SEGMENT REPORTING (Tables) (Ares Holdings, Inc. and Ares Investments LLC)

3 Months Ended

Mar. 31, 2014

Ares Holdings, Inc. and Ares Investments LLC

Segment reporting

Schedule of financial results for Company's operating segments, as well as the OMG

  The following table presents the financial results for the Company's operating segments, as well as the OMG, as of and for the three months ended March 31, 2014:

	Private Equity Group			Direct Lending Group			Tradable Credit Group			Real Estate Group			Total Segments			OMG			Total Stand Alone
Management fees
Recurring fees (includes, in the case of the Direct Lending Group, $28,318 of ARCC Part I Fees)	$	23,196		$	66,204		$	33,693		$	16,768		$	139,861		$	—		$	139,861
Previously deferred fees		—			—			—			—			—			—			—
Total management fees		23,196			66,204			33,693			16,768			139,861			—			139,861
Administrative fees and other income		76			90			17			1,290			1,473			5,392			6,865
General, administrative and other expenses		(2,000	)		(1,914	)		(3,696	)		(4,267	)		(11,877	)		(13,535	)		(25,412	)
Compensation and benefits		(8,195	)		(32,212	)		(10,805	)		(11,485	)		(62,697	)		(27,657	)		(90,354	)
Fee related earnings (loss)		13,077			32,168			19,209			2,306			66,760			(35,800	)		30,960
Performance fees—realized		13,086			39			10,213			—			23,338			—			23,338
Performance fees—unrealized		21,341			2,292			13,509			2,950			40,092			—			40,092
Performance fee compensation expense—realized		(10,472	)		(29	)		(5,506	)		—			(16,007	)		—			(16,007	)
Performance fee compensation expense—unrealized		(16,912	)		(1,451	)		(6,355	)		—			(24,718	)		—			(24,718	)
Net performance fees		7,043			851			11,861			2,950			22,705			—			22,705
Investment income (loss)—realized		1,131			(597	)		18,018			730			19,282			—			19,282
Investment income (loss)—unrealized		15,156			1,524			(12,866	)		(862	)		2,952			—			2,952
Interest and other income		2,785			98			251			11			3,145			—			3,145
Interest expense		(623	)		(304	)		(387	)		(325	)		(1,639	)		—			(1,639	)
Net investment income (loss)		18,449			721			5,016			(446	)		23,740			—			23,740
Performance related earnings		25,492			1,572			16,877			2,504			46,445			—			46,445
Economic net income (loss)	$	38,569		$	33,740		$	36,086		$	4,810		$	113,205		$	(35,800	)	$	77,405
Distributable earnings (loss)	$	18,698		$	31,158		$	40,704		$	1,499		$	92,059		$	(37,512	)	$	54,547
Total assets	$	477,710		$	195,543		$	555,851		$	167,315		$	1,396,419		$	10,437		$	1,406,856

        The following table presents the financial results for the Company's operating segments, as well as the OMG, as of and for the three months ended March 31, 2013:

