- $105 million of Distributable
Earnings on a pre-tax basis in Q3 2013, or $0.32 per common unit on
a post-tax basis
- $6.5 billion in new capital raised
in Q3 2013 and $22.9 billion raised over the past twelve
months
- $3.0 billion in realized proceeds in
Q3 2013, with $17.8 billion realized over the past twelve
months
- $1.9 billion in equity invested in
Q3 2013 and $9.1 billion invested over the past twelve
months
- 4% carry fund portfolio appreciation
in Q3 2013, driving Economic Net Income of $195 million on a
pre-tax basis
- Declared quarterly distribution of
$0.16 per common unit for Q3 2013 for an aggregate distribution of
$0.48 for the first three quarters of 2013
- U.S. GAAP net income attributable to
The Carlyle Group L.P. of $2.3 million, or $0.04 per common unit on
a diluted basis, in Q3 2013
Global alternative asset manager The Carlyle Group L.P.
(NASDAQ:CG) today reported its unaudited results for the third
quarter of 2013, which ended on September 30, 2013.
Carlyle Co-CEO David M. Rubenstein said, “We continue to see
strong interest from fund investors for Carlyle products, and our
overall pace of fundraising is the highest since 2007. Carlyle has
produced $1.33 per common unit in Distributable Earnings year to
date and announced distributions to unitholders of $0.48,
positioning unitholders for a solid year end distribution. We
continue to innovate and add high quality strategic assets to
Carlyle, and we look forward to taking a deep dive into all of
Carlyle’s businesses at our first Investor Day on November
11th.”
Carlyle Co-CEO William E. Conway, Jr. said, “Our carry funds
performed well in the quarter, posting 4% appreciation across the
entire platform, with specific strength in Corporate Private Equity
which is now up 25% over the past year. We have generated realized
proceeds of nearly $18 billion for our fund investors over the past
twelve months, and we currently have additional portfolio companies
in the pipeline which we expect to go public over the next two
quarters. Our investing acumen and fund performance has driven
Carlyle’s net accrued carry balance up 34% year to date to $1.6
billion.”
U.S. GAAP results for Q3 2013 included loss before provision for
income taxes of ($8.6) million and net income attributable to the
common unitholders through The Carlyle Group L.P. of $2.3 million,
or net income per common unit of $0.04 on a diluted basis. Total
balance sheet assets were $33.9 billion as of September 30,
2013.
Third Quarter Distribution
The Board of Directors has declared a quarterly distribution of
$0.16 per common unit to holders of record at the close of business
on November 18, 2013, payable on November 27, 2013.
For the first three quarters of 2013, the Board of Directors has
declared $0.48 in aggregate distributions per common unit. Carlyle
has generated $1.33 in year-to-date after-tax Distributable
Earnings per common unit.
The Carlyle Group Distribution Policy
As further discussed in its Annual Report on Form 10-K and
Quarterly Reports on Form 10-Q, Carlyle currently anticipates that
it will cause Carlyle Holdings to make quarterly distributions to
its partners, including The Carlyle Group L.P.’s wholly owned
subsidiaries, that will enable The Carlyle Group L.P. to pay a
quarterly distribution of $0.16 per common unit for each of the
first three quarters of each year, and, for the fourth quarter of
each year, to pay a distribution of at least $0.16 per common unit,
that, taken together with the prior quarterly distributions in
respect of that year, represents its share, net of taxes and
amounts payable under the tax receivable agreement, of Carlyle’s
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
Distributable Earnings for that year due to these funding
requirements. The declaration and payment of any distributions 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 these
metrics for Q3 2013, year-to-date (YTD) and for the last twelve
months (LTM)1.
Funds Raised Equity Invested
Q3
$6.5 billion
Q3 $1.9 billion YTD: $18.3
bn LTM: $22.9 bn YTD: $5.7 bn LTM: $9.1 bn
Realized
Proceeds Carry Fund Returns
Q3 $3.0 billion
Q3 4% YTD: $11.0
bn LTM: $17.8 bn YTD: 13% LTM: 17%
Note: Equity Invested and Realized Proceeds
reflect carry funds only.
During Q3 2013, within its carry funds, Carlyle generated
realized proceeds of $3.0 billion from 138 different investments
across 35 carry funds. Carlyle deployed $1.9 billion of equity in
96 new or follow-on investments across 27 carry funds. On an LTM
basis, Carlyle realized proceeds of $17.8 billion and invested $9.1
billion.
Segment
Realized Proceeds Equity
Invested
# of
Investments
# of Funds $ in millions
# of
Investments
# of Funds $ in millions
Q3 Corporate Private Equity 38 16 $1,466 27 13 $1,138
Global Market Strategies 37 6 $140 5 3 $126 Real Assets 68
13 $1,404 64 11 $640
Carlyle 138
35 $3,010
96 27 $1,905
YTD Corporate Private Equity 72 21 $6,934 45 17
$3,867 Global Market Strategies 58 6 $754 11 4 $463
Real Assets 108 13 $3,319 110 13 $1,387
Carlyle
232 40 $11,006
165 34
$5,717 Note: The columns may not sum as some
investments cross segment lines, but are only counted one time for
Carlyle results.
1
LTM, or last twelve months, refers to the
period Q4 2012 through Q3 2013. Prior LTM, or the prior rolling
twelve month period, refers to the period Q4 2011 through Q3
2012.
Carlyle All Segment Results
- Distributable Earnings (DE): $105
million for Q3 2013 and $627 million on an LTM basis
- Pre-tax Distributable Earnings
were $105 million for Q3 2013, or $0.32 per common unit on a
post-tax basis. On a year-to-date basis, pre-tax Distributable
Earnings were $439 million, 13% below the first three quarters of
2012, and Distributable Earnings per common unit were $1.33 on a
post-tax basis. Distributable Earnings were $627 million on an LTM
basis, which is 16% lower than the prior rolling twelve month
period.
- Fee-Related Earnings were $40
million for Q3 2013 and declined by $6 million from $46 million in
Q3 2012 due to higher fundraising costs and other expenses, offset
by higher Fee-Earning Assets Under Management. Fee-Related Earnings
were $157 million on an LTM basis, up 22% compared with the prior
rolling twelve month period.
- Realized Net Performance Fees
were $61 million for Q3 2013, compared to $156 million in Q3 2012.
For Q3 2013, Realized Net Performance Fees were positively impacted
by exits in Wesco, Allison Transmission, and SS&C Technologies,
among others. Realized Net Performance Fees were $448 million on an
LTM basis, which was 24% lower than the prior rolling twelve month
period.
- Realized Investment
Income/(Loss) was ($1) million in Q3 2013, driven by losses in
certain European real estate investments.
- Economic Net Income (ENI): $195
million for Q3 2013 and $926 million on an LTM basis
- Economic Net Income was $195
million for Q3 2013 and $926 million on an LTM basis. On a post-tax
basis, Carlyle generated $0.51 in ENI per Adjusted Unit for Q3
2013.
- Q3 2013 ENI was impacted by
appreciation of 4% in Carlyle’s carry fund portfolio. Corporate
Private Equity carry funds were up 5%, Global Market Strategies
carry funds increased 2%, and Real Assets carry funds increased 1%
compared to the end of Q2 2013. Carry fund appreciation was 17% on
an LTM basis, compared to 18% in the prior rolling twelve month
period.
The Carlyle Group L.P. - All
Segments
Period
LTM
% Change
$ in millions, except where noted
Q3
2012 Q4 2012 Q1 2013 Q2
2013 Q3 2013 Q4 12 - Q3 13
QoQ
YoY YTD Revenues 584 505
852 508 615 2,480 21% 5% 28% Expenses 365 323 458 352 420
1,553 19% 15% 25%
Economic Net
Income 219 182 394 156
195 926 25% (11%)
34% Fee-Related Earnings 46 55 36
26 40 157 52%
(12%) (11%) Net Performance Fees 165
132 355 123 157 766
28% (4%) 62% Realized Net
Performance Fees 156 127 142 118
61 448 (48%) (61%)
(14%) Distributable Earnings 207 188
171 163 105 627
(36%) (49%) (13%) Total Assets Under
Management ($ in billions) 157.4 170.2
176.3 180.4 185.0
3% 18% 9% Fee-Earning Assets Under Management
($ in billions) 115.1 123.1 122.9
132.0 137.9
4% 20% 12% Note: Totals may not sum due to
rounding.
Assets Under Management and Remaining
Fair Value of Capital
- Total Assets Under Management:
$185.0 billion as of Q3 2013 (+18% LTM)
- Major drivers of change versus Q2
2013: New capital commitments (+$4.6 billion), market appreciation
(+$3.7 billion), foreign exchange/other (+$1.7 billion) and net
subscriptions to our hedge funds (+$0.4 billion), offset by net
distributions (-$5.8 billion).
- Total Dry Powder of $51.1 billion as
of Q3 2013, comprised of $22.8 billion in Corporate Private
Equity, $1.6 billion in Global Market Strategies, $9.1 billion in
Real Assets and $17.6 billion in Solutions.
- Fee-Earning Assets Under Management:
$137.9 billion as of Q3 2013 (+20% LTM)
- Major drivers of change versus Q2 2013:
Asset inflows including commitments (+$6.5 billion), foreign
exchange/other (+$2.0 billion) and net subscriptions (+$0.4
billion), partially offset by net distributions and outflows (-$2.9
billion).
- Since the end of Q2 2013, Fee-Earning
AUM was positively impacted by the addition of new commitments in
Carlyle’s latest vintage buyout funds in the U.S., Europe, and
Asia, in addition to other fundraising across the Carlyle
platform.
- Remaining Fair Value of Capital
(carry funds only) as of Q3 2013: $62.2 billion
- Current Multiple of Invested Capital
(MOIC) of remaining fair value of capital: 1.3x.
