EX-99.1 2 a51277524ex99_1.htm EXHIBIT 99.1

Exhibit 99.1

KKR & Co. L.P. Reports Fourth Quarter and Full Year 2015 Results

NEW YORK--(BUSINESS WIRE)--February 11, 2016--KKR & Co. L.P. (NYSE:KKR) today reported GAAP net income for the fourth quarter and full year 2015 of $32.3 million and $488.5 million, respectively.

For the full year 2015, After-tax Economic Net Income and After-tax Economic Net Income per adjusted unit were $1.0 billion and $1.21, respectively, compared to $1.5 billion and $1.84 for the full year 2014. After-tax Cash Earnings and After-tax Cash Earnings per adjusted unit eligible for distribution were $1.5 billion and $1.78, respectively, for the full year 2015 compared to $1.9 billion and $2.47 for the full year 2014. Return on equity and cash return on equity were 10% and 14%, respectively, for 2015.

For the quarter ended December 31, 2015, After-tax Economic Net Income and After-tax Economic Net Income per adjusted unit were $70.5 million and $0.08, respectively, compared to $46.0 million and $0.05 for the quarter ended December 31, 2014. After-tax Cash Earnings and After-tax Cash Earnings per adjusted unit eligible for distribution were $168.6 million and $0.21, respectively, for the quarter ended December 31, 2015 compared to $361.2 million and $0.44 for the quarter ended December 31, 2014.

Annual Highlights

  • For the full year 2015, KKR's private equity portfolio appreciated 14.2% and the investments on KKR's balance sheet appreciated 3.3% compared to the total return for the S&P 500 and MSCI World indices of 1.4% and -0.3%, respectively.
  • Book value per adjusted unit was $11.78 as of December 31, 2015 compared to $12.07 per adjusted unit as of December 31, 2014.
  • Assets Under Management and Fee Paying Assets Under Management were $120 billion and $92 billion, respectively, up 12% and 7% compared to December 31, 2014. (1)
  • Since the announcement of KKR's unit repurchase program on October 27, 2015, KKR has repurchased and canceled 17.5 million outstanding common units for $270 million. In addition, 1.7 million granted equity awards were canceled for approximately $27 million to satisfy tax obligations in connection with their vesting. In total, 19.2 million common units have been retired on a fully-diluted basis over this period.
  • KKR's regular distribution per common unit of $0.16 was declared for the quarter ended December 31, 2015.

___________________________

“KKR delivered strong investment results in 2015 as our private equity portfolio appreciated 14.2%, outperforming the S&P 500 by over 1,200 basis points despite challenging markets,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “We capitalized on attractive opportunities across our segments in the fourth quarter including record deployment within our Credit and Infrastructure businesses. Our ability to take advantage of volatile market environments stems from the long-dated capital entrusted to us by a growing base of limited partners across our diverse set of strategies. With $20 billion of new capital raised in 2015, we ended the year with record dry powder and over $10 billion of cash and investments on our balance sheet to invest as attractive opportunities arise.”

 
Note: Certain financial measures, including ENI, After-tax ENI, After-tax cash earnings, 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 C and D for a reconciliation of such measures to financial results prepared in accordance with GAAP.
 
(1) AUM and FPAUM reflect the inclusion of KKR's pro rata portion of AUM or FPAUM, as applicable, managed by other asset managers in which KKR holds a minority stake. In addition, AUM reflects the inclusion of capital commitments for which KKR is eligible to receive fees or carried interest upon deployment of capital. See "Notes to Reportable Segments" for the definitions of AUM and FPAUM.
 

GAAP RESULTS

GAAP net income (loss) for the quarter and year ended December 31, 2015, included net income (loss) attributable to KKR & Co. L.P. of $32.3 million and $488.5 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit of $0.07 and $1.01, respectively, on a diluted basis. For the quarter and year ended December 31, 2014, net income (loss) attributable to KKR & Co. L.P. was $(0.6) million and $477.6 million, respectively, and net income (loss) attributable to KKR & Co. L.P. per common unit was $0.00 and $1.16, respectively, on a diluted basis. The increase in both comparable periods was primarily due to an increase in KKR & Co. L.P.'s ownership percentage in the KKR business, and for the quarter ended December 31, 2015, an increase in income before taxes.

TOTAL REPORTABLE SEGMENT RESULTS

KEY FINANCIAL METRICS (UNAUDITED)
(Amounts in millions, except per adjusted unit amounts)
     
 
Quarter Ended Year Ended

December 31,
2015

 

December 31,
2014

   

%
Change

December 31,
2015

 

December 31,
2014

   

%
Change

Cash Earnings

 
Management, Monitoring and Transaction Fees, Net $ 337 $ 244 $ 1,142 $ 1,099
Realized Performance Income (Loss) 215 210 1,047 1,242
Realized Investment Income (Loss) (48 )

(1)

182   547   (1) 902  
Total Cash Segment Revenues 504 636 (21 )% 2,736 3,243 (16 )%
Less: Total Cash Segment Expenses and Other 297 250 1,142 1,180
Less: Corporate and Local Income Taxes Paid 38   25   141   131  
After-tax Cash Earnings $ 169  

(1)

$ 361  

(53

)%

 

$ 1,453  

(1)

$ 1,932   (25 )%
 

After-tax Cash Earnings Per Adjusted Units
Eligible for Distribution

$ 0.21 $ 0.44 (52 )% $ 1.78 $ 2.47 (28 )%
 
Quarter Ended Year Ended

Economic Net Income (Loss)

December 31,
2015

December 31,
2014

%
Change

December 31,
2015

December 31,
2014

%
Change

 
Management, Monitoring and Transaction Fees, Net $ 337 $ 244 $ 1,142 $ 1,099
Performance Income (Loss) 327 256 1,210 1,352
Investment Income (Loss) (176 ) (143 ) 154   505  
Total Segment Revenues 488 357 37 % 2,506 2,956 (15 )%
Less: Total Segment Expenses and Other 343   270   1,208   1,229  
Economic Net Income (Loss) 145 87 67 % 1,298 1,727 (25 )%
Less: Equity-based Compensation 38   37   186   159  
Pre-tax Economic Net Income (Loss) 107 50 114 % 1,112 1,568 (29 )%
Less: Provision for Income Tax (Benefit) 36   4   84   94  
After-tax Economic Net Income (Loss) $ 71   $ 46   54 % $ 1,028   $ 1,474   (30 )%
 

After-tax Economic Net Income (Loss) Per
Adjusted Unit

$ 0.08 $ 0.05 60 % $ 1.21 $ 1.84 (34 )%
 

Book Value Per Unit

December 31, 2015 December 31, 2014
 
Book Value Per Outstanding Adjusted Unit $ 12.18 $ 12.48 (2 )%
 
Book Value Per Adjusted Unit $ 11.78 $ 12.07 (2 )%
 
Year Ended
December 31, 2015 December 31, 2014
Return on Equity 10% 16%
 
Cash Return on Equity 14% 21%
 

(1) Amount includes a $100.0 million realized loss on a segment basis relating to the write off of an investment which had previously been marked at zero on an unrealized basis. Accordingly, this write off had no impact on our Economic Net Income during the fourth quarter and full year of 2015.

