SEGMENT REPORTING (Tables)

9 Months Ended

Sep. 30, 2020

Schedule of financial results for Company's operating segments, as well as the OMG

The following tables present the financial results for the Company’s operating segments, as well as the OMG:


	Three months ended September 30, 2020
	Credit Group		Private Equity Group		Real Estate Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees (Credit Group includes ARCC Part I Fees of $41,643)	$	208,371	$	54,653	$	23,787	13,320		$	300,131	$	—	$	300,131
Other fees	4,898		2		5		6		4,911		—		4,911
Compensation and benefits	(74,373)		(21,224)		(13,011)		(4,241)		(112,849)		(41,551)		(154,400)
General, administrative and other expenses	(13,789)		(6,002)		(2,987)		(1,514)		(24,292)		(19,519)		(43,811)
Fee related earnings	125,107		27,429		7,794		7,571		167,901		(61,070)		106,831
Performance income—realized	7,069		115,997		199		—		123,265		—		123,265
Performance related compensation—realized	(4,131)		(93,284)		(123)		—		(97,538)		—		(97,538)
Realized net performance income	2,938		22,713		76		—		25,727		—		25,727
Investment income—realized	—		16,351		486		—		16,837		—		16,837
Interest and other investment income (expense) —realized	1,962		1,065		1,308		(4)		4,331		(503)		3,828
Interest expense	(2,340)		(2,216)		(1,389)		(729)		(6,674)		(141)		(6,815)
Realized net investment income (loss)	(378)		15,200		405		(733)		14,494		(644)		13,850
Realized income	$	127,667	$	65,342	$	8,275	$	6,838	$	208,122	$	(61,714)	$	146,408


	Three months ended September 30, 2019
	Credit Group		Private Equity Group		Real Estate Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees (Credit Group includes ARCC Part I Fees of $38,786)	$	178,447	$	54,543	$	26,988	$	—	$	259,978	$	—	$	259,978
Other fees	5,174		141		28		—		5,343		—		5,343
Compensation and benefits	(67,770)		(19,226)		(14,523)		—		(101,519)		(34,061)		(135,580)
General, administrative and other expenses	(12,789)		(5,532)		(3,341)		—		(21,662)		(21,405)		(43,067)
Fee related earnings	103,062		29,926		9,152		—		142,140		(55,466)		86,674
Performance income—realized	1,037		—		6,277		—		7,314		—		7,314
Performance related compensation—realized	(630)		—		(1,412)		—		(2,042)		—		(2,042)
Realized net performance income	407		—		4,865		—		5,272		—		5,272
Investment income—realized	114		47		2,015		—		2,176		—		2,176
Interest and other investment income (expense) —realized	6,964		435		1,588		—		8,987		(11)		8,976
Interest expense	(1,561)		(1,628)		(967)		—		(4,156)		(535)		(4,691)
Realized net investment income (loss)	5,517		(1,146)		2,636		—		7,007		(546)		6,461
Realized income	$	108,986	$	28,780	$	16,653	$	—	$	154,419	$	(56,012)	$	98,407


	Nine months ended September 30, 2020
	Credit Group		Private Equity Group		Real Estate Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees (Credit Group includes ARCC Part I Fees of $126,872)	$	606,596	$	160,206	$	71,459	$	13,320	$	851,581	$	—	$	851,581
Other fees	12,057		142		716		6		12,921		—		12,921
Compensation and benefits	(222,063)		(62,946)		(38,159)		(4,241)		(327,409)		(114,916)		(442,325)
General, administrative and other expenses	(41,626)		(16,083)		(9,185)		(1,514)		(68,408)		(56,877)		(125,285)
Fee related earnings	354,964		81,319		24,831		7,571		468,685		(171,793)		296,892
Performance income—realized	16,085		276,469		27,106		—		319,660		—		319,660
Performance related compensation—realized	(12,142)		(222,949)		(17,484)		—		(252,575)		—		(252,575)
Realized net performance income	3,943		53,520		9,622		—		67,085		—		67,085
Investment income (loss)—realized	(843)		35,866		2,740		—		37,763		(5,698)		32,065
Interest and other investment income (expense) —realized	13,166		2,364		3,024		(4)		18,550		(588)		17,962
Interest expense	(6,391)		(6,106)		(3,715)		(729)		(16,941)		(1,262)		(18,203)
Realized net investment income (loss)	5,932		32,124		2,049		(733)		39,372		(7,548)		31,824
Realized income	$	364,839	$	166,963	$	36,502	$	6,838	$	575,142	$	(179,341)	$	395,801


