Global alternative asset manager The Carlyle Group L.P. (NASDAQ:
CG), today reported its unaudited results for the fourth quarter
and the year ended December 31, 2012.
David M. Rubenstein, Co-Chief Executive Officer of Carlyle,
said, “We had another excellent year. Our performance over the past
two years was marked by steady, continuous progress across our
business. Most notably, in 2012 we raised twice as much capital as
we did in 2011, with over $14 billion of new capital commitments
into our funds. As a strong reflection of our cash earnings, we are
announcing an attractive fourth quarter distribution of $0.85 per
unit to our common unitholders.”
William E. Conway, Jr., Co-Chief Executive Office of Carlyle,
said, “I am optimistic about investment opportunities globally, in
developed and emerging markets alike. We deployed and harvested
capital at a solid pace in the fourth quarter, which is a
reflection of the scope of the Carlyle global platform. In the
fourth quarter alone, we invested $3.3 billion in equity in 96
investments in 19 countries across 24 carry funds. In the same
period, we achieved $6.8 billion in realized proceeds from 155
investments across 39 carry funds. Our performance in 2012 has
built a strong foundation for producing significant returns for our
fund investors and Distributable Earnings for our common
unitholders in 2013 and beyond.”
U.S. GAAP results for Q4 2012 included income before provision
for income taxes of $146 million and net income attributable to the
public unitholders through The Carlyle Group L.P. of $12 million,
or net income per common unit of $0.25 on a fully diluted basis.
For the year ended December 31, 2012, income before provision for
income taxes was $2.4 billion, compared to $1.2 billion in 2011.
Total balance sheet assets were $31.6 billion as of December 31,
2012 compared with $24.7 billion as of December 31, 2011.
Fourth Quarter Distribution
The Board of Directors has declared a quarterly distribution of
$0.85 per common unit to holders of record at the close of business
on March 4, 2013, payable on March 13, 2013. Since its IPO in May
2012, Carlyle has announced an aggregate of $1.12 per common unit
in distributions to common unitholders.
The Carlyle Group Distribution Policy
Carlyle intends to distribute $0.16 per full quarter to common
unitholders for each of the first three quarters of the calendar
year, and to announce a year-end catch-up distribution in its
fourth quarter earnings release. As noted in Carlyle’s Registration
Statement on Form S-1, Carlyle intends to make the year-end
catch-up distribution in an amount that, taken together with the
other quarterly distributions, represents substantially all of its
Distributable Earnings in excess of the amount determined by the
General Partner to be necessary or appropriate to provide for the
conduct of its business, to make appropriate investments in its
business and its funds or to comply with applicable law or any of
its financing agreements. Carlyle anticipates that the aggregate
amount of its distributions for most years will be less than its
total Distributable Earnings for that year. The declaration and
payment of any distribution is at the sole discretion of the
General Partner, which may change the distribution policy at any
time.
The Carlyle Engine
Carlyle evaluates the underlying performance of its business on
four key metrics, known as the Carlyle Engine: funds raised, equity
invested, carry fund returns and realized proceeds for fund
investors. The table below highlights the results of those metrics
for Q4 2012, and for 2012 and 2011.
Funds Raised Equity Invested
Q4 $4.6 billion
Q4 $3.3 billion
2012: $14.0 bn
2011: $6.6 bn
2012: $7.9 bn
2011: $11.3 bn
Realized Proceeds
Carry Fund Returns Q4 $6.8 billion
Q4
4%
2012: $18.7 bn
2011: $17.6 bn
2012: 14%
2011: 16% Note: Equity Invested and Realized
Proceeds reflect carry funds only.
During Q4 2012, Carlyle generated net realized proceeds of $6.8
billion from 155 different investments across 39 carry funds.
Carlyle deployed $3.3 billion of equity in Q4 2012 in 96 new or
follow-on investments across 24 carry funds. For 2012, Carlyle
realized proceeds of $18.7 billion, compared to $17.6 billion in
2011, and invested $7.9 billion in 2012 compared to $11.3 billion
in 2011.