- Remaining fair value of capital in the
ground in investments made in 2009 or earlier: 47% of total fair
value.
- AUM in-carry ratio as of the end of Q3
2013: 58%.
Non-GAAP Operating Results
Carlyle’s non-GAAP results for Q3 2013 are provided in the table
below:
Carlyle Group Summary $ in millions, except unit and
per unit amounts
Economic Net income Q3
2013 Economic Net Income (pre-tax) $ 194.5 Less:
Provision for income taxes (1) 34.3 Economic Net Income,
After Taxes $ 160.2 Fully diluted units (in millions) 315.0
Economic Net Income, After Taxes per Adjusted Unit
$ 0.51 Distributable Earnings
Distributable Earnings $ 104.7 Less: Estimated
foreign, state, and local taxes (2) 14.9 Distributable
Earnings, After Taxes $ 89.8 Allocating Distributable
Earnings for only public unitholders of The Carlyle Group L.P.
Distributable Earnings to The Carlyle Group L.P. $ 14.2
Less: Estimated current corporate income taxes (benefit) (3)
(1.8) Distributable Earnings to The Carlyle Group L.P. net of
corporate income taxes $ 16.0 Units in public float (in
millions)(4) 49.3 Distributable Earnings, net, per The
Carlyle Group L.P. common unit outstanding
$
0.32 (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 (benefit) upon distributable earnings allocated to
Carlyle Holdings I GP Inc. and estimated current Tax Receivable
Agreement payments owed. (4) Includes 76,680 common units issued in
October and November 2013 in connection with the closing of the
Metropolitan Real Estate Equity Management acquisition and the
vesting of deferred restricted common units. These newly issued
units are included in this calculation because they will
participate in the unitholder distribution that will be paid in
November
Corporate Private Equity (CPE)
Funds
Raised Equity Invested
Realized Proceeds
Carry Fund Returns Q3 $4.0 bn
Q3 $1.1 bn
Q3 $1.5 bn
Q3 5% YTD:
$9.2 bn LTM: $12.2 bn YTD: $3.9
bn LTM: $6.2 bn YTD: $6.9 bn
LTM: $11.7 bn YTD: 20%
LTM: 25%
- Distributable Earnings (DE): $54
million for Q3 2013 and $325 million on an LTM basis. The
following components impacted Distributable Earnings in Q3 2013:
- Fee-Related Earnings were $5
million in Q3 2013 and $17 million on an LTM basis, compared to $19
million in Q3 2012, with the decline driven by higher fundraising
costs for buyout funds, partially offset by higher fund management
fees.
- Realized Net Performance Fees
were $45 million for Q3 2013 and $296 million on an LTM basis,
compared to $126 million for Q3 2012.
- Economic Net Income (ENI): $159
million for Q3 2013
- Economic Net Income of $159
million for Q3 2013 and $627 million on an LTM basis, compared to
$177 million for Q3 2012.
- CPE carry fund valuations increased 5%
in Q3 2013 and 25% on an LTM basis, compared with 5% in Q3
2012.
- Net Performance Fees of $147
million for Q3 2013 and $590 million on an LTM basis, compared to
$159 million for Q3 2012.
- Total Assets Under Management
(AUM): $62.2 billion as of Q3 2013
- Total AUM increased 17% to $62.2
billion from $53.2 billion as of Q3 2012.
- Funds Raised of $4.0 billion
were driven by additional closings of our latest vintage U.S., Asia
and Sub Saharan Africa funds, and first closes in our latest Europe
and Japan buyout funds and various co-investments.
- Fee-Earning Assets Under
Management were $41.9 billion as of Q3 2013, up 14% from $36.9
billion as of Q3 2012, with the increase driven by $14.9 billion in
inflows, and partially offset by $9.3 billion in outflows,
including distributions and basis step downs.
Corporate Private Equity
Period
LTM
% Change $
in millions, except where noted
Q3 2012 Q4
2012 Q1 2013 Q2 2013
Q3 2013 Q4 12 - Q3
13
QoQYo
Y
YTD Economic Net Income
177 122 239 106
159 627 50%
(10%) 42% Fee-Related Earnings
19 18 (0)
(6) 5 17
184% (72%) (103%) Net
Performance Fees 159 100
235 109 147 590
35% (8%)
67% Realized Net Performance Fees 126
54 111 86 45
296 (48%)
(65%) (14%) Distributable Earnings
145 74 114
84 54 325
(36%) (63%) (23%) Total
Assets Under Management ($ in billions) 53.2
53.3 55.1 57.9
62.2 7%
17% Fee-Earning Assets
Under Management ($ in billions) 36.9
33.8 33.2 38.5 41.9
9%
14% Note: Totals may not
sum due to rounding.
Global Market Strategies (GMS)
Funds
Raised Equity Invested
(Carry Fund Only)
Realized Proceeds
(Carry Fund Only)
Carry Fund Returns Q3
$1.6 bn
Q3 $0.1 bn
Q3 $0.1 bn
Q3 2% YTD: $5.2 bn LTM: $6.4 bn
YTD: $0.5 bn LTM: $0.6 bn
YTD: $0.8 bn LTM: $1.3 bn YTD:
18% LTM: 20% Note: Funds Raised excludes
acquisitions, but includes hedge funds and CLOs. Equity Invested
and Realized Proceeds are for carry funds only.
- Distributable Earnings (DE): $24
million for Q3 2013 and $198 million on an LTM basis. The
following components impacted Distributable Earnings in Q3 2013:
- Fee-Related Earnings were $17
million in Q3 2013 and $95 million on an LTM basis, compared to $22
million in Q3 2012. The decline versus last year was driven by
higher fundraising costs related to raising the Carlyle GMS Finance
business development company (BDC) and other expenses, partially
offset by higher management fees.
- Realized Net Performance Fees
were $5 million for Q3 2013 and $81 million on an LTM basis,
compared to $1 million for Q3 2012.
- Realized Investment Income was
$2 million and $21 million on an LTM basis.
- Economic Net Income (ENI): $10
million for Q3 2013
- Economic Net Income of $10
million for Q3 2013 and $220 million on an LTM basis, compared to
$36 million for Q3 2012.
- GMS carry fund valuations increased 2%
in Q3 2013, in line with a 2% appreciation in Q3 2012.
- Net Performance Fees of ($12)
million for Q3 2013 and $109 million on an LTM basis, compared to
$8 million for Q3 2012.
- Total Assets Under Management
(AUM): $35.4 billion as of Q3 2013
- Total AUM of $35.4 billion as of
Q3 2013 increased 18% versus Q3 2012, while Fee-Earning AUM of
$33.7 billion increased 18% versus Q3 2012.
- Total hedge fund AUM was $14.0 billion
as of Q3 2013.
- Carlyle priced one new CLO during Q3
2013 totaling $446 million in assets, and secured $541 million of
new funding for the Carlyle GMS Finance BDC.
- GMS carry fund AUM ended Q3 2013 at
$3.6 billion.
- Total structured credit AUM ended Q3
2013 at $17.5 billion.
Global Market Strategies
Period
LTM
% Change
$ in millions, except where noted
Q3
2012 Q4 2012 Q1 2013
Q2 2013 Q3 2013
Q4 12 - Q3 13
QoQYo
Y
YTD Economic Net Income
36 59 104 47
10 220 (79%)
(72%) 52% Fee-Related Earnings
22 31 25 22
17 95 (25%)
(26%) 9% Net Performance Fees
8 23 73 25
(12) 109
(148%) (243%) 183% Realized Net
Performance Fees 1 50
14 11 5 81
(55%) 614% 92%
Distributable Earnings 28 86
41 46 24
198 (48%) (13%)
35% Total Assets Under Management ($ in billions)
30.1 32.5 33.1
34.7 35.4
2% 18%
Fee-Earning Assets Under Management ($ in billions)
28.5 31.0 31.4
33.1 33.7
2% 18%
Funds Raised, excluding hedge funds ($
in billions) 0.8 1.2
1.3 1.5 1.1
5.1 (25%) 36%
Hedge Fund Net Inflows ($ in billions)
0.4 0.0 0.0 0.9
0.4 1.3 (52%)
11% 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 Q3 $0.8 bn
Q3 $0.6 bn
Q3 $1.4 bn
Q3 1% YTD:
$1.6 bn LTM: $1.6 bn YTD: $1.4 bn LTM: $2.2 bn
YTD: $3.3 bn LTM: $4.8 bn
YTD: 2% LTM: 3% Note: Funds Raised excludes
acquisitions. Equity Invested and Realized Proceeds are for carry
funds only.
- Distributable Earnings (DE): $12
million for Q3 2013 and $71 million on an LTM basis. The
following components impacted Distributable Earnings in Q3 2013:
- Fee-Related Earnings were $6
million in Q3 2013 and $19 million on an LTM basis, compared to $1
million in Q3 2012. The increase was primarily driven by earnings
from our equity interest in NGP Energy Capital Management and
fundraising for our first generation international energy
fund.
- Realized Net Performance Fees
were $9 million for Q3 2013 and $66 million on an LTM basis,
compared to $29 million for Q3 2012.
- Realized Investment
Income/(Loss) of ($4) million during Q3 2013 and ($17) million
on a LTM basis, primarily driven by losses in certain Latin
American and European real estate investments.
- Economic Net Income (ENI): $0
million for Q3 2013 and $25 million on an LTM basis
- Economic Net Income of $0
million for Q3 2013 and $25 million on an LTM basis compared to $2
million for Q3 2012.
- Real Asset carry fund valuations
appreciated 1% in Q3 2013, compared to 0% in Q3 2012.
- Net Performance Fees of $10
million for Q3 2013 and $40 million on an LTM basis, compared to
($4) million for Q3 2012.
- Total Assets Under Management (AUM):
$39.0 billion as of Q3 2013
- Total AUM of $39.0 billion
increased 32% versus Q3 2012, driven largely by the acquisition of
an equity interest in NGP Energy Capital Management, partially
offset by fund distributions.
