XML 55 R36.htm IDEA: XBRL DOCUMENT

CONSOLIDATION (Tables)

3 Months Ended

Mar. 31, 2020

Condensed Financial Information Disclosure [Abstract]

The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:


	As of March 31,		As of December 31,
	2020		2019
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs⁽¹⁾	$	235,751	$	260,520
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs⁽¹⁾	154,490		181,856
Assets of consolidated VIEs	9,990,390		9,454,572
Liabilities of consolidated VIEs	9,308,677		8,679,869

(1)As of March 31, 2020 and December 31, 2019, the Company's maximum exposure of loss for CLO securities was equal to the cumulative fair value of our capital interest in CLOs that are managed and totaled $64.9 million and $104.7 million, respectively.


	For the Three months ended March 31,
	2020		2019
Net income (loss) attributable to non-controlling interests related to consolidated VIEs	$	(166,406)	$	17,624

Schedule of consolidating effects of the Consolidated Funds on the Company's financial condition

The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition, results from operations and cash flows:


	As of March 31, 2020
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	1,167,673	$	—	$	—	$	1,167,673
Investments (includes $747,363 of accrued carried interest)	1,345,094		—		(154,490)		1,190,604
Due from affiliates	308,566		—		(20,536)		288,030
Other assets	428,853		—		(1,942)		426,911
Right-of-use operating lease assets	145,225		—		—		145,225
Assets of Consolidated Funds
Cash and cash equivalents	—		514,401		—		514,401
Investments, at fair value	—		9,086,469		8,096		9,094,565
Due from affiliates	—		6,192		—		6,192
Receivable for securities sold	—		355,149		—		355,149
Other assets	—		28,179		—		28,179
Total assets	$	3,395,411	$	9,990,390	$	(168,872)	$	13,216,929
Liabilities
Accounts payable, accrued expenses and other liabilities	$	90,613	$	—	$	—	$	90,613
Accrued compensation	69,702		—		—		69,702
Due to affiliates	73,050		—		—		73,050
Performance related compensation payable	532,665		—		—		532,665
Debt obligations	1,046,775		—		—		1,046,775

Operating lease liabilities	169,828		—		—		169,828
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		72,486		—		72,486
Due to affiliates	—		14,382		(14,382)		—
Payable for securities purchased	—		796,316		—		796,316
CLO loan obligations, at fair value	—		8,390,053		(35,595)		8,354,458
Fund borrowings	—		35,440		—		35,440
Total liabilities	1,982,633		9,308,677		(49,977)		11,241,333
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—		681,713		(118,895)		562,818
Non-controlling interest in Ares Operating Group entities	514,166		—		—		514,166
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)	298,761		—		—		298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (132,373,743 shares issued and outstanding)	1,324		—		—		1,324
Class B common stock, $0.01 par value,1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (115,199,621 shares issued and outstanding)	1,152		—		—		1,152
Additional paid-in-capital	746,595		—		—		746,595
Retained earnings	(138,371)		—		—		(138,371)
Accumulated other comprehensive loss, net of tax	(10,849)		—		—		(10,849)
Total stockholders' equity	898,612		—		—		898,612
Total equity	1,412,778		681,713		(118,895)		1,975,596
Total liabilities, non-controlling interests and equity	$	3,395,411	$	9,990,390	$	(168,872)	$	13,216,929


