Global alternative asset manager The Carlyle Group L.P. (NASDAQ:
CG) today reported its unaudited first quarter 2012 results.
Carlyle generated strong Distributable Earnings (DE) of $179
million in the first quarter of 2012, primarily driven by Net
Realized Performance Fees of $143 million. On a pro forma basis,
taking into consideration changes related to our Initial Public
Offering, which priced on May 2, 2012, our first quarter pre-tax DE
was $189 million and $0.57 per unit on a post-tax basis, with pro
forma Net Realized Performance Fees of $149 million. On a Last
Twelve Month (LTM) basis (Q2 2011 – Q1 2012), DE was $759 million,
a 36% increase from the prior LTM result (Q2 2010 – Q1 2011) of
$560 million.
Economic Net Income (ENI) for the first quarter 2012 was $392
million, a 54% increase from $254 million in the fourth quarter
2011, resulting from 9% appreciation in our carry funds driving
strong Unrealized Performance Fees. First quarter 2012 ENI
reflected a 26% decline from $533 million in the first quarter
2011, which was a particularly strong performance quarter driven by
large realized distributions and global market appreciation. In
addition, first quarter 2011 results were positively impacted by
our fifth U.S. Buyout fund (Carlyle Partners V) moving into a
“carry position”, resulting in a cumulative catch-up of performance
fees earned as of that date, while that fund remains in carry in
the first quarter 2012 but at a normalized rate. Total segment
revenue of $894 million included Fee Revenue of $236 million, total
Performance Fees of $632 million and Investment and other Income of
$26 million. Segment revenues increased 34% versus the fourth
quarter 2011 and declined 22% compared to the first quarter 2011.
On a pro forma basis, pre-tax ENI for the first quarter 2012 was
$401 million, and $1.10 per unit on a post-tax basis.
David M. Rubenstein, Co-Chief Executive Officer of The Carlyle
Group, said, “Our results for the quarter are consistent with our
plans for the year and demonstrate the breadth, balance and depth
of our firm. They also show our ability to attract capital
commitments, pursue investments and realize distributions on a
global basis. We are particularly pleased with the performance and
growth of our Corporate Private Equity and Global Market Strategies
businesses.”
William E. Conway Jr., Co-Chief Executive Officer of The Carlyle
Group, said, “Our pace of distributions remains robust, as we
generated realized proceeds for our fund investors of $3.8 billion
during the first quarter. The 54% quarter-over-quarter increase in
Economic Net Income reflects the creation of significant value as
our carry portfolio appreciated by 9%, and the $0.57 per unit of
pro forma post-tax distributable earnings reflects our continued
focus on cash return. While this is our first quarterly report as a
public firm, our central mission remains the same as it has for 25
years - investing wisely and creating value for our limited
partners. In doing so, our new partners - our public unitholders -
will benefit.”
During the first quarter 2012, Carlyle generated realized
proceeds of $3.8 billion for its carry fund level investors. The
proceeds include $2.3 billion in distributions made during the
first quarter, net of prior period realized proceeds also
distributed during the first quarter 2012, as well as $1.5 billion
of realized proceeds yet to be distributed1. The strong pace of
realized proceeds emanated from 113 investments across 31 funds in
Carlyle’s global portfolio. During the quarter, the Corporate
Private Equity segment accounted for 57% of realized proceeds, Real
Assets drove 31% of realized proceeds, and Global Market Strategies
provided 12% of realized proceeds. Additionally, Carlyle invested
$1.5 billion of equity capital in 67 new or follow-on investments
across 18 carry funds, and raised $2.0 billion of new capital
commitments across our fund platform.
U.S. GAAP results for the first quarter included Net Income
attributable to Carlyle Group (Predecessor of The Carlyle Group
L.P.) of $629 million compared to $896 million for the first
quarter of 2011. On a pro forma basis, net income attributable to
Carlyle Group was $299 million for the first quarter 2012. Income
before taxes was $1.5 billion and $0.8 billion for the first
quarter 2012 and 2011, respectively. Total revenue was $1.1 billion
and $1.3 billion for the first quarter 2012 and 2011, respectively.
Pro forma net income per common unit on a diluted basis was $0.93
for the first quarter 2012. Total balance sheet assets were $29.2
billion as of March 31, 2012 compared with $24.7 billion at
December 31, 2011.
The following table highlights key metrics across all business
segments and assets under management for The Carlyle Group L.P.
Carlyle Group - All Segments
Period Pro forma (1)
LTM % Change $ in millions, except where noted
1Q2011 2Q2011 3Q2011
4Q2011 1Q2012 1Q2012
2Q11 - 1Q12 QoQ YoY
Revenues $ 1,152 $ 595 $ (263 ) $ 666 $
894 $ 1,892 34% (22%) Expenses 618 359 (72 ) 411 501 1,199
22% (19%)
Economic Net Income 533
237 (191 ) 254 392
401 692 54% (26%) Fee-Related
Earnings 40 31 37
14 34 39 116
146% (15%) Net Performance Fees
440 191 (223 ) 223
335 526 50% (24%)
Net Realized Performance Fees 214
53 194 216
143 606 (34%) (33%)
Distributable Earnings 284 89
244 247 179
189 759 (28%) (37%) Total Assets
Under Management ($ billion) 107.5
107.9 148.6 147.0
159.2 8% 48%
Fee-Earning Assets Under Management ($ billion) 81.6
80.3 112.6 111.0
117.0 5%
43% Equity Invested ($ billion) (4) 4.7
1.6 2.1 2.9
1.5 8.1 (47%) (67%) Funds
Raised ($ billion) (2) 1.4 2.8
1.4 1.1 2.0
7.3 82% 43% Distributions ($ billion)
(3,4) 7.7 4.5 2.9
3.7 2.5
13.6 (33%) (68%) (1) The selected pro forma
non-GAAP financial measures for the three months ended March 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.
(2) Funds raised excludes the impact of
acquisitions. In 1Q2012, Carlyle acquired CLO collateral of $2.9
billion from Highland Capital Management L.P.
(3) Distributions are based on when
proceeds are actually distributed to the Limited Partners, which
may differ from when they are realized. For 1Q 2012, approximately
$2.3 billion of the $3.8 billion of realized proceeds was
distributed during the quarter, with an additional $0.2 billion of
distributions resulting from prior period proceeds.
(4) Equity invested and Distributions reflect activity in carry
funds only.
Fee-Earning Assets Under Management (Fee-Earning AUM) increased
5% during the quarter to $117.0 billion, with growth driven by
multiple factors, including but not limited to: (1) $2.9 billion of
acquired assets; (2) $3.9 billion of inflows (including CLOs); and
(3) distributions and other outflows of $3.1 billion. Our
Fee-Earning AUM increased 43% compared to the first quarter 2011
primarily due to acquired assets, including AlpInvest, CLO vehicles
and the Emerging Sovereign Group (ESG).
Total Assets Under Management (AUM) increased 8% compared with
the fourth quarter 2011, to $159.2 billion, and increased 48%
year-over-year from $107.5 billion at the end of the first quarter
2011, aided by the addition of AlpInvest, acquired and de-novo CLO
collateral raises, and ESG during the year. Total dry powder, as of
March 31, 2012, was $39.9 billion. While Total AUM provides a
general sense of the scope and size of Carlyle’s global platform,
(1) it will fluctuate as we distribute capital to our fund level
investors, which reduces Total AUM but improves Distributable
Earnings, (2) it is impacted by short-term market appreciation and
depreciation in both our public and private portfolios, and (3) it
does not differentiate between the varying levels of profitability
of AUM in different business lines.
Quarterly fund valuations appreciated 9% across the Carlyle
carry fund platform, with significant strength in Corporate Private
Equity buyout funds, Energy funds and Global Market Strategies
carry funds. Over the past 12-months, our carry funds have
appreciated 15%. As of March 31, 2012, the remaining Fair Value of
capital in the ground across our carry funds was $66.4 billion. Our
hedge funds ended the quarter with $8.8 billion of asset value.
Additionally, as of quarter-end, the “AUM in-carry” ratio across
our carry fund portfolio was 70%, as calculated by the percentage
of our carry fund Assets Under Management, excluding dry-powder,
that are in funds that have exceeded their hurdles and are eligible
to generate performance fees within the period.
On a pro forma basis, taking into consideration changes related
to the IPO, our non-GAAP results for the first quarter 2012 are
provided in the table below:
Carlyle Group Pro Forma Summary $ in millions, except
per unit amounts
Economic Net income First
Quarter 2012 Economic Net Income (pre-tax) $ 400.8 Less:
Provision for Income Taxes (1) 63.5 Pro Forma Economic Net
Income, After Taxes 337.3 Fully diluted units (in
millions) 306.3
Pro Forma Economic Net Income, After
Taxes per Adjusted Unit $ 1.10
Distributable Earnings Pro Forma
Distributable Earnings $ 189.1 Less: Estimated foreign, state, and
local taxes (2) 6.2 Pro Forma Distributable Earnings, After
Taxes 182.9 Allocating DE for only public unit
holders of The Carlyle Group L.P. Pro Forma Distributable
Earnings to The Carlyle Group L.P. $ 18.3 Less: Estimated current
corporate income taxes (3) 0.9 Pro Forma Distributable
Earnings to The Carlyle Group L.P. net of corporate income taxes
17.4 Units in public float (in millions) 30.5
Pro Forma Distributable Earnings, net, per The Carlyle Group L.P.
common unit outstanding
$ 0.57
(1) Represents the implied provision for
income taxes that was calculated using a similar methodology
applied in calculating the pro forma tax provision for The Carlyle
Group L.P., without any reduction for noncontrolling interests.
