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Fortress Reports Fourth Quarter & Year End 2012 Results

“We announced today a 20% increase in our base quarterly dividend, to $0.06 per dividend paying share. This increase reflects visibility into higher management fees in the near-term, driven by the substantial amount of capital raised over the past 14 months, and expectations for increases in AUM going forward. This action supplements a $179 million, or $0.36 per dividend paying share, investment made in the fourth quarter to repurchase nearly 10% of outstanding shares at a substantial discount. We believe that these actions will generate significant value for our current investors in 2013 and beyond.”

SUMMARY FINANCIAL RESULTS

Fortress’s business model is highly diversified, and management believes that this positions the company to capitalize on opportunities for investing, capital formation and harvesting profits that can occur at different points in any cycle for our individual businesses. Fortress’s business model generates stable and predictable management fees, which is a function of the majority of alternative assets under management residing in long-term investment structures. Fortress’s alternatives businesses also generate variable incentive income based on performance, and this incentive income can contribute meaningfully to financial results. Balance sheet investments represent a third component of Fortress’s business model, and the company has built substantial value in these investments, which are made in Fortress funds alongside the funds’ limited partners.

The table below summarizes Fortress’s operating results for the fourth quarter and year ended December 31, 2012. The consolidated GAAP statement of operations and balance sheet are presented at the end of this press release.

                       
4Q 3Q 4Q % Change FY % Change
  2012   2012     2011   QoQ     YoY   2012       2011   YoY
(in millions, except per share amount)
GAAP
Net income (loss) $ 222 $ 7 $ (234 ) N/M N/M $ 219 $ (1,117 ) N/M
Net income (loss) attributable to Class A Shareholders $ 102 $ 1   $ (91 ) N/M N/M $ 78 $ (432 ) N/M
Per diluted share $ 0.24 $ (0.04 ) $ (0.49 ) N/M N/M $ 0.27 $ (2.36 ) N/M
Weighted average Class A shares outstanding, diluted 525 520 496 525 493
 
Distributable Earnings (non-GAAP)
Fund management DE $ 105 $ 63 $ 53 67% 98% $ 277 $ 253 9%
Pre-tax DE $ 107 $ 64   $ 50   67% 114% $ 278 $ 242   15%
Per dividend paying share/unit $ 0.20 $ 0.12   $ 0.09   69% 124% $ 0.52 $ 0.46   13%
Weighted average dividend paying shares and units outstanding 530 537 531 533 528
 
Assets Under Management
Private Equity $ 14,271 $ 14,718 $ 12,466 -3% 14% $ 14,271 $ 12,466 14%
Credit 13,414 11,753 12,208 14% 10% 13,414 12,208 10%
Liquid Markets 5,060 4,378 5,515 16% -8% 5,060 5,515 -8%
Logan Circle   20,685   20,626     13,524   0% 53%   20,685   13,524   53%

Total Assets Under Management

$ 53,430 $ 51,475   $ 43,713   4% 22% $ 53,430 $ 43,713   22%
 

CONSOLIDATED GAAP RESULTS

Fortress recorded GAAP net income of $222 million, or $0.24 per diluted share for the fourth quarter of 2012, compared with a GAAP net loss of $234 million, or $0.49 loss per diluted share, for the fourth quarter of 2011. Our diluted earnings per share for all periods presented includes the income tax effects to net income (loss) attributable to Class A Shareholders from the assumed conversion of Fortress Operating Group Units and fully vested Restricted Partnership Units to Class A shares.

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