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KKR & Co. L.P. Announces Fourth Quarter and Full Year 2012 Results

02.07.2013

 

Significant realization activity drives record total distributable earnings

GAAP net income (loss) attributable to KKR & Co. L.P. was $96.7 million and $560.8 million for the quarter and year ended December 31, 2012, respectively, up from $46.1 million and $1.9 million in the comparable periods of 2011.

Assets under management ("AUM") totaled $75.5 billion as of December 31, 2012, up from $66.3 billion as of September 30, 2012.

Fee related earnings ("FRE") were $86.0 million and $319.8 million for the quarter and year ended December 31, 2012, respectively, down from $116.6 million and $417.2 million in the comparable periods of 2011.

Total distributable earnings were $546.3 million and $1,449.4 million for the quarter and year ended December 31, 2012, respectively, up from $146.5 million and $782.6 million in the comparable periods of 2011.

Economic net income (loss) ("ENI") was $347.7 million and $2,130.9 million for the quarter and year ended December 31, 2012, respectively, up from $285.5 million and $750.9 million in the comparable periods of 2011.

After-tax ENI was $0.48 and $2.90 per adjusted unit for the quarter and year ended December 31, 2012, respectively, up from $0.33 and $0.73 per adjusted unit in the comparable periods of 2011.

Book value was $7.0 billion on a segment basis as of December 31, 2012, representing $9.87 per adjusted unit.

KKR & Co. L.P. declares a fourth quarter distribution of $0.70 per common unit, bringing year-to-date distributions for 2012 to $1.22 per common unit, up from $0.74 per common unit for 2011.

NEW YORK--(BUSINESS WIRE)-- KKR & Co. L.P. (NYSE: KKR) today reported its fourth quarter and full year 2012 results.

For the fourth quarter and full year 2012, the carrying value of KKR's private equity investment portfolio appreciated 4.0% and 23.8%, respectively, driving meaningful ENI.

ENI was $347.7 million for the quarter ended December 31, 2012, an increase of $62.2 million compared to the quarter ended December 31, 2011. The increase was primarily attributable to higher net carried interest earned from our investment funds. ENI was $2,130.9 million for the year ended December 31, 2012, an increase of $1,380.0 million compared to the year ended December 31, 2011. The increase was primarily due to a higher level of appreciation in the carrying value of our principal investments and greater net carried interest earned from our investment funds.

Total distributable earnings was $546.3 million and $1,449.4 million for the quarter and year ended December 31, 2012, respectively, an increase of $399.8 million and $666.8 million from the comparable periods in 2011. The increase in both comparative periods is due to a higher level of realization activity in our private equity investment portfolio.

On October 1, 2012, we closed our acquisition of Prisma Capital Partners LP and its affiliates ("Prisma"), a leading provider of customized hedge fund solutions. Prisma's results have been reported as part of our Public Markets segment in the fourth quarter of 2012. As of December 31, 2012, Prisma had $8.5 billion of assets under management.

AUM was $75.5 billion as of December 31, 2012, an increase of $9.2 billion, or 13.9%, compared to AUM of $66.3 billion as of September 30, 2012. Fee paying assets under management ("FPAUM") was $60.8 billion as of December 31, 2012, an increase of $10.5 billion, or 20.9%, compared to FPAUM of $50.3 billion as of September 30, 2012. The increases in both AUM and FPAUM were primarily attributable to new capital from the acquisition of Prisma and to a lesser extent new capital raised and appreciation in the fair value of our investment vehicles. The increases were partially offset by distributions to limited partners of our investment funds. Neither AUM nor FPAUM include $4.0 biillion (includes general partner commitment) of capital raised for our second Asian private equity fund.

On January 23, 2013, we announced the acquisition of a 24.9% interest in Nephila Capital Ltd. ("Nephila"). Nephila is a leading investment manager that offers a broad range of investment products focusing on reinsurance risk, investing in instruments such as insurance-linked securities, catastrophe bonds, and weather derivatives. Nephila has assets under management of approximately $8 billion as of January 1, 2013 and has been managing institutional assets in this space since it was founded in 1998. This strategic partnership increases our breadth of liquid product offerings through a strategy which is uncorrelated to the global financial markets relative to other asset classes. Nephila's assets under management are not included in KKR's results.

"Our private equity portfolio and our balance sheet both appreciated 24% in 2012, outperforming the S&P 500 and MSCI World indices by over 700 basis points," said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. "In addition, in 2012 we completed transactions which returned over $9 billion to all investors in our private equity funds and co-investment vehicles, the highest figure in our 36-year history, and contributed to a record annual distribution of $1.22 per common unit. We are pleased with our results."

 

Note: Certain financial measures, including FRE, ENI, after-tax ENI, after-tax ENI per adjusted unit, fee related EBITDA, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America ("GAAP"). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP. See calculation and reconciliation of total distributable earnings under "Distribution Calculation."
 

 

GAAP RESULTS

GAAP results for the quarter and year ended December 31, 2012 included net income attributable to KKR & Co. L.P. of $96.7 million and $560.8 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.36 and $2.21, respectively, on a diluted basis. For the quarter and year ended December 31, 2011, net income attributable to KKR & Co. L.P. was $46.1 million and $1.9 million, respectively, and net income attributable to KKR & Co. L.P. per common unit was $0.20 and $0.01, respectively, on a diluted basis. The increases in both comparable periods were primarily due to a greater level of investment appreciation for the quarter and year ended December 31, 2012 compared to the quarter and year ended December 31, 2011. This increase in investment appreciation, which is recorded in net gains (losses) from investment activities, was partially offset by an increase in compensation and benefits expense

SEGMENT RESULTS

Private Markets

AUM was $49.1 billion as of December 31, 2012, a decrease of $0.7 billion, or 1.4%, compared to AUM of $49.8 billion as of September 30, 2012. The decrease was primarily attributable to distributions to the limited partners of our private equity funds arising from realizations. The decrease was partially offset by the appreciation in the fair value of our private equity portfolio and new capital raised.

FPAUM was $41.2 billion as of December 31, 2012, an increase of $0.8 billion, or 2.0%, compared to FPAUM of $40.4 billion as of September 30, 2012. The increase was primarily due to new capital raised, partially offset by distributions to the limited partners of our private equity funds arising from realizations.

FRE was $32.4 million for the quarter ended December 31, 2012, a decrease of $24.6 million, or 43.2%, compared to FRE of $57.0 million for the quarter ended December 31, 2011. The decrease was principally attributable to (i) a lower level of transaction fees during the quarter ended December 31, 2012, as a result of closing relatively smaller transaction fee-generating investments, which in turn produced lower transaction fees and (ii) higher compensation expense in connection with increased headcount. The decrease was partially offset by a higher level of monitoring fees as a result of new monitoring agreements with portfolio companies acquired over the past year.

FRE was $151.0 million for the year ended December 31, 2012, a decrease of $75.6 million, or 33.4%, compared to FRE of $226.6 million for year ended December 31, 2011. The decrease was primarily attributable to (i) a lower level of transaction fees during the year ended December 31, 2012 as a result of closing relatively smaller transaction fee-generating investments, which in turn produced lower transaction fees; (ii) lower monitoring fees as a result of $76.6 million of termination payments on monitoring agreements with three portfolio companies during the year ended December 31, 2011, which increased FRE by $39.7 million net of associated fee credits and (iii) higher compensation expense in connection with increased headcount.

ENI was $177.8 million for the quarter ended December 31, 2012, an increase of $68.0 million, or 61.9%, compared to ENI of $109.8 million for the quarter ended December 31, 2011. ENI was $831.7 million for the year ended December 31, 2012, an increase of $468.9 million, or 129.2%, compared to ENI of $362.8 million for the year ended December 31, 2011. The increase in both comparative periods was primarily attributable to higher net carried interest driven by a greater level of appreciation in our private equity portfolio, partially offset by the decrease in FRE discussed above.