In 2012, 78% of realized proceeds were from sale activities,
versus 88% in 2011. In addition, 58% of realized proceeds in 2012
were produced by funds actively realizing performance fees versus
64% in 2011.
Segment
Realized Proceeds Equity Invested
# ofInvestments
# of Funds
$ mn
# ofInvestments
# of Funds
$ mn
Q4
Corporate Private Equity 50 18 $4,739 18 10 $2,369 Global
Market Strategies 42 6 $584 9 4 $106 Real Assets 67 15
$1,477 70 10 $861
Carlyle
155 39 $6,801 96
24 $3,336
YTD
Corporate Private Equity 94 21 $12,148 49 16 $4,170 Global
Market Strategies 58 6 $1,127 26 5 $577 Real Assets
106 15 $5,444 126 11 $3,172
Carlyle 250 42
$18,719 197 32
$7,919 Note: The columns may not sum as some
investments cross segment lines, but are only counted one time for
Carlyle results.
Carlyle All Segment Results for Fourth
Quarter and Full Year 2012
- Distributable Earnings (DE): $188
million for Q4 2012 and $688 million for 2012
- Pre-tax Distributable Earnings
of $188 million for Q4 2012 equates to $0.49 per common unit on a
post-tax basis. Post-IPO and after-tax Distributable Earnings per
common unit for 2012 was $1.39. Distributable Earnings of $688
million in 2012 compares to $864 million in 2011.
- Fee-Related Earnings were $55
million for Q4 2012 and increased from $14 million in Q4 2011 due
to an increase in fee earning assets under management, lower
general and administrative expenses and $18 million in proceeds
from an insurance settlement. Fee-Related Earnings of $170 million
in 2012 increased 40% from $121 million in 2011.
- Realized Net Performance Fees of
$127 million for Q4 2012 compares to $216 million in Q4 2011. For
the current quarter, realized net performance fees were positively
impacted by public equity exits in Hertz, Housing Development
Finance Corporation (HDFC) and Kinder Morgan in Corporate Private
Equity and the sale of Metaldyne in Global Market Strategies, among
other full and partial realization events. Realized net performance
fees of $502 million in 2012 compared to $678 million in 2011.
- Realized Investment Income was
$6 million in Q4 2012. Realized investment income was $16 million
in 2012.
- Economic Net Income (ENI): $182
million for Q4 2012 and $736 million for 2012
- Economic Net Income was $182
million for Q4 2012 and $736 million for 2012. On an after-tax
basis, Carlyle generated $0.47 in ENI per Adjusted Unit for Q4
2012.
- Q4 2012 ENI was positively impacted by
appreciation of 4% in Carlyle’s carry fund portfolio, which
excludes structured credit, hedge funds and Fund of Funds Solutions
vehicles. Corporate Private Equity and Global Market Strategies
carry funds were up an average of 5%, while Real Asset funds were
up 1% compared to the end of Q3 2012. Carry fund appreciation was
14% in 2012 compared to 16% in 2011.
- Carlyle’s public carry fund portfolio
increased 4% during Q4 2012 while the private carry fund portfolio
increased 3%.
The Carlyle
Group L.P. - All Segments (Actual Results) Period
LTM % Change $ in millions, except where noted
Q4
2011 Q1 2012 Q2 2012 Q3
2012 Q4 2012 Q1 12 - Q4 12
QoQ YoY YTD Revenues 666
894 61 584 505 2,044 (14%) (24%) (5%) Expenses 411
501 119 365 323 1,308 (12%)
(21%) (1%) Economic Net Income 254 392
(57) 219 182 736 (17%) (28%)
(12%) Fee-Related Earnings 14 34 36 46
55 170 20% 289% 39% Net
Performance Fees 223 335 (107) 165 132
525 (20%) (41%) (17%) Realized Net
Performance Fees 216 143 76 156 127
502 (18%) (41%) (26%) Distributable
Earnings 247 179 115 206 188 688
(9%) (24%) (20%) Total Assets Under
Management ($ billion) 147.0 159.2 156.2 157.4
170.2 8% 16%
Fee-Earning Assets Under Management ($ billion) 111.0 117.0
112.0 115.1 123.1 7%
11% Note: Totals may not sum due to rounding.
