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SEGMENT REPORTING (Tables)
 6 Months Ended
Jun. 30, 2018
Segment Reporting [Abstract]  
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, 2018:
 
Credit Group
 
Private Equity Group
 
Real
Estate Group
 
Total
Segments
 
OMG
 
Total
Management fees (Credit Group includes ARCC Part I Fees of $29,866)
$
135,848

 
$
49,318

 
$
17,138

 
$
202,304

 
$
—

 
$
202,304

Other fees
6,877

 
337

 
7

 
7,221

 
—

 
7,221

Compensation and benefits
(51,892
)
 
(18,672
)
 
(8,768
)
 
(79,332
)
 
(31,059
)
 
(110,391
)
General, administrative and other expenses
(11,041
)
 
(4,175
)
 
(2,391
)
 
(17,607
)
 
(19,489
)
 
(37,096
)
Fee related earnings
79,792


26,808


5,986

 
112,586

 
(50,548
)
 
62,038

Performance income—realized
41,672

 
80,415

 
521

 
122,608

 
—

 
122,608

Performance income—unrealized
(4,568
)
 
(133,605
)
 
13,830

 
(124,343
)
 
—

 
(124,343
)
Performance related compensation—realized
(23,577
)
 
(64,311
)
 
7

 
(87,881
)
 
—

 
(87,881
)
Performance related compensation—unrealized
2,759

 
106,912

 
(8,785
)
 
100,886

 
—

 
100,886

Net performance income
16,286


(10,589
)

5,573

 
11,270

 
—

 
11,270

Investment income (loss)—realized
595

 
9,016

 
(250
)
 
9,361

 
798

 
10,159

Investment income (loss)—unrealized
1,617

 
290

 
(525
)
 
1,382

 
2,866

 
4,248

Interest and other investment income (expense)
3,428

 
3,039

 
(1,218
)
 
5,249

 
623

 
5,872

Interest expense
(3,596
)
 
(1,440
)
 
(452
)
 
(5,488
)
 
(588
)
 
(6,076
)
Net investment income (loss)
2,044


10,905


(2,445
)
 
10,504

 
3,699

 
14,203

Performance related earnings
18,330


316


3,128

 
21,774

 
3,699

 
25,473

Economic net income
$
98,122


$
27,124


$
9,114

 
$
134,360

 
$
(46,849
)
 
$
87,511

Realized income
$
97,921

 
$
53,408

 
$
6,479

 
$
157,808

 
$
(49,754
)
 
$
108,054


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, 2017:
 
Credit Group
 
Private Equity Group
 
Real
Estate Group
 
Total
Segments
 
OMG
 
Total
Management fees (Credit Group includes ARCC Part I Fees of $19,143)
$
112,654

 
$
56,427

 
$
16,479

 
$
185,560

 
$
—

 
$
185,560

Other fees
5,663

 
338

 
19

 
6,020

 
—

 
6,020

Compensation and benefits
(45,160
)
 
(18,388
)
 
(9,714
)
 
(73,262
)
 
(30,584
)
 
(103,846
)
General, administrative and other expenses
(8,048
)
 
(4,345
)
 
(3,091
)
 
(15,484
)
 
(18,862
)
 
(34,346
)
Fee related earnings
65,109


34,032


3,693


102,834


(49,446
)

53,388

Performance income—realized
7,883

 
64,780

 
1,467

 
74,130

 
—

 
74,130

Performance income—unrealized
5,093

 
228,747

 
29,789

 
263,629

 
—

 
263,629

Performance related compensation—realized
(1,898
)
 
(50,914
)
 
(161
)
 
(52,973
)
 
—

 
(52,973
)
Performance related compensation—unrealized
(6,079
)
 
(184,021
)
 
(18,632
)
 
(208,732
)
 
—

 
(208,732
)
Net performance income
4,999


58,592


12,463


76,054


—


76,054

Investment income—realized
2,525

 
2,717

 
373

 
5,615

 
1,340

 
6,955

Investment income (loss)—unrealized
(3,450
)
 
25,354

 
1,134

 
23,038

 
(2,728
)
 
20,310

Interest and other investment income
2,958

 
1,983

 
1,534

 
6,475

 
225

 
6,700

Interest expense
(3,065
)
 
(1,397
)
 
(429
)
 
(4,891
)
 
(463
)
 
(5,354
)
Net investment income (loss)
(1,032
)

28,657


2,612


30,237


(1,626
)

28,611

Performance related earnings
3,967


87,249


15,075


106,291


(1,626
)

104,665

Economic net income
$
69,076


$
121,281


$
18,768


$
209,125


$
(51,072
)