(2) Represents the implied provision for
current income taxes that was calculated using a similar
methodology applied in calculating the pro forma current tax
provision for The Carlyle Group L.P., without any reduction for
noncontrolling interests.
(3) Represents pro forma current corporate income taxes payable
upon distributable earnings allocated to Carlyle Holdings I GP,
Inc.
Segment Review
All financial figures presented in the segment level results are
provided as actual results and not pro forma for the initial public
offering.
Corporate Private Equity (CPE)
The Corporate Private Equity segment comprises Carlyle’s
operations that advise a diverse group of 26 funds that invest in
buyout and growth capital transactions. The funds focus on either a
particular geography or a particular industry.
Corporate Private Equity generated total revenue of $614 million
and increased 24% compared to the fourth quarter 2011, as
unrealized performance fees of $241 million were more than triple
the fourth quarter level. Economic Net Income increased 51%
sequentially to $244 million. Distributable Earnings of $120
million declined 10% compared with the fourth quarter 2011 and were
45% lower than first quarter 2011, which was a particularly strong
quarter due to substantial exits in Carlyle’s Asia buyout funds.
Over the past 12 months, CPE has generated $466 million in DE.
The carry funds in Corporate Private Equity appreciated 8% in
the quarter versus year-end 2011, driven by a 9% increase in buyout
fund valuations and a 5% increase in growth fund valuations. During
the quarter, CPE invested $0.7 billion and realized $2.2 billion in
proceeds in the first quarter, including $0.8 billion in proceeds
realized but not yet distributed to fund level investors, net of
proceeds realized in the prior periods but distributed in the first
quarter 2012. The CPE segment raised $0.3 billion in the quarter,
consistent with recent quarter activity. The 6th US Buyout Fund,
Carlyle Partners VI, launched its fundraising effort in the first
quarter 2012 and anticipates an acceleration of related fundraising
activity in future quarters throughout 2012 and 2013.
The Multiple of Invested Capital (MOIC) in our Corporate Private
Equity funds remained stable at 1.8x as compared to the fourth
quarter 2011 and the first quarter 2011, which reflects ongoing
exits from the portfolio at higher multiples, offset by new
investments held near invested cost, and existing investments
positively impacted by appreciation. Total AUM of the CPE funds and
related coinvestments as of the first quarter 2012 was $53.3
billion, including $13.4 billion in dry powder.
Total Fee-Earning Assets Under Management of $37.8 billion was
largely unchanged from the prior quarter, and declined 4% compared
to the first quarter of 2011 as CPE distributed $8.9 billion to
fund level investors over the past 12-months. Such distributions
have a positive impact on Distributable Earnings but a negative
impact on Fee-Earning AUM. Segment Total AUM of $53.3 billion
increased 4% compared to the fourth quarter 2011, and declined 4%
compared to the first quarter 2011.
Corporate Private Equity (Actual
Results)
Period LTM % Change $ in
millions, except where noted
1Q2011 2Q2011
3Q2011 4Q2011 1Q2012
2Q11 - 1Q12 QoQ YoY
Economic Net Income 375
163 (185 ) 162 244
384 51% (35%) Net Performance Fees 312
135 (186 ) 152 215
316 41% (31%) Net Realized
Performance Fees 160 19 157
130 105 411 (19%)
(34%) Distributable Earnings 220
39 173 134 120
466 (10%) (45%) Total Assets Under
Management ($ billion) 55.4 55.8
51.0 51.1 53.3
4% (4%) Fee-Earning Assets Under Management ($
billion) 39.2 39.3 38.6
38.0 37.8 (1%)
(4%) Equity Invested ($ billion) 3.8
0.6 1.4 1.7 0.7
4.4 (60%) (82%) Funds Raised ($
billion) 0.4 0.4 0.3
0.5 0.3 1.5 (37%)
(22%) Distributions ($ billion) (1) 5.1 3.1
1.9 2.4 1.5
8.9 (36%) (70%)
Carry Fund
Appreciation/(Depreciation) (2)
10%
5%
(6%)
7%
8%
(1) Distributions are based on when proceeds are actually
distributed to the Limited Partners, which may differ from when
they are realized. For 1Q 2012, approximately $1.4 billion of the
$2.2 billion of realized proceeds was distributed during the
quarter, with an additional $0.1 billion of distributions resulting
from prior period proceeds.
(2) Represents Carry Fund gains/(losses)
for the period on a total return basis before fees and expenses
(excluding related coinvestments). For purposes of calculation,
funds denominated in a currency other than U.S. Dollars have been
converted at the spot rate as of the end of each period
presented.
Global Market Strategies (GMS)
The Global Market Strategies segment advises a group of funds
that pursue investment opportunities across structured credit,
distressed debt, corporate and energy mezzanine debt, middle-market
and senior debt, as well as credit and emerging markets hedge
funds.
Global Market Strategies generated total revenue of $100 million
in the first quarter 2012, up 74% compared to the prior quarter,
driven by a 12% sequential increase in GMS carry funds, as well as
positive marks within certain GMS hedge funds. Economic Net Income
for the GMS segment increased 72% sequentially to $38 million.
Distributable Earnings of $31 million increased 15% compared to
the first quarter 2011, and declined 65% from the fourth quarter
2011, due to year-end seasonality of hedge fund realized
performance fees. GMS and its associated hedge funds (funds advised
by Claren Road Asset Management and Emerging Sovereign Group)
exhibit seasonality in the fourth quarter, as unrealized
performance fees accrued during the year are realized at year-end
and reflected in realized performance fees and realized
compensation at that time. Specifically, in the fourth quarter
2011, GMS generated $44 million in net realized performance fees
related to its hedge funds, which drove DE to $90 million.
Additionally, starting in the latter half of 2011, GMS benefited
from the acquisition of ESG, which closed on July 1, 2011.
During the quarter, Global Markets Strategies invested $0.1
billion in its carry funds and generated realized proceeds for its
fund level investors of $0.5 billion from its carry funds. Proceeds
distributed in the period were $0.4 billion, with an additional
$0.1 billion in proceeds realized but not yet distributed. GMS was
also effective in attracting capital, raising $1.3 billion,
including $710 million of net inflows into its hedge funds and the
launch of a $510 million new-issue CLO.
Fee-Earning Assets Under Management of $26.8 billion increased
16% from the fourth quarter 2011, and 40% from the first quarter
2011. Fee-Earning AUM have benefited over the past 12-months due to
the acquisition of $4.6 billion in CLO assets, organic CLO raises
of $1.0 billion, the acquisition of Emerging Sovereign Group, and
overall fundraising and net inflows of $2.4 billion. Total Assets
Under Management of $28.3 billion increased 15% compared to the
fourth quarter 2011, was up 35% from the prior year, and includes
$1.1 billion in dry powder.
Global Markets Strategies (Actual Results)
Period LTM % Change $ in
millions, except AUM where noted
1Q2011 2Q2011
3Q2011 4Q2011 1Q2012
2Q11 - 1Q12 QoQ YoY
Economic Net Income 62 43
34 22 38
137 72% (38%) Net Performance Fees 33
24 11 3 18
56 450% (47%) Net Realized
Performance Fees 15 27 7
67 15 116 (78%)
(5%) Distributable Earnings 27 43
32 90 31
196 (65%) 15% Total Assets Under Management ($
billion) 20.9 20.5 23.0
24.5 28.3 15%
35% Fee-Earning Assets Under Management ($ billion)
19.1 18.4 21.4
23.2 26.8 16% 40%
Equity Invested ($ billion, carry funds only) 0.3
0.1 0.1 0.3
0.1 0.6 (66%) (66%) Funds Raised ($
billion, carry funds only) 0.8 1.3
0.4 0.0 1.3 3.0
NM 66% Hedge Fund Net Inflows ($ billion) 0.2
0.0 0.5 0.8
0.7 2.0 (14%) 214% Distributions ($
billion, carry funds only) 0.5 0.3
0.0 0.3 0.4 1.0
19% (28%)
Carry Fund
Appreciation/Depreciation (2) 12% 4% (12%)
5% 12%
(1) Distributions are based on when
proceeds are actually distributed to the Limited Partners, which
may differ from when they are realized. For 1Q 2012, approximately
$0.3 billion of the $0.4 billion of realized proceeds was
distributed during the quarter, with an additional $0.1 billion of
distributions resulting from prior period proceeds.
(2) Represents Carry Fund gains/(losses)
for the period on a total return basis before fees and expenses
(excluding related coinvestments). For purposes of calculation,
funds denominated in a currency other than U.S. Dollars have been
converted at the spot rate as of the end of each period
presented.
Real Assets (RA)
The Real Assets segment comprises Carlyle’s operations that
advise 17 U.S. and international funds focused on real estate,
infrastructure, energy and renewable energy transactions.
Real Assets generated total revenue of $147 million and
increased 41% compared to the fourth quarter 2011, as the
investments in energy drove $82 million of unrealized performance
fees compared to $51 million in the fourth quarter 2011. Economic
Net Income of $101 million increased 58% compared to the fourth
quarter 2011 and was up 4% from the first quarter 2011 result.
Distributable Earnings of $22 million increased 49% compared to the
fourth quarter 2011, and declined 41% compared to the first quarter
2011.
The Real Assets funds appreciated 11% sequentially versus the
fourth quarter 2011, driven by a 14% increase in energy funds and a
5% increase in Real Estate funds. During the quarter, Real Assets
invested $0.7 billion of capital. The Real Asset funds also
realized proceeds of $1.2 billion, including $0.6 billion of
proceeds realized but not yet distributed, net of prior period
realized proceeds that were distributed in the first quarter 2012.