	As of December 31, 2019
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Assets
Cash and cash equivalents	$	138,384	$	—	$	—	$	138,384
Investments (includes $1,134,967 of accrued carried interest)	1,845,520		—		(181,856)		1,663,664
Due from affiliates	282,197		—		(14,098)		268,099
Other assets	343,674		—		(2,381)		341,293
Right-of-use operating lease assets	143,406		—		—		143,406
Assets of Consolidated Funds
Cash and cash equivalents	—		606,321		—		606,321
Investments, at fair value	—		8,723,169		4,778		8,727,947
Due from affiliates	—		6,192		—		6,192
Receivable for securities sold	—		88,809		—		88,809
Other assets	—		30,081		—		30,081
Total assets	$	2,753,181	$	9,454,572	$	(193,557)	$	12,014,196
Liabilities
Accounts payable, accrued expenses and other liabilities	$	88,173	$	—	$	—	$	88,173
Accrued compensation	37,795		—		—		37,795
Due to affiliates	71,445		—		—		71,445
Performance related compensation payable	829,764		—		—		829,764
Debt obligations	316,609		—		—		316,609
Operating lease liabilities	168,817		—		—		168,817
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities	—		61,857		—		61,857
Due to affiliates	—		11,700		(11,700)		—
Payable for securities purchased	—		500,146		—		500,146
CLO loan obligations	—		7,998,922		(25,174)		7,973,748
Fund borrowings	—		107,244		—		107,244
Total liabilities	1,512,603		8,679,869		(36,874)		10,155,598
Commitments and contingencies
Non-controlling interest in Consolidated Funds	—		774,703		(156,683)		618,020
Non-controlling interest in Ares Operating Group entities	472,288		—		—		472,288
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)	298,761		—		—		298,761
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (115,242,028 shares issued and outstanding)	1,152		—		—		1,152
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)	—		—		—		—
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)	—		—		—		—
Additional paid-in-capital	525,244		—		—		525,244
Retained earnings	(50,820)		—		—		(50,820)
Accumulated other comprehensive loss, net of tax	(6,047)		—		—		(6,047)
Total stockholders' equity	768,290		—		—		768,290
Total equity	1,240,578		774,703		(156,683)		1,858,598
Total liabilities, non-controlling interests and equity	$	2,753,181	$	9,454,572	$	(193,557)	$	12,014,196

Schedule of results from operations


	Three months ended March 31, 2020
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $43,923)	$	274,351	$	—	$	(10,502)	$	263,849
Carried interest allocation	(230,876)		—		—		(230,876)
Incentive fees	(3,294)		—		45		(3,249)
Principal investment loss	(75,988)		—		49,265		(26,723)
Administrative, transaction and other fees	13,725		—		(3,317)		10,408
Total revenues	(22,082)		—		35,491		13,409
Expenses
Compensation and benefits	180,084		—		—		180,084
Performance related compensation	(167,899)		—		—		(167,899)
General, administrative and other expense	62,331		—		—		62,331
Expenses of the Consolidated Funds	—		17,899		(10,456)		7,443
Total expenses	74,516		17,899		(10,456)		81,959
Other income (expense)
Net realized and unrealized losses on investments	(35,695)		—		27,661		(8,034)
Interest and dividend income	2,602		—		(812)		1,790
Interest expense	(5,306)		—		—		(5,306)
Other expense, net	4,962		—		502		5,464
Net realized and unrealized losses on investments of the Consolidated Funds	—		(230,173)		(24,588)		(254,761)
Interest and other income of the Consolidated Funds	—		113,225		—		113,225
Interest expense of the Consolidated Funds	—		(81,297)		1,056		(80,241)
Total other expense	(33,437)		(198,245)		3,819		(227,863)
Loss before taxes	(130,035)		(216,144)		49,766		(296,413)
Income tax expense (benefit)	(20,644)		28		—		(20,616)
Net loss	(109,391)		(216,172)		49,766		(275,797)
Less: Net loss attributable to non-controlling interests in Consolidated Funds	—		(216,172)		49,766		(166,406)
Less: Net loss attributable to non-controlling interests in in Ares Operating Group entities	(78,355)		—		—		(78,355)
Net loss attributable to Ares Management Corporation	(31,036)		—		—		(31,036)
Less: Series A Preferred Stock dividends paid	5,425		—		—		5,425
Net loss attributable to Ares Management Corporation Class A common stockholders	$	(36,461)	$	—	$	—	$	(36,461)


