758.1 453.1
Other non-operating expenses   0.2     2.0     7.1     32.0  
Total expenses 660.2 422.2 2,291.2 1,347.1
 
Other income (loss)
Net investment gains (losses) of Consolidated Funds 50.4 294.9 1,758.0 (323.3 )
Gain on business acquisition   -     7.9     -     7.9  
 
Income before provision for income taxes 145.5 712.4 2,439.9 1,182.8
Provision for income taxes   12.6     2.8     40.4     28.5  
Net income 132.9 709.6 2,399.5 1,154.3

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

  48.5     270.8     1,756.7     (202.6 )
Net income attributable to Carlyle Holdings 84.4 $ 438.8   642.8 $ 1,356.9  

Net income attributable to non-controlling interests in Carlyle Holdings

  72.4     622.5  
Net income attributable to The Carlyle Group L.P. $ 12.0   $ 20.3  
 
 
Net income attributable to The Carlyle Group L.P. per common unit
Basic $ 0.28   $ 0.48  
Diluted (1) $ 0.25   $ 0.41  
 
Weighted-average common units
Basic   43,300,792     42,562,928  
Diluted   48,945,580     259,698,987  
 

(1) Included in net income attributable to The Carlyle Group L.P. per common unit on a fully diluted basis is incremental net income fromthe assumed exchange of Carlyle Holdings partnership units of $87.1 million for the year ended December 31, 2012.

 

             

Total Segment Information (Unaudited)

 

The following table sets forth information in the format used by management when making resourcedeployment decisions and in assessing the performance of our segments. The information below is theaggregate results of our four segments.

 
Three Months Ended Twelve Months Ended
Dec 31, Dec 31, Sept 30, Dec 31, Dec 31,
2012 2011 2012 2012 2011
(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees $ 248.9 $ 220.6 $ 233.9 $ 943.2 $ 870.5
Portfolio advisory fees, net 2.4 5.7 4.6 22.0 37.5
Transaction fees, net   13.9   9.9   7.2   27.5   38.2
Total fee revenues 265.2 236.2 245.7 992.7 946.2
Performance fees
Realized 200.6 414.6 276.4 869.1 1,301.3
Unrealized   39.3   (3.4)   49.0   126.9   (195.1)
Total performance fees 239.9 411.2 325.4 996.0 1,106.2
Investment income (loss)
Realized 5.6 17.2 4.6 16.3 65.6
Unrealized   (9.8)   0.4   3.8   25.2   15.8
Total investment income (loss) (4.2) 17.6 8.4 41.5 81.4
Interest and other income   4.2   0.6   4.4   13.7   15.5
Total revenues 505.1 665.6 583.9 2,043.9 2,149.3
 
Segment Expenses
Compensation and benefits
Direct base compensation 112.5 101.0 97.9 417.4 404.4
Indirect base compensation 42.3 32.9 32.9 144.5 133.5
Equity-based compensation 0.6 - 0.6 1.8 -
Performance fee related
Realized 73.2 198.2 120.2 367.0 623.8
Unrealized   34.8   (9.8)   40.6   104.4   (148.0)
Total compensation and benefits 263.4 322.3 292.2 1,035.1 1,013.7
General, administrative, and other indirect

expenses

49.5 72.9 62.3 227.2 221.5
Depreciation and amortization expense 6.1 3.4 6.2 21.5 21.8
Interest expense   3.9   12.8   4.7   24.5   59.2
Total expenses   322.9   411.4   365.4   1,308.3   1,316.2
 
Economic Net Income $ 182.2 $ 254.2 $ 218.5 $ 735.6 $ 833.1
Fee Related Earnings $ 54.5 $ 13.8 $ 45.5 $ 169.5 $ 121.3
Net Performance Fees $ 131.9 $ 222.8 $ 164.6 $ 524.6 $ 630.4
Realized Net Performance Fees $ 127.4 $ 216.4 $ 156.2 $ 502.1 $ 677.5
Investment Income (Loss) $ (4.2) $ 17.6 $ 8.4 $ 41.5 $ 81.4
Distributable Earnings $ 187.5 $ 247.4 $ 206.3 $ 687.9 $ 864.4
 
               

Total Segment Information (Unaudited), cont

 

Three Months Ended

Dec 31, 2012 vs.

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

Dec 31, 2012

 

Dec 31, 2011

 

Sept 30, 2012

Economic Net Income,

(Dollars in millions)

Total Segments
Revenues
Segment fee revenues
Fund management fees $ 220.6 $ 225.4 $ 235.0 $ 233.9 $ 248.9 $ 28.3 $ 15.0
Portfolio advisory fees, net 5.7 8.0 7.0 4.6 2.4 (3.3) (2.2)
Transaction fees, net   9.9   2.7   3.7   7.2   13.9   4.0   6.7
Total fee revenues 236.2 236.1 245.7 245.7 265.2 29.0 19.5
Performance fees
Realized 414.6 281.8 110.3 276.4 200.6 (214.0) (75.8)
Unrealized   (3.4)   349.7   (311.1)   49.0   39.3   42.7   (9.7)
Total performance fees 411.2 631.5 (200.8) 325.4 239.9 (171.3) (85.5)
Investment income
Realized 17.2 2.1 4.0 4.6 5.6 (11.6) 1.0
Unrealized   0.4   21.2   10.0   3.8   (9.8)   (10.2)   (13.6)
Total investment income 17.6 23.3 14.0 8.4 (4.2) (21.8) (12.6)
Interest and other income   0.6   2.6   2.5   4.4   4.2   3.6   (0.2)
Total revenues 665.6 893.5 61.4 583.9 505.1 (160.5) (78.8)
 