	Nine months ended September 30, 2019
	Credit Group		Private Equity Group		Real Estate Group		Strategic Initiatives		Total Segments		OMG		Total
Management fees (Credit Group includes ARCC Part I Fees of $116,336)	$	513,760	$	158,101	$	67,408	$	—	$	739,269	$	—	$	739,269
Other fees	12,179		141		709		—		13,029		—		13,029
Compensation and benefits	(193,083)		(61,713)		(35,735)		—		(290,531)		(100,716)		(391,247)
General, administrative and other expenses	(39,675)		(14,501)		(9,996)		—		(64,172)		(61,911)		(126,083)
Fee related earnings	293,181		82,028		22,386		—		397,595		(162,627)		234,968
Performance income—realized	38,921		62,492		10,468		—		111,881		—		111,881
Performance related compensation—realized	(22,857)		(49,993)		(3,638)		—		(76,488)		—		(76,488)
Realized net performance income	16,064		12,499		6,830		—		35,393		—		35,393
Investment income—realized	662		12,013		7,041		—		19,716		—		19,716
Interest and other investment income (expense) —realized	14,500		4,047		4,812		—		23,359		(13)		23,346
Interest expense	(5,368)		(6,239)		(3,136)		—		(14,743)		(1,330)		(16,073)
Realized net investment income (loss)	9,794		9,821		8,717		—		28,332		(1,343)		26,989
Realized income	$	319,039	$	104,348	$	37,933	$	—	$	461,320	$	(163,970)	$	297,350

Schedule of segment’ revenue, expenses and other income (expense)

The following table presents the components of the Company’s operating segments’ revenue, expenses and realized net investment income:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Segment revenues
Management fees (includes ARCC Part I Fees of $41,643, $126,872 and $38,786, $116,336 for the three and nine months ended September 30, 2020 and 2019, respectively)	$	300,131	$	259,978	$	851,581	$	739,269
Other fees	4,911		5,343		12,921		13,029
Performance income—realized	123,265		7,314		319,660		111,881
Total segment revenues	$	428,307	$	272,635	$	1,184,162	$	864,179
Segment expenses
Compensation and benefits	$	112,849	$	101,519	$	327,409	$	290,531
General, administrative and other expenses	24,292		21,662		68,408		64,172
Performance related compensation—realized	97,538		2,042		252,575		76,488
Total segment expenses	$	234,679	$	125,223	$	648,392	$	431,191
Segment realized net investment income
Investment income—realized	$	16,837	$	2,176	$	37,763	$	19,716
Interest and other investment income —realized	4,331		8,987		18,550		23,359
Interest expense	(6,674)		(4,156)		(16,941)		(14,743)
Total segment realized net investment income	$	14,494	$	7,007	$	39,372	$	28,332

Schedule of segment revenues components

The following table reconciles the Company's consolidated revenues to segment revenue:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Total consolidated revenue	$	489,866	$	466,490	$	1,106,033	$	1,328,509
Performance (income) loss-unrealized	(52,488)		(181,174)		77,866		(426,411)
Management fees of Consolidated Funds eliminated in consolidation	11,719		8,780		33,601		25,928

Incentive fees of Consolidated Funds eliminated in consolidation	—		—		(70)		5,184
Administrative, transaction and other fees of Consolidated Funds eliminated in consolidation	4,448		—		12,249		—
Administrative fees(1)	(9,216)		(9,649)		(27,715)		(22,853)

Performance income (loss) reclass(2)	(291)		(27)		(3,664)		553
Principal investment income, net of eliminations	(11,408)		(11,389)		(8,330)		(45,992)
Net income of non-controlling interests in consolidated subsidiaries	(4,323)		(396)		(5,808)		(739)
Total consolidation adjustments and reconciling items	(61,559)		(193,855)		78,129		(464,330)
Total segment revenue	$	428,307	$	272,635	$	1,184,162	$	864,179

(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 net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