Public Markets

AUM was $26.4 billion as of December 31, 2012, an increase of $9.9 billion, or 60.0%, compared to AUM of $16.5 billion as of September 30, 2012. FPAUM was $19.7 billion as of December 31, 2012, an increase of $9.8 billion, or 99.0%, compared to FPAUM of $9.9 billion as of September 30, 2012. The increase in both AUM and FPAUM were primarily attributable to new capital from the acquisition of Prisma and to a lesser extent net new capital raised.

FRE was $29.4 million for the quarter ended December 31, 2012, an increase of $17.6 million compared to FRE of $11.8 million for the quarter ended December 31, 2011. FRE was $80.5 million for the year ended December 31, 2012, an increase of $20.9 million compared to FRE of $59.6 million for year ended December 31, 2011. The increase in both comparable periods was primarily due to (i) higher management fees related to new capital raised as well as the acquisition of Prisma and (ii) higher incentive fees earned.

ENI was $37.4 million for the quarter ended December 31, 2012, an increase of $25.6 million compared to ENI of $11.8 million for the quarter ended December 31, 2011. The increase was primarily attributable to the increase in FRE discussed above and to a lesser extent a higher level of net carried interest recognized driven by the appreciation in the net asset value of certain carry-eligible investment vehicles.

ENI was $102.9 million for the year ended December 31, 2012, an increase of $44.9 million compared to ENI of $58.0 million for year ended December 31, 2011. The increase was principally attributable to the increase in FRE discussed above and net carried interest recognized for the year ended December 31, 2012 driven by the appreciation in the net asset value of certain carry-eligible investment vehicles. For the year ended December 31, 2011, there was a reversal of previously recognized net carried interest due to a decline in the carrying value of certain carry-eligible investment vehicles.

Capital Markets and Principal Activities

FRE was $24.2 million for the quarter ended December 31, 2012, a decrease of $23.6 million, or 49.4%, compared to FRE of $47.8 million for the quarter ended December 31, 2011. FRE was $88.3 million for the year ended December 31, 2012, a decrease of $42.6 million, or 32.5%, compared to FRE of $130.9 million for year ended December 31, 2011. The decrease in both comparative periods was primarily driven by a lower level of overall capital markets transaction activity.

ENI was $132.6 million for the quarter ended December 31, 2012, a decrease of $31.2 million, or 19.0%, compared to ENI of $163.8 million for the quarter ended December 31, 2011. The decrease was principally attributable to the decrease in FRE discussed above and to a lesser extent a lower level of investment income. While the fair value of our principal investments increased during the fourth quarter of 2012, the level of appreciation was lower than in the comparable period of 2011.

ENI was $1,196.2 million for the year ended December 31, 2012, an increase of $866.0 million compared to ENI of $330.2 million for year ended December 31, 2011. The increase was primarily driven by a higher level of appreciation in the carrying value of our principal investments, partially offset by the decrease in FRE discussed above.

CAPITAL AND LIQUIDITY

As of December 31, 2012, KKR had $1,534.3 million of cash and short-term investments on a segment basis and $500.0 million of outstanding debt obligations under its senior notes. KKR's availability for further borrowings was approximately $750.0 million (which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of December 31, 2012).

On February 1, 2013, KKR issued $500.0 million of 5.5% senior notes due in 2043. The senior notes are rated A and A- by Fitch and Standard & Poor's, respectively.

As of December 31, 2012, KKR's portion of total uncalled commitments to its investment funds was $677.9 million, consisting of the following (amounts in thousands):

     
    Uncalled

Commitments

Private Markets

   
North America Fund XI   $ 232,100
European Fund III     174,000
2006 Fund     64,700
Asian Fund     35,400
Infrastructure     34,100
E2 Investors (Annex Fund)     14,000
Natural Resources     13,600
China Growth Fund     6,400
Other     10,800
Total Private Markets Commitments     585,100
     

Public Markets

   
Direct Lending Vehicles     33,700
Special Situations Vehicles     29,200
Mezzanine Fund     29,900
Total Public Markets Commitments     92,800
     
Total Uncalled Commitments   $ 677,900
       

DISTRIBUTION

A distribution of $0.70 per common unit will be paid on March 5, 2013 to unitholders of record as of the close of business on February 19, 2013.

CONFERENCE CALL

A conference call to discuss KKR's financial results will be held on Thursday, February 7, 2013 at 10:00 a.m. EST. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Public Investors section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) and +1 (404) 537-3406 (non-U.S. callers), pass code 86899275, beginning approximately two hours after the broadcast.

From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Public Investors section of KKR's website at http://ir.kkr.com/kkr_ir/alerts.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the "Email Alerts" area of the Public Investors section of the website.

ABOUT KKR

Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $75.5 billion in assets under management as of December 31, 2012. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with fund investors through its client relationships and capital markets platform. KKR & Co. L.P. is publicly traded on the New York Stock Exchange (NYSE: KKR), and "KKR," as used in this release, includes its subsidiaries, their managed investment funds and accounts, and/or their affiliated investment vehicles, as appropriate. For additional information, please visit KKR's website at www.kkr.com.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR's beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR's business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, after-tax ENI, fee related EBITDA, committed dollars invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR's business strategies including the ability to realize the anticipated synergies from the acquisitions or strategic partnerships such as Prisma or Nephila; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR's competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR's business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.'s Annual Report on Form 10-K for the fiscal year ended December 31, 2011, filed with the SEC on February 27, 2012 and Quarterly Report on Form 10-Q for the quarter ended September 30, 2012 filed with the SEC on November 2, 2012, and other filings with the SEC, which are available at www.sec.gov.

                 
KKR
CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
                 
                 
    Quarter Ended   Year Ended
    December 31, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Revenues                
Fees   $ 177,621     $ 209,357     $ 568,442     $ 723,620  
                 
Expenses                
Compensation and Benefits     261,454       190,832       1,280,854       868,749  
Occupancy and Related Charges     14,569       15,197       58,205       54,282  
General, Administrative and Other     82,249       124,108       259,729       290,974  
Total Expenses     358,272       330,137       1,598,788       1,214,005  
                 
Investment Income (Loss)                
Net Gains (Losses) from Investment Activities     874,507       514,580       7,871,673       981,858  
Dividend Income     677,590       117,944       940,888       225,073  
Interest Income     98,929       102,968       358,598       321,943  
Interest Expense     (16,407 )     (20,393 )     (69,164 )     (72,758 )
Total Investment Income (Loss)     1,634,619       715,099       9,101,995       1,456,116  
                 
Income (Loss) Before Taxes     1,453,968       594,319       8,071,649       965,731  
                 
Income Taxes     5,628       21,322       43,405       89,245  
                 
Net Income (Loss)     1,448,340       572,997       8,028,244       876,486  
                 
Net Income (Loss) Attributable to                
Redeemable Noncontrolling Interests     16,412       4,318       34,963       4,318  
Net Income (Loss) Attributable to                
Noncontrolling Interests     1,335,200       522,542       7,432,445       870,247  
                 
Net Income (Loss) Attributable to KKR & Co. L.P.   $ 96,728     $ 46,137     $ 560,836     $ 1,921  
                 
Distributions Declared per KKR & Co. L.P. Common Unit   $ 0.70     $ 0.32     $ 1.22     $ 0.74  
                 
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit                
Basic   $ 0.39     $ 0.20     $ 2.35     $ 0.01  
Diluted (a)   $ 0.36     $ 0.20     $ 2.21     $ 0.01  
Weighted Average Common Units Outstanding                
Basic     249,303,558       225,382,001       238,503,257       220,235,469  
Diluted (a)     268,192,128       231,361,032       254,093,160       222,519,174  
     
(a)   KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.'s interests in KKR's business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange.