Assets Under Management and Remaining Fair
Value of Capital
- Total Assets Under Management:
$170.2 billion as of Q4 2012 (+16% in 2012)
- Changes versus Q3 2012: Acquisitions of
equity interests in NGP Energy Capital Management and Vermillion
Asset Management (+$14.4 billion), new capital commitments (+$3.5
billion), market appreciation (+$2.9 billion), foreign exchange
impact (+$640 million), changes in par value of CLO collateral
(-$383 million) and net distributions (-$8.0 billion).
- Increases versus year end 2011
primarily were due to acquisitions, portfolio appreciation,
fundraising and foreign exchange impacts. Partially offsetting
these additions was a significant level of distributions to fund
investors.
- Total Dry Powder of $43.9 billion as
of Q4 2012, comprised of Corporate Private Equity $17.6
billion, Global Market Strategies $1.8 billion, Real Assets $9.9
billion and Fund of Funds Solutions $14.5 billion.
- Fee-Earning Assets Under Management:
$123.1 billion as of Q4 2012 (+11% in 2012)
- Changes versus Q3 2012: Acquisitions
(+$12.6 billion), asset inflows (+$2.8 billion), foreign exchange
impact (+$968 million), market appreciation (+$394 million), change
in the par value of CLO collateral (-$364 million) and net
distributions and outflows (-$8.4 billion).
- As of December 31, 2012, Carlyle had
raised Limited Partner commitments of $5.0 billion to several of
its latest vintage funds, including our U.S. Buyout, Asia Buyout
and Financial Services funds, which are not yet included in
Fee-Earning Assets Under Management.
- Remaining Fair Value of Capital
(carry funds only) as of Q4 2012: $60 billion
- Current Multiple of Invested Capital
(MOIC) of remaining fair value of capital: 1.2x.
- Remaining fair value of capital in the
ground in investments made in 2008 or earlier: 48% of total fair
value.
- AUM in-carry ratio as of the end of Q4
2012: 67%.
Non-GAAP Operating Results
Carlyle’s non-GAAP results for Q4 2012 are provided in the table
below:
Carlyle Group Summary$ in millions, except
unit and per unit amounts
Economic Net income
Q4 2012 Economic Net Income (pre-tax) $ 182.2 Less:
Provision for income taxes (1) 36.6 Economic Net Income,
After Taxes $ 145.6 Fully diluted units (in millions) 311.8
Economic Net Income, After Taxes per Adjusted Unit $
0.47 Distributable Earnings
Distributable Earnings $ 187.5 Less: Estimated foreign, state, and
local taxes (2) 12.5 Distributable Earnings, After Taxes $
175.0 Allocating Distributable Earnings for only public
unitholders of The Carlyle Group L.P. Distributable Earnings
to The Carlyle Group L.P. $ 24.7 Less: Estimated current corporate
income taxes (3) 3.6 Distributable Earnings to The Carlyle
Group L.P. net of corporate income taxes $ 21.1 Units in
public float (in millions) 43.2 Distributable Earnings, net,
per The Carlyle Group L.P. common unit outstanding
$
0.49
(1) Represents the implied provision for
income taxes that was calculated using a similar methodology
applied in calculating the 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
current tax provision for The Carlyle Group L.P., without any
reduction for noncontrolling interests.(3) Represents current
corporate income taxes payable upon distributable earnings
allocated to Carlyle Holdings I GP Inc. and estimated current Tax
Receivable Agreement payments owed
Corporate Private Equity (CPE)
Funds
Raised Equity Invested Realized Proceeds Carry
Fund Returns Q4 $3.0 bn
Q4 $2.4 bn
Q4 $4.7 bn
Q4 5%
2012: $7.8 bn
2011: $1.6 bn
2012: $4.2 bn
2011: $7.5 bn
2012: $12.1 bn
2011: $11.4 bn
2012: 16%
2011: 16%
- Distributable Earnings (DE): $74
million for Q4 2012 and $399 million for 2012. The following
components impacted Distributable Earnings in Q4 and 2012:
- Fee Related Earnings were $18
million in Q4 2012 and $61 million for 2012, compared to $(4)
million in Q4 2011 and $57 million in 2011.