- Fee-Earning AUM of $28.5 billion
was up 46% versus Q3 2012, with the increase driven largely by the
AUM associated with NGP Energy Capital Management and fundraising
for the new international energy fund, partially offset by
distributions and outflows.
Real Assets
Period
LTM
% Change
$ in millions, except where noted
Q3
2012 Q4 2012 Q1 2013
Q2 2013 Q3 2013
Q4 12 - Q3 13 QoQ YoY
YTD Economic Net Income (Loss)
2 (7) 42 (11)
0 25 104%
(75%) (57%) Fee-Related Earnings
1 0 9 4 6
19
37% 490% 545% Net Performance
Fees (4) 6 42
(17) 10 40
156% 369% (45%) Realized Net
Performance Fees 29 22
16 19 9 66
(54%) (70%) (44%) Distributable
Earnings 31 23 12
25 12 71
(54%) (63%) (39%) Total Assets Under
Management ($ in billions) 29.5
40.2 40.3 39.8 39.0
(2%)
32% Fee-Earning Assets Under Management
($ in billions) 19.6 29.3
29.4 28.7 28.5
(1%) 46%
Note: Totals may not sum due to rounding.
Solutions
- Distributable Earnings (DE): $15
million for Q3 2013 and $33 million on an LTM basis
- Fee-Related Earnings were $12
million for Q3 2013 and $27 million on an LTM basis.
- Realized Net Performance Fees
were $3 million for Q3 2013 and $6 million on an LTM basis.
- Economic Net Income (ENI): $25
million for Q3 2013 and $54 million on an LTM basis, compared to $4
million in Q3 2012.
- Total Assets Under Management
(AUM): $48.4 billion as of Q3 2013
- Total AUM of $48.4 billion was
up 9% compared to Q3 2012.
- Fee-Earning AUM of $33.7 billion
increased 12% versus Q3 2012, with the increase primarily driven by
an increase in the fee basis of certain funds and inflows,
partially offset by outflows and fee basis step downs.
- AlpInvest attracted new commitments
into the AlpInvest Secondaries Fund V (ASF V) during the quarter,
and AlpInvest completed its final close for the fund in October
2013, with over $750 million in total commitments.
- During the quarter, Carlyle completed
the acquisition of the remaining 40% ownership interest in
AlpInvest and announced the acquisition of Metropolitan Real Estate
Equity Management (MRE), a global manager of real estate fund of
funds. The MRE acquisition closed in November 2013. As of September
2013, MRE had more than $2.6 billion in capital commitments.
Solutions
Period
LTM
% Change
$ in millions, except where noted
Q3
2012 Q4 2012 Q1 2013
Q2 2013 Q3 2013
(1) Q4 12 - Q3 13
QoQ YoY YTD
Economic Net Income 4
8 9 13
25 54
91% 565% 176%
Fee-Related Earnings 3 5
3 6
12 27 94%
294% 95% Net Performance Fees
1 3 6
7 12
27 89% 1950%
338% Realized Net Performance Fees
0 1 1
1 3
6 138% 933%
513% Distributable Earnings 3
6 4 8
15 33
100% 353% 125% Total
Assets Under Management ($ in billions) 44.6
44.1 47.8
48.0 48.4
1% 9%
Fee-Earning Assets Under Management ($ in
billions) 30.2 28.9
28.9 31.8
33.7
6% 12%
Note: Totals may not sum due to rounding.
(1) - During Q3 2013, Carlyle acquired the
remaining 40% interest in AlpInvest. As such, amounts represent
100% of the financial results of AlpInvest. Prior to Q3 2013,
amounts represent Carlyle's 60% economic interest in Alpinvest.
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 September 30, 2013.
- Cash and Cash Equivalents of $856
million.
- On-balance sheet investments
attributable to unitholders of $264 million, excluding the equity
investment by Carlyle in NGP Energy Capital Management.
- Net Accrued Performance Fees
attributable to unitholders of $1,612 million. These performance
fees are comprised of Gross Accrued Performance Fees of $2,928
million less $59 million in accrued giveback obligation and $1,257
million in accrued performance fee compensation and non-controlling
interest.
- Loans payable and senior notes totaling
$923 million.
As of September 30, 2013, Carlyle began consolidating Urbplan
Desenvolvimento Urbano S.A. (“Urbplan”), a Brazilian real estate
portfolio company of certain of its real estate investment funds.
During the second and third quarters of 2013, Carlyle and certain
senior Carlyle professionals made $32 million of investments in
Urbplan, funded $6.4 million by Carlyle and $25.6 million by
certain senior Carlyle professionals. Subsequent to September 30,
2013, Carlyle has funded an additional $3.6 million. Carlyle and
the senior Carlyle professionals will evaluate the possibility of
further capital infusions based on the circumstances at the time
(including levels of third party funding participation), but
currently anticipate that they will make additional investments
(for which the Carlyle portion, exclusive of investments made by
senior Carlyle professionals and others, is not expected to exceed
$50 million in incremental capital). During the third quarter of
2013, Carlyle concluded that Urbplan was a VIE of which Carlyle was
the primary beneficiary, and accordingly consolidated Urbplan into
the firm’s condensed consolidated financial statements as of
September 30, 2013. As Carlyle consolidated Urbplan as of September
30, 2013, the consolidation had no impact on the consolidated
results of operations for the three and nine months ended September
30, 2013.
The Carlyle Group 2013 Investor
Day
Carlyle will host an Investor Day for unitholders and analysts
on Monday, November 11th 2013 in New York City. The Investor Day
will include presentations by the firm's management team as well as
various fund heads from Carlyle's business segments. The event is
scheduled to begin at 8:00 am EST. A slide presentation will be
available on Carlyle’s investor relations website immediately
preceding the beginning of the event.
The Investor Day will be webcast live and can be accessed by all
interested parties and media via Carlyle's investor relations
website at ir.carlyle.com. For those unable to join the live
webcast, a replay will be available on the investor relations
website following the conclusion of the event.
Conference Call
Carlyle will host a conference call at 8:30 a.m. EST on
Wednesday, November 6, 2013 to announce and discuss financial
results for Q3 2013.
Analysts and institutional investors may listen to the call by
dialing +1-800-850-2903 (international +1-253-237-1169) and
mentioning “Carlyle Group Third Quarter 2013 Earnings Conference
Call.” The conference call will be webcast simultaneously to the
public through a link on the investor relations section of the
Carlyle web site at ir.carlyle.com. An archived replay of the
webcast will be available soon after the live call.
About The Carlyle Group
The Carlyle Group (NASDAQ:CG) is a global alternative asset
manager with $185 billion of assets under management across 122
funds and 81 fund of funds vehicles as of September 30, 2013.
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 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 more than 1,450
people in 34 offices across six continents.
Web: www.carlyle.comVideos: www.youtube.com/onecarlyleTweets:
www.twitter.com/onecarlylePodcasts:
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 Annual Report on Form 10-K
for the year ended December 31, 2012 filed with the SEC on March
14, 2013, 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 Nine Months
Ended Sept 30, Sept 30, Sept 30,
Sept 30, 2013 2012 2013
2012 (Dollars in millions, except unit and per unit
data) Revenues Fund management fees $ 257.9 $ 239.8 $
731.5 $ 714.1 Performance fees Realized 108.6 291.4 564.6 688.7
Unrealized 211.9 64.9 657.4 88.0 Total
performance fees 320.5 356.3 1,222.0 776.7 Investment income (loss)
Realized (3.1) 9.8 5.4 11.4 Unrealized 8.1 0.4
11.0 27.3 Total investment income (loss) 5.0 10.2 16.4 38.7
Interest and other income 2.7 4.5 9.2 9.9 Interest and other income
of Consolidated Funds 302.0 247.7 823.3
678.4 Total revenues 888.1 858.5 2,802.4 2,217.8
Expenses Compensation and benefits Base compensation 204.2
177.0 556.3 433.0 Equity-based compensation 78.7 53.2 257.0 147.4
Performance fee related Realized 45.4 121.9 232.2 188.3 Unrealized
113.5 41.5 374.5 (1.4) Total
compensation and benefits 441.8 393.6 1,420.0 767.3 General,
administrative and other expenses 136.4 92.9 368.1 268.1 Interest
11.7 4.0 33.8 20.6 Interest and other expenses of Consolidated
Funds 217.2 204.1 669.0 568.1 Other non-operating (income) expense
7.6 10.3 1.9 6.9 Total expenses 814.7
704.9 2,492.8 1,631.0
Other income Net investment
gains (losses) of Consolidated Funds (82.0) 448.9
420.1 1,707.6 Income (loss) before provision
for income taxes (8.6) 602.5 729.7 2,294.4 Provision for income
taxes 17.9 5.5 59.4 27.8 Net income
(loss) (26.5) 597.0 670.3 2,266.6
Net income (loss) attributable to
non-controlling
interests in consolidated
entities
(26.6) 485.4 441.4 1,708.2 Net income
attributable to Carlyle Holdings 0.1 111.6 228.9 558.4
Net income (loss) attributable to
non-controlling interests in Carlyle Holdings
(2.2) 93.0 196.1 550.1 Net income
attributable to The Carlyle Group L.P. $ 2.3 $ 18.6 $ 32.8 $ 8.3
Net income attributable to The Carlyle Group L.P. per
common unit Basic (1) $ 0.04 $ 0.43 $ 0.72 $ 0.20 Diluted (1) (2) $
0.04 $ 0.40 $ 0.65 $ 0.15
Weighted-average common units Basic 47,554,246
43,235,336 45,363,194 42,097,973 Diluted
51,055,564 46,939,751 50,209,620 255,300,460
(1) - Excluded from net income
attributable to The Carlyle Group L.P. was approximately $0.2
million which was allocable to participating securities under the
two-class method for the three months and nine months ended
September 30, 2013.