$
158,053

Realized income
$
73,181

 
$
50,151

 
$
5,181

 
$
128,513

 
$
(48,346
)
 
$
80,167





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, 2018:
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Group
 
Private Equity Group
 
Real
Estate Group
 
Total
Segments
 
OMG
 
Total
Management fees (Credit Group includes ARCC Part I Fees of $58,283)
$
267,614

 
$
99,205

 
$
32,311

 
$
399,130

 
$
—

 
$
399,130

Other fees
12,607

 
677

 
10

 
13,294

 
—

 
13,294

Compensation and benefits
(102,172
)
 
(37,871
)
 
(16,407
)
 
(156,450
)
 
(61,665
)
 
(218,115
)
General, administrative and other expenses
(20,670
)
 
(8,216
)
 
(4,823
)
 
(33,709
)
 
(38,105
)
 
(71,814
)
Fee related earnings
157,379

 
53,795

 
11,091

 
222,265

 
(99,770
)
 
122,495

Performance fees—realized
46,743

 
84,813

 
14,159

 
145,715

 
—

 
145,715

Performance fees—unrealized
11,524

 
(112,539
)
 
11,790

 
(89,225
)
 
—

 
(89,225
)
Performance fee compensation—realized
(26,665
)
 
(67,871
)
 
(8,214
)
 
(102,750
)
 
—

 
(102,750
)
Performance fee compensation—unrealized
9,935

 
88,218

 
(8,276
)
 
89,877

 
—

 
89,877

Net performance fees
41,537

 
(7,379
)
 
9,459

 
43,617

 
—

 
43,617

Investment income—realized
1,366

 
9,687

 
3,100

 
14,153

 
1,636

 
15,789

Investment income (loss)—unrealized
1,348

 
(3,860
)
 
(1,757
)
 
(4,269
)
 
4,097

 
(172
)
Interest and other investment income (expense)
5,624

 
3,368

 
(201
)
 
8,791

 
1,870

 
10,661

Interest expense
(8,269
)
 
(2,668
)
 
(872
)
 
(11,809
)
 
(1,136
)
 
(12,945
)
Net investment income
69

 
6,527

 
270

 
6,866

 
6,467

 
13,333

Performance related earnings
41,606

 
(852
)
 
9,729

 
50,483

 
6,467

 
56,950

Economic net income
$
198,985

 
$
52,943

 
$
20,820

 
$
272,748

 
$
(93,303
)
 
$
179,445

Realized income
$
176,778

 
$
80,735

 
$
20,148

 
$
277,661

 
$
(97,534
)
 
$
180,127


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, 2017:
 
 
 
 
 
 
 
 
 
 
 
 
 
Credit Group
 
Private Equity Group
 
Real
Estate Group
 
Total
Segments
 
OMG
 
Total
Management fees (Credit Group includes ARCC Part I Fees of $52,400)
$
234,001

 
$
96,246

 
$
32,094

 
$
362,341

 
$
—

 
$
362,341

Other fees
10,166

 
678

 
10

 
10,854

 
—

 
10,854

Compensation and benefits
(96,863
)
 
(31,606
)
 
(19,450
)
 
(147,919
)
 
(56,537
)
 
(204,456
)
General, administrative and other expenses
(16,089
)
 
(8,543
)
 
(5,822
)
 
(30,454
)
 
(38,175
)
 
(68,629
)
Fee related earnings
131,215

 
56,775

 
6,832

 
194,822

 
(94,712
)
 
100,110

Performance fees—realized
16,661

 
64,780

 
1,494

 
82,935

 
—

 
82,935

Performance fees—unrealized
8,029

 
260,984

 
43,877

 
312,890

 
—

 
312,890

Performance fee compensation—realized
(7,183
)
 
(50,914
)
 
(177
)
 
(58,274
)
 
—

 
(58,274
)
Performance fee compensation—unrealized
(7,537
)
 
(209,526
)
 
(27,070
)
 
(244,133
)
 
—

 
(244,133
)
Net performance fees
9,970

 
65,324

 
18,124

 
93,418

 
—

 
93,418

Investment income—realized
2,843

 
3,296

 
2,156

 
8,295

 
3,199

 
11,494

Investment income (loss)—unrealized
1,139

 
33,900

 
690

 
35,729

 
(4,135
)
 
31,594

Interest and other investment income
2,939

 
2,135

 
1,353

 
6,427

 
1,099

 
7,526

Interest expense
(5,523
)
 
(2,910
)
 
(861
)
 
(9,294
)
 
(939
)
 