	Three months ended March 31, 2019
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Revenues
Management fees (includes ARCC Part I Fees of $38,393)	$	233,072	$	—	$	(8,413)	$	224,659
Carried interest allocation	197,293		—		—		197,293
Incentive fees	17,249		—		(434)		16,815
Principal investment income	29,892		—		(1,133)		28,759
Administrative, transaction and other fees	9,671		—		—		9,671
Total revenues	487,177		—		(9,980)		477,197
Expenses
Compensation and benefits	156,846		—		—		156,846
Performance related compensation	156,520		—		—		156,520
General, administrative and other expense	51,187		—		—		51,187
Expenses of the Consolidated Funds	—		13,401		(8,847)		4,554
Total expenses	364,553		13,401		(8,847)		369,107
Other income (expense)
Net realized and unrealized gains on investments	4,424		—		(948)		3,476
Interest and dividend income	2,324		—		(480)		1,844
Interest expense	(5,589)		—		—		(5,589)
Other expense, net	(4,868)		—		371		(4,497)
Net realized and unrealized gains on investments of the Consolidated Funds	—		3,748		616		4,364
Interest and other income of the Consolidated Funds	—		93,184		—		93,184
Interest expense of the Consolidated Funds	—		(65,725)		813		(64,912)
Total other income (expense)	(3,709)		31,207		372		27,870
Income before taxes	118,915		17,806		(761)		135,960
Income tax expense (benefit)	14,963		(579)		—		14,384
Net income	103,952		18,385		(761)		121,576
Less: Net income attributable to non-controlling interests in Consolidated Funds	—		18,385		(761)		17,624
Less: Net income attributable to non-controlling interests in Ares Operating Group entities	59,003		—		—		59,003
Net income attributable to Ares Management Corporation	44,949		—		—		44,949
Less: Series A Preferred Stock dividends paid	5,425		—		—		5,425
Net income attributable to Ares Management Corporation Class A common stockholders	$	39,524	$	—	$	—	$	39,524

Schedule of cash flows


	Three months ended March 31, 2020
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net loss	$	(109,391)	$	(216,172)	$	49,766	$	(275,797)
Adjustments to reconcile net loss to net cash used in operating activities	190,761				(65,691)		125,070







Adjustments to reconcile net loss to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds			(478,695)		25,680		(453,015)





Cash flows due to changes in operating assets and liabilities	45,995				6,000		51,995





Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds:			99,272		89,238		188,510




Net cash provided by (used in) operating activities	127,365		(595,595)		104,993		(363,237)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(3,062)		—		—		(3,062)
Acquisitions	(35,844)		—		—		(35,844)
Net cash used in investing activities	(38,906)		—		—		(38,906)
Cash flows from financing activities:
Net proceeds from issuance of Class A common stock	383,334		—		—		383,334
Proceeds from credit facility	790,000		—		—		790,000

Repayments of credit facility	(60,000)		—		—		(60,000)

Dividends and distributions	(106,838)		—		—		(106,838)
Series A Preferred Stock dividends and distributions	(5,425)		—		—		(5,425)


Stock option exercises	19,551		—		—		19,551

Taxes paid related to net share settlement of equity awards	(73,500)		—		—		(73,500)

Other financing activities	(2,125)		—		—		(2,125)
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	—		148,270		(15,005)		133,265
Distributions to non-controlling interests in Consolidated Funds	—		(15,426)		1,934		(13,492)
Borrowings under loan obligations by Consolidated Funds	—		454,391		—		454,391
Repayments under loan obligations by Consolidated Funds	—		(73,609)		—		(73,609)
Net cash provided by financing activities	944,997		513,626		(13,071)		1,445,552
Effect of exchange rate changes	(4,167)		(9,953)		—		(14,120)
Net change in cash and cash equivalents	1,029,289		(91,922)		91,922		1,029,289
Cash and cash equivalents, beginning of period	138,384		606,321		(606,321)		138,384
Cash and cash equivalents, end of period	$	1,167,673	$	514,399	$	(514,399)	$	1,167,673