(2) - Included in net income attributable
to The Carlyle Group L.P. per common unit on a fully diluted basis
is incremental net income from the assumed exchange of Carlyle
Holdings partnership units of $31.1 million for the nine months
ended September 30, 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 Sept 30, Sept 30,
Jun 30, Sept 30, Sept 30,
2013 2012 2013 2013 2012
(Dollars in millions) Segment Revenues Fund level fee
revenues Fund management fees $ 281.2 $ 233.9 $ 249.9 $ 1,020.1 $
914.9 Portfolio advisory fees, net 5.0 4.6 5.7 17.7 25.3
Transaction fees, net 5.9 7.2 6.8
37.0 23.5 Total fee revenues 292.1
245.7 262.4 1,074.8 963.7 Performance fees Realized 103.1 276.4
192.6 745.2 1,083.1 Unrealized 219.6 49.0
42.1 643.7 84.2 Total
performance fees 322.7 325.4 234.7 1,388.9 1,167.3 Investment
income (loss) Realized (0.7 ) 4.6 14.6 10.2 27.9 Unrealized
(2.1 ) 3.8 (7.7 ) (7.3 ) 35.4 Total
investment income (loss) (2.8 ) 8.4 6.9 2.9 63.3 Interest and other
income 2.6 4.4 4.0 13.2
10.1 Total revenues 614.6 583.9 508.0 2,479.8 2,204.4
Segment Expenses Compensation and benefits Direct base
compensation 111.4 97.9 101.0 432.9 405.9 Indirect base
compensation 41.2 32.9 35.0 152.1 135.1 Equity-based compensation
4.0 0.6 4.2 11.4 1.2 Performance fee related Realized 41.8 120.2
74.8 297.2 492.0 Unrealized 123.7 40.6
37.4 325.4 59.8 Total compensation and
benefits 322.1 292.2 252.4 1,219.0 1,094.0
General, administrative, and other
indirectexpenses
80.0 62.3 82.0 273.8 250.6 Depreciation and amortization expense
6.2 6.2 6.2 24.8 18.8 Interest expense 11.8
4.7 11.6 35.8 33.4 Total
expenses 420.1 365.4 352.2
1,553.4 1,396.8
Economic Net
Income $ 194.5 $ 218.5
$ 155.8 $ 926.4 $
807.6 (-) Net Performance Fees 157.2 164.6 122.5 766.3 615.5
(-) Investment Income (2.8 ) 8.4 6.9
2.9 63.3
(=) Fee Related Earnings
$ 40.1 $ 45.5 $
26.4 $ 157.2 $
128.8 (+) Realized Net Performance Fees 61.3 156.2 117.8
448.0 591.1 (+) Realized Investment Income (Loss) (0.7 ) 4.6 14.6
10.2 27.9 (+) Equity based compensation 4.0
0.6 4.2 11.4 1.2
(=)
Distributable Earnings $ 104.7 $
206.9 $ 163.0 $ 626.8
$ 749.0
Total Segment Information (Unaudited),
cont
Three Months Ended
Sept 30, 2013 vs.
Sept 30,2012
Dec 31,2012
Mar 31,2013
Jun 30,2013
Sept 30,2013
Sept 30, 2012 Jun 30, 2013 Economic Net
Income,
(Dollars in millions)
Total Segments Revenues Segment fee revenues Fund management
fees $ 233.9 $ 248.9 $ 240.1 $ 249.9 $ 281.2 $ 47.3 $ 31.3
Portfolio advisory fees, net 4.6 2.4 4.6 5.7 5.0 0.4 (0.7 )
Transaction fees, net 7.2 13.9 10.4
6.8 5.9 (1.3 )
(0.9 ) Total fee revenues 245.7 265.2 255.1 262.4 292.1 46.4 29.7
Performance fees
Realized 276.4 200.6 248.9 192.6 103.1 (173.3 ) (89.5 ) Unrealized
49.0 39.3 342.7 42.1
219.6 170.6 177.5
Total performance fees 325.4 239.9 591.6 234.7 322.7 (2.7 ) 88.0
Investment income (loss) Realized 4.6 5.6 (9.3 ) 14.6 (0.7 ) (5.3 )
(15.3 ) Unrealized 3.8 (9.8 ) 12.3
(7.7 ) (2.1 ) (5.9 ) 5.6 Total
investment income (loss) 8.4 (4.2 ) 3.0 6.9 (2.8 ) (11.2 ) (9.7 )
Interest and other income 4.4 4.2 2.4
4.0 2.6 (1.8 )
(1.4 ) Total revenues 583.9 505.1 852.1 508.0 614.6 30.7 106.6
Expenses Compensation and benefits Direct base compensation
97.9 112.5 108.0 101.0 111.4 13.5 10.4 Indirect base compensation
32.9 42.3 33.6 35.0 41.2 8.3 6.2 Equity-based compensation 0.6 0.6
2.6 4.2 4.0 3.4 (0.2 ) Performance fee related Realized 120.2 73.2
107.4 74.8 41.8 (78.4 ) (33.0 ) Unrealized 40.6 34.8
129.5 37.4 123.7
83.1 86.3 Total compensation and
benefits 292.2 263.4 381.1 252.4 322.1 29.9 69.7
General, administrative, and other
indirectexpenses
62.3 49.5 62.3 82.0 80.0 17.7 (2.0 ) Depreciation and amortization
expense 6.2 6.1 6.3 6.2 6.2 - - Interest expense 4.7
3.9 8.5 11.6 11.8
7.1 0.2 Total expenses 365.4
322.9 458.2 352.2
420.1 54.7 67.9
Economic Net Income $ 218.5 $
182.2 $ 393.9 $
155.8 $ 194.5 $
(24.0 ) $ 38.7 (-) Net
Performance Fees 164.6 131.9 354.7 122.5 157.2 (7.4 ) 34.7 (-)
Investment Income (Loss) 8.4 (4.2 ) 3.0
6.9 (2.8 ) (11.2 ) (9.7 )
(=)
Fee Related Earnings $ 45.5 $ 54.5
$ 36.2 $ 26.4
$ 40.1 $ (5.4 ) $
13.7 (+) Realized Net Performance Fees 156.2 127.4
141.5 117.8 61.3 (94.9 ) (56.5 ) (+) Realized Investment Income
(Loss) 4.6 5.6 (9.3 ) 14.6 (0.7 ) (5.3 ) (15.3 ) (+) Equity based
compensation 0.6 0.6 2.6
4.2 4.0 3.4 (0.2 )
(=)
Distributable Earnings $ 206.9 $
188.1 $ 171.0 $
163.0 $ 104.7 $
(102.2 ) $ (58.3 )
Corporate Private Equity Segment
Results (Unaudited)
Three Months Ended
Sept 30, 2013 vs.
Sept 30,2012
Dec 31,2012
Mar 31,2013
Jun 30,2013
Sept 30,2013
Sept 30, 2012 Jun 30, 2013 Corporate
Private Equity
(Dollars in millions)
Revenues Segment fee revenues Fund management fees $ 124.8 $
123.5 $ 108.3 $ 108.8 $ 131.0 $ 6.2 $ 22.2 Portfolio advisory fees,
net 3.1 2.8 4.1 4.9 4.7 1.6 (0.2 ) Transaction fees, net 6.2
9.6 10.4 4.0 5.7
(0.5 ) 1.7 Total fee revenues 134.1 135.9
122.8 117.7 141.4 7.3 23.7 Performance fees Realized 241.4 94.5
212.3 151.4 79.1 (162.3 ) (72.3 ) Unrealized 72.8
86.4 207.6 31.2 182.2
109.4 151.0 Total performance fees
314.2 180.9 419.9 182.6 261.3 (52.9 ) 78.7 Investment income (loss)
Realized (0.2 ) 1.2 1.8 1.7 1.6 1.8 (0.1 ) Unrealized (1.0 )
3.3 2.8 2.4 5.5
6.5 3.1 Total investment income (loss) (1.2 )
4.5 4.6 4.1 7.1 8.3 3.0 Interest and other income 3.4
2.6 1.0 1.7 1.5
(1.9 ) (0.2 ) Total revenues 450.5 323.9 548.3 306.1 411.3
(39.2 ) 105.2 Expenses Compensation and benefits Direct base
compensation 56.2 59.9 55.0 50.0 53.9 (2.3 ) 3.9 Indirect base
compensation 19.9 27.7 20.0 21.8 27.6 7.7 5.8 Equity-based
compensation 0.4 0.4 1.5 2.3 2.1 1.7 (0.2 ) Performance fee related
Realized 115.6 40.5 101.6 65.1 34.6 (81.0 ) (30.5 ) Unrealized
39.2 40.8 83.6 8.8
79.8 40.6 71.0 Total
compensation and benefits 231.3 169.3 261.7 148.0 198.0 (33.3 )
50.0
General, administrative, and other
indirectexpenses
36.0 26.3 39.0 41.6 43.7 7.7 2.1 Depreciation and amortization
expense 3.5 3.5 3.5 3.4 3.3 (0.2 ) (0.1 ) Interest expense
2.5 2.4 4.9 6.7
6.9 4.4 0.2 Total expenses 273.3
201.5 309.1 199.7
251.9 (21.4 ) 52.2
Economic Net
Income $ 177.2 $ 122.4
$ 239.2 $ 106.4 $
159.4 $ (17.8 ) $ 53.0
(-) Net Performance Fees 159.4 99.6 234.7 108.7 146.9 (12.5
) 38.2 (-) Investment Income (Loss) (1.2 ) 4.5
4.6 4.1 7.1 8.3
3.0
(=) Fee Related Earnings $ 19.0
$ 18.3 $ (0.1 ) $
(6.4 ) $ 5.4 $ (13.6
) $ 11.8 (+) Realized Net Performance
Fees 125.8 54.0 110.7 86.3 44.5 (81.3 ) (41.8 ) (+) Realized
Investment Income (Loss) (0.2 ) 1.2 1.8 1.7 1.6 1.8 (0.1 ) (+)
Equity based compensation 0.4 0.4 1.5
2.3 2.1 1.7 (0.2 )
(=) Distributable Earnings $ 145.0
$ 73.9 $ 113.9 $
83.9 $ 53.6 $ (91.4
) $ (30.3 )
Global Market Strategies Segment
Results (Unaudited)
Three Months Ended
Sept 30, 2013 vs.
