reflected in the consolidated balance sheets were $7.2 billion and $6.2 billion, respectively. Except to the extent of the

consolidated assets of the VIEs, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company.

The Company’s Consolidated Funds are primarily CLOs, which are VIEs that issue loans payable that are backed by

diversified collateral asset portfolios consisting primarily of loans or structured debt. In exchange for managing the collateral

for the CLOs, the Company earns investment management fees, including in some cases subordinated management fees and

contingent incentive fees. In cases where the Company consolidates the CLOs (primarily because of a retained interest that is

significant to the CLO), those management fees and contingent incentive fees have been eliminated as intercompany

transactions. As of December 31, 2023, the Company held $138.4 million of investments in these CLOs which represents its

maximum risk of loss. The Company’s investments in these CLOs are generally subordinated to other interests in the entities

and entitle the Company to receive a pro rata portion of the residual cash flows, if any, from the entities. Investors in the CLOs

have no recourse against the Company for any losses sustained in the CLO structure. The Company’s Consolidated Funds also

include certain investment funds in our Global Private Equity segment that are accounted for as consolidated VIEs due to the

Company providing financing to bridge investment purchases. As of December 31, 2023, the Company held $309.9 million of

notes receivable from these investment funds which represents its maximum risk of loss. The Company’s Consolidated Funds

also include certain funds in our Global Credit and Global Investment Solutions segments that are accounted for as consolidated

VIEs due to the Company having a significant indirect interest in these funds via the Company’s investment in Fortitude (see

Note 5).

Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities. Under the voting

interest entity model, the Company consolidates those entities it controls through a majority voting interest.

All significant inter-entity transactions and balances of entities consolidated have been eliminated.

Investments in Unconsolidated Variable Interest Entities

The Company holds variable interests in certain VIEs that are not consolidated because the Company is not the

primary beneficiary, including its investments in certain credit vehicles and certain AlpInvest vehicles, as well as its strategic

investment in NGP Management Company, L.L.C. (“NGP Management” and, together with its affiliates, “NGP”). Refer to

Note 5 for information on the strategic investment in NGP. The Company’s involvement with such entities is in the form of

direct or indirect equity interests and fee arrangements. The maximum exposure to loss represents the loss of assets recognized

by the Company relating to its variable interests in these unconsolidated entities. The assets recognized in the Company’s

consolidated balance sheets related to the Company’s variable interests in these non-consolidated VIEs were as follows:


	As of December 31,
	2023	2022
	(Dollars in millions)
Investments	$1,118.4	$1,124.0
Accrued performance allocations	492.3	406.0
Management fee receivables	65.1	49.6
Total	$1,675.8	$1,579.6

These amounts represent the Company’s maximum exposure to loss related to the unconsolidated VIEs as of

December 31, 2023 and 2022.

Basis of Accounting

The accompanying financial statements are prepared in accordance with U.S. GAAP. Management has determined that

the Company’s Funds are investment companies under U.S. GAAP for the purposes of financial reporting. U.S. GAAP for an

investment company requires investments to be recorded at estimated fair value and the unrealized gains and/or losses in an

investment’s fair value are recognized on a current basis in the statements of operations. Additionally, the Funds do not

consolidate their majority-owned and controlled investments (the “Portfolio Companies”). In the preparation of these

consolidated financial statements, the Company has retained the specialized accounting for the Funds.

All of the investments held and notes issued by the Consolidated Funds are presented at their estimated fair values in

the Company’s consolidated balance sheets. Interest and other income of the Consolidated Funds, interest expense and other

expenses of the Consolidated Funds, and net investment income (losses) of Consolidated Funds are included in the Company’s

consolidated statements of operations.

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make assumptions and

estimates that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of

the financial statements and the reported amounts of revenues and expenses during the reporting period. Management’s

estimates are based on historical experiences and other factors, including expectations of future events that management

believes to be reasonable under the circumstances. It also requires management to exercise judgment in the process of applying

the Company’s accounting policies. Assumptions and estimates regarding the valuation of investments and their resulting

impact on performance allocations and incentive fees involve a higher degree of judgment and complexity and these

assumptions and estimates may be significant to the consolidated financial statements and the resulting impact on performance

allocations and incentive fees. Actual results could differ from these estimates and such differences could be material.

Business Combinations

The Company accounts for business combinations using the acquisition method of accounting, under which the

purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by

management as of the acquisition date. Contingent consideration obligations that are elements of consideration transferred are

recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business. Acquisition-

related costs incurred in connection with a business combination are expensed as incurred.

Revenue Recognition

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers. Revenue is

recognized when the Company transfers promised goods or services to customers in an amount that reflects the consideration to

which the Company expects to be entitled to in exchange for those goods or services. ASC 606 includes a five-step framework

that requires an entity to: (i) identify the contract(s) with a customer, which includes assessing the collectability of the

consideration to which it will be entitled in exchange for the goods or services transferred to the customer, (ii) identify the

performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the

performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation.

