NEW YORK--(BUSINESS WIRE)--The Blackstone Group L.P. (NYSE: BX) today reported its first quarter 2011 results.
Economic Net Income (“ENI”) was $568.1 million for the first quarter of 2011, an increase of $207.7 million compared to ENI for the first quarter of 2010. The increase in ENI was driven principally by strong investment performance across Blackstone’s investment segments, which produced $726.9 million in Performance Fees and Investment Income, more than twice the $343.0 million in the first quarter of 2010.
Blackstone’s Fee-Earning Assets Under Management and Total Assets Under Management continued to demonstrate consistently strong growth, rising to a record $124.0 billion and $150.0 billion, respectively, driven both by net inflows and investment appreciation. Blackstone funds had $31.8 billion of committed but uninvested capital, or “dry powder”, at the end of the first quarter of 2011, a record level.
For the first quarter of 2011, Total Segment Revenues were $1.2 billion, up 64% from the first quarter of 2010. The increase was driven by higher Performance Fees across all the investment segments and an increase in Total Management Fees to $425.7 million, up 17% from $362.6 million in the prior year’s first quarter.
Total Segment Expenses were $509.9 million for the first quarter of 2011, an increase from $326.0 million for the first quarter of 2010, driven largely by increased accruals for Performance Fee Compensation of $177.1 million for the first quarter of 2011. Compensation, excluding Performance Fee Compensation, was up 21% to $229.9 million. Blackstone’s non-compensation expenses were up 41% from the first quarter of 2010 driven mostly by fund-raising and financing activities.
Net Fee Related Earnings from Operations were $93.2 million for the first quarter of 2011, down slightly from $98.7 million for the first quarter of 2010 reflecting increased fund-raising and financing expenses.
GAAP results for the first quarter of 2011 included Revenues of $1.2 billion, compared to $701.2 million for the first quarter of 2010, and Net Income Attributable to The Blackstone Group L.P. of $42.7 million, compared to a net loss of $121.4 million for the first quarter of 2010.
Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, “Blackstone reported our strongest quarterly earnings since becoming a public company four years ago, as the values of all of our funds continued to increase. In real estate, operating fundamentals continue to improve and two of our global funds moved above their preferred return hurdle and started accruing performance fees. Our unique mix of businesses, each of which is a leader in its own right, gives us a distinct competitive advantage in identifying opportunities for value creation and attracting new capital. Every one of our investing businesses grew sharply year over year, and Blackstone ended the first quarter with record total assets under management of $150 billion, up from $105 billion this time last year.”
The table below details Blackstone’s ENI, Net Fee Related Earnings from Operations, Distributable Earnings and Fee-Earning Assets Under Management as of, and for, the first quarters of 2011 and 2010. ENI, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains (losses), but excludes IPO and acquisition-related accounting charges.
| As of and for the Three | |||||||||||||
| Months Ended March 31, | Variance | ||||||||||||
| 2011 | 2010 | $ | % | ||||||||||
| (Dollars in Thousands, Except per Unit Amounts) | |||||||||||||
| Economic Net Income, Total Segments | $ | 654,305 | $ | 385,102 | $ | 269,203 | 70% | ||||||
| Provision for Income Taxes (a) | 86,206 | 24,709 | 61,497 | N/M | |||||||||
| Economic Net Income, After Taxes | $ | 568,099 | $ | 360,393 | $ | 207,706 | 58% | ||||||
| Economic Net Income, After Taxes per Adjusted Unit (b) | $ |
0.51 |
$ | 0.32 | $ |
0.19 |
59% |
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| Net Fee Related Earnings from Operations | $ | 93,180 | $ | 98,745 | $ | (5,565) | -6% | ||||||
| Distributable Earnings | $ | 196,549 | $ | 148,696 | $ | 47,853 | 32% | ||||||
| Distributable Earnings per Common Unit (c) | $ | 0.18 | $ | 0.14 | $ | 0.04 | 29% | ||||||
| Fee-Earning Assets Under Management: | |||||||||||||
| Private Equity | $ | 35,892,804 | $ | 25,173,936 | $ | 10,718,868 | 43% | ||||||
| Real Estate | 26,454,012 | 23,820,697 | 2,633,315 | 11% | |||||||||
| Hedge Fund Solutions | 35,847,002 | 28,902,220 | 6,944,782 | 24% | |||||||||
| Credit Businesses | 25,838,878 | 20,173,319 | 5,665,559 | 28% | |||||||||
| Total Fee-Earning Assets Under Management | $ | 124,032,696 | $ | 98,070,172 | $ | 25,962,524 | 26% | ||||||
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| (a) | Represents the implied provision for income taxes calculated using a similar methodology applied in calculating the tax provision for The Blackstone Group L.P. | |
| (b) |
Adjusted Units represents the weighted-average fully diluted unit count for Economic Net Income purposes. A reconciliation of this item to the comparable GAAP measure is presented in Exhibit 4 to this release. |
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| (c) | See Exhibit 4 for the calculation of Distributable Earnings Units Outstanding. |
SEGMENT REVIEW
Private Equity
Private Equity had revenues of $273.7 million for the first quarter of 2011 compared to $276.8 million in 2010. Increases in Performance Fees and Management Fees of 25% and 10%, respectively, were offset by a decline in Investment Income of $37.2 million.
Private Equity had Realized Performance Fees of $82.4 million resulting from realizations in BCP IV and Realized Investment Income of $17.9 million resulting from realizations in both its BCP IV and BCP V funds.
The appreciation of the underlying assets for Blackstone’s contributed Private Equity funds was 4.9% for the first quarter of 2011. BCP’s privately held portfolio companies continued to perform well on a revenue and EBITDA basis while its publicly held investments benefited from an increase in public stock markets, as well as public offerings of Nielsen and Bank United. As of March 31, 2011, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, of Blackstone’s contributed Private Equity funds represented 1.5 times investors’ original investments.
Economic Net Income was $175.5 million for the first quarter of 2011, down from $193.2 million for the first quarter of 2010, a result of lower Investment Income and increased operating expenses.
BCP V closed its investment period on January 7, 2011, thereby commencing the investment period for BCP VI, which is now included in Fee-Earning Assets Under Management. Fee-Earning Assets Under Management were $35.9 billion compared to $25.2 billion in the first quarter of 2010 principally due to the start of BCP VI’s investment period.
Dry powder for Private Equity, which is inclusive of amounts related to BCP VI, was $16.9 billion as of March 31, 2011. Limited Partner Capital Invested during the first quarter of 2011 totaled $652.9 million, an increase from $387.9 million invested during the first quarter of 2010. Blackstone’s Private Equity segment’s funds had $1.7 billion of Limited Partner Capital committed to transactions which had not yet closed as of March 31, 2011.
Real Estate
Real Estate had revenues of $555.6 million for the first quarter of 2011, compared with revenues of $152.2 million for the first quarter of 2010. Improved operating performance, primarily across the hospitality and office segments, led to an increase in the real estate investments’ carrying values, which drove an increase in Performance Fees.
As of March 31, 2011, the unrealized value and cumulative realized proceeds, before carried interest, fees and expenses, of the Real Estate segment’s contributed carry funds represented 1.4 times investors’ original investment.
The appreciation of the underlying assets for Blackstone’s contributed Real Estate carry funds was 8.7% for the first quarter of 2011, and for the Real Estate debt hedge funds was 4.5% for the first quarter of 2011.
ENI for the Real Estate segment was $361.0 million for the first quarter of 2011 compared to $89.3 million for the first quarter of 2010, driven principally by the increase in Performance Fees noted above.
Fee-Earning Assets Under Management were $26.5 billion compared to $23.8 billion for the first quarter of 2010. Fee-Earning Assets Under Management increased principally due to the commencement of Blackstone’s management of the Merrill Lynch Asia assets which added $2.1 billion in Fee-Earning Assets Under Management in the fourth quarter of 2010.
Dry powder for Real Estate was $8.6 billion as of March 31, 2011. Limited Partner Capital Invested during the first quarter of 2011 was $654.4 million, up from $424.9 million during the first quarter of 2010. Blackstone’s Real Estate segment’s funds had $2.4 billion of Limited Partner Capital committed to transactions which had not yet closed as of March 31, 2011. This active investment pace has resulted in the segment’s BREP VI fund reaching approximately 82% invested or committed capital as of the end of the first quarter of 2011. Accordingly, Blackstone has commenced fund-raising for its next major real estate fund.
Hedge Fund Solutions
Hedge Fund Solutions had revenues of $105.4 million for the first quarter of 2011, compared with revenues of $89.2 million for the first quarter of 2010. The increase from the first quarter of 2010 was principally due to an increase in Total Management Fees of 18% to $76.2 million for the first quarter of 2011.