 

TOTAL REPORTABLE SEGMENTS

Total segment revenues were $487.6 million for the quarter ended December 31, 2015, an increase of $130.1 million, compared to total segment revenues of $357.5 million for the quarter ended December 31, 2014. The increase was principally attributable to (i) a non-recurring increase in monitoring fees in our Private Markets segment, which increased segment revenues by $55.5 million net of associated fee credits, (ii) an increase in transaction fees primarily reflecting larger transaction sizes in both our Private Markets segment and Capital Markets segment and (iii) higher performance income from increased carried interest primarily reflecting more favorable performance in our carry earning Private Markets funds. These increases were partially offset by lower total investment income driven primarily by a lower level of net interest and dividends in the current period.

Total segment revenues were $2,505.9 million for the year ended December 31, 2015, a decrease of $449.7 million, compared to total segment revenues of $2,955.6 million for the year ended December 31, 2014. The decrease was principally attributable to (i) lower total investment income driven primarily by a lower level of realized and unrealized investment income which represented a net loss in the current year and (ii) lower performance income during the year reflecting a lower level of net carried interest in our Public Markets segment as well as a decrease in incentive fees.

ENI was $144.7 million for the quarter ended December 31, 2015, an increase of $58.1 million, compared to ENI of $86.6 million for the quarter ended December 31, 2014. The increase was primarily attributable to higher total segment revenues as described above partially offset by an increase in cash compensation and benefits resulting from the higher levels of management, monitoring and transaction fees.

ENI was $1,298.0 million for the year ended December 31, 2015, a decrease of $429.2 million, compared to ENI of $1,727.2 million for the year ended December 31, 2014. The decrease was primarily attributable to lower total segment revenues as described above.

AUM(1) was $119.5 billion as of December 31, 2015, an increase of $7.1 billion, compared to AUM of $112.4 billion as of September 30, 2015. The increase was primarily attributable to (i) an increase in our pro rata portion of AUM managed by other asset managers in which KKR holds a minority stake, primarily reflecting our long-term strategic partnership with Marshall Wace, (ii) an increase in the fair value of our private equity portfolio (our private equity portfolio appreciated by 4.8% and 14.2% for the quarter and year ended December 31, 2015, respectively) and (iii) new capital raised primarily in Special Situations Fund II, our hedge-fund-of-funds platform and our CLOs. These increases were partially offset by distributions to limited partners of our private equity funds arising from realizations and distributions and redemptions in our alternative credit funds and other separately managed accounts in our Public Markets segment.

FPAUM(1) was $91.7 billion as of December 31, 2015, an increase of $5.8 billion, compared to FPAUM of $85.9 billion as of September 30, 2015. The increase was primarily attributable to (i) an increase in our pro rata portion of FPAUM managed by other asset managers in which KKR holds a minority stake, primarily reflecting our long-term strategic partnership with Marshall Wace, (ii) new capital raised primarily in our hedge-fund-of-funds platform and our CLOs and (iii) capital invested across various investment strategies for which KKR was not eligible to receive a fee until deployment of such capital. These increases were partially offset by distributions to limited partners of our private equity funds arising from realizations and distributions and redemptions in our alternative credit funds and other separately managed accounts in our Public Markets segment.

CAPITAL AND LIQUIDITY

As of December 31, 2015, KKR had $1.3 billion of cash and short-term investments and $3.0 billion of outstanding debt and preferred share obligations on a total reportable segment basis. This includes KFN’s debt obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares of $373.8 million, which are non-recourse to KKR beyond the assets of KFN. As of December 31, 2015, KKR had a $1.0 billion revolving credit facility, which was undrawn. In addition, KKR has a $500.0 million revolving credit facility for use in its capital markets business, which was undrawn as of December 31, 2015.

As of December 31, 2015, KKR’s portion of total uncalled commitments to its investment funds was $1.4 billion. See Exhibit B for details.

DISTRIBUTION

A distribution of $0.16 per common unit has been declared, which will be paid on March 8, 2016 to unitholders of record as of the close of business on February 22, 2016. Under KKR's distribution policy, KKR intends to make equal quarterly distributions to holders of common units in an amount of $0.16 per common unit per quarter.

The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all, that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR or that any particular distribution policy will be maintained.

 
(1) AUM and FPAUM reflect the inclusion of KKR's pro rata portion of AUM or FPAUM, as applicable, managed by other asset managers in which KKR holds a minority stake. In addition, AUM reflects the inclusion of capital commitments for which KKR is eligible to receive fees or carried interest upon deployment of capital. See "Notes to Reportable Segments" for the definitions of AUM and FPAUM.
 

SUPPLEMENTAL INFORMATION

A slide presentation containing supplemental commentary about the Company's financial results for the fiscal quarter and year ended December 31, 2015 may be accessed through the KKR Investor Relations section of the KKR website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. The presentation will be referenced on the conference call discussed below.

CONFERENCE CALL

A conference call to discuss KKR's financial results will be held on Thursday, February 11, 2016 at 10:00 a.m. ET. 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 Investor Center 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) or +1 (404) 537-3406 (non-U.S. callers), pass code 38906590, 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 Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.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 Investor Center on the website.

2015 SCHEDULE K-1 DISTRIBUTION

The 2015 K-1 tax information is expected to be available by the end of March 2016. For the quickest access to your K-1, we encourage you to register for e-mail notification and electronic K-1 delivery at our dedicated website https://www.taxpackagesupport.com/kkr. Unitholders who do not register for electronic delivery will receive a hard copy K-1 with delivery expected in April 2016.

ABOUT KKR

KKR is a leading global investment firm that manages investments across multiple asset classes including private equity, energy, infrastructure, real estate, credit and hedge funds. KKR aims to generate attractive investment returns by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation at the asset level. KKR invests its own capital alongside its partners' capital and brings opportunities to others through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. L.P. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements, including the statements with respect to the strategic partnership with Marshall Wace LLP, the declaration and payment of distributions on common units of KKR and the timing, manner and volume of repurchases of common units pursuant to a repurchase program. 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, 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, ENI, ENI after taxes, after-tax cash earnings, equity invested and syndicated capital, uncalled commitments, cash and short-term investments, net realized investment income 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 acquisitions or strategic partnerships; 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. All forward looking statements speak only as of the date hereof. 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, 2014, filed with the SEC on February 27, 2015, quarterly reports on Form 10-Q for subsequent quarters 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, 2015     December 31, 2014 December 31, 2015     December 31, 2014
Revenues
Fees and Other $ 307,923   $ 212,944   $ 1,043,768   $ 1,110,008  
Expenses
Compensation and Benefits 306,942 253,661 1,180,591 1,263,852
Occupancy and Related Charges 17,295 15,596 65,683 62,564
General, Administrative and Other 200,858   363,904   624,951   869,651  
Total Expenses 525,095   633,161   1,871,225   2,196,067  
Investment Income (Loss)
Net Gains (Losses) from Investment Activities 1,197,879 535,943 4,672,627 4,778,232
Dividend Income 140,397 205,875 850,527 1,174,501
Interest Income 320,569 271,083 1,219,197 909,207
Interest Expense (170,282 ) (119,846 ) (573,226 ) (317,192 )
Total Investment Income (Loss) 1,488,563   893,055   6,169,125   6,544,748  
 
Income (Loss) Before Taxes 1,271,391 472,838 5,341,668 5,458,689
 
Income Tax (Benefit) 27,341   6,524   66,636   63,669  
 
Net Income (Loss) 1,244,050 466,314 5,275,032 5,395,020
 
Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests 7,371 (4,707 ) (4,512 ) (3,341 )
Net Income (Loss) Attributable to
Noncontrolling Interests and Appropriated Capital 1,204,422 471,604 4,791,062 4,920,750
       
Net Income (Loss) Attributable to KKR & Co. L.P. $ 32,257   $ (583 ) $ 488,482   $ 477,611  
                         
Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ 0.07 $ 0.00 $ 1.09 $ 1.25
Diluted (a) $ 0.07 $ 0.00 $ 1.01 $ 1.16
Weighted Average Common Units Outstanding
Basic 461,374,013 431,432,521 448,884,185 381,092,394
Diluted (a)     489,704,787       458,982,859       482,699,194       412,049,275  
 
 
(a) KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships.
 