The Company accounts for performance allocations that represent a performance-based capital allocation from fund

limited partners to the Company (commonly known as “carried interest”), as earnings from financial assets within the scope of

ASC 323, Investments – Equity Method and Joint Ventures, and therefore are not in the scope of ASC 606. In accordance with

ASC 323, the Company records equity method income (losses) as a component of investment income based on the change in its

proportionate claim on net assets of the investment fund, including performance allocations, assuming the investment fund was

liquidated as of each reporting date pursuant to each fund’s governing agreements. See Note 5 for additional information on the

components of investments and investment income. Performance fees that do not meet the definition of performance-based

capital allocations are in the scope of ASC 606 and are included in incentive fees in the consolidated statements of operations.

The calculation of unrealized performance revenues utilizes investment valuations of the funds’ underlying investments, which

are derived using the policies, methodologies and templates prepared by the Company’s valuation group, as described in Note

4, Fair Value Measurement.

While the determination of who is the customer in a contractual arrangement will be made on a contract-by-contract

basis, the customer will generally be the investment fund for the Company’s significant management and advisory contracts.

The customer determination impacts the Company’s analysis of the accounting for contract costs.

Fund Management Fees

The Company provides management services to funds in which it holds a general partner interest or to funds or certain

portfolio companies with which it has an investment advisory or investment management agreement. The Company considers

the performance obligations in its contracts with its funds to be the promise to provide (or to arrange for third parties to provide)

investment management services related to the management, policies and operations of the funds.

As it relates to the Company’s performance obligation to provide investment management services, the Company

typically satisfies this performance obligation over time as the services are rendered, since the funds simultaneously receive and

consume the benefits provided as the Company performs the service. The transaction price is the amount of consideration to

which the Company expects to be entitled in exchange for transferring the promised services to the funds. Management fees

earned from each investment management contract over the contract life represent variable consideration because the

consideration the Company is entitled to varies based on fluctuations in the basis for the management fee, for example fund net

asset value (“NAV”) or assets under management (“AUM”). Given that the management fee basis is susceptible to market

factors outside of the Company’s influence, management fees are constrained and, therefore, estimates of future period

management fees are generally not included in the transaction price. Revenue recognized for the investment management

services provided is generally the amount determined at the end of the period because that is when the uncertainty for that

period is resolved.

For closed-end carry funds in the Global Private Equity segment, management fees generally range from 1.0% to 2.0%

of limited partners’ capital commitments during the fund’s commitment period. For closed-end carry funds in the Global Credit

segment, management fees generally range from 1.0% to 2.0% of limited partners’ invested capital. Following the expiration or

termination of the investment period, management fees generally are based on the lower of cost or fair value of invested capital

and the rate charged may also be reduced. These terms may vary for certain separately managed accounts, longer-dated carry

funds, and other closed-end funds. The Company will receive management fees during a specified period of time, which is

generally ten years from the initial closing date, or, in some instances, from the final closing date, but such termination date

may be earlier in certain limited circumstances or later if extended for successive one-year periods, typically up to a maximum

of two years. Depending upon the contracted terms of investment advisory or investment management and related agreements,

these fees are generally called semi-annually in advance and are recognized as earned over the subsequent six month period.

For certain longer-dated carry funds and certain other closed-end funds, management fees are called quarterly over the life of

the funds.

Within the Global Credit segment, for CLOs and other structured products, management fees generally range from

0.4% to 0.5% based on the total par amount of assets or the aggregate principal amount of the notes in the CLO and are

generally due quarterly in arrears based on the terms and recognized over the respective period. Management fees for the CLOs

and other structured products are governed by indentures and collateral management agreements. The Company will receive

management fees for the CLOs generally five to ten years after issuance, including after the CLO redemption date up until all

eligible assets are disposed of or at such time the collateral manager waives fees at its discretion. Management fees for the

business development companies are due quarterly in arrears at annual rates that range from 1.0% of capital under management

to 1.5% of gross assets, excluding cash and cash equivalents. Management fees for Carlyle Tactical Private Credit (“CTAC”)

are due monthly in arrears at the annual rate of 1.0% of the month-end value of the CTAC’s net assets. Carlyle Aviation

Partners’ funds have varying management fee arrangements depending on the strategy of the particular fund. Under the

strategic advisory services agreement with Fortitude, the Company earns a recurring management fee based on Fortitude’s

general account assets, which adjusts within an agreed range based on Fortitude’s overall profitability and which is due

quarterly in arrears. Managed accounts across the Global Credit segment have varying management fee arrangements

depending on the strategy of the particular account.