The appreciation of the underlying assets for Blackstone’s Hedge Fund Solutions’ funds was 2% for the first quarter of 2011.
ENI for the Hedge Funds Solutions segment was up 10% to $58.1 million for the first quarter of 2011 compared to $52.6 million for the first quarter of 2010 as higher Fee-Earning Assets Under Management drove increases in Management and Performance Fees.
Fee-Earning Assets Under Management for the segment grew 24% to $35.8 billion from $28.9 billion at the end of the first quarter of 2010. The increase from the prior year period was principally due to net inflows and market appreciation across the segment. Net inflows for Blackstone’s Hedge Fund Solutions business came primarily from its commingled and customized investment products, hedge fund manager seeding platform and long only solutions business.
As of March 31, 2011, 74% of the Fee-Earnings Assets Under Management in Blackstone’s Hedge Fund Solutions products which were eligible to earn performance fees were above their respective high water marks.
Credit Businesses
Credit Businesses had revenues of $156.7 million for the first quarter of 2011, compared with revenues of $115.4 million for the first quarter of 2010. The increase from the first quarter of 2010 was due to an increase in Performance Fees of 47% to $95.0 million for the first quarter of 2011, resulting from strong fund performance across the segment, and an increase in Total Management Fees of 40% to $55.3 million.
The appreciation of the underlying assets for Blackstone’s credit-oriented business was 8.1% for the flagship hedge funds, 9.0% for the mezzanine funds and 9.4% for the rescue lending funds for the first quarter of 2011.
ENI for the Credit Businesses segment was up 45% to $60.5 million for the first quarter of 2011 compared to $41.8 million for the first quarter of 2010 as higher Fee-Earning Assets Under Management and favorable market conditions drove increases in Management and Performance Fees.
Fee-Earning Assets Under Management for the segment increased 28% to $25.8 billion from $20.2 billion for the first quarter of 2010. The long only platform had particularly strong year over year growth in Fee-Earning Assets Under Management, increasing to $19.3 billion, up $5.1 billion, or 36%, from the first quarter of last year as the segment continued to launch new products and strategies. Additionally, Blackstone announced the acquisition of Allied Irish Banks’ CLO platform, which will add $2.1 billion of Fee-Earning Assets Under Management when that acquisition closes sometime in the second quarter.
As of March 31, 2011, 99% of the Fee-Earning Assets Under Management in Blackstone’s credit-oriented hedge funds which were eligible to earn performance fees were above their respective high water marks compared to 88% as of March 31, 2010.
Dry powder of drawdown funds for the Credit Businesses segment was $4.1 billion as of March 31, 2011.
Financial Advisory
Revenues were $72.8 million for the first quarter of 2011, a modest decrease from $77.5 million for the first quarter of 2010. The decrease in segment revenues was primarily driven by decreases in Blackstone Advisory Partners’ business as several transactions closed in late 2010 instead of 2011 and a decrease in the restructuring and reorganization business largely due to the improving economy as well as the continued strength of the credit markets. These decreases were largely offset by an increase in fees earned by Blackstone’s fund placement business as the institutional fund-raising environment improved compared to the first quarter of 2010.
ENI was a loss of $0.9 million for the first quarter of 2011 compared to income of $8.2 million for the first quarter of 2010.
CAPITAL AND LIQUIDITY
As of March 31, 2011, Blackstone had $455.8 million in cash, $976.1 million invested in Blackstone’s Treasury cash management strategies, $254.0 million invested in liquid Blackstone funds and $1.7 billion invested in illiquid Blackstone funds. Long-term debt totaled $1.0 billion in borrowings from the 2010 and 2009 bond issuances. Blackstone has no borrowings outstanding against its $1 billion revolving credit facility. On April 8, 2011, Blackstone and its lenders amended the revolving credit facility to extend its maturity from March 23, 2013 to April 8, 2016.
DISTRIBUTION
The Blackstone Group L.P. has declared a quarterly distribution of $0.10 per common unit to record holders of common units at the close of business on May 16, 2011. This distribution will be paid on May 31, 2011.
Blackstone's general partner maintains the right to determine the amount to be distributed from The Blackstone Group L.P.’s net after-tax share of its annual Distributable Earnings. Distributable Earnings will only be a starting point for the determination of the amount to be distributed to unitholders because in determining the amount to be distributed Blackstone will subtract from Distributable Earnings any amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter. The aggregate amounts of Blackstone’s distributions to unitholders will typically be less than its Distributable Earnings for that year.
Although for calendar 2010 Blackstone distributed substantially all of its net after-tax annual Distributable Earnings. Blackstone’s current intention is now to distribute to its common unitholders substantially all of The Blackstone Group L.P.'s net after-tax share of annual Distributable Earnings less the amount of its realized investment gains. This determination was made based on the continued pace of organic and inorganic growth and the potential for further strategic initiatives and the retained amount will be used for those purposes. The retained cash will be deducted from the fourth quarter distribution which is made in the first quarter of the ensuing calendar year. Distributions for the first three quarters will remain unchanged at $0.10 per unit. All distributions are subject to Blackstone’s discretion to retain additional amounts from the amount of annual Distribituable Earnings to be distributed as described above.
Because Blackstone will not know what its Distributable Earnings will be for any fiscal year until the end of such year, Blackstone expects that its first three quarterly distributions in respect of any given year will be based on its anticipated annualized Net Fee Related Earnings. As such, the distributions for the first three quarters are expected to be smaller than the final quarterly distribution in respect of such year. For the fourth quarter of 2011 Blackstone expects to pay the remaining amount of the year’s Distributable Earnings less realized investment gains.
All of the foregoing is subject to the qualification that the declaration and payment of any distributions are at the sole discretion of Blackstone’s general partner and the general partner may change its distribution policy at any time.
Because the wholly-owned subsidiaries of The Blackstone Group L.P. must pay taxes and make payments under the tax receivable agreements described in Blackstone’s Annual Report on Form 10-K, the amounts ultimately distributed by The Blackstone Group L.P. to its common unitholders in respect of fiscal 2011 and subsequent years are expected to be different, on a per unit basis, than the amounts distributed by the Blackstone Holdings partnerships to the Blackstone personnel and others who are limited partners of the Blackstone Holdings partnerships in respect of their Blackstone Holdings partnership units.
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Blackstone will host a conference call on April 21, 2011 at 11:00 a.m. ET to discuss first quarter 2011 results. The conference call can be accessed by dialing (877) 391-6747 (U.S. domestic) or +1 (617) 597-9291 (international) pass code 14994355. Additionally, the conference call will be broadcast live over the internet and can be accessed by all interested parties through the Investor Relations section of The Blackstone Group’s website http://ir.blackstone.com. For those unable to listen to the live broadcast, a replay will be available on Blackstone’s website or by dialing (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international) conference ID number 77830492, beginning approximately two hours after the event.
Blackstone expects to host conference calls to report its 2011 results as follows: second quarter results, July 21, 2011; third quarter results, October 20, 2011 and fourth quarter and full year results, February 2, 2012.
About The Blackstone Group
Blackstone is one of the world’s leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of private equity funds, real estate funds, hedge fund solutions, credit-oriented funds and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including financial and strategic advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstone’s current views with respect to, among other things, Blackstone’s operations and financial performance. You can identify these forward-looking statements by the use of words such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but are not limited to those described under the section entitled “Risk Factors” in its Annual Report on Form 10-K for the fiscal year ended December 31, 2010, as such factors may be updated from time to time in its periodic filings with the SEC, which are accessible on the SEC’s website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the filings. Blackstone undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
This release does not constitute an offer of any Blackstone Fund.