- Realized Net Performance Fees
were $54 million for Q4 2012 and $335 million for 2012, compared to
$130 million for Q4 2011 and $465 million for 2011. In 2012,
realized proceeds of $12.1 billion compared to $11.4 billion in
2011.
- Economic Net Income (ENI): $122
million for Q4 2012 and $479 million for 2012
- Economic Net Income of $122
million for Q4 2012 and $479 million for 2012 compared to $162
million for Q4 2011 and $514 million for 2011.
- CPE carry fund valuations increased 5%
in Q4 2012, compared with 7% in Q4 2011. For 2012, carry fund
valuations increased 16%, in line with 16% appreciation in
2011.
- Net Performance Fees of $100
million for Q4 2012 and $394 million for 2012, compared to $152
million for Q4 2011 and $413 million for 2011. The composition of
funds experiencing appreciation was different year-over-year,
resulting in a lower increase in unrealized performance fees in
2012 versus 2011.
- Assets Under Management (AUM):
$53.3 billion as of Q4 2012
- Total AUM increased 4% during
2012 to $53.3 billion.
- Funds Raised of $3.0 billion was
driven by an additional closing of our latest vintage U.S. buyout
fund, a first closing in our latest vintage Asia buyout fund, as
well as closings in our U.S. mid-market buyout fund, regional funds
and various co-investments. For 2012, corporate private equity
funds raised of $7.8 billion compared to $1.6 billion for
2011.
- Fee Earning Assets Under
Management were $33.8 billion as of Q4 2012, down from $38.0
billion as of Q4 2011, with the decline driven by $5.2 billion in
outflows, which are partially offset by fundraising.
Corporate Private Equity (Actual Results) Period
LTM % Change $ in millions, except where noted
Q4
2011 Q1 2012 Q2 2012 Q3
2012 Q4 2012 Q1 12 - Q4 12 QoQ
YoY YTD Economic Net Income 162
244 (65) 177 122 479
(31%) (24%) (7%) Net Performance Fees 152 215
(80) 159 100 394 (38%)
(34%) (5%) Realized Net Performance Fees 130 105
50 126 54 335 (57%) (58%)
(28%) Distributable Earnings 134 120 61
145 74 399 (49%) (45%) (29%)
Total Assets Under Management ($ in billions) 51.1
53.3 52.5 53.2 53.3
0% 4% Fee-Earning Assets Under
Management ($ in billions) 38.0 37.8 37.1 36.9
33.8 (8%) (11%)
Note: Totals may not sum due to rounding.
Global Market Strategies (GMS)
Funds Raised
Equity Invested
Realized Proceeds
Carry Fund Returns
Q4 $1.2 bn
Q4 $0.1 bn
Q4 $0.6 bn
Q4 5%
2012: $5.2 bn
2011: $2.4 bn
2012: $0.6 bn
2011: $0.8 bn
2012: $1.1 bn
2011: $1.0 bn
2012: 23%
2011: 9% Note: Funds Raised excludes acquisitions, but
includes hedge funds and CLOs. Equity Invested and Realized
Proceeds are for carry funds only.
- Distributable Earnings (DE): $86
million for Q4 2012 and $168 million for 2012. The following
components impacted Distributable Earnings for Q4 and 2012:
- Fee Related Earnings were $31
million in Q4 2012 and $89 million for 2012, compared to $14
million for Q4 2011 and $57 million for 2011, as fee-earning AUM
increased 34% for 2012 driven by organic fundraising, a new CLO
issuance and acquisitions.