Management fees for the Company’s carry fund vehicles in the Global Investment Solutions segment generally range

from 0.25% to 1.5% of the vehicle’s capital commitments during the commitment fee period of the relevant fund. Following the

expiration of the commitment fee period, the management fees generally range from 0.25% to 1.5% on (i) the net invested

capital, (ii) the lower of cost or net asset value of the capital invested, or (iii) the net asset value for unrealized investments.

Management fees for the Global Investment Solutions carry fund vehicles are generally due quarterly in advance and

recognized over the related quarter. The investment adviser to CAPM is entitled to receive a monthly management fee equal to

1.25% on an annualized basis of the fund’s net asset value as of the last day of the month.

The Company also provides transaction advisory and portfolio advisory services to the portfolio companies, and where

covered by separate contractual agreements, recognizes fees for these services when the performance obligation has been

satisfied and collection is reasonably assured. The Company is generally required to offset its fund management fees earned by

a percentage of the transaction and advisory fees earned, which is referred to as the “rebate offset,” which is generally 100%.

The Company also recognizes underwriting fees from the Company’s loan syndication and capital markets business, Carlyle

Global Capital Markets. Fund management fees include transaction and portfolio advisory fees, as well as capital markets fees,

of $68.6 million, $106.2 million and $90.7 million for the years ended December 31, 2023, 2022 and 2021, respectively, net of

rebate offsets as defined in the respective partnership agreements.

Fund management fees exclude the reimbursement of any partnership expenses paid by the Company on behalf of the

Carlyle funds pursuant to the limited partnership agreements, including amounts related to the pursuit of actual, proposed, or

unconsummated investments, professional fees, expenses associated with the acquisition, holding and disposition of

investments, and other fund administrative expenses. For the professional fees that the Company arranges for the investment

funds, the Company concluded that the nature of its promise is to arrange for the services to be provided and it does not control

the services provided by third parties before they are transferred to the customer. Therefore, the Company concluded it is acting

in the capacity of an agent. Accordingly, the reimbursement for these professional fees paid on behalf of the investment funds is

presented on a net basis in general, administrative and other expenses in the consolidated statements of operations.

The Company also incurs certain costs, primarily employee travel and entertainment costs, employee compensation

and systems costs, for which it receives reimbursement from the investment funds in connection with its performance obligation

to provide investment and management services. For reimbursable travel, compensation and systems costs, the Company

concluded it controls the services provided by its employees and the resources used to develop applicable systems before they

are transferred to the customer and therefore is a principal. Accordingly, the reimbursement for these costs incurred by the

Company to manage the fund limited partnerships are presented on a gross basis in interest and other income in the

consolidated statements of operations and the expense in general, administrative and other expenses or cash-based

compensation and benefits expenses in the consolidated statements of operations.

Incentive Fees

In connection with management contracts from certain of its Global Credit funds, the Company is also entitled to

receive performance-based incentive fees when the return on assets under management exceeds certain benchmark returns or

other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has been

achieved. Incentive fees are variable consideration because they are contingent upon the investment vehicle achieving stipulated

investment return hurdles. Investment returns are highly susceptible to market factors outside of the Company’s influence.

Accordingly, incentive fees are constrained until all uncertainty is resolved. Estimates of future period incentive fees are

generally not included in the transaction price because these estimates are constrained. The transaction price for incentive fees

is generally the amount determined at the end of each accounting period to which they relate because that is when the

uncertainty for that period is resolved, as these fees are not subject to clawback.

Investment Income (Loss), including Performance Allocations

Investment income (loss) represents the unrealized and realized gains and losses resulting from the Company’s equity

method investments, including any associated general partner performance allocations, and other principal investments,

including CLOs.

General partner performance allocations consist of the allocation of profits from certain of the funds to which the

Company is entitled (commonly known as carried interest). For closed-end carry funds in the Global Private Equity and Global

Credit segments, the Company is generally entitled to a 20% allocation (or approximately 2% to 12.5% for most of the Global

Investment Solutions segment carry fund vehicles) of the net realized income or gain as a carried interest after returning the

invested capital, the allocation of preferred returns of generally 7% to 9% and return of certain fund costs (generally subject to

catch-up provisions as set forth in the fund limited partnership agreement). These terms may vary on longer-dated funds, certain

credit funds, and external co-investment vehicles. Carried interest is recognized upon appreciation of the funds’ investment

values above certain return hurdles set forth in each respective partnership agreement. The Company recognizes revenues

attributable to performance allocations based upon the amount that would be due pursuant to the fund partnership agreement at

each period end as if the funds were terminated at that date. Accordingly, the amount recognized as investment income for

performance allocations reflects the Company’s share of the gains and losses of the associated funds’ underlying investments

measured at their then-current fair values relative to the fair values as of the end of the prior period. Because of the inherent

uncertainty, these estimated values may differ significantly from the values that would have been used had a ready market for

the investments existed, and it is reasonably possible that the difference could be material.