Expenses
Compensation and benefits
Direct base compensation 101.0 101.2 105.8 97.9 112.5 11.5 14.6
Indirect base compensation 32.9 33.1 36.2 32.9 42.3 9.4 9.4
Equity-based compensation - - 0.6 0.6 0.6 0.6 -
Performance fee related
Realized 198.2 139.1 34.5 120.2 73.2 (125.0) (47.0)
Unrealized   (9.8)   157.6   (128.6)   40.6   34.8   44.6   (5.8)
Total compensation and benefits 322.3 431.0 48.5 292.2 263.4 (58.9) (28.8)
General, administrative, and other

indirect expenses

72.9 55.4 60.0 62.3 49.5 (23.4) (12.8)
Depreciation and amortization expense 3.4 5.2 4.0 6.2 6.1 2.7 (0.1)
Interest expense   12.8   9.8   6.1   4.7   3.9   (8.9)   (0.8)
Total expenses   411.4   501.4   118.6   365.4   322.9   (88.5)   (42.5)
 
Economic Net Income (Loss) $ 254.2 $ 392.1 $ (57.2) $ 218.5 $ 182.2 $ (72.0) $ (36.3)
Fee Related Earnings $ 13.8 $ 34.0 $ 35.5 $ 45.5 $ 54.5 $ 40.7 $ 9.0
Net Performance Fees $ 222.8 $ 334.8 $ (106.7) $ 164.6 $ 131.9 $ (90.9) $ (32.7)
Realized Net Performance Fees $ 216.4 $ 142.7 $ 75.8 $ 156.2 $ 127.4 $ (89.0) $ (28.8)
Investment Income (Loss) $ 17.6 $ 23.3 $ 14.0 $ 8.4 $ (4.2) $ (21.8) $ (12.6)
Distributable Earnings $ 247.4 $ 178.8 $ 115.3 $ 206.3 $ 187.5 $ (59.9) $ (18.8)
 
   

Corporate Private Equity Segment Results (Unaudited)

 

Three Months Ended

          Dec 31, 2012 vs.

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

Dec 31, 2012

 

Dec 31, 2011

 

 

Sept 30, 2012

Corporate Private Equity

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 123.6 $ 123.9 $ 124.0 $ 124.8 $ 123.5 $ (0.1) $ (1.3)
Portfolio advisory fees, net 4.3 7.0 4.9 3.1 2.8 (1.5) (0.3)
Transaction fees, net   8.3   1.6   1.6   6.2   9.6   1.3   3.4
Total fee revenues 136.2 132.5 130.5 134.1 135.9 (0.3) 1.8
Performance fees
Realized 262.2 223.0 80.6 241.4 94.5 (167.7) (146.9)
Unrealized   79.7   241.3   (269.7)   72.8   86.4   6.7   13.6
Total performance fees 341.9 464.3 (189.1) 314.2 180.9 (161.0) (133.3)
Investment income (loss)
Realized 8.1 0.8 1.5 (0.2) 1.2 (6.9) 1.4
Unrealized   5.9   14.5   3.7   (1.0)   3.3   (2.6)   4.3
Total investment income (loss) 14.0 15.3 5.2 (1.2) 4.5 (9.5) 5.7
Interest and other income   1.1   1.4   1.6   3.4   2.6   1.5   (0.8)
Total revenues 493.2 613.5 (51.8) 450.5 323.9 (169.3) (126.6)
 
Expenses
Compensation and benefits
Direct base compensation 63.9 55.3 54.8 56.2 59.9 (4.0) 3.7
Indirect base compensation 23.7 20.8 24.1 19.9 27.7 4.0 7.8
Equity-based compensation - - 0.4 0.4 0.4 0.4 -
Performance fee related
Realized 131.9 117.6 31.0 115.6 40.5 (91.4) (75.1)
Unrealized   58.0   132.0   (140.3)   39.2   40.8   (17.2)   1.6
Total compensation and benefits 277.5 325.7 (30.0) 231.3 169.3 (108.2) (62.0)
General, administrative, and other

indirect expenses

44.3 34.8 36.9 36.0 26.3 (18.0) (9.7)
Depreciation and amortization expense 2.2 3.2 2.3 3.5 3.5 1.3 -
Interest expense   7.5   5.9   3.5   2.5   2.4   (5.1)   (0.1)
Total expenses   331.5   369.6   12.7   273.3   201.5   (130.0)   (71.8)
 
Economic Net Income (Loss) $ 161.7 $ 243.9 $ (64.5) $ 177.2 $ 122.4 $ (39.3) $ (54.8)
Fee Related Earnings $ (4.3) $ 13.9 $ 10.1 $ 19.0 $ 18.3 $ 22.6 $ (0.7)
Net Performance Fees $ 152.0 $ 214.7 $ (79.8) $ 159.4 $ 99.6 $ (52.4) $ (59.8)
Realized Net Performance Fees $ 130.3 $ 105.4 $ 49.6 $ 125.8 $ 54.0 $ (76.3) $ (71.8)
Investment Income (Loss) $ 14.0 $ 15.3 $ 5.2 $ (1.2) $ 4.5 $ (9.5) $ 5.7
Distributable Earnings $ 134.1 $ 120.1 $ 61.2 $ 144.6 $ 73.5 $ (60.6) $ (71.1)
 
               

Global Market Strategies Segment Results (Unaudited)

 

Three Months Ended

Dec 31, 2012 vs.

