SEGMENT REPORTING

9 Months Ended

Sep. 30, 2015

Segment Reporting [Abstract]

SEGMENT REPORTING

SEGMENT REPORTING

Operating segments are defined as components of a company that engage in business activities that may earn revenues and incur expenses for which separate financial information is available and reviewed by the chief operating decision maker or group in determining how to allocate resources and assessing performance. The Company operates its business through the following reportable segments: credit (“Credit”), natural resources (“Natural Resources”) and other (“Other”).

The Company’s reportable segments are differentiated primarily by their investment focuses. The Credit segment consists primarily of below investment grade corporate debt comprised of senior secured and unsecured loans, mezzanine loans, high yield bonds, private and public equity investments, and distressed and stressed debt securities. The Natural Resources segment consists of non-operated working and overriding royalty interests in oil and natural gas properties, as well as interests in joint ventures and partnerships focused on the oil and gas sector. The Other segment includes all other portfolio holdings, consisting solely of commercial real estate. The segments currently reported are consistent with the way decisions regarding the allocation of resources are made, as well as how operating results are reviewed by the Company.

The Company evaluates the performance of its reportable segments based on several net income (loss) components. Net income (loss) includes (i) revenues, (ii) related investment costs and expenses, (iii) other income (loss), which is comprised primarily of unrealized and realized gains and losses on investments, debt and derivatives, and (iv) other expenses, including related party management compensation and general and administrative expenses. Certain corporate assets and expenses that are not directly related to the individual segments, including interest expense and related costs on borrowings, base management fees and professional services are allocated to individual segments based on the investment portfolio balance in each respective segment as of the most recent period-end. Certain other corporate assets and expenses, including prepaid insurance, incentive fees, insurance expenses, directors’ expenses and share-based compensation expense are not allocated to individual segments in the Company’s assessment of segment performance. Collectively, these items are included as reconciling items between reported segment amounts and consolidated totals.

The following tables present the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations (amounts in thousands):

	Successor Company
	Credit						Natural Resources						Other				Reconciling Items(1)						Total Consolidated
	Three months ended September 30, 2015			Nine months ended September 30, 2015			Three months ended September 30, 2015			Nine months ended September 30, 2015			Three months ended September 30, 2015		Nine months ended September 30, 2015		Three months ended September 30, 2015			Nine months ended September 30, 2015			Three months ended September 30, 2015			Nine months ended September 30, 2015
Total revenues	$	79,698		$	265,176		$	3,876		$	13,055		$	5,535	$	14,355	$	—		$	—		$	89,109		$	292,586
Total investment costs and expenses	47,948			163,246			2,016			6,062			388		1,147		—			—			50,352			170,455
Total other income (loss)	(149,952		)	(216,786		)	(36,236		)	(50,337		)	739		20,545		—			—			(185,449		)	(246,578		)
Total other expenses	11,285			39,702			114			800			99		333		49			149			11,547			40,984
Income tax expense (benefit)	64			126			—			—			30		1,044		—			—			94			1,170
Net income (loss)	$	(129,551	)	$	(154,684	)	$	(34,490	)	$	(44,144	)	$	5,757	$	32,376	$	(49	)	$	(149	)	$	(158,333	)	$	(166,601	)
Net income (loss) attributable to noncontrolling interests	(2,727		)	(8,403		)	(3,949		)	(7,049		)	—		—		—			—			(6,676		)	(15,452		)
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries	$	(126,824	)	$	(146,281	)	$	(30,541	)	$	(37,095	)	$	5,757	$	32,376	$	(49	)	$	(149	)	$	(151,657	)	$	(151,149	)

(1) Consists of insurance and directors’ expenses which are not allocated to individual segments.

	Successor Company
	Credit						Natural Resources						Other				Reconciling Items(1)					Total Consolidated
	Three months ended September 30, 2014			Five months ended September 30, 2014			Three months ended September 30, 2014			Five months ended September 30, 2014			Three months ended September 30, 2014		Five months ended September 30, 2014		Three months ended September 30, 2014		Five months ended September 30, 2014			Three months ended September 30, 2014			Five months ended September 30, 2014
Total revenues	$	98,413		$	160,724		$	17,929		$	49,859		$	8,414	$	8,486	$	—	$	—		$	124,756		$	219,069
Total investment costs and expenses	46,412			81,822			14,617			34,674			311		508		—		—			61,340			117,004
Total other income (loss)	(132,098		)	(114,985		)	(1,514		)	(6,394		)	7,927		16,581		—		—			(125,685		)	(104,798		)
Total other expenses	14,136			26,889			617			2,010			145		328		—		35			14,898			29,262
Income tax expense (benefit)	34			58			—			—			—		4		—		—			34			62
Net income (loss)	$	(94,267	)	$	(63,030	)	$	1,181		$	6,781		$	15,885	$	24,227	$	—	$	(35	)	$	(77,201	)	$	(32,057	)
Net income (loss) attributable to noncontrolling interests	816			816			—			—			—		—		—		—			816			816
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries	$	(95,083	)	$	(63,846	)	$	1,181		$	6,781		$	15,885	$	24,227	$	—	$	(35	)	$	(78,017	)	$	(32,873	)

(1) Consists of insurance and directors’ expenses which are not allocated to individual segments.

	Predecessor Company
	Credit		Natural Resources			Other			Reconciling Items(1)			Total Consolidated
	Four months ended April 30, 2014		Four months ended April 30, 2014			Four months ended April 30, 2014			Four months ended April 30, 2014			Four months ended April 30, 2014
Total revenues	$	134,255	$	61,782		$	21,205		$	—		$	217,242
Total investment costs and expenses	62,485		38,915			425			—			101,825
Total other income (loss)	76,046		(8,123		)	(11,589		)	—			56,334
Total other expenses	23,121		1,633			230			40,625			65,609
Income tax expense (benefit)	146		—			16			—			162
Net income (loss)	$	124,549	$	13,111		$	8,945		$	(40,625	)	$	105,980

(1) Consists of certain expenses not allocated to individual segments including other expenses comprised of incentive fees of $12.9 million and merger related transaction costs of $22.7 million. The remaining reconciling items include insurance expenses, directors’ expenses and share-based compensation expense which are not allocated to individual segments.

The following table shows total assets of our reportable segments reconciled to amounts reflected in the condensed consolidated balance sheets as of September 30, 2015 and December 31, 2014 (amounts in thousands):

	Successor Company
	Credit				Natural Resources				Other				Reconciling Items				Total Consolidated(1)
As of	September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014		September 30, 2015		December 31, 2014
Total assets	$	7,412,244	$	8,438,227	$	252,618	$	300,281	$	234,581	$	213,006	$	—	$	111	$	7,899,443	$	8,951,625

(1) Total consolidated assets as of September 30, 2015 included $86.0 million of noncontrolling interests, of which $53.1 million was related to the Credit segment and $32.9 million was related to the Natural Resources segment. Total consolidated assets as of December 31, 2014 included $100.2 million of noncontrolling interests, of which $62.7 million was related to the Credit segment and $37.4 million was related to the Natural Resources segment.