Sept 30,2012
Dec 31,2012
Mar 31,2013
Jun 30,2013
Sept 30,2013
Sept 30, 2012 Jun 30, 2013 Global Market
Strategies
(Dollars in millions)
Revenues Segment fee revenues Fund management fees $ 58.2 $
70.9 $ 66.3 $ 73.8 $ 65.7 $ 7.5 $ (8.1 ) Portfolio advisory fees,
net 0.8 0.5 0.2 0.5 0.1 (0.7 ) (0.4 ) Transaction fees, net
0.3 3.2 - 0.1 -
(0.3 ) (0.1 ) Total fee revenues 59.3 74.6
66.5 74.4 65.8 6.5 (8.6 ) Performance fees Realized 0.9 77.8 24.1
17.9 5.8 4.9 (12.1 ) Unrealized 5.7 (43.6 )
64.3 23.0 (13.6 ) (19.3 )
(36.6 ) Total performance fees 6.6 34.2 88.4 40.9 (7.8 ) (14.4 )
(48.7 ) Investment income (loss) Realized 4.6 4.4 1.9 12.2 2.0 (2.6
) (10.2 ) Unrealized 0.8 0.3 5.1
(11.9 ) 3.2 2.4 15.1
Total investment income (loss) 5.4 4.7 7.0 0.3 5.2 (0.2 )
4.9 Interest and other income 0.5 0.8
1.1 1.5 0.7 0.2
(0.8 ) Total revenues 71.8 114.3 163.0 117.1 63.9 (7.9 )
(53.2 ) Expenses Compensation and benefits Direct base
compensation 17.4 24.0 25.7 24.9 23.6 6.2 (1.3 ) Indirect base
compensation 5.9 6.0 4.8 5.5 4.6 (1.3 ) (0.9 ) Equity-based
compensation - 0.1 0.4 0.6 0.6 0.6 - Performance fee related
Realized 0.2 27.5 9.7 6.7 0.8 0.6 (5.9 ) Unrealized (1.8 )
(16.5 ) 6.2 9.6 3.1
4.9 (6.5 ) Total compensation and benefits
21.7 41.1 46.8 47.3 32.7 11.0 (14.6 )
General, administrative, and other
indirectexpenses
11.7 12.5 9.5 19.5 17.8 6.1 (1.7 ) Depreciation and amortization
expense 1.1 1.0 1.2 1.1 1.2 0.1 0.1 Interest expense 1.3
0.6 1.5 2.1 2.1
0.8 - Total expenses 35.8
55.2 59.0 70.0
53.8 18.0 (16.2 )
Economic
Net Income $ 36.0 $ 59.1
$ 104.0 $ 47.1 $
10.1 $ (25.9 ) $
(37.0 ) (-) Net Performance Fees 8.2 23.2 72.5 24.6
(11.7 ) (19.9 ) (36.3 ) (-) Investment Income 5.4
4.7 7.0 0.3 5.2
(0.2 ) 4.9
(=) Fee Related Earnings
$ 22.4 $ 31.2 $
24.5 $ 22.2 $ 16.6
$ (5.8 ) $ (5.6 ) (+)
Realized Net Performance Fees 0.7 50.3 14.4 11.2 5.0 4.3 (6.2 ) (+)
Realized Investment Income 4.6 4.4 1.9 12.2 2.0 (2.6 ) (10.2 ) (+)
Equity based compensation 0.0 0.1
0.4 0.6 0.6 0.6
0.0
(=) Distributable Earnings $
27.7 $ 86.0 $ 41.2
$ 46.2 $ 24.2 $
(3.5 ) $ (22.0 )
Real Assets Segment Results
(Unaudited)
Three Months Ended
Sept 30, 2013 vs.
Sept 30,2012
Dec 31,2012
Mar 31,2013
Jun 30,2013
Sept 30,2013
Sept 30, 2012 Jun 30, 2013 Real Assets
(Dollars in millions)
Revenues Segment fee revenues Fund management fees $ 34.4 $
35.9 $ 47.0 $ 46.4 $ 47.3 $ 12.9 $ 0.9 Portfolio advisory fees, net
0.7 (0.9 ) 0.3 0.3 0.2 (0.5 ) (0.1 ) Transaction fees, net
0.7 1.1 - 2.7
0.2 (0.5 ) (2.5 ) Total fee revenues
35.8 36.1 47.3 49.4 47.7 11.9 (1.7 ) Performance fees Realized 31.9
24.5 11.0 20.6 12.5 (19.4 ) (8.1 ) Unrealized (27.7 )
(11.9 ) 49.5 (33.4 ) 12.1
39.8 45.5 Total performance fees 4.2 12.6 60.5
(12.8 ) 24.6 20.4 37.4 Investment income (loss) Realized 0.2 -
(13.0 ) 0.7 (4.3 ) (4.5 ) (5.0 ) Unrealized 4.0
(13.4 ) 4.5 1.7 (10.9 )
(14.9 ) (12.6 ) Total investment income (loss) 4.2
(13.4 ) (8.5 ) 2.4 (15.2 ) (19.4 ) (17.6 ) Interest and other
income 0.4 0.5 0.3
0.6 0.4 - (0.2 ) Total
revenues 44.6 35.8 99.6 39.6 57.5 12.9 17.9 Expenses
Compensation and benefits Direct base compensation 16.1 19.9 17.9
18.2 17.1 1.0 (1.1 ) Indirect base compensation 5.7 6.8 7.5 6.4 7.9
2.2 1.5 Equity-based compensation 0.2 0.1 0.6 1.2 1.2 1.0 -
Performance fee related Realized 2.5 2.4 (4.9 ) 1.6 3.8 1.3 2.2
Unrealized 5.3 4.0 23.6
2.9 11.1 5.8 8.2
Total compensation and benefits 29.8 33.2 44.7 30.3 41.1
11.3 10.8
General, administrative, and other
indirectexpenses
11.4 7.7 10.4 16.5 12.8 1.4 (3.7 ) Depreciation and amortization
expense 1.1 1.1 1.1 1.2 1.0 (0.1 ) (0.2 ) Interest expense
0.7 0.7 1.6 2.2
2.2 1.5 - Total expenses
43.0 42.7 57.8
50.2 57.1 14.1 6.9
Economic Net Income (Loss) $ 1.6
$ (6.9 ) $ 41.8 $
(10.6 ) $ 0.4 $
(1.2 ) $ 11.0 (-) Net
Performance Fees (3.6 ) 6.2 41.8 (17.3 ) 9.7 13.3 27.0 (-)
Investment Income (Loss) 4.2 (13.4 )
(8.5 ) 2.4 (15.2 ) (19.4 ) (17.6
)
(=) Fee Related Earnings $ 1.0
$ 0.3 $ 8.5 $
4.3 $ 5.9 $ 4.9
$ 1.6 (+) Realized Net Performance Fees
29.4 22.1 15.9 19.0 8.7 (20.7 ) (10.3 ) (+) Realized Investment
Income (Loss) 0.2 - (13.0 ) 0.7 (4.3 ) (4.5 ) (5.0 ) (+) Equity
based compensation 0.2 0.1 0.6
1.2 1.2 1.0
0.0
(=) Distributable Earnings $ 30.8
$ 22.5 $ 12.0
$ 25.2 $ 11.5 $
(19.3 ) $ (13.7 )
Solutions Segment Results
(Unaudited)
Three Months Ended
Sept 30, 2013 vs.
Sept 30,2012
Dec 31,2012
Mar 31,2013
Jun 30,2013
Sept 30,2013 (1)
Sept 30, 2012 Jun 30, 2013 Solutions
(Dollars in millions)
Revenues Segment fee revenues Fund management fees $ 16.5 $
18.6 $ 18.5 $ 20.9 $ 37.2 $ 20.7 $ 16.3 Portfolio advisory fees,
net - - - - - - - Transaction fees, net - - - - - - - Total fee
revenues 16.5 18.6 18.5 20.9 37.2 20.7 16.3 Performance fees
Realized 2.2 3.8 1.5 2.7 5.7 3.5 3.0 Unrealized (1.8) 8.4 21.3 21.3
38.9 40.7 17.6 Total performance fees 0.4 12.2 22.8 24.0 44.6 44.2
20.6 Investment income (loss) Realized - - - - - - - Unrealized - -
(0.1) 0.1 0.1 0.1 - Total investment income (loss) - - (0.1) 0.1
0.1 0.1 - Interest and other income 0.1 0.3 - 0.2 - (0.1) (0.2)
Total revenues 17.0 31.1 41.2 45.2 81.9 64.9 36.7 Expenses
Compensation and benefits Direct base compensation 8.2 8.7 9.4 7.9
16.8 8.6 8.9 Indirect base compensation 1.4 1.8 1.3 1.3 1.1 (0.3)
(0.2) Equity-based compensation - - 0.1 0.1 0.1 0.1 - Performance
fee related Realized 1.9 2.8 1.0 1.4 2.6 0.7 1.2 Unrealized (2.1)
6.5 16.1 16.1 29.7 31.8 13.6 Total compensation and benefits 9.4
19.8 27.9 26.8 50.3 40.9 23.5
General, administrative, and other
indirectexpenses
3.2 3.0 3.4 4.4 5.7 2.5 1.3 Depreciation and amortization expense
0.5 0.5 0.5 0.5 0.7 0.2 0.2 Interest expense 0.2 0.2 0.5 0.6 0.6
0.4 - Total expenses 13.3 23.5 32.3 32.3 57.3 44.0 25.0
Economic Net Income $ 3.7 $ 7.6 $ 8.9
$ 12.9 $ 24.6 $ 20.9 $ 11.7 (-) Net
Performance Fees 0.6 2.9 5.7 6.5 12.3 11.7 5.8 (-) Investment
Income (Loss) - - (0.1) 0.1 0.1 0.1 0.0
(=) Fee Related
Earnings $ 3.1 $ 4.7 $ 3.3 $ 6.3
$ 12.2 $ 9.1 $ 5.9 (+) Realized Net
Performance Fees 0.3 1.0 0.5 1.3 3.1 2.8 1.8 (+) Realized
Investment Income - - - - - - - (+) Equity based compensation - -
0.1 0.1 0.1 0.1 0.0
(=) Distributable Earnings $ 3.4
$ 5.7 $ 3.9 $ 7.7 $ 15.4 $ 12.0
$ 7.7 (1) - During Q3 2013, Carlyle acquired
the remaining 40% ownership interest in AlpInvest. As such, amounts
represent 100% of the financial results of AlpInvest. Prior to Q3
2013, amounts represent Carlyle's 60% economic interest in
Alpinvest.