 

 
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
                     
    Quarter Ended   Year Ended
    December 31, 2012   September 30, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Fees                    
Management and incentive fees:                    
Management fees   $ 144,355     $ 126,483     $ 127,556     $ 529,107     $ 515,384  
Incentive fees     12,350       17,768       6,084       43,845       34,243  
Management and incentive fees     156,705       144,251       133,640       572,952       549,627  
                     
Monitoring and transaction fees:                    
Monitoring fees     32,988       29,969       21,797       116,565       163,769  
Transaction fees     76,840       75,264       128,338       240,108       349,130  
Fee credits     (37,991 )     (31,707 )     (36,862 )     (105,730 )     (150,858 )
Net monitoring and transaction fees     71,837       73,526       113,273       250,943       362,041  
                     
Total fees     228,542       217,777       246,913       823,895       911,668  
                     
Expenses                    
Compensation and benefits     76,001       71,340       65,038       272,811       257,951  
Occupancy and related charges     13,763       13,605       14,353       55,068       51,009  
Other operating expenses     52,799       42,128       50,947       176,205       185,555  
Total expenses (a)     142,563       127,073       130,338       504,084       494,515  
                     
Fee Related Earnings     85,979       90,704       116,575       319,811       417,153  
                     
Investment income (loss)                    
Gross carried interest     268,936       410,736       96,503       1,431,910       263,621  
Less: allocation to KKR carry pool     (107,514 )     (169,633 )     (40,410 )     (581,206 )     (108,325 )
Less: management fee refunds (b)     (8,712 )     (61,499 )     (1,993 )     (143,723 )     (17,587 )
Net carried interest     152,710       179,604       54,100       706,981       137,709  
Other investment income (loss)     110,236       240,876       117,039       1,111,122       202,758  
Total investment income (loss)     262,946       420,480       171,139       1,818,103       340,467  
                     
Income (Loss) before noncontrolling interests                    
in Income of consolidated entities     348,925       511,184       287,714       2,137,914       757,620  
Income (Loss) attributable to                    
noncontrolling interests     1,245       1,310       2,220       7,043       6,671  
                     
Economic Net Income (Loss)   $ 347,680     $ 509,874     $ 285,494     $ 2,130,871     $ 750,949  
                     
Provision for Income Taxes     10,632       22,548       59,988       102,420       248,082  
                     
Economic Net Income (Loss), After Taxes ©   $ 337,048     $ 487,326     $ 225,506     $ 2,028,451     $ 502,867  
                     
Economic Net Income (Loss), After Taxes per Adjusted Unit ©   $ 0.48     $ 0.69     $ 0.33     $ 2.90     $ 0.73  
                     
Assets Under Management   $ 75,527,500     $ 66,278,700     $ 59,008,600     $ 75,527,500     $ 59,008,600  
Fee Paying Assets Under Management   $ 60,846,000     $ 50,266,000     $ 46,397,300     $ 60,846,000     $ 46,397,300  
Committed Dollars Invested and Syndicated Capital   $ 1,715,700     $ 926,000     $ 2,582,600     $ 4,354,900     $ 6,014,000  
Uncalled Commitments   $ 16,071,900     $ 15,845,900     $ 11,400,500     $ 16,071,900     $ 11,400,500  
                     

Other Information

                   
Fee Related Earnings   $ 85,979     $ 90,704     $ 116,575     $ 319,811     $ 417,153  
Plus: depreciation and amortization     3,580       3,273       2,528       12,499       9,925  
Fee Related EBITDA   $ 89,559     $ 93,977     $ 119,103     $ 332,310     $ 427,078  
                     
Distributed Earnings   $ 179,412     $ 187,174     $ 195,725     $ 582,620     $ 596,306  
Plus: Net realized principal investment income     366,878       145,700       (49,237 )     866,776       186,288  
Total Distributable Earnings ©   $ 546,290     $ 332,874     $ 146,488     $ 1,449,396     $ 782,594  
                     
GAAP interest expense   $ 16,407     $ 17,868     $ 20,393     $ 69,164     $ 72,758  
Less: interest expense related to debt obligations                    
from investment financing arrangements     7,014       8,502       9,598       31,050       30,160  
Core Interest Expense ©   $ 9,393     $ 9,366     $ 10,795     $ 38,114     $ 42,598  
 
     
(a)   Excludes a $15.2 million, $17.4 million and $5.5 million charge for non-cash equity based compensation during the quarters ended December 31, 2012, September 30, 2012, and December 31, 2011, respectively, associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. Excludes a $62.9 million and $16.7 million charge for non-cash equity based compensation during the years ended December 31, 2012 and 2011, respectively, associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan.
(b)   As of December 31, 2012, there is no carried interest subject to management fee refunds, which may reduce carried interest in future periods.
©   See definitions for after-tax ENI, adjusted units, total distributable earnings, and core interest expense under "Notes to Reportable Segments."
     

 

                     
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
                     
    Quarter Ended   Year Ended
    December 31, 2012   September 30, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Fees                    
Management and incentive fees:                    
Management fees   $ 104,804     $ 105,035     $ 106,716     $ 423,921     $ 430,400  
Incentive fees     -       -       -       -       -  
Management and incentive fees     104,804       105,035       106,716       423,921       430,400  
                     
Monitoring and transaction fees:                    
Monitoring fees     32,988       29,969       21,797       116,565       163,769  
Transaction fees     41,231       32,788       65,148       96,454       166,654  
Fee credits     (37,721 )     (26,293 )     (34,799 )     (97,362 )     (144,928 )
Net monitoring and transaction fees     36,498       36,464       52,146       115,657       185,495  
                     
Total fees     141,302       141,499       158,862       539,578       615,895  
                     
Expenses                    
Compensation and benefits     53,383       48,905       46,139       192,765       185,709  
Occupancy and related charges     12,075       12,049       12,902       48,562       45,694  
Other operating expenses     43,463       35,885       42,825       147,253       157,901  
Total expenses     108,921       96,839       101,866       388,580       389,304  
                     
Fee Related Earnings     32,381       44,660       56,996       150,998       226,591  
                     
Investment income (loss)                    
Gross carried interest     255,296       391,168       96,115       1,392,755       266,211  
Less: allocation to KKR carry pool     (102,058 )     (161,805 )     (40,255 )     (565,543 )     (109,361 )
Less: management fee refunds     (8,712 )     (61,499 )     (1,993 )     (143,723 )     (17,587 )
Net carried interest     144,526       167,864       53,867       683,489       139,263  
Other investment income (loss)     1,158       1,779       (364 )     599       (549 )
Total investment income (loss)     145,684       169,643       53,503       684,088       138,714  
                     
Income (Loss) before noncontrolling interests                    
in Income of consolidated entities     178,065       214,303       110,499       835,086       365,305  
Income (Loss) attributable to                    
noncontrolling interests     292       444       651       3,390       2,536  
                     
Economic Net Income (Loss)   $ 177,773     $ 213,859     $ 109,848     $ 831,696     $ 362,769  
                     
                     
Assets Under Management   $ 49,127,600     $ 49,771,000     $ 43,627,900     $ 49,127,600     $ 43,627,900  
Fee Paying Assets Under Management   $ 41,173,000     $ 40,354,200     $ 37,869,700     $ 41,173,000     $ 37,869,700  
Committed Dollars Invested   $ 1,220,800     $ 623,000     $ 2,148,400     $ 3,026,300     $ 5,033,300  
Uncalled Commitments   $ 14,271,100     $ 14,594,700     $ 10,070,300     $ 14,271,100     $ 10,070,300  
 

 

 

KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
                     
    Quarter Ended   Year Ended
    December 31, 2012   September 30, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Fees                    
Management and incentive fees:                    
Management fees   $ 39,551     $ 21,448     $ 20,840     $ 105,186     $ 84,984  
Incentive fees     12,350       17,768       6,084       43,845       34,243  
Management and incentive fees     51,901       39,216       26,924       149,031       119,227  
                     
Monitoring and transaction fees:                    
Monitoring fees     -       -       -       -       -  
Transaction fees     1,974       8,780       4,151       14,495       11,996  
Fee credits     (270 )     (5,414 )     (2,063 )     (8,368 )     (5,930 )
Net monitoring and transaction fees     1,704       3,366       2,088       6,127       6,066  
                     
