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SEGMENT REPORTING (Tables)
 3 Months Ended
Mar. 31, 2016
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, for the three months ended March 31, 2016:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Private

    

Real

    

 

 

    

 

 

    

Total

 

 

 

Credit

 

Equity

 

Estate

 

Total

 

 

 

 

Stand

 

 

 

Group

 

Group

 

Group

 

Segments

 

OMG

 

Alone

 

Management fees (includes ARCC Part I Fees of $28,625)

 

$
109,441

 

$
36,482

 

$
16,745

 

$
162,668

 

$

 —

 

$
162,668

 

Administrative fees and other income

 

 
109

 

 
340

 

 
406

 

 
855

 

 
6,674

 

 
7,529

 

Compensation and benefits

 

 
(43,914)

 

 
(12,167)

 

 
(10,714)

 

 
(66,795)

 

 
(34,714)

 

 
(101,509)

 

General, administrative and other expenses

 

 
(5,051)

 

 
(2,904)

 

 
(3,450)

 

 
(11,405)

 

 
(18,235)

 

 
(29,640)

 

Fee related earnings

 

 
60,585

 

 
21,751

 

 
2,987

 

 
85,323

 

 
(46,275)

 

 
39,048

 

Performance fees—realized

 

 
6,178

 

 

 —

 

 
171

 

 
6,349

 

 

 —

 

 
6,349

 

Performance fees—unrealized

 

 
(29,327)

 

 
(12,143)

 

 
4,122

 

 
(37,348)

 

 

 —

 

 
(37,348)

 

Performance fee compensation—realized

 

 
(1,983)

 

 

 —

 

 

 —

 

 
(1,983)

 

 

 —

 

 
(1,983)

 

Performance fee compensation—unrealized

 

 
16,605

 

 
8,941

 

 
(2,233)

 

 
23,313

 

 

 —

 

 
23,313

 

Net performance fees

 

 
(8,527)

 

 
(3,202)

 

 
2,060

 

 
(9,669)

 

 

 —

 

 
(9,669)

 

Investment income (loss)—realized

 

 
162

 

 
(112)

 

 
(132)

 

 
(82)

 

 
(57)

 

 
(139)

 

Investment income (loss)—unrealized

 

 
(4,007)

 

 
(7,745)

 

 
2,799

 

 
(8,953)

 

 
385

 

 
(8,568)

 

Interest and other investment income

 

 
7,579

 

 
(91)

 

 
892

 

 
8,380

 

 
(49)

 

 
8,331

 

Interest expense

 

 
(2,448)

 

 
(1,405)

 

 
(274)

 

 
(4,127)

 

 
(728)

 

 
(4,855)

 

Net investment income (loss)

 

 
1,286

 

 
(9,353)

 

 
3,285

 

 
(4,782)

 

 
(449)

 

 
(5,231)

 

Performance related earnings

 

 
(7,241)

 

 
(12,555)

 

 
5,345

 

 
(14,451)

 

 
(449)

 

 
(14,900)

 

Economic net income

 

$
53,344

 

$
9,196

 

$
8,332

 

$
70,872

 

$
(46,724)

 

$
24,148

 

Distributable earnings

 

$
68,083

 

$
19,605

 

$
3,343

 

$
91,031

 

$
(49,750)

 

$
41,281

 

 

 

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended March 31, 2015:

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

    

 

    

Private

    

Real

    

 

 

    

 

 

    

Total

 

 

 

Credit

 

Equity

 

Estate

 

Total

 

 

 

 

Stand

 

 

 

Group

 

Group

 

Group

 

Segments

 

OMG

 

Alone

 

Management fees (includes ARCC Part I Fees of $29,042)

 

$
108,348

 

$
36,589

 

$
17,379

 

$
162,316

 

$

—

 

$
162,316

 

Administrative fees and other income

 

 
98

 

 
13

 

 
854

 

 
965

 

 
6,385

 

 
7,350

 

Compensation and benefits

 

 
(42,565)

 

 
(12,321)

 

 
(10,131)

 

 
(65,017)

 

 
(28,914)

 

 
(93,931)

 

General, administrative and other expenses

 

 
(7,125)

 

 
(3,118)

 

 
(2,544)

 

 
(12,787)

 

 
(15,326)

 

 
(28,113)

 

Fee related earnings

 

 
58,756

 

 
21,163

 

 
5,558

 

