DERIVATIVE FINANCIAL INSTRUMENTS (Tables)

3 Months Ended

Mar. 31, 2014

AM LLC and AIH LLC

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis

	As of March 31, 2014
	Assets				Liabilities
AM LLC and AIH LLC	Notional(1)		Fair Value		Notional(1)		Fair Value
Interest rate contracts	$	—	$	—	$	250,000	$	1,197
Foreign exchange contracts		53,406		1,132		126,002		1,745
Total derivatives, at fair value	$	53,406	$	1,132	$	376,002	$	2,942

                                                   (1)         Represents the total contractual amount of derivative assets and liabilities outstanding.

	As of December 31, 2013
	Assets				Liabilities
AM LLC and AIH LLC	Notional(1)		Fair Value		Notional(1)		Fair Value
Interest rate contracts	$	—	$	—	$	250,000	$	1,254
Foreign exchange contracts		66,733		1,164		76,419		1,653
Total derivatives, at fair value	$	66,733	$	1,164	$	326,419	$	2,907

                                                     (1)          Represents the total contractual amount of derivative assets and liabilities outstanding.

Summary of net realized and unrealized appreciation (depreciation) on derivative instruments

	As of March 31, 2014
AM LLC and AIH LLC	Interest Rate Contracts			Foreign Exchange Contracts			Total
Net realized loss on investments
Swaps	$	(341	)	$	—		$	(341	)
Foreign currency forward contracts		—			(793	)		(793	)
Net realized loss on investments	$	(341	)	$	(793	)	$	(1,134	)
Net change in unrealized appreciation (depreciation) on investments
Purchased options	$	—		$	(61	)	$	(61	)
Swaps		57			—			57
Foreign currency forward contracts		—			(63	)		(63	)
Total net change in unrealized appreciation (depreciation) on investments	$	57		$	(124	)	$	(67	)

	As of March 31, 2013
AM LLC and AIH LLC	Interest Rate Contracts			Foreign Exchange Contracts			Total
Net realized loss on investments
Swaps	$	(302	)	$	—		$	(302	)
Foreign currency forward contracts		—			(863	)		(863	)
Net realized loss on investments	$	(302	)	$	(863	)	$	(1,165	)
Net change in unrealized appreciation on investments
Purchased options	$	—		$	247		$	247
Swaps		223			—			223
Foreign currency forward contracts		—			4,203			4,203
Total net change in unrealized appreciation on investments	$	223		$	4,450		$	4,673

Consolidated Funds

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of fair value and notional amounts of derivative contracts by major product type on a gross basis

	As of March 31, 2014
	Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value
Interest rate contracts	$	34,000	$	0	$	89,000	$	2,545
Credit contracts		51,500		6,271		703,700		39,178
Equity contracts		64		245		—		—
Foreign exchange contracts		35,832		115		166,756		3,751
Other financial instruments		8,538		2,330		92,386		8,169
Total derivatives, at fair value		129,934		8,961		1,051,842		53,643
Warrants—equity(2)		68,859		21,734		—		—
TOTAL	$	198,793	$	30,695	$	1,051,842	$	53,643

(1)

Represents the total contractual amount of derivative assets and liabilities outstanding.

(2)

The fair value of warrants is included within investments, at fair value in the Combined and Consolidated Statements of Financial Condition.

	As of December 31, 2013
	Assets				Liabilities
Consolidated Funds	Notional(1)		Fair Value		Notional(1)		Fair Value
Interest rate contracts	$	70,000	$	8	$	623,225	$	3,878
Credit contracts		25,437		4,489		537,921		28,385
Equity contracts		50		179		—		—
Foreign exchange contracts		211,324		8,653		813,997		38,631
Other financial instruments		6,174		1,296		83,662		4,221
Total derivatives, at fair value		312,985		14,625		2,058,805		75,115
Warrants—equity(2)		68,253		46,802		—		—
TOTAL	$	381,238	$	61,427	$	2,058,805	$	75,115

(1)

Represents the total contractual amount of derivative assets and liabilities outstanding.

(2)

The fair value of warrants is included within investments, at fair value in the Combined and Consolidated Statements of Financial Condition.

Summary of net realized and unrealized appreciation (depreciation) on derivative instruments

	As of March 31, 2014
Consolidated Funds	Interest Rate Contracts			Credit Contracts			Equity Contracts			Foreign Exchange Contracts			Other			Total
Net realized gain (loss) on investments of Consolidated Funds
Purchased options	$	—		$	—		$	(2,019	)	$	(273	)	$	—		$	(2,292	)
Written options		—			—			—			1,853			—			1,853
Swaps		(514	)		(10,206	)		—			—			3,546			(7,174	)
Warrants(1)		—			—			1,261			—			—			1,261
Foreign currency forward contracts		—			—			—			(17,888	)		—			(17,888	)
Total net realized gain (loss) on investments of Consolidated Funds	$	(514	)	$	(10,206	)	$	(758	)	$	(16,308	)	$	3,546		$	(24,240	)
Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds
Purchased options	$	—		$	—		$	108		$	(1,663	)	$	(113	)	$	(1,668	)
Written options		—			—			—			(1,214	)		—			(1,214	)
Swaps		(342	)		3,476			—			(15	)		(3,591	)		(472	)
Interest rate caps/floor		(4	)		—			—			—			—			(4	)
Warrants(1)		—			—			(7,180	)		—			—			(7,180	)
Foreign currency forward contracts		(22	)		—			1,222			17,142			—			18,342
Total net change in unrealized appreciation (depreciation) on investments of Consolidated Funds	$	(368	)	$	3,476		$	(5,850	)	$	14,250		$	(3,704	)	$	7,804

(1)

Realized and unrealized gains (losses) on warrants are also reflected in the changes presented on the investment, at fair value footnote table.