The Real Assets segment raised $0.1 billion in the first quarter
2012. With the final close in the 6th U.S. Real Estate fund during
the fourth quarter 2011, there are no significant Real Assets funds
currently in the market.
The Multiple of Invested Capital (MOIC) for the Real Assets
funds remained stable at 1.5x as compared to the fourth quarter
2011, as well as the first quarter 2011, which reflects ongoing
exits from the portfolio at higher multiples, offset by new
investments near invested cost and existing investments positively
impacted by appreciation. Total AUM for the Real Assets funds and
related coinvestments was $32.2 billion as of the first quarter
2012, including $7.8 billion in dry powder.
Total Fee-Earning Assets Under Management of $22.8 billion
increased 3% from the prior quarter, and declined 2% from the first
quarter 2011. Over the past 12-months, Real Assets distributed $3.7
billion to fund level investors. Total Assets Under Management of
$32.2 billion increased 5% compared to the fourth quarter 2011, and
was up 3% compared to the first quarter 2011.
Real Assets (Actual Results)
Period LTM % Change $ in
millions, except where noted
1Q2011 2Q2011
3Q2011 4Q2011 1Q2012
2Q11 - 1Q12 QoQ YoY
Economic Net Income 97 31
(48 ) 64 101 148
58% 4% Net Performance Fees 95
31 (47 ) 67 99
150 48% 4% Net Realized Performance
Fees 39 7 27 17
22 73 34% (43%)
Distributable Earnings 36 7 27
14 22 70 49%
(41%) Total Assets Under Management ($ billion)
31.2 31.6 30.4
30.7 32.2 5% 3%
Fee-Earning Assets Under Management ($ billion) 23.3
22.6 22.4 22.2
22.8 3% (2%)
Equity Invested ($ billion) 0.6 0.9
0.6 0.9 0.7 3.1
(17%) 25% Funds Raised ($ billion) 0.2
0.6 0.7 0.6 0.1
2.0 (91%) (73%) Distributions ($
billion) (1) 2.1 1.1 1.0
1.0 0.6 3.7 (42%)
(73%)
Carry Fund Appreciation/Depreciation (2)
10% 2% (3%) 7% 11%
(1) Distributions are based on when
proceeds are actually distributed to the Limited Partners, which
may differ from when they are realized. For 1Q 2012, approximately
$0.6 billion of the $1.2 billion of realized proceeds was
distributed during the quarter.
(2) Represents Carry Fund gains/(losses)
for the period on a total return basis before fees and expenses
(excluding related coinvestments). For purposes of calculation,
funds denominated in a currency other than U.S. Dollars have been
converted at the spot rate as of the end of each period
presented.
Fund of Funds Solutions (FoF)
The Fund of Funds Solutions segment was launched upon Carlyle’s
acquisition of a 60% equity interest in AlpInvest on July 1, 2011
and advises a global private equity fund of private equity funds
program and related co‐investment and secondary activities.
Fund of Funds Solutions generated total revenue of $33 million,
up 214% compared to the fourth quarter 2011, as unrealized
performance fees of $13 million were $46 million higher than the
fourth quarter 2011. Economic Net Income of $9 million increased
42% compared to fourth quarter 2011 as revenue growth outpaced
higher expenses. Distributable Earnings of $6 million declined 32%
from the fourth quarter 2011.
Fund of Funds Solutions was effective in attracting capital
during the first quarter 2012, raising $300 million, while also
benefiting from $3 billion in commitments from its long time fund
level investors. Total Assets Under Management of $45.4 billion
increased 12% from the fourth quarter 2011 and includes $17.6
billion in dry powder. Fee-Earning AUM in the Fund of Funds segment
grew 7% to $29.5 billion in the first quarter 2012.
Fund of Funds Solutions (Actual Results)
Period LTM % Change $ in
millions, except where noted
1Q2011 2Q2011
3Q2011 4Q2011 1Q2012
2Q11 - 1Q12 QoQ YoY
Economic Net Income N.A. N.A. 7
6 9 N.M. 42 % N.A.
Net Performance Fees N.A. N.A. (1 ) 1
4 N.M. 429 % N.A. Net Realized
Performance Fees N.A. N.A. 4 3
0 N.M. (86 %) N.A. Distributable
Earnings N.A. N.A. 12 9 6
N.M. (32 %) N.A. Total Assets Under
Management ($ billion) N.A. N.A. 44.2
40.7 45.4 12 % N.A.
Fee-Earning Assets Under Management ($ billion) N.A.
N.A. 30.2 27.7 29.5
7 % N.A. Note: Carlyle Group acquired a
60% ownership interest in AlpInvest on July 1, 2011.
Initial Public Offering and related Pro Forma Balance Sheet
impacts
On May 2, 2012, Carlyle priced its initial public offering of
30.5 million of its common units at $22 per unit. The common units
trade on the NASDAQ Global Select Market under the symbol "CG." The
Carlyle Group L.P. has granted the underwriters a 30-day option to
purchase up to 4.575 million additional common units at the initial
public offering price less underwriting discounts.
Carlyle raised $639 million in proceeds, after accounting for
the underwriter discount, during the initial public offering, and
will use the net proceeds from the offering to repay
indebtedness.
On a pro forma basis, our U.S. GAAP balance sheet as of March
31, 2012 included $507 million in cash and equivalents, $2.4
billion of Accrued Performance Fees, net of Giveback Obligations,
and $500 million in term loan debt.
There are no distributions to be declared from the first quarter
2012, due to Carlyle’s status as a private firm throughout the
period. However, we anticipate that we will announce a pro-rated
quarterly distribution as part of our second quarter results to
reflect a partial quarter as a public company.
Conference Call
Carlyle will host a conference call on May 15, 2012 at 8:00 a.m.
EDT to discuss the first quarter 2012 results and industry trends.
There will be no Question and Answer session following prepared
remarks given the proximity to the recent initial public offering
of common units of The Carlyle Group L.P.
Analysts and institutional investors may listen to the call by
dialing +1-800-850-2903 (international +1-253-237-1169) and
mentioning “Carlyle Group First 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 $159 billion of assets under management in 94
active funds and 63 fund of funds vehicles as of March 31,
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.
1 Distributions yet to be distributed of $1.5 billion refer to
proceeds realized during the period that were distributed to Fund
investors after period end. Accordingly, realized proceeds reflects
the amount of proceeds realized in the period after subtracting
cash distributions made in the period that were realized in the
prior period and adding investor distributions that were made
subsequent to period end that were realized from events occurring
within the period.
Carlyle Group (Predecessor of The Carlyle Group L.P.)
GAAP Statements of Operations
(Unaudited)
Three Months Ended March 31, March
31, 2012 2011
(Dollars in millions) Revenues Fund management
fees $ 234.4 $ 228.0 Performance fees Realized 280.6 402.4
Unrealized 360.2 472.3 Total
performance fees 640.8 874.7 Investment income (loss) Realized (0.8
) 33.1 Unrealized 22.3 8.3 Total
investment income (loss) 21.5 41.4 Interest and other income 2.7
5.9 Interest and other income of Consolidated Funds 211.5
167.3 Total revenues 1,110.9 1,317.3
Expenses Compensation and benefits Base compensation 106.1
86.7 Performance fee related Realized 34.3 53.0 Unrealized
54.8 35.5 Total compensation and benefits
195.2 175.2 General, administrative and other expenses 91.2 66.5
Interest 10.4 17.0 Interest and other expenses of Consolidated
Funds 184.5 86.6 Other non-operating expense (income) (4.1 )
15.4 Total expenses 477.2 360.7
Other
income (loss) Net investment income (losses) of Consolidated
Funds 872.1 (184.3 ) Income before
provision for income taxes 1,505.8 772.3 Provision for income taxes
11.7 6.1 Net income 1,494.1 766.2
Net income (loss) attributable to
non-controlling
interests in consolidated entities
864.9 (130.0 ) Net income attributable to
Carlyle Group $ 629.2 $ 896.2
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 March 31, March 31,
December 31, March 31, March 31, 2012
2011 2011 2012 2011 (Dollars in
millions) Segment Revenues Fund level fee revenues Fund
management fees $ 225.4 $ 200.6 $ 220.6 $ 895.3 $ 768.4 Portfolio
advisory fees, net 8.0 12.3 5.7 33.2 28.2 Transaction fees, net
2.7 18.8 9.9 22.1
38.0 Total fee revenues 236.1 231.7 236.2 950.6 834.6 Performance
fees Realized 281.8 401.7 414.6 1,181.4 672.8 Unrealized
349.7 459.2 (3.4 ) (304.6 ) 1,416.4
Total performance fees 631.5 860.9 411.2 876.8 2,089.2 Investment
income Realized 2.1 29.8 17.2 37.9 40.3 Unrealized 21.2
23.2 0.4 13.8 76.3 Total
investment income 23.3 53.0 17.6 51.7 116.6 Interest and other
income 2.6 5.9 0.6 12.2
22.4 Total revenues 893.5 1,151.5 665.6 1,891.3 3,062.8
Segment Expenses Direct compensation and benefits Direct
base compensation 101.2 98.8 101.0 406.8 361.5 Performance fee
related Realized 139.1 187.8 198.2 575.1 327.3 Unrealized
157.6 232.9 (9.8 ) (223.3 ) 724.3
Direct compensation and benefits 397.9 519.5 289.4 758.6 1,413.1
General, administrative, and other
indirect expenses
93.7 82.1 109.2 388.4 291.8 Interest expense 9.8 16.5
12.8 52.5 29.8 Total expenses
501.4 618.1 411.4 1,199.5
1,734.7 Economic Net Income $ 392.1 $ 533.4 $ 254.2
$ 691.8 $ 1,328.1 Fee Related Earnings $ 34.0 $ 40.2
$ 13.8 $ 115.1 $ 173.9
Net Performance Fees
$ 334.8 $ 440.2 $ 222.8 $ 525.0 $ 1,037.6
Realized Net Performance Fees
$
142.7
$
213.9
$
216.4
$
606.3
$
345.5
Investment Income $ 23.3 $ 53.0 $ 17.6 $ 51.7 $ 116.6
Distributable Earnings $ 178.8 $ 283.9 $ 247.4 $ 759.3
$ 559.7 Pro Forma Economic Net Income(1) $ 400.8 Pro
Forma Fee Related Earnings(1) $ 38.9 Pro Forma Distributable
Earnings(1) $ 189.1
(1) The selected pro forma non-GAAP
financial measures for the three months ended March 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.