Carried interest is ultimately realized when: (i) an underlying investment is profitably disposed of, (ii) certain costs

borne by the limited partner investors have been reimbursed, (iii) the fund’s cumulative returns are in excess of the preferred

return and (iv) the Company has decided to collect carry rather than return additional capital to limited partner investors.

Realized carried interest may be required to be returned by the Company in future periods if the fund’s investment values

decline below certain levels. When the fair value of a fund’s investments remains constant or falls below certain return hurdles,

previously recognized performance allocations are reversed. In all cases, each fund is considered separately in this regard, and

for a given fund, performance allocations can never be negative over the life of a fund. If upon a hypothetical liquidation of a

fund’s investments at their then-current fair values, previously recognized and distributed carried interest would be required to

be returned, a liability is established for the potential giveback obligation. As of December 31, 2023 and 2022, the Company

has accrued $44.0 million and $40.9 million, respectively, for giveback obligations.

Principal investment income (loss) is realized when the Company redeems all or a portion of its investment or when

the Company receives or is due cash income, such as dividends or distributions. Unrealized principal investment income (loss)

results from the Company’s proportionate share of the investee’s unrealized earnings, including changes in the fair value of the

underlying investment, as well as the reversal of unrealized gain (loss) at the time an investment is realized. As it relates to the

Company’s investments in NGP (see Note 5), principal investment income includes the related amortization of the basis

difference between the Company’s carrying value of its investment and the Company’s share of underlying net assets of the

investee, as well as the compensation expense associated with compensatory arrangements provided by the Company to

employees of its equity method investee.

Interest Income

Interest income is recognized when earned. For debt securities representing non-investment grade beneficial interests

in securitizations, the effective yield is determined based on the estimated cash flows of the security. Changes in the effective

yield of these securities due to changes in estimated cash flows are recognized on a prospective basis as adjustments to interest

income in future periods. Interest income earned by the Company is included in interest and other income in the accompanying

consolidated statements of operations. Interest income of the Consolidated Funds was $512.4 million, $282.3 million and

$231.3 million for the years ended December 31, 2023, 2022 and 2021, respectively, and is included in interest and other

income of Consolidated Funds in the accompanying consolidated statements of operations.

Credit Losses

The Company measures all expected credit losses for financial assets held at the reporting date in accordance with

ASC 326, Financial Instruments—Credit Losses, based on historical experience, current conditions, and reasonable and

supportable forecasts. The Company assesses the collection risk characteristics of the outstanding amounts in its due from

affiliates balance into the following pools of receivables:

•Reimbursable fund expenses receivables,

•Management fee receivables,

•Incentive fee receivables,

•Transaction fee receivables,

•Portfolio fee receivables, and

•Notes receivable.

The Company generally utilizes either historical credit loss information or discounted cash flows to calculate expected

credit losses for each pool. The Company’s receivables are predominantly with its investment funds, which have low risk of

credit loss based on the Company’s historical experience. Historical credit loss data may be adjusted for current conditions and

reasonable and supportable forecasts, including the Company’s expectation of near-term realization based on the liquidity of the

affiliated investment funds.

Compensation and Benefits

Cash-based Compensation and Benefits – Cash-based compensation and benefits includes salaries, bonuses

(discretionary awards and guaranteed amounts), performance payment arrangements and benefits paid and payable to Carlyle

employees. Bonuses are accrued over the service period to which they relate.

Equity-Based Compensation – Compensation expense relating to the issuance of equity-based awards is measured at

fair value on the grant date. The compensation expense for awards that vest over a future service period is recognized over the

relevant service period on a straight-line basis. The compensation expense for awards that do not require future service is

recognized immediately. Cash settled equity-based awards are classified as liabilities and are re-measured at the end of each

reporting period. The compensation expense for awards that contain performance conditions is recognized when it is probable

that the performance conditions will be achieved. The compensation expense for awards that contain market conditions is based

on a grant-date fair value that factors in the probability that the market conditions will be achieved and is recognized over the

requisite service period on a straight-line basis.

Certain equity-based awards contain dividend-equivalent rights, which are subject to the same terms and conditions,

including with respect to vesting and settlement, that apply to the related award. Dividend-equivalents are accounted for as a

reclassification from retained earnings to additional paid-in capital at the time dividends are declared and do not result in

incremental compensation expense.

Equity-based awards issued to non-employees are generally recognized as general, administrative and other expenses,

except to the extent they are recognized as part of the Company’s equity method earnings because they are issued to employees

of equity method investees.

The Company recognizes equity-based award forfeitures in the period they occur as a reversal of previously

recognized compensation expense for awards that vest based on service and/or performance conditions. The reduction in

compensation expense is determined based on the specific awards forfeited during that period. Furthermore, the Company

recognizes all excess tax benefits and deficiencies as income tax benefit or expense in the consolidated statements of operations.

For awards with a market condition (e.g., achievement of certain stock price hurdles) that are forfeited due to the market

condition not being achieved, the related equity-based compensation expense is not reversed.