(10,233
)
Net investment income (loss)
1,398

 
36,421

 
3,338

 
41,157

 
(776
)
 
40,381

Performance related earnings
11,368

 
101,745

 
21,462

 
134,575

 
(776
)
 
133,799

Economic net income
$
142,583

 
$
158,520

 
$
28,294

 
$
329,397

 
$
(95,488
)
 
$
233,909

Realized income
$
143,126

 
$
72,496

 
$
9,769

 
$
225,391

 
$
(91,551
)
 
$
133,840
Schedule of segment’ revenue, expenses and other income (expense)
The following table presents the components of the Company’s operating segments’ revenue, expenses and other income (expense):
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Segment Revenues
 
 
 
 
 
 
 
Management fees (includes ARCC Part I Fees of $29,866, $58,283 and $19,143, $52,400 for the three and six months ended June 30, 2018 and 2017, respectively)
$
202,304

 
$
185,560

 
$
399,130

 
$
362,341

Other fees
7,221

 
6,020

 
13,294

 
10,854

Performance income—realized
122,608

 
74,130

 
145,715

 
82,935

Performance income—unrealized
(124,343
)
 
263,629

 
(89,225
)
 
312,890

Total segment revenues
$
207,790

 
$
529,339

 
$
468,914

 
$
769,020

Segment Expenses
 
 
 
 
 
 
 
Compensation and benefits
$
79,332

 
$
73,262

 
$
156,450

 
$
147,919

General, administrative and other expenses
17,607

 
15,484

 
33,709

 
30,454

Performance related compensation—realized
87,881

 
52,973

 
102,750

 
58,274

Performance related compensation—unrealized
(100,886
)
 
208,732

 
(89,877
)
 
244,133

Total segment expenses
$
83,934

 
$
350,451

 
$
203,032

 
$
480,780

Other Income (Expense)
 
 
 
 
 
 
 
Investment income—realized
$
9,361

 
$
5,615

 
$
14,153

 
$
8,295

Investment income (loss)—unrealized
1,382

 
23,038

 
(4,269
)
 
35,729

Interest and other investment income
5,249

 
6,475

 
8,791

 
6,427

Interest expense
(5,488
)
 
(4,891
)
 
(11,809
)
 
(9,294
)
Total segment other income
$
10,504

 
$
30,237

 
$
6,866

 
$
41,157
Schedule of segment revenues components
The following table reconciles segment revenue to Ares consolidated revenues:
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Total segment revenue
$
207,790

 
$
529,339

 
$
468,914

 
$
769,020

Revenue of Consolidated Funds eliminated in consolidation
(25,123
)
 
(169
)
 
(30,233
)
 
(18,357
)
Administrative fees(1)
6,770

 
9,132

 
13,182

 
18,738

Performance income reclass(2)
31

 
(217
)
 
1,006

 
(241
)
Principal investment income
14,722

 
34,166

 
17,430

 
47,335

Revenue of non-controlling interests in consolidated
subsidiaries(3)
(27
)
 
(54
)
 
(47
)
 
(54
)
Total consolidated adjustments and reconciling items
(3,627
)
 
42,858

 
1,338

 
47,421

Total consolidated revenue
$
204,163

 
$
572,197

 
$
470,252


$
816,441

 
(1)
Represents administrative fees that are presented in administrative, transaction 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 income 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.
(3)
Adjustments for administrative fees reimbursed attributable to certain of our joint venture partners.
Schedule of segment expenses components
The following table reconciles segment expenses to Ares consolidated expenses:
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Total segment expenses
$
83,934

 
$
350,451

 
$
203,032

 
$
480,780

Expenses of Consolidated Funds added in consolidation
47,382

 
8,825

 
56,011

 
19,334

Expenses of Consolidated Funds eliminated in consolidation
(12,270
)
 
(4,303
)
 
(19,583
)
 
(10,901
)
Administrative fees(1)
6,770

 
9,132

 
13,182

 
18,738

OMG expenses
50,548

 
49,446

 
99,770

 
94,712

Acquisition and merger-related expenses
47

 
724

 
(272
)
 
276,060

Equity compensation expense
22,507

 
18,917

 
43,594

 
34,006

Placement fees and underwriting costs
1,852

 
6,383

 
3,516

 
9,822

Amortization of intangibles
3,285

 
5,274

 
6,572

 
10,549

Depreciation expense
4,426

 
2,774

 
8,315

 
5,990

Other expenses(3)
11,836

 
—

 
11,836

 
—

Expenses of non-controlling interests in consolidated subsidiaries(2)
700

 
574

 
1,327

 
574

Total consolidation adjustments and reconciling items
137,083

 
97,746

 
224,268

 
458,884

Total consolidated expenses
$
221,017

 
$
448,197

 
$
427,300


$
939,664

 
(1)
Represents administrative fees that are presented in administrative, transaction and other fees in the Company’s Condensed Consolidated Statements of Operations and are netted against the respective expenses for segment reporting.
(2)
Costs being borne by certain of our joint venture partners.
(3)
Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.