Total fees     53,605       42,582       29,012       155,158       125,293  
                     
Expenses                    
Compensation and benefits     16,097       13,997       12,166       50,705       46,133  
Occupancy and related charges     1,479       1,343       1,189       5,606       4,059  
Other operating expenses     6,596       3,897       3,834       18,350       15,483  
Total expenses     24,172       19,237       17,189       74,661       65,675  
                     
Fee Related Earnings     29,433       23,345       11,823       80,497       59,618  
                     
Investment income (loss)                    
Gross carried interest     13,640       19,568       388       39,155       (2,590 )
Less: allocation to KKR carry pool     (5,456 )     (7,828 )     (155 )     (15,663 )     1,036  
Less: management fee refunds     -       -       -       -       -  
Net carried interest     8,184       11,740       233       23,492       (1,554 )
Other investment income (loss)     30       25       (93 )     20       505  
Total investment income (loss)     8,214       11,765       140       23,512       (1,049 )
                     
Income (Loss) before noncontrolling interests                    
in Income of consolidated entities     37,647       35,110       11,963       104,009       58,569  
Income (Loss) attributable to                    
noncontrolling interests     292       233       119       1,079       599  
                     
Economic Net Income (Loss)   $ 37,355     $ 34,877     $ 11,844     $ 102,930     $ 57,970  
                     
Assets Under Management   $ 26,399,900     $ 16,507,700     $ 15,380,700     $ 26,399,900     $ 15,380,700  
Fee Paying Assets Under Management   $ 19,673,000     $ 9,911,800     $ 8,527,600     $ 19,673,000     $ 8,527,600  
Committed Dollars Invested   $ 226,400     $ 278,300     $ 434,200     $ 784,800     $ 980,700  
Uncalled Commitments   $ 1,800,800     $ 1,251,200     $ 1,330,200     $ 1,800,800     $ 1,330,200  
                                         

 

                     
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)
(Amounts in thousands)
                     
    Quarter Ended   Year Ended
    December 31, 2012   September 30, 2012   December 31, 2011   December 31, 2012   December 31, 2011
Fees                    
Management and incentive fees:                    
Management fees   $ -   $ -   $ -   $ -   $ -
Incentive fees     -     -     -     -     -
Management and incentive fees     -     -     -     -     -
                     
Monitoring and transaction fees:                    
Monitoring fees     -     -     -     -     -
Transaction fees     33,635     33,696     59,039     129,159     170,480
Fee credits     -     -     -     -     -
Net monitoring and transaction fees     33,635     33,696     59,039     129,159     170,480
                     
Total fees     33,635     33,696     59,039     129,159     170,480
                     
Expenses                    
Compensation and benefits     6,521     8,438     6,733     29,341     26,109
Occupancy and related charges     209     213     262     900     1,256
Other operating expenses     2,740     2,346     4,288     10,602     12,171
Total expenses     9,470     10,997     11,283     40,843     39,536
                     
Fee Related Earnings     24,165     22,699     47,756     88,316     130,944
                     
Investment income (loss)                    
Gross carried interest     -     -     -     -     -
Less: allocation to KKR carry pool     -     -     -     -     -
Less: management fee refunds     -     -     -     -     -
Net carried interest     -     -     -     -     -
Other investment income (loss)     109,048     239,072     117,496     1,110,503     202,802
Total investment income (loss)     109,048     239,072     117,496     1,110,503     202,802
                     
Income (Loss) before noncontrolling interests                    
in Income of consolidated entities     133,213     261,771     165,252     1,198,819     333,746
Income (Loss) attributable to                    
noncontrolling interests     661     633     1,450     2,574     3,536
                     
Economic Net Income (Loss)   $ 132,552   $ 261,138   $ 163,802   $ 1,196,245   $ 330,210
                     
                     
Syndicated Capital   $ 268,500   $ 24,700   $ 1,151,900   $ 543,800   $ 2,426,600
                     

 

                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended December 31, 2012
(Amounts in thousands)
                 
                 
            Capital Markets   Total
    Private Markets   Public Markets   and Principal   Reportable
    Segment   Segment   Activities Segment   Segments
                 
Fees                
Management and incentive fees:                
Management fees   $ 104,804     $ 39,551     $ -   $ 144,355  
Incentive fees     -       12,350       -     12,350  
Management and incentive fees     104,804       51,901       -     156,705  
                 
Monitoring and transaction fees:                
Monitoring fees     32,988       -       -     32,988  
Transaction fees     41,231       1,974       33,635     76,840  
Fee credits     (37,721 )     (270 )     -     (37,991 )
Net monitoring and transaction fees     36,498       1,704       33,635     71,837  
                 
Total fees     141,302       53,605       33,635     228,542  
                 
Expenses                
Compensation and benefits     53,383       16,097       6,521     76,001  
Occupancy and related charges     12,075       1,479       209     13,763  
Other operating expenses     43,463       6,596       2,740     52,799  
Total expenses     108,921       24,172       9,470     142,563  
                 
Fee Related Earnings     32,381       29,433       24,165     85,979  
                 
Investment income (loss)                
Gross carried interest     255,296       13,640       -     268,936  
Less: allocation to KKR carry pool     (102,058 )     (5,456 )     -     (107,514 )
Less: management fee refunds     (8,712 )     -       -     (8,712 )
Net carried interest     144,526       8,184       -     152,710  
Other investment income (loss)     1,158       30       109,048     110,236  
Total investment income (loss)     145,684       8,214       109,048     262,946  
                 
Income (Loss) before noncontrolling interests                
in Income of consolidated entities     178,065       37,647       133,213     348,925  
Income (Loss) attributable to                
noncontrolling interests     292       292       661     1,245  
                 
Economic Net Income (Loss)   $ 177,773     $ 37,355     $ 132,552   $ 347,680  
                 

 

                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended September 30, 2012
(Amounts in thousands)
                 
                 
            Capital Markets   Total
    Private Markets   Public Markets   and Principal   Reportable
    Segment   Segment   Activities Segment   Segments
                 
Fees                
Management and incentive fees:                
Management fees   $ 105,035     $ 21,448     $ -   $ 126,483  
Incentive fees     -       17,768       -     17,768  
Management and incentive fees     105,035       39,216       -     144,251  
                 
Monitoring and transaction fees:                
Monitoring fees     29,969       -       -     29,969  
Transaction fees     32,788       8,780       33,696     75,264  
Fee credits     (26,293 )     (5,414 )     -     (31,707 )
Net monitoring and transaction fees     36,464       3,366       33,696     73,526  
                 
Total fees     141,499       42,582       33,696     217,777  
                 
Expenses                
Compensation and benefits     48,905       13,997       8,438     71,340  
Occupancy and related charges     12,049       1,343       213     13,605  
Other operating expenses     35,885       3,897       2,346     42,128  
Total expenses     96,839       19,237       10,997     127,073  
                 
Fee Related Earnings     44,660       23,345       22,699     90,704  
                 
Investment income (loss)                
Gross carried interest     391,168       19,568       -     410,736  
Less: allocation to KKR carry pool     (161,805 )     (7,828 )     -     (169,633 )
Less: management fee refunds     (61,499 )     -       -     (61,499 )
Net carried interest     167,864       11,740       -     179,604  
Other investment income (loss)     1,779       25       239,072     240,876  
Total investment income (loss)     169,643       11,765       239,072     420,480  
                 
Income (Loss) before noncontrolling interests                
in Income of consolidated entities     214,303       35,110       261,771     511,184  
Income (Loss) attributable to                
noncontrolling interests     444       233       633     1,310  
                 
Economic Net Income (Loss)   $ 213,859     $ 34,877     $ 261,138   $ 509,874  
                 

 

                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended December 31, 2011
(Amounts in thousands)
                 
                 
            Capital Markets   Total
    Private Markets   Public Markets   and Principal   Reportable
    Segment   Segment   Activities Segment   Segments
                 