Total Assets Under Management Roll
Forward (Unaudited)
Corporate Private Equity
Global Market Strategies (8)
Real Assets (9) Solutions (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 June 30, 2013 $ 20,098 $
37,794
$ 57,892 $ 1,797 $ 32,946
$ 34,743 $ 9,189 $ 30,580
$
39,769 $ 17,931 $ 30,113
$
48,044 $ 49,015 $ 131,433
$ 180,448 Acquisitions - -
- - -
- - -
- - -
- - - -
Commitments (1) 3,652 -
3,652 (14 ) -
(14 )
790 -
790 126 -
126 4,554 -
4,554 Capital Called, net (2) (1,178 ) 1,057
(121
) (184 ) 309
125 (1,119 ) 1,318
199 (939 ) 832
(107 ) (3,420 ) 3,516 96
Distributions (3) 158 (1,791 )
(1,633 ) 41 (133 )
(92 ) 235 (2,618 )
(2,383 ) 121 (1,824
)
(1,703 ) 555 (6,366 )
(5,811 ) Subscriptions, net of Redemptions (4) - -
- - 419
419 - -
- - -
- -
419 419 Changes in CLO collateral balances (5) - -
- - (52 )
(52 ) - -
- - -
-
- (52 ) (52 ) Market
Appreciation/(Depreciation) (6) - 1,931
1,931 - 31
31
- 468
468 - 1,251
1,251 - 3,681
3,681 Foreign Exchange and other (7) 85
369
454 -
260
260 18
129
147
340 488
828
443 1,246
1,689 Balance, As of September 30,
2013 $ 22,815 $
39,360 $ 62,175 $
1,640 $ 33,780
$ 35,420 $ 9,113
$ 29,877 $ 38,990
$ 17,579 $ 30,860
$ 48,439 $ 51,147
$ 133,877 $
185,024 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)
11,829 -
11,829 825 -
825 1,190 -
1,190 4,972
-
4,972 18,816 - 18,816 Capital Called,
net (2) (5,738 ) 5,413
(325 ) (693 ) 815
122
(3,927 ) 4,005
78 (3,746 ) 3,702
(44 )
(14,104 ) 13,935 (169 )
Distributions (3) 1,137 (11,961 )
(10,824 ) 231
(1,324 )
(1,093 ) 789 (6,323 )
(5,534 )
479 (7,704 )
(7,225 ) 2,636 (27,312
) (24,676 ) Subscriptions, net of Redemptions
(4) - -
- - 1,305
1,305 - -
- - -
-
- 1,305 1,305 Changes in CLO collateral
balances (5) - -
- - 436
436 - -
- - -
- - 436 436 Market
Appreciation/(Depreciation) (6) - 8,280
8,280 - 1,097
1,097 - 1,618
1,618 - 5,320
5,320 -
16,315 16,315 Foreign Exchange and other (7)
11 33
44
- 322
322
24 25
49 356 480
836 391
860 1,251 Balance, As
of September 30, 2013 $ 22,815
$ 39,360 $ 62,175
$ 1,640 $ 33,780
$ 35,420 $ 9,113
$ 29,877 $ 38,990
$ 17,579 $ 30,860
$ 48,439 $ 51,147
$ 133,877 $
185,024 (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 investors, which may differ
from when they are realized. (4) Represents the net result of
subscriptions to and redemptions from our hedge 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 and other changes in Total AUM.
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
$17.5 billion from our structured credit funds, $14.0 billion in
our hedge funds, $3.6 billion (including $1.6 billion of Available
Capital) in our carry funds and $0.2 billion from our business
development companies. (9) Amounts related to the NGP Funds are
based on the latest available information (in most cases as of June
30, 2013). (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 June 30, 2013) as provided by their
general partners, plus the net cash flows since the latest
valuation, up to September 30, 2013.
Fee-Earning AUM Roll Forward
(Unaudited)
For the Three Months Ended September 30, 2013
(USD in millions)
CorporatePrivateEquity
GlobalMarketStrategies
Real Assets(7)
Solutions
Total Fee-Earning AUM
Balance, Beginning of Period 38,507 33,057 28,685 31,775
132,024 Acquisitions - - - - - Inflows, including Commitments(1)
3,877 138 680 1,793 6,488 Outflows, including Distributions(2) (761
) (49 ) (963 ) (1,089 ) (2,862 ) Subscriptions, net of Redemptions
(3) - 423 - - 423 Changes in CLO collateral balances (4) - (76 ) -
- (76 ) Market Appreciation/(Depreciation) (5) - (6 ) - (35 ) (41 )
Foreign Exchange and other (6) 290 250
128 1,300
1,968
Balance, End of Period $
41,913 $ 33,737
$ 28,530 $ 33,744
$ 137,924 For the Twelve
Months Ended September 30, 2013 (USD in millions)
CorporatePrivateEquity
GlobalMarketStrategies
Real Assets(7)
Solutions Total Fee-Earning AUM
Balance, Beginning of Period $ 36,947 $ 28,450 $ 19,571 $ 30,156 $
115,124 Acquisitions - 2,260 10,308 - 12,568 Inflows, including
Commitments(1) 14,891 1,051 2,180 8,051 26,173 Outflows, including
Distributions(2) (9,299 ) (499 ) (3,584 ) (6,897 ) (20,279 )
Subscriptions, net of Redemptions (3) - 1,187 - - 1,187 Changes in
CLO collateral balances (4) - 364 - - 364 Market
Appreciation/(Depreciation) (5) - 613 - 710 1,323 Foreign Exchange
and other (6) (626 ) 311
55 1,724 1,464
Balance, End of Period $ 41,913
$ 33,737 $ 28,530
$ 33,744 $ 137,924
(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.