Total Segment Information (Unaudited),
cont
Three Months Ended
Mar 31, 2012 vs. Mar 31, 2011 Dec 31, 2011
Mar 31, 2011 Jun 30, 2011
Sep 30, 2011
Dec 31, 2011 Mar 31, 2012 $
$
Economic Net Income, Total
Segments
(Dollars in millions) Revenues Segment fee revenues Fund
management fees $ 200.6 $ 214.9 $ 234.4 $ 220.6 $ 225.4 $ 24.8 $
4.8 Portfolio advisory fees, net 12.3 12.0 7.5 5.7 8.0 (4.3 ) 2.3
Transaction fees, net 18.8 4.1
5.4 9.9 2.7
(16.1 ) (7.2 ) Total fee revenues 231.7 231.0 247.3
236.2 236.1 4.4 (0.1 ) Performance fees Realized 401.7 97.6 387.4
414.6 281.8 (119.9 ) (132.8 ) Unrealized 459.2
243.8 (894.7 ) (3.4 )
349.7 (109.5 ) 353.1 Total
performance fees 860.9 341.4 (507.3 ) 411.2 631.5 (229.4 ) 220.3
Investment income Realized 29.8 5.6 13.0 17.2 2.1 (27.7 ) (15.1 )
Unrealized 23.2 9.8 (17.6 )
0.4 21.2 (2.0 )
20.8 Total investment income 53.0 15.4 (4.6 )
17.6 23.3 (29.7 ) 5.7 Interest and other income 5.9
7.6 1.4 0.6
2.6 (3.3 ) 2.0 Total
revenues 1,151.5 595.4 (263.2 ) 665.6 893.5 (258.0 ) 227.9
Expenses Direct compensation and benefits Direct base compensation
98.8 97.4 107.2 101.0 101.2 2.4 0.2 Performance fee related
Realized 187.8 44.6 193.2 198.2 139.1 (48.7 ) (59.1 ) Unrealized
232.9 106.1 (477.2 )
(9.8 ) 157.6 (75.3 )
167.4 Total direct comp and benefits 519.5 248.1
(176.8 ) 289.4 397.9 (121.6 ) 108.5
General, administrative, and other
indirect expenses
82.1 95.7 89.8 109.2 93.7 11.6 (15.5 ) Interest expense 16.5
14.8 15.1 12.8
9.8 (6.7 ) (3.0 )
Total expenses 618.1 358.6 (71.9
) 411.4 501.4
(116.7 ) 90.0
Economic Net Income
$ 533.4 $ 236.8 $ (191.3 ) $ 254.2
$ 392.1 $ (141.3 ) $ 137.9
Fee Related Earnings
$ 40.2 $ 30.7 $ 36.6 $ 13.8
$ 34.0 $ (6.2 ) $ 20.2
Net Performance Fees
$ 440.2 $ 190.7 $ (223.3 ) $ 222.8
$ 334.8 $ (105.4 ) $ 112.0
Realized Net Performance Fees
$
213.9
$
53.0
$
194.2
$
216.4
$
142.7
$
(71.2
)
$
(73.7
)
Investment Income
$ 53.0 $ 15.4 $ (4.6 ) $ 17.6 $
23.3 $ (29.7 ) $ 5.7
Distributable Earnings
$ 283.9 $ 89.3 $ 243.8 $ 247.4
$ 178.8 $ (105.1 ) $ (68.6 )
Corporate Private Equity Segment
Results (Unaudited)
Three Months
Ended Mar 31, 2012 vs. Mar 31, 2011 Dec
31, 2011 Mar 31, 2011 Jun 30, 2011
Sep 30, 2011
Dec 31, 2011 Mar 31, 2012 $
$ Corporate Private Equity (Dollars
in millions) Revenues Segment fee revenues Fund
management fees $ 129.4 $ 130.2 $ 128.1 $ 123.6 $ 123.9 $ (5.5 ) $
0.3 Portfolio advisory fees, net 11.8 10.4 4.8 4.3 7.0 (4.8 ) 2.7
Transaction fees, net 18.5 4.1
3.8 8.3 1.6
(16.9 ) (6.7 ) Total fee revenues 159.7 144.7
136.7 136.2 132.5 (27.2 ) (3.7 ) Performance fees Realized 326.9
30.8 333.0 262.2 223.0 (103.9 ) (39.2 ) Unrealized 367.4
240.8 (787.2 )
79.7 241.3 (126.1 )
161.6 Total performance fees 694.3 271.6 (454.2 )
341.9 464.3 (230.0 ) 122.4 Investment income Realized 27.1 (0.1 )
8.1 8.1 0.8 (26.3 ) (7.3 ) Unrealized 2.0 7.2
(14.8 ) 5.9
14.5 12.5 8.6 Total
investment income 29.1 7.1 (6.7 ) 14.0 15.3 (13.8 ) 1.3 Interest
and other income 3.6 4.2
0.3 1.1 1.4
(2.2 ) 0.3 Total revenues 886.7 427.6 (323.9 )
493.2 613.5 (273.2 ) 120.3 Expenses Direct compensation and
benefits Direct base compensation 64.1 62.3 62.8 63.9 55.3 (8.8 )
(8.6 ) Performance fee related Realized 167.3 12.1 176.2 131.9
117.6 (49.7 ) (14.3 ) Unrealized 214.9 124.2
(444.2 ) 58.0
132.0 (82.9 ) 74.0 Total
direct comp and benefits 446.3 198.6 (205.2 ) 253.8 304.9 (141.4 )
51.1
General, administrative, and other
indirect expenses
55.1 56.7 56.5 70.2 58.8 3.7 (11.4 ) Interest expense 10.5
9.7 9.8 7.5
5.9 (4.6 ) (1.6 )
Total expenses 511.9 265.0
(138.9 ) 331.5 369.6
(142.3 ) 38.1
Economic Net Income
$ 374.8 $ 162.6 $ (185.0 ) $ 161.7
$ 243.9 $ (130.9 ) $ 82.2
Fee Related Earnings
$ 33.6 $ 20.2 $ 7.9 $ (4.3 )
$ 13.9 $ (19.7 ) $ 18.2
Net Performance Fees
$ 312.1 $ 135.3 $ (186.2 ) $ 152.0
$ 214.7 $ (97.4 ) $ 62.7
Realized Net Performance Fees
$
159.6
$
18.7
$
156.8
$
130.3
$
105.4
$
(54.2
)
$
(24.9
)
Investment Income
$ 29.1 $ 7.1 $ (6.7 ) $ 14.0
$ 15.3 $ (13.8 ) $ 1.3
Distributable Earnings
$ 220.3 $ 38.8 $ 172.8 $ 134.1
$ 120.1 $ (100.2 ) $ (14.0 )
Global Market Strategies Segment
Results (Unaudited)
Three Months
Ended Mar 31, 2012 vs. Mar 31, 2011 Dec 31,
2011 Mar 31, 2011 Jun 30, 2011
Sep 30, 2011
Dec 31, 2011 Mar 31, 2012 $
$ Global Market Strategies (Dollars
in millions) Revenues Segment fee revenues Fund
management fees $ 33.8 $ 44.4 $ 50.4 $ 44.9 $ 48.6 $ 14.8 $ 3.7
Portfolio advisory fees, net 0.5 0.9 0.8 0.8 0.7 0.2 (0.1 )
Transaction fees, net - -
- - - -
- Total fee revenues 34.3 45.3 51.2
45.7 49.3 15.0 3.6 Performance fees Realized 34.8 54.8 6.1 108.5
32.4 (2.4 ) (76.1 ) Unrealized 31.0 (16.1 )
(6.8 ) (101.0 ) 12.7
(18.3 ) 113.7 Total performance
fees 65.8 38.7 (0.7 ) 7.5 45.1 (20.7 ) 37.6 Investment income
Realized 2.9 5.0 3.1 9.3 1.3 (1.6 ) (8.0 ) Unrealized 16.8
2.8 (2.1 ) (4.7 )
3.7 (13.1 ) 8.4
Total investment income 19.7 7.8 1.0 4.6 5.0 (14.7 ) 0.4 Interest
and other income 1.7 1.3
1.4 (0.4 ) 0.6
(1.1 ) 1.0 Total revenues 121.5 93.1 52.9 57.4
100.0 (21.5 ) 42.6 Expenses Direct compensation and benefits
Direct base compensation 15.6 15.3 16.9 13.9 19.7 4.1 5.8
Performance fee related Realized 19.4 27.9 (0.7 ) 41.8 17.8 (1.6 )
(24.0 ) Unrealized 13.5 (13.5 )
(10.7 ) (37.5 ) 9.7 (3.8
) 47.2 Total direct comp and benefits 48.5
29.7 5.5 18.2 47.2 (1.3 ) 29.0
General, administrative, and other
indirect expenses
8.4 17.8 10.8 14.0 13.0 4.6 (1.0 ) Interest expense 2.9
2.2 2.4 3.0
1.7 (1.2 ) (1.3 )
Total expenses 59.8 49.7
18.7 35.2 61.9
2.1 26.7
Economic Net Income
$ 61.7 $ 43.4 $ 34.2 $ 22.2
$ 38.1 $ (23.6 ) $ 15.9