 
85,477

 

 
(37,855)

 

 
47,622

 

Performance fees—realized

 

 
35,214

 

 
425

 

 

 —

 

 
35,639

 

 

—

 

 
35,639

 

Performance fees—unrealized

 

 
(19,201)

 

 
87,331

 

 
320

 

 
68,450

 

 

—

 

 
68,450

 

Performance fee compensation—realized

 

 
(21,004)

 

 
(340)

 

 

 —

 

 
(21,344)

 

 

—

 

 
(21,344)

 

Performance fee compensation—unrealized

 

 
14,531

 

 
(69,981)

 

 
402

 

 
(55,048)

 

 

—

 

 
(55,048)

 

Net performance fees

 

 
9,540

 

 
17,435

 

 
722

 

 
27,697

 

 

 —

 

 
27,697

 

Investment income (loss)—realized

 

 
8,618

 

 
4,172

 

 
132

 

 
12,922

 

 

—

 

 
12,922

 

Investment income (loss)—unrealized

 

 
(3,369)

 

 
(1,442)

 

 
196

 

 
(4,615)

 

 

—

 

 
(4,615)

 

Interest and other investment income

 

 
(1,526)

 

 
4,485

 

 
29

 

 
2,988

 

 

—

 

 
2,988

 

Interest expense

 

 
(1,734)

 

 
(1,680)

 

 
(270)

 

 
(3,684)

 

 

—

 

 
(3,684)

 

Net investment income (loss)

 

 
1,989

 

 
5,535

 

 
87

 

 
7,611

 

 

 —

 

 
7,611

 

Performance related earnings

 

 
11,529

 

 
22,970

 

 
809

 

 
35,308

 

 

 —

 

 
35,308

 

Economic net income

 

$
70,285

 

$
44,133

 

$
6,367

 

$
120,785

 

$
(37,855)

 

$
82,930

 

Distributable earnings

 

$
75,707

 

$
27,086

 

$
3,382

 

$
106,175

 

$
(38,880)

 

$
67,295

 

 

Components of Revenue, Expenses, and Other Income (Loss)

 

 

 

 

 

 

 

 

 

 

    

    

For the Three Months Ended March 31,

 

 

 

 

2016

 

2015

 

Segment Revenues

 

 

 

 

 

 

 

 

Management fees (includes ARCC Part I Fees of $28,625 and $29,042 for the three months ended March 31, 2016 and 2015, respectively)

 

 

$
162,668

 

$
162,316

 

Administrative fees and other income

 

 

 
855

 

 
965

 

Performance fees—realized

 

 

 
6,349

 

 
35,639

 

Performance fees—unrealized

 

 

 
(37,348)

 

 
68,450

 

Total segment revenues

 

 

$
132,524

 

$
267,370

 

Segment Expenses

 

 

 

 

 

 

 

 

Compensation and benefits

 

 

$
66,795

 

$
65,017

 

General, administrative and other expenses

 

 

 
11,405

 

 
12,787

 

Performance fee compensation—realized

 

 

 
1,983

 

 
21,344

 

Performance fee compensation—unrealized

 

 

 
(23,313)

 

 
55,048

 

Total segment expenses

 

 

$
56,870

 

$
154,196

 

Other Income (Expense)

 

 

 

 

 

 

 

 

Investment income (loss)—realized

 

 

$
(82)

 

$
12,922

 

Investment income (loss)—unrealized

 

 

 
(8,953)

 

 
(4,615)

 

Interest and other investment income

 

 

 
8,380

 

 
2,988

 

Interest expense

 

 

 
(4,127)

 

 
(3,684)

 

Total other income (expense)

 

 

$
(4,782)

 

$
7,611

 

 

Schedule of revenue adjustment

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

2016

    

2015

Total segment revenue

$
132,524

 

$
267,370

Consolidated Fund revenue eliminated in consolidation

 
(2,611)

 

 
(2,859)

Administrative fees and other income attributable to OMG

 
6,674

 

 
6,385

Performance fees reclass (1)

 
(572)

 

 
(991)

Total consolidated adjustments and reconciling items

 
3,491

 

 
2,535

Total consolidated revenue

$
136,015

 

$
269,905

(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 Condensed Consolidated Statements of Operations.