Fees                
Management and incentive fees:                
Management fees   $ 106,716     $ 20,840     $ -   $ 127,556  
Incentive fees     -       6,084       -     6,084  
Management and incentive fees     106,716       26,924       -     133,640  
                 
Monitoring and transaction fees:                
Monitoring fees     21,797       -       -     21,797  
Transaction fees     65,148       4,151       59,039     128,338  
Fee credits     (34,799 )     (2,063 )     -     (36,862 )
Net monitoring and transaction fees     52,146       2,088       59,039     113,273  
                 
Total fees     158,862       29,012       59,039     246,913  
                 
Expenses                
Compensation and benefits     46,139       12,166       6,733     65,038  
Occupancy and related charges     12,902       1,189       262     14,353  
Other operating expenses     42,825       3,834       4,288     50,947  
Total expenses     101,866       17,189       11,283     130,338  
                 
Fee Related Earnings     56,996       11,823       47,756     116,575  
                 
Investment income (loss)                
Gross carried interest     96,115       388       -     96,503  
Less: allocation to KKR carry pool     (40,255 )     (155 )     -     (40,410 )
Less: management fee refunds     (1,993 )     -       -     (1,993 )
Net carried interest     53,867       233       -     54,100  
Other investment income (loss)     (364 )     (93 )     117,496     117,039  
Total investment income (loss)     53,503       140       117,496     171,139  
                 
Income (Loss) before noncontrolling interests                
in Income of consolidated entities     110,499       11,963       165,252     287,714  
Income (Loss) attributable to                
noncontrolling interests     651       119       1,450     2,220  
                 
Economic Net Income (Loss)   $ 109,848     $ 11,844     $ 163,802   $ 285,494  
                               

 

 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Year Ended December 31, 2012
(Amounts in thousands)
                 
                 
            Capital Markets   Total
    Private Markets   Public Markets   and Principal   Reportable
    Segment   Segment   Activities Segment   Segments
                 
Fees                
Management and incentive fees:                
Management fees   $ 423,921     $ 105,186     $ -   $ 529,107  
Incentive fees     -       43,845       -     43,845  
Management and incentive fees     423,921       149,031       -     572,952  
                 
Monitoring and transaction fees:                
Monitoring fees     116,565       -       -     116,565  
Transaction fees     96,454       14,495       129,159     240,108  
Fee credits     (97,362 )     (8,368 )     -     (105,730 )
Net monitoring and transaction fees     115,657       6,127       129,159     250,943  
                 
Total fees     539,578       155,158       129,159     823,895  
                 
Expenses                
Compensation and benefits     192,765       50,705       29,341     272,811  
Occupancy and related charges     48,562       5,606       900     55,068  
Other operating expenses     147,253       18,350       10,602     176,205  
Total expenses     388,580       74,661       40,843     504,084  
                 
Fee Related Earnings     150,998       80,497       88,316     319,811  
                 
Investment income (loss)                
Gross carried interest     1,392,755       39,155       -     1,431,910  
Less: allocation to KKR carry pool     (565,543 )     (15,663 )     -     (581,206 )
Less: management fee refunds     (143,723 )     -       -     (143,723 )
Net carried interest     683,489       23,492       -     706,981  
Other investment income (loss)     599       20       1,110,503     1,111,122  
Total investment income (loss)     684,088       23,512       1,110,503     1,818,103  
                 
Income (Loss) before noncontrolling interests                
in Income of consolidated entities     835,086       104,009       1,198,819     2,137,914  
Income (Loss) attributable to                
noncontrolling interests     3,390       1,079       2,574     7,043  
                 
Economic Net Income (Loss)   $ 831,696     $ 102,930     $ 1,196,245   $ 2,130,871  
   

 

                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Year Ended December 31, 2011
(Amounts in thousands)
                 
                 
            Capital Markets   Total
    Private Markets   Public Markets   and Principal   Reportable
    Segment   Segment   Activities Segment   Segments
                 
Fees                
Management and incentive fees:                
Management fees   $ 430,400     $ 84,984     $ -   $ 515,384  
Incentive fees     -       34,243       -     34,243  
Management and incentive fees     430,400       119,227       -     549,627  
                 
Monitoring and transaction fees:                
Monitoring fees     163,769       -       -     163,769  
Transaction fees     166,654       11,996       170,480     349,130  
Fee credits     (144,928 )     (5,930 )     -     (150,858 )
Net monitoring and transaction fees     185,495       6,066       170,480     362,041  
                 
Total fees     615,895       125,293       170,480     911,668  
                 
Expenses                
Compensation and benefits     185,709       46,133       26,109     257,951  
Occupancy and related charges     45,694       4,059       1,256     51,009  
Other operating expenses     157,901       15,483       12,171     185,555  
Total expenses     389,304       65,675       39,536     494,515  
                 
Fee Related Earnings     226,591       59,618       130,944     417,153  
                 
Investment income (loss)                
Gross carried interest     266,211       (2,590 )     -     263,621  
Less: allocation to KKR carry pool     (109,361 )     1,036       -     (108,325 )
Less: management fee refunds     (17,587 )     -       -     (17,587 )
Net carried interest     139,263       (1,554 )     -     137,709  
Other investment income (loss)     (549 )     505       202,802     202,758  
Total investment income (loss)     138,714       (1,049 )     202,802     340,467  
                 
Income (Loss) before noncontrolling interests                
in Income of consolidated entities     365,305       58,569       333,746     757,620  
Income (Loss) attributable to                
noncontrolling interests     2,536       599       3,536     6,671  
                 
Economic Net Income (Loss)   $ 362,769     $ 57,970     $ 330,210   $ 750,949  
                               

 

 
KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
 
As of December 31, 2012
   

Private
Markets
Segment

 

Public
Markets
Segment

 

Capital
Markets and
Principal
Activities
Segment

     

Total
Reportable
Segments

                     
Cash and short-term investments   $ 358,237     $ 28,690   $ 1,147,360       $ 1,534,287
Investments     -       -     4,758,157   (a)     4,758,157
Unrealized carry     730,292       24,939     -         755,231
Other assets     207,047       280,472     62,119         549,638
Total assets   $ 1,295,576     $ 334,101   $ 5,967,636       $ 7,597,313
                     
Debt obligations   $ -     $ -   $ 500,000       $ 500,000
Other liabilities     78,724       16,433     24,275         119,432
Total liabilities     78,724       16,433     524,275         619,432
                     
Noncontrolling interests     1,339       739     18,619         20,697
                     
Book value   $ 1,215,513     $ 316,929   $ 5,424,742       $ 6,957,184
                     
Book value per adjusted unit   $ 1.72     $ 0.45   $ 7.70       $ 9.87
                     
                     
                     
As of December 31, 2011
   

Private
Markets
Segment

 

Public
Markets
Segment

 

Capital
Markets and
Principal
Activities
Segment

     

Total
Reportable
Segments

                     
Cash and short-term investments   $ 296,717     $ 8,087   $ 684,637       $ 989,441
Investments     -       -     4,743,406         4,743,406
Unrealized carry     419,523       1,447     -         420,970
Other assets     139,432       58,360     63,799         261,591
Total assets   $ 855,672     $ 67,894   $ 5,491,842       $ 6,415,408
                     
Debt obligations   $ -     $ -   $ 500,000       $ 500,000
Other liabilities     128,590       8,153     49,329         186,072
Total liabilities     128,590       8,153     549,329         686,072
                     
Noncontrolling interests     (1,358 )     729     19,381         18,752
                     
Book value   $ 728,440     $ 59,012   $ 4,923,132       $ 5,710,584
                     
Book value per adjusted unit   $ 1.06     $ 0.09   $ 7.14       $ 8.29
 
     
(a)   See Capital Markets and Principal Activities segment schedule of investments that follows.
     