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

Dec 31, 2012

 

Dec 31, 2011

 

Sept 30, 2012

Global Market Strategies

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 44.9 $ 48.6 $ 59.5 $ 58.2 $ 70.9 $ 26.0 $ 12.7
Portfolio advisory fees, net 0.8 0.7 0.5 0.8 0.5 (0.3) (0.3)
Transaction fees, net   -   -   -   0.3   3.2   3.2   2.9
Total fee revenues 45.7 49.3 60.0 59.3 74.6 28.9 15.3
Performance fees
Realized 108.5 32.4 1.3 0.9 77.8 (30.7) 76.9
Unrealized   (101.0)   12.7   4.0   5.7   (43.6)   57.4   (49.3)
Total performance fees 7.5 45.1 5.3 6.6 34.2 26.7 27.6
Investment income
Realized 9.3 1.3 2.8 4.6 4.4 (4.9) (0.2)
Unrealized   (4.7)   3.7   4.8   0.8   0.3   5.0   (0.5)
Total investment income 4.6 5.0 7.6 5.4 4.7 0.1 (0.7)
Interest and other income   (0.4)   0.6   0.4   0.5   0.8   1.2   0.3
Total revenues 57.4 100.0 73.3 71.8 114.3 56.9 42.5
 
Expenses
Compensation and benefits
Direct base compensation 13.9 19.7 25.2 17.4 24.0 10.1 6.6
Indirect base compensation 3.9 4.9 4.5 5.9 6.0 2.1 0.1
Equity-based compensation - - 0.1 - 0.1 0.1 0.1
Performance fee related
Realized 41.8 17.8 0.7 0.2 27.5 (14.3) 27.3
Unrealized   (37.5)   9.7   0.2   (1.8)   (16.5)   21.0   (14.7)
Total compensation and benefits 22.1 52.1 30.7 21.7 41.1 19.0 19.4
General, administrative, and other

indirect expenses

9.6 7.3 9.1 11.7 12.5 2.9 0.8
Depreciation and amortization expense 0.5 0.8 0.6 1.1 1.0 0.5 (0.1)
Interest expense   3.0   1.7   0.9   1.3   0.6   (2.4)   (0.7)
Total expenses   35.2   61.9   41.3   35.8   55.2   20.0   19.4
 
Economic Net Income $ 22.2 $ 38.1 $ 32.0 $ 36.0 $ 59.1 $ 36.9 $ 23.1
Fee Related Earnings $ 14.4 $ 15.5 $ 20.0 $ 22.4 $ 31.2 $ 16.8 $ 8.8
Net Performance Fees $ 3.2 $ 17.6 $ 4.4 $ 8.2 $ 23.2 $ 20.0 $ 15.0
Realized Net Performance Fees $ 66.7 $ 14.6 $ 0.6 $ 0.7 $ 50.3 $ (16.4) $ 49.6
Investment Income $ 4.6 $ 5.0 $ 7.6 $ 5.4 $ 4.7 $ 0.1 $ (0.7)
Distributable Earnings $ 90.4 $ 31.4 $ 23.4 $ 27.7 $ 85.9 $ (4.5) $ 58.2

 

               

Real Assets Segment Results (Unaudited)

 

Three Months Ended

Dec 31, 2012 vs.

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

Dec 31, 2012

 

Dec 31, 2011

 

Sept 30, 2012

Real Assets

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 35.8 $ 36.6 $ 34.1 $ 34.4 $ 35.9 $ 0.1 $ 1.5
Portfolio advisory fees, net 0.6 0.3 1.6 0.7 (0.9) (1.5) (1.6)
Transaction fees, net   1.6   1.1   2.1   0.7   1.1   (0.5)   0.4
Total fee revenues 38.0 38.0 37.8 35.8 36.1 (1.9) 0.3
Performance fees
Realized 16.9 23.2 27.0 31.9 24.5 7.6 (7.4)
Unrealized   50.8   82.4   (56.0)   (27.7)   (11.9)   (62.7)   15.8
Total performance fees 67.7 105.6 (29.0) 4.2 12.6 (55.1) 8.4
Investment income (loss)
Realized (0.2) - (0.3) 0.2 - 0.2 (0.2)
Unrealized   (0.8)   3.0   1.5   4.0   (13.4)   (12.6)   (17.4)
Total investment income (loss) (1.0) 3.0 1.2 4.2 (13.4) (12.4) (17.6)
Interest and other income   (0.2)   0.4   0.4   0.4   0.5   0.7   0.1
Total revenues 104.5 147.0 10.4 44.6 35.8 (68.7) (8.8)
 
Expenses
Compensation and benefits
Direct base compensation 17.0 18.2 16.9 16.1 19.9 2.9 3.8
Indirect base compensation 5.3 6.4 5.6 5.7 6.8 1.5 1.1
Equity-based compensation - - 0.1 0.2 0.1 0.1 (0.1)
Performance fee related
Realized 0.3 0.9 1.5 2.5 2.4 2.1 (0.1)
Unrealized   0.5   5.9   2.1   5.3   4.0   3.5   (1.3)
Total compensation and benefits 23.1 31.4 26.2 29.8 33.2 10.1 3.4
General, administrative, and other

indirect expenses

14.6 11.7 11.1 11.4 7.7 (6.9) (3.7)
Depreciation and amortization expense 0.6 1.0 0.7 1.1 1.1 0.5 -
Interest expense   2.3   1.9   1.1   0.7   0.7   (1.6)   -
Total expenses   40.6   46.0   39.1   43.0   42.7   2.1   (0.3)
 
Economic Net Income (Loss) $ 63.9 $ 101.0 $ (28.7) $ 1.6 $ (6.9) $ (70.8) $ (8.5)
Fee Related Earnings $ (2.0) $ (0.8) $ 2.7 $ 1.0 $ 0.3 $ 2.3 $ (0.7)
Net Performance Fees $ 66.9 $ 98.8 $ (32.6) $ (3.6) $ 6.2 $ (60.7) $ 9.8
Realized Net Performance Fees $ 16.6 $ 22.3 $ 25.5 $ 29.4 $ 22.1 $ 5.5 $ (7.3)
Investment Income (Loss) $ (1.0) $ 3.0 $ 1.2 $ 4.2 $ (13.4) $ (12.4) $ (17.6)
Distributable Earnings $ 14.4 $ 21.5 $ 27.9 $ 30.6 $ 22.4 $ 8.0 $ (8.2)
 
               

Fund of Funds Solutions Segment Results (Unaudited)

 

Three Months Ended

Dec 31, 2012 vs.