- Realized Net Performance Fees
were $50 million for Q4 2012 and $66 million for 2012, compared to
$67 million in Q4 2011 and $116 million for 2011, as hedge fund net
performance was not as strong in 2012 as it was in 2011.
- Economic Net Income (ENI): $59
million for Q4 2012 and $165 million for 2012
- Economic Net Income of $59
million for Q4 2012 and $165 million for 2012 compared to $22
million for Q4 2011 and $162 million for 2011.
- Net Performance Fees were $23
million for Q4 2012 and $53 million for 2012.
- Assets Under Management (AUM):
$32.5 billion as of Q4 2012
- Total AUM of $32.5 billion as of
Q4 2012 increased 33% versus Q4 2011, while Fee-Earning AUM
of $31.0 billion as of Q4 2012 increased 34% versus Q4 2011.
- Hedge Fund net inflows (excluding
acquisitions) were flat in Q4 2012 and were $1.8 billion in 2012.
Total hedge fund AUM was $12.1 billion as of Q4 2012.
- Carlyle raised a fourth new CLO during
Q4 2012 with $620 million in assets. For the year, Carlyle raised
four new CLOs with total capital of $2.3 billion.
- GMS Carry Fund AUM ended 2012 at $3.8
billion.
- Total Structured Credit AUM ended 2012
at $16.6 billion.
Global Markets
Strategies (Actual Results) Period LTM %
Change $ in millions, except AUM where noted
Q4 2011
Q1 2012 Q2 2012 Q3 2012
Q4 2012 Q1 12 - Q4 12 QoQ
YoY YTD Economic Net Income 22 38
32 36 59 165 64% 169%
3% Net Performance Fees 3 18 4 8
23 53 183% 673% (25%) Realized Net
Performance Fees 67 15 1 1 50 66
7086% (25%) (43%) Distributable Earnings 90
31 23 28 86 168 210%
(5%) (13%) Total Assets Under Management ($ in
billions) 24.5 28.3 29.0 30.1 32.5
8% 33% Fee-Earning Assets
Under Management ($ in billions) 23.2 26.8 27.7
28.5 31.0 9% 34%
Funds Raised, excluding hedge funds ($ in billions) 0.0
0.7 0.8 0.8 1.2 3.5 50%
N.A. Hedge Fund Net Inflows ($ in billions)
0.8 0.7 0.7 0.4 0.0 1.8
N.M N.M. Note: Totals may not sum due to
rounding. Funds Raised excludes the impact of acquisitions.
Real Assets (RA)
Funds
Raised
Equity Invested
Realized Proceeds
Carry Fund Returns Q4 $0.0 bn
Q4 $0.9
bn
Q4 $1.5 bn
Q4
1%
2012: $0.3 bn
2011: $2.1 bn
2012: $3.2 bn
2011: $3.0 bn
2012: $5.4 bn
2011: $5.2 bn
2012: 9%
2011: 16% Note: Equity Invested and Realized Proceeds are
for carry funds only. Funds Raised excludes acquisitions.
- Distributable Earnings (DE): $22
million for Q4 2012 and $102 million for 2012. The following
components impacted Distributable Earnings in Q4 and 2012:
- Fee Related Earnings were $0.3
million in Q4 2012 and $3 million for 2012, compared to $(2)
million for Q4 2011 and $(7) million for 2011.
- Realized Net Performance Fees
were $22 million for Q4 2012 and $99 million for 2012, compared to
$17 million for Q4 2011 and $90 million for 2011.
- Economic Net Income (ENI): $(7)
million for Q4 2012 and $67 million for 2012
- Economic Net Income was $(7)
million for Q4 2012 and $67 million for 2012, compared to $64
million for Q4 2011 and $144 million for 2011. Real Assets carry
fund valuations increased 9% in 2012 and 16% in 2011. The ENI loss
in Q4 2012 was due to unrealized losses on real estate
investments.
- Net Performance Fees were $6
million for Q4 2012 and $69 million for 2012, compared to $67
million for Q4 2011 and $146 million for 2011.
