NEW YORK, Aug 09, 2010 (BUSINESS WIRE) — Assets under management (“AUM”) totaled $54.4 billion as of June 30, 2010, up from $46.9 billion as of June 30, 2009.

Economic net income (“ENI”) was $433.1 million for the second quarter of 2010, down from pro forma² ENI of $613.5 million for the second quarter of 2009. ENI was $1,107.9 million for the first six months of 2010, up from pro forma ENI of $616.0 million for the first six months of 2009.

Fee related earnings (“FRE”) were $63.3 million and $153.7 million for the second quarter and the first six months of 2010, respectively, up from pro forma fee related earnings of $53.3 million and $92.9 million in the comparable periods of 2009.

GAAP net income attributable to KKR & Co. L.P. was $29.9 million and $143.7 million for the second quarter and first six months of 2010, respectively³.

Book value was $5.0 billion on a segment basis representing $7.37 per unit as of June 30, 2010.

KKR declares a second quarter distribution of $0.08 per common unit.

KKR received an A rating from Fitch and an A- rating from Standard & Poor’s, in each case with a stable outlook.

Consolidated Results

KKR’s consolidated GAAP results for the quarter and six months ended June 30, 2010 included net income attributable to KKR & Co. L.P. of $29.9 million and $143.7 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.15 and $0.70, respectively. For the quarter and six months ended June 30, 2009, net income attributable to KKR & Co. L.P. was $365.8 million and $311.2 million, respectively. The decrease from both prior periods was primarily due to the following factors that were not applicable to the quarter and six months ended June 30, 2009 as a result of the Business Combination that occurred on October 1, 2009: (i) the allocation of approximately 70% of the earnings of KKR to KKR Holdings L.P., (ii) the issuance of equity-based awards which resulted in the recognition of non-cash compensation charges, and (iii) the recognition of corporate income tax expense.

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¹ Certain financial measures contained herein, including fee related earnings and economic net income, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See page 7 for a reconciliation of such measures to financial results prepared in accordance with GAAP.

Information contained herein relating to KKR’s reportable segments are presented prior to giving effect to the allocation of income between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total.

² On October 1, 2009 KKR and KKR & Co. (Guernsey) L.P. completed a transaction to combine their businesses (the “Business Combination”). Amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to KKR’s unaudited reportable segments on page 23 of this press release for a summary of the applicable adjustments as a result of the Business Combination.

³ For the second quarter and first six months of 2009, GAAP Net income attributable to KKR & Co. L.P. was $365.8 million and $311.2 million, respectively. The 2010 and 2009 GAAP periods are not directly comparable as GAAP financial information prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination. See “Consolidated Results”.

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Total Reportable Segments

Management makes operating decisions, assesses performance and allocates resources based on financial and operating data and measures that are presented without giving effect to the consolidation of any of the funds that KKR manages. In addition, there are other components of KKR’s reportable segment results that differ from the equivalent GAAP results on a consolidated basis. These differences are described in the Notes to the Unaudited Reportable Segments on page 23.

AUM was $54.4 billion as of June 30, 2010, a decrease of $0.3 billion or 0.6% compared to AUM of $54.7 billion as of March 31, 2010. The decrease was primarily due to distributions and redemptions, partially offset by an increase in the fair value of KKR’s private equity portfolio.

Fee paying assets under management (“FPAUM”) were $41.6 billion as of June 30, 2010, a decrease of $0.9 billion or 2.1% compared to FPAUM of $42.5 billion as of March 31, 2010. The decrease was primarily due to changes in foreign exchange related to Euro denominated commitments and invested capital in KKR’s private equity funds as well as distributions and redemptions.

FRE was $63.3 million for the quarter ended June 30, 2010, an increase of $10.1 million or 18.9% compared to pro forma FRE of $53.3 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $153.7 million, an increase of $60.8 million or 65.4% compared to pro forma FRE of $92.9 million for the six months ended June 30, 2009. The increase over both comparative periods was due primarily to (i) higher transaction fees in the private markets segment as a result of the closing of more fee generating investments, (ii) higher capital markets fees as a result of increased activity within the capital markets and principal activities segment, and (iii) incentive fees earned in the public markets segment. These increases were partially offset by higher compensation expense as a result of improved performance and increased other operating expenses in connection with the expansion of KKR’s business.

For the quarter ended June 30, 2010, ENI was $433.1 million, a decrease of $180.4 million or 29.4% compared to pro forma ENI of $613.5 million for the quarter ended June 30, 2009. The decrease primarily reflects lower investment income resulting from lower levels of gains relating to KKR’s principal investments and lower net carried interest in its private equity portfolio. While the fair value of KKR’s investments increased during the second quarter of 2010, the amount of net unrealized gains was lower than the amount recorded during the second quarter of 2009.

For the six months ended June 30, 2010, ENI was $1.1 billion, an increase of $491.9 million or 79.8% compared to pro forma ENI of $616.0 million for the six months ended June 30, 2009. The increase reflects higher investment income resulting from higher levels of gains relating to KKR’s principal investments and higher net carried interest in its private equity portfolio.

Private Markets

AUM in the private markets segment was $41.0 billion as of June 30, 2010, an increase of $0.1 billion or 0.2% compared to AUM of $40.9 billion as of March 31, 2010. The increase was primarily due to an increase in the fair value of KKR’s private equity portfolio, partially offset by distributions as a result of realizations.

FPAUM in the private markets segment was $35.3 billion as of June 30, 2010, a decrease of $0.6 billion or 1.6% compared to FPAUM of $35.9 billion as of March 31, 2010. The decrease was primarily due to changes in foreign exchange related to Euro denominated commitments and invested capital in KKR’s private equity funds as well as distributions as a result of realizations, partially offset by new capital raised.

FRE in the private markets segment was $42.1 million for the quarter ended June 30, 2010, a decrease of $9.2 million or 18.0% compared to pro forma FRE of $51.3 million for the quarter ended June 30, 2009. The decrease was due primarily to higher compensation expense and other operating expenses in connection with the expansion of KKR’s business, partially offset by higher transaction fees as a result of the closing of more fee generating investments.

FRE in the private markets segment was $98.3 million for the six months ended June 30, 2010, an increase of $4.9 million or 5.3% compared to pro forma FRE of $93.4 million for the six months ended June 30, 2009. The increase was due primarily to higher transaction fees as a result of the closing of more fee generating investments, partially offset by higher compensation expense and other operating expenses in connection with the expansion of KKR’s business.