Performance Allocations and Incentive Fee Related Compensation – A portion of the performance allocations and

incentive fees and certain other interests earned is due to employees and advisors of the Company. These amounts are

accounted for as profit sharing interests in compensation expense in a systematic and rational manner in conjunction with the

recognition of the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of

the accrued compensation and benefits liability. The liability is measured assuming the hypothetical liquidation of the

associated funds’ underlying investments as of the measurement date. Accordingly, upon a reversal of performance allocations

or incentive fee revenue, the related compensation expense, if any, is also reversed. As any vesting requirement is accelerated

upon realization, the service period is not considered substantive when recording the liability based on the hypothetical

liquidation value. As of December 31, 2023 and 2022, the Company had recorded a liability of $4.3 billion and $3.6 billion,

respectively, related to the portion of accrued performance allocations and incentive fees due to employees and advisors,

respectively, which was included in accrued compensation and benefits in the accompanying consolidated balance sheets.

In October 2021, the Company commenced a program under which, at the Company’s discretion, up to 20% of the

realized performance allocation related compensation over a threshold amount may be distributed in fully vested newly issued

shares of the Company’s common stock. Shares issued under the program are accounted for as performance allocations and

incentive fee related compensation and do not result in incremental compensation expense. The Company has determined to

pause the issuance of shares pursuant to this program.

Income Taxes

The Carlyle Group Inc. is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal, state

and local corporate income taxes. Tax positions taken by the Company are subject to periodic audit by U.S. federal, state, local

and foreign taxing authorities.

The Company accounts for income taxes using the asset and liability method, which requires the recognition of

deferred tax assets and liabilities for the expected future consequences of events that have been included in the financial

statements or tax returns. Under this method, deferred tax assets and liabilities are determined based on the difference between

the financial statement reporting and the tax basis of assets and liabilities using enacted tax rates in effect for the period in

which the difference is expected to reverse. The effect of a change in tax rates on deferred tax assets and liabilities is recognized

in the period of the change in the provision for income taxes. Further, deferred tax assets are recognized for the expected

realization of available net operating loss and tax credit carry forwards. A valuation allowance is recorded on the Company’s

gross deferred tax assets when it is “more likely than not” that such asset will not be realized. When evaluating the realizability

of the Company’s deferred tax assets, all evidence, both positive and negative, is evaluated. Items considered in this analysis

include the ability to carry back losses, the reversal of temporary differences, tax planning strategies, and expectations of future

earnings. The Company accounts for the valuation allowance assessment on its deferred tax assets and without regard to the

Company’s potential future corporate alternative minimum tax (“CAMT”) status. Lastly, the Company accounts for the tax on

global intangible low-taxed income (“GILTI”) as incurred and therefore has not recorded deferred taxes related to GILTI on its

foreign subsidiaries.

Under U.S. GAAP for income taxes, the amount of tax benefit to be recognized is the amount of benefit that is “more

likely than not” to be sustained upon examination. The Company analyzes its tax filing positions in all of the U.S. federal, state,

local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these

jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is

established, which is included in accounts payable, accrued expenses and other liabilities in the consolidated financial

statements. The Company recognizes accrued interest and penalties related to unrecognized tax positions in the provision for

income taxes. If recognized, the entire amount of unrecognized tax positions would be recorded as a reduction in the provision

for income taxes.

Non-controlling Interests

Non-controlling interests in consolidated entities represent the component of equity in consolidated entities held by

third-party investors. These interests are adjusted for general partner allocations which occur during the reporting period. Any

change in ownership of a subsidiary while the controlling financial interest is retained is accounted for as an equity transaction

between the controlling and non-controlling interests. Transaction costs incurred in connection with such changes in ownership

of a subsidiary are recorded as a direct charge to equity.

Earnings Per Common Share

The Company computes earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings

per common share is calculated by dividing net income (loss) attributable to the common shares of the Company by the

weighted-average number of common shares outstanding for the period. Diluted earnings per common share reflects the

assumed conversion of all dilutive securities. The Company applies the treasury stock method to determine the dilutive

weighted-average common shares outstanding for certain equity-based compensation awards. For certain equity-based

compensation awards that contain performance or market conditions, the number of contingently issuable common shares is

included in diluted earnings per common share based on the number of common shares, if any, that would be issuable under the

terms of the awards if the end of the reporting period were the end of the contingency period, if the result is dilutive.

Fair Value of Financial Instruments

The underlying entities that the Company manages and invests in (and in certain cases, consolidates) are primarily

investment companies which account for their investments at estimated fair value.

The fair value measurement accounting guidance under ASC Topic 820, Fair Value Measurement (“ASC 820”),

establishes a hierarchical disclosure framework which ranks the observability of market price inputs used in measuring financial

instruments at fair value. The observability of inputs is impacted by a number of factors, including the type of financial

instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and

transparency of transactions between market participants. Financial instruments with readily available quoted prices, or for

which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price

observability and a lesser degree of judgment applied in determining fair value.

