Earnings Per Common Unit

Basic and diluted net income (loss) per common unit are calculated as follows:



	Three Months Ended September 30, 2016						Nine Months Ended September 30, 2016
	Basic			Diluted			Basic			Diluted
Net income attributable to The Carlyle Group L.P.	$	800,000		$	800,000		$	15,300,000		$	15,300,000
Incremental net (loss) income from assumed exchange of Carlyle Holdings partnership units	—			(5,700,000		)	—			8,100,000
Net income (loss) attributable to common units	$	800,000		$	(4,900,000	)	$	15,300,000		$	23,400,000
Weighted-average common units outstanding	83,602,503			312,534,968			82,062,633			306,981,103
Net income (loss) per common unit	$	0.01		$	(0.02	)	$	0.19		$	0.08

	Three Months Ended September 30, 2015						Nine Months Ended September 30, 2015
	Basic			Diluted			Basic			Diluted
Net loss attributable to The Carlyle Group L.P.	$	(83,900,000	)	$	(83,900,000	)	$	(13,800,000	)	$	(13,800,000	)
Dilution of earnings due to participating securities with distribution rights	820,200			—			163,250			(1,423,000		)
Incremental net loss from assumed exchange of Carlyle Holdings partnership units	—			(250,900,000		)	—			(67,800,000		)
Net loss attributable to common units	$	(83,079,800	)	$	(334,800,000	)	$	(13,636,750	)	$	(83,023,000	)
Weighted-average common units outstanding	78,849,332			301,558,908			72,812,892			299,143,320
Net loss per common unit	$	(1.05	)	$	(1.11	)	$	(0.19	)	$	(0.28	)

The weighted-average common units outstanding, basic and diluted, are calculated as follows:



	Three Months Ended September 30, 2016		Nine Months Ended September 30, 2016
	Basic	Diluted	Basic	Diluted
The Carlyle Group L.P. weighted-average common units outstanding	83,602,503	83,602,503	82,062,633	82,062,633
Unvested deferred restricted common units	—	3,569,302	—	3,181,825
Weighted-average vested Carlyle Holdings Partnership units	—	224,826,988	—	221,377,938
Unvested Carlyle Holdings Partnership units	—	536,175	—	358,707
Weighted-average common units outstanding	83,602,503	312,534,968	82,062,633	306,981,103

	Three Months Ended September 30, 2015		Nine Months Ended September 30, 2015
	Basic	Diluted	Basic	Diluted
The Carlyle Group L.P. weighted-average common units outstanding	78,849,332	78,849,332	72,812,892	72,812,892
Unvested deferred restricted common units	—	—	—	—
Weighted-average vested Carlyle Holdings Partnership units	—	216,864,271	—	216,956,438
Unvested Carlyle Holdings Partnership units	—	5,845,305	—	9,373,990
Weighted-average common units outstanding	78,849,332	301,558,908	72,812,892	299,143,320

The Carlyle Group L.P. weighted-average common units outstanding includes vested deferred restricted common units and common units associated with acquisitions that have been earned for which issuance of the related common units is deferred until future periods.

The Partnership applies the treasury stock method to determine the dilutive weighted-average common units represented by the unvested deferred restricted common units. Also included in the determination of dilutive weighted-average common units are contingently issuable Carlyle Holdings partnership units and common units associated with the Partnership's acquisitions. For purposes of determining the dilutive weighted-average common units, it is assumed that September 30, 2016 and 2015 represent the end of the contingency period. The Partnership applies the “if-converted” method to the vested Carlyle Holdings partnership units to determine the dilutive weighted-average common units outstanding. The Partnership applies the treasury stock method to the unvested Carlyle Holdings partnership units and the “if-converted” method on the resulting number of additional Carlyle Holdings partnership units to determine the dilutive weighted-average common units represented by the unvested Carlyle Holdings partnership units.

In computing the dilutive effect that the exchange of Carlyle Holdings partnership units would have on earnings per common unit, the Partnership considered that net income available to holders of common units would increase due to the elimination of non-controlling interests in Carlyle Holdings (including any tax impact). Based on these calculations, the 224,826,988 and 221,377,938 of vested Carlyle Holdings partnership units and 536,175 and 358,707 of unvested Carlyle Holdings partnership units for the three months and nine months ended September 30, 2016, respectively, were dilutive. As a result, a net (loss) income of non-controlling interests in Carlyle Holdings was estimated with this assumed exchange of $(5.7) million and $8.1 million for the three months and nine months ended September 30, 2016, respectively, have been included in net income attributable to The Carlyle Group L.P. for purposes of the dilutive earnings per common unit calculation.

Further, based on these calculations, 216,864,271 and 216,956,438 of vested Carlyle Holdings partnership units and 5,845,305 and 9,373,990 of unvested Carlyle Holdings partnership units for the three and nine months ended September 30, 2015, respectively, were dilutive. As a result, the net loss of non-controlling interests in Carlyle Holdings associated with the assumed exchange of $250.9 million and $67.8 million for the three and nine months ended September 30, 2015 has been included in net income (loss) attributable to The Carlyle Group L.P. for purposes of the dilutive earnings per common unit calculation. However, for the three and nine months ended September 30, 2015, 3,501,505 and 4,625,233 of unvested deferred restricted common units, respectively, were antidilutive, and therefore have been excluded.

On August 1, 2013, as part of acquiring the remaining 40% equity interests in AlpInvest, the Partnership issued 914,087 common units that are subject to vesting conditions. As of September 30, 2016, 38,911 common units remain unvested. The common units participate immediately in any Partnership distributions. Under ASC 260, these common units are considered participating securities and are required to be included in the computation of earnings per common unit pursuant to the two-class method.