	Private Equity Group			Direct Lending Group			Tradable Credit Group			Real Estate Group			Total Segments			OMG			Total Stand Alone
Management fees
Recurring fees (includes, in the case of the Direct Lending Group, $23,836 of ARCC Part I Fees)	$	23,543		$	51,450		$	30,031		$	2,467		$	107,491		$	—		$	107,491
Previously deferred fees		—			—			1,139			—			1,139			—			1,139
Total management fees		23,543			51,450			31,170			2,467			108,630			—			108,630
Administrative fees and other income		117			83			—			5			205			4,455			4,660
General, administrative and other expenses		(2,238	)		(1,802	)		(2,475	)		(1,258	)		(7,773	)		(5,554	)		(13,327	)
Compensation and benefits		(6,596	)		(26,902	)		(8,767	)		(3,568	)		(45,833	)		(19,082	)		(64,915	)
Fee related earnings (loss)		14,826			22,829			19,928			(2,354	)		55,229			(20,181	)		35,048
Performance fees—realized		9,012			—			9,038			—			18,050			—			18,050
Performance fees—unrealized		25,513			1,499			54,351			—			81,363			—			81,363
Performance fee compensation expense—realized		(7,209	)		—			(36	)		—			(7,245	)		—			(7,245	)
Performance fee compensation expense—unrealized		(20,269	)		(823	)		(34,665	)		—			(55,757	)		—			(55,757	)
Net performance fees		7,047			676			28,688			—			36,411			—			36,411
Investment income (loss)—realized		926			(825	)		19,513			(37	)		19,577			—			19,577
Investment income (loss)—unrealized		2,424			3,839			(3,961	)		1,048			3,350			—			3,350
Interest and other income		406			1,151			312			39			1,908			—			1,908
Interest expense		(919	)		(637	)		(656	)		(213	)		(2,425	)		—			(2,425	)
Net investment income (loss)		2,837			3,528			15,208			837			22,410			—			22,410
Performance related earnings		9,884			4,204			43,896			837			58,821			—			58,821
Economic net income (loss)	$	24,710		$	27,033		$	63,824		$	(1,517	)	$	114,050		$	(20,181	)	$	93,869
Distributable earnings (loss)	$	16,752		$	22,342		$	47,607		$	(3,422	)	$	83,279		$	(20,472	)	$	62,807
Total assets	$	407,526		$	211,238		$	656,974		$	53,547		$	1,329,285		$	9,444		$	1,338,729

Schedule of reconcile segment results to the Company's income before taxes and total assets

	For the Three Months Ended March 31, 2014
	Total Segments			Consolidation Adjustments and Reconciling Items			Consolidated Results
Revenues	$	204,764	(1)	$	(71,136	)(a)	$	133,628
Expenses		115,299	(2)		68,831	(b)		184,130
Other income		23,740	(3)		301,437	(c)		325,177
Economic net income / Income before taxes		113,205			161,470	(d)		274,675
Total assets		1,396,419			20,639,082	(e)		22,035,501

	For the Three Months Ended March 31, 2013
	Total Segments			Consolidation Adjustments and Reconciling Items			Consolidated Results
Revenues	$	208,248	(1)	$	(100,711	)(a)	$	107,537
Expenses		116,608	(2)		96,459	(b)		213,067
Other income		22,410	(3)		330,704	(c)		353,114
Economic net income / Income before taxes		114,050			133,534	(d)		247,584
Total assets		1,329,285			23,898,471	(e)		25,227,756

(1)

Segment revenues consist of management fees, administrative fees and other income, as well as realized and unrealized performance fees.

	March 31, 2014		March 31, 2013
Management fees	$	139,861	$	108,630
Administrative fees and other income		1,473		205
Performance fees—realized		23,338		18,050
Performance fees—unrealized		40,092		81,363
Total segment revenue	$	204,764	$	208,248

(2)

Segment expenses consist of compensation and benefits, and general, administrative and other expenses, as well as realized and unrealized performance fee expenses.

	March 31, 2014		March 31, 2013
Compensation and benefits	$	62,697	$	45,833
General, administrative and other expenses		11,877		7,773
Performance fee compensation expense—realized		16,007		7,245
Performance fee compensation expense—unrealized		24,718		55,757
Total segment expense	$	115,299	$	116,608

(3)

Segment other income consists of realized and unrealized investment income and expenses, interest and other income and interest expenses.

	March 31, 2014			March 31, 2013
Investment income (loss)—realized	$	19,282		$	19,577
Investment income (loss)—unrealized		2,952			3,350
Interest and other income		3,145			1,908
Interest expense		(1,639	)		(2,425	)
Net investment income	$	23,740		$	22,410

(a)

The revenues adjustment principally represents management and performance fees earned from Consolidated Funds which were eliminated in consolidation to arrive at Ares consolidated revenues.