Schedule of segment expenses components

The following table reconciles the Company's consolidated expenses to segment expenses:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Total consolidated expenses	$	392,580	$	395,701	$	958,106	$	1,100,509
Performance related compensation-unrealized	(24,818)		(137,174)		61,010		(311,936)
Expenses of Consolidated Funds added in consolidation	(17,737)		(19,664)		(50,237)		(61,977)
Expenses of Consolidated Funds eliminated in consolidation	11,718		8,780		33,531		31,112
Administrative fees(1)	(9,216)		(9,649)		(27,715)		(22,853)
OMG expenses	(61,070)		(55,466)		(171,793)		(162,627)
Acquisition and merger-related expense	(3,474)		(4,777)		(9,430)		(10,757)
Equity compensation expense	(30,336)		(22,393)		(91,576)		(73,974)
Deferred placement fees	(2,942)		(4,366)		(18,677)		(17,319)
Depreciation and amortization expense	(14,336)		(24,564)		(26,197)		(35,609)

Expense of non-controlling interests in consolidated subsidiaries	(5,690)		(1,205)		(8,630)		(3,378)
Total consolidation adjustments and reconciling items	(157,901)		(270,478)		(309,714)		(669,318)
Total segment expenses	$	234,679	$	125,223	$	648,392	$	431,191

Schedule of segment other income (expense) components

The following table reconciles the Company's consolidated other income to segment realized net investment income:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Total consolidated other income (expense)	$	62,355	$	32,787	$	(43,602)	$	95,919
Investment (income) loss—unrealized	1,479		(4,138)		83,369		(12,703)
Interest and other investment (income) loss—unrealized	(1,390)		3,044		(10,330)		3,394
Other (income) loss from Consolidated Funds added in consolidation, net	(68,132)		(37,070)		20,719		(101,285)
Other income from Consolidated Funds eliminated in consolidation, net	(3,470)		(1,124)		(11,478)		(1,214)
OMG other (income) expense	(1,820)		87		(781)		(71)
Performance (income) loss reclass(1)	291		27		3,664		(553)
Principal investment income (loss)	18,080		13,865		(24,951)		45,336
Other (income) expense, net(2)	9,534		(461)		9,903		(460)
Other (income) loss of non-controlling interests in consolidated subsidiaries	(2,433)		(10)		12,859		(31)
Total consolidation adjustments and reconciling items	(47,861)		(25,780)		82,974		(67,587)
Total segment realized net investment income	$	14,494	$	7,007	$	39,372	$	28,332

(1)Related to performance income for AREA Sponsor Holdings LLC. Changes in value of this investment are reflected within net realized and unrealized gains (losses) on investments in the Company’s Condensed Consolidated Statements of Operations.

(2)The three and nine months ended September 30, 2020 includes a $9.5 million non-cash unrealized guarantee expense.

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 RI and FRE:


	Three months ended September 30,				Nine months ended September 30,
	2020		2019		2020		2019
Income before taxes	$	159,641	$	103,576	$	104,325	$	323,919
Adjustments:
Depreciation and amortization expense	14,336		24,564		26,197		35,609
Equity compensation expense	30,336		22,393		91,576		73,974
Acquisition and merger-related expense	3,490		4,777		9,815		10,757
Deferred placement fees	2,942		4,366		18,677		17,319
OMG expense, net	59,250		55,553		171,012		162,556
Other (income) expense, net(1)	9,518		(461)		9,518		(460)
Net (income) expense of non-controlling interests in consolidated subsidiaries	(1,066)		799		15,681		2,608
(Income) loss before taxes of non-controlling interests in Consolidated Funds, net of eliminations	(42,744)		(16,054)		38,446		(41,178)
Total performance (income) loss-unrealized	(52,488)		(181,174)		77,866		(426,411)
Total performance related compensation - unrealized	24,818		137,174		(61,010)		311,936
Total investment (income) loss-unrealized	89		(1,094)		73,039		(9,309)
Realized income	208,122		154,419		575,142		461,320
Total performance income - realized	(123,265)		(7,314)		(319,660)		(111,881)
Total performance related compensation - realized	97,538		2,042		252,575		76,488
Total investment income - realized	(14,494)		(7,007)		(39,372)		(28,332)
Fee related earnings	$	167,901	$	142,140	$	468,685	$	397,595

(1)The three and nine months ended September 30, 2020 includes a $9.5 million non-cash unrealized guarantee expense.