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THE BLACKSTONE GROUP L.P. Exhibit 1. Consolidated Statements of Operations (Dollars in Thousands, Except Per Unit Data) |
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| Quarter Ended March 31, | ||||||||||||
| 2011 | 2010 | |||||||||||
| Revenues | ||||||||||||
| Management and Advisory Fees | $ | 412,738 | $ | 354,820 | ||||||||
| Performance Fees | ||||||||||||
| Realized | 96,203 | 54,049 | ||||||||||
| Unrealized | 512,401 | 131,779 | ||||||||||
| Total Performance Fees | 608,604 | 185,828 | ||||||||||
| Investment Income | ||||||||||||
| Realized | 12,783 | 5,726 | ||||||||||
| Unrealized | 107,395 | 149,220 | ||||||||||
| Total Investment Income | 120,178 | 154,946 | ||||||||||
| Interest and Dividend Revenue | 9,490 | 8,895 | ||||||||||
| Other | 2,259 | (3,250 | ) | |||||||||
| Total Revenues | 1,153,269 | 701,239 | ||||||||||
| Expenses | ||||||||||||
| Compensation and Benefits | ||||||||||||
| Compensation | 659,483 | 924,950 | ||||||||||
| Performance Fee Compensation | ||||||||||||
| Realized | 14,543 | 7,741 | ||||||||||
| Unrealized | 162,525 | 54,600 | ||||||||||
| Total Compensation and Benefits | 836,551 | 987,291 | ||||||||||
| General, Administrative and Other | 129,386 | 106,379 | ||||||||||
| Interest Expense | 13,803 | 7,185 | ||||||||||
| Fund Expenses | 11,124 | (141 | ) | |||||||||
| Total Expenses | 990,864 | 1,100,714 | ||||||||||
| Other Income | ||||||||||||
| Net Gains (Losses) from Fund Investment Activities | (45,191 | ) | 171,804 | |||||||||
| Income (Loss) Before Provision (Benefit) for Taxes | 117,214 | (227,671 | ) | |||||||||
| Provision for Taxes | 38,850 | 9,635 | ||||||||||
| Net Income (Loss) | 78,364 | (237,306 | ) | |||||||||
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Net Income Attributable to Redeemable Non-Controlling Interests in Consolidated Entities |
22,025 | 23,969 | ||||||||||
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Net Income (Loss) Attributable to Non-Controlling Interests in Consolidated Entities |
(93,081 | ) | 135,966 | |||||||||
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Net Income (Loss) Attributable to Non-Controlling Interests in Blackstone Holdings |
106,716 | (275,864 | ) | |||||||||
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Net Income (Loss) Attributable to The Blackstone Group L.P. |
$ | 42,704 | $ | (121,377 | ) | |||||||
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Net Loss per Common Unit, Basic and Diluted |
|
|
$ | (0.36 |
) |
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Net Income per Common Unit, Basic |
$ |
0.10 |
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Net Income per Common Unit, Diluted |
$ |
0.09 |
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THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations (Dollars in Thousands) |
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The tables below detail Blackstone’s Economic Net Income and Net Fee Related Earnings from Operations. Net Fee Related Earnings from Operations is a supplemental measure of after tax performance used to highlight earnings from operations excluding the income from and related profit sharing expenses of Blackstone’s performance fees and investment income, except for interest income. The reconciliation of Economic Net Income to Net Fee Related Earnings from Operations is presented in Exhibit 2b to this release. |
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| Three Months Ended | ||||||||||||||||||||||||||||||||||
| Mar 31, 2011 vs. | ||||||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Mar 31, 2010 | |||||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | ||||||||||||||||||||||||||||
|
Economic Net Income Recap, Total Segments |
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| Revenues | ||||||||||||||||||||||||||||||||||
| Management and Advisory Fees | ||||||||||||||||||||||||||||||||||
| Base Management Fees | $ | 251,971 | $ | 262,914 | $ | 269,434 | $ | 285,152 | $ | 305,587 | $ | 53,616 | 21 | % | ||||||||||||||||||||
| Advisory Fees | 76,568 | 134,099 | 84,541 | 130,932 | 70,252 | (6,316 | ) | -8 | % | |||||||||||||||||||||||||
|
Transaction and Other Fees,
Net * |
35,260 | 20,617 | 22,948 | 58,923 | 58,363 | 23,103 | 66 | % | ||||||||||||||||||||||||||
| Management Fee Offsets ** | (1,178 | ) | (179 | ) | (674 | ) | (282 | ) | (8,536 | ) | (7,358 | ) | N/M | |||||||||||||||||||||
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Total Management and
Advisory Fees |
362,621 | 417,451 | 376,249 | 474,725 | 425,666 | 63,045 | 17 | % | ||||||||||||||||||||||||||
| Performance Fees | ||||||||||||||||||||||||||||||||||
| Realized | 53,881 | 46,374 | 66,039 | 195,369 | 95,600 | 41,719 | 77 | % | ||||||||||||||||||||||||||
| Unrealized | 132,333 | (20,738 | ) | 192,745 | 260,286 | 505,197 | 372,864 | N/M | ||||||||||||||||||||||||||
| Total Performance Fees | 186,214 | 25,636 | 258,784 | 455,655 | 600,797 | 414,583 | N/M | |||||||||||||||||||||||||||
| Investment Income | ||||||||||||||||||||||||||||||||||
| Realized | 5,307 | 15,721 | 14,276 | 11,611 | 23,499 | 18,192 | N/M | |||||||||||||||||||||||||||
| Unrealized | 151,521 | 87,186 | 128,247 | 134,680 | 102,577 | (48,944 | ) | -32 | % | |||||||||||||||||||||||||
| Total Investment Income | 156,828 | 102,907 | 142,523 | 146,291 | 126,076 | (30,752 | ) | -20 | % | |||||||||||||||||||||||||
|
Interest Income and Dividend
Revenue |
8,690 | 6,930 | 10,187 | 10,289 | 9,448 | 758 | 9 | % | ||||||||||||||||||||||||||
| Other | (3,250 | ) | (644 | ) | 4,468 | (1,192 | ) | 2,259 | 5,509 | N/M | ||||||||||||||||||||||||
| Total Revenues | 711,103 | 552,280 | 792,211 | 1,085,768 | 1,164,246 | 453,143 | 64 | % | ||||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||||||||||||||
| Compensation | 190,637 | 220,662 | 210,582 | 237,233 | 229,898 | 39,261 | 21 | % | ||||||||||||||||||||||||||
|
Performance Fee
Compensation |
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| Realized | 7,741 | 22,879 | 24,962 | 72,734 | 14,543 | 6,802 | 88 | % | ||||||||||||||||||||||||||
| Unrealized | 54,600 | (892 | ) | 104,323 | 70,615 | 162,525 | 107,925 | 198 | % | |||||||||||||||||||||||||
|
Total Compensation
and Benefits |
252,978 | 242,649 | 339,867 | 380,582 | 406,966 | 153,988 | 61 | % | ||||||||||||||||||||||||||
| Other Operating Expenses | 73,023 | 88,160 | 84,253 | 99,080 | 102,975 | 29,952 | 41 | % | ||||||||||||||||||||||||||
| Total Expenses | 326,001 | 330,809 | 424,120 | 479,662 | 509,941 | 183,940 | 56 | % | ||||||||||||||||||||||||||
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Total Economic Net Income |
$ | 385,102 | $ | 221,471 | $ | 368,091 | $ | 606,106 | $ | 654,305 | $ | 269,203 | 70 | % | ||||||||||||||||||||
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Total Net Fee Related Earnings from Operations |
$ | 98,745 | $ | 107,915 | $ | 112,914 | $ | 122,740 | $ | 93,180 | $ | (5,565 | ) | -6 | % | |||||||||||||||||||
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____________________ |
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* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses. |
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| ** Primarily placement fees. | ||||||||||||||||||||||||||||||||||
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continued... |
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THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
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| Three Months Ended | ||||||||||||||||||||||||||||||||||
| Mar 31, 2011 vs. | ||||||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Mar 31, 2010 | |||||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | ||||||||||||||||||||||||||||
| Private Equity | ||||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||||
| Management Fees | ||||||||||||||||||||||||||||||||||
