Oaktree Capital Group, LLC (NYSE: OAK) today reported its
unaudited financial results for the quarter ended March 31,
2013.
Adjusted net income (“ANI”) nearly doubled, to a record $335.8
million in the first quarter of 2013 from $173.6 million in the
first quarter of 2012, on an 86% increase in total segment
revenues. The growth in revenues, to $593.4 million from $318.3
million, reflected a 422% gain in incentive income, to a record
$327.2 million, and a 28% gain in investment income, to $82.1
million, on the quarter's strong fund realizations and returns.
Distributable earnings grew to a record $295.0 million in the
first quarter of 2013 from $137.3 million in the first quarter of
2012, on higher incentive income and growth in investment income
proceeds from Oaktree funds and DoubleLine Capital LP and its
affiliates (collectively, “DoubleLine”). Distributable earnings
generated a distribution of $1.41 per Class A unit, the highest
ever, with respect to the first quarter of 2013.
Howard Marks, Chairman, said, “As we mark our first anniversary
of being public, Oaktree's performance and prospects have never
been better. The first quarter's records for adjusted net income,
distributable earnings and the unitholder distribution reflect the
strong cash generating capacity of our business. Plus, the
substantial incentives created by the quarter's strong fund returns
bode well for our future cash flow.”
In addition to ANI, Oaktree calculates economic net income
(“ENI”) to facilitate comparability with other alternative asset
managers that use ENI as their profit measure. Unlike ANI, ENI
measures incentive income based on market values. ENI rose to
$400.6 million in the first quarter of 2013 from $278.4 million in
the first quarter of 2012, reflecting near-record incentives
created on strong fund returns.
GAAP-basis results for the first quarter of 2013 included net
income attributable to Oaktree Capital Group, LLC of $57.6
million.
As previously announced, assets under management were $78.8
billion as of March 31, 2013, up $1.7 billion from December 31,
2012 and $0.9 billion since March 31, 2012. The increase during the
first quarter reflected new capital commitments and market-value
appreciation that in the aggregate exceeded $3.2 billion of
closed-end fund distributions. Management fee-generating assets
under management were $66.4 billion as of March 31, 2013, little
changed from $66.8 billion at December 31, 2012 and down slightly
from $68.0 billion as of March 31, 2012, as declines from
significant fund asset sales were largely offset by new capital
raises and appreciation in funds for which management fees are
based on net asset value.
Gross equity capital raised during the first quarter of 2013 was
$2.6 billion. In March 2013, Oaktree held a final closing for
Oaktree Enhanced Income Fund, L.P. (“EIF”), which invests in senior
loan assets on a leveraged basis. The total fund size of EIF,
including leverage, is currently $1.8 billion. The fund is expected
to exceed $2.0 billion when fully invested and leveraged, exceeding
our initial target of $1.5 billion. Following its third and most
recent closing in March 2013, Oaktree Real Estate Opportunities
Fund VI, L.P. (“ROF VI”) has received capital commitments of
approximately $750 million, towards a targeted size of $1.5
billion. Oaktree Emerging Market Opportunities Fund, L.P., which
will invest in distressed emerging market corporate debt, held a
first closing this month. Together with a potential $100 million
separate account that Oaktree is in the process of establishing,
the first closing brings capital for this strategy to $175 million,
towards a targeted size of $500 million. Capital commitments to our
new Strategic Credit strategy, which seeks to achieve an attractive
total return on an unleveraged basis by investing in stressed
credits, have reached $900 million.
In January 2013, Oaktree launched the marketing of Oaktree
Principal Fund VI, L.P. (“PF VI”), a control investing closed-end
fund, with a target of $3.0 billion in capital commitments.
Oaktree’s control investing funds primarily invest to gain control
of, or significant influence over, middle-market companies that are
experiencing distress or dislocation. In March 2013, Oaktree
launched the marketing of Oaktree Real Estate Debt Fund, L.P.
(“REDF”), with a target of $500 million in capital commitments.
REDF will invest in a diversified portfolio of real estate debt
instruments, including commercial mortgage-backed securities,
commercial first mortgages, subordinated secured debt, mezzanine
loans, corporate debt and residential first mortgage pools. First
closings for both funds are expected this summer.
On May 10, 2013, OCM Opportunities Fund VIIb, L.P. (“Opps VIIb”)
will make a distribution to its investors of $1.4 billion, its
first since February 7, 2013. From that distribution, Oaktree
currently expects to recognize incentive income of an estimated
$272 million, or $178 million, net of incentive income compensation
expense, and investment income proceeds of an estimated $20
million, in the second quarter of 2013.
The table below presents: (a) adjusted net income,
distributable earnings, fee-related earnings and economic net
income, in each case for both the Operating Group and per
Class A unit; (b) adjusted net income revenues, distributable
earnings revenues, fee-related earnings revenues and economic net
income revenues, in each case for the Operating Group; and
(c) assets under management and accrued incentives (fund
level) data. Please refer to the Glossary for definitions.
As of or for the Three
MonthsEnded March 31,
2013 2012
(in thousands, except per unit
dataor as otherwise indicated)
Segment Results: Adjusted net income revenues $ 593,448 $
318,271 Adjusted net income 335,750 173,632 Distributable earnings
revenues 554,437 284,566 Distributable earnings 295,027 137,329
Fee-related earnings revenues 184,214 191,262 Fee-related earnings
64,214 80,277 Economic net income revenues 725,964 520,764 Economic
net income 400,574 278,391
Per Class A unit: Adjusted net
income $ 1.95 $ 0.90 Distributable earnings 1.79 0.67 Fee-related
earnings 0.34 0.41 Economic net income 2.07 1.45
Operating
Metrics: Assets under management (in millions): Assets under
management $ 78,801 $ 77,850 Management fee-generating assets under
management 66,350 67,973 Incentive-creating assets under management
33,950 36,593 Uncalled capital commitments 11,198 12,141 Accrued
incentives (fund level): Incentives created (fund level) 459,700
265,162 Incentives created (fund level), net of associated
incentive income compensation expense 262,758 159,435 Accrued
incentives (fund level) 2,270,314 1,889,460 Accrued incentives
(fund level), net of associated incentive income compensation
expense 1,347,018 1,132,470
Note: Oaktree discloses in this earnings release certain
revenues and financial measures, including adjusted net income
revenues, adjusted net income, adjusted net income per Class A
unit, distributable earnings revenues, distributable earnings,
distributable earