SEGMENT REPORTING (Tables)

6 Months Ended

Jun. 30, 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 June 30, 2016:

			Private		Real						Total
	Credit		Equity		Estate		Total				Stand
	Group		Group		Group		Segments		OMG		Alone
Management fees (Credit Group includes ARCC Part I Fees of $28,999)	$	110,770	$	35,612	$	16,230	$	162,612	$	—	$	162,612
Other fees(1)		550		334		435		1,319		—		1,319
Compensation and benefits		(45,479)		(13,191)		(10,165)		(68,835)		(28,218)		(97,053)
General, administrative and other expenses		(6,609)		(2,925)		(2,399)		(11,933)		(15,380)		(27,313)
Fee related earnings		59,232		19,830		4,101		83,163		(43,598)		39,565
Performance fees—realized		16,024		62,779		2,801		81,604		—		81,604
Performance fees—unrealized		16,603		105,450		1,261		123,314		—		123,314
Performance fee compensation—realized		(754)		(50,224)		(53)		(51,031)		—		(51,031)
Performance fee compensation—unrealized		(14,755)		(84,337)		(1,773)		(100,865)		—		(100,865)
Net performance fees		17,118		33,668		2,236		53,022		—		53,022
Investment income (loss)—realized		123		3,003		695		3,821		(31)		3,790
Investment income (loss)—unrealized		7,032		420		(1,067)		6,385		(11,904)		(5,519)
Interest and other investment income		8,098		8,206		36		16,340		(19)		16,321
Interest expense		(2,450)		(1,397)		(272)		(4,119)		(709)		(4,828)
Net investment income (loss)		12,803		10,232		(608)		22,427		(12,663)		9,764
Performance related earnings		29,921		43,900		1,628		75,449		(12,663)		62,786
Economic net income	$	89,153	$	63,730	$	5,729	$	158,612	$	(56,261)	$	102,351
Distributable earnings	$	76,074	$	41,130	$	8,374	$	125,578	$	(48,758)	$	76,820

(1) For the three months ending June 30, 2016, the Company presented compensation and benefits expenses and general, administrative and other expenses net of the administrative fees earned from certain funds.  As a result, for the three months ended June 30, 2016,  $6.0 million and $0.5 million of administrative fees have been reclassified from other fees to compensation and benefits expenses and general, administrative and other expenses, respectively.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the three months ended June 30, 2015:

			Private		Real						Total
	Credit		Equity		Estate		Total				Stand
	Group		Group		Group		Segments		OMG		Alone
Management fees (Credit Group includes ARCC Part I Fees of $29,250)	$	108,180	$	36,373	$	15,934	$	160,487	$	—	$	160,487
Other fees(1)		99		36		731		866		—		866
Compensation and benefits		(43,036)		(11,226)		(9,992)		(64,254)		(21,811)		(86,065)
General, administrative and other expenses		(6,825)		(3,200)		(3,709)		(13,734)		(15,067)		(28,801)
Fee related earnings		58,418		21,983		2,964		83,365		(36,878)		46,487
Performance fees—realized		40,081		18,878		102		59,061		—		59,061
Performance fees—unrealized		(26,175)		41,863		3,886		19,574		—		19,574
Performance fee compensation—realized		(22,617)		(15,102)		—		(37,719)		—		(37,719)
Performance fee compensation—unrealized		16,151		(33,795)		(1,181)		(18,825)		—		(18,825)
Net performance fees		7,440		11,844		2,807		22,091		—		22,091
Investment income (loss)—realized		5,903		3,105		255		9,263		—		9,263
Investment income (loss)—unrealized		(6,533)		2,085		953		(3,495)		—		(3,495)
Interest and other investment income		3,933		1,330		18		5,281		—		5,281
Interest expense		(1,736)		(1,658)		(260)		(3,654)		—		(3,654)
Net investment income (loss)		1,567		4,862		966		7,395		—		7,395
Performance related earnings		9,007		16,706		3,773		29,486		—		29,486
Economic net income	$	67,425	$	38,689	$	6,737	$	112,851	$	(36,878)	$	75,973
Distributable earnings	$	81,605	$	28,242	$	2,090	$	111,937	$	(38,981)	$	72,956

(1) For the three months ending June 30, 2015, the Company presented compensation and benefits expenses and general, administrative and other expenses net of the administrative fees earned from certain funds.  As a result, for the three months ended June 30, 2015,  $5.3 million and $0.9 million of administrative fees have been reclassified from other fees to compensation and benefits expenses and general, administrative and other expenses, respectively.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2016:

			Private		Real						Total
	Credit		Equity		Estate		Total				Stand
	Group		Group		Group		Segments		OMG		Alone
Management fees (Credit Group includes ARCC Part I Fees of $57,624)	$	220,211	$	72,094	$	32,975	$	325,280	$	—	$	325,280
Other fees(1)		659		674		693		2,026		—		2,026
Compensation and benefits		(89,393)		(25,358)		(20,879)		(135,630)		(57,208)		(192,838)
General, administrative and other expenses		(11,660)		(5,829)		(5,701)		(23,190)		(32,665)		(55,855)
Fee related earnings		119,817		41,581		7,088		168,486		(89,873)		78,613
Performance fees—realized		22,202		62,779		2,972		87,953		—		87,953
Performance fees—unrealized		(12,724)		93,307		5,383		85,966		—		85,966
Performance fee compensation—realized		(2,737)		(50,224)		(53)		(53,014)		—		(53,014)
Performance fee compensation—unrealized		1,850		(75,396)		(4,006)		(77,552)		—		(77,552)
Net performance fees		8,591		30,466		4,296		43,353		—		43,353
Investment income (loss)—realized		285		2,891		563		3,739		(88)		3,651
Investment income (loss)—unrealized		3,025		(7,325)		1,732		(2,568)		(11,519)		(14,087)
Interest and other investment income		15,677		8,115		928		24,720		(68)		24,652
Interest expense		(4,898)		(2,802)		(546)		(8,246)		(1,437)		(9,683)
Net investment income (loss)		14,089		879		2,677		17,645		(13,112)		4,533
Performance related earnings		22,680		31,345		6,973		60,998		(13,112)		47,886
Economic net income	$	142,497	$	72,926	$	14,061	$	229,484	$	(102,985)	$	126,499
Distributable earnings	$	144,157	$	60,735	$	11,717	$	216,609	$	(98,508)	$	118,101

(1) For the six months ending June 30, 2016, the Company presented compensation and benefits expenses and general, administrative and other expenses net of the administrative fees earned from certain funds.  As a result, for the six months ended June 30, 2016, $11.8 million and $1.6 million of administrative fees have been reclassified from other fees to compensation and benefits expenses and general, administrative and other expenses, respectively.

The following table presents the financial results for the Company’s operating segments, as well as the OMG, for the six months ended June 30, 2015:

			Private		Real						Total
	Credit		Equity		Estate		Total				Stand
	Group		Group		Group		Segments		OMG		Alone
Management fees (Credit Group includes ARCC Part I Fees of $58,292)	$	216,528	$	72,962	$	33,313	$	322,803	$	—	$	322,803
Other fees(1)		197		49		1,585		1,831		—		1,831
Compensation and benefits		(85,601)		(23,547)		(20,123)		(129,271)		(45,445)		(174,716)
General, administrative and other expenses		(13,950)		(6,318)		(6,253)		(26,521)		(29,288)		(55,809)
Fee related earnings		117,174		43,146		8,522		168,842		(74,733)		94,109
Performance fees—realized		75,295		19,303		102		94,700		—		94,700
Performance fees—unrealized		(45,376)		129,194		4,206		88,024		—		88,024
Performance fee compensation—realized		(43,621)		(15,442)		—		(59,063)		—		(59,063)
Performance fee compensation—unrealized		30,682		(103,776)		(779)		(73,873)		—		(73,873)
Net performance fees		16,980		29,279		3,529		49,788		—		49,788
Investment income (loss)—realized		14,521		7,277		387		22,185		—		22,185
Investment income (loss)—unrealized		(9,902)		643		1,149		(8,110)		—		(8,110)
Interest and other investment income		2,407		5,815		47		8,269		—		8,269
Interest expense		(3,470)		(3,338)		(530)		(7,338)		—		(7,338)
Net investment income (loss)		3,556		10,397		1,053		15,006		—		15,006
Performance related earnings		20,536		39,676		4,582		64,794		—		64,794
Economic net income	$	137,710	$	82,822	$	13,104	$	233,636	$	(74,733)	$	158,903
Distributable earnings	$	157,312	$	55,328	$	5,472	$	218,112	$	(77,861)	$	140,251

(1) For the six months ending June 30, 2015, the Company presented compensation and benefits expenses and general, administrative and other expenses net of the administrative fees earned from certain funds.  As a result, for the six months ended June 30, 2015, $10.5 million and $2.1 million of administrative fees have been reclassified from other fees to compensation and benefits expenses and general, administrative and other expenses, respectively.

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

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Segment Revenues
Management fees (includes ARCC Part I Fees of $28,999,  $57,624 and $29,250, $58,292 for the three and six months ended June 30, 2016 and 2015, respectively)	$	162,612	$	160,487	$	325,280	$	322,803
Other fees		1,319		866		2,026		1,831
Performance fees—realized		81,604		59,061		87,953		94,700
Performance fees—unrealized		123,314		19,574		85,966		88,024
Total segment revenues	$	368,849	$	239,988	$	501,225	$	507,358
Segment Expenses
Compensation and benefits	$	68,835	$	64,254	$	135,630	$	129,271
General, administrative and other expenses		11,933		13,734		23,190		26,521
Performance fee compensation—realized		51,031		37,719		53,014		59,063
Performance fee compensation—unrealized		100,865		18,825		77,552		73,873
Total segment expenses	$	232,664	$	134,532	$	289,386	$	288,728
Other Income (Expense)
Investment income (loss)—realized	$	3,821	$	9,263		3,739		22,185
Investment income (loss)—unrealized		6,385		(3,495)		(2,568)		(8,110)
Interest and other investment income		16,340		5,281		24,720		8,269
Interest expense		(4,119)		(3,654)		(8,246)		(7,338)
Total other income	$	22,427	$	7,395	$	17,645	$	15,006

Schedule of revenue adjustment

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Total segment revenue	$	368,849	$	239,988	$	501,225	$	507,358
Consolidated Fund revenue eliminated in consolidation		(4,842)		(2,972)		(7,453)		(5,831)
Other fees(1)		6,544		6,167		13,366		12,552
Performance fees reclass(2)		(1,016)		(2,019)		(1,588)		(3,010)
Total consolidated adjustments and reconciling items		686		1,176		4,325		3,711
Total consolidated revenue	$	369,535	$	241,164	$	505,550	$	511,069

(1) Represents administrative fees that are presented in administrative and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

(2) 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 June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Total segment expenses	$	232,664	$	134,532	$	289,386	$	288,728
Consolidated Fund expenses added in consolidation		5,288		7,614		11,267		22,973
Consolidated Fund expenses eliminated in consolidation		(4,589)		(4,005)		(10,341)		(8,691)
Other fees(1)		6,544		6,167		13,366		12,552
OMG expenses		43,598		36,878		89,873		74,733
Acquisition and merger-related expenses		85		3,526		353		5,750
Equity compensation expense		9,536		7,798		18,709		15,719
Placement fees and underwriting costs		1,754		1,462		2,684		4,507
Amortization of intangibles		7,121		16,646		14,384		27,538
Depreciation expense		1,934		1,951		3,792		3,223
Total consolidation adjustments and reconciling items		71,271		78,037		144,087		158,304
Total consolidated expenses	$	303,935	$	212,569	$	433,473	$	447,032

(1) Represents administrative fees that are presented in administrative and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.

Schedule of other income (expense) adjustment

	For the Three Months Ended June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Total other income	$	22,427	$	7,395	$	17,645	$	15,006
Consolidated Funds other income (expense) added in consolidation, net		7,168		22,667		(15,635)		20,084
Other income (expense) from Consolidated Funds eliminated in consolidation, net		(566)		(3,124)		11,673		1,875
OMG other expense		(12,663)		—		(13,112)		—
Performance fee reclass(1)		1,016		2,019		1,588		3,010
Other non-cash expense		24		(1)		(204)		(11)
Total consolidation adjustments and reconciling items		(5,021)		21,561		(15,690)		24,958
Total consolidated other income (expense)	$	17,406	$	28,956	$	1,955	$	39,964

(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 June 30,				For the Six Months Ended June 30,
	2016		2015		2016		2015
Economic net income
Income before taxes	$	83,006	$	57,551	$	74,032	$	104,001
Adjustments:
Amortization of intangibles		7,121		16,646		14,384		27,538
Depreciation expense		1,934		1,951		3,792		3,223
Equity compensation expenses		9,536		7,798		18,709		15,719
Acquisition and merger-related expenses		61		3,526		557		5,750
Placement fees and underwriting costs		1,754		1,462		2,684		4,507
OMG expenses, net		56,261		36,878		102,985		74,733
Other non-cash expense		—		1		—		11
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations		(1,061)		(12,962)		12,341		(1,846)
Total consolidation adjustments and reconciling items		75,606		55,300		155,452		129,635
Economic net income		158,612		112,851		229,484		233,636
Total performance fees income - realized		(81,604)		(59,061)		(87,953)		(94,700)
Total performance fees income - unrealized		(123,314)		(19,574)		(85,966)		(88,024)
Total performance fee compensation - realized		51,031		37,719		53,014		59,063
Total performance fee compensation - unrealized		100,865		18,825		77,552		73,873
Total investment income		(22,427)		(7,395)		(17,645)		(15,006)
Fee related earnings		83,163		83,365		168,486		168,842
Performance fees—realized		81,604		59,061		87,953		94,700
Performance fee compensation—realized		(51,031)		(37,719)		(53,014)		(59,063)
Investment and other income realized, net		14,657		10,890		18,828		23,116
Additional adjustments:
Dividend equivalent(1)		(552)		(717)		(1,236)		(1,401)
One-time acquisition costs(1)		(12)		253		(282)		(471)
Income tax expense(1)		(249)		(391)		(481)		(867)
Non-cash items		683		(253)		847		(409)
Placement fees and underwriting costs(1)		(1,747)		(1,463)		(2,685)		(4,507)
Depreciation and amortization(1)		(938)		(1,089)		(1,807)		(1,828)
Distributable earnings	$	125,578	$	111,937	$	216,609	$	218,112
Performance related earnings
Economic net income	$	158,612	$	112,851	$	229,484	$	233,636
Less: fee related earnings		(83,163)		(83,365)		(168,486)		(168,842)
Performance related earnings	$	75,449	$	29,486	$	60,998	$	64,794

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