| Base Management Fees | $ | 65,432 | $ | 66,795 | $ | 66,077 | $ | 65,003 | $ | 79,935 | $ | 14,503 | 22 | % | ||||||||||||||||||||
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Transaction and Other Fees,
Net * |
31,972 | 16,367 | 13,348 | 10,556 | 35,342 | 3,370 | 11 | % | ||||||||||||||||||||||||||
| Management Fee Offsets ** | ― | ― | (91 | ) | (97 | ) | (7,889 | ) | (7,889 | ) | N/M | |||||||||||||||||||||||
| Total Management Fees | 97,404 | 83,162 | 79,334 | 75,462 | 107,388 | 9,984 | 10 | % | ||||||||||||||||||||||||||
| Performance Fees | ||||||||||||||||||||||||||||||||||
| Realized | 46,175 | 1,106 | 44,814 | 64,774 | 82,389 | 36,214 | 78 | % | ||||||||||||||||||||||||||
| Unrealized | 45,549 | (24,020 | ) | 45,499 | 84,466 | 32,537 | (13,012 | ) | -29 | % | ||||||||||||||||||||||||
| Total Performance Fees | 91,724 | (22,914 | ) | 90,313 | 149,240 | 114,926 | 23,202 | 25 | % | |||||||||||||||||||||||||
| Investment Income (Loss) | N/M | |||||||||||||||||||||||||||||||||
| Realized | (495 | ) | 3,141 | 9,940 | 2,746 | 17,907 | 18,402 | N/M | ||||||||||||||||||||||||||
| Unrealized | 84,684 | 17,275 | 30,491 | 20,838 | 29,126 | (55,558 | ) | -66 | % | |||||||||||||||||||||||||
|
Total Investment Income
(Loss) |
84,189 | 20,416 | 40,431 | 23,584 | 47,033 | (37,156 | ) | -44 | % | |||||||||||||||||||||||||
|
Interest Income and Dividend
Revenue |
3,428 | 2,728 | 3,802 | 4,086 | 3,505 | 77 | 2 | % | ||||||||||||||||||||||||||
| Other | 100 | 460 | 1,061 | 400 | 811 | 711 | N/M | |||||||||||||||||||||||||||
| Total Revenues | 276,845 | 83,852 | 214,941 | 252,772 | 273,663 | (3,182 | ) | -1 | % | |||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||||
| Compensation and Benefits | ||||||||||||||||||||||||||||||||||
| Compensation | 46,910 | 46,612 | 47,552 | 38,271 | 56,254 | 9,344 | 20 | % | ||||||||||||||||||||||||||
|
Performance Fee
Compensation |
||||||||||||||||||||||||||||||||||
| Realized | 6,005 | 128 | 10,783 | 15,711 | 7,718 | 1,713 | 29 | % | ||||||||||||||||||||||||||
| Unrealized | 6,344 | (10,296 | ) | 18,306 | 6,966 | 5,464 | (880 | ) | -14 | % | ||||||||||||||||||||||||
|
Total Compensation
and Benefits |
59,259 | 36,444 | 76,641 | 60,948 | 69,436 | 10,177 | 17 | % | ||||||||||||||||||||||||||
| Other Operating Expenses | 24,431 | 28,677 | 26,359 | 30,122 | 28,713 | 4,282 | 18 | % | ||||||||||||||||||||||||||
| Total Expenses | 83,690 | 65,121 | 103,000 | 91,070 | 98,149 | 14,459 | 17 | % | ||||||||||||||||||||||||||
| Economic Net Income | $ | 193,155 | $ | 18,731 | $ | 111,941 | $ | 161,702 | $ | 175,514 | $ | (17,641 | ) | -9 | % | |||||||||||||||||||
|
Net Fee Related Earnings
from Operations |
$ | 28,712 | $ | 11,464 | $ | 17,465 | $ | 7,355 | $ | 23,803 | $ | (4,909 | ) | -17 | % | |||||||||||||||||||
|
____________________ |
||||||||||||||||||||||||||||||||||
|
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners including, for Private Equity, broken deal expenses. |
||||||||||||||||||||||||||||||||||
| ** Primarily placement fees. | ||||||||||||||||||||||||||||||||||
|
continued... |
||||||||||||||||||||||||||||||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
|||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||
| Mar 31, 2011 vs. | |||||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Mar 31, 2010 | ||||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | |||||||||||||||||||||||||||
| Real Estate | |||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||
| Management Fees | |||||||||||||||||||||||||||||||||
| Base Management Fees | $ | 83,060 | $ | 82,916 | $ | 83,232 | $ | 89,220 | $ | 95,439 | $ | 12,379 | 15% | ||||||||||||||||||||
|
Transaction and Other Fees, Net * |
1,942 | 2,979 | 8,538 | 46,455 | 21,543 | 19,601 | N/M | ||||||||||||||||||||||||||
|
Management Fee Offsets ** |
(489 | ) | (110 | ) | (401 | ) | (71 | ) | (505 | ) | (16 | ) | -3% | ||||||||||||||||||||
|
Total Management Fees |
84,513 | 85,785 | 91,369 | 135,604 | 116,477 | 31,964 | 38% | ||||||||||||||||||||||||||
| Performance Fees | |||||||||||||||||||||||||||||||||
| Realized | 5,948 | 16,319 | 5,010 | 13,011 | 2,593 | (3,355 | ) | -56% | |||||||||||||||||||||||||
| Unrealized | 11,391 | 21,117 | 69,910 | 154,553 | 368,104 | 356,713 | N/M | ||||||||||||||||||||||||||
| Total Performance Fees | 17,339 | 37,436 | 74,920 | 167,564 | 370,697 | 353,358 | N/M | ||||||||||||||||||||||||||
| Investment Income | |||||||||||||||||||||||||||||||||
| Realized | 2,632 | 3,900 | 2,159 | 2,560 | 2,919 | 287 | 11% | ||||||||||||||||||||||||||
| Unrealized | 46,892 | 79,543 | 83,968 | 108,576 | 61,406 | 14,514 | 31% | ||||||||||||||||||||||||||
| Total Investment Income | 49,524 | 83,443 | 86,127 | 111,136 | 64,325 | 14,801 | 30% | ||||||||||||||||||||||||||
|
Interest Income and Dividend Revenue |
2,718 | 2,178 | 3,026 | 3,251 | 3,288 | 570 | 21% | ||||||||||||||||||||||||||
| Other | (1,876 | ) | (390 | ) | 2,330 | (400 | ) | 860 | 2,736 | N/M | |||||||||||||||||||||||
| Total Revenues | 152,218 | 208,452 | 257,772 | 417,155 | 555,647 | 403,429 | N/M | ||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||
| Compensation and Benefits | |||||||||||||||||||||||||||||||||
| Compensation | 40,150 | 44,528 | 43,219 | 55,280 | 58,501 | 18,351 | 46% | ||||||||||||||||||||||||||
|
Performance Fee
Compensation |
|||||||||||||||||||||||||||||||||
| Realized | 1,524 | 8,895 | 1,806 | 3,619 | 1,230 | (294 | ) | -19% | |||||||||||||||||||||||||
| Unrealized | 6,937 | 15,999 | 46,182 | 53,746 | 106,501 | 99,564 | N/M | ||||||||||||||||||||||||||
|
Total Compensation
and Benefits |
48,611 | 69,422 | 91,207 | 112,645 | 166,232 | 117,621 | N/M | ||||||||||||||||||||||||||
|
Other Operating Expenses |
14,290 | 17,647 | 18,584 | 23,668 | 28,366 | 14,076 | 99% | ||||||||||||||||||||||||||
| Total Expenses | 62,901 | 87,069 | 109,791 | 136,313 | 194,598 | 131,697 | N/M | ||||||||||||||||||||||||||
| Economic Net Income | $ | 89,317 | $ | 121,383 | $ | 147,981 | $ | 280,842 | $ | 361,049 | $ | 271,732 | N/M | ||||||||||||||||||||
|
Net Fee Related Earnings from Operations |
$ | 29,825 | $ | 24,743 | $ | 39,853 | $ | 52,457 | $ | 31,233 | $ | 1,408 | 5% | ||||||||||||||||||||
|
____________________ |
|||||||||||||||||||||||||||||||||
| * Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners. | |||||||||||||||||||||||||||||||||
| ** Primarily placement fees. | |||||||||||||||||||||||||||||||||
|
continued... |
|||||||||||||||||||||||||||||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
|||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||
| Mar 31, 2011 vs. | |||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Mar 31, 2010 | ||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | |||||||||||||||||||||||||
| Hedge Fund Solutions | |||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||
| Management Fees | |||||||||||||||||||||||||||||||
| Base Management Fees | $ | 63,866 | $ | 65,533 | $ | 69,305 | $ | 74,069 | $ | 75,612 | $ | 11,746 | 18% | ||||||||||||||||||
|
Transaction and Other Fees,
Net * |
809 | 870 | 846 | 1,047 | 727 | (82 | ) | -10% | |||||||||||||||||||||||
| Management Fee Offsets ** | ― | (72 | ) | (163 | ) | (95 | ) | (124 | ) | (124 | ) | N/M | |||||||||||||||||||
| Total Management Fees | 64,675 | 66,331 | 69,988 | 75,021 | 76,215 | 11,540 | 18% | ||||||||||||||||||||||||
| Performance Fees | |||||||||||||||||||||||||||||||
| Realized | 2,117 | 1,021 | 872 | 52,616 | 893 | (1,224 | ) | -58% | |||||||||||||||||||||||
| Unrealized | 10,413 | (2,596 | ) | 14,137 | (18,972 | ) | 19,253 | 8,840 | 85% | ||||||||||||||||||||||
| Total Performance Fees | 12,530 | (1,575 | ) | 15,009 | 33,644 | 20,146 | 7,616 | 61% | |||||||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||||||||
| Realized | (250 | ) | 5,438 | 1,050 | 3,580 | 1,341 | 1,591 | N/M | |||||||||||||||||||||||
| Unrealized | 11,880 | (6,749 | ) | 7,831 | 6,399 | 7,120 | (4,760 | ) | -40% | ||||||||||||||||||||||