(4) Represent 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 of our fund of funds vehicles
based on the lower of cost or fair value. (6) Includes funds with
fees based on gross asset value, onboarding of fully committed
existing funds from another manager and 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 minority representation on the funds’ management
committees, management of each of the Legacy Energy Funds is vested
in committees with equal representation by Carlyle and Riverstone,
and the consent of representatives of both Carlyle and Riverstone
are required for investment decisions. As of September 30, 2013,
the Legacy Energy Funds had, in the aggregate, approximately $13.0
billion in AUM and $8.5 billion in Fee-Earning AUM. NGP VII, NGP
VIII, NGP IX, NGP X, or in the case of NGP M&R, NGP ETP I, NGP
ETP II, and NGPC, certain affiliated entities (collectively, the
“NGP management fee funds”), are managed by NGP Energy Capital
Management. As of September 30, 2013, the NGP management fee funds
had, in the aggregate, approximately $11.8 billion in AUM and $9.6
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
REALIZEDINVESTMENTS (5)
as of September 30, 2013 as of September 30, 2013
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 $ 10,146.6 2.5x 27 % 21 % $ 4,031.6 $ 10,146.6 2.5x 27 % CP
IV 12/2004 $ 7,850.0 $ 7,612.6 $ 16,909.6 2.2x 16 % 13 % $ 5,063.6
$ 12,477.9 2.5x 19 % CP V 5/2007 $ 13,719.7 $ 12,165.1 $ 19,741.4
1.6x 18 % 13 % $ 3,033.8 $ 7,269.3 2.4x 28 % 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
€
2,048.4
€
3,762.6
1.8x 37 % 20 %
€
1,230.8
€
3,059.2
2.5x 61 % CAP I 12/1998 $ 750.0
$
627.7 $ 2,491.0 4.0x 25 % 18 % $ 627.7
$
2,491.0 4.0x 25 % CAP II 2/2006 $ 1,810.0 $ 1,626.6 $ 2,833.1 1.7x
12 % 8 % $ 664.7 $ 1,950.5 2.9x 27 % CAP III 5/2008 $ 2,551.6 $
2,238.3 $ 2,855.9 1.3x 12 % 7 % $ 585.7 $ 1,039.1 1.8x 20 % CJP I
10/2001
¥
50,000.0
¥
47,291.4
¥
134,285.1
2.8x 61 % 37 %
¥
39,756.6
¥
130,976.9
3.3x 65 %
CJP II
7/2006
¥
165,600.0
¥
141,866.7
¥
149,199.4
1.1x 1 % (3 %)
¥
31,806.1
¥
52,822.8
1.7x 22 % CGFSP I 9/2008 $ 1,100.2 $ 1,007.2 $ 1,486.6 1.5x 17 % 10
% $ 184.3 $ 435.7 2.4x 27 % All Other Funds(9) Various $ 3,814.2
$
5,635.6 1.5x 16 % 6 % $ 2,559.0 $ 4,300.7 1.7x 20 % Coinvestments
and Other(10) Various $ 7,554.7 $ 18,304.3 2.4x
36 % 33 % $ 4,759.9
$
14,623.3 3.1x 36 %
Total Fully Invested Funds
$ 48,066.6 $ 95,331.1
2.0x 27 % 19 %
$ 26,595.2 $ 67,694.4
2.5x 30 % Funds in the
Investment Period (6) CP VI (21) 5/2012 $
11,588.3 n/a n/a n/a n/a n/m CEP III 12/2006
€
5,294.9
€
4,966.4
€
6,705.9
1.4x 11 % 8 % CAP IV (21) 11/2012 $ 1,442.6 n/a n/a n/a n/a n/m
CAGP IV 6/2008 $ 1,041.4 $ 665.2 $ 805.9 1.2x 10 % 1 % CEOF I
5/2011 $ 1,119.1 $ 388.0 $ 457.3 1.2x 19 % 7 % All Other Funds(11)
Various $ 1,022.0 $ 1,288.7 1.3x 12 % 1
%
Total Funds in the Investment Period $
8,795.6 $ 11,626.2 1.3x
11 % 7 % $
1,013.1 $ 2,114.6 2.1x
22 % TOTAL CORPORATE PRIVATE EQUITY
(12) $ 56,862.3 $ 106,957.3
1.9x 26 % 18
% $ 27,608.3 $
69,809.0 2.5x 30 %
TOTAL INVESTMENTS
REALIZED/PARTIALLY
REALIZEDINVESTMENTS (5)
as of September 30, 2013 as of September 30, 2013
FundInceptionDate
(1)
CommittedCapital
CumulativeInvestedCapital
(2)
Total FairValue (3)
MOIC (4)
GrossIRR (7)
NetIRR (8)
CumulativeInvestedCapital
(2)
Total Fair Value (3) MOIC (4)
Gross IRR (7) Real Assets (Reported in Local
Currency, in Millions) (Reported in Local Currency, in
Millions) Fully Invested Funds (6) CRP III
11/2000 $ 564.1 $ 522.5 $ 1,396.7 2.7x 44 % 30 % $ 522.5 $ 1,396.7
2.7x 44 % CRP IV 12/2004 $ 950.0 $ 1,186.2 $ 1,237.2 1.0x 1 % (3 %)
$ 442.0 $ 466.1 1.1x 10 % CRP V 11/2006 $ 3,000.0 $ 3,259.1 $
4,576.8 1.4x 11 % 7 % $ 2,357.4 $ 3,405.1 1.4x 13 % CEREP I 3/2002
€
426.6
€
517.0
€
741.6
1.4x 13 % 7 %
€
503.2
€
739.1
1.5x 14 % CEREP II 4/2005
€
762.7
€
826.9
€
106.3
0.1x n/a n/a
€
416.6
€
120.1
0.3x n/a CEREP III 5/2007
€
2,229.5
€
1,900.6
€
1,879.5
1.0x 0 % (5 %)
€
83.7
€
50.4
0.6x (15 %) CIP 9/2006 $ 1,143.7 $ 911.7 $ 989.2 1.1x 3 % (2 %) $
180.7 $ - 0.0x n/a Energy II 7/2002 $ 1,100.0 $ 1,334.8 $ 3,616.2
2.7x 81 % 54 % $ 827.4 $ 3,354.0 4.1x 105 % Energy III 10/2005 $
3,800.0 $ 3,559.9 $ 6,620.7 1.9x 15 % 11 % $ 1,545.4 $ 4,396.6 2.8x
27 % Energy IV 12/2007 $ 5,979.1 $ 5,171.5 $ 8,188.9 1.6x 20 % 13 %
$ 1,997.1 $ 4,090.2 2.0x 31 % All Other Funds(13) Various $ 2,289.6
$ 2,309.8 1.0x 0 % (5 %) $ 1,484.1 $ 1,699.4 1.1x 8 % Coinvestments
and Other(10) Various $ 4,286.9 $ 7,089.5 1.7x
20 % 15 % $ 1,828.8 $ 4,001.5 2.2x
28 %
Total Fully Invested Funds $
26,912.8 $ 39,715.5 1.5x
15 % 9 % $
12,543.1 $ 24,040.6 1.9x
26 % Funds in the Investment Period
(6) CRP VI 9/2010 $ 2,340.0 $ 1,100.7 $ 1,525.7
1.4x 33 % 19 % Renew II 3/2008 $ 3,417.5 $ 2,779.0 $ 3,758.5 1.4x
13 % 8 % All Other Funds(14) Various $ 360.7 $ 428.6
1.2x 29 % 21 %
Total Funds in the Investment
Period $ 4,240.4 $ 5,712.7
1.3x 15 % 9
% $ 714.0 $
1,018.9 1.4x 16 %
TOTAL REAL ASSETS (12) $ 31,153.2
$ 45,428.2 1.5x 15
% 9 % $ 13,257.1
$ 25,059.4 1.9x 26
%
Global Markets Strategies Carry Funds
and Solutions (Unaudited)
TOTAL INVESTMENTS as of
September 30, 2013
FundInceptionDate
(1)
Fund Size
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 $ 2,418.8
1.8x 18 % 13 % CEMOF I 12/2010 $ 1,382.5 $
489.0 $ 589.0 1.2x 27 % 9 %
TOTAL INVESTMENTS
as of September 30, 2013
VintageYear
Fund Size
Cumulative Invested
Capital(2)(18)
Total FairValue (3)(18)
MOIC (4) Gross IRR (7) Net
IRR (8) Solutions (16) (Reported in Local Currency,
in Millions) Fully Committed Funds
(17) Main Fund I - Fund Investments 2000
€
5,174.6
€
3,834.9
€
6,171.5
1.6x 12 % 12 % Main Fund II - Fund Investments 2003
€
4,545.0
€
4,342.9
€
6,325.2
1.5x 10 % 9 %
Main Fund III - Fund Investments
2005
€
11,500.0
€
10,078.6
€
12,673.5
1.3x 7 % 6 % Main Fund IV - Fund Investments 2009
€
4,880.0
€
1,777.3
€
1,900.4
1.1x 5 % 4 % Main Fund I - Secondary Investments 2002
€
519.4
€
454.3
€
848.3
1.9x 54 % 50 % Main Fund II - Secondary Investments 2003
€
998.4
€
906.6
€
1,618.4
1.8x 28 % 26 % Main Fund III - Secondary Investments 2006
€
2,250.0
€
2,058.5
€
2,787.9
1.4x 10 % 9 % Main Fund IV - Secondary Investments 2010
€
1,856.4
€
1,621.1
€
2,202.6
1.4x 20 % 18 % Main Fund II - Co-Investments 2003
€
1,090.0
€
858.6
€
2,331.6
2.7x 45 % 43 % Main Fund III - Co-Investments 2006
€
2,760.0
€
2,400.8
€
3,162.2
1.3x 5 % 5 % Main Fund IV - Co-Investments 2010
€
1,475.0
€
1,216.7
€
1,843.4
1.5x 22 % 19 % Main Fund II - Mezzanine Investments 2004
€
700.0
€
691.5
€
939.9
1.4x 8 % 7 % Main Fund III - Mezzanine Investments 2006
€
2,000.0
€
1,396.5
€
1,806.1
1.3x 10 % 9 %
All Other Funds (19)
Various
€
1,328.9
€
1,934.4
1.5x 17 % 14 %
Total Fully Committed
Funds
€
32,967.2
€
46,545.5
1.4x 12 % 11
% Funds in the Commitment Period Main
Fund V - Fund Investments 2012
€
4,830.4
€
134.8
€
124.0
0.9x (22 %) (34 %) Main Fund V - Secondary Investments 2011
€
2,665.3
€
733.6
€
953.5
1.3x 39 % 35 % Main Fund V - Co-Investments 2012
€
1,228.0
€
362.7
€
443.1
1.2x 40 % 35 % All Other Funds (19) Various
€
156.4
€
181.7
1.2x 27 % 28 %
Total Funds in the
Commitment Period
€
1,387.5
€
1,702.3
1.2x 35 % 31
% TOTAL SOLUTIONS
€
34,354.7
€
48,247.8
1.4x 12 % 11
% TOTAL SOLUTIONS (USD) (20) $ 46,447.2
$ 65,230.5 1.4x (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 and CEMOF I were formed in
June 2007 and December 2010, respectively. (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 ("Gross 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 ("Net 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, Mexico and MENA. (10) Includes
co-investments, prefund investments and certain other stand-alone
investments arranged by us. (11) Aggregate includes the following
funds: CJP III, CGFSP II, 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, CAREP II, Energy I and Renew I. (14) Aggregate
includes the following fund: CRCP I and CPOCP. (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
September 30, 2013, 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) Returns are not considered
meaningful, as the investment period commenced in May 2012 for CP
VI and November 2012 for CAP IV.