Dec 31, 2011

Mar 31, 2012

Jun 30, 2012

Sept 30, 2012

Dec 31, 2012

 

Dec 31, 2011

 

Sept 30, 2012

Fund of Funds Solutions

(Dollars in millions)

 
Revenues
Segment fee revenues
Fund management fees $ 16.3 $ 16.3 $ 17.4 $ 16.5 $ 18.6 $ 2.3 $ 2.1
Portfolio advisory fees, net - - - - - - -
Transaction fees, net   -   -   -   -   -   -   -
Total fee revenues 16.3 16.3 17.4 16.5 18.6 2.3 2.1
Performance fees
Realized 27.0 3.2 1.4 2.2 3.8 (23.2) 1.6
Unrealized   (32.9)   13.3   10.6   (1.8)   8.4   41.3   10.2
Total performance fees (5.9) 16.5 12.0 0.4 12.2 18.1 11.8
Investment income
Realized - - - - - - -
Unrealized   -   -   -   -   -   -   -
Total investment income - - - - - - -
Interest and other income   0.1   0.2   0.1   0.1   0.3   0.2   0.2
Total revenues 10.5 33.0 29.5 17.0 31.1 20.6 14.1
 
Expenses
Compensation and benefits
Direct base compensation 6.2 8.0 8.9 8.2 8.7 2.5 0.5
Indirect base compensation - 1.0 2.0 1.4 1.8 1.8 0.4
Equity-based compensation - - - - - - -
Performance fee related
Realized 24.2 2.8 1.3 1.9 2.8 (21.4) 0.9
Unrealized   (30.8)   10.0   9.4   (2.1)   6.5   37.3   8.6
Total compensation and benefits (0.4) 21.8 21.6 9.4 19.8 20.2 10.4
General, administrative, and other

indirect expenses

4.4 1.6 2.9 3.2 3.0 (1.4) (0.2)
Depreciation and amortization expense 0.1 0.2 0.4 0.5 0.5 0.4 -
Interest expense   -   0.3   0.6   0.2   0.2   0.2   -
Total expenses   4.1   23.9   25.5   13.3   23.5   19.4   10.2
 
Economic Net Income $ 6.4 $ 9.1 $ 4.0 $ 3.7 $ 7.6 $ 1.2 $ 3.9
Fee Related Earnings $ 5.7 $ 5.4 $ 2.7 $ 3.1 $ 4.7 $ (1.0) $ 1.6
Net Performance Fees $ 0.7 $ 3.7 $ 1.3 $ 0.6 $ 2.9 $ 2.2 $ 2.3
Realized Net Performance Fees $ 2.8 $ 0.4 $ 0.1 $ 0.3 $ 1.0 $ (1.8) $ 0.7
Investment Income $ - $ - $ - $ - $ - $ - $ -
Distributable Earnings $ 8.5 $ 5.8 $ 2.8 $ 3.4 $ 5.7 $ (2.8) $ 2.3
 
                             
 

Total Assets Under Management Roll Forward (Unaudited)

 
Corporate Private Equity Global Market Strategies (8) Real Assets (9)

Fund of Funds (10)

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 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
Acquisitions - - - - 2,275 2,275 4,000 8,106 12,106 - - - 4,000 10,381 14,381
Commitments (1) 2,924 - 2,924 566 - 566 (315 ) - (315 ) 308 - 308 3,483 - 3,483
Capital Called, net (2) (1,623 ) 1,482 (141 ) (145 ) 111 (34 ) (1,052 ) 1,046 (6 ) (1,607 ) 1,513 (94 ) (4,427 ) 4,152 (275 )
Distributions (3) 755 (5,036 ) (4,281 ) 122 (463 ) (341 ) 260 (1,496 ) (1,236 ) 140 (2,291 ) (2,151 ) 1,277 (9,286 ) (8,009 )
Subscriptions, net of Redemptions (4) - - - - 15 15 - - - - - - - 15 15
Changes in CLO collateral balances (5) - - - - (383 ) (383 ) - - - - - - - (383 ) (383 )
Market Appreciation/(Depreciation) (6) - 1,652 1,652 - 161 161 - 85 85 - 1,041 1,041 - 2,939 2,939
Foreign exchange (7)   10       3       13     -       152       152     14       63       77     169       229       398     193       447       640  
Balance, As of December 31, 2012 $ 17,642     $ 35,696     $ 53,338   $ 1,820     $ 30,722     $ 32,542   $ 9,944     $ 30,250     $ 40,194   $ 14,528     $ 29,554     $ 44,082   $ 43,934     $ 126,222     $ 170,156  
 
 
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 - - - - 5,178 5,178 4,000 8,106 12,106 - - - 4,000 13,284 17,284
Commitments (1) 7,560 - 7,560 1,202 - 1,202 (42 ) - (42 ) 3,561 - 3,561 12,281 - 12,281
Capital Called, net (2) (4,474 ) 3,968 (506 ) (625 ) 543 (82 ) (3,510 ) 3,488 (22 ) (4,475 ) 4,414 (61 ) (13,084 ) 12,413 (671 )
Distributions (3) 1,231 (12,017 ) (10,786 ) 164 (1,008 ) (844 ) 1,208 (5,411 ) (4,203 ) 435 (6,576 ) (6,141 ) 3,038 (25,012 ) (21,974 )
Subscriptions, net of Redemptions (4) - - - - 1,763 1,763 - - - - - - - 1,763 1,763
Changes in CLO collateral balances (5) - - - - 481 481 - - - - - - - 481 481
Market Appreciation/(Depreciation) (6) - 6,035 6,035 - 311 311 - 1,581 1,581 - 5,037 5,037 - 12,964 12,964
Foreign exchange (7)   (3 )     (27 )     (30 )   -       20       20     10       92       102     167       800       967     174       885       1,059  
Balance, As of December 31, 2012 $ 17,642     $ 35,696     $ 53,338   $ 1,820     $ 30,722     $ 32,542   $ 9,944     $ 30,250     $ 40,194   $ 14,528     $ 29,554     $ 44,082   $ 43,934     $ 126,222     $ 170,156  
(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 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) Represents the change in the aggregate collateral balance and principal cash at par of the CLOs.
(6) Market Appreciation/(Depreciation) represents realized and unrealized gains (losses) on portfolio investments and changes in the net asset value of our hedge funds.
(7) 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.
(8) Ending balance is comprised of approximately $16.6 billion from our structured credit funds (including $0.1 billion of Available Capital), $12.1 billion in our hedge funds, and $3.8 billion (including $1.7 billion of Available Capital) in our carry funds.
(9) Amounts related to the NGP Funds are based on the latest available information (in most cases as of September 30, 2012).
(10) 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 September 30, 2012) as provided by their general partners, plus the net cash flows since the latest valuation, up to December 31, 2012.
 