Schedule of segment other income (expense) components
The following table reconciles segment other income (expense) to Ares consolidated other income:
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Total segment other income
$
10,504

 
$
30,237

 
$
6,866

 
$
41,157

Other income (expense) from Consolidated Funds added in consolidation, net
69,193

 
(3,150
)
 
76,445

 
35,295

Other expense from Consolidated Funds eliminated in consolidation, net
993

 
(410
)
 
534

 
(433
)
Other income of non-controlling interests in consolidated subsidiaries
8

 
5

 
15

 
5

OMG other income (expense)
3,699

 
(1,626
)
 
6,467

 
(776
)
Performance income reclass(1)
(31
)
 
217

 
(1,006
)
 
241

Principal investment income
(14,722
)
 
(34,166
)
 
(17,430
)
 
(47,335
)
Changes in value of contingent consideration
—

 
(32
)
 
—

 
20,216

Other non-cash expense
(1,715
)
 
—

 
(1,722
)
 
—

Offering costs
(3
)
 
5

 
(3
)
 
(655
)
Total consolidation adjustments and reconciling items
57,422

 
(39,157
)
 
63,300

 
6,558

Total consolidated other income
$
67,926

 
$
(8,920
)
 
$
70,166


$
47,715

 
(1)
Related to performance income 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 segment results to the Company's income before taxes and total assets
The following table presents the reconciliation of income before taxes as reported in the Condensed Consolidated Statements of Operations to segment results of ENI, RI, FRE and PRE:
 
For the Three Months Ended 
 June 30,
 
For the Six Months Ended 
 June 30,
 
2018
 
2017
 
2018
 
2017
Economic net income
 
 
 
 
 
 
 
Income (loss) before taxes
$
51,072

 
$
115,080

 
$
113,118

 
$
(75,508
)
Adjustments:
 
 
 
 
 
 
 
Amortization of intangibles
3,285

 
5,274

 
6,572

 
10,549

Depreciation expense
4,426

 
2,774

 
8,315

 
5,990

Equity compensation expenses
22,507

 
18,917

 
43,594

 
34,006

Acquisition and merger-related expenses
47

 
756

 
(272
)
 
255,844

Placement fees and underwriting costs
1,852

 
6,383

 
3,516

 
9,822

OMG expenses, net
46,849

 
51,072

 
93,303

 
95,488

Offering costs
3

 
(5
)
 
3

 
655

Other expense(2)
13,551

 
—

 
13,558

 
—

Expense of non-controlling interests in consolidated subsidiaries(1)
719

 
623

 
1,359

 
623

(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations
(9,951
)
 
8,251

 
(10,318
)
 
(8,072
)
Total consolidation adjustments and reconciling items
83,288

 
94,045


159,630


404,905

Economic net income
134,360

 
209,125


272,748


329,397

Total performance income - unrealized
124,343

 
(263,629
)
 
89,225

 
(312,890
)
Total performance related compensation - unrealized
(100,886
)
 
208,732

 
(89,877
)
 
244,133

Total investment (income) loss - unrealized
(9
)
 
(25,715
)
 
5,565

 
(35,249
)
Realized income
157,808

 
128,513

 
277,661

 
225,391

Total performance income - realized
(122,608
)
 
(74,130
)
 
(145,715
)
 
(82,935
)
Total performance related compensation - realized
87,881

 
52,973

 
102,750

 
58,274

Total investment income - realized
(10,495
)
 
(4,522
)
 
(12,431
)
 
(5,908
)
Fee related earnings
112,586

 
102,834


222,265


194,822

Performance related earnings
 
 
 
 
 
 
 
Economic net income
$
134,360

 
$
209,125


$
272,748


$
329,397

Less: fee related earnings
(112,586
)
 
(102,834
)

(222,265
)

(194,822
)
Performance related earnings
$
21,774


$
106,291


$
50,483


$
134,575

 
(1)
Adjustments for administrative fees reimbursed and other revenue items attributable to certain of our joint venture partners.
(2)
Includes $11.8 million payment to ARCC for rent and utilities for the years ended 2017, 2016, 2015 and 2014, and the first quarter of 2018.