The following tables present the adjustments made in connection with the Company's change in accounting principle related to carried interest under ASC 323, Investments-Equity Method and Joint Ventures on the financial statement line items for the periods presented in the condensed consolidated financial statements:



Condensed Consolidated Statement of Financial Condition

	As of December 31, 2017
	As Previously Reported		Adjustments				As Adjusted
	(audited)
Assets
Investments ($1,077,236 of accrued carried interest)	$	647,335	$	1,077,236			$	1,724,571
Performance income receivable	1,099,847		(1,099,847		)		—
Other assets	107,730		22,611			(1)	130,341


(1)	Unrealized incentive fees receivable balance as of December 31, 2017.



Condensed Consolidated Statement of Operations

	Three Months Ended June 30, 2017
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance fees	$	338,024	$	(338,024	)	$	—
Carried interest allocation	—		333,808			333,808
Incentive fees	—		4,216			4,216
Principal investment income	—		38,307			38,307
Total revenues	533,890		38,307			572,197
Other income (expense)
Net realized and unrealized gain on investments	30,079		(36,667		)	(6,588		)
Interest and dividend income	3,102		(1,640		)	1,462



Condensed Consolidated Statement of Operations

	Six Months Ended June 30, 2017
	As Previously Reported		Adjustments			As Adjusted

Revenues
Performance fees	$	393,196	$	(393,196	)	$	—
Carried interest allocation	—		385,815			385,815
Incentive fees	—		7,381			7,381
Principal investment income	—		40,894			40,894
Total revenues	775,547		40,894			816,441
Other income (expense)
Net realized and unrealized gain on investments	32,734		(38,434		)	(5,700		)
Interest and dividend income	5,846		(2,460		)	3,386

The Company's change in accounting policy related to carried interest did not impact the Condensed Consolidated Statements of Comprehensive Income, Condensed Consolidated Statements of Changes in Equity or Condensed Consolidated Statements of Cash Flows for the year ended December 31, 2017.

The following tables present the impact of incentive fees on the condensed consolidated financial statements upon the adoption of ASC 606 effective January 1, 2018:

Condensed Consolidated Statement of Financial Condition



	As of January 1, 2018
	As adjusted December 31, 2017		Adjustments				As Adjusted for ASC 606 adoption
Investments	$	1,724,571	$	—			$	1,724,571
Other assets	130,341		(22,611		)	(1)	107,730
Total assets	8,563,522		(22,611		)		8,540,911
Total liabilities	7,103,230		—				7,103,230
Cumulative effect adjustment to equity(2)	—		(22,611		)		(22,611		)
Total equity	1,460,292		(22,611		)		1,437,681
Total liabilities, non-controlling interests and equity	8,563,522		(22,611		)		8,540,911


(1)	Unrealized incentive fees receivable balance as of December 31, 2017.


(2)	See detail below.

Condensed Consolidated Statement of Changes in Equity



	Preferred Equity		Shareholders' Capital			Accumulated Other Comprehensive Loss			Non-controlling interest in Ares Operating Group Entities			Non-Controlling Interest in Consolidated Funds		Total Equity
Balance at December 31, 2017	$	298,761	$	279,065		$	(4,208	)	$	358,186		$	528,488	$	1,460,292
Cumulative effect of the adoption of ASC 606	—		(10,827		)	—			(17,117		)	5,333		(22,611		)
As adjusted balance at January 1, 2018	$	298,761	$	268,238		$	(4,208	)	$	341,069		$	533,821	$	1,437,681

In accordance with the ASC 606 disclosure requirements, the following tables present the adjustments made by the Company to remove the effects of adopting ASC 606 on the condensed consolidated financial statements as of and for the three and six months ended June 30, 2018:



Condensed Consolidated Statement of Financial Condition

	As of June 30, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Assets
Cash and cash equivalents	$	125,448		$	—		$	125,448
Investments ($985,035 of accrued carried interest)	$	1,466,247					$	1,466,247
Due from affiliates	$	172,428					$	172,428
Deferred tax asset, net	$	42,942		$	(199	)	$	42,743
Other assets	100,183			26,195			126,378
Total assets	10,144,735			25,996			10,170,731
Commitments and contingencies
Non-controlling interest in Consolidated Funds	577,217			(3,473		)	573,744
Non-controlling interest in Ares Operating Group entities	316,048			18,109			334,157
Controlling interest in Ares Management, L.P.:
Shareholders' equity (98,398,340 shares issued and outstanding)	349,981			11,443			361,424
Accumulated other comprehensive loss, net of tax	(6,758		)	(83		)	(6,841		)
Total controlling interest in Ares Management, L.P	343,223			11,360			354,583
Total equity	1,535,249			25,996			1,561,245
Total liabilities and equity	10,144,735			25,996			10,170,731



Condensed Consolidated Statement of Operations

	Three Months Ended June 30, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606
Revenues
Incentive fees	$	7,740		$	2,924		$	10,664
Total revenues	204,163			2,924			207,087
Expenses
Expenses of Consolidated Funds	35,112			—			35,112
Total expenses	221,017			—			221,017
Other income (expense)
Other income (expense), net	(1,987		)	12			(1,975		)
Total other income	67,926			12			67,938
Income before taxes	51,072			2,936			54,008
Income tax benefit	36,903			(50		)	36,853
Net income	14,169			2,986			17,155
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	9,882			3,579			13,461
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	16,062			(433		)	15,629
Net income attributable to Ares Management, L.P.	(11,775		)	(160		)	(11,935		)
Less: Preferred equity dividend paid	5,425						5,425
Net income attributable to Ares Management, L.P. common shareholders	(17,200		)	(160		)	(17,360		)



Condensed Consolidated Statement of Operations

	Six Months Ended June 30, 2018
	As Reported		Adjustments		Balances without adoption of ASC 606
Revenues
Incentive fees	$	12,811	$	3,780	$	16,591
Total revenues	470,252		3,780		474,032
Expenses
Expenses of Consolidated Funds	36,428		—		36,428
Total expenses	427,300		—		427,300
Income before taxes	113,118		3,780		116,898
Income tax benefit	24,528		200		24,728
Net income	88,590		3,580		92,170
Less: Net income (loss) attributable to non-controlling interests in Consolidated Funds	10,249		1,860		12,109
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	49,168		1,104		50,272
Net income attributable to Ares Management, L.P.	29,173		616		29,789
Less: Preferred equity dividend paid	10,850				10,850
Net income attributable to Ares Management, L.P. common shareholders	18,323		616		18,939

Condensed Consolidated Statement of Comprehensive Income



	Three Months Ended June 30, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Net income	$	14,169		$	2,986		$	17,155
Other comprehensive income:
Foreign currency translation adjustments	(12,377		)	(444		)	(12,821		)
Total comprehensive income	1,792			2,542			4,334
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	4,193			3,579			7,772
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	12,131			—			12,131
Comprehensive income attributable to Ares Management, L.P.	$	(14,532	)	$	(1,037	)	$	(15,569	)

Condensed Consolidated Statement of Comprehensive Income



	Six Months Ended June 30, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Net income	$	88,590		$	3,580		$	92,170
Other comprehensive income:
Foreign currency translation adjustments	(6,892		)	(195		)	(7,087		)
Total comprehensive income	81,698			3,385			85,083
Less: Comprehensive income attributable to non-controlling interests in Consolidated Funds	7,735			1,860			9,595
Less: Comprehensive income attributable to non-controlling interests in Ares Operating Group entities	47,340			992			48,332
Comprehensive income attributable to Ares Management, L.P.	$	26,623		$	533		$	27,156

Condensed Consolidated Statement of Cash Flows



	Six Months Ended June 30, 2018
	As Reported			Adjustments			Balances without adoption of ASC 606

Cash flows from operating activities:
Net income	$	88,590		$	3,580		$	92,170
Cash flows due to changes in operating assets and liabilities	66,925			(1,720		)	65,205
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interests in Consolidated Funds	(34,335		)	(1,860		)	(36,195		)