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. The cornerstone of Fortress’s business model is its ability to generate 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 company’s limited partners.

The table below summarizes Fortress’s operating results for the three and six months ended June 30, 2012. The consolidated GAAP statement of operations and balance sheet are presented at the end of this press release.
             
2Q 1Q 2Q % Change 1H 1H % Change
  2012     2012     2011  

 QoQ 
 

 YoY 
  2012     2011   YoY
(in millions, except per share amount)
GAAP
Net income (loss) $ 14 $ (24 ) $ (246 ) N/M N/M $ (10 ) $ (501 ) N/M
Net income (loss) attributable to Class A Shareholders $ 5   $ (30 ) $ (95 ) N/M

 
N/M $ (25 ) $ (198 ) N/M  
Per diluted share $ (0.12 ) $ (0.16 ) $ (0.56 ) N/M N/M $ (0.13 ) $ (1.11 ) N/M  
Weighted average Class A shares outstanding, diluted 516 516 491 516 491
 
Distributable Earnings (non-GAAP)
Fund management DE $ 53 $ 56 $ 54 -5 % -2 % $ 109 $ 149 -27 %
Pre-tax DE $ 50   $ 57   $ 46   -12 % 9 % $ 107   $ 149   -28 %
Per dividend paying share/unit $ 0.09   $ 0.11   $ 0.09   -15 % 7 % $ 0.20   $ 0.28   -28 %
Weighted average dividend paying shares and units outstanding 533 533 526 533 526
 
Assets Under Management
Private Equity $ 13,826 $ 13,239 $ 13,256 4 % 4 % $ 13,826 $ 13,256 4 %
Credit 11,452 12,269 11,315 -7 % 1 % 11,452 11,315 1 %
Liquid Markets 4,398 4,840 6,321 -9 % -30 % 4,398 6,321 -30 %
Logan Circle   18,112     16,084     12,931   13 % 40 %   18,112     12,931   40 %
Total Assets Under Management $ 47,788   $ 46,432   $ 43,823   3 % 9 % $ 47,788   $ 43,823   9 %
 

CONSOLIDATED GAAP RESULTS

Fortress recorded GAAP net income of $14 million, or a $0.12 loss per diluted share in the second quarter of 2012, compared with a GAAP net loss of $246 million, or $0.56 per diluted share, in the second quarter of 2011. Our diluted loss 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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