	Three months ended March 31, 2019
	Consolidated Company Entities		Consolidated Funds		Eliminations		Consolidated
Cash flows from operating activities:
Net income	$	103,952	$	18,385	$	(761)	$	121,576
Adjustments to reconcile net income to net cash used in operating activities	(79,008)		—		89,774		10,766







Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds	—		(415,841)		(616)		(416,457)





Cash flows due to changes in operating assets and liabilities	4,306		—		(769)		3,537





Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds:	—		83,267		(152,535)		(69,268)




Net cash provided by (used in) operating activities	29,250		(314,189)		(64,907)		(349,846)
Cash flows from investing activities:
Purchase of furniture, equipment and leasehold improvements, net	(2,994)		—		—		(2,994)

Net cash used in investing activities	(2,994)		—		—		(2,994)
Cash flows from financing activities:

Proceeds from credit facility	145,000		—		—		145,000

Repayments of credit facility	(60,000)		—		—		(60,000)
Dividends and distributions	(75,479)		—		—		(75,479)
Series A Preferred Stock dividends and distributions	(5,425)		—		—		(5,425)


Taxes paid related to net share settlement of equity awards	(21,121)		—		—		(21,121)
Other financing activities	2,140		—		—		2,140
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds	—		148,691		(94,656)		54,035
Distributions to non-controlling interests in Consolidated Funds	—		(23,629)		2,893		(20,736)
Borrowings under loan obligations by Consolidated Funds	—		392,777		3,367		396,144
Repayments under loan obligations by Consolidated Funds	—		(61,227)		—		(61,227)
Net cash provided by (used in) financing activities	(14,885)		456,612		(88,396)		353,331
Effect of exchange rate changes	(1,120)		10,880		—		9,760
Net change in cash and cash equivalents	10,251		153,303		(153,303)		10,251
Cash and cash equivalents, beginning of period	110,247		384,644		(384,644)		110,247
Cash and cash equivalents, end of period	$	120,498	$	537,947	$	(537,947)	$	120,498

- Definition

Tabular disclosure of the significant judgments and assumptions made in determining whether a variable interest (as defined) held by the entity requires the variable interest entity (VIE) (as defined) to be consolidated and (or) disclose information about its involvement with the VIE, individually or in aggregate (as applicable); the nature of restrictions, if any, on the consolidated VIE's assets and on the settlement of its liabilities reported by an entity in its statement of financial position, including the carrying amounts of such assets and liabilities; the nature of, and changes in, the risks associated with involvement in the VIE; how involvement with the VIE affects the entity's financial position, financial performance, and cash flows; the lack of recourse if creditors (or beneficial interest holders) of the consolidated VIE have no recourse to the general credit of the primary beneficiary (if applicable); the terms of arrangements, giving consideration to both explicit arrangements and implicit variable interests, if any, that could require the entity to provide financial support to the VIE, including events or circumstances that could expose the entity to a loss; the methodology used by the entity for determining whether or not it is the primary beneficiary of the variable interest entity; the significant factors considered and judgments made in determining that the power to direct the activities of a VIE that most significantly impact the VIE's economic performance are shared (as defined); the carrying amounts and classification of assets and liabilities of the VIE included in the statement of financial position; the entity's maximum exposure to loss, if any, as a result of its involvement with the VIE, including how the maximum exposure is determined and significant sources of the entity's exposure to the VIE; a comparison of the carrying amounts of the assets and liabilities and the entity's maximum exposure to loss; information about any liquidity arrangements, guarantees, and (or) other commitments by third parties that may affect the fair value or risk of the entity's variable interest in the VIE; whether or not the entity has provided financial support or other support (explicitly or implicitly) to the VIE that it was not previously contractually required to provide or whether the entity intends to provide that support, including the type and amount of the support and the primary reasons for providing the support; and supplemental information the entity determines necessary to provide.

+ References + Details