Reconciliation for Economic Net Income
and Distributable Earnings (Unaudited)
Three Months Ended Nine Months
Ended Sept 30, Sept 30, Sept 30,
2013 2012 2013 (Dollars in millions)
Income (loss) before provision for income taxes $
(8.6 ) $ 602.5 $ 729.7 Adjustments: Equity-based compensation
issued in conjunction with the initial public
offering, acquisitions and strategic
investments
76.2 52.6 251.4 Acquisition related charges and amortization of
intangibles 94.5 43.4 209.5 Losses associated with debt refinancing
activities - - 1.9 Other non-operating expenses 7.6 10.3 1.9 Net
(income) loss attributable to non-controlling interests in
consolidated
entities
26.6 (485.4 ) (441.4 ) Provision for income taxes attributable to
non-controlling interests
in consolidated entities
- (4.0 ) (11.7 ) Severance and lease terminations (0.1 ) 0.9 3.9
Other adjustments (1.7 ) (1.8 ) (1.0 )
Economic Net Income $ 194.5 $ 218.5 $ 744.2
Net performance fees 157.2 164.6 634.4 Investment income
(2.8 ) 8.4 7.1
Fee Related
Earnings $ 40.1 $ 45.5 $ 102.7 Realized
performance fees, net of related compensation 61.3 156.2 320.6
Investment income - realized (0.7 ) 4.6 4.6 Equity-based
compensation 4.0 0.6 10.8
Distributable Earnings $ 104.7 $ 206.9 $ 438.7
Depreciation and amortization expense 6.2 6.2 18.7 Interest
expense 11.8 4.7 31.9
Adjusted EBITDA $ 122.7 $ 217.8 $ 489.3
Reconciliation for Economic Net income
and Distributable Earnings, cont.
(Unaudited)
Three Months Ended Nine Months Ended
Sept 30, Sept 30, 2013 2013 (Dollars
in millions, except unit and per unit amounts)
Economic Net Income $ 194.5 $ 744.2 Less: Provision for Income
Taxes 34.3 141.2 Economic Net Income,
After Taxes $ 160.2 $ 603.0 Economic Net
Income, After Taxes per Adjusted Unit(1) $ 0.51 $ 1.91
Distributable Earnings $ 104.7 $ 438.7 Less:
Estimated foreign, state, and local taxes 14.9
32.6 Distributable Earnings, After Taxes $ 89.8 $
406.1 Distributable Earnings to The Carlyle Group
L.P. $ 14.2 $ 64.3 Less: Estimated current corporate income taxes
(benefit) and TRA payments (1.8 ) (1.1 )
Distributable Earnings to The Carlyle Group L.P. net of corporate
income taxes $ 16.0 $ 65.4 Distributable
Earnings, net, per The Carlyle Group L.P. common unit
outstanding(2) $ 0.32 $ 1.33
(1) Adjusted Units were determined as
follows:
The Carlyle Group L.P. common units outstanding 49,209,545
49,209,545 Carlyle Holdings partnership units not held by The
Carlyle Group L.P. 262,133,877 262,133,877 Common units and Carlyle
Holdings partnership units issued in November 2013
related to the acquisition of Metropolitan
Real Estate Management
120,227 120,227 Dilutive effect of unvested deferred restricted
common units 2,569,500 3,914,608 Contingently issuable Carlyle
Holdings partnership units 931,818 931,818
Total Adjusted Units 314,964,967
316,310,075
(2) As of September 30, 2013, there
were 49,209,545 outstanding common units of The Carlyle Group L.P.
In October and November 2013, an additional 76,680 common units
were issued in connection with the closing of the acquisition of
Metropolitan Real Estate Equity Management and the vesting of
deferred restricted common units. For purposes of this calculation,
these newly issued common units have been added to the common units
outstanding as of September 30, 2013, resulting in total common
units of 49,286,225.
GAAP for 12-Month Rolling Summary
(Unaudited)
Twelve Months Ended Sept 30,
Sept 30, 2013 2012 (Dollars in
millions) Revenues Fund management fees $ 995.0 $ 946.4
Performance fees Realized 783.4 1,126.0 Unrealized 703.0
35.8 Total performance fees 1,486.4 1,161.8
Investment income (loss) Realized 10.3 26.2 Unrealized 3.8
34.3 Total investment income (loss) 14.1 60.5
Interest and other income 13.8 10.1 Interest and other income of
Consolidated Funds 1,048.4 870.8 Total
revenues 3,557.7 3,049.6
Expenses Compensation and
benefits Base compensation 747.8 530.3 Equity-based compensation
311.3 147.4 Performance fee related Realized 329.4 277.8 Unrealized
408.1 (42.0 ) Total compensation and benefits 1,796.6
913.5 General, administrative and other expenses 457.5 366.9
Interest 37.8 32.7 Interest and other expenses of Consolidated
Funds 859.0 731.2 Other non-operating expenses 2.1
8.9 Total expenses 3,153.0 2,053.2
Other
income Net investment gains of Consolidated Funds 470.5 2,002.5
Gain on business acquisition - 7.9
Income before provision for income taxes 875.2 3,006.8 Provision
for income taxes 72.0 30.6 Net income 803.2
2,976.2 Net income attributable to non-controlling
interests in consolidated entities
489.9 1,979.0 Net income attributable to
Carlyle Holdings 313.3 997.2 Net income attributable to
non-controlling
interests in Carlyle Holdings
268.5 988.9 Net income attributable to The
Carlyle Group L.P. $ 44.8 $ 8.3
Reconciliation of Non-GAAP to GAAP for
12-Month Rolling Summary (Unaudited)
Twelve Months Ended Sept 30, Sept
30, 2013 2012 (Dollars in millions)
Income before provision for income taxes $ 875.2 $ 3,006.8
Adjustments: Partner compensation - (479.1 ) Equity-based
compensation issued in conjunction with the IPO and
strategic investments
305.3 146.2 Acquisition related charges and amortization of
intangibles 248.8 123.4 Losses associated with debt refinancing
activities 1.9 - Gain on business acquisition - (7.9 ) Other
non-operating expenses 2.1 8.9 Net income attributable to
non-controlling interests
in consolidated entities
(489.9 ) (1,979.0 ) Provision for income taxes attributable to
non-controlling
interests in consolidated entities
(21.5 ) (9.7 ) Severance and lease terminations 4.8 3.2 Other
adjustments (0.3 ) (5.2 )
Economic Net Income
$ 926.4 $ 807.6 Net performance fees 766.3 615.5
Investment income 2.9 63.3
Fee
Related Earnings $ 157.2 $ 128.8 Realized
performance fees, net of related compensation 448.0 591.1
Investment income - realized 10.2 27.9 Equity-based compensation
11.4 0.8
Distributable Earnings
$ 626.8 $ 748.6 Depreciation and amortization expense
24.8 11.2 Interest expense 35.8 19.4
Adjusted EBITDA $ 687.4 $ 779.2
The Carlyle Group L.P.
GAAP Balance Sheet (Unaudited)
As of September 30, 2013
ConsolidatedOperatingEntities
ConsolidatedFunds
Eliminations
Consolidated (Dollars in millions)
Assets Cash and cash equivalents $ 855.7 $ - $ - $ 855.7
Cash and cash equivalents held at Consolidated Funds - 1,494.9 -
1,494.9 Restricted cash 79.6 - - 79.6 Restricted cash and
securities of Consolidated Funds - 25.7 - 25.7 Accrued performance
fees 2,927.6 - (49.9 ) 2,877.7 Investments 903.2 - (109.2 ) 794.0
Investments of Consolidated Funds - 26,094.0 24.0 26,118.0 Due from
affiliates and other receivables, net 188.3 - (12.2 ) 176.1 Due
from affiliates and other receivables of Consolidated
Funds, net
- 493.6 - 493.6 Receivables and inventory of a consolidated real
estate VIE 191.4 - - 191.4 Fixed assets, net 63.3 - - 63.3 Deposits
and other 39.9 3.4 - 43.3 Other assets of a consolidated real
estate VIE 42.7 - - 42.7 Intangible assets, net 580.3 - - 580.3
Deferred tax assets 69.0 - -
69.0 Total assets $ 5,941.0 $ 28,111.6 $ (147.3 ) $ 33,905.3
Liabilities and partners' capital Loans payable $ 25.0 $ - $
- $ 25.0 3.875% Senior Notes due 2023 499.8 - - 499.8 5.625% Senior
Notes due 2043 398.4 - - 398.4 Loans payable of Consolidated Funds
- 15,169.8 (99.2 ) 15,070.6 Loans payable of a consolidated real
estate VIE at fair value
(principal amount of $335.1)
123.8 - - 123.8 Accounts payable, accrued expenses and other
liabilities 236.5 - - 236.5 Accrued compensation and benefits
1,797.8 - - 1,797.8 Due to affiliates 345.3 58.2 (0.3 ) 403.2
Deferred revenue 195.4 1.5 - 196.9 Deferred tax liabilities 92.6 -
- 92.6 Other liabilities of Consolidated Funds - 1,214.5 (69.9 )
1,144.6 Other liabilities of a consolidated real estate VIE 110.3 -
- 110.3 Accrued giveback obligations 58.8 -
(10.1 ) 48.7 Total liabilities 3,883.7 16,444.0 (179.5 )
20,148.2 Redeemable non-controlling interests in
consolidated entities 8.6 4,190.5 - 4,199.1 Total partners'
capital 2,048.7 7,477.1 32.2
9,558.0 Total liabilities and partners' capital $ 5,941.0 $
28,111.6 $ (147.3 ) $ 33,905.3
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 and excluding equity-based compensation.
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, interest expense and
equity-based compensation.
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, NGP 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;
(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
(d) the gross assets (including assets
acquired with leverage) of our Business Development Company.
AUM includes certain energy and renewable resources funds that
Carlyle jointly advises with Riverstone Holdings L.L.C.
(“Riverstone”) and certain NGP 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 management or performance
fees.
“Available capital,” commonly known as “dry powder,” for
Carlyle’s carry funds and NGP 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 NGP 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 NGP 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 NGP 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
(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 NGP management fee funds advised by NGP
Energy Capital Management.
For Carlyle’s carry funds, co-investment vehicles, NGP
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.
“NGP 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.
“VIE” refers to a variable interest entity, as that term
is defined in Accounting Standards Codification Topic 810,
Consolidation.
Photos/Multimedia Gallery Available:
http://www.businesswire.com/multimedia/home/20131106005719/en/
The Carlyle GroupPublic Market Investor
RelationsDaniel Harris,
212-813-4527daniel.harris@carlyle.comorMediaElizabeth Gill,
202-729-5385elizabeth.gill@carlyle.com
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