 

 
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS
(Amounts in thousands, except percentage amounts)
             
    As of December 31, 2012

 

 

 

      Fair Value as
        Fair   a Percentage of

Investment

 

Cost

  Value   Total Investments
             
Co-Investments in Portfolio Companies of            
Private Equity Investment Vehicles:            
Alliance Boots GmbH   195,640   426,561   9.0%
HCA Inc.   141,983   378,387   8.0%
The Nielsen Company B.V.   134,603   273,712   5.8%
NXP B.V.   207,964   207,388   4.4%
Samson Resources Corporation   237,514   190,012   4.0%
Dollar General Corporation   37,733   185,107   3.9%
KION Group GmbH   128,058   172,748   3.6%
ProSiebenSat.1 Media AG   226,913   144,919   3.0%
US Foods   100,000   140,000   2.9%
Biomet, Inc.   151,444   121,155   2.5%
First Data Corporation   135,258   94,681   2.0%
Energy Future Holdings Corp.   200,000   10,000   0.2%
PagesJaunes Groupe S.A.   235,201   -   0.0%
    2,132,311   2,344,670   49.3%
             
Private Equity Investment Vehicles            
KKR 2006 Fund L.P.   380,803   436,552   9.2%
KKR European Fund III L.P.   189,441   221,393   4.7%
KKR Asian Fund L.P.   64,324   82,641   1.7%
KKR European Fund II L.P.   65,649   57,616   1.2%
KKR Millennium Fund L.P.   59,426   50,111   1.1%
KKR North America Fund XI L.P.   22,788   22,788   0.5%
KKR E2 Investors, L.P.   10,418   19,261   0.4%
KKR European Fund L.P.   47,664   4,299   0.1%
KKR China Growth Fund L.P.   3,611   4,051   0.1%
Co-Investment Vehicles   528   598   0.0%
    844,652   899,310   19.0%
             
Private Equity Total   2,976,963   3,243,980   68.3%
             
Energy & Infrastructure Investment Vehicles            
Royalties and Drilling   93,755   93,755   2.0%
Infrastructure Fund   24,447   25,678   0.5%
Co-Investment Vehicles   10,718   13,217   0.3%
Natural Resources   9,747   5,796   0.1%
Energy & Infrastructure Total   138,667   138,446   2.9%
             
Private Markets Total   3,115,630   3,382,426   71.2%
             
Public Markets Investment Vehicles            
Liquid Credit SMAs/Funds   187,163   194,658   4.1%
Long/Short Equities Funds   100,000   105,648   2.2%
Credit Relative Value Fund   50,000   52,507   1.1%
Direct Lending   36,739   39,649   0.8%
Special Situations Vehicles   20,148   22,172   0.5%
Mezzanine Fund   14,735   17,235   0.4%
Public Markets Total   408,785   431,869   9.1%
             
Other   947,040   943,862   19.7%
             
Total Investments   $ 4,471,455   $ 4,758,157   100.0%
 

 

 
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED
(Amounts in thousands, except percentage amounts)
 

 

 

As of December 31, 2012

           

Fair Value as

 

 

 

     

a Percentage

       

Fair

 

of Total

Investment

 

Cost

 

Value

 

Investments

             
Significant Aggregate Investments: (a)            
Alliance Boots GmbH   $ 228,769   $ 491,530   10.3 %
HCA Inc.     173,443     451,752   9.5 %
The Nielsen Company B.V.     134,603     273,712   5.8 %
Dollar General Corporation     52,359     245,432   5.2 %
      589,174     1,462,426   30.8 %
             
Other investments     3,882,281     3,295,731   69.2 %
Total Investments   $ 4,471,455   $ 4,758,157   100.0 %
             
             
Investments by Geography:            
North America   $ 2,911,143   $ 3,232,122   67.9 %
Europe     1,391,256     1,355,801   28.5 %
Asia-Pacific     169,056     170,234   3.6 %
Total Investments   $ 4,471,455   $ 4,758,157   100.0 %
 
     
(a)   The significant aggregate investments include investments in portfolio companies with individual fair values of 5% or more of the Capital Markets and Principal Activities segment investments balance as of December 31, 2012. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.

 

 
KKR
ASSETS UNDER MANAGEMENT
(Amounts in thousands)
                 
                 
   

Private
Markets
Segment

 

Public
Markets
Segment

     

Total
Reportable
Segments

Quarter Ended December 31, 2012

               
                 
September 30, 2012   $ 49,771,000     $ 16,507,700         $ 66,278,700  
New Capital Raised     934,100       1,794,000           2,728,100  
Acquisitions (a)     -       8,086,900           8,086,900  
Distributions     (3,097,100 )     (485,600 )   (b)     (3,582,700 )
Foreign Exchange     17,400       -           17,400  
Change in Value     1,502,200       496,900           1,999,100  
December 31, 2012   $ 49,127,600     $ 26,399,900         $ 75,527,500  
                 
                 

Year Ended December 31, 2012

               
                 
December 31, 2011   $ 43,627,900     $ 15,380,700         $ 59,008,600  
New Capital Raised     7,360,100       3,219,600           10,579,700  
Acquisitions (a)     -       8,086,900           8,086,900  
Distributions     (9,023,900 )     (1,543,200 )   ©     (10,567,100 )
Net Changes in Fee Base of Certain Funds (d)     (1,327,900 )     -           (1,327,900 )
Foreign Exchange     16,000       -           16,000  
Change in Value     8,475,400       1,255,900           9,731,300  
December 31, 2012   $ 49,127,600     $ 26,399,900         $ 75,527,500  
                 
                 
                 
KKR
FEE PAYING ASSETS UNDER MANAGEMENT
(Amounts in thousands)
                 
                 
   

Private
Markets
Segment

 

Public
Markets
Segment

     

Total
Reportable
Segments

Quarter Ended December 31, 2012

               
                 
September 30, 2012   $ 40,354,200     $ 9,911,800         $ 50,266,000  
New Capital Raised     1,272,000       1,559,100           2,831,100  
Acquisitions (a)     -       8,078,400           8,078,400  
Distributions     (551,100 )     (257,200 )   (b)     (808,300 )
Foreign Exchange     83,600       -           83,600  
Change in Value     14,300       380,900           395,200  
December 31, 2012   $ 41,173,000     $ 19,673,000         $ 60,846,000  
                 
                 

Year Ended December 31, 2012

               
                 
December 31, 2011   $ 37,869,700     $ 8,527,600         $ 46,397,300  
New Capital Raised     7,451,700       2,999,200           10,450,900  
Acquisitions (a)     -       8,078,400           8,078,400  
Distributions     (1,089,400 )     (851,400 )   ©     (1,940,800 )
Net Changes in Fee Base of Certain Funds (d)     (3,205,400 )     -           (3,205,400 )
Foreign Exchange     99,600       -           99,600  
Change in Value     46,800       919,200           966,000  
December 31, 2012   $ 41,173,000     $ 19,673,000         $ 60,846,000  
                             
     
(a)   Represents AUM and FPAUM of Prisma as of October 1, 2012, the date of acquisition. These figures exclude new capital raised and distributions during the quarter ended December 31, 2012.
(b)   Includes $169.9 million of redemptions by fund investors.
©   Includes $421.8 million of redemptions by fund investors.
(d)   Represents the impact of including certain funds entering the post-investment period including KKR 2006 Fund L.P.
     