|
Total Investment Income
(Loss) |
11,630 | (1,311 | ) | 8,881 | 9,979 | 8,461 | (3,169 | ) | -27% | ||||||||||||||||||||||
|
Interest Income and Dividend
Revenue |
475 | 353 | 498 | 543 | 516 | 41 | 9% | ||||||||||||||||||||||||
| Other | (83 | ) | (40 | ) | 270 | (50 | ) | 104 | 187 | N/M | |||||||||||||||||||||
| Total Revenues | 89,227 | 63,758 | 94,646 | 119,137 | 105,442 | 16,215 | 18% | ||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||
| Compensation and Benefits | |||||||||||||||||||||||||||||||
| Compensation | 20,742 | 26,388 | 24,506 | 23,750 | 28,657 | 7,915 | 38% | ||||||||||||||||||||||||
|
Performance Fee
Compensation |
|||||||||||||||||||||||||||||||
| Realized | 771 | 356 | 3,313 | 16,193 | 300 | (471 | ) | -61% | |||||||||||||||||||||||
| Unrealized | 3,783 | (977 | ) | 5,075 | (6,814 | ) | 5,358 | 1,575 | 42% | ||||||||||||||||||||||
|
Total Compensation
and Benefits |
25,296 | 25,767 | 32,894 | 33,129 | 34,315 | 9,019 | 36% | ||||||||||||||||||||||||
| Other Operating Expenses | 11,285 | 12,353 | 12,388 | 15,334 | 13,008 | 1,723 | 15% | ||||||||||||||||||||||||
| Total Expenses | 36,581 | 38,120 | 45,282 | 48,463 | 47,323 | 10,742 | 29% | ||||||||||||||||||||||||
| Economic Net Income | $ | 52,646 | $ | 25,638 | $ | 49,364 | $ | 70,674 | $ | 58,119 | $ | 5,473 | 10% | ||||||||||||||||||
|
Net Fee Related Earnings
from Operations |
$ | 31,542 | $ | 26,857 | $ | 36,082 | $ | 29,240 | $ | 33,136 | $ | 1,594 | 5% | ||||||||||||||||||
|
____________________ |
|||||||||||||||||||||||||||||||
| * Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners. | |||||||||||||||||||||||||||||||
|
** Primarily placement fees. |
|||||||||||||||||||||||||||||||
|
continued... |
|||||||||||||||||||||||||||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
|||||||||||||||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||||||||||||||
|
Mar 31, 2011 vs. |
|||||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, |
Mar 31, 2010 |
||||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | |||||||||||||||||||||||||||
| Credit Businesses | |||||||||||||||||||||||||||||||||
| Revenues | |||||||||||||||||||||||||||||||||
| Management Fees | |||||||||||||||||||||||||||||||||
| Base Management Fees | $ | 39,613 | $ | 47,670 | $ | 50,820 | $ | 56,860 | $ | 54,601 | $ | 14,988 | 38% | ||||||||||||||||||||
|
Transaction and Other Fees,
Net * |
536 | 299 | 216 | 606 | 745 | 209 | 39% | ||||||||||||||||||||||||||
| Management Fee Offsets ** | (689 | ) | 3 | (19 | ) | (19 | ) | (18 | ) | 671 | 97% | ||||||||||||||||||||||
| Total Management Fees | 39,460 | 47,972 | 51,017 | 57,447 | 55,328 | 15,868 | 40% | ||||||||||||||||||||||||||
| Performance Fees | |||||||||||||||||||||||||||||||||
| Realized | (359 | ) | 27,928 | 15,343 | 64,968 | 9,725 | 10,084 | N/M | |||||||||||||||||||||||||
| Unrealized | 64,980 | (15,239 | ) | 63,199 | 40,239 | 85,303 | 20,323 | 31% | |||||||||||||||||||||||||
| Total Performance Fees | 64,621 | 12,689 | 78,542 | 105,207 | 95,028 | 30,407 | 47% | ||||||||||||||||||||||||||
| Investment Income (Loss) | |||||||||||||||||||||||||||||||||
| Realized | 3,233 | 3,291 | 658 | 2,518 | 1,235 | (1,998 | ) | -62% | |||||||||||||||||||||||||
| Unrealized | 7,835 | (3,444 | ) | 5,350 | (269 | ) | 4,532 | (3,303 | ) | -42% | |||||||||||||||||||||||
|
Total Investment Income
(Loss) |
11,068 | (153 | ) | 6,008 | 2,249 | 5,767 | (5,301 | ) | -48% | ||||||||||||||||||||||||
|
Interest Income and Dividend
Revenue |
673 | 403 | 1,252 | 710 | 453 | (220 | ) | -33% | |||||||||||||||||||||||||
| Other | (459 | ) | (332 | ) | 330 | (27 | ) | 98 | 557 | N/M | |||||||||||||||||||||||
| Total Revenues | 115,363 | 60,579 | 137,149 | 165,586 | 156,674 | 41,311 | 36% | ||||||||||||||||||||||||||
| Expenses | |||||||||||||||||||||||||||||||||
| Compensation and Benefits | |||||||||||||||||||||||||||||||||
| Compensation | 28,343 | 26,982 | 28,774 | 39,158 | 30,325 | 1,982 | 7% | ||||||||||||||||||||||||||
|
Performance Fee
Compensation |
|||||||||||||||||||||||||||||||||
| Realized | (559 | ) | 13,500 | 9,060 | 37,211 | 5,295 | 5,854 | N/M | |||||||||||||||||||||||||
| Unrealized | 37,536 | (5,618 | ) | 34,760 | 16,717 | 45,202 | 7,666 | 20% | |||||||||||||||||||||||||
|
Total Compensation
and Benefits |
65,320 | 34,864 | 72,594 | 93,086 | 80,822 | 15,502 | 24% | ||||||||||||||||||||||||||
| Other Operating Expenses | 8,290 | 12,167 | 9,669 | 8,980 | 15,357 | 7,067 | 85% | ||||||||||||||||||||||||||
| Total Expenses | 73,610 | 47,031 | 82,263 | 102,066 | 96,179 | 22,569 | 31% | ||||||||||||||||||||||||||
| Economic Net Income | $ | 41,753 | $ | 13,548 | $ | 54,886 | $ | 63,520 | $ | 60,495 | $ | 18,742 | 45% | ||||||||||||||||||||
|
Net Fee Related Earnings
from Operations |
$ | 2,594 | $ | 7,695 | $ | 13,252 | $ | 10,028 | $ | 8,987 | $ | 6,393 | N/M | ||||||||||||||||||||
|
____________________ |
|||||||||||||||||||||||||||||||||
|
* Transaction and Other Fees, Net, are net of amounts, if any, shared with limited partners. |
|||||||||||||||||||||||||||||||||
| ** Primarily placement fees. | |||||||||||||||||||||||||||||||||
|
continued... |
|||||||||||||||||||||||||||||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 2a. Economic Net Income and Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
||||||||||||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||||||||||||
| Mar 31, 2011 vs. | ||||||||||||||||||||||||||||||||
| Mar 31, | Jun 30, | Sep 30, | Dec 31, | Mar 31, | Mar 31, 2010 | |||||||||||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | $ | % | ||||||||||||||||||||||||||
| Financial Advisory | ||||||||||||||||||||||||||||||||
| Revenues | ||||||||||||||||||||||||||||||||
| Advisory Fees | $ | 76,568 | $ | 134,099 | $ | 84,541 | $ | 130,932 | $ | 70,252 | $ | (6,316 | ) | -8% | ||||||||||||||||||
|
Transaction and Other Fees, Net |
1 | 102 | ― | 259 | 6 | 5 | N/M | |||||||||||||||||||||||||
|
Total Advisory and Transaction Fees |
76,569 | 134,201 | 84,541 | 131,191 | 70,258 | (6,311 | ) | -8% | ||||||||||||||||||||||||
| Investment Income (Loss) | ||||||||||||||||||||||||||||||||
| Realized | 187 | (49 | ) | 469 | 207 | 97 | (90 | ) | -48% | |||||||||||||||||||||||
| Unrealized | 230 | 561 | 607 | (864 | ) | 393 | 163 | 71% | ||||||||||||||||||||||||
|
Total Investment Income (Loss) |
417 | 512 | 1,076 | (657 | ) | 490 | 73 | 18% | ||||||||||||||||||||||||
|
Interest Income and Dividend Revenue |
1,396 | 1,268 | 1,609 | 1,699 | 1,686 | 290 | 21% | |||||||||||||||||||||||||
| Other | (932 | ) | (342 | ) | 477 | (1,115 | ) | 386 | 1,318 | N/M | ||||||||||||||||||||||
| Total Revenues | 77,450 | 135,639 | 87,703 | 131,118 | 72,820 | (4,630 | ) | -6% | ||||||||||||||||||||||||
| Expenses | ||||||||||||||||||||||||||||||||
|
Compensation and Benefits |
||||||||||||||||||||||||||||||||
| Compensation | 54,492 | 76,152 | 66,531 | 80,774 | 56,161 | 1,669 | 3% | |||||||||||||||||||||||||
|
Total Compensation
and Benefits |
54,492 | 76,152 | 66,531 | 80,774 | 56,161 | 1,669 | 3% | |||||||||||||||||||||||||
| Other Operating Expenses | 14,727 | 17,316 | 17,253 | 20,976 | 17,531 | 2,804 | 19% | |||||||||||||||||||||||||
| Total Expenses | 69,219 | 93,468 | 83,784 | 101,750 | 73,692 | 4,473 | 6% | |||||||||||||||||||||||||
| Economic Net Income (Loss) | $ | 8,231 | $ | 42,171 | $ | 3,919 | $ | 29,368 | $ | (872 | ) | $ | (9,103 | ) | N/M | |||||||||||||||||
|
Net Fee Related Earnings (Loss)
from Operations |
$ | 6,072 | $ | 37,156 | $ | 6,262 | $ | 23,660 | $ | (3,979 | ) | $ | (10,051 | ) | N/M | |||||||||||||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations (Dollars in Thousands) |
|||||||||||||||||||||
|
The tables below reconcile Economic Net Income (Loss) to Net Fee Related Earnings from Operations. |
|||||||||||||||||||||
|
|
|||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | March 31, | |||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||