	March 31, 2014			March 31, 2013
Consolidated Fund income eliminated in consolidation	$	(73,578	)	$	(105,166	)
Administrative fees and other income attributable to OMG		5,392			4,455
Performance fee reclass(1)		(2,950	)		—
Total consolidated adjustments and reconciling items	$	(71,136	)	$	(100,711	)

(1)

Related to performance fees for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company's Combined and Consolidated Statements of Operations.

(b)

The expenses adjustment represents the addition of expenses of the Consolidated Funds to the Ares unconsolidated expenses, depreciation expense, equity-based compensation and expenses associated with acquisitions and corporate actions necessary to arrive at Ares consolidated expenses.

	March 31, 2014			March 31, 2013
Consolidated Fund expenses added in consolidation	$	40,637		$	122,345
Consolidated Fund expenses eliminated in consolidation		(31,700	)		(61,237	)
OMG expenses		41,192			24,636
Acquisition related expenses		1,421			750
Equity compensation expense		5,339			6,310
Income tax expenses(1)		—			41
Placement fees and underwriting costs		1,052			82
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Total consolidation adjustments and reconciling items	$	68,831		$	96,459

(1)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

(c)

The other income adjustment represents the addition of net investment income (loss) and net interest income (expense) to arrive at Ares consolidated other income.

	March 31, 2014			March 31, 2013
Other income from Consolidated Funds eliminated in consolidation, net	$	(22,630	)	$	(12,985	)
Consolidated Funds other income added in consolidation, net		321,117			343,689
Performance fee reclass(1)		2,950			—
Total consolidation adjustments and reconciling items	$	301,437		$	330,704

(1)

Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company's Combined and Consolidated Statements of Operations.

(d)

The reconciliation of income before taxes as reported in the Combined and Consolidated Statements of Operations to economic net income, to fee related earnings, to performance related earnings and to distributable earnings consists of the following:

	March 31, 2014			March 31, 2013
Economic net income
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax expense (benefit) of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Economic net income	$	113,205		$	114,050
Fee related earnings
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax (expense) benefit of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Total consolidation adjustments and reconciling items		(161,470	)		(133,534	)
Economic net income		113,205			114,050
Total performance fee income—realized		(23,338	)		(18,050	)
Total performance fee income—unrealized		(40,092	)		(81,363	)
Total performance fee expense—realized		16,007			7,245
Total performance fee expense—unrealized		24,718			55,757
Net investment income		(23,740	)		(22,410	)
Fee related earnings	$	66,760		$	55,229
Management fees	$	139,861		$	108,630
Administrative fees and other income		1,473			205
Compensation and benefits		(62,697	)		(45,833	)
General, administrative and other expenses		(11,877	)		(7,773	)
Fee related earnings	$	66,760		$	55,229

	March 31, 2014			March 31, 2013
Performance related earnings:
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax expense (benefit) of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Economic net income		113,205			114,050
Total management fees	$	(139,861	)	$	(108,630	)
Administrative fees and other income		(1,473	)		(205	)
Compensation and benefits		62,697			45,833
General, administrative and other expenses		11,877			7,773
Performance related earnings	$	46,445		$	58,821
Total performance fee income—realized	$	23,338		$	18,050
Total performance fee income—unrealized		40,092			81,363
Total performance fee expense—realized		(16,007	)		(7,245	)
Total performance fee expense—unrealized		(24,718	)		(55,757	)
Net investment income		23,740			22,410
Performance related earnings	$	46,445		$	58,821

(1)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

	March 31, 2014			March 31, 2013
Distributable Earnings
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Equity compensation expenses		5,339			6,310
OMG distributable loss(1)		37,512			20,472
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax (expense) benefit of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Unrealized performance fee		(40,092	)		(81,363	)
Unrealized performance fee compensation expense		24,718			55,757
Unrealized investment and other loss		(2,952	)		(3,350	)
Distributable Earnings	$	92,059		$	83,279
Fee related earnings	$	66,760		$	55,229
Performance fees—realized		23,338			18,050
Performance fee compensation expense—realized		(16,007	)		(7,245	)
Other income realized, net		20,788			19,060
Net performance fee—realized		28,119			29,865
Less:
One-time acquisition costs		—			(750	)
Income tax expense(2)		—			(41	)
Placement fees and underwriting costs		(1,052	)		(82	)
Non-cash depreciation and amortization(3)		(1,768	)		(942	)
Distributable earnings	$	92,059		$	83,279

(1)

Represents OMG distributable earnings which includes depreciation expense.