 

 
KKR
INVESTMENT VEHICLE SUMMARY* (UNAUDITED)
As of December 31, 2012
(Amounts in millions, except percentages)
                                         
                                         
    Investment Period   Amount
   

Commencement
Date

  End Date   Commitment  

Uncalled
Commitments

 

Percentage
Committed by
General
Partner

  Invested   Realized      

Remaining
Cost

 

Remaining
Fair Value

Private Markets

                                       
                                         
Private Equity Funds                                        
North America Fund XI   9/2012   9/2018   $ 6,331.2   $ 5,908.7   3.9%   $ 422.5   $ -       $ 422.5   $ 422.5
China Growth Fund   11/2010   11/2016     1,010.0     674.9   1.0%     335.1     -         335.1     370.8
E2 Investors (Annex Fund)   8/2009   11/2013     346.3     192.1   4.3%     154.2     -         154.2     303.7
European Fund III   3/2008   3/2014     6,087.7     2,410.9   4.6%     3,676.8     -         3,676.8     4,360.3
Asian Fund   7/2007   7/2013     3,983.2     860.5   2.5%     3,122.7     732.0         2,612.9     4,783.5
2006 Fund   9/2006   9/2012     17,642.2     1,315.2   2.1%     16,327.0     9,291.5         10,594.0     14,422.5
European Fund II   11/2005   10/2008     5,750.8     -   2.1%     5,750.8     2,271.7         4,091.5     4,855.1
Millennium Fund   12/2002   12/2008     6,000.0     -   2.5%     6,000.0     7,907.9         3,050.9     4,362.3
European Fund   12/1999   12/2005     3,085.4     -   3.2%     3,085.4     8,720.0         -     51.5
Total Private Equity Funds             50,236.8     11,362.3         38,874.5     28,923.1         24,937.9     33,932.2
                                         
Co-Investment Vehicles   Various   Various     2,133.5     213.1   Various     1,920.4     2,032.4         1,363.0     1,830.2
Total Private Equity             52,370.3     11,575.4         40,794.9     30,955.5         26,300.9     35,762.4
                                         
Energy & Infrastructure                                        
Natural Resources   Various   Various     1,225.8     805.0   Various     420.8     35.2         408.1     253.7
Infrastructure   Various   Various     1,041.7     736.2   4.8%     305.5     1.7         305.5     323.9
Co-Investment Vehicles   Various   Various     2,369.8     1,154.5   Various     1,215.3     150.9         1,215.3     1,491.6
Energy & Infrastructure Total             4,637.3     2,695.7         1,941.6     187.8         1,928.9     2,069.2
                                         
Private Markets Total             57,007.6     14,271.1         42,736.5     31,143.3         28,229.8     37,831.6
                                         
Public Markets                                        
                                         
Special Situations Vehicles   Various   Various     2,189.3     641.4   Various     1,547.9     164.2         1,547.9     1,800.4
Mezzanine Fund   3/2010   8/2015     987.0     655.8   4.6%     331.2     31.9         331.2     378.5
Direct Lending   Various   Various     668.5     503.6   Various     164.9     -         164.9     175.1
                                         
Public Markets Total             3,844.8     1,800.8         2,044.0     196.1         2,044.0     2,354.0
                                         
Grand Total           $ 60,852.4   $ 16,071.9       $ 44,780.5   $ 31,339.4       $ 30,273.8   $ 40,185.6
 
 
* Reflects only investment vehicles for which KKR has the ability to earn carried interest.
 

 

                     
KKR
DISTRIBUTION CALCULATION
(Amounts in thousands, except unit and per unit amounts)
                     
                     
    Quarter Ended   Year Ended
   

December 31,
2012

 

September 30,
2012

 

December 31,
2011

 

December 31,
2012

 

December 31,
2011

                     
FRE (a)   $ 85,979     $ 90,704     $ 116,575     $ 319,811     $ 417,153  
Realized cash carry     100,992       100,145       83,226       285,424       202,115  
Net realized principal investment income     366,878       145,700       (49,237 )     866,776       186,288  
Less: local income taxes     (6,314 )     (2,365 )     (1,856 )     (15,572 )     (16,291 )
Less: noncontrolling interests     (1,245 )     (1,310 )     (2,220 )     (7,043 )     (6,671 )
Total Distributable Earnings     546,290       332,874       146,488       1,449,396       782,594  
                     
Less: net realized principal investment income     (366,878 )     (145,700 )     49,237       (866,776 )     (186,288 )
                     
Distributed Earnings     179,412       187,174       195,725       582,620       596,306  
                     
Distributed Earnings to KKR & Co. L.P. (b)     66,275       66,015       65,059       206,491       193,876  
                     
Less: estimated current corporate income taxes     (8,525 )     (6,890 )     (22,924 )     (23,705 )     (57,048 )
                     
Distributed Earnings to KKR & Co. L.P., After Taxes     57,750       59,125       42,135       182,786       136,828  
                     
Additional Distribution ©     119,081       -       29,530       119,081       29,530  
                     
Total Distribution to KKR & Co. L.P.   $ 176,831     $ 59,125     $ 71,665     $ 301,867     $ 166,358  
                     
Distribution per KKR & Co. L.P. common unit   $ 0.70     $ 0.24     $ 0.32     $ 1.22     $ 0.74  
                     
Outstanding KKR & Co. L.P. common units     253,363,691       241,407,805       227,150,182          
                     
     
(a)   See Exhibit A for a reconciliation of such measure to financial results prepared in accordance with GAAP.
(b)   Represents the amount of distributed earnings allocable to KKR & Co. L.P. based on its ownership in the KKR business as of December 31, 2012.
©   Additional distribution is provided primarily from certain realizations on investments within KKR's capital markets and principal activities segment and was calculated for certain taxes as described in our distribution policy. The amount of any additional distribution in the future should not be expected to be consistent or regularly declared.
     

DISTRIBUTION POLICY

KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its investment management business each year in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other agreements. KKR does not intend to distribute net realized principal investment income, other than certain additional distributions that KKR may determine to make. These additional distributions, if any, are intended to cover certain tax liabilities, as calculated by KKR. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships. For purposes of KKR's distribution policy, its distributions are expected to consist of (i) FRE, (ii) carry distributions received from KKR's investment funds which have not been allocated as part of its carry pool, and (iii) any additional distributions for certain taxes as described above. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.

The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P. and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that such distributions will be sufficient to pay any particular KKR unit holder's actual U.S. or non-U.S. tax liability.

KKR

Notes to Reportable Segments (Unaudited)

The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR's reportable business segments. The reportable segments for KKR's business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR's reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.

KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR's businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.

Fee related earnings ("FRE") is comprised of segment operating revenues less segment operating expenses and is used by management as an alternative measurement of the operating earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan; (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items.

Economic net income (loss) ("ENI") is a measure of profitability for KKR's reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR's businesses inclusive of investment income and carried interest. ENI is comprised of: (i) FRE; plus (ii) segment investment income (loss), which is reduced for carry pool allocations and management fee refunds; less (iii) certain economic interests in KKR's segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income (loss) relating to noncontrolling interests; and (iii) the exclusion of income taxes.

After-tax ENI is used to measure KKR's implied ENI on a fully diluted basis. We believe this measure is useful to unitholders as it provides an indication of KKR's ENI as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P. After-tax ENI is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.

Total distributable earnings is the sum of (i) FRE, (ii) carry distributions received from KKR's investment funds which have not been allocated as part of its carry pool and (iii) net realized principal investment income; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. Net realized principal investment income includes, with respect to KKR's principal investments (i) realized investment gains and losses, (ii) dividend income and (iii) interest income, net of interest expense, earned from KKR's principal investments. KKR does not intend to distribute net realized principal investment income other than certain additional distributions that KKR may determine to make, which are intended to cover certain tax liabilities, as calculated by KKR. See "Distribution Policy." We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and amounts available for distribution to KKR unitholders, however, total distributable earnings is not a measure that calculates actual distributions under KKR's current distribution policy.

Assets under management ("AUM") represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR's capital raising activities and the overall activity in its investment funds and vehicles. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR's co-investment vehicles; (iii) the net asset value of certain of KKR's fixed income products; (iv) the value of outstanding structured finance vehicles; and (v) the fair value of other assets managed by KKR. KKR's definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.

Fee paying AUM ("FPAUM") represents only those assets under management from which KKR receives fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR's capital raising activities and the overall activity in its investment funds and vehicles, for only those funds and vehicles where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.

Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR's investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholdersas it provides additional insight into KKR's investment of committed capital. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a fee or carried interest and (ii) capital invested by KKR's investment funds and vehicles.

Syndicated capital is the aggregate amount of debt or equity capital in transactions originated by KKR investment funds and vehicles, which has been distributed to third parties in exchange for a fee. It does not include capital committed to such transactions by carry-yielding co-investment vehicles, which is instead reported in committed dollars invested. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR's Capital Markets and Principal Activities segment and across its investment platform.