Fee Related Earnings
$ 9.1 $ 11.3 $ 22.5 $ 14.4
$ 15.5 $ 6.4 $ 1.1
Net Performance Fees
$ 32.9 $ 24.3 $ 10.7 $ 3.2
$ 17.6 $ (15.3 ) $ 14.4
Realized Net Performance Fees
$
15.4
$
26.9
$
6.8
$
66.7
$
14.6
$
(0.8
)
$
(52.1
)
Investment Income
$ 19.7 $ 7.8 $ 1.0 $ 4.6
$ 5.0 $ (14.7 ) $ 0.4
Distributable Earnings
$ 27.4 $ 43.2 $ 32.4 $ 90.4
$ 31.4 $ 4.0 $ (59.0 ) -
Real Assets Segment Results
(Unaudited)
Three Months
Ended Mar 31, 2012 vs. Mar 31, 2011 Dec 31,
2011 Mar 31, 2011 Jun 30, 2011
Sep 30, 2011
Dec 31, 2011 Mar 31, 2012 $
$ Real Assets (Dollars in
millions) Revenues Segment fee revenues Fund management
fees $ 37.4 $ 40.3 $ 37.2 $ 35.8 $ 36.6 $ (0.8 ) $ 0.8 Portfolio
advisory fees, net - 0.7 1.9 0.6 0.3 0.3 (0.3 ) Transaction fees,
net 0.3 - 1.6
1.6 1.1
0.8 (0.5 ) Total fee revenues 37.7 41.0
40.7 38.0 38.0 0.3 - Performance fees Realized 40.0 12.0 29.1 16.9
23.2 (16.8 ) 6.3 Unrealized 60.8 19.1
(78.2 ) 50.8
82.4 21.6 31.6
Total performance fees 100.8 31.1 (49.1 ) 67.7 105.6 4.8
37.9 Investment income Realized (0.2 ) 0.7 1.8 (0.2 ) - 0.2 0.2
Unrealized 4.4 (0.2 )
(0.7 ) (0.8 ) 3.0
(1.4 ) 3.8 Total investment income 4.2 0.5 1.1
(1.0 ) 3.0 (1.2 ) 4.0 Interest and other income 0.6
2.1 (0.5 ) (0.2 )
0.4 (0.2 ) 0.6
Total revenues
143.3 74.7 (7.8 ) 104.5 147.0 3.7 42.5 Expenses Direct
compensation and benefits Direct base compensation 19.1 19.8 19.4
17.0 18.2 (0.9 ) 1.2 Performance fee related Realized 1.1 4.6 2.4
0.3 0.9 (0.2 ) 0.6 Unrealized 4.5 (4.6
) (4.3 ) 0.5 5.9
1.4 5.4 Total
direct comp and benefits 24.7 19.8 17.5 17.8 25.0 0.3 7.2
General, administrative, and other
indirect expenses
18.6 21.2 19.5 20.5 19.1 0.5 (1.4 ) Interest expense 3.1
2.9 2.9
2.3 1.9 (1.2 )
(0.4 ) Total expenses 46.4
43.9 39.9 40.6
46.0 (0.4 )
5.4
Economic Net Income
$ 96.9 $ 30.8 $ (47.7 ) $ 63.9
$ 101.0 $ 4.1 $ 37.1
Fee Related Earnings
$ (2.5 ) $ (0.8 ) $ (1.6 ) $ (2.0 ) $
(0.8 ) $ 1.7 $ 1.2
Net Performance Fees
$ 95.2 $ 31.1 $ (47.2 ) $ 66.9
$ 98.8 $ 3.6 $ 31.9
Realized Net Performance Fees
$
38.9
$
7.4
$
26.7
$
16.6
$
22.3
$
(16.6
)
$
5.7
Investment Income
$ 4.2 $ 0.5 $ 1.1 $ (1.0
) $ 3.0 $ (1.2 ) $ 4.0
Distributable Earnings
$ 36.2 $ 7.3 $ 26.9 $
14.4 $ 21.5 $ (14.7 ) $ 7.1
Fund of Funds Solutions Segment Results
(Unaudited)
Three Months
Ended Mar 31, 2012 vs. Mar 31, 2011 Dec 31,
2011 Mar 31, 2011 Jun 30, 2011
Sep 30, 2011
Dec 31, 2011 Mar 31, 2012 $ $
Fund of Funds Solutions (Dollars in millions)
Revenues Segment fee revenues Fund management fees n/a n/a $
18.7 $ 16.3 $ 16.3 n/a $ - Portfolio advisory fees, net n/a n/a - -
- n/a - Transaction fees, net n/a n/a -
- - n/a -
Total fee revenues n/a n/a 18.7 16.3 16.3 n/a - Performance
fees Realized n/a n/a 19.2 27.0 3.2 n/a (23.8 ) Unrealized n/a
n/a (22.5 ) (32.9 )
13.3 n/a 46.2 Total performance
fees n/a n/a (3.3 ) (5.9 ) 16.5 n/a 22.4 Investment income Realized
n/a n/a - - - n/a - Unrealized n/a n/a -
- - n/a
- Total investment income n/a n/a - - - n/a -
Interest and other income n/a n/a 0.2
0.1 0.2 n/a
0.1 Total revenues n/a n/a 15.6 10.5 33.0 n/a 22.5
Expenses Direct compensation and benefits Direct base compensation
n/a n/a 8.1 6.2 8.0 n/a 1.8 Performance fee related Realized n/a
n/a 15.3 24.2 2.8 n/a (21.4 ) Unrealized n/a n/a
(18.0 ) (30.8 ) 10.0 n/a
40.8 Total direct comp and benefits n/a n/a
5.4 (0.4 ) 20.8 n/a 21.2
General, administrative, and other
indirect expenses
n/a n/a 3.0 4.5 2.8 n/a (1.7 ) Interest expense n/a n/a
- - 0.3
n/a 0.3 Total expenses n/a n/a
8.4 4.1
23.9 n/a 19.8
Economic Net Income
n/a n/a $ 7.2 $ 6.4 $ 9.1
n/a $ 2.7
Fee Related Earnings
n/a n/a $ 7.8 $ 5.7 $ 5.4
n/a $ (0.3 )
Net Performance Fees
n/a n/a $ (0.6 ) $ 0.7 $ 3.7
n/a $ 3.0
Realized Net Performance Fees
n/a
n/a
$
3.9
$
2.8
$
0.4
n/a
$
(2.4
)
Investment Income
n/a n/a $ - $ - $ -
n/a $ -
Distributable Earnings
n/a n/a $ 11.7 $ 8.5 $
5.8 n/a $ (2.7 )
Total Assets Under Management Roll Forward
(Unaudited)
Corporate Private Equity
Real Assets Global Market Strategies Fund of
Funds (7) Consolidated (USD in millions)
AvailableCapital
Fair Value
of Capital
Total AUM
AvailableCapital
Fair Value
of Capital
Total AUM
AvailableCapital
Fair Value
of Capital
Total AUM
AvailableCapital
Fair Value
of Capital
Total AUM
AvailableCapital
Fair Value
of Capital
Total AUM
Balance, As of December 31, 2011 $ 13,328 $ 37,737
$ 51,065 $ 8,278 $ 22,394
$ 30,672 $
1,079 $ 23,434
$ 24,513 $ 14,840 $ 25,879
$
40,719 $ 37,525 $ 109,444
$ 146,969 Acquisitions - -
- - -
- -
2,903
2,903 - -
- - 2,903 2,903
Commitments (1) 314 -
314 54 -
54 112 -
112
3,293 -
3,293 3,773 - 3,773 Capital
Called, net (2) (645 ) 519
(126 ) (889 ) 988
99 (76 ) 65
(11 ) (873 ) 1,068
195
(2,483 ) 2,640 157 Distributions (3)
315 (1,528 )
(1,213 ) 292 (1,172 )
(880
) 1 (367 )
(366 ) 64 (1,281 )
(1,217
) 672 (4,348 ) (3,676 )
Subscriptions, net of Redemptions (4) - -
- - -
- -
710
710 - -
- - 710 710 Changes
in CLO collateral balances - -
- - -
- - 244
244 - -
- - 244 244 Market
Appreciation/(Depreciation) (5) - 3,024
3,024 - 2,159
2,159 - 90
90 - 1,297
1,297 -
6,570 6,570 Foreign exchange (6) 50
150
200 35
103
138
- 97
97
312 825
1,137 397
1,175 1,572 Balance,
As of March 31, 2012 $ 13,362
$ 39,902 $ 53,264
$ 7,770 $ 24,472
$ 32,242 $ 1,116
$ 27,176 $ 28,292
$ 17,636 $ 27,788
$ 45,424 $ 39,884
$ 119,338 $
159,222 (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 Limited Partners, 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
December 31, 2011) as provided by their general partners, plus the
net cash flows since the latest valuation, up to March 31, 2012.