(2)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

(3)

Depreciation and amortization is reduced by the amounts attributed to OMG equal to $291 and $291 for the periods ended March 31, 2014 and 2013, respectively.

(e)

The reconciliation of total segment assets to total assets reported in the Combined and Consolidated Statements of Financial Condition consists of the following:

	March 31, 2014			March 31, 2013
Total assets from Consolidated Funds eliminated in consolidation	$	(791,639	)	$	(829,629	)
Total assets from Consolidated Funds added in consolidation		21,420,284			24,718,656
OMG assets		10,437			9,444
Total consolidation adjustments and reconciling items	$	20,639,082		$	23,898,471

Schedule of segment revenues consist of management fees, administrative fees and other income, as well as realized and unrealized performance fees

	March 31, 2014		March 31, 2013
Management fees	$	139,861	$	108,630
Administrative fees and other income		1,473		205
Performance fees—realized		23,338		18,050
Performance fees—unrealized		40,092		81,363
Total segment revenue	$	204,764	$	208,248

Schedule of segment expenses consist of compensation and benefits, and general, administrative and other expenses, as well as realized and unrealized performance fee expenses

	March 31, 2014		March 31, 2013
Compensation and benefits	$	62,697	$	45,833
General, administrative and other expenses		11,877		7,773
Performance fee compensation expense—realized		16,007		7,245
Performance fee compensation expense—unrealized		24,718		55,757
Total segment expense	$	115,299	$	116,608

Schedule of segment other income consists of realized and unrealized investment income and expenses, interest and other income and interest expenses

	March 31, 2014			March 31, 2013
Investment income (loss)—realized	$	19,282		$	19,577
Investment income (loss)—unrealized		2,952			3,350
Interest and other income		3,145			1,908
Interest expense		(1,639	)		(2,425	)
Net investment income	$	23,740		$	22,410

Schedule of revenue adjustment

	March 31, 2014			March 31, 2013
Consolidated Fund income eliminated in consolidation	$	(73,578	)	$	(105,166	)
Administrative fees and other income attributable to OMG		5,392			4,455
Performance fee reclass(1)		(2,950	)		—
Total consolidated adjustments and reconciling items	$	(71,136	)	$	(100,711	)

(1)

Related to performance fees for AREA Sponsor Holdings LLC, an investment pool. Changes in value of this investment are reflected within other income (expense) in the Company's Combined and Consolidated Statements of Operations.

Schedule of expenses adjustment

	March 31, 2014			March 31, 2013
Consolidated Fund expenses added in consolidation	$	40,637		$	122,345
Consolidated Fund expenses eliminated in consolidation		(31,700	)		(61,237	)
OMG expenses		41,192			24,636
Acquisition related expenses		1,421			750
Equity compensation expense		5,339			6,310
Income tax expenses(1)		—			41
Placement fees and underwriting costs		1,052			82
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Total consolidation adjustments and reconciling items	$	68,831		$	96,459

(1)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

Schedule of other income adjustment

	March 31, 2014			March 31, 2013
Other income from Consolidated Funds eliminated in consolidation, net	$	(22,630	)	$	(12,985	)
Consolidated Funds other income added in consolidation, net		321,117			343,689
Performance fee reclass(1)		2,950			—
Total consolidation adjustments and reconciling items	$	301,437		$	330,704

(1)

Related to performance fees for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within other (income) expense in the Company's Combined and Consolidated Statements of Operations.