	As of March 31, 2013
Consolidated Funds	Interest Rate Contracts			Credit Contracts			Equity Contracts			Foreign Exchange Contracts			Other			Total
Net realized gain (loss) on investments of Consolidated Funds
Purchased options	$	—		$	—		$	(1,565	)	$	(318	)	$	—		$	(1,883	)
Written options		—			—			—			337			—			337
Swaps		(2,755	)		—			—			233			—			(2,522	)
Interest rate caps/floor		—			—			—			1,526			—			1,526
Warrants(1)		—			—			33			—			—			33
Foreign currency forward contracts		—			—			—			(565	)		—			(565	)
Total net realized gain (loss) on investments of Consolidated Funds	$	(2,755	)	$	—		$	(1,532	)	$	1,213		$	—		$	(3,074	)
Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds
Purchased options	$	—		$	—		$	140		$	(170	)	$	—		$	(30	)
Written options		—			—			—			(35	)		—			(35	)
Swaps		1,785			(734	)		762			971			1,805			4,589
Interest rate caps/floor		(2	)		—			—			(1,711	)		—			(1,713	)
Warrants(1)		—			2,137			802			—			—			2,939
Foreign currency forward contracts		—			—			28,778			187			(234	)		28,731
Total net change in unrealized appreciation (depreciation) on investments of Consolidated Funds	$	1,783		$	1,403		$	30,482		$	(758	)	$	1,571		$	34,481

(1)

Realized and unrealized gains (losses) on warrants are also reflected in the changes presented on the investment, at fair value footnote table.

Schedule of setoff and related arrangements associated with the derivative and other financial instruments

Derivative and Other Instruments of the Consolidated Funds as of March 31, 2014

										Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)
Description				Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Cash Collateral Received (Pledged)			Net Amount
Assets:
Derivatives	$	54,171		$	45,210		$	8,961		$	5,271		$	1,746		$	1,944
Total		54,171			45,210			8,961			5,271			1,746			1,944
Liabilities:
Derivatives		(98,853	)		(45,210	)		(53,643	)		(5,481	)		(36,540	)		(11,622	)
Total		(98,853	)		(45,210	)		(53,643	)		(5,481	)		(36,540	)		(11,622	)
Grand Total	$	(44,682	)	$	—		$	(44,682	)	$	(210	)	$	(34,794	)	$	(9,678	)

Derivative and Other Instruments of the Consolidated Funds as of December 31, 2013

										Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)
Description				Gross Amounts Offset in Assets (Liabilities)			Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Cash Collateral Received (Pledged)			Net Amount
Assets:
Derivatives	$	27,081		$	12,456		$	14,625		$	9,642		$	4,675		$	308
Reverse repurchase, securities borrowing, and similar arrangements(1)		1,695			—			1,695			—			—			1,695
Total		28,776			12,456			16,320		$	9,642		$	4,675		$	2,003
Liabilities:
Derivatives		(87,571	)		(12,456	)		(75,115	)		(9,642	)		(42,903	)		(22,570	)
Total		(87,571	)		(12,456	)		(75,115	)		(9,642	)		(42,903	)		(22,570	)
Grand Total	$	(58,795	)	$	—		$	(58,795	)	$	—		$	(38,228	)	$	(20,567	)

(1)

Included within investments, at fair value in the Combined and Consolidated Statement of Financial Condition

Ares Holdings, Inc. and Ares Investments LLC

DERIVATIVE FINANCIAL INSTRUMENTS

Schedule of setoff and related arrangements associated with the derivative and other financial instruments

Derivative and Other Instruments of the Company as of March 31, 2014

									Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)
Description				Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	1,132		$	—	$	1,132		$	366		$	766
Total		1,132			—		1,132			366			766
Liabilities:
Derivatives		(2,942	)		—		(2,942	)		(366	)		(2,576	)
Total		(2,942	)		—		(2,942	)		(366	)		(2,576	)
Grand Total	$	(1,810	)	$	—	$	(1,810	)	$	—		$	(1,810	)

Derivative and Other Instruments of the Company as of December 31, 2013

									Gross Amounts Not Offset in the Statement of Financial Position
	Gross Amounts of Recognized Assets (Liabilities)
Description				Gross Amounts Offset in Assets (Liabilities)		Net Amounts of Assets (Liabilities) Presented			Financial Instruments			Net Amount
Assets:
Derivatives	$	1,164		$	—	$	1,164		$	338		$	826
Total		1,164			—		1,164			338			826
Liabilities:
Derivatives		(2,907	)		—		(2,907	)		(338	)		(2,569	)
Total		(2,907	)		—		(2,907	)		(338	)		(2,569	)
Grand Total	$	(1,743	)	$	—	$	(1,743	)	$	—		$	(1,743	)