- Assets Under Management (AUM): $40.2
billion as of Q4 2012
- Total AUM increased 31% versus
2011, driven largely by the investment in NGP Energy Capital
Management and portfolio appreciation, offset by net distributions
of $4.2 billion.
- Fee-Earning AUM of $29.3 billion
was up 32% in 2012 compared to 2011, with the increase driven
largely by the investment in NGP Energy Capital Management,
partially offset by outflows of $5.3 billion.
- On December 20, 2012, Carlyle announced
the acquisition of an equity interest in NGP Energy Capital
Management which entitles Carlyle to 47.5% of NGP’s management fee
related revenues. NGP had $12.1 billion in total AUM as of Q3 2012
and $10.3 billion in fee earning AUM as of Q4 2012. Although
Carlyle does not consolidate NGP, Carlyle includes NGP AUM within
Total AUM and Fee-Earning AUM.
Real Assets
(Actual Results) Period LTM % Change $ in
millions, except where noted
Q4 2011 Q1 2012
Q2 2012 Q3 2012 Q4 2012
Q1 12 - Q4 12 QoQ YoY
YTD Economic Net Income 64 101 (29) 2
(7) 67 (531%) (111%) (53%) Net
Performance Fees 67 99 (33) (4) 6
69 272% (91%) (53%) Realized Net
Performance Fees 17 22 26 29 22
99 (25%) 30% 10% Distributable Earnings 14
22 28 31 22 102 (27%)
60% 21% Total Assets Under Management ($ in
billions) 30.7 32.2 30.0 29.5 40.2
36% 31% Fee-Earning
Assets Under Management ($ in billions) 22.2 22.8
19.5 19.6 29.3 49% 32%
Note: Totals may not sum due to rounding.
Fund of Funds Solutions (FoF)
- Distributable Earnings (DE): $6
million for Q4 2012 and $18 million for 2012
- Fee Related Earnings of $5
million for Q4 2012 and $16 million for 2012.
- Realized Net Performance Fees
were $1 million for Q4 2012 and $2 million for 2012.
- Economic Net Income (ENI): $8
million for Q4 2012 and $24 million for 2012
- Assets Under Management (AUM):
$44.1 billion as of Q4 2012
- Total AUM was up 8% compared to
2011.
- Fee-Earning AUM of $28.9 billion
increased 4% versus 2011.
- AlpInvest raised $349 million in new
commitments during Q4 2012.
Fund of Funds
Solutions (Actual Results) Period LTM %
Change $ in millions, except where noted
Q4 2011
Q1 2012 Q2 2012 Q3 2012
Q4 2012 Q1 12 - Q4 12 QoQ
YoY YTD Economic Net Income 6 9
4 4 8 24 105% 27%
N.A. Net Performance Fees 1 4 1 1 3
9 383% 190% N.A. Realized Net
Performance Fees 3 0 0 0 1 2
233% (67%) N.A. Distributable Earnings 9
6 3 3 6 18 68%
(37%) N.A. Total Assets Under Management ($ in
billions) 40.7 45.4 44.6 44.6 44.1
(1%) 8% N.A. Fee-Earning Assets
Under Management ($ in billions) 27.7 29.5 27.6
30.2 28.9 (4%) 4%
N.A. Note: Carlyle Group acquired a 60% ownership interest in
AlpInvest on July 1, 2011. Totals may not sum due to rounding.
Balance Sheet Highlights
The amounts presented below exclude the effect of U.S. GAAP
consolidation eliminations on investments and accrued performance
fees, as well as cash and debt associated with Carlyle’s
consolidated funds. All data is as of December 31, 2012.
- Cash and Cash Equivalents of $567
million.
- On-balance sheet investments
attributable to unitholders of $310 million, excluding the
equity-method investment by Carlyle in NGP Energy Capital
Management.
- Net Accrued Performance Fees
attributable to unitholders of $1,200 million. These performance
fees comprise Gross Accrued Performance Fees of $2,205 million less
$79 million in accrued giveback obligation and $926 million in
accrued performance fee compensation and non-controlling
interest.