Fee Earning Assets Under Management
Roll Forward (Unaudited)
As of March 31, 2012 (USD
in millions)
CorporatePrivate Equity
Real Assets
GlobalMarketStrategies
Fund
ofFundsSolutions
Total Fee-Earning AUM Balance, Beginning of Period $
37,996 $ 22,172 $ 23,186 $ 27,671 $ 111,025 Acquisitions - - 2,866
- 2,866 Inflows, including Commitments(1) 137 837 193 2,519 3,686
Outflows, including Distributions(2) (454 ) (265 ) (331 ) (2,010 )
(3,060 ) Subscriptions, net of Redemptions (3) - - 717 - 717
Changes in CLO collateral balances - - 234 - 234 Market
Appreciation/(Depreciation) (4) - - (154 ) 431 277 Foreign exchange
and other (5) 154 104
92 903 1,253
Balance, End of Period $ 37,833
$ 22,848 $ 26,803
$ 29,514 $
116,998 (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. (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.
Corporate Private Equity and Real Assets
Fund Families (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 funds or our other existing and
future funds will achieve similar returns.
TOTAL INVESTMENTS
REALIZED/PARTIALLY REALIZED INVESTMENTS (5) as of
March 31, 2012 as of March 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 $ 4,074.6 3.0x 34% 25% $ 1,362.4 $ 4,074.6 3.0x 34% CP III
2/2000 $ 3,912.7
$ 4,031.7
$ 10,067.4 2.5x 27% 21% $ 3,851.7 $ 9,923.0 2.6x 27% CP IV 12/2004
$ 7,850.0 $ 7,612.6 $ 15,449.0 2.0x 16% 13% $ 3,569.1 $ 9,481.3
2.7x 25% 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 € 2,045.4 €
3,692.8 1.8x 39% 22% € 1,016.5 € 2,746.2 2.7x 72% CAP I 12/1998 $
750.0 $ 627.7 $ 2,428.5 3.9x 25% 18% $ 627.7 $ 2,428.5 3.9x 25% CAP
II 2/2006 $ 1,810.0 $ 1,611.3 $ 2,608.0 1.6x 12% 8% $ 390.1 $
1,297.3 3.3x 33% CJP 10/2001 ¥ 50,000.0 ¥ 47,291.4 ¥ 120,785.1 2.6x
61% 37% ¥ 30,009.4 ¥ 104,486.3 3.5x 72% All Other Funds (9) Various
$ 2,869.4 $ 4,240.0 1.5x 18% 7% $ 2,002.6 $ 3,337.0 1.7x 22%
Coinvestments and Other (10)
Various $ 6,724.8 $ 16,254.3
2.4x 36% 33% $ 4,190.2 $ 13,015.4 3.1x
36%
Total Fully Invested Funds
$ 29,435.7 $ 64,334.1
2.2x 28% 21% $ 19,008.6
$ 51,309.9 2.7x 31%
Funds in the Investment Period
(6) CP V 5/2007 $ 13,719.7 $ 9,219.6 $ 12,821.8
1.4x 15% 10% CEP III 12/2006 € 5,294.9 € 4,042.5 € 4,563.5 1.1x 5%
2% CAP III 5/2008 $ 2,551.6 $ 1,534.2 $ 1,615.9 1.1x 3%
(4)%
CJP II 7/2006 ¥ 165,600.0 ¥ 119,539.7 ¥ 123,662.7 1.0x 1%
(4)%
CGFSP 9/2008 $ 1,100.2 $ 785.5 $ 1,053.5 1.3x 19% 10% CAGP IV
6/2008 $ 1,041.4 $ 398.1 $ 477.6 1.2x 13%
(1)%
All Other Funds (11) Various $ 1,464.8
$ 1,910.7 1.3x 12% 4%
Total Funds in the
Investment Period $ 20,239.3
$ 25,461.3 1.3x 11%
5% TOTAL CORPORATE PRIVATE EQUITY (12)
$ 49,675.1 $ 89,795.4
1.8x 27% 19% $ 21,763.5
$ 55,880.8 2.6x 31%
Real Assets Fully Invested Funds
(6) CRP III 11/2000 $ 564.1 $ 522.5 $ 1,313.7
2.5x 44% 30% $ 481.4 $ 1,275.3 2.6x 48% CRP IV 12/2004 $ 950.0 $
1,186.1 $ 1,066.5 0.9x
(4)%
(8)%
$ 360.7 $ 506.3 1.4x 20% CRP V 11/2006 $ 3,000.0 $ 3,051.0 $
3,737.9 1.2x 8% 4% $ 1,374.0 $ 1,717.5 1.3x 10% CEREP I 3/2002 €
426.6 € 517.0 € 741.6 1.4x
14%
7% € 441.2 € 693.6 1.6x 19% CEREP II 4/2005 € 762.7 € 826.9 € 391.0
0.5x
(19)%
(19)%
€ 303.1 € 150.5 0.5x -17% Energy II 7/2002 $ 1,100.0 $ 1,311.9 $
3,785.9 2.9x 83% 56% $ 827.4 $ 3,472.8 4.2x 109% Energy III 10/2005
$ 3,800.0 $ 3,462.6 $ 7,000.4 2.0x 17% 14% $ 1,493.9 $ 4,533.7 3.0x
32% All Other Funds (13) Various $ 1,723.9 $ 1,762.0 1.0x 2%
(5)%
$ 995.1 $ 1,435.0 1.4x 16% Coinvestments and Other (10)
Various $ 3,847.3 $ 6,695.7 1.7x
22% 18% $ 1,428.7 $ 3,814.6 2.7x 32%
Total Fully Invested Funds $
16,897.5 $ 26,872.3 1.6x
18% 12% $ 7,953.7 $
17,880.9 2.2x 31% Funds in
the Investment Period (6) CRP VI
(14) 9/2010 $ 2,340.0 $ 416.2 $ 425.4 1.0x n/m n/m CIP 9/2006 $
1,143.7 $ 722.5 $ 799.7 1.1x 5%
(2)%
CEREP III 5/2007 € 2,229.5 € 1,344.9 € 1,551.0 1.2x 6% 0% Energy IV
12/2007 $ 5,979.1 $ 4,631.1 $ 7,693.1 1.7x 26% 20% Renewable Energy
II 3/2008 $ 3,417.5 $ 2,261.4 $ 3,159.9 1.4x 18% 10% All Other
Funds (15) Various $ 2,261.4 $ 3,159.9
1.4x
(4)%
(10)%
Total Funds in the Investment Period
$ 10,267.4 $ 14,558.2
1.4x 17% 11% TOTAL REAL
ASSETS (12) $
27,164.9 $ 41,430.5 1.5x
18% 12% $ 9,234.0 $
19,992.7 2.2x 31%
Global Markets Strategies Carry Funds
and Fund of Funds Vehicles (Unaudited)
TOTAL INVESTMENTS as of March 31,
2012
Inception toMarch 31,
2012
VintageYear
Fund Size
CumulativeInvested Capital
(2)
Total FairValue
(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 $ 2,140.9
1.6x 18% 12%
TOTAL
INVESTMENTS as of March 31, 2012
Inception toMarch 31,
2012
VintageYear
Fund Size
CumulativeInvested Capital
(2)
Total FairValue
(3)
MOIC (4) Gross IRR (7)
Net IRR (8) Fund of Funds Solutions
(16) (17) (Reported in Local Currency, in Millions)
Fully Committed Funds
(6)
Main Fund I - Fund Investments 2000 € 5,174.6 € 3,858.8 € 6,127.9
1.6x 13% 12% Main Fund II - Fund Investments 2003 € 4,545.0 €
4,299.8 € 5,840.8 1.4x 9% 9% Main Fund III - Fund Investments 2006
€ 11,500.0 € 8,790.4 € 9,533.5 1.1x 3% 3% Main Fund I - Secondary
Investments 2002 € 519.4 € 456.8 € 854.4 1.9x 55% 51% Main Fund II
- Secondary Investments 2003 € 998.4 € 909.3 € 1,597.4 1.8x 28% 27%
Main Fund III - Secondary Investments 2006 € 2,250.0 € 2,005.5 €
2,495.3 1.2x 8% 8% Main Fund IV - Secondary Investments 2010 €
1,856.4 € 1,442.9 € 1,753.0 1.2x 25% 24% Main Fund II -
Co-Investments 2003 € 1,090.0 € 864.7 € 2,286.9 2.6x 45% 43% Main
Fund III - Co-Investments 2006 € 2,760.0 € 2,418.3 € 2,324.3 1.0x
(1)%
(2)%
Main Fund II - Mezzanine Investments 2005 € 700.0 € 686.9 € 884.1
1.3x 8% 7% Main Fund III - Mezzanine Investments 2007 € 2,000.0 €
1,288.0 € 1,571.5 1.2x 10% 8%
All Other Funds (19)
Various € 1,205.3 € 1,801.1 1.5x
19% 15%
Total Fully Committed Funds
€ 28,226.7 €
37,070.2 1.3x 11% 10%
Funds in the Commitment
Period
Main Fund IV - Fund Investments 2009 € 4,880.0 € 780.3 € 742.6 1.0x
(6)%
(9)%
Main Fund V - Secondary Investments 2011 € 2,377.3 € 121.5 € 122.2
1.0x 15%
(11)%
Main Fund IV - Co-Investments 2010 € 1,575.0 € 934.8 € 938.7 1.0x
0%
(2)%
All Other Funds (19)
Various € 12.2 € 12.1 1.0x
(55)%
(91)%
Total Funds in the Commitment Period
€ 1,848.8 € 1,815.6 1.0x
(2)%
(5)%
TOTAL FUND OF FUNDS SOLUTIONS
€ 30,075.5 € 38,885.8 1.3x
10% 9% TOTAL FUND OF FUNDS
SOLUTIONS (USD) (20) $
40,106.0 $ 51,854.6 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.