ENI in the private markets segment was $155.1 million for the quarter ended June 30, 2010, a decrease of $67.8 million or 30.4% compared to pro forma ENI of $223.0 million for the quarter ended June 30, 2009. The decrease was due primarily to lower net carried interest. Greater unrealized gains in KKR’s private equity portfolio this quarter drove higher gross carried interest, however, this increase was more than offset by increases in the allocation to the carry pool and management fee refunds as a result of certain funds becoming carry-earning in 2010.

ENI in the private markets segment was $348.9 million for the six months ended June 30, 2010, an increase of $136.6 million or 64.3% compared to pro forma ENI of $212.3 million for the six months ended June 30, 2009. The increase was due primarily to higher gross carried interest driven by greater unrealized gains in KKR’s private equity portfolio. This increase was partially offset by increases in the allocation to the carry pool and management fee refunds. As of June 30, 2010, the amount subject to management fee refunds, which may reduce carried interest in future periods, totaled $68.8 million.

Public Markets

AUM in the public markets segment was $13.4 billion as of June 30, 2010, a decrease of $0.4 billion or 2.9% compared to AUM of $13.8 billion as of March 31, 2010. The decrease was primarily due to redemptions, partially offset by new capital raised during the quarter.

FPAUM in the public markets segment was $6.3 billion as of June 30, 2010, a decrease of $0.3 billion or 4.5% compared to FPAUM of $6.6 billion as of March 31, 2010. The decrease was primarily due to redemptions, partially offset by new capital raised during the quarter.

FRE in the public markets segment was $11.8 million for the quarter ended June 30, 2010, an increase of $9.8 million compared to pro forma FRE of $1.9 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $27.4 million, an increase of $24.8 million compared to pro forma FRE of $2.7 million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to incentive fees earned from KKR Financial Holdings LLC (“KFN”) as a result of KFN’s financial performance exceeding certain required benchmarks in the 2010 periods. No such fees were earned in the corresponding periods in 2009.

ENI in the public markets segment was $12.2 million for the quarter ended June 30, 2010, an increase of $11.7 million compared to pro forma ENI of $0.5 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, ENI was $28.4 million, an increase of $27.9 million compared to pro forma ENI of $0.6 million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to incentive fees earned from KFN as a result of KFN’s financial performance exceeding certain required benchmarks in the 2010 periods. No such fees were earned in the corresponding periods in 2009.

Capital Markets and Principal Activities

FRE in the capital markets and principal activities segment was $9.5 million for the quarter ended June 30, 2010, an increase of $9.4 million compared to pro forma FRE of less than $0.1 million for the quarter ended June 30, 2009. For the six months ended June 30, 2010, FRE was $27.9 million, an increase of $31.1 million compared to pro forma FRE of $(3.1) million for the six months ended June 30, 2009. The increase in both comparative periods was due primarily to an increase in overall capital markets transaction activity resulting from an improvement in the capital markets environment from the prior period as well as the continued buildout of this business.

ENI in the capital markets and principal activities segment was $265.8 million for the quarter ended June 30, 2010, a decrease of $124.3 million or 31.9% compared to pro forma ENI of $390.1 million for the quarter ended June 30, 2009. The decrease was due primarily to lower levels of net unrealized appreciation of KKR’s principal investments when compared to the prior period.

ENI in the capital markets and principal activities segment was $730.5 million for the six months ended June 30, 2010, an increase of $327.4 million or 81.2% compared to pro forma ENI of $403.1 million for the six months ended June 30, 2009. The increase was due primarily to higher levels of net unrealized appreciation of KKR’s principal investments when compared to the prior period.

CAPITAL AND LIQUIDITY

As of June 30, 2010, KKR had an available cash balance of $508.1 million and $314.1 million of outstanding debt obligations. As of June 30, 2010, KKR’s availability for further borrowings was approximately $1.6 billion (which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of June 30, 2010).

KKR recently received an A rating from Fitch and an A- rating from Standard & Poor’s, in each case with a stable outlook.

As of June 30, 2010, KKR’s portion of total uncalled commitments to its investment funds was $1,070.8 million, consisting of the following (amounts in thousands):

		Commitments
Private Markets
2006 Fund		$	414,634
European III Fund			384,080
Asian Fund			171,254
E2 Investors (Annex Fund)			29,295
Natural Resources I			7,500
Other Private Markets Commitments			348
Total Private Markets Commitments			1,007,111
Public Markets
Mezzanine Fund			45,000
Capital Solutions Vehicles			18,700
Total Public Markets Commitments			63,700
Total Uncalled Commitments		$	1,070,811

DISTRIBUTION

A distribution of $0.08 per common unit will be paid on September 8, 2010 to unitholders of record as of the close of business on August 24, 2010.

SUBSEQUENT EVENTS

KKR has elected not to proceed with the proposed public offering of $500 million in KKR common units and has applied to withdraw the related registration statement with the U.S. Securities and Exchange Commission.

CONFERENCE CALL

A conference call to discuss KKR’s financial results will be on held Tuesday, August 10, 2010 at 10:00 AM EDT. The conference call may be accessed by dialing (888) 661-5167 (U.S. callers) or +1 (913) 981-5520 (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 Investor Relations section of KKR’s website at http://www.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (888) 203-1112 (U.S. callers) and +1 (719) 457-0820 (non-U.S. callers) / pass code 4833378, beginning approximately two hours after the broadcast.

From time to time we may use our Web site as a channel of distribution of material company information. Financial and other important information regarding the Company is routinely posted on and accessible at the Investor Relations section for KKR at www.kkr.com. In addition, you may automatically receive email alerts and other information about us by enrolling your email by visiting the “Email Alerts” area in KKR’s Investment Relations section.

ABOUT KKR

Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global alternative asset manager with $54.4 billion in assets under management as of June 30, 2010. With over 600 people and 14 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 investors through its client relationships and capital markets platforms. KKR is publicly traded on the New York Stock Exchange (NYSE: KKR). 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 them. 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 assets under management, fee paying assets under management, fee related earnings, economic net income, committed dollars invested, uncalled commitments 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 risk that the anticipated benefits of the business combination with KKR & Co. (Guernsey) L.P. may not be achieved; the general volatility of the capital markets; changes in KKR’s business strategy; 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 Registration Statement on Form S-1 (Reg. No. 333-165414) and other filings with the SEC, which are available at www.sec.gov.