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, 2015     September 30, 2015     December 31, 2014 December 31, 2015     December 31, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 195,072 $ 181,780 $ 178,064 $ 732,033 $ 726,043
Monitoring Fees 94,128 24,964 38,738 264,643 135,160
Transaction Fees 107,320 61,437 53,292 364,994 459,677
Fee Credits (59,375 ) (23,293 ) (25,728 ) (219,620 ) (222,037 )
Total Management, Monitoring and Transaction Fees, Net 337,145   244,888   244,366   1,142,050   1,098,843  
Performance Income
Realized Incentive Fees 7,209 880 11,301 19,647 47,807
Realized Carried Interest 207,211 265,291 198,597 1,027,154 1,193,661
Unrealized Carried Interest 112,388   (428,493 ) 46,120   163,545   110,133  
Total Performance Income 326,808   (162,322 ) 256,018   1,210,346   1,351,601  
Investment Income (Loss)
Net Realized Gains (Losses) (81,343 ) 61,439 62,219 337,023 628,403
Net Unrealized Gains (Losses) (128,765 ) (384,460 ) (324,416 ) (391,962 ) (396,425 )
Total Realized and Unrealized (210,108 ) (323,021 ) (262,197 ) (54,939 ) 231,978  
Interest Income and Dividends 85,907 101,318 165,856 411,536 408,084
Interest Expense (52,174 ) (52,681 ) (46,531 ) (203,085 ) (134,909 )
Net Interest and Dividends 33,733   48,637   119,325   208,451   273,175  
Total Investment Income (Loss) (176,375 ) (274,384 ) (142,872 ) 153,512   505,153  
Total Segment Revenues 487,578   (191,818 ) 357,512   2,505,908   2,955,597  
Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits 121,036 87,680 86,035 409,992 380,581
Realized Performance Income Compensation 85,766 106,469 83,960 418,718 496,589
Unrealized Performance Income Compensation 45,351   (170,621 ) 21,508   66,927   49,459  
Total Compensation and Benefits 252,153 23,528 191,503 895,637 926,629
Occupancy and Related Charges 16,666 15,720 14,383 62,657 57,787
Other Operating Expenses 68,978   52,081   61,685   233,618   229,069  
Total Segment Expenses 337,797   91,329   267,571   1,191,912   1,213,485  
Income (Loss) attributable to noncontrolling interests 5,100   2,902   3,349   16,007   14,946  
Economic Net Income (Loss) (a) 144,681 (286,049 ) 86,592 1,297,989 1,727,166
Equity-based Compensation 37,376   48,252   36,607   186,346   158,927  
Pre-tax Economic Net Income (Loss) (b) 107,305 (334,301 ) 49,985 1,111,643 1,568,239
Provision for Income Tax (Benefit) 36,797   (19,505 ) 3,951   83,363   94,223  
After-tax Economic Net Income (Loss) (c) $ 70,508   $ (314,796 ) $ 46,034   $ 1,028,280   $ 1,474,016  
 
After-tax Economic Net Income (Loss) Per Adjusted Unit $ 0.08 $ (0.37 ) $ 0.05 $ 1.21 $ 1.84
Weighted Average Adjusted Units (Fully Diluted Basis) (a) 852,446,702 851,704,303 838,067,975 851,099,066 800,247,988
                               
Assets Under Management $ 119,544,300 $ 112,414,500 $ 107,119,300 $ 119,544,300 $ 107,119,300
Fee Paying Assets Under Management $ 91,720,500 $ 85,861,800 $ 85,857,200 $ 91,720,500 $ 85,857,200
Equity Invested and Syndicated Capital $ 2,192,100 $ 1,462,900 $ 2,343,900 $ 8,611,500 $ 12,818,100
Uncalled Commitments     $ 29,457,100       $ 26,892,300       $ 21,113,700       $ 29,457,100       $ 21,113,700  
                               
Fee Related Earnings (d)     $ 180,848       $ 127,523       $ 126,416       $ 610,496       $ 631,344  
 
 
(a)   See definitions for Economic Net Income (Loss) and adjusted units under "Notes to Reportable Segments."
(b) Represents Economic Net Income (Loss) after equity-based compensation.
(c) Represents Economic Net Income (Loss) after equity-based compensation and income taxes.
(d) See Exhibit A "Other Information" for the definition and calculation of Fee Related Earnings.
 

KKR
SCHEDULE OF SEGMENT REVENUES AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands)
             
PRIVATE MARKETS
       
Quarter Ended Year Ended
December 31, 2015     September 30, 2015     December 31, 2014 December 31, 2015     December 31, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 122,703 $ 118,250 $ 111,186 $ 465,575 $ 453,210
Monitoring Fees 94,128 24,964 38,738 264,643 135,160
Transaction Fees 40,000 17,732 8,480 144,652 214,612
Fee Credits (51,567 ) (20,266 ) (16,054 ) (195,025 ) (198,680 )
Total Management, Monitoring and Transaction Fees, Net 205,264   140,680   142,350   679,845   604,302  
Performance Income
Realized Incentive Fees
Realized Carried Interest 207,211 265,291 198,597 1,018,201 1,159,011
Unrealized Carried Interest 137,438   (394,126 ) 34,070   182,628   70,058  
Total Performance Income 344,649   (128,835 ) 232,667   1,200,829   1,229,069  
Investment Income (Loss)
Net Realized Gains (Losses)
Net Unrealized Gains (Losses)
Total Realized and Unrealized
Interest Income and Dividends
Interest Expense
Net Interest and Dividends
Total Investment Income (Loss)
Total Segment Revenues $ 549,913   $ 11,845   $ 375,017   $ 1,880,674   $ 1,833,371  
                               
Assets Under Management $ 66,028,600 $ 66,776,600 $ 64,611,300 $ 66,028,600 $ 64,611,300
Fee Paying Assets Under Management $ 45,307,400 $ 46,399,800 $ 47,262,500 $ 45,307,400 $ 47,262,500
Equity Invested $ 1,355,300 $ 867,000 $ 828,000 $ 5,527,900 $ 7,223,400
Uncalled Commitments     $ 22,766,300       $ 21,610,400       $ 18,272,400       $ 22,766,300       $ 18,272,400  
 