Uncalled commitments are used as a measure of unfunded capital commitments that KKR's investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR's investment funds and vehicles to make future investments.

Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. and KKR Holdings and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P.

Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR's private equity funds, investment vehicles and principal investments. These financing arrangements are not direct obligations of the general partners of KKR's private equity funds or its management companies. On a segment basis, interest expense is included in other investment income. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR's investment funds and vehicles and other noncontrolling interest holders. Additionally, we believe this measure is useful for analyzing KKR's ability to service its debt obligations.

Book value is a measure of the net assets of KKR's reportable segments and is used by management primarily in assessing the unrealized value of our investment portfolio, including carried interest, as well as our overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from the equivalent GAAP amounts on a consolidated basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings L.P.

Fee related EBITDA is comprised of FRE before the impact of depreciation of fixed assets and amortization of intangible assets and is used by management as a measure of the cash earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the amount of cash earnings generated by KKR's management companies and capital markets businesses.

Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR's liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR's available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.

             
KKR

EXHIBIT A

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT (GAAP BASIS - UNAUDITED)
TO AFTER TAX ENI PER ADJUSTED UNIT
(Amounts in thousands, except common unit and per common unit amounts)
             
             
    Quarter Ended   Quarter Ended   Quarter Ended
    December 31, 2012   September 30, 2012   December 31, 2011
             
Net income (loss) attributable to KKR & Co. L.P. per common unit   $ 0.39   $ 0.53   $ 0.20
Weighted Average Common Units Outstanding     249,303,558     239,696,358     225,382,001
Net income (loss) attributable to KKR & Co. L.P.     96,728     127,411     46,137
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

    170,256     249,460     133,301
Plus: Non-cash equity based charges     70,170     122,157     83,688
Plus: Amortization of intangibles and other, net     4,898     1,234     1,046
Plus: Income taxes     5,628     9,612     21,322
Economic net income (loss)     347,680     509,874     285,494
Less: Provision for income taxes     10,632     22,548     59,988
Economic net income (loss) after taxes     337,048     487,326     225,506
Weighted Average Adjusted Units     704,805,537     702,252,548     689,335,706
Economic net income (loss) after taxes per adjusted unit   $ 0.48   $ 0.69   $ 0.33
             
    Year Ended   Year Ended    
    December 31, 2012   December 31, 2011    
             
Net income (loss) attributable to KKR & Co. L.P. per common unit   $ 2.35   $ 0.01    
Weighted Average Common Units Outstanding     238,503,257     220,235,469    
Net income (loss) attributable to KKR & Co. L.P.     560,836     1,921    
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

    1,116,740     185,352    
Plus: Non-cash equity based charges     400,207     470,221    
Plus: Amortization of intangibles and other, net     9,683     4,210    
Plus: Income taxes     43,405     89,245    
Economic net income (loss)     2,130,871     750,949    
Less: Provision for income taxes     102,420     248,082    
Economic net income (loss) after taxes     2,028,451     502,867    
Weighted Average Adjusted Units     699,988,443     685,386,132    
Economic net income (loss) after taxes per adjusted unit   $ 2.90   $ 0.73    
             
             
             
             
             
             
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS - UNAUDITED)
TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS AND FEE RELATED EBITDA
(Amounts in thousands)
             
    Quarter Ended   Quarter Ended   Quarter Ended
    December 31, 2012   September 30, 2012   December 31, 2011
             
Net income (loss) attributable to KKR & Co. L.P.   $ 96,728   $ 127,411   $ 46,137
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

    170,256     249,460     133,301
Plus: Non-cash equity based charges     70,170     122,157     83,688
Plus: Amortization of intangibles and other, net     4,898     1,234     1,046
Plus: Income taxes     5,628     9,612     21,322
Economic net income (loss)     347,680     509,874     285,494
Plus: Income attributable to segment noncontrolling interests     1,245     1,310     2,220
Less: Investment income (loss)     262,946     420,480     171,139
Fee related earnings     85,979     90,704     116,575
Plus: depreciation and amortization     3,580     3,273     2,528
Fee related EBITDA   $ 89,559   $ 93,977   $ 119,103
             
    Year Ended   Year Ended    
    December 31, 2012   December 31, 2011    
             
Net income (loss) attributable to KKR & Co. L.P.   $ 560,836   $ 1,921    
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

    1,116,740     185,352    
Plus: Non-cash equity based charges     400,207     470,221    
Plus: Amortization of intangibles and other, net     9,683     4,210    
Plus: Income taxes     43,405     89,245    
Economic net income (loss)     2,130,871     750,949    
Plus: Income attributable to segment noncontrolling interests     7,043     6,671    
Less: Investment income (loss)     1,818,103     340,467    
Fee related earnings     319,811     417,153    
Plus: depreciation and amortization     12,499     9,925    
Fee related EBITDA   $ 332,310   $ 427,078    
                 

 

 
KKR

EXHIBIT A (CONTINUED)

RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS - UNAUDITED)
TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT
(Amounts in thousands, except common unit and per common unit amounts)
         
         
    As of   As of
    December 31, 2012   December 31, 2011
         
KKR & Co. L.P. partners' capital   $ 2,004,359     $ 1,328,698
         
Noncontrolling interests held by KKR Holdings L.P.     4,981,864       4,342,157
         
Equity impact of KKR Management Holdings Corp. and other     (29,039 )     39,729
         
Book value     6,957,184       5,710,584
         
Adjusted units     704,780,484       689,392,861
         
Book value per adjusted unit   $ 9.87     $ 8.29
         
         
         
         
         
         
RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS - UNAUDITED)
TO CASH AND SHORT-TERM INVESTMENTS (SEGMENT BASIS)
(Amounts in thousands)
         
         
    As of   As of
    December 31, 2012   December 31, 2011
         
Cash and cash equivalents   $ 1,230,464     $ 843,261
         
Liquid short-term investments     303,823       146,180
         
Cash and short-term investments   $ 1,534,287     $ 989,441
               

 

             
KKR

EXHIBIT B

             
RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS
             
The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.
             
    Quarter Ended
    December 31, 2012   September 30, 2012   December 31, 2011
Weighted Average GAAP Common Units Outstanding - Basic   249,303,558   239,696,358   225,382,001
Weighted Average Unvested Common Units(a)   18,888,570   17,950,264   5,979,031
Weighted Average GAAP Common Units Outstanding - Diluted   268,192,128   257,646,622   231,361,032
Adjustments:            
Weighted Average KKR Holdings Units(b)   436,613,409   444,605,926   457,974,674
Weighted Average Adjusted Units   704,805,537   702,252,548   689,335,706
             
    Year Ended    
    December 31, 2012   December 31, 2011    
Weighted Average GAAP Common Units Outstanding - Basic   238,503,257   220,235,469    
Weighted Average Unvested Common Units(a)   15,589,903   2,283,705    
Weighted Average GAAP Common Units Outstanding - Diluted   254,093,160   222,519,174    
Adjustments:            
Weighted Average KKR Holdings Units(b)   445,895,283   462,866,958    
Weighted Average Adjusted Units   699,988,443   685,386,132    
             
             
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS
             
The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units.
             
    As of   As of    
    December 31, 2012   December 31, 2011    
GAAP Common Units Outstanding - Basic   253,363,691   227,150,182    
Unvested Common Units(a)   18,863,517   6,028,444    
GAAP Common Units Outstanding - Diluted   272,227,208   233,178,626    
Adjustments:            
KKR Holdings Units(b)   432,553,276   456,214,235    
Adjusted Units   704,780,484   689,392,861    
     
(a)   Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.
(b)   Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.

 

Kohlberg Kravis Roberts & Co. L.P.
Investor Relations:
Craig Larson
+1-877-610-4910 (U.S.) / +1-212-230-9410
investor-relations@kkr.com
or
Media:
Kristi Huller
+1-212-750-8300
media@kkr.com

 

Source: KKR & Co. L.P.

 

 

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