| Private Equity | |||||||||||||||||||||
| Economic Net Income | $ | 193,155 | $ | 18,731 | $ | 111,941 | $ | 161,702 | $ | 175,514 | |||||||||||
|
Performance Fees Adjustment (a) |
(91,724 | ) | 22,914 | (90,313 | ) | (149,240 | ) | (114,926 | ) | ||||||||||||
|
Investment Income (Loss) Adjustment (b) |
(84,189 | ) | (20,416 | ) | (40,431 | ) | (23,584 | ) | (47,033 | ) | |||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (c) |
1,650 | 2,278 | 5,052 | (3,358 | ) | 275 | |||||||||||||||
|
Performance Fee Compensation and Benefits Adjustment (d) |
12,349 | (10,168 | ) | 29,089 | 22,677 | 13,182 | |||||||||||||||
|
Taxes Payable (e) |
(2,529 | ) | (1,875 | ) | 2,127 | (842 | ) | (3,209 | ) | ||||||||||||
|
Net Fee Related Earnings from Operations |
$ | 28,712 | $ | 11,464 | $ | 17,465 | $ | 7,355 | $ | 23,803 | |||||||||||
| Real Estate | |||||||||||||||||||||
| Economic Net Income | $ | 89,317 | $ | 121,383 | $ | 147,981 | $ | 280,842 | $ | 361,049 | |||||||||||
| Performance Fees Adjustment (a) | (17,339 | ) | (37,436 | ) | (74,920 | ) | (167,564 | ) | (370,697 | ) | |||||||||||
| Investment Income (Loss) Adjustment (b) | (49,524 | ) | (83,443 | ) | (86,127 | ) | (111,136 | ) | (64,325 | ) | |||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (c) |
1,311 | 1,811 | 4,016 | (2,669 | ) | 257 | |||||||||||||||
|
Performance Fee Compensation and Benefits Adjustment (d) |
8,461 | 24,894 | 47,988 | 57,365 | 107,731 | ||||||||||||||||
| Taxes Payable (e) | (2,401 | ) | (2,466 | ) | 915 | (4,381 | ) | (2,782 | ) | ||||||||||||
| Net Fee Related Earnings from Operations | $ | 29,825 | $ | 24,743 | $ | 39,853 | $ | 52,457 | $ | 31,233 | |||||||||||
| (a) | This adjustment removes from ENI the segment amount of Performance Fees. | |
| (b) | This adjustment removes from ENI the segment amount of Investment Income (Loss). | |
| (c) | This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings. | |
| (d) | This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees. | |
| (e) | Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P. | |
|
continued... |
|
THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
|||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | March 31, | |||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||
| Hedge Fund Solutions | |||||||||||||||||||||
| Economic Net Income | $ | 52,646 | $ | 25,638 | $ | 49,364 | $ | 70,674 | $ | 58,119 | |||||||||||
| Performance Fees Adjustment (a) | (12,530 | ) | 1,575 | (15,009 | ) | (33,644 | ) | (20,146 | ) | ||||||||||||
| Investment Income (Loss) Adjustment (b) | (11,630 | ) | 1,311 | (8,881 | ) | (9,979 | ) | (8,461 | ) | ||||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (c) |
215 | 292 | 647 | (430 | ) | 40 | |||||||||||||||
|
Performance Fee Compensation and Benefits Adjustment (d) |
4,554 | (621 | ) | 8,388 | 9,379 | 5,658 | |||||||||||||||
| Taxes Payable (e) | (1,713 | ) | (1,338 | ) | 1,573 | (6,760 | ) | (2,074 | ) | ||||||||||||
| Net Fee Related Earnings from Operations | $ | 31,542 | $ | 26,857 | $ | 36,082 | $ | 29,240 | $ | 33,136 | |||||||||||
| Credit Businesses | |||||||||||||||||||||
| Economic Net Income | $ | 41,753 | $ | 13,548 | $ | 54,886 | $ | 63,520 | $ | 60,495 | |||||||||||
| Performance Fees Adjustment (a) | (64,621 | ) | (12,689 | ) | (78,542 | ) | (105,207 | ) | (95,028 | ) | |||||||||||
| Investment Income (Loss) Adjustment (b) | (11,068 | ) | 153 | (6,008 | ) | (2,249 | ) | (5,767 | ) | ||||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (c) |
139 | 197 | 438 | 2,494 | 667 | ||||||||||||||||
|
Performance Fee Compensation and Benefits Adjustment (d) |
36,977 | 7,882 | 43,820 | 53,928 | 50,497 | ||||||||||||||||
|
Taxes Payable (e) |
(586 | ) | (1,396 | ) | (1,342 | ) | (2,458 | ) | (1,877 | ) | |||||||||||
|
Net Fee Related Earnings from Operations |
$ | 2,594 | $ | 7,695 | $ | 13,252 | $ | 10,028 | $ | 8,987 | |||||||||||
| ____________________ | ||
| (a) | This adjustment removes from ENI the segment amount of Performance Fees. | |
| (b) | This adjustment removes from ENI the segment amount of Investment Income (Loss). | |
| (c) | This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings. | |
| (d) | This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees. | |
| (e) | Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P. | |
|
continued... |
||
|
THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
|||||||||||||||||||||
| Three Months Ended | |||||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | March 31, | |||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | |||||||||||||||||
| Financial Advisory | |||||||||||||||||||||
| Economic Net Income (Loss) | $ | 8,231 | $ | 42,171 | $ | 3,919 | $ | 29,368 | $ | (872 | ) | ||||||||||
| Investment Income (Loss) Adjustment (a) | (417 | ) | (512 | ) | (1,076 | ) | 657 | (490 | ) | ||||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (b) |
350 | 484 | 1,073 | (713 | ) | 63 | |||||||||||||||
| Taxes Payable (c) | (2,092 | ) | (4,987 | ) | 2,346 | (5,652 | ) | (2,680 | ) | ||||||||||||
|
Net Fee Related Earnings (Loss) from Operations |
$ | 6,072 | $ | 37,156 | $ | 6,262 | $ | 23,660 | $ | (3,979 | ) | ||||||||||
|
____________________ |
||
| (a) | This adjustment removes from ENI the segment amount of Investment Income (Loss). | |
| (b) | This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings. | |
| (c) | Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P. | |
|
continued... |
||
|
THE BLACKSTONE GROUP L.P. Exhibit 2b. Reconciliation of Income (Loss) Before Provision (Benefit) for Taxes to Total Segments Economic Net Income, of Total Segments, Economic Net Income to Net Fee Related Earnings from Operations, of Net Fee Related Earnings from Operations to Distributable Earnings and of Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations to Net Fee Related Earnings from Operations - Continued (Dollars in Thousands) |
||||||||||||||||||||||
| Three Months Ended | ||||||||||||||||||||||
| March 31, | June 30, | September 30, | December 31, | March 31, | ||||||||||||||||||
| 2010 | 2010 | 2010 | 2010 | 2011 | ||||||||||||||||||
|
Income (Loss) Before Provision (Benefit)
for Taxes |
$ | (227,671 | ) | $ | (636,928 | ) | $ | 143,302 | $ | 198,643 | $ | 117,214 | ||||||||||
| IPO and Acquisition-Related Charges (a) | 726,722 | 749,930 | 438,568 | 453,975 | 421,861 | |||||||||||||||||
| Amortization of Intangibles (b) | 39,512 | 40,822 | 40,872 | 44,172 | 44,174 | |||||||||||||||||
|
(Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities (c) |
(153,461 | ) | 67,647 | (254,651 | ) | (90,684 | ) | 71,056 | ||||||||||||||
| Total Segments | ||||||||||||||||||||||
| Total Segments, Economic Net Income | 385,102 | 221,471 | 368,091 | 606,106 | 654,305 | |||||||||||||||||
| Performance Fees Adjustment (d) | (186,214 | ) | (25,636 | ) | (258,784 | ) | (455,655 | ) | (600,797 | ) | ||||||||||||
| Investment Income (Loss) Adjustment (e) | (156,828 | ) | (102,907 | ) | (142,523 | ) | (146,291 | ) | (126,076 | ) | ||||||||||||
|
Investment Income - Blackstone's Treasury Cash Management Strategies (f) |
3,665 | 5,062 | 11,226 | (4,676 | ) | 1,302 | ||||||||||||||||
|
Performance Fee Compensation and
Benefits Adjustment (g) |
62,341 | 21,987 | 129,285 | 143,349 | 177,068 | |||||||||||||||||
| Taxes Payable (h) | (9,321 | ) | (12,062 | ) | 5,619 | (20,093 | ) | (12,622 | ) | |||||||||||||
| Net Fee Related Earnings from Operations | 98,745 | 107,915 | 112,914 | 122,740 | 93,180 | |||||||||||||||||
| Realized Performance Fees (i) | 46,140 | 23,495 | 41,077 | 122,635 | 81,057 | |||||||||||||||||
| Realized Investment Income (Loss) (j) | 5,307 | 15,721 | 14,276 | 11,611 | 23,499 | |||||||||||||||||
|
Adjustment Related to Realized Investment Income - Blackstone's Treasury Cash Management Strategies (k) |
(1,264 | ) | 512 | (4,874 | ) | (2,156 | ) | (1,010 | ) | |||||||||||||
|
Other Payables Including Payable Under Tax Receivable Agreement |