Financial instruments measured and reported at fair value are classified and disclosed based on the observability of

inputs used in the determination of fair values, as follows:

Level I – inputs to the valuation methodology are quoted prices available in active markets for identical instruments as

of the reporting date. The type of financial instruments in this category include unrestricted securities, such as equities

and derivatives, listed in active markets. The Company does not adjust the quoted price for these instruments, even in

situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Level II – inputs to the valuation methodology are other than quoted prices in active markets, which are either directly

or indirectly observable as of the reporting date. The types of financial instruments in this category include less liquid

and restricted securities listed in active markets, securities traded in other than active markets, government and agency

securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level III – inputs to the valuation methodology are unobservable and significant to overall fair value measurement.

The inputs into the determination of fair value require significant management judgment or estimation. The types of

financial instruments in this category include investments in privately-held entities, non-investment grade residual

interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where the fair value

is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such

cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is

based on the lowest level of input that is significant to the fair value measurement. The Company’s assessment of the

significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to

the financial instrument.

In certain cases, debt and equity securities (including corporate treasury investments) are valued on the basis of prices

from an orderly transaction between market participants provided by reputable dealers or pricing services. In determining the

value of a particular investment, pricing services may use certain information with respect to transactions in such investments,

quotations from dealers, pricing matrices, market transactions in comparable investments and various relationships between

investments.

In the absence of observable market prices, the Company values its investments and its funds’ investments using

valuation methodologies applied on a consistent basis. For some investments little market activity may exist. Management’s

determination of fair value is then based on the best information available in the circumstances and may incorporate

management’s own assumptions and involve a significant degree of judgment, taking into consideration a combination of

internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. Investments for

which market prices are not observable include private investments in the equity and debt of operating companies and real

assets, CLO investments and CLO loans payable and fund investments. The valuation technique for each of these investments is

described below:

Investments in Operating Companies and Real Assets – The fair values of private investments in operating companies

and real assets are generally determined by reference to the income approach (including the discounted cash flow

method and the income capitalization method) and the market approach (including the comparable publicly traded

company method and the comparable transaction method). Valuations under these approaches are typically derived by

reference to investment-specific inputs (such as projected cash flows, earnings before interest, taxes, depreciation and

amortization (“EBITDA”), and net operating income) combined with market-based inputs (such as discount rates,

EBITDA multiples and capitalization rates). In many cases, the investment-specific inputs are unaudited at the time

received. Management may also adjust the market-based inputs to account for differences between the subject

investment and the companies, asset or investments used to derive the market-based inputs. Adjustments to observable

valuation measures are frequently made upon the initial investment to calibrate the initial investment valuation to

industry observable inputs. Such adjustments are made to align the investment to observable industry inputs for

differences in size, profitability, projected growth rates, geography, capital structure, and other factors as applicable.

The adjustments are then reviewed with each subsequent valuation to assess how the investment has evolved relative

to the observable inputs. Additionally, the investment may be subject to certain specific risks and/or development

milestones which are also taken into account in the valuation assessment. Option pricing models and similar tools may

also be considered but do not currently drive a significant portion of operating company or real asset valuations and are

used primarily to value warrants, derivatives, certain restrictions and other atypical investment instruments.

Credit-Oriented Investments – The fair values of credit-oriented investments (including corporate treasury

investments) are generally determined on the basis of prices between market participants provided by reputable dealers

or pricing services. In determining the value of a particular investment, pricing services may use certain information

with respect to transactions in such investments, quotations from dealers, pricing matrices, market transactions in

comparable investments and various relationships between investments. Specifically, for investments in distressed debt

and corporate loans and bonds, the fair values are generally determined by valuations of comparable investments. In

some instances, the Company may utilize other valuation techniques, including the discounted cash flow method.

CLO Investments and CLO Loans Payable – The Company measures the financial liabilities of its consolidated CLOs

based on the fair value of the financial assets of its consolidated CLOs, as the Company believes the fair value of the

financial assets are more observable. The fair values of the CLO loan and bond assets are primarily based on

quotations from reputable dealers or relevant pricing services. In situations where valuation quotations are unavailable,

the assets are valued based on similar securities, market index changes, and other factors. The Company performs

certain procedures to ensure the reliability of the quotations from pricing services for its CLO assets and CLO

structured asset positions, which generally includes corroborating prices with a discounted cash flow analysis.

Generally, the loan and bond assets of the CLOs are not publicly traded and are classified as Level III. The fair values

of the CLO structured asset positions are determined based on both discounted cash flow analyses and third party

quotes. Those analyses consider the position size, liquidity, current financial condition of the CLOs, the third party

financing environment, reinvestment rates, recovery lags, discount rates and default forecasts and are compared to

broker quotations from market makers and third party dealers.