* * * * *

KKR
CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (GAAP BASIS – UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
				Quarter Ended						Six Months Ended
				June 30, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Revenues
	Fees			$	87,070		$	51,482		$	193,101		$	90,552
Expenses
	Employee Compensation and Benefits				348,621			47,907			714,152			93,449
	Occupancy and Related Charges				9,510			9,781			19,195			18,666
	General, Administrative and Other				58,046			28,477			135,770			65,880
	Fund Expenses				14,409			11,557			24,777			24,485
		Total Expenses			430,586			97,722			893,894			202,480
Investment Income (Loss)
	Net Gains (Losses) from Investment Activities				1,031,568			2,218,980			3,318,121			1,498,131
	Dividend Income				147,373			76,942			590,280			77,642
	Interest Income				56,152			31,780			104,455			58,862
	Interest Expense				(10,134)			(20,092)			(23,961)			(42,370)
		Total Investment Income (Loss)			1,224,959			2,307,610			3,988,895			1,592,265
Income (Loss) Before Taxes					881,443			2,261,370			3,288,102			1,480,337
Income Taxes					31,283			159			44,735			1,690
Net Income (Loss)					850,160			2,261,211			3,243,367			1,478,647
Less: Net Income (Loss) Attributable to
	Noncontrolling Interests in Consolidated Entities				676,816			1,895,385			2,663,946			1,167,404
Less: Net Income (Loss) Attributable to
	Noncontrolling Interests Held by KKR Holdings L.P.				143,437			–			435,678			–
		Net Income (Loss) Attributable to KKR & Co. L.P.		$	29,907		$	365,826		$	143,743		$	311,243
Net Income Attributable to KKR & Co. L.P. Per Common Unit (a)
	Basic			$	0.15					$	0.70
	Diluted (b)			$	0.15					$	0.70
Weighted Average Common Units
	Basic				204,902,226						204,902,226
	Diluted (b)				204,902,226						204,902,226

(a) Prior to the Business Combination, KKR’s business was conducted through a large number of entities as to which there was no single holding entity and no single capital structure upon which to calculate historical earnings per common unit information. Accordingly, earnings per common unit information has not been presented for historical periods prior to the Business Combination.

(b) For the quarter and six months ended June 30, 2010, 478,105,194 of KKR Holdings 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
RECONCILIATION OF TOTAL REPORTABLE SEGMENTS FEE RELATED EARNINGS AND ECONOMIC NET INCOME
TO NET INCOME ATTRIBUTABLE TO KKR & CO L.P. (GAAP BASIS – UNAUDITED)
(Amounts in thousands)
					Quarter Ended				Six Months Ended
					June 30, 2010				June 30, 2010
Total reportable segments fee related earnings					$	63,336			$	153,725
Investment income						370,589				955,380
Less: Income attributable to noncontrolling interests						(874	)			(1,250	)
Economic net income (loss)						433,051				1,107,855
Income taxes						(31,283	)			(44,735	)
Amortization of intangibles and other, net						(1,341	)			(3,857	)
Non-cash equity based charges						(227,083	)			(479,842	)
Allocation to noncontrolling										–
	interests held by KKR Holdings L.P.					(143,437	)			(435,678	)
Net income attributable to KKR & Co. L.P.					$	29,907			$	143,743

					Quarter Ended				Six Months Ended
					June 30, 2009 (a)				June 30, 2009 (a)
Total pro forma reportable segments fee related earnings					$	53,265			$	92,917
Investment income						560,788				523,950
Less: Income attributable to noncontrolling interests						(566	)			(873	)
Pro forma economic net income (loss)						613,487				615,994
Allocation to carry pool						22,741				22,433
Carry allocated to former KKR principals						38,144				29,262
Income on capital invested by or on behalf of KKR principals prior to completion of the Business Combination						38,734				14,836
Economic interests associated with the KKR 1996 Fund						36,889				26,569
Elimination of management fees paid by KPE prior to completion of Business Combination						9,409				17,641
Financial results of KPE						(388,753	)			(404,334	)
Certain compensation adjustments						(4,251	)			(8,502	)
Income attributable to noncontrolling interests						532				928
Total actual economic net income (loss)					$	366,932			$	314,827
Income taxes						(159	)			(1,690	)
Amortization of intangibles and other, net						(947	)			(1,894	)
Net income attributable to KKR & Co. L.P.					$	365,826			$	311,243

(a) The 2009 segment financial information is presented on a pro forma basis to give effect to the Business Combination and related transactions as if they were completed on January 1, 2009 whereas the 2009 GAAP financial information is presented on an actual basis. Accordingly, the reconciliations of segment financial information to GAAP financial information for the 2009 periods is presented in two parts: (i) a reconciliation of 2009 pro forma segment financial information to 2009 actual segment financial information, and (ii) a reconciliation of 2009 actual segment financial information to 2009 actual GAAP information.

KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands)
						Quarter Ended												Six Months Ended
						Actual				Actual				Pro Forma*				Actual				Pro Forma*
						June 30, 2010				March 31, 2010				June 30, 2009				June 30, 2010				June 30, 2009
Fees
	Management and incentive fees:
		Management fees				$	110,669			$	111,029			$	109,019			$	221,698			$	216,657
		Incentive fees					8,350				12,500				–				20,850				–
			Management and incentive fees				119,019				123,529				109,019				242,548				216,657
	Monitoring and transaction fees:
		Monitoring fees					20,512				22,532				20,954				43,044				42,914
		Transaction fees					37,441				55,534				14,376				92,975				14,567
		Fee credits					(15,278	)			(14,267	)			(8,794	)			(29,545	)			(10,516	)
			Net monitoring and transaction fees				42,675				63,799				26,536				106,474				46,965
	Total fees						161,694				187,328				135,555				349,022				263,622
Expenses
	Employee compensation and benefits						49,431				52,253				38,684				101,684				78,705
	Other operating expenses						48,927				44,686				43,606				93,613				92,000
	Total expenses						98,358				96,939				82,290				195,297				170,705
Fee Related Earnings							63,336				90,389				53,265				153,725				92,917
Investment income (loss)
	Gross carried interest						229,494				323,211				195,213				552,705				145,070
	Less: allocation to KKR carry pool						(96,029	)			(99,382	)			(27,606	)			(195,411	)			(28,303	)
	Less: management fee refunds						(17,907	)			(83,740	)			–				(101,647	)			–
		Net carried interest					115,558				140,089				167,607				255,647				116,767
	Other investment income (loss)						255,031				444,702				393,181				699,733				407,183
		Total investment income (loss)					370,589				584,791				560,788				955,380				523,950
Income (Loss) before noncontrolling interests in Income of consolidated entities							433,925				675,180				614,053				1,109,105				616,867
Income (Loss) attributable to noncontrolling interests							874				376				566				1,250				873
Economic Net Income (Loss)						$	433,051			$	674,804			$	613,487			$	1,107,855			$	615,994
Assets Under Management						$	54,398,300			$	54,708,700			$	46,865,800			$	54,398,300			$	46,865,800
Fee Paying Assets Under Management						$	41,643,400			$	42,528,900			$	41,994,700			$	41,643,400			$	41,994,700
Committed Dollars Invested						$	1,113,200			$	1,142,700			$	562,900			$	2,255,900			$	580,900
Uncalled Commitments						$	13,264,200			$	14,234,800			$	14,695,766			$	13,264,200			$	14,695,766
* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
						Quarter Ended												Six Months Ended
						Actual				Actual				Pro Forma				Actual				Pro Forma
						June 30, 2010				March 31, 2010				June 30, 2009				June 30, 2010				June 30, 2009
Fees
	Management and incentive fees:
		Management fees				$	97,046			$	98,160			$	97,089			$	195,206			$	192,698
		Incentive fees					–				–				–				–				–
			Management and incentive fees				97,046				98,160				97,089				195,206				192,698
	Monitoring and transaction fees:
		Monitoring fees					20,512				22,532				20,954				43,044				42,914
		Transaction fees					20,128				25,114				10,400				45,242				10,400
		Fee credits					(13,872	)			(10,077	)			(8,794	)			(23,949	)			(10,516	)
			Net monitoring and transaction fees				26,768				37,569				22,560				64,337				42,798
	Total fees						123,814				135,729				119,649				259,543				235,496
Expenses
	Employee compensation and benefits						38,463				40,841				30,811				79,304				63,430
	Other operating expenses						43,237				38,671				37,498				81,908				78,678
	Total expenses						81,700				79,512				68,309				161,212				142,108
Fee Related Earnings							42,114				56,217				51,340				98,331				93,388
Investment income (loss)
	Gross carried interest						228,413				322,840				195,213				551,253				145,070
	Less: allocation to KKR carry pool						(95,597	)			(99,233	)			(27,606	)			(194,830	)			(28,303	)
	Less: management fee refunds						(17,907	)			(83,740	)			–				(101,647	)			–
		Net carried interest					114,909				139,867				167,607				254,776				116,767
	Other investment income (loss)						(1,462	)			(2,594	)			4,520				(4,056	)			3,089
		Total investment income (loss)					113,447				137,273				172,127				250,720				119,856
Income (Loss) before noncontrolling interests in Income of consolidated entities							155,561				193,490				223,467				349,051				213,244
Income (Loss) attributable to noncontrolling interests							436				(250	)			513				186				933
Economic Net Income (Loss)						$	155,125			$	193,740			$	222,954			$	348,865			$	212,311
Assets Under Management						$	41,031,100			$	40,943,100			$	33,686,100			$	41,031,100			$	33,686,100
Fee Paying Assets Under Management						$	35,317,500			$	35,901,900			$	36,813,800			$	35,317,500			$	36,813,800
Committed Dollars Invested						$	1,055,500			$	995,500			$	562,900			$	2,051,000			$	580,900
Uncalled Commitments						$	11,901,100			$	12,844,300			$	14,695,766			$	11,901,100			$	14,695,766
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
						Quarter Ended												Six Months Ended
						Actual				Actual				Pro Forma				Actual				Pro Forma
						June 30, 2010				March 31, 2010				June 30, 2009				June 30, 2010				June 30, 2009
Fees
	Management and incentive fees:
		Management fees				$	13,623			$	12,869			$	11,930			$	26,492			$	23,959
		Incentive fees					8,350				12,500				–				20,850				–
			Management and incentive fees				21,973				25,369				11,930				47,342				23,959
	Monitoring and transaction fees:
		Monitoring fees					–				–				–				–				–
		Transaction fees					2,330				5,823				–				8,153				–
		Fee credits					(1,406	)			(4,190	)			–				(5,596	)			–
			Net monitoring and transaction fees				924				1,633				–				2,557				–
	Total fees						22,897				27,002				11,930				49,899				23,959
Expenses
	Employee compensation and benefits						7,474				7,142				5,426				14,616				10,579
	Other operating expenses						3,673				4,165				4,603				7,838				10,724
	Total expenses						11,147				11,307				10,029				22,454				21,303
Fee Related Earnings							11,750				15,695				1,901				27,445				2,656
Investment income (loss)
	Gross carried interest						1,081				371				–				1,452				–
	Less: allocation to KKR carry pool						(432	)			(149	)			–				(581	)			–
	Less: management fee refunds						–				–				–				–				–
		Net carried interest					649				222				–				871				–
	Other investment income (loss)						(126	)			508				(1,411	)			382				(2,071	)
		Total investment income (loss)					523				730				(1,411	)			1,253				(2,071	)
Income (Loss) before noncontrolling interests in Income of consolidated entities							12,273				16,425				490				28,698				585
Income (Loss) attributable to noncontrolling interests							110				145				19				255				27
Economic Net Income (Loss)						$	12,163			$	16,280			$	471			$	28,443			$	558
Assets Under Management						$	13,367,200			$	13,765,600			$	13,179,700			$	13,367,200			$	13,179,700
Fee Paying Assets Under Management						$	6,325,900			$	6,627,000			$	5,180,900			$	6,325,900			$	5,180,900
Committed Dollars Invested						$	57,700			$	147,200			$	–			$	204,900			$	–
Uncalled Commitments						$	1,363,100			$	1,390,500			$	–			$	1,363,100			$	–
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)
(Amounts in thousands)
						Quarter Ended									Six Months Ended
						Actual			Actual			Pro Forma			Actual			Pro Forma
						June 30, 2010			March 31, 2010			June 30, 2009			June 30, 2010			June 30, 2009
Fees
	Management and incentive fees:
		Management fees				$	–		$	–		$	–		$	–		$	–
		Incentive fees					–			–			–			–			–
			Management and incentive fees				–			–			–			–			–
	Monitoring and transaction fees:
		Monitoring fees					–			–			–			–			–
		Transaction fees					14,983			24,597			3,976			39,580			4,167
		Fee credits					–			–			–			–			–
			Net monitoring and transaction fees				14,983			24,597			3,976			39,580			4,167
	Total fees						14,983			24,597			3,976			39,580			4,167
Expenses
	Employee compensation and benefits						3,494			4,270			2,447			7,764			4,696
	Other operating expenses						2,017			1,850			1,505			3,867			2,598
	Total expenses						5,511			6,120			3,952			11,631			7,294
Fee Related Earnings							9,472			18,477			24			27,949			(3,127	)
Investment income (loss)
	Gross carried interest						–			–			–			–			–
	Less: allocation to KKR carry pool						–			–			–			–			–
	Less: management fee refunds						–			–			–			–			–
		Net carried interest					–			–			–			–			–
	Other investment income (loss)						256,619			446,788			390,072			703,407			406,165
		Total investment income (loss)					256,619			446,788			390,072			703,407			406,165
Income (Loss) before noncontrolling interests in Income of consolidated entities							266,091			465,265			390,096			731,356			403,038
Income (Loss) attributable to noncontrolling interests							328			481			34			809			(87	)
Economic Net Income (Loss)						$	265,763		$	464,784		$	390,062		$	730,547		$	403,125