 

Fee Earning Assets Under Management Roll Forward (Unaudited)

 
For the Three Months Ended December 31, 2012
(USD in millions)

Corporate Private Equity

 

Global Market Strategies

 

Real Assets (7)

 

Fund of Funds Solutions

  Total
Fee-Earning AUM        
Balance, Beginning of Period $ 36,947 $ 28,450 $ 19,571 $ 30,156 $ 115,124
Acquisitions - 2,260 10,308 - 12,568
Inflows, including Commitments (1) 391 578 502 1,337 2,808
Outflows, including Distributions (2) (3,486 ) (83 ) (1,138 ) (3,678 ) (8,385 )
Subscriptions, net of Redemptions (3) - 8 - - 8
Changes in CLO collateral balances (4) - (364 ) - - (364 )
Market Appreciation/(Depreciation) (5) - 36 - 358 394
Foreign exchange and other (6)   (12 )     149       62       769       968  
Balance, End of Period $ 33,840     $ 31,034     $ 29,305     $ 28,942     $ 123,121  
 
For the Twelve Months Ended December 31, 2012
(USD in millions)

Corporate Private Equity

 

Global Market Strategies

 

Real Assets (7)

 

Fund of Funds Solutions

  Total
Fee-Earning AUM
Balance, Beginning of Period $ 37,996 $ 23,186 $ 22,172 $ 27,671 $ 111,025
Acquisitions - 5,126 10,308 - 15,434
Inflows, including Commitments (1) 1,087 1,283 2,006 7,480 11,856
Outflows, including Distributions (2) (5,192 ) (511 ) (5,264 ) (7,969 ) (18,936 )
Subscriptions, net of Redemptions (3) - 1,786 - - 1,786
Changes in CLO collateral balances (4) - 311 - - 311
Market Appreciation/(Depreciation) (5) - (164 ) - 1,038 874
Foreign exchange and other (6)   (51 )     17       83       722       771  
Balance, End of Period $ 33,840     $ 31,034     $ 29,305     $ 28,942     $ 123,121  
(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) Represents the change in the aggregate fee-earning collateral balances at par of our CLOs, as of the quarterly cut-off dates.
(5) Market Appreciation/(Depreciation) represents changes in the net asset value of our hedge funds and our fund of fund vehicles based on the lower of cost or fair value.
(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) ENERGY I, ENERGY II, ENERGY III, ENERGY IV, RENEW I, and RENEW II (collectively, the "Legacy 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 Legacy Energy Funds. With the exception of ENERGY IV and RENEW II, 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 is required for investment decisions. As of December 31, 2012, the Legacy Energy Funds had, in the aggregate, approximately $14.4 billion in AUM and $9.0 billion in fee-earning AUM. NGP VII, NGP VIII, NGP IX, NGP X, NGP M&R, NGP ETP I, NGP ETP II, and NGP CRC (collectively, the “NGP Funds”), are managed by NGP Energy Capital Management. As of December 31, 2012, the NGP Funds had, in the aggregate, approximately $12.1 billion in AUM and $10.3 billion in fee-earning AUM.
 
 

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 December 31, 2012 as of December 31, 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 $ 4,071.5 3.0x 34% 25% $ 1,362.4 $ 4,071.5 3.0x 34%
CP III 2/2000 $ 3,912.7 $ 4,031.6 $ 10,129.0 2.5x 27% 21% $ 4,007.9 $ 10,114.8 2.5x 27%
CP IV 12/2004 $ 7,850.0 $ 7,612.6 $ 15,281.6 2.0x 15% 12% $ 4,126.3 $ 10,188.9 2.5x 21%
CEP I 12/1997

1,003.6

981.6

2,126.5

2.2x 18% 11%

981.6

2,126.5

2.2x 18%
CEP II 9/2003

1,805.4

2,046.5

3,713.1

1.8x 38% 21%

1,016.5

2,763.9

2.7x 72%
CAP I 12/1998 $ 750.0 $ 627.7 $ 2,482.2 4.0x 25% 18% $ 627.7 $ 2,482.2 4.0x 25%
CAP II 2/2006 $ 1,810.0 $ 1,611.3 $ 2,744.1 1.7x 12% 8% $ 587.7 $ 1,719.4 2.9x 27%
CJP I 10/2001

¥

50,000.0

¥

47,291.4

¥

130,279.3

2.8x 61% 37%

¥

30,009.4

¥

104,486.3

3.5x 72%
All Other Funds (9) Various $ 3,404.8 $ 5,074.5 1.5x 17% 7% $ 2,305.1 $ 3,953.8 1.7x 22%
Coinvestments and Other (10) Various $ 7,017.2   $ 17,109.9   2.4x   36%   33% $ 4,635.3   $ 14,185.2   3.1x   36%
Total Fully Invested Funds $ 30,209.9   $ 66,103.9   2.2x   28%   21% $ 20,635.9   $ 54,376.3   2.6x   31%

Funds in the Investment Period (6)