(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, CEVP, CETP, 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, CUSGF
III, CETP II, CBPF, and CEOF.
(12) For purposes of aggregation, funds
that report in foreign currency have been converted to USD at the
reporting period spot rate.
(13) Aggregate includes the following
funds: CRP I, CRP II, CAREP I, ENERGY I and RENEW I.
(14) Gross IRR and Net IRR for CRP VI are
not meaningful as the investment period commenced in September
2010.
(15) Aggregate includes the following funds: CAREP II and CRCP I.
(16) 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. (17) Includes private equity and mezzanine primary
fund investments, secondary fund investments and co-investments
originated by the AlpInvest team. (18) To exclude the impact of FX,
all foreign currency cash flows have been converted to EUR at the
reporting period spot rate. (19) All Other Funds are AlpInvest
Funds for which both the Fund Size and Total Value are less than
US$ 1.0 billion. It 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
US Dollar equivalent balance translated at the spot rate as of
period end.
The Carlyle Group L.P.Pro Forma
Consolidated Statement of Operations (Unaudited)
Pro Forma(1) for the
ThreeMonths Ended
March 31, 2012 (Dollars in millions,
except unit and per unit amounts) Revenues Fund
management fees $ 234.4 Performance fees Realized 280.6 Unrealized
360.2 Total performance fees 640.8 Investment income
(loss) Realized (1.5 ) Unrealized 11.1 Total
investment income (loss) 9.6 Interest and other income 2.6 Interest
and other income of Consolidated Funds 211.5 Total
revenues 1,098.9
Expenses Compensation and benefits
Base compensation 222.4 Performance fee related Realized 121.4
Unrealized 132.3 Total compensation and benefits
476.1 General, administrative and other expenses 91.2 Interest 4.8
Interest and other expenses of Consolidated Funds 184.5 Other
non-operating expense (income) (0.5 ) Total expenses 756.1
Other income (loss) Net investment income (losses) of
Consolidated Funds 871.6 Income before
provision for income taxes 1,214.4 Provision for income taxes
13.8 Net income 1,200.6
Net income (loss) attributable to
non-controlling interests in consolidated entities
901.7
Net income attributable to non-controlling
interests in Carlyle Holdings
269.0
Net income attributable to The Carlyle
Group L.P.
$ 29.9 Net income per common unit, basic(2) $
0.98 Net income per common unit, diluted(2) $ 0.93
(1) The pro forma consolidated statement
of operations data for the three months ended March 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 as it is 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 combined and consolidated
financial information of Carlyle Group. The unaudited pro forma
financial information is included for informational purposes only
and does not purport to reflect the results of operations of
Carlyle Group 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 The Carlyle Group L.P. common units
outstanding 30,500,000 30,500,000 Dilutive effect of unvested
deferred restricted common units - 344,467 Contingently issuable
Carlyle Holdings partnership units - 1,436,552 Total common units
30,500,000 32,281,019
Reconciliation for Economic Net Income
and Distributable Earnings (Unaudited)
Pro Forma(1) for
the
Three Months
Ended Three Months Ended March 31,
March 31, March 31, 2012 2012
2011 (Dollars in Millions)
Income before provision for income taxes $
1,214.4
$ 1,505.8 $ 772.3 Adjustments: Partner compensation - (271.0 )
(400.6 )
Equity-based compensation issued in
conjunction with the IPO
63.3
-
-
Acquisition related charges and amortization of intangibles 23.1
24.1 14.6 Other non-operating expenses (0.5 ) (4.1 ) 15.4
Non-controlling interests in consolidated
entities
(901.7 ) (864.9 ) 130.0 Severance and lease terminations 2.4 2.4
2.0 Other adjustments (0.2 ) (0.2 ) (0.3 )
Economic Net Income $ 400.8 $ 392.1 $ 533.4
Net performance fees 354.8 334.8 440.2 Investment income
7.1 23.3 53.0
Fee
Related Earnings $ 38.9 $ 34.0 $ 40.2
Realized performance fees, net of related compensation 149.4 142.7
213.9 Investment income - realized 0.8 2.1
29.8
Distributable Earnings $ 189.1
$ 178.8 $ 283.9
(1) The selected pro forma non-GAAP
financial measures for the three months ended March 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.
Reconciliation for Economic Net income
and Distributable Earnings, cont
(Unaudited)
Pro Forma(1)
for the Three Months Ended March 31,
2012
(Dollars in millions,except unit
and per unitamounts)
Pro Forma Economic Net Income $ 400.8 Less: Provision
for Income Taxes 63.5 Pro Forma Economic Net Income, After
Taxes $ 337.3 Pro Forma Economic Net Income, After Taxes per
Adjusted Unit(2) $ 1.10 Pro Forma Distributable
Earnings $ 189.1 Less: Estimated foreign, state, and local taxes
6.2 Pro Forma Distributable Earnings, After Taxes $ 182.9
Pro Forma Distributable Earnings to The Carlyle Group L.P. $
18.3 Less: Estimated current corporate income taxes 0.9 Pro
Forma Distributable Earnings to The Carlyle Group L.P.
net of corporate income taxes
$ 17.4 Pro Forma Distributable Earnings, net, per The
Carlyle Group L.P.
common unit outstanding(3)
$ 0.57
(1) The selected pro forma non-GAAP
financial measures for the three months ended March 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.
(2) Adjusted Units were determined as follows:
The Carlyle
Group L.P. common units outstanding 30,500,000 Carlyle Holdings
partnership units held by the existing owners 274,000,000 Dilutive
effect of unvested deferred restricted common units 344,467
Contingently issuable Carlyle Holdings partnership units 1,436,552
Total Adjusted Units 306,281,019 (3) As of March 31, 2012,
on a pro forma basis, there are 30,500,000 outstanding common units
of The Carlyle Group L.P.
Carlyle Group (Predecessor of The
Carlyle Group L.P.)
GAAP for 12-Month Rolling Summary
(Unaudited)
Twelve Months Ended March 31, March
31, 2012 2011 (Dollars in millions)
Revenues Fund management fees $ 921.9 $ 793.3 Performance
fees Realized 1,185.6 665.7 Unrealized (297.9 )
1,449.6 Total performance fees 887.7 2,115.3 Investment
income Realized 31.2 44.6 Unrealized 27.3 60.2
Total investment income 58.5 104.8 Interest and other income
12.6 21.6 Interest and other income of Consolidated Funds
758.2 503.7 Total revenues 2,638.9 3,538.7
Expenses Compensation and benefits Base compensation
393.9 279.8 Performance fee related Realized 207.0 97.8 Unrealized
(103.0 ) 120.5 Total compensation and benefits
497.9 498.1 General, administrative and other expenses 348.2 210.8
Interest 54.0 30.3 Interest and other expenses of Consolidated
Funds 551.0 258.3 Other non-operating expenses 12.5 15.4
Loss from early extinguishment of debt,
net of related expenses
- 2.5 Equity issued for affiliate debt financing -
214.0 Total expenses 1,463.6 1,229.4
Other
income (loss) Net investment income (losses) of Consolidated
Funds 733.1 (615.1 ) Gain on business acquisition 7.9
- Income before provision for income taxes
1,916.3 1,694.2 Provision for income taxes 34.1
23.3 Net income 1,882.2 1,670.9
Net income (loss) attributable to
non-controlling interests in consolidated entities
792.3 (423.0 ) Net income attributable to Carlyle Group $ 1,089.9
$ 2,093.9
Reconciliation of Non-GAAP to GAAP for
12-Month Rolling Summary (Unaudited)
Twelve Months Ended
March 31, March 31, 2012
2011 (Dollars in Millions) Income before
provision for income taxes $ 1,916.3 $ 1,694.2 Adjustments:
Partner compensation (541.9 ) (1,058.4 ) Acquisition related
charges and amortization of intangibles 101.0 25.6 Gain on business
acquisition (7.9 ) - Other non-operating expenses 12.5 15.4 Losses
associated with early extinguishment of debt - 2.5 Equity issued
for affiliate debt financing - 214.0 Non-controlling interests in
Consolidated entities (792.3 ) 423.0 Severance and lease
terminations 4.9 11.4 Other adjustments (0.8 ) 0.4
Economic Net Income $ 691.8 $ 1,328.1
Net performance fees 525.0 1,037.6 Investment income 51.7
116.6
Fee Related Earnings $ 115.1
$ 173.9 Realized performance fees, net of related
compensation 606.3 345.5 Investment income - realized 37.9
40.3
Distributable Earnings $ 759.3
$ 559.7
Carlyle Group (Predecessor of The
Carlyle Group L.P.) GAAP Balance Sheet (Unaudited)
As of March 31, 2012
Consolidated
Operating
Entities
Consolidated
Funds
Eliminations Consolidated
(Dollars in millions) Assets
Cash and cash equivalents $ 523.2 $ - $ - $
523.2 Cash and cash equivalents held at Consolidated Funds -
1,435.8 - 1,435.8 Restricted cash 24.9 - - 24.9 Restricted cash and
securities of Consolidated Funds - 95.3 - 95.3 Accrued performance
fees 2,506.4 - (16.8 ) 2,489.6 Investments 450.7 - (39.2 ) 411.5
Investments of Consolidated Funds - 22,929.9 - 22,929.9 Due from
affiliates and other receivables, net 231.3 - (10.8 ) 220.5
Due from affiliates and other receivables
of Consolidated Funds, net
- 288.5 - 288.5 Fixed assets, net 52.4 - - 52.4 Deposits and other
69.5 5.9 - 75.4 Intangible assets, net 619.0 - - 619.0 Deferred tax
assets 17.0 -
- 17.0 Total assets $
4,494.4 $ 24,755.4 $ (66.8 )
$ 29,183.0
Liabilities and
equity Loans payable $ 1,108.1 $ - $ - $ 1,108.1 Loans payable
of Consolidated Funds - 12,489.3 (34.7 ) 12,454.6 Accounts payable,
accrued expenses and other liabilities 180.6 - - 180.6 Accrued
compensation and benefits 480.1 - - 480.1 Due to Carlyle partners
1,169.0 - - 1,169.0 Due to affiliates 47.6 37.0 - 84.6 Deferred
revenue 202.2 - - 202.2 Deferred tax liabilities 54.9 - - 54.9
Other liabilities of Consolidated Funds - 1,287.6 (7.7 ) 1,279.9