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS – ACTUAL (UNAUDITED)
Quarter Ended June 30, 2010
(Amounts in thousands)
							Private Markets Segment				Public Markets Segment				Capital Markets and Principal Activities Segment			Total Reportable Segments
Fees
	Management and incentive fees:
		Management fees					$	97,046			$	13,623			$	–		$	110,669
		Incentive fees						–				8,350			$	–			8,350
			Management and incentive fees					97,046				21,973				–			119,019
	Monitoring and transaction fees:
		Monitoring fees						20,512				–				–			20,512
		Transaction fees						20,128				2,330				14,983			37,441
		Fee credits						(13,872	)			(1,406	)			–			(15,278	)
			Net monitoring and transaction fees					26,768				924				14,983			42,675
	Total fees							123,814				22,897				14,983			161,694
Expenses
	Employee compensation and benefits							38,463				7,474				3,494			49,431
	Other operating expenses							43,237				3,673				2,017			48,927
	Total expenses							81,700				11,147				5,511			98,358
Fee Related Earnings								42,114				11,750				9,472			63,336
Investment income (loss)
	Gross carried interest							228,413				1,081				–			229,494
	Less: allocation to KKR carry pool							(95,597	)			(432	)			–			(96,029	)
	Less: management fee refunds							(17,907	)			–				–			(17,907	)
		Net carried interest						114,909				649				–			115,558
	Other investment income (loss)							(1,462	)			(126	)			256,619			255,031
		Total investment income (loss)						113,447				523				256,619			370,589
Income (Loss) before noncontrolling interests in Income of consolidated entities								155,561				12,273				266,091			433,925
Income (Loss) attributable to noncontrolling interests								436				110				328			874
Economic Net Income (Loss)							$	155,125			$	12,163			$	265,763		$	433,051
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS – ACTUAL (UNAUDITED)
Quarter Ended March 31, 2010
(Amounts in thousands)
							Private Markets Segment				Public Markets Segment				Capital Markets and Principal Activities Segment			Total Reportable Segments
Fees
	Management and incentive fees:
		Management fees					$	98,160			$	12,869			$	–		$	111,029
		Incentive fees						–				12,500				–			12,500
			Management and incentive fees					98,160				25,369				–			123,529
	Monitoring and transaction fees:
		Monitoring fees						22,532				–				–			22,532
		Transaction fees						25,114				5,823				24,597			55,534
		Fee credits						(10,077	)			(4,190	)			–			(14,267	)
			Net monitoring and transaction fees					37,569				1,633				24,597			63,799
	Total fees							135,729				27,002				24,597			187,328
Expenses
	Employee compensation and benefits							40,841				7,142				4,270			52,253
	Other operating expenses							38,671				4,165				1,850			44,686
	Total expenses							79,512				11,307				6,120			96,939
Fee Related Earnings								56,217				15,695				18,477			90,389
Investment income (loss)
	Gross carried interest							322,840				371				–			323,211
	Less: allocation to KKR carry pool							(99,233	)			(149	)			–			(99,382	)
	Less: management fee refunds							(83,740	)			–				–			(83,740	)
		Net carried interest						139,867				222				–			140,089
	Other investment income (loss)							(2,594	)			508				446,788			444,702
		Total investment income (loss)						137,273				730				446,788			584,791
Income (Loss) before noncontrolling interests in Income of consolidated entities								193,490				16,425				465,265			675,180
Income (Loss) attributable to noncontrolling interests								(250	)			145				481			376
Economic Net Income (Loss)							$	193,740			$	16,280			$	464,784		$	674,804
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS – PRO FORMA (UNAUDITED)
Quarter Ended June 30, 2009
(Amounts in thousands)
							Private Markets Segment				Public Markets Segment				Capital Markets and Principal Activities Segment			Total Reportable Segments
Fees
	Management and incentive fees:
		Management fees					$	97,089			$	11,930			$	–		$	109,019
		Incentive fees						–				–				–			–
			Management and incentive fees					97,089				11,930				–			109,019
	Monitoring and transaction fees:
		Monitoring fees						20,954				–				–			20,954
		Transaction fees						10,400				–				3,976			14,376
		Fee credits						(8,794	)			–				–			(8,794	)
			Net monitoring and transaction fees					22,560				–				3,976			26,536
	Total fees							119,649				11,930				3,976			135,555
Expenses
	Employee compensation and benefits							30,811				5,426				2,447			38,684
	Other operating expenses							37,498				4,603				1,505			43,606
	Total expenses							68,309				10,029				3,952			82,290
Fee Related Earnings								51,340				1,901				24			53,265
Investment income (loss)
	Gross carried interest							195,213				–				–			195,213
	Less: allocation to KKR carry pool							(27,606	)			–				–			(27,606	)
	Less: management fee refunds							–				–				–			–
		Net carried interest						167,607				–				–			167,607
	Other investment income (loss)							4,520				(1,411	)			390,072			393,181
		Total investment income (loss)						172,127				(1,411	)			390,072			560,788
Income (Loss) before noncontrolling interests in Income of consolidated entities								223,467				490				390,096			614,053
Income (Loss) attributable to noncontrolling interests								513				19				34			566
Economic Net Income (Loss)							$	222,954			$	471			$	390,062		$	613,487
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS – ACTUAL (UNAUDITED)
Six Months Ended June 30, 2010
(Amounts in thousands)
							Private Markets Segment				Public Markets Segment				Capital Markets and Principal Activities Segment			Total Reportable Segments
Fees
	Management and incentive fees:
		Management fees					$	195,206			$	26,492			$	–		$	221,698
		Incentive fees						–				20,850				–			20,850
			Management and incentive fees					195,206				47,342				–			242,548
	Monitoring and transaction fees:
		Monitoring fees						43,044				–				–			43,044
		Transaction fees						45,242				8,153				39,580			92,975
		Fee credits						(23,949	)			(5,596	)			–			(29,545	)
			Net monitoring and transaction fees					64,337				2,557				39,580			106,474
	Total fees							259,543				49,899				39,580			349,022
Expenses
	Employee compensation and benefits							79,304				14,616				7,764			101,684
	Other operating expenses							81,908				7,838				3,867			93,613
	Total expenses							161,212				22,454				11,631			195,297
Fee Related Earnings								98,331				27,445				27,949			153,725
Investment income (loss)
	Gross carried interest							551,253				1,452				–			552,705
	Less: allocation to KKR carry pool							(194,830	)			(581	)			–			(195,411	)
	Less: management fee refunds							(101,647	)			–				–			(101,647	)
		Net carried interest						254,776				871				–			255,647
	Other investment income (loss)							(4,056	)			382				703,407			699,733
		Total investment income (loss)						250,720				1,253				703,407			955,380
Income (Loss) before noncontrolling interests in Income of consolidated entities								349,051				28,698				731,356			1,109,105
Income (Loss) attributable to noncontrolling interests								186				255				809			1,250
Economic Net Income (Loss)							$	348,865			$	28,443			$	730,547		$	1,107,855
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS – PRO FORMA (UNAUDITED)
Six Months Ended June 30, 2009
(Amounts in thousands)
							Private Markets Segment				Public Markets Segment				Capital Markets and Principal Activities Segment				Total Reportable Segments
Fees
	Management and incentive fees:
		Management fees					$	192,698			$	23,959			$	–			$	216,657
		Incentive fees						–				–				–				–
			Management and incentive fees					192,698				23,959				–				216,657
	Monitoring and transaction fees:
		Monitoring fees						42,914				–				–				42,914
		Transaction fees						10,400				–				4,167				14,567
		Fee credits						(10,516	)			–				–				(10,516	)
			Net monitoring and transaction fees					42,798				–				4,167				46,965
	Total fees							235,496				23,959				4,167				263,622
Expenses
	Employee compensation and benefits							63,430				10,579				4,696				78,705
	Other operating expenses							78,678				10,724				2,598				92,000
	Total expenses							142,108				21,303				7,294				170,705
Fee Related Earnings								93,388				2,656				(3,127	)			92,917
Investment income (loss)
	Gross carried interest							145,070				–				–				145,070
	Less: allocation to KKR carry pool							(28,303	)			–				–				(28,303	)
	Less: management fee refunds							–				–				–				–
		Net carried interest						116,767				–				–				116,767
	Other investment income (loss)							3,089				(2,071	)			406,165				407,183
		Total investment income (loss)						119,856				(2,071	)			406,165				523,950
Income (Loss) before noncontrolling interests in Income of consolidated entities								213,244				585				403,038				616,867
Income (Loss) attributable to noncontrolling interests								933				27				(87	)			873
Economic Net Income (Loss)							$	212,311			$	558			$	403,125			$	615,994
See notes to KKR’s unaudited reportable segments on page 23 of this press release.

KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)
		As of June 30, 2010
		Private Markets Segment				Public Markets Segment			Capital Markets and Principal Activities Segment					Total Reportable Segments
Cash and cash equivalents		$	159,131			$	13,844		$	335,151				$	508,126
Investments			–				–			4,450,147		(a)			4,450,147
Unrealized carry			360,520				872			–					361,392
Other assets			124,223				56,066			30,621					210,910
Total assets		$	643,874			$	70,782		$	4,815,919				$	5,530,575
Debt obligations		$	–			$	–		$	314,051				$	314,051
Other liabilities			123,604				11,570			31,426					166,600
Total liabilities			123,604				11,570			345,477					480,651
Noncontrolling interests			(1,057	)			222			19,414					18,579
Partners’ capital		$	521,327			$	58,990		$	4,451,028				$	5,031,345
Book value per unit (b)		$	0.76			$	0.09		$	6.52				$	7.37

		As of December 31, 2009
		Private Markets Segment			Public Markets Segment			Capital Markets and Principal Activities Segment			Total Reportable Segments
Cash and cash equivalents		$	51,015		$	9,089		$	496,554		$	556,658
Investments			–			–			4,108,359			4,108,359
Unrealized carry			156,149			–			–			156,149
Other assets			154,964			53,319			55,219			263,502
Total assets		$	362,128		$	62,408		$	4,660,132		$	5,084,668
Debt obligations		$	–		$	–		$	733,697		$	733,697
Other liabilities			84,936			12,300			85,802			183,038
Total liabilities			84,936			12,300			819,499			916,735
Noncontrolling interests			130			527			14,392			15,049
Partners’ capital		$	277,062		$	49,581		$	3,826,241		$	4,152,884
Book value per unit (b)		$	0.41		$	0.07		$	5.60		$	6.08
(a) See Capital Markets and Principal Activities segment schedule of investments that follows in this press release
(b) Book value per unit is based on 683,007,420 units on a fully diluted basis giving effect to the common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.

KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT – SCHEDULE OF INVESTMENTS
(Amounts in thousands, except percentage amounts)
			As of June 30, 2010
								Fair Value as
						Fair		a Percentage
Investment			Cost			Value		of Investments
Private Equity Investments:
Co-investments in portfolio companies of private equity funds:
Dollar General Corporation		$	183,332		$	577,233		13.0	%
HCA Inc.			201,444			455,037		10.2
Alliance Boots GmbH.			301,352			268,913		6.0
The Nielsen Company B.V.			156,839			219,574		4.9
Biomet, Inc.			151,443			151,443		3.4
NXP B.V.			250,000			125,000		2.8
U.S. Foodservice, Inc.			100,000			90,000		2.0
First Data Corporation			135,258			81,155		1.8
Energy Future Holdings Corp.			200,000			60,000		1.3
ProSiebenSat.1 Media AG			226,913			42,592		1.0
KION Group GmbH.			128,058			26,975		0.6
PagesJaunes Groupe S.A.			235,201			25,681		0.6
Capmark Financial Group Inc.			137,321			—		—
			2,407,161			2,123,603		47.7
Private equity funds:
KKR 2006 Fund L.P.			1,176,414			1,239,622		27.9
KKR Millennium Fund L.P.			197,664			178,721		4.0
KKR European Fund, Limited Partnership			160,690			165,796		3.7
KKR European Fund III, Limited Partnership			156,810			152,976		3.4
KKR Asian Fund L.P.			123,382			140,372		3.2
KKR European Fund II, Limited Partnership			96,387			68,161		1.5
KKR E2 Investors, L.P.			10,961			12,723		0.3
			1,922,308			1,958,371		44.0
Other Investments			411,179			368,173		8.3
Total Investments		$	4,740,648		$	4,450,147		100.0	%

KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT – SCHEDULE OF INVESTMENTS (CONTINUED)
(Amounts in thousands, except percentage amounts)
			As of June 30, 2010
								Fair Value as
						Fair		a Percentage
Investment			Cost			Value		of Investments
Significant Aggregate Investments: (a)
Dollar General Corporation		$	264,880		$	798,952		18.0	%
HCA Inc.			260,920			574,420		12.9
Alliance Boots GmbH			443,114			407,054		9.1
Biomet, Inc.			256,358			256,358		5.8
The Nielsen Company B.V.			172,841			240,698		5.4
			1,398,113			2,277,482		51.2
Other Portfolio Companies (b)			2,931,356			1,804,492		40.5
Other Investments			411,179			368,173		8.3
Total Investments		$	4,740,648		$	4,450,147		100.0	%
Investments by Geography:
North America		$	2,559,013		$	2,995,747		67.3	%
Europe			1,771,306			1,029,109		23.1
Asia Pacific			410,329			425,291		9.6
Total Investments		$	4,740,648		$	4,450,147		100.0	%
Investments by Industry:
Healthcare		$	1,019,662		$	1,290,725		29.0	%
Retail			600,909			1,072,761		24.1
Financial Services			901,688			569,798		12.8
Media/Telecom			763,570			409,289		9.2
Technology			467,304			372,520		8.4
Industrial			338,061			268,244		6.0
Energy			456,923			267,954		6.0
Consumer Products			171,290			177,822		4.0
Other			21,241			21,034		0.5
Total Investments		$	4,740,648		$	4,450,147		100.0	%
(a) The significant aggregate private equity investments include the co-investment in the underlying portfolio company and the limited partner and/or general partner interests equal to the pro rata share of KKR’s private equity fund investment with fair values in excess of 5% of the Capital Markets and Principal Activities Segment investments balance as of June 30, 2010.
(b) Other portfolio companies include aggregate private equity investments in portfolio companies with individual fair values less than 5% of the Capital Markets and Principal Activities Segment investments balance as of June 30, 2010.

KKR
ASSETS UNDER MANAGEMENT AND FEE PAYING ASSETS UNDER MANAGEMENT
(Amounts in thousands)
Assets Under Management
				Private Markets Segment				Public Markets Segment				Total Reportable Segments
	AUM as of March 31, 2010			$	40,943,100			$	13,765,600				54,708,700
		New Capital Raised			184,900				144,700				329,600
		Distributions			(811,800	)			(512,500	)			(1,324,300	)
		Foreign Exchange			(299,400	)			–				(299,400	)
		Change in Value			1,014,300				(30,600	)			983,700
		AUM as of June 30, 2010		$	41,031,100			$	13,367,200			$	54,398,300
Fee Paying Assets Under Management
				Private Markets Segment				Public Markets Segment				Total Reportable Segments
	FPAUM as of March 31, 2010			$	35,901,900			$	6,627,000			$	42,528,900
		New Capital Raised			184,500				144,300				328,800
		Distributions			(110,300	)			(512,500	)			(622,800	)
		Foreign Exchange			(660,100	)			–				(660,100	)
		Change in Value			1,500				67,100				68,600
		FPAUM as of June 30, 2010		$	35,317,500			$	6,325,900			$	41,643,400

KKR
INVESTMENT VEHICLE SUMMARY (UNAUDITED)
As of June 30, 2010
(Amounts in millions, except percentages)
		Investment Period				Amount
Private Markets		Commencement Date		End Date		Commitment			Uncalled Commitments			Percentage Committed by General Partner		Invested			Realized			Remaining Cost			Fair Value
Traditional Funds
E2 Investors (Annex Fund)		8/2009		11/2011		$	523.8		$	389.0		4.3%		$	134.8		$	–		$	134.8		$	155.1
European Fund III		3/2008		3/2014			5,721.4			3,878.5		4.7%			1,842.9			–			1,842.9			1,723.2
Asian Fund		7/2007		7/2013			4,000.0			2,306.9		2.5%			1,693.1			–			1,693.1			1,988.5
2006 Fund		9/2006		9/2012			17,642.2			4,636.7		2.1%			13,005.5			711.7			12,303.2			13,885.9
European Fund II		11/2005		10/2008			5,750.8			–		2.1%			5,750.8			658.3			5,439.1			3,598.9
Millennium Fund		12/2002		12/2008			6,000.0			–		2.5%			6,000.0			5,523.1			4,385.3			5,509.6
European Fund		12/1999		12/2005			3,085.4			–		3.2%			3,085.4			6,214.3			565.6			1,929.3
Total Traditional Funds							42,723.6			11,211.1					31,512.5			13,107.4			26,364.0			28,790.5
Co-Investment and Other
Co-Investment Vehicles		Various		Various			1,847.7			432.5		Various			1,415.2			189.9			1,357.7			1,874.5
Natural Resources I		3/2010		(1)			257.5			257.5		2.9%			–			–			–			–
Total Co-Investment and Other							2,105.2			690.0					1,415.2			189.9			1,357.7			1,874.5
Private Markets Total							44,828.8			11,901.1					32,927.7			13,297.3			27,721.7			30,665.0
Public Markets
Capital Solutions Vehicles		Various		Various			1,187.7			934.5		Various			253.2			–			253.2			264.7
Mezzanine Fund		3/2010		3/2015			428.6			428.6		10.5%			–			–			–			–
Public Markets Total							1,616.3			1,363.1					253.2			–			253.2			264.7
Total						$	46,445.1		$	13,264.2				$	33,180.9		$	13,297.3		$	27,974.9		$	30,929.7
(1) Third anniversary of the first acquisition.