CP V 5/2007 $ 13,719.7 $ 11,031.9 $ 16,073.1 1.5x 16% 10%
CEP III 12/2006

5,294.9

4,199.8

5,303.4

1.3x 9% 5%
CAP III 5/2008 $ 2,551.6 $ 1,764.8 $ 1,909.6 1.1x 4% (2%)
CJP II 7/2006

¥

165,600.0

¥

135,239.7

¥

134,722.4

1.0x (0%) (5%)
CGFSP I 9/2008 $ 1,100.2 $ 809.6 $ 1,105.2 1.4x 15% 8%
CAGP IV 6/2008 $ 1,041.4 $ 545.1 $ 664.4 1.2x 12% 1%
CEOF I (22) 5/2011 $ 1,017.7 $ 220.6 $ 250.6 1.1x n/m n/m
All Other Funds (11) Various $ 1,259.8   $ 1,497.8   1.2x   10%   0%                  
Total Funds in the Investment Period $ 22,772.4   $ 30,088.9   1.3x   12%   6% $ 4,693.7   $ 9,621.8   2.0x   25%
TOTAL CORPORATE PRIVATE EQUITY (12) $ 52,982.3   $ 96,192.8   1.8x   26%   18% $ 25,329.6   $ 63,998.0   2.5x   31%
 
 
TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS (5)
as of December 31, 2012 as of December 31, 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 $ 1,343.6 2.6x 44% 30% $ 522.5 $ 1,343.6 2.6x 44%
CRP IV 12/2004 $ 950.0 $ 1,186.1 $ 1,130.8 1.0x (1%) (5%) $ 441.8 $ 463.9 1.0x 3%
CRP V 11/2006 $ 3,000.0 $ 3,162.5 $ 4,163.7 1.3x 9% 6% $ 1,809.7 $ 2,429.5 1.3x 11%
CEREP I 3/2002

426.6

517.0

741.6

1.4x 13% 7%

441.2

751.2

1.7x 19%
CEREP II 4/2005

762.7

826.9

268.1

0.3x (27%) (26%)

416.5

185.2

0.4x (27%)
CEREP III 5/2007

2,229.5

1,731.0

1,996.9

1.2x 5% 1%

-

3.5

n/a n/a
Energy II 7/2002 $ 1,100.0 $ 1,330.8 $ 3,599.3 2.7x 81% 54% $ 827.4 $ 3,335.1 4.0x 105%
Energy III 10/2005 $ 3,800.0 $ 3,543.9 $ 6,684.1 1.9x 16% 12% $ 1,504.9 $ 4,265.3 2.8x 28%
Energy IV 12/2007 $ 5,979.1 $ 5,071.7 $ 8,027.4 1.6x 24% 15% $ 1,710.6 $ 3,650.0 2.1x 32%
All Other Funds (13) Various $ 1,726.3 $ 1,722.2 1.0x (0%) (8%) $ 1,297.2 $ 1,547.9 1.2x 10%
Coinvestments and Other (10) Various $ 3,984.8   $ 6,714.8   1.7x   20%   16% $ 1,731.5   $ 3,854.6   2.2x   29%
Total Fully Invested Funds $ 24,586.8   $ 37,353.9   1.5x   17%   10% $ 10,977.6   $ 22,130.2   2.0x   28%

Funds in the Investment Period (6)

CRP VI 9/2010 $ 2,340.0 $ 712.0 $ 876.9 1.2x 29% 13%
CIP 9/2006 $ 1,143.7 $ 908.9 $ 908.2 1.0x (0%) (5%)
Renew II 3/2008 $ 3,417.5 $ 2,647.7 $ 3,526.5 1.3x 14% 8%
All Other Funds (14) Various $ 758.6   $ 771.0   1.0x   1%   (4%)                  
Total Funds in the Investment Period $ 5,027.2   $ 6,082.7   1.2x   10%   4% $ 979.7   $ 1,040.7   1.1x   3%
TOTAL REAL ASSETS (12) $ 29,614.0   $ 43,436.6   1.5x   16%   10% $ 11,957.3   $ 23,170.8   1.9x   27%
     
 

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

 
TOTAL INVESTMENTS
as of December 31, 2012  

Inception to December 31, 2012

Fund Inception Date (1)

 

Committed Capital

 

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   $ 2,255.7   1.7x   17%   12%
CEMOF I (21) 12/2010 $ 1,382.5 $ 224.1 $ 265.3 1.2x n/m n/m
 
 
TOTAL INVESTMENTS
as of December 31, 2012  

Inception to December 31, 2012

Vintage Year

 

Committed Capital

 

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

3,899.3

6,226.6

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

4,545.0

4,374.7

6,159.0

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

11,500.0

9,775.7

11,467.2

1.2x 5% 5%
Main Fund I - Secondary Investments 2002

519.4

462.9

868.2

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

998.4

919.8

1,632.1

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

2,250.0

2,073.6

2,706.7

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

1,856.4

1,578.4

2,034.7

1.3x 21% 20%
Main Fund II - Co-Investments 2003

1,090.0

872.9

2,318.2

2.7x 45% 43%
Main Fund III - Co-Investments 2006

2,760.0

2,456.9

2,768.8

1.1x 3% 2%
Main Fund II - Mezzanine Investments 2004

700.0

704.1

923.4

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

2,000.0

1,368.6

1,754.9

1.3x 11% 9%
All Other Funds (19) Various

1,275.4

 

1,882.6

  1.5x   18%   15%
Total Fully Committed Funds

29,762.1

 

40,742.4

  1.4x   11%   10%

Funds in the Commitment Period

Main Fund IV - Fund Investments 2009

4,880.0

1,364.7

1,385.2

1.0x 2% (0%)
Main Fund V - Fund Investments (23) 2012

4,151.1

12.5

11.5

0.9x n/m n/m
Main Fund V - Secondary Investments 2011

2,377.3

572.7

651.8

1.1x 46% 41%
Main Fund IV - Co-Investments 2010

1,475.0

1,216.9

1,393.7

1.1x 10% 8%
Main Fund V - Co-Investments (23) 2012

1,227.3

110.5

110.4

1.0x n/m n/m
All Other Funds (19) Various

96.0

 

101.0

  1.1x   18%   13%
Total Funds in the Commitment Period

3,373.3

 

3,653.6

  1.1x   8%   6%
TOTAL FUND OF FUNDS SOLUTIONS

33,135.5

 

44,396.1

  1.3x   11%   10%
TOTAL FUND OF FUNDS SOLUTIONS (USD) (20) $ 43,731.6   $ 58,593.2   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 and CEMOF I was formed in 2010.
(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 CPF 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 December 31, 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.
(21) Gross IRR and Net IRR for CEMOF I are not meaningful as the investment period commenced in December 2010.
(22) Gross IRR and Net IRR for CEOF I are not meaningful as the investment period commenced in May 2011.
(23) Gross IRR and Net IRR are not meaningful as the commitment periods commenced in Q3 2012.
     