The Company measures the CLO loan payables held by third party beneficial interest holders on the basis of the fair

value of the financial assets of the CLO and the beneficial interests held by the Company. The Company continues to

measure the CLO loans payable that it holds at fair value based on relevant pricing services or discounted cash flow

analyses, as described above.

Fund Investments – The Company’s primary and secondary investments in external funds are generally valued as its

proportionate share of the most recent net asset value provided by the third-party general partners of the underlying

fund partnerships, adjusted for subsequent cash flows received from or distributed to the underlying fund partnerships.

The Company also adjusts for any changes in the market prices of public securities held by the underlying fund

partnerships and may also apply a market adjustment to reflect the estimated change in the fair value of the underlying

fund partnerships’ non-public investments from the date of the most recent net asset value provided by the third-party

general partners.

Investment professionals with responsibility for the underlying investments are responsible for preparing the

investment valuations pursuant to the policies, methodologies and templates prepared by the Company’s valuation group, which

is a team made up of dedicated valuation professionals reporting to the Company’s chief accounting officer. The valuation

group is responsible for maintaining the Company’s valuation policy and related guidance, templates and systems that are

designed to be consistent with the guidance found in ASC 820. These valuations, inputs and preliminary conclusions are

reviewed by the fund management teams. The valuations are then reviewed and approved by the respective fund valuation

subcommittees, which include the respective fund head(s), segment head, chief financial officer and chief accounting officer, as

well as members of the valuation group. The valuation group compiles the aggregate results and significant matters and

presents them for review and approval by the global valuation committee, which includes the Company’s Chief Executive

Officer, chief risk officer, chief financial officer, chief accounting officer, and the business segment heads, and observed by the

chief compliance officer, the director of Internal Audit, the Company’s Audit Committee and others. Additionally, each quarter

a sample of valuations are reviewed by external valuation firms. Valuations of the funds’ investments are used in the calculation

of accrued performance allocations, or “carried interest.”

Investments, at Fair Value

Investments include (i) the Company’s ownership interests (typically general partner interests) in the Funds, including

the Company’s investment in Fortitude, (which are accounted for as equity method investments), (ii) the Company’s investment

in NGP (which is accounted for as an equity method investment), (iii) the investments held by the Consolidated Funds (which

are presented at fair value in the Company’s consolidated financial statements), and (iv) certain credit-oriented investments,

including investments in the CLOs and the preferred securities of Carlyle Secured Lending, Inc. (“CSL,” formerly known as

“TCG BDC, Inc.,” the preferred securities of which are referred to as the “BDC Preferred Shares”) (which are accounted for as

trading securities).

Upon the sale of a security or other investment, the realized net gain or loss is computed on a weighted average cost

basis, with the exception of the investments held by the CLOs, which compute the realized net gain or loss on a first in, first out

basis. Securities transactions are recorded on a trade date basis.

Equity Method Investments

The Company accounts for all investments in which it has or is otherwise presumed to have significant influence,

including investments in the unconsolidated Funds and the Company’s investment in NGP, using the equity method of

accounting. The carrying value of equity method investments is determined based on amounts invested by the Company,

adjusted for the equity in earnings or losses of the investee (including performance allocations) allocated based on the

respective partnership agreement, less distributions received. The Company evaluates its equity method investments for

impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be

recoverable.

Cash and Cash Equivalents

Cash and cash equivalents include cash held at banks and cash held for distributions, including investments with

original maturities of less than three months when purchased. The Company is subject to credit risk should a financial

institution be unable to fulfil its obligations, and if balances held at a financial institution exceed insured limits.

Cash and Cash Equivalents Held at Consolidated Funds

Cash and cash equivalents held at Consolidated Funds consists of cash and cash equivalents held by the Consolidated

Funds, which, although not legally restricted, is not available to fund the general liquidity needs of the Company.

Restricted Cash

Restricted cash primarily represents cash held by the Company’s foreign subsidiaries due to certain government

regulatory capital requirements as well as certain amounts held on behalf of Carlyle funds.

Corporate Treasury Investments

Corporate treasury investments represent investments in U.S. Treasury and government agency obligations,

commercial paper, certificates of deposit, other investment grade securities and other investments with original maturities of

greater than three months when purchased. These investments are accounted for as trading securities in which changes in the

fair value of each investment are recorded through investment income (loss). Any interest earned on debt investments is

recorded through interest and other income.

Derivative Instruments

The Company uses derivative instruments primarily to reduce its exposure to changes in foreign currency exchange

rates. Derivative instruments are recognized at fair value in the consolidated balance sheets with changes in fair value

recognized in the consolidated statements of operations for all derivatives not designated as hedging instruments.

