SEGMENT REPORTING

3 Months Ended

Mar. 31, 2016

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 and directors’ expenses 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 table presents the net income (loss) components of our reportable segments reconciled to amounts reflected in the condensed consolidated statements of operations (amounts in thousands):

	Credit						Natural Resources						Other					Reconciling Items(1)					Total Consolidated
	Three months ended March 31, 2016			Three months ended March 31, 2015			Three months ended March 31, 2016			Three months ended March 31, 2015			Three months ended March 31, 2016			Three months ended March 31, 2015		Three months ended March 31, 2016		Three months ended March 31, 2015			Three months ended March 31, 2016			Three months ended March 31, 2015
Total revenues	$	77,395		$	94,958		$	2,641		$	2,828		$	9,269		$	—	$	—	$	—		$	89,305		$	97,786
Total investment costs and expenses	50,984			55,967			1,614			1,340			400			346		—		—			52,998			57,653
Total other income (loss)	(173,946		)	(65,992		)	(27,242		)	(7,753		)	(8,694		)	4,581		—		—			(209,882		)	(69,164		)
Total other expenses	23,864			16,403			130			510			70			155		—		100			24,064			17,168
Income tax expense (benefit)	23			48			—			—			37			299		—		—			60			347
Net income (loss)	$	(171,422	)	$	(43,452	)	$	(26,345	)	$	(6,775	)	$	68		$	3,781	$	—	$	(100	)	$	(197,699	)	$	(46,546	)
Net income (loss) attributable to noncontrolling interests	(9,711		)	(5,858		)	(5,824		)	(213		)	—			—		—		—			(15,535		)	(6,071		)
Net income (loss) attributable to KKR Financial Holdings LLC and Subsidiaries	$	(161,711	)	$	(37,594	)	$	(20,521	)	$	(6,562	)	$	68		$	3,781	$	—	$	(100	)	$	(182,164	)	$	(40,475	)

(1) Consists of insurance and directors’ expenses 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 March 31, 2016 and December 31, 2015 (amounts in thousands):

	Credit				Natural Resources				Other				Reconciling Items				Total Consolidated(1)
As of	March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015		March 31, 2016		December 31, 2015
Total assets	$	6,663,815	$	7,303,305	$	208,161	$	230,815	$	217,667	$	254,275	$	—	$	—	$	7,089,643	$	7,788,395

(1) Total consolidated assets as of March 31, 2016 included $63.0 million of noncontrolling interests, of which $34.5 million was related to the Credit segment and $28.5 million was related to the Natural Resources segment. Total consolidated assets as of December 31, 2015 included $82.9 million of noncontrolling interests, of which $50.3 million was related to the Credit segment and $32.6 million was related to the Natural Resources segment.