 

Reconciliation for Economic Net Income and Distributable Earnings (Unaudited)

 
Three Months Ended
December 31, 2012 December 31, 2011
(Dollars in millions)
 
Income before provision for income taxes

$

145.5

$ 712.4
Adjustments:
Partner compensation - (213.2 )
Equity-based compensation issued in conjunction with the IPO 53.9 -
Acquisition related charges and amortization of intangibles 39.3 34.4
Gain on business acquisition - (7.9 )
Other non-operating expenses 0.2 2.0

Net income attributable to non-controlling interests in consolidated entities

(48.5 ) (270.8 )

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

(9.8 ) -
Severance and lease terminations 0.9 (1.8 )
Other adjustments   0.7     (0.9 )
Economic Net Income $ 182.2   $ 254.2  
Net performance fees 131.9 222.8
Investment income (loss)   (4.2 )   17.6  
Fee Related Earnings $ 54.5   $ 13.8  
Realized performance fees, net of related compensation 127.4 216.4
Investment income - realized   5.6     17.2  
Distributable Earnings $ 187.5   $ 247.4  
Depreciation and amortization expense 6.1 3.4
Interest expense   3.9     12.8  
Adjusted EBITDA $ 197.5   $ 263.6  
       
 
 

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

 

For the Three Months Ended

Pro Forma (1) for the Year Ended

December 31, 2012

December 31, 2012

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

182.2

Less: Provision for Income Taxes   36.6
Economic Net Income, After Taxes $ 145.6
 
Economic Net Income, After Taxes per Adjusted Unit (2) $ 0.47
 
 
Distributable Earnings $ 187.5 $

699.6

Less: Estimated foreign, state, and local taxes   12.5   44.1
Distributable Earnings, After Taxes $ 175.0 $ 655.5
 
Distributable Earnings to The Carlyle Group L.P. $ 24.7 $ 85.3
Less: Estimated current corporate income taxes and TRA payments   3.6   6.0
Distributable Earnings to The Carlyle Group L.P. net of corporate income taxes $ 21.1 $ 79.3
 
Distributable Earnings, net, per The Carlyle Group L.P. common unit outstanding (3) $ 0.49 $ 1.83

(4)

 
 
(1)

The selected pro forma non-GAAP financial measures for the year ended December 31, 2012 presents those measures giving pro forma effect to the Reorganization and Offering Transactions described in our final Prospectus dated May 2, 2012, as if such transactions had occurred on January 1, 2012.

 

 
(2) Adjusted Units (as used in Economic Net Income, After Taxes per Adjusted Unit) were determined as follows:
 
The Carlyle Group L.P. common units outstanding 43,244,180
Carlyle Holdings partnership units not held by The Carlyle Group L.P. 262,873,250
Dilutive effect of unvested deferred restricted common units 3,272,694
Contingently issuable Carlyle Holdings partnership units   2,372,094
Total Adjusted Units   311,762,218
 
(3) As of December 31, 2012, there are 43,244,180 outstanding common units of The Carlyle Group L.P.
 
(4)

Assuming the distribution of 80% of pro forma Distributable Earnings, net, per common unit for the year ended December 31, 2012, or $1.46 per common unit, and the initial public offering price of our common units of $22.00, the pro-forma full-year yield on our common units would have been 6.7%.

 

 

Pro Forma Consolidated Statement of Operations (Unaudited)

    Pro Forma (1) for the

Year Ended

Dec 31, 2012

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

Revenues
Fund management fees $

977.6

 

Performance fees
Realized 907.5
Unrealized   133.6  
Total performance fees 1,041.1
Investment income
Realized 15.6
Unrealized   8.9  
Total investment income 24.5
Interest and other income 14.4
Interest and other income of Consolidated Funds   903.5  
Total revenues 2,961.1
 
Expenses
Compensation and benefits
Base compensation 691.5
Equity-based compensation 213.2
Performance fee related
Realized 374.7
Unrealized   96.1  
Total compensation and benefits 1,375.5
General, administrative and other expenses 357.5
Interest 17.4
Interest and other expenses of Consolidated Funds 758.1
Other non-operating expenses   10.6  
Total expenses 2,519.1
 
Other income
Net investment gains of Consolidated Funds   1,757.5  
 
Income before provision for income taxes 2,199.5
Provision for income taxes   41.8  
Net income 2,157.7
Net income attributable to non-controlling interests in

consolidated entities

  1,788.1  
Net income attributable to Carlyle Holdings 369.6

Net income attributable to non-controlling interests in Carlyle Holdings

  324.1  
Net income attributable to The Carlyle Group L.P. $ 45.5  
 
 
Net income attributable to The Carlyle Group L.P. per common unit
Basic (2) $ 1.19  
Diluted (2) $ 1.07  
 
 

Pro Forma Consolidated Statement of Operations (Unaudited), cont

           
(1)