(232 | ) | (68 | ) | 2,923 | (15,633 | ) | (177 | ) | |||||||||||||
| Distributable Earnings | $ | 148,696 | $ | 147,575 | $ | 166,316 | $ | 239,197 | $ | 196,549 | ||||||||||||
|
Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (l) |
$ | 120,805 | $ | 132,866 | $ | 124,195 | $ | 163,600 | $ | 126,666 | ||||||||||||
| ____________________ | ||
| (a) | This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for Transaction-Related Charges which include principally equity-based compensation charges associated with Blackstone’s initial public offering and other corporate actions. | |
| (b) | This adjustment adds back to Income (Loss) Before Provision for Taxes amounts for the Amortization of Intangibles which are associated with Blackstone’s initial public offering and other corporate actions. | |
| (c) | This adjustment adds back to Income (Loss) Before Provision for Taxes the amount of (Income) Loss Associated with Non-Controlling Interests in (Income) Loss of Consolidated Entities and includes the amount of Management Fee Revenues associated with Consolidated CLO Entities. | |
| (d) | This adjustment removes from ENI the total segment amount of Performance Fees. | |
| (e) | This adjustment removes from ENI the total segment amount of Investment Income (Loss). | |
| (f) | This adjustment represents the realized and unrealized gain on Blackstone’s Treasury cash management strategies which are a component of Investment Income (Loss) but included in Net Fee Related Earnings. | |
| (g) | This adjustment removes from expenses the compensation and benefit amounts related to Blackstone’s profit sharing plans related to Performance Fees. | |
| (h) | Represents an implied payable for income taxes calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P. | |
| (i) | Represents the adjustment for realized Performance Fees net of corresponding actual amounts due under Blackstone’s profit sharing plans related thereto. | |
| (j) | Represents the adjustment for Blackstone’s Investment Income (Loss) - Realized. | |
| (k) | Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of both Net Fee Related Earnings from Operations and Realized Investment Income (Loss). | |
| (l) |
Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations represents Net Fee Related Earnings from Operations adding back the implied cash taxes payable component from the Distributable Earnings reconciliation presented above, which is included in (i), and segment interest and depreciation and amortization. The cash taxes payable component of (i) was $9.3 million, $12.1 million, $(5.6) million, $20.1 million and $12.6 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively. Interest was $6.3 million, $6.8 million, $10.3 million, $13.2 million and $12.7 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively. Depreciation and amortization was $6.4 million, $6.1 million, $6.6 million, $7.6 million and $8.2 million for the three months ended March 31, 2010, June 30, 2010, September 30, 2010, December 31, 2010, and March 31, 2011, respectively. |
|
|
THE BLACKSTONE GROUP L.P. Exhibit 3. Distributable Earnings (Dollars in Thousands) |
|||||||||||
|
The following table calculates Blackstone’s Distributable Earnings. Distributable Earnings is a supplemental measure of performance to assess amounts available for distributions to Blackstone unitholders, including Blackstone personnel. |
|||||||||||
| Three Months Ended | |||||||||||
| March 31, | |||||||||||
| 2011 | 2010 | ||||||||||
| Fee Related Earnings | |||||||||||
| Revenues | |||||||||||
| Total Management and Advisory Fees (a) | $ | 425,666 | $ | 362,621 | |||||||
| Interest and Dividend Revenue (a) | 9,448 | 8,690 | |||||||||
| Other (a) | 2,259 | (3,250 | ) | ||||||||
| Investment Income - Blackstone's Treasury Cash Management Strategies (b) | 1,302 | 3,665 | |||||||||
| Total Revenues | 438,675 | 371,726 | |||||||||
| Expenses | |||||||||||
| Compensation and Benefits - Compensation (a) | 229,898 | 190,637 | |||||||||
| Other Operating Expenses (a) | 102,975 | 73,023 | |||||||||
| Cash Taxes (c) | 12,622 | 9,321 | |||||||||
| Total Expenses | 345,495 | 272,981 | |||||||||
| Net Fee Related Earnings from Operations | 93,180 | 98,745 | |||||||||
| Performance Fees, Net of Related Compensation | |||||||||||
| Performance Fees - Realized (a) | 95,600 | 53,881 | |||||||||
| Compensation and Benefits - Performance Fee Compensation - Realized (a) | (14,543 | ) | (7,741 | ) | |||||||
| Total Performance Fees, Net of Related Compensation | 81,057 | 46,140 | |||||||||
| Investment Income and Other | |||||||||||
| Investment Income - Realized (a) | 23,499 | 5,307 | |||||||||
|
Adjustment Related to Realized Investment Income -
Blackstone's Treasury Cash Management Strategies (d) |
(1,010 | ) | (1,264 | ) | |||||||
| Other Payables Including Payable Under Tax Receivable Agreement | (177 | ) | (232 | ) | |||||||
| Total Investment Income and Other | 22,312 | 3,811 | |||||||||
| Distributable Earnings | $ | 196,549 | $ | 148,696 | |||||||
| _________________________ | ||
| (a) | Represents the total segment amounts of the respective captions. | |
| (b) | Represents the inclusion of Investment Income from Blackstone’s Treasury cash management strategies. | |
| (c) | Represents the provisions for and/or adjustments to income taxes that were calculated using a similar methodology applied in calculating the current provision for The Blackstone Group L.P. | |
| (d) | Represents the elimination of Realized Investment Income attributable to Blackstone’s Treasury cash management strategies which is a component of Net Fee Related Earnings from Operations. | |
|
THE BLACKSTONE GROUP L.P. Exhibit 4. Reconciliation of Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted and of Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding |
||||||
|
The following table provides a reconciliation of Blackstone’s Total GAAP Weighted-Average Common Units Outstanding—Basic and Diluted to Weighted-Average Economic Net Income Adjusted Units—Basic and Diluted. |
||||||
|
|
||||||
| Three Months Ended | ||||||
| March 31, | ||||||
| 2011 | 2010 | |||||
| Total GAAP Weighted-Average Common Units Outstanding - Basic | 447,742,389 | 333,433,864 | ||||
| Adjustments: | ||||||
| Weighted-Average Unvested Deferred Restricted Common Units |
9,910,527 |
― | ||||
| Total GAAP Weighted-Average Common Units Outstanding - Diluted |
457,652,916 |
333,433,864 | ||||
| Adjustments: | ||||||
| Weighted-Average Blackstone Holdings Partnership Units | 658,290,684 | 764,866,007 | ||||
| Weighted-Average Unvested Deferred Restricted Common Units | ― | 28,626,333 | ||||
| Weighted-Average Economic Net Income Adjusted Units - Diluted |
1,115,943,600 |
1,126,926,204 | ||||
|
The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding—Basic and Diluted to Economic Net Income Adjusted Units—Basic and Diluted. |
||||||
| March 31, | ||||||
| 2011 | 2010 | |||||
| Total GAAP Common Units Outstanding - Basic |
464,502,284 |
347,181,400 | ||||
| Adjustments: | ||||||
| Blackstone Holdings Partnership Units | 639,228,191 | 751,496,468 | ||||
| Unvested Deferred Restricted Common Units | 24,297,037 | 27,815,594 | ||||
| Economic Net Income Adjusted Units - Basic | 1,128,027,512 | 1,126,493,462 | ||||
|
|
||||||
| March 31, | ||||||
| 2011 | 2010 | |||||
| Total GAAP Common Units Outstanding - Diluted |
474,412,811 |
347,181,400 | ||||
| Adjustments: | ||||||
| Blackstone Holdings Partnership Units | 639,228,191 | 751,496,468 | ||||
| Unvested Deferred Restricted Common Units | ― | 27,815,594 | ||||
| Economic Net Income Adjusted Units - Diluted |
1,113,641,002 |
1,126,493,462 | ||||
|
The following table provides a reconciliation of Blackstone’s Total GAAP Common Units Outstanding to Distributable Earnings Units Outstanding. |
||||||
| March 31, | ||||||
| 2011 | 2010 | |||||
| Total GAAP Common Units Outstanding (a) | 464,502,284 | 347,181,400 | ||||
| Adjustments: | ||||||