PUBLIC MARKETS
       
Quarter Ended Year Ended
December 31, 2015     September 30, 2015     December 31, 2014 December 31, 2015     December 31, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ 72,369 $ 63,530 $ 66,878 $ 266,458 $ 272,833
Monitoring Fees
Transaction Fees 8,183 3,386 10,511 28,872 27,145
Fee Credits (7,808 ) (3,027 ) (9,674 ) (24,595 ) (23,357 )
Total Management, Monitoring and Transaction Fees, Net 72,744   63,889   67,715   270,735   276,621  
Performance Income
Realized Incentive Fees 7,209 880 11,301 19,647 47,807
Realized Carried Interest 8,953 34,650
Unrealized Carried Interest (25,050 ) (34,367 ) 12,050   (19,083 ) 40,075  
Total Performance Income (17,841 ) (33,487 ) 23,351   9,517   122,532  
Investment Income (Loss)
Net Realized Gains (Losses)
Net Unrealized Gains (Losses)
Total Realized and Unrealized
Interest Income and Dividends
Interest Expense                    
Net Interest and Dividends
Total Investment Income (Loss)
Total Segment Revenues $ 54,903   $ 30,402   $ 91,066   $ 280,252   $ 399,153  
                               
Assets Under Management $ 53,515,700 $ 45,637,900 $ 42,508,000 $ 53,515,700 $ 42,508,000
Fee Paying Assets Under Management $ 46,413,100 $ 39,462,000 $ 38,594,700 $ 46,413,100 $ 38,594,700
Equity Invested $ 661,200 $ 583,400 $ 1,126,700 $ 2,214,700 $ 3,027,400
Uncalled Commitments $ 6,690,800 $ 5,281,900 $ 2,841,300 $ 6,690,800 $ 2,841,300
Gross Dollars Invested     $ 1,742,600       $ 1,181,400       $ 1,545,600       $ 5,244,900       $ 4,425,600  
 

KKR
SCHEDULE OF SEGMENT REVENUES AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands)
                   
CAPITAL MARKETS
           
Quarter Ended Year Ended
December 31, 2015     September 30, 2015     December 31, 2014 December 31, 2015 December 31, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ $ $ $ $
Monitoring Fees
Transaction Fees 59,137 40,319 34,301 191,470 217,920
Fee Credits        
Total Management, Monitoring and Transaction Fees, Net 59,137   40,319   34,301   191,470   217,920
Performance Income
Realized Incentive Fees
Realized Carried Interest
Unrealized Carried Interest        
Total Performance Income        
Investment Income (Loss)
Net Realized Gains (Losses)
Net Unrealized Gains (Losses)        
Total Realized and Unrealized        
Interest Income and Dividends
Interest Expense        
Net Interest and Dividends        
Total Investment Income (Loss)        
Total Segment Revenues $ 59,137   $ 40,319   $ 34,301   $ 191,470   $ 217,920
                               
Syndicated Capital     $ 175,600       $ 12,500       $ 389,200       $ 868,900       $ 2,567,300
 
PRINCIPAL ACTIVITIES
           
Quarter Ended Year Ended
December 31, 2015     September 30, 2015     December 31, 2014 December 31, 2015 December 31, 2014
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees $ $ $ $ $
Monitoring Fees
Transaction Fees
Fee Credits                
Total Management, Monitoring and Transaction Fees, Net                
Performance Income
Realized Incentive Fees
Realized Carried Interest
Unrealized Carried Interest                  
Total Performance Income                
Investment Income (Loss)
Net Realized Gains (Losses)

(81,343

) 61,439 62,219 337,023 628,403
Net Unrealized Gains (Losses) (128,765 ) (384,460 ) (324,416 ) (391,962 ) (396,425 )
Total Realized and Unrealized (210,108 ) (323,021 ) (262,197 ) (54,939 ) 231,978  
Interest Income and Dividends 85,907 101,318 165,856 411,536 408,084
Interest Expense (52,174 ) (52,681 ) (46,531 ) (203,085 ) (134,909 )
Net Interest and Dividends 33,733   48,637   119,325   208,451   273,175  
Total Investment Income (Loss) (176,375 ) (274,384 ) (142,872 ) 153,512   505,153  
Total Segment Revenues $ (176,375 ) $ (274,384 ) $ (142,872 ) $ 153,512   $ 505,153  
 

KKR
BALANCE SHEET
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
                     
           
 
As of As of
December 31, 2015 December 31, 2014
Cash and Short-term Investments $ 1,287,650 $ 1,121,385
Investments 8,958,089 (a) 9,807,606
Unrealized Carry 1,415,478 (b) 1,283,022 (b)
Other Assets 1,613,139 999,654
Corporate Real Estate 154,942    
Total Assets $ 13,429,298   $ 13,211,667  
 
Debt Obligations - KKR (ex-KFN) $ 2,000,000 $ 1,527,000
Debt Obligations - KFN 657,310 657,310
Preferred Shares - KFN 373,750 373,750
Other Liabilities 291,537   413,808  
Total Liabilities 3,322,597   2,971,868  
 
Noncontrolling Interests 127,472 121,574
   
Book Value $ 9,979,229   $ 10,118,225  
 
 
Book Value Per Outstanding Adjusted Unit $ 12.18 $ 12.48
 
Book Value Per Adjusted Unit $ 11.78 $ 12.07
                     
 
(a) See schedule of investments that follows on the next page.
 
As of As of

(b) Unrealized Carry

December 31, 2015 December 31, 2014
Private Markets $ 1,340,556 $ 1,196,633
Public Markets 74,922   86,389  
Total $ 1,415,478   $ 1,283,022  
 

KKR
SCHEDULE OF INVESTMENTS*
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except percentage amounts)
       
   
As of December 31, 2015
       
Investments Cost Fair

Value

Fair Value as a

Percentage of

Total Investments

 
Private Equity Co-Investments $ 2,250,079 $ 3,036,805 33.9 %
Private Equity Funds 786,043   1,020,953   11.4 %
Private Equity Total 3,036,122   4,057,758   45.3 %
 
Energy 977,213 580,680 6.5 %
Real Estate 793,068 846,266 9.4 %
Infrastructure 183,347   191,181   2.1 %
Real Assets Total 1,953,628   1,618,127   18.0 %
 
 
Special Situations 894,344 788,123 8.8 %
Direct Lending 65,802 66,827 0.8 %
Mezzanine 63,559   64,090   0.7 %
Alternative Credit Total 1,023,705 919,040 10.3 %
CLOs (a) 1,330,450 921,509 10.3 %
Liquid Credit 189,280 184,825 2.1 %
Specialty Finance 297,756   234,467   2.6 %
Credit Total 2,841,191   2,259,841   25.3 %
 
 
Other 1,090,008 1,022,363 11.4 %
     
Total Investments $ 8,920,949   $ 8,958,089   100.0 %
 
                   
 
As of December 31, 2015
 
Significant Investments: (b) Cost Fair
Value
Fair Value as a
Percentage of
Total Investments

First Data Corporation (NYSE: FDC)

$ 1,061,332 $ 1,266,196 14.1 %

Walgreens Boots Alliance (NASDAQ: WBA)

222,533 748,688 8.4 %

WMI Holdings Corp. (NASDAQ: WMIH)

221,127 311,270 3.5 %

Oil & Gas Royalties Investment

118,640 173,800 1.9 %

HCA Holdings, Inc. (NYSE: HCA)

29,455   169,332   1.9 %
Total Significant Investments 1,653,087 2,669,286 29.8 %
 
Other Investments 7,267,862   6,288,803   70.2 %
Total Investments $ 8,920,949   $ 8,958,089   100.0 %
 
* Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
 
(a) Includes approximately $104.2 million of CLOs that are not held for investment purposes and are held at cost.