The pro forma consolidated statement of operations data for the year ended December 31, 2012 presents our consolidated results of operations giving pro forma effect to the Reorganization and Offering Transactions described in our final Prospectus dated May 2, 2012, as if such transactions had occurred on January 1, 2012. The pro forma adjustments applied to the statement of operations primarily relate to the following: (a) a change in the allocation of performance fees to our investment professionals from approximately 55% prior to the IPO to approximately 45% after the IPO; (b) the recognition of partner compensation as an expense in the pro-forma results, which was excluded from our actual results for periods prior to the IPO, when it was shown as distributions from equity; (c) pro forma stock-based compensation charges for awards issued in the IPO; (d) the reclassification of performance fees allocable to retired Carlyle partners to non-controlling interests; and (e) the reduction of interest expense associated with the pro forma repayment of debt with the IPO proceeds. The pro forma adjustments are based on available information and upon assumptions our management believes are reasonable in order to reflect, on a pro forma basis, the impact of these transactions on the historical consolidated financial information of The Carlyle Group L.P. The unaudited pro forma financial information is included for informational purposes only and does not purport to reflect the results of operations of The Carlyle Group L.P. that would have occurred had the transactions described above occurred on the dates indicated or had we operated as a public company during the periods presented or for any future period or date.

 
(2) Common units used in these calculations are as follows:
Basic Diluted
Weighted-average common units of The Carlyle Group L.P. outstanding

 

38,344,199

 

 

38,344,199

 

Dilutive effect of unvested deferred restricted common units - 2,851,762
Contingently issuable Carlyle Holdings partnership units   -     1,294,846  
Total common units   38,344,199     42,490,807  
 

The weighted-average common units outstanding was calculated assuming the Reorganization and Offering Transactions described in our final Prospectus dated May 2, 2012 had occurred on January 1, 2012.

 

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

           
 
Year Ended

Pro Forma (1) for the Year Ended

Dec. 31, 2012 Dec. 31, 2011 Dec. 31, 2012
(Dollars in millions)
 
Income before provision for income taxes $ 2,439.9 $ 1,182.8 $ 2,199.5
Adjustments:
Partner compensation (265.4 ) (671.5 ) -
Equity-based compensation issued in conjunction with IPO 200.1 - 210.9
Acquisition related charges and amortization of intangibles 128.3 91.5 127.4
Gain on business acquisition - (7.9 ) -
Other non-operating expenses 7.1 32.0 10.6
Net income attributable to non-controlling interests

in consolidated entities

(1,756.7 ) 202.6 (1,788.1 )
Provision for income taxes attributable to non-controlling

interests in consolidated entities

(19.5 ) - (19.5 )
Severance and lease terminations 5.9 4.5 5.9
Other adjustments   (4.1 )   (0.9 )   (4.1 )
Economic Net Income $ 735.6   $ 833.1   $ 742.6  
Net performance fees 524.6 630.4 541.4
Investment income   41.5     81.4     25.3  
Fee Related Earnings $ 169.5   $ 121.3   $ 175.9  
Realized performance fees, net of related compensation 502.1 677.5 508.7
Investment income - realized   16.3     65.6     15.0  
Distributable Earnings $ 687.9   $ 864.4   $ 699.6  
Depreciation and amortization expense 21.5 21.8 21.5
Interest expense   24.5     59.2     17.3  
Adjusted EBITDA $ 733.9   $ 945.4   $ 738.4  
(1)

The selected pro forma non-GAAP financial measures for the year ended December 31, 2012 presents these measures giving pro forma effect to the Reorganization and Offering Transactions described in our final Prospectus dated May 2, 2012, as if such transactions had occurred on January 1, 2012.

 
 
       
 

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

 

As of December 31, 2012

Consolidated Operating Entities

Consolidated Funds

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

567.1

 

$

-

$ - $ 567.1
Cash and cash equivalents held at Consolidated Funds -

1,646.6

 

-

1,646.6

 

Restricted cash 34.5 - - 34.5
Restricted cash and securities of Consolidated Funds - 36.3 - 36.3
Accrued performance fees 2,204.9 - (12.4 ) 2,192.5
Investments 932.6 - (51.4 ) 881.2
Investments of Consolidated Funds - 24,815.7 - 24,815.7
Due from affiliates and other receivables, net 201.5 - (10.8 ) 190.7
Due from affiliates and other receivables of Consolidated

Funds, net

- 331.8 - 331.8
Fixed assets, net 63.6 - - 63.6
Deposits and other 44.2 4.2 - 48.4
Intangible assets, net 691.1 - - 691.1
Deferred tax assets   67.1     -     -     67.1  
Total assets $ 4,806.6   $ 26,834.6   $ (74.6 ) $ 31,566.6  
 
Liabilities and partners' capital
Loans payable $ 886.3 $ - $ - $ 886.3
Loans payable of Consolidated Funds - 13,708.2 (51.5 ) 13,656.7
Accounts payable, accrued expenses and other liabilities 215.0 - - 215.0
Accrued compensation and benefits 1,318.2 - - 1,318.2
Due to affiliates 290.4 42.1 (0.4 ) 332.1
Deferred revenue 57.9 1.5 - 59.4
Deferred tax liabilities 61.1 - - 61.1
Other liabilities of Consolidated Funds - 1,405.0 (19.2 ) 1,385.8
Accrued giveback obligations   79.0     -     (9.8 )   69.2  
Total liabilities 2,907.9 15,156.8 (80.9 ) 17,983.8
 
Redeemable non-controlling interests in consolidated entities 6.0 2,881.4 - 2,887.4
 
Total partners' capital   1,892.7     8,796.4     6.3     10,695.4  
Total liabilities and partners' capital $ 4,806.6   $ 26,834.6   $ (74.6 ) $ 31,566.6  

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 in acquisitions or strategic investments, 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 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.
  • Adjusted EBITDA is a component of ENI and is used to measure Carlyle’s ability to cover recurring operating expenses from cash earnings. Adjusted EBITDA is computed as ENI excluding unrealized performance fees, unrealized performance fee compensation, unrealized investment income, depreciation and amortization expense, and interest expense.

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