KKR
DISTRIBUTION CALCULATION
(Amounts in thousands, except unit and per unit amounts)
		Quarter Ended
		June 30, 2010
FRE		$	63,336
Realized cash carry			16,343
Less: local income taxes			(1,720	)
Less: noncontrolling interests			(874	)
Gross distributable earnings			77,085
Earnings attributable to KKR & Co. L.P. (30%)			23,126
Less: estimated current corporate income taxes			(6,990	)
Plus: tax distribution			–
Net cash available for distribution			16,136
Outstanding KKR & Co. L.P. units			204,902,226
Distribution per KKR & Co. L.P. unit		$	0.08

During the second quarter of 2010, $0.0290 of U.S. federal tax withholding per KKR common unit was withheld on behalf of KKR unitholders by various entities through which KKR operates its businesses as required under U.S. tax laws. This amount will be reported as a distribution in each KKR unitholder’s 2010 Schedule K-1 for U.S. federal tax reporting purposes.

Prior to July 15, 2010, distributions made to KKR & Co. (Guernsey) L.P. (a Guernsey limited partnership formerly listed on Euronext Amsterdam), by KKR Management Holdings Corp. (a Delaware corporation) were subject to U.S. federal tax withholding at a rate of 30%. By July 15, 2010, KKR & Co. L.P. (a Delaware limited partnership) was listed on the New York Stock Exchange in replacement of KKR & Co. (Guernsey) L.P. as the relevant publicly traded partnership of KKR’s unitholders, and KKR & Co. L.P. became the successor of KKR & Co. (Guernsey) L.P. for U.S. federal tax reporting purposes. Because distributions between U.S. entities generally do not give rise to a withholding obligation, distributions by KKR Management Holdings Corp. to KKR & Co. L.P. are not subject to U.S. federal tax withholding.

To the extent the distribution for the quarter ended June 30, 2010 by KKR & Co. L.P. to its unitholders is allocable to non-U.S. persons for U.S. federal tax reporting purposes, withholding is expected to be imposed by the intermediaries through which those unitholders own their KKR & Co. L.P. units based upon the Qualified Notice to be issued by KKR & Co. L.P. prior to the time of such distribution.

DISTRIBUTION POLICY

For the purposes of KKR’s distribution policy, its distributions are expected to consist of an amount initially consisting 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) certain tax distributions, if any. This amount is expected to be reduced by (i) corporate and applicable local taxes if any, (ii) noncontrolling 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 unitholder’s actual U.S. or non-U.S. tax liability.

Notes to the Unaudited Reportable Segments

The reportable segments are presented prior to giving effect to the allocation of income between KKR & Co. L.P. and KKR Holdings L.P. and as such represents the business in total. KKR’s allocable portion of FRE and ENI would be calculated as approximately 30% of the amounts presented less applicable income taxes.

The FRE and ENI previously reported for periods prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination, which include items such as:

 

• the exclusion of approximately 40% of the carry allocated to KKR principals pursuant to its carry pool;
• the exclusion of carry allocated to former KKR principals;
• the exclusion of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Business Combination and any returns thereon;
• the exclusion of the economic interests associated with the KKR 1996 Fund;
• the elimination of management fees paid by KKR & Co. (Guernsey) L.P. formerly known as KKR Private Equity Investors, L.P. (“KPE”), prior to the Business Combination, to KKR’s management companies;
• the inclusion of the financial results of KPE; and
• certain compensation adjustments including: (a) the exclusion of bonuses earned by certain of KKR’s principals which will not be borne by public investors and (b) the inclusion of salaries for KKR’s senior principals.

 

Given the significance of these adjustments, the comparisons to all periods prior to October 1, 2009 in this press release are on a pro forma basis giving effect to the adjustments above. For a further discussion of adjustments related to the Business Combination please refer to KKR’s registration statement on Form S-1 (Registration No. 333-165414), which is available at the SEC’s website at www.sec.gov.

Key performance measures used in evaluating KKR’s reportable business segments are summarized below. These measures are used by management for its segments in making resource deployment and other operational decisions.

Fee related earnings (“FRE”) is comprised of segment operating revenues, less segment operating expenses. The components of FRE on a segment basis differ from the equivalent U.S. GAAP amounts on a combined basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of expenses of consolidated funds; (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; (vi) the exclusion of certain reimbursable expenses and (vii) the exclusion of certain non-recurring items.

Economic net income (“ENI”) is a measure of profitability for KKR’s reportable segments and is comprised of: (i) FRE; plus (ii) segment investment income, 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 on a U.S. GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income relating to noncontrolling interests; and (iii) the exclusion of income taxes.

Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. 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; and (iv) the value of outstanding structured finance vehicles. You should note that KKR’s calculation of AUM may differ from the calculations of other asset managers and, as a result, its measurements of AUM may not be comparable to similar measures presented by other asset managers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in the agreements governing the investment funds, vehicles or accounts that it manages.

Notes to KKR’s Unaudited Reportable Segments (Continued)

Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. 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 during a given period. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR.

Uncalled commitments represent 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.

The following should be considered when reviewing KKR’s reportable segments:

Fee Credits require KKR to share a portion of any monitoring and transaction fees received from portfolio companies with limited partners in certain of its investment funds. Fee credits exclude fees that are not attributable to a fund’s investment in a portfolio company and generally amount to 80% of monitoring and transaction fees after fund related expenses are recovered.

KKR Carry Pool represents a portion of the carried interest earned in relation to certain of KKR’s active and future investment funds and co-investment vehicles that will be allocated to its principals, other professionals and selected other individuals.

Management Fee Refunds represent 20% of any cash management fees earned from limited partners in the event that certain of KKR’s investment funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, carried interest is reduced, not to exceed 20% of management fees earned.

Noncontrolling interests represent economic interests that will (i) allocate to a former principal an aggregate of 1% of profits and losses of its management companies until a future date and (ii) allocate to a third party investor an aggregate of 2% of the equity in its capital markets business.

SOURCE: KKR & Co. L.P.

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

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