 

Schedule of expenses adjustment

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2016

    

2015

    

 

Total segment expenses

$
56,870

 

$
154,196

 

 

Consolidated Fund expenses added in consolidation

 
5,979

 

 
15,359

 

 

Consolidated Fund expenses eliminated in consolidation

 
(5,752)

 

 
(4,686)

 

 

OMG expenses

 
52,949

 

 
44,240

 

 

Acquisition-related expenses

 
268

 

 
2,224

 

 

Equity compensation expense

 
9,173

 

 
7,921

 

 

Placement fees and underwriting costs

 
930

 

 
3,045

 

 

Amortization of intangibles

 
7,263

 

 
10,892

 

 

Depreciation expense

 
1,858

 

 
1,272

 

 

Total consolidation adjustments and reconciling items

 
72,668

 

 
80,267

 

 

Total consolidated expenses

$
129,538

 

$
234,463

 

 

 

Schedule of other income (expense) adjustment

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2016

    

2015

    

 

Total other income (expense)

$
(4,782)

 

$
7,611

 

 

Consolidated Funds other income added in consolidation, net

 
(22,803)

 

 
(2,583)

 

 

Other income from Consolidated Funds eliminated in consolidation, net

 
12,239

 

 
4,999

 

 

OMG other income

 
(449)

 

 

 —

 

 

Performance fee reclass(1)

 
572

 

 
991

 

 

Change in value of contingent consideration

 
(228)

 

 

 —

 

 

Other non-cash expense

 

 —

 

 
(11)

 

 

Total consolidation adjustments and reconciling items

 
(10,669)

 

 
3,396

 

 

Total consolidated other income (expense)

$
(15,451)

 

$
11,007

 

 

(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 Condensed Consolidated Statements of Operations.
Reconciliation of reported net income to segment earnings

 

 

 

 

 

 

 

 

 

For the Three Months Ended March 31,

 

 

 

2016

    

2015

    

 

Economic net income

 

 

 

 

 

 

 

Income (loss) before taxes

$
(8,974)

 

$
46,449

 

 

Adjustments:

 

 

 

 

 

 

 

Amortization of intangibles

 
7,263

 

 
10,892

 

 

Depreciation expense

 
1,858

 

 
1,272

 

 

Equity compensation expenses

 
9,173

 

 
7,921

 

 

Net acquisition-related expenses

 
496

 

 
2,224

 

 

Placement fees and underwriting costs

 
930

 

 
3,045

 

 

OMG expenses, net

 
46,724

 

 
37,855

 

 

Other non-cash expense

 

 —

 

 
11

 

 

Income before taxes of non-controlling interests in Consolidated Funds, net of eliminations

 
13,402

 

 
11,116

 

 

Total consolidation adjustments and reconciling items

 
79,846

 

 
74,336

 

 

Economic net income

 
70,872

 

 
120,785

 

 

Total performance fees income - realized

 
(6,349)

 

 
(35,639)

 

 

Total performance fees income - unrealized

 
37,348

 

 
(68,450)

 

 

Total performance fee compensation - realized

 
1,983

 

 
21,344

 

 

Total performance fee compensation - unrealized

 
(23,313)

 

 
55,048

 

 

Total investment income

 
4,782

 

 
(7,611)

 

 

Fee related earnings

 
85,323

 

 
85,477

 

 

Performance fees—realized

 
6,349

 

 
35,639

 

 

Performance fee compensation—realized

 
(1,983)

 

 
(21,344)

 

 

Investment and other income realized, net

 
4,171

 

 
12,227

 

 

Additional adjustments:

 

 

 

 

 

 

 

Dividend equivalent(1)

 
(684)

 

 
(684)

 

 

One-time acquisition costs(1)

 
(270)

 

 
(724)

 

 

Income tax expense(1)

 
(232)

 

 
(476)

 

 

Non-cash items

 
164

 

 
(156)

 

 

Placement fees and underwriting costs(1)

 
(938)

 

 
(3,045)

 

 

Depreciation and amortization(1)

 
(869)

 

 
(739)

 

 

Distributable earnings

$
91,031

 

$
106,175

 

 

Performance related earnings

 

 

 

 

 

 

 

Economic net income

$
70,872

 

$
120,785

 

 

Less fee related earnings

 
(85,323)

 

 
(85,477)

 

 

Performance related earnings

$
(14,451)

 

$
35,308

 

 

 

 

(1)

Certain costs are reduced by the amounts attributable to OMG, which is excluded from segment results.