| Blackstone Holdings Partnership Units | 639,228,191 | 751,496,468 | ||||
| Distributable Earnings Units Outstanding | 1,103,730,475 | 1,098,677,868 | ||||
| ______________________ | ||
| (a) | Common unit holders receive tax benefits from deductions taken by Blackstone’s corporate tax paying subsidiaries and bear responsibility for the deduction from Distributable Earnings of the Payable Under the Tax Receivable Agreement and certain other tax-related payables. | |
|
THE BLACKSTONE GROUP L.P. Exhibit 5. Assets Under Management (Dollars in Thousands) |
|||||||||
| As of and for the Periods Ended | |||||||||
| March 31, | |||||||||
| 2011 | 2010 | ||||||||
| Total Assets Under Management | |||||||||
| (End of Period) | |||||||||
| Private Equity | $ | 43,955,392 | $ | 28,022,326 | |||||
| Real Estate | 34,990,590 | 21,880,655 | |||||||
| Hedge Fund Solutions | 39,542,086 | 30,322,510 | |||||||
| Credit Businesses | 31,475,397 | 24,290,357 | |||||||
| $ | 149,963,465 | $ | 104,515,848 | ||||||
| Fee-Earning Assets Under Management | |||||||||
| (End of Period) | |||||||||
| Private Equity | $ | 35,892,804 | $ | 25,173,936 | |||||
| Real Estate | 26,454,012 | 23,820,697 | |||||||
| Hedge Fund Solutions | 35,847,002 | 28,902,220 | |||||||
| Credit Businesses | 25,838,878 | 20,173,319 | |||||||
| $ | 124,032,696 | $ | 98,070,172 | ||||||
| Weighted-Average Fee-Earning | |||||||||
| Assets Under Management | |||||||||
| (For the Three Months Ended) | |||||||||
| Private Equity | $ | 35,775,826 | $ | 25,010,887 | |||||
| Real Estate | 26,454,180 | 23,719,287 | |||||||
| Hedge Fund Solutions | 35,320,896 | 28,506,845 | |||||||
| Credit Businesses | 25,482,707 | 20,259,313 | |||||||
| $ | 123,033,609 | $ | 97,496,332 | ||||||
|
THE BLACKSTONE GROUP L.P. Exhibit 6. Limited Partner Capital Invested Metrics (Dollars in Thousands) |
||||||||||
| As of and for the Periods | ||||||||||
| Ended March 31, | ||||||||||
| 2011 | 2010 | |||||||||
| Limited Partner Capital Invested | ||||||||||
| (For the Three Months Ended) | ||||||||||
| Private Equity | $ | 652,947 | $ | 387,904 | ||||||
| Real Estate (a) | 654,428 | 424,868 | ||||||||
| Credit Businesses | 154,298 | 157,052 | ||||||||
| $ | 1,461,673 | $ | 969,824 | |||||||
| Fund Level Unrealized Value (b) | ||||||||||
| (End of Period) | ||||||||||
| Private Equity | ||||||||||
| Cost | $ | 20,262,265 | $ | 19,695,417 | ||||||
| Unrealized Value | $ | 22,646,168 | $ | 19,695,029 | ||||||
| Real Estate (a) | ||||||||||
| Cost | $ | 16,637,075 | $ | 12,478,211 | ||||||
| Unrealized Value | $ | 20,805,296 | $ | 8,355,147 | ||||||
| Credit Businesses | ||||||||||
| Cost | $ | 3,668,448 | $ | 3,088,626 | ||||||
| Unrealized Value | $ | 4,418,781 | $ | 3,424,993 | ||||||
| _________________________ | ||
| (a) | Limited Partner Capital Invested and Fund Level Unrealized Value for the Real Estate segment represents activity related to funds raised by Blackstone. | |
| (b) | Cost and unrealized value represent the limited partners’ share, including co-investments arranged by Blackstone, of those fund level investments on which carried interest can be earned, before carried interest allocations to Blackstone, when a fund achieves cumulative investment returns in excess of a specified rate. | |
|
THE BLACKSTONE GROUP L.P. |
|
Exhibit 7. Definitions of Non-GAAP Financial Information |
|
Blackstone discloses the following financial measures that are calculated and presented on the basis of methodologies other than in accordance with generally accepted accounting principles in the United States of America (“non-GAAP”) in the attached press release: |
-
Blackstone uses Economic Net Income, or “ENI”, as a key measure of
value creation and as a benchmark of its performance. ENI represents
segment net income excluding the impact of income taxes and initial
public offering (“IPO”) and acquisition-related items, including
charges associated with equity-based compensation, the amortization of
intangibles and corporate actions including acquisitions. For segment
reporting purposes, revenues and expenses are presented on a basis
that deconsolidates the investment funds we manage.
Total Segment ENI equals the aggregate of ENI for all segments. ENI is used by management primarily in making resource deployment and compensation decisions across Blackstone’s five segments.
- Economic Net Income After Taxes represents ENI adjusted to reflect the implied provision (benefit) for income taxes calculated using a similar methodology as applied in calculating the tax provision (benefit) for The Blackstone Group L.P. but consistent with the ENI concepts as noted above.
- Blackstone uses Net Fee Related Earnings from Operations as a key measure to highlight earnings from operations excluding: (a) the income related to performance fees and related carry plan costs, (b) income earned from Blackstone’s investments in the Blackstone Funds, and (c) realized and unrealized gains (losses) from other investments except for such gains (losses) from Blackstone’s Treasury cash management strategies. Management uses Net Fee Related Earnings from Operations as a measure to assess whether recurring revenue from our businesses is sufficient to adequately cover all of our operating expenses and generate profits. Net Fee Related Earnings from Operations equals contractual fee revenues, investment income from Blackstone’s Treasury cash management strategies and interest income, less (a) compensation expenses (which includes amortization of non-IPO and non-acquisition-related equity-based awards, but excludes amortization of IPO and acquisition-related equity-based awards, carried interest and incentive fee compensation), (b) other operating expenses, and (c) cash taxes due on earnings from operations as calculated using a similar methodology as applied in calculating the current tax provision (benefit) for The Blackstone Group L.P.
- Blackstone uses Earnings Before Interest, Taxes and Depreciation and Amortization from Net Fee Related Earnings from Operations (“EBITDA-NFRE”) as a measure of segment performance and an indicator of our ability to cover our recurring operating expenses. EBITDA-NFRE equals Net Fee Related Earnings from Operations before segment interest expense, segment depreciation and amortization and the cash taxes included in Net Fee Related Earnings from Operations.
-
Distributable Earnings, which is derived from our segment reported
results, is a supplemental measure to assess performance and amounts
available for distributions to Blackstone unitholders, including
Blackstone personnel and others who are limited partners of the
Blackstone Holdings partnerships. Distributable Earnings is intended
to show the amount of net realized earnings without the effects of the
consolidation of the Blackstone Funds.
Distributable Earnings, which is a component of Economic Net Income, is the sum across all segments of: (a) Total Management and Advisory Fees, (b) Interest and Dividend Revenue, (c) Other Revenue, (d) Realized Performance Fees, and (e) Realized Investment Income (Loss); less (a) Compensation, (b) Realized Performance Fee Compensation, (c) Other Operating Expenses, and (d) Cash Taxes and Payables Under the Tax Receivable Agreement. Distributable Earnings is reconciled to Blackstone’s Consolidated Statement of Operations. It is Blackstone’s current intention that on an annual basis it will distribute to unitholders all of its Distributable Earnings, less realized investment gains, in excess of amounts determined by its general partner to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and funds, to comply with applicable law, any of its debt instruments or other agreements, or to provide for future distributions to its unitholders for any ensuing quarter.
Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included within this press release. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.