Securities Sold Under Agreements to Repurchase

As it relates to certain European CLOs sponsored by the Company, securities sold under agreements to repurchase

(“repurchase agreements”) are accounted for as collateralized financing transactions. The Company provides securities to

counterparties to collateralize amounts borrowed under repurchase agreements on terms that permit the counterparties to

repledge or resell the securities to others. As of December 31, 2023, $305.1 million of securities were transferred to

counterparties under repurchase agreements and are included within investments in the consolidated balance sheets. Cash

received under repurchase agreements is recognized as a liability within debt obligations in the consolidated balance sheets. See

Note 7 for additional information.

Fixed Assets

Fixed assets consist of furniture, fixtures and equipment, leasehold improvements, computer hardware and software,

and fractional shares in corporate aircraft, and are stated at cost, less accumulated depreciation and amortization. Depreciation

is recognized on a straight-line method over the assets’ estimated useful lives, which for leasehold improvements are the lesser

of the lease terms or the life of the asset, and three to seven years for other fixed assets. Fixed assets are reviewed for

impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable.

Leases

The Company accounts for its leases in accordance with ASC 842, Leases, and recognizes a lease liability and right-

of-use asset in the consolidated balance sheet for contracts that it determines are leases or contain a lease. The Company’s

leases primarily consist of operating leases for office space in various countries around the world. The Company also has

operating leases for office equipment and vehicles, which are not significant. The Company does not separate non-lease

components from lease components for its office space and equipment operating leases and instead accounts for each separate

lease component and its associated non-lease component as a single lease component. Right-of-use assets represent the

Company’s right to use an underlying asset for the lease term and lease liabilities represent the Company’s obligation to make

lease payments arising from the leases. The Company’s right-of-use assets and lease liabilities are recognized at lease

commencement based on the present value of lease payments over the lease term. Lease right-of-use assets include initial direct

costs incurred by the Company and are presented net of deferred rent and lease incentives. Absent an implicit interest rate in the

lease, the Company uses its incremental borrowing rate, adjusted for the effects of collateralization, based on the information

available at commencement in determining the present value of lease payments. The Company’s lease terms may include

options to extend or terminate the lease when it is reasonably certain that the Company will exercise those options. Lease

expense for lease payments is recognized on a straight-line basis over the lease term. Lease right-of-use assets are reviewed for

impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

The Company does not recognize a lease liability or right-of-use asset on the balance sheet for short-term leases.

Instead, the Company recognizes short-term lease payments as an expense on a straight-line basis over the lease term. A short-

term lease is defined as a lease that, at the commencement date, has a lease term of 12 months or less and does not include an

option to purchase the underlying asset that the lessee is reasonably certain to exercise. When determining whether a lease

qualifies as a short-term lease, the Company evaluates the lease term and the purchase option in the same manner as all other

leases.

Intangible Assets and Goodwill

The Company’s intangible assets consist of acquired contractual rights to earn future fee income, including

management and advisory fees, customer relationships, and acquired trademarks. Finite-lived intangible assets are amortized

over their estimated useful lives, which range from four to eight years, and are reviewed for impairment whenever events or

changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Goodwill represents the excess of cost over the identifiable net assets of businesses acquired and is recorded in the

functional currency of the acquired entity. Goodwill is recognized as an asset and is reviewed for impairment annually as of

October 1 and between annual tests when events and circumstances indicate that impairment may have occurred.

Deferred Revenue

Deferred revenue represents management fees and other revenue received prior to the balance sheet date, which has

not yet been earned. Deferred revenue also includes transaction and portfolio advisory fees received by the Company that are

required to offset fund management fees pursuant to the related fund agreements. As of December 31, 2023 and 2022, the

balance was primarily comprised of transaction and portfolio advisory fees required to offset fund management fees.

Accumulated Other Comprehensive Income (Loss)

The Company’s accumulated other comprehensive income (loss) is comprised of foreign currency translation

adjustments and gains and losses on defined benefit plans sponsored by AlpInvest. The components of accumulated other

comprehensive income (loss) as of December 31, 2023 and 2022 were as follows:


	As of December 31,
	2023	2022
	(Dollars in millions)
Currency translation adjustments	$(292.8)	$(322.0)
Unrealized losses on defined benefit plans	(4.5)	(0.2)
Total	$(297.3)	$(322.2)

Foreign Currency Translation

Non-U.S. dollar denominated assets and liabilities are translated at period-end rates of exchange, and the consolidated

statements of operations are translated at rates of exchange in effect throughout the period. Foreign currency gains (losses)

resulting from transactions outside of the functional currency of an entity of $(13.6) million, $25.2 million and $(13.5) million

for the years ended December 31, 2023, 2022 and 2021, respectively, are included in general, administrative and other expenses

in the consolidated statements of operations.

Recent Accounting Pronouncements

The Company considers the applicability and impact of all accounting standard updates (“ASU”) issued by the

Financial Accounting Standards Board (“FASB”). ASUs not listed below were assessed and either determined to be not

applicable or expected to have minimal impact on the Company’s consolidated financial statements.