Accrued giveback obligations 89.2
- - 89.2
Total liabilities 3,331.7 13,813.9 (42.4 ) 17,103.2
Redeemable non-controlling interests in consolidated entities 4.7
2,226.8 - 2,231.5 Members’ equity 1,007.7 21.2 (21.2 )
1,007.7 Accumulated other comprehensive income (69.1 )
0.1 (0.1 )
(69.1 ) Total members’ equity 938.6 21.3 (21.3 ) 938.6
Equity appropriated for Consolidated Funds - 1,342.1 (3.1 ) 1,339.0
Non-controlling interests in consolidated entities 219.4
7,351.3 -
7,570.7 Total equity 1,158.0
8,714.7 (24.4 )
9,848.3 Total liabilities and equity $
4,494.4 $ 24,755.4 $ (66.8 )
$ 29,183.0
The Carlyle Group
L.P. Pro Forma Balance Sheet (Unaudited)
Pro Forma(1) as
of
March 31, 2012
Consolidated (Dollars in millions)
Assets Cash and cash equivalents $
507.0
Cash and cash equivalents held at Consolidated Funds 1,435.8
Restricted cash 24.9 Restricted cash and securities of Consolidated
Funds 95.3 Accrued performance fees 2,489.6 Investments 411.5
Investments of Consolidated Funds
22,929.8
Due from affiliates and other receivables, net 220.5
Due from affiliates and other receivables
of Consolidated Funds, net
288.5 Fixed assets, net 52.4 Deposits and other 75.4 Intangible
assets, net 619.0 Deferred tax assets 17.0 Total
assets $ 29,166.9
Liabilities and equity Loans
payable $ 500.0 Loans payable of Consolidated Funds 12,454.6
Accounts payable, accrued expenses and other liabilities 180.6
Accrued compensation and benefits 1,445.1 Due to Carlyle partners -
Due to affiliates 84.6 Deferred revenue 202.2 Deferred tax
liabilities 64.8 Other liabilities of Consolidated Funds 1,279.9
Accrued giveback obligations 89.2 Total liabilities
16,301.0 Redeemable non-controlling interests in
consolidated entities 2,231.5 Members’ equity
216.1
Accumulated other comprehensive income (69.1 ) Total
members’ equity
147.0
Equity appropriated for Consolidated Funds 1,339.0 Non-controlling
interests in consolidated entities 7,756.3 Non-controlling
interests in Carlyle Holdings 1,392.0 Total equity
10,634.3
Total liabilities and equity $
29,166.8
(1) The pro forma consolidated balance
sheet as of March 31, 2012 presents our consolidated financial
position 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 March 31,
2012. The pro forma adjustments applied to the balance
sheet primarily relate to the following: (a) the reorganization of
certain co-investments that were originally funded by individual
Carlyle partners as well as certain carried interest rights held by
retired Carlyle partners to non-controlling interests; (b) the
reclassification of amounts owed to Carlyle partners to accrued
compensation and benefits; (c) a reduction of accrued compensation
and benefits to reflect 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; (d) a distribution
of previously undistributed earnings; (e) the receipt of the
proceeds from the IPO and the application of those proceeds to
repay debt; and (f) the reclassification of the portion of Carlyle
Group not acquired in the IPO to non-controlling interests. 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 combined and consolidated financial information of
Carlyle Group. The unaudited pro forma financial information is
included for informational purposes only and does not purport to
reflect the financial position of Carlyle Group 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.
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.
Other Key Terms
“Assets under management” or “AUM” refers to the
assets managed by Carlyle. AUM equals the sum of the following:
(a) the fair value of the capital invested in Carlyle carry
funds, co-investment vehicles and fund of funds vehicles plus the
capital that Carlyle is entitled to call from investors in those
funds and vehicles (including Carlyle commitments to those funds
and vehicles and those of senior Carlyle professionals and
employees) pursuant to the terms of their capital commitments to
those funds and vehicles;
(b) the amount of aggregate collateral balance at par of
Carlyle’s collateralized loan obligations (“CLOs“) and the
reference portfolio notional amount of Carlyle’s synthetic
collateralized loan obligations (“synthetic CLOs“); and
(c) the net asset value (pre-redemptions and subscriptions) of
Carlyle’s long/short credit, emerging markets, multi-product
macroeconomic and other hedge funds and certain structured credit
funds.
AUM includes certain energy and renewable resources funds that
Carlyle jointly advise with Riverstone Investment Group L.L.C.
(“Riverstone”). In addition, Carlyle’s calculation of AUM (but not
fee-earning AUM) includes uncalled commitments to, and the fair
value of invested capital in, investment funds from Carlyle and its
personnel, regardless of whether such commitments or invested
capital are subject to fees.
“Available capital,” commonly known as “dry powder,” for
Carlyle’s carry funds refers to the amount of capital commitments
available to be called for investments. Amounts previously called
may be added back to available capital following certain
distributions.
“Carlyle funds,” “our funds” and “our
investment funds” refer to the investment funds and vehicles
advised by Carlyle.
“Carry funds” refers to those investment funds that
Carlyle advises, including the buyout funds, growth capital funds,
real asset funds and distressed debt and mezzanine funds (but
excluding Carlyle’s structured credit funds, hedge funds and fund
of funds vehicles), where Carlyle receives a special residual
allocation of income, which is referred to as a “carried interest,”
in the event that specified investment returns are achieved by the
fund.
“Expired available capital” occurs when a fund has passed
the investment and follow-on periods and can no longer invest
capital into new or existing deals. Any remaining available
capital, typically a result of either recycled distributions or
specific reserves established for the follow-on period that are not
drawn, can only be called for fees and expenses and is therefore
removed from the total AUM calculation.
“Fee-earning assets under management” or “Fee-earning
AUM” refers to the assets managed by Carlyle from which Carlyle
derives recurring fund management fees. Fee-earning AUM generally
equals the sum of:
(a) for carry funds and certain co-investment vehicles where the
investment period has not expired, the amount of limited partner
capital commitments and for fund of funds vehicles, the amount of
external investor capital commitments during the commitment
period;
(b) for substantially all carry funds and certain co-investment
vehicles where the investment period has expired, the remaining
amount of limited partner invested capital;
(c) the gross amount of aggregate collateral balance at par,
adjusted for defaulted or discounted collateral, of Carlyle’s CLOs
and the reference portfolio notional amount of Carlyle’s synthetic
CLOs;
(d) the external investor portion of the net asset value
(pre-redemptions and subscriptions) of Carlyle’s long/short credit,
emerging markets, multi-product macroeconomic and other hedge funds
and certain structured credit funds; and
(e) for fund of funds vehicles and certain carry funds where the
investment period has expired, the lower of cost or fair value of
invested capital.
Fee-earning AUM includes certain energy and renewable resources
funds that Carlyle jointly advises with Riverstone.
For Carlyle’s carry funds, co-investment vehicles and fund of
funds vehicles, total AUM includes the fair value of the capital
invested, whereas fee-earning AUM includes the amount of capital
commitments or the remaining amount of invested capital at cost,
depending on whether the investment period for the fund has
expired. As such, fee-earning AUM may be greater than total AUM
when the aggregate fair value of the remaining investments is less
than the cost of those investments.
“Fund of funds vehicles” refer to those funds, accounts
and vehicles advised by AlpInvest Partners B.V., formerly known as
AlpInvest Partners N.V.
“Net performance fees” refers to the performance fees
from Carlyle funds and fund of funds vehicles net of the portion
allocated to Carlyle investment professionals which is reflected as
performance fee related compensation expense.
“Net realized performance fees” refers to the realized
performance fees from Carlyle funds and fund of funds vehicles net
of the portion allocated to Carlyle investment professionals which
is reflected as realized performance fee related compensation
expense.
“Performance fees” consist principally of carried
interest from carry funds and fund of funds vehicles and incentive
fees or allocations from certain of our Global Market Strategies
funds. Carlyle is generally entitled to a 20% allocation (or 1.8%
to 10% in the case of most of the fund of funds vehicles) of the
net realized income or gain as a carried interest after returning
the invested capital, the allocation of preferred returns of
generally 8% to 9% and the return of certain fund costs (subject to
catch-up provisions as set forth in the fund limited partnership
agreement). Carried interest revenue, which is a component of
performance fees in Carlyle’s combined and consolidated financial
statements, is recognized by Carlyle upon appreciation of the
valuation of the applicable funds’ investments above certain return
hurdles as set forth in each respective partnership agreement and
is based on the amount that would be due to Carlyle pursuant to the
fund partnership agreement at each period end as if the funds were
liquidated at such date.
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