(b) The significant investments include the top five investments (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair market value as of December 31, 2015. The fairvalue figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

 

KKR
ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
         
Private

Markets

Segment

Public

Markets

Segment

Total

Reportable

Segments

First Quarter 2015

December 31, 2014 - As Reported $ 61,505,800 $ 37,106,700 $ 98,612,500
Net AUM of Strategic Partnerships (pro-rata based on ownership interest) 2,810,800 2,810,800
Capital Commitments Excluded from AUM ("Shadow AUM") 3,105,500 2,590,500 5,696,000
December 31, 2014 - As Adjusted $ 64,611,300 $ 42,508,000 $ 107,119,300
New Capital Raised 1,570,500 2,324,600 3,895,100
Distributions (2,967,000 ) (1,900,800 ) (c) (4,867,800 )
Net Changes in Fee Base of Certain Funds (a) (238,600 ) (238,600 )
Change in Value 2,009,500   (292,800 ) 1,716,700  
March 31, 2015 $ 65,224,300   $ 42,400,400   $ 107,624,700  
 

Second Quarter 2015

March 31, 2015 $ 65,224,300 $ 42,400,400 $ 107,624,700
New Capital Raised 3,468,900 4,374,700 7,843,600
Distributions (3,447,000 ) (1,485,400 ) (d) (4,932,400 )
Change in Value 3,294,100   642,700   3,936,800  
June 30, 2015 $ 68,540,300   $ 45,932,400   $ 114,472,700  
 

Third Quarter 2015

June 30, 2015 $ 68,540,300 $ 45,932,400 $ 114,472,700
New Capital Raised 1,583,800 2,444,700 4,028,500
Distributions (2,700,300 ) (1,861,300 ) (e) (4,561,600 )
Change in Value (647,200 ) (877,900 ) (1,525,100 )
September 30, 2015 $ 66,776,600   $ 45,637,900   $ 112,414,500  
 

Fourth Quarter 2015

September 30, 2015 $ 66,776,600 $ 45,637,900 $ 112,414,500
New Capital Raised 327,000 3,782,300 4,109,300
Acquisitions 6,010,800 (b) 6,010,800
Distributions (2,718,200 ) (1,713,900 ) (f) (4,432,100 )
Change in Value 1,643,200   (201,400 ) 1,441,800  
December 31, 2015 $ 66,028,600   $ 53,515,700   $ 119,544,300  
                   
 

Full Year 2015

December 31, 2014 - As Adjusted $ 64,611,300 $ 42,508,000 $ 107,119,300
New Capital Raised 6,950,200 12,926,300 19,876,500
Acquisitions 6,010,800 (b) 6,010,800
Distributions (11,832,500 ) (6,961,400 ) (g) (18,793,900 )
Net Changes in Fee Base of Certain Funds (a) (238,600 ) (238,600 )
Change in Value 6,299,600   (729,400 ) 5,570,200  
December 31, 2015 $ 66,028,600   $ 53,515,700   $ 119,544,300  
 

* For the periods reported, AUM reflects the inclusion of capital commitments for which we are eligible to receive fees or carried interest upon deployment of capital and the inclusion of KKR's pro rata portion of AUM managed by other asset managers in which KKR holds a minority stake.

 

(a) Represents the impact of certain funds entering their post-investment period.
(b) Represents KKR's pro rata portion of AUM managed by Marshall Wace.
(c) Includes $705.4 million of redemptions by fund investors.
(d) Includes $563.8 million of redemptions by fund investors.
(e) Includes $696.3 million of redemptions by fund investors.
(f) Includes $908.0 million of redemptions by fund investors.
(g) Includes $2,873.5 million of redemptions by fund investors.
 

KKR
FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)
         
Private

Markets

Segment

Public

Markets

Segment

Total

Reportable

Segments

First Quarter 2015

December 31, 2014 - As Reported $ 47,262,500 $ 35,783,900 $ 83,046,400
Net FPAUM of Strategic Partnerships (pro-rata based on ownership interest) 2,810,800 2,810,800
December 31, 2014 - As Adjusted $ 47,262,500 $ 38,594,700 $ 85,857,200
New Capital Raised 1,320,500 2,277,200 3,597,700
Distributions (961,100 ) (1,638,600 ) (c) (2,599,700 )
Net Changes in Fee Base of Certain Funds (a) (325,200 ) (325,200 )
Change in Value (460,000 ) (357,500 ) (817,500 )
March 31, 2015 $ 47,161,900   $ 38,550,600   $ 85,712,500  
 

Second Quarter 2015

March 31, 2015 $ 47,161,900 $ 38,550,600 $ 85,712,500
New Capital Raised 1,310,500 2,249,200 3,559,700
Distributions (1,723,600 ) (1,293,900 ) (d) (3,017,500 )
Change in Value 196,900   429,300   626,200  
June 30, 2015 $ 46,945,700   $ 39,935,200   $ 86,880,900  
 

Third Quarter 2015

June 30, 2015 $ 46,945,700 $ 39,935,200 $ 86,880,900
New Capital Raised 1,042,700 1,944,500 2,987,200
Distributions (1,648,300 ) (1,776,100 ) (e) (3,424,400 )
Change in Value 59,700   (641,600 ) (581,900 )
September 30, 2015 $ 46,399,800   $ 39,462,000   $ 85,861,800  
 

Fourth Quarter 2015

September 30, 2015 $ 46,399,800 $ 39,462,000 $ 85,861,800
New Capital Raised 222,400 2,741,500 2,963,900
Acquisitions 6,010,800 (b) 6,010,800
Distributions (1,212,200 ) (1,620,700 ) (f) (2,832,900 )
Change in Value (102,600 ) (180,500 ) (283,100 )
December 31, 2015 $ 45,307,400   $ 46,413,100   $ 91,720,500  
                   
 

Full Year 2015

December 31, 2014 - As Adjusted $ 47,262,500 $ 38,594,700 $ 85,857,200
New Capital Raised 3,896,100 9,212,400 13,108,500
Acquisitions 6,010,800 (b) 6,010,800
Distributions (5,545,200 ) (6,329,300 ) (g) (11,874,500 )
Net Changes in Fee Base of Certain Funds (a) (325,200 ) (325,200 )
Change in Value (306,000 ) (750,300 ) (1,056,300 )
December 31, 2015 $ 45,307,400   $ 46,413,100   $ 91,720,500  
 
 
* For the periods reported, FPAUM reflects the inclusion of KKR's pro rata portion of FPAUM managed by other asset managers in which KKR holds a minority stake.
 
(a) Represents the impact of certain funds entering their post-investment period.
(b) Represents KKR's pro rata portion of FPAUM managed by Marshall Wace.
(c) Includes $705.4 million of redemptions by fund investors.
(d) Includes $563.8 million of redemptions by fund investors.
(e) Includes $696.3 million of redemptions by fund investors.
(f) Includes $908.0 million of redemptions by fund investors.
(g) Includes $2,873.5 million of redemptions by fund investors.
 