Schedule of reconciliation of income before taxes from reportable segments to economic net income, to fee related earnings, to performance related earnings and to distributable earnings of entity's consolidated statement of operations

	March 31, 2014			March 31, 2013
Economic net income
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax expense (benefit) of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Economic net income	$	113,205		$	114,050
Fee related earnings
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax (expense) benefit of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Total consolidation adjustments and reconciling items		(161,470	)		(133,534	)
Economic net income		113,205			114,050
Total performance fee income—realized		(23,338	)		(18,050	)
Total performance fee income—unrealized		(40,092	)		(81,363	)
Total performance fee expense—realized		16,007			7,245
Total performance fee expense—unrealized		24,718			55,757
Net investment income		(23,740	)		(22,410	)
Fee related earnings	$	66,760		$	55,229
Management fees	$	139,861		$	108,630
Administrative fees and other income		1,473			205
Compensation and benefits		(62,697	)		(45,833	)
General, administrative and other expenses		(11,877	)		(7,773	)
Fee related earnings	$	66,760		$	55,229

	March 31, 2014			March 31, 2013
Performance related earnings:
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Depreciation expense		2,059			1,233
Equity compensation expenses		5,339			6,310
Income tax expense(1)		—			41
Acquisition-related expenses		1,421			750
Placement fees and underwriting costs		1,052			82
OMG expenses, net		35,800			20,181
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax expense (benefit) of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Economic net income		113,205			114,050
Total management fees	$	(139,861	)	$	(108,630	)
Administrative fees and other income		(1,473	)		(205	)
Compensation and benefits		62,697			45,833
General, administrative and other expenses		11,877			7,773
Performance related earnings	$	46,445		$	58,821
Total performance fee income—realized	$	23,338		$	18,050
Total performance fee income—unrealized		40,092			81,363
Total performance fee expense—realized		(16,007	)		(7,245	)
Total performance fee expense—unrealized		(24,718	)		(55,757	)
Net investment income		23,740			22,410
Performance related earnings	$	46,445		$	58,821

(1)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

	March 31, 2014			March 31, 2013
Distributable Earnings
Income before taxes	$	274,675		$	247,584
Adjustments
Amortization of intangibles		8,831			2,299
Equity compensation expenses		5,339			6,310
OMG distributable loss(1)		37,512			20,472
Income of non-controlling interests in Consolidated Funds		(225,181	)		(148,591	)
Income tax (expense) benefit of non-controlling interests in Consolidated Funds		9,209			(15,839	)
Unrealized performance fee		(40,092	)		(81,363	)
Unrealized performance fee compensation expense		24,718			55,757
Unrealized investment and other loss		(2,952	)		(3,350	)
Distributable Earnings	$	92,059		$	83,279
Fee related earnings	$	66,760		$	55,229
Performance fees—realized		23,338			18,050
Performance fee compensation expense—realized		(16,007	)		(7,245	)
Other income realized, net		20,788			19,060
Net performance fee—realized		28,119			29,865
Less:
One-time acquisition costs		—			(750	)
Income tax expense(2)		—			(41	)
Placement fees and underwriting costs		(1,052	)		(82	)
Non-cash depreciation and amortization(3)		(1,768	)		(942	)
Distributable earnings	$	92,059		$	83,279

(1)

Represents OMG distributable earnings which includes depreciation expense.

(2)

Relates to local income taxes paid by subsidiary operating entities included in general, administrative and other expenses.

(3)

Depreciation and amortization is reduced by the amounts attributed to OMG equal to $291 and $291 for the periods ended March 31, 2014 and 2013, respectively.

Schedule of reconciliation of total segment assets to total assets reported in the Combined and Consolidated Statements of Financial Condition

	March 31, 2014			March 31, 2013
Total assets from Consolidated Funds eliminated in consolidation	$	(791,639	)	$	(829,629	)
Total assets from Consolidated Funds added in consolidation		21,420,284			24,718,656
OMG assets		10,437			9,444
Total consolidation adjustments and reconciling items	$	20,639,082		$	23,898,471