- Loans payable of $886 million,
including $386 million drawn from the revolving credit facility. On
January 15, 2013, Carlyle Holdings Finance L.L.C., an indirect
subsidiary of The Carlyle Group L.P., issued $500 million aggregate
principal amount of 3.875% Senior Notes due 2023. Carlyle used a
portion of the net proceeds to repay the outstanding borrowings of
$386 million under the revolving credit facility of its senior
credit facility, as of December 31, 2012. The remaining net
proceeds were used to prepay the initial $75 million amortization
amount due under Carlyle’s term loan and for general corporate
purposes.
Conference Call
Carlyle will host a conference call on February 21, 2013 at 8:00
a.m. EST to discuss Q4 and 2012 results and industry trends.
Immediately following the prepared remarks, there will be a
question and answer session for analysts and investors.
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)
CorporatePrivateEquity
GlobalMarketStrategies
Real Assets(7)
Fund
ofFundsSolutions
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)
CorporatePrivateEquity
GlobalMarketStrategies
Real Assets(7)
Fund
ofFundsSolutions
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
FundInceptionDate
(1)
CommittedCapital
CumulativeInvestedCapital
(2)
Total FairValue (3)
MOIC (4)
GrossIRR (7)
NetIRR (8)
CumulativeInvestedCapital
(2)
Total FairValue (3)
MOIC (4)
GrossIRR (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
FundInceptionDate
(1)
CommittedCapital
CumulativeInvestedCapital
(2)
Total FairValue (3)
MOIC (4)
GrossIRR (7)
NetIRR (8)
CumulativeInvestedCapital
(2)
Total FairValue (3)
MOIC (4)
GrossIRR (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 toDecember 31,
2012
FundInceptionDate
(1)
CommittedCapital
CumulativeInvested
Capital(15)
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 $ 2,255.7 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 toDecember 31,
2012
VintageYear
CommittedCapital
CumulativeInvested
Capital(2)(18)
Total FairValue (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 ThreeMonths
Ended
Pro Forma(1)for the
YearEnded
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, exceptunit
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
theYear 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
ConsolidatedOperatingEntities
ConsolidatedFunds
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.
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, management fee funds
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
and principal cash at par of our CLOs (inclusive of all positions)
and the reference portfolio notional amount of our 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 advises with Riverstone Investment Group L.L.C.
(“Riverstone”) and certain management fee funds advised by NGP
Energy Capital Management. 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 and management fee 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 estate funds, infrastructure funds, certain energy funds and
distressed debt and mezzanine funds (but excluding Carlyle’s
structured credit funds, hedge funds and fund of funds vehicles as
well as the management fee funds), 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, for fund of funds vehicles,
the amount of external investor capital commitments during the
commitment period, and for management fee funds, the amount of
investor capital commitments before the first investment
realization;
(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
and for management fee funds where the first investment has been
realized, the amount of partner commitments less realized and
written-off investments;
(c) the amount of aggregate fee-earning
collateral balance at par of our collateralized loan obligations
(“CLOs“), as defined in the fund indentures (typically exclusive of
equities and defaulted positions) as of the quarterly cut-off date
for each CLO, and the reference portfolio notional amount of our
synthetic collateralized loan obligations (“synthetic CLOs“);
(d) the external investor portion of the net
asset value (pre-redemptions and subscriptions) of our long/short
credit, emerging markets, multi-product macroeconomic and other
hedge funds and certain structured credit funds; and
(e) for fund of funds vehicles where the
commitment fee period has expired 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 and certain management fee funds advised by NGP Energy
Capital Management.
For Carlyle’s carry funds, co-investment vehicles, management
fee funds 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.
“Management fee funds” refers to those funds advised by
NGP Energy Capital Management. In December 2012, Carlyle acquired
an equity interest in NGP Energy Capital Management that entitles
Carlyle to an allocation of income equal to 47.5% of the management
fee-related revenues of the NGP Energy Capital Management entities
that serve as the advisors to certain private equity funds.
“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.
“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 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.
“Realized net 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.
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