KKR
INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED)
As of December 31, 2015
(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
European Fund IV (b) 12/2014 12/2020 $ 3,468.0 $ 3,307.1 5.7% $ 160.9 $ $ 160.9 $ 185.7
Asian Fund II (b) 4/2013 4/2019 5,825.0 3,979.3 1.3% 2,599.7 753.9 1,845.8 3,163.6
North America Fund XI (b) 9/2012 9/2018 8,718.4 3,704.0 2.9% 5,932.1 1,733.8 4,635.4 6,983.8
China Growth Fund 11/2010 11/2016 1,010.0 307.6 1.0% 702.4 283.4 544.4 713.4
E2 Investors (Annex Fund) 8/2009 11/2013 195.8 4.9% 195.8 195.7 18.1 10.3
European Fund III 3/2008 3/2014 6,121.8 812.1 4.6% 5,309.7 4,447.2 3,224.2 4,240.2
Asian Fund 7/2007 4/2013 3,983.3 129.5 2.5% 3,853.8 5,397.4 1,918.7 2,534.0
2006 Fund 9/2006 9/2012 17,642.2 525.6 2.1% 17,116.6 18,411.5 7,703.3 13,028.5
European Fund II 11/2005 10/2008 5,750.8 2.1% 5,750.8 6,611.1 825.0 2,003.2
Millennium Fund 12/2002 12/2008 6,000.0 2.5% 6,000.0 12,517.4 714.0 1,521.1
European Fund 12/1999 12/2005 3,085.4       3.2% 3,085.4     8,748.0         17.1
Total Private Equity Funds 61,800.7 12,765.2 50,707.2 59,099.4 21,589.8 34,400.9
 
Co-Investment Vehicles (b) Various Various 5,774.0 2,709.6 Various 3,137.4 2,511.0 2,118.0 2,865.8
                   
Total Private Equity 67,574.7     15,474.8   53,844.6     61,610.4     23,707.8     37,266.7
 
Real Assets
Energy Income and Growth Fund 9/2013 9/2018 1,974.2 1,142.6 12.8% 831.6 143.9 757.1 544.3
Natural Resources Fund Various Various 887.4 2.9 Various 884.5 96.6 809.9 200.1
Global Energy Opportunities (b) Various Various 1,026.4 808.7 Various 252.7 55.0 144.8 124.7
Global Infrastructure Investors (b) 9/2011 10/2014 1,039.9 100.9 4.8% 967.0 216.4 847.8 972.7
Global Infrastructure Investors II (b) 10/2014 10/2020 3,028.3 2,685.7 4.1% 346.5 8.9 338.9 354.0
Infrastructure Co-Investments Various Various 1,125.0 Various 1,125.0 377.9 1,124.4 1,520.1
Real Estate Partners Americas (b) 5/2013 12/2016 1,229.1 598.2 16.3% 777.5 314.5 630.5 740.7
Real Estate Partners Europe (b) 9/2015 (d) 591.3     591.3   10.9%            
Real Assets 10,901.6     5,930.3   5,184.8     1,213.2     4,653.4     4,456.6
 
Unallocated Commitments 1,361.2     1,361.2   Various            
 
Private Markets Total 79,837.5     22,766.3   59,029.4     62,823.6     28,361.2     41,723.3
 

Public Markets

Special Situations Fund 12/2012 1/2016 2,257.6 128.0 11.6% 2,129.6 257.6 2,129.6 2,205.6
Special Situations Fund II 12/2014 (c) 2,675.5 2,083.4 9.4% 592.1 592.1 452.4
Mezzanine Fund 3/2010 3/2015 1,022.8 150.6 4.4% 872.2 541.0 618.5 634.3
Lending Partners 12/2011 12/2014 460.2 90.5 15.2% 369.7 181.5 325.3 303.3
Lending Partners II 6/2014 6/2017 1,335.9 889.6 3.7% 446.3 26.4 446.3 475.7
Lending Partners Europe 3/2015 3/2018 780.1 763.6 5.2% 16.5 16.5 24.0
Other Alternative Credit Vehicles Various Various 5,157.2 2,585.1 Various 2,572.1 1,496.5 1,706.7 1,925.9
                   
Public Markets Total 13,689.3     6,690.8   6,998.5     2,503.0     5,835.0     6,021.2
 
Grand Total $ 93,526.8     $ 29,457.1   $ 66,027.9     $ 65,326.6     $ 34,196.2     $ 47,744.5
 

_____________________________________________________________________________________________________________________

(a)   Reflects investment vehicles for which KKR has the ability to earn carried interest.
(b) The “Invested” and “Realized” columns include the amounts of any realized investments that restored the unused capital commitments of the fund investors.
(c) Three years from final close.
(d) Four years from final close.
 

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.

Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. (including equity awards issued under the Equity Incentive Plan), KKR Holdings and other holders of securities exchangeable into common units of KKR & Co. L.P. 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, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for common units of KKR & Co. L.P.

After-tax cash earnings is used by management as a measure of the cash earnings of KKR. KKR believes this measure, which was formerly referred to as total distributable earnings, is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses). After-tax cash earnings excludes certain realized investment losses to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009.

Assets under management ("AUM") represent the assets managed by KKR or by its strategic partners from which KKR is entitled to receive fees or a carried interest (either currently or upon deployment of capital) 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 strategic partnerships. 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; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or carried interest; (iii) the fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs (excluding CLOs wholly-owned by KKR); (vi) KKR's pro-rata portion of the AUM managed by strategic partnerships in which KKR holds a minority ownership interest and (vi) the fair value of other assets managed by KKR. The pro-rata portion of the AUM managed by strategic partnerships is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. 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.

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 KKR’s investment portfolio, including carried interest, as well as KKR’s 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 KKR & Co. L.P. partners’ capital on a GAAP basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings.

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.

Cash return on equity measures the amount of cash income generated as a percentage of capital invested in KKR’s business. Cash return on equity is calculated by dividing Cash Earnings on a trailing twelve-month basis by the average book value during the period.

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 carried interest and related carry pool allocations and investment income. ENI is comprised of total segment revenues less total segment expenses and 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 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 non-cash equity-based charges and other non-cash compensation charges borne by KKR Holdings or incurred under the Equity Incentive Plan and other securities that are exchangeable for common units of KKR & Co. L.P.; (v) the exclusion of certain non-recurring items; (vi) the exclusion of investment income (loss) relating to noncontrolling interests; and (vii) the exclusion of income taxes.


Equity invested is the aggregate amount of equity capital that has 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 unitholders as it provides additional insight into KKR’s investments among its investment funds and carry-yielding co-investment vehicles and replaces committed dollars invested. 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’s investment funds, including investments made using investment financing arrangements.

Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority investments in subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.

Fee paying AUM ("FPAUM") represents only those assets under management of KKR or its strategic partners from which KKR receives management fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management 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 and commitments from which KKR does not receive a fee are excluded (i.e., assets and commitments with respect to which it receives only carried interest or is otherwise not currently receiving a fee) 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.

Gross dollars invested is the aggregate amount of capital that has been invested by all of KKR’s Public Markets investment vehicles in our private credit non-liquid strategies and is used as a measure of investment activity for a portion of KKR’s Public Markets segment in a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of capital across private credit non-liquid strategies for all the investment vehicles in the Public Markets segment. Such amounts include capital invested by fund investors and co-investors with respect to which KKR’s Public Markets business is entitled to a fee or carried interest.

Return on equity measures the amount of net income generated as a percentage of capital invested in KKR’s business. Return on equity is calculated by dividing After-tax Economic Net Income (Loss) on a trailing twelve-month basis by the average book value during the period.

Syndicated capital is generally the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in equity invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds. 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 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 to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.


KKR

EXHIBIT A

 
 
OTHER FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands)
                   
Quarter Ended Year Ended
December 31, 2015 September 30, 2015 December 31, 2014 December 31, 2015 December 31, 2014

Fee Related Earnings

Total Management, Monitoring and Transaction Fees, Net $ 337,145 $ 244,888 $ 244,366 $ 1,142,050 $ 1,098,843
Less: Cash Compensation and Benefits 121,036 87,680 86,035 409,992 380,581
Less: Occupancy and Related Charges 16,666 15,720 14,383 62,657 57,787
Less: Other Operating expenses 68,978 52,081 61,685 233,618 229,069
Plus: Expenses of Principal Activities Segment 50,383   38,116   44,153   174,713   199,938
Fee Related Earnings (a) 180,848 127,523 126,416 610,496 631,344
Plus: Net Interest and Dividends 33,733 48,637 119,325 208,451 273,175
Plus: Depreciation and Amortization 3,775 3,745 3,830 15,319 15,782
Plus: Core Interest Expense 29,516 30,429 27,050 116,027 88,002
Less: Expenses of Principal Activities Segment 50,383   38,116   44,153   174,713   199,938
Fee and Yield EBITDA (b) 197,489 172,218 232,468 775,580 808,365
Plus: Realized Performance Income, net 128,654 159,702 125,938 628,083 744,879
Plus: Net Realized Gains (Losses) (81,343 ) 61,439   62,219   337,023   628,403
Total EBITDA $ 244,800   $ 393,359   $ 420,625   $ 1,740,686   $ 2,181,647
 
 

Core Interest Expense

GAAP Interest Expense $ 170,282 $ 151,554 $ 119,846 $ 573,226 $ 317,192

Less: Interest expense related to debt obligations from investment financing arrangements

118,108   98,873   73,315   370,141   182,283
Segment Interest Expense 52,174 52,681 46,531 203,085 134,909
Less: Interest Expense related to debt obligations from KFN and other 22,658   22,252   19,481   87,058   46,907
Core Interest Expense (c) $ 29,516   $ 30,429   $ 27,050   $ 116,027   $ 88,002

________________________________________________________________________________________________________________________________________________________

(a)   Fee related earnings (“FRE”) is a measure of the operating earnings of KKR and its business segments before performance income, related performance income compensation and investment income. KKR believes this measure is useful to unitholders as it provides additional insight into the operating profitability of KKR's fee generating management companies and capital markets businesses.
 
(b) Fee and Yield EBITDA is used by management as another measure of the cash earnings of KKR and its business segments investment income. We believe this measure is also useful to unitholders as it provides insight into the amount of KKR’s cash earnings before the impact of interest expense, significant portions of which tend to be more recurring than realized carried interest and realized investment income from quarter to quarter.
 
(c) 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 investment funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN are non-recourse to KKR beyond the assets of KFN. KKR believes 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, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN.
 

KKR

EXHIBIT B

 
 
KKR'S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS (UNAUDITED)
(Amounts in thousands)
 
 
Uncalled

Commitments

Private Markets

European Fund IV $ 184,700
Energy Income and Growth Fund 147,100
Global Infrastructure Investors II 110,900
North America Fund XI 100,500
Real Estate Partners Americas 97,300
European Fund III 66,300
Real Estate Partners Europe 64,700
Asian Fund II 50,900
2006 Fund 22,700
Co-Investment Vehicles 69,600
Other Private Markets Funds 10,600
Total Private Markets Commitments 925,300
 

Public Markets

Special Situations Fund 14,900
Special Situations Fund II 195,100
Mezzanine Fund 6,500
Lending Partners 13,900
Lending Partners II 33,300
Lending Partners Europe 39,600
Other Alternative Credit Vehicles 125,200
Total Public Markets Commitments 428,500
 
Total Uncalled Commitments $ 1,353,800
 

KKR

EXHIBIT C

 
 
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT - BASIC (GAAP BASIS)
TO AFTER TAX ENI PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
 
Quarter Ended
December 31, 2015   September 30, 2015   December 31, 2014
 

Net income (loss) attributable to KKR & Co. L.P. per common unit
- Basic

$ 0.07   $ (0.42 ) $ 0.00  
Weighted Average Common Units Outstanding - Basic 461,374,013 452,165,697 431,432,521
Net income (loss) attributable to KKR & Co. L.P. 32,257 (190,588 ) (583 )
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

35,060 (166,078 ) (3,365 )
Plus: Non-cash equity-based charges 47,730 67,821 55,968
Plus: Amortization of intangibles and other, net 2,293 10,186 28,048
Plus: Income tax (benefit) 27,341   (7,390 ) 6,524  
Economic Net Income (Loss) 144,681 (286,049 ) 86,592

Less: Equity-based compensation associated with the KKR & Co. L.P.
2010 equity incentive plan

37,376   48,252   36,607  
Pre-tax Economic Net Income (Loss) 107,305 (334,301 ) 49,985
Less: Provision for income tax (benefit) 36,797   (19,505 ) 3,951  
After-tax Economic Net Income (Loss) 70,508 (314,796 ) 46,034
Weighted Average Adjusted Units 852,446,702   851,704,303   838,067,975  
After-tax Economic Net Income (Loss) Per Adjusted Unit $ 0.08   $ (0.37 ) $ 0.05  
 
 
Year Ended
December 31, 2015 December 31, 2014
 

Net income (loss) attributable to KKR & Co. L.P. per common unit
- Basic

$ 1.09   $ 1.25  
Weighted Average Common Units Outstanding - Basic 448,884,185 381,092,394
Net income (loss) attributable to KKR & Co. L.P. 488,482 477,611

Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.

433,693 585,135
Plus: Non-cash equity-based charges 261,579 310,403
Plus: Amortization of intangibles and other, net 47,599 290,348
Plus: Income tax (benefit) 66,636   63,669  
Economic Net Income (Loss) 1,297,989 1,727,166

Less: Equity-based compensation associated with the KKR & Co. L.P.
2010 equity incentive plan

186,346   158,927  
Pre-tax Economic Net Income (Loss) 1,111,643 1,568,239
Less: Provision for income tax (benefit) 83,363   94,223  
After-tax Economic Net Income (Loss) 1,028,280 1,474,016
Weighted Average Adjusted Units 851,099,066   800,247,988  
After-tax Economic Net Income (Loss) Per Adjusted Unit $ 1.21   $ 1.84  
 

KKR

EXHIBIT C (CONTINUED)

 
 
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS)

TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE AND YIELD EBITDA, AFTER TAX CASH EARNINGS AND
TOTAL EBITDA (UNAUDITED)

(Amounts in thousands)
 
Quarter Ended
December 31, 2015   September 30, 2015   December 31, 2014
Net income (loss) attributable to KKR & Co. L.P. $ 32,257 $ (190,588 ) $ (583 )
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

35,060 (166,078 ) (3,365 )
Plus: Non-cash equity-based charges 47,730 67,821 55,968
Plus: Amortization of intangibles and other, net 2,293 10,186 28,048
Plus: Income tax (benefit) 27,341   (7,390 ) 6,524  
Economic Net Income (Loss) 144,681 (286,049 ) 86,592
Plus: Income attributable to segment noncontrolling interests 5,100 2,902 3,349
Less: Total investment income (loss) (176,375 ) (274,384 ) (142,872 )
Less: Net performance income (loss) 195,691 (98,170 ) 150,550
Plus: Expenses of Principal Activities Segment 50,383   38,116   44,153  
Fee Related Earnings 180,848 127,523 126,416
Plus: Net interest and dividends 33,733 48,637 119,325
Plus: Depreciation and amortization 3,775 3,745 3,830
Plus: Core interest expense 29,516 30,429 27,050
Less: Expenses of Principal Activities Segment 50,383   38,116   44,153  
Fee and Yield EBITDA 197,489 172,218 232,468
Less: Depreciation and amortization 3,775 3,745 3,830
Less: Core interest expense 29,516 30,429 27,050
Plus: Realized performance income (loss), net 128,654 159,702 125,938
Plus: Net realized gains (losses) (81,343 ) 61,439 62,219
Less: Corporate and local income taxes paid 37,791 25,173 25,183
Less: Income attributable to segment noncontrolling interests 5,100   2,902   3,349  
After-tax Cash Earnings 168,618 331,110 361,213
Plus: Depreciation and amortization 3,775 3,745 3,830
Plus: Core interest expense 29,516 30,429 27,050
Plus: Corporate and local income taxes paid 37,791 25,173 25,183
Plus: Income attributable to segment noncontrolling interests 5,100   2,902   3,349  
Total EBITDA $ 244,800   $ 393,359   $ 420,625  
 
Year Ended
December 31, 2015 December 31, 2014
Net income (loss) attributable to KKR & Co. L.P. $ 488,482 $ 477,611
Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.

433,693 585,135
Plus: Non-cash equity-based charges 261,579 310,403
Plus: Amortization of intangibles and other, net 47,599 290,348
Plus: Income tax (benefit) 66,636   63,669  
Economic Net Income (Loss) 1,297,989 1,727,166
Plus: Income attributable to segment noncontrolling interests 16,007 14,946
Less: Total investment income (loss) 153,512 505,153
Less: Net performance income (loss) 724,701 805,553
Plus: Expenses of Principal Activities Segment 174,713   199,938  
Fee Related Earnings 610,496 631,344
Plus: Net interest and dividends 208,451 273,175
Plus: Depreciation and amortization 15,319 15,782
Plus: Core interest expense 116,027 88,002
Less: Expenses of Principal Activities Segment 174,713   199,938  
Fee and Yield EBITDA 775,580 808,365
Less: Depreciation and amortization 15,319 15,782
Less: Core interest expense 116,027 88,002
Plus: Realized performance income (loss), net 628,083 744,879
Plus: Net realized gains (losses) 337,023 628,403
Less: Corporate and local income taxes paid 140,677 131,081
Less: Income attributable to segment noncontrolling interests 16,007   14,946  
After-tax Cash Earnings 1,452,656 1,931,836
Plus: Depreciation and amortization 15,319 15,782
Plus: Core interest expense 116,027 88,002
Plus: Corporate and local income taxes paid 140,677 131,081
Plus: Income attributable to segment noncontrolling interests 16,007   14,946  
Total EBITDA $ 1,740,686   $ 2,181,647  
 

KKR

EXHIBIT C (CONTINUED)

 
 
RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS)
TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
   
 
As of As of
December 31, 2015 December 31, 2014
 
KKR & Co. L.P. partners’ capital $ 5,547,182 $ 5,382,691
Noncontrolling interests held by KKR Holdings L.P. 4,347,153 4,661,679
Equity impact of KKR Management Holdings Corp. and other 84,894   73,855
 
Book value 9,979,229 10,118,225
Adjusted units 847,083,373   838,020,974
Book value per adjusted unit $ 11.78   $ 12.07
 
         
 
RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS)
TO CASH AND SHORT-TERM INVESTMENTS (UNAUDITED)
(Amounts in thousands)
 
 
As of As of
December 31, 2015 December 31, 2014
 
Cash and cash equivalents $ 1,047,740 $ 918,080
Liquid short-term investments 239,910   203,305
Cash and short-term investments $ 1,287,650   $ 1,121,385
 

KKR

EXHIBIT D

 
 
RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING (UNAUDITED)
 
The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units:
 
Quarter Ended
December 31, 2015   September 30, 2015 December 31, 2014
Weighted Average GAAP Common Units Outstanding - Basic 461,374,013 452,165,697 431,432,521
Adjustments:
Weighted Average Unvested Common Units and Other Securities (a) 28,330,774     (c) 27,550,338
Weighted Average GAAP Common Units Outstanding - Diluted 489,704,787 452,165,697 458,982,859
Adjustments:
Weighted Average KKR Holdings Units (b) 362,741,915 365,717,358 379,085,116
Weighted Average Unvested Common Units and Other Securities (a)   33,821,248   (c)
Weighted Average Adjusted Units 852,446,702   851,704,303   838,067,975
 
 
Year Ended
December 31, 2015 December 31, 2014
Weighted Average GAAP Common Units Outstanding - Basic 448,884,185 381,092,394
Adjustments:
Weighted Average Unvested Common Units and Other Securities (a) 33,815,009   30,956,881  
Weighted Average GAAP Common Units Outstanding - Diluted 482,699,194 412,049,275
Adjustments:
Weighted Average KKR Holdings Units (b) 368,399,872   388,198,713  
Weighted Average Adjusted Units 851,099,066   800,247,988  
 
             
 
RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING (UNAUDITED)
 

The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units, Adjusted Units Eligible for Distribution and
Outstanding Adjusted Units:

 
As of As of
December 31, 2015 December 31, 2014
GAAP Common Units Outstanding - Basic 457,834,875 433,330,540
Unvested Common Units and Other Securities (a) 27,901,910   27,493,685  
GAAP Common Units Outstanding - Diluted 485,736,785 460,824,225
Adjustments:
KKR Holdings Units (b) 361,346,588   377,196,749  
Adjusted Units 847,083,373 838,020,974
Adjustments:
Unvested Common Units and Unvested Other Securities (a) (24,060,289 ) (24,373,441 )
Adjusted Units Eligible for Distribution 823,023,084 813,647,533
Adjustments:
Vested Other Securities (3,841,621 ) (3,120,244 )
Outstanding Adjusted Units 819,181,463   810,527,289  

______________________________________________________________________________________________________________________________________________________

(a)   Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan and other securities that are exchangeable into KKR & Co. L.P common units. The issuance of common units of KKR & Co. L.P. pursuant to such equity awards or other securities 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.
(c) Unvested common units and other securities are excluded from the calculation of diluted earnings per common unit on a GAAP basis because inclusion of such unvested common units and other securities would be anti-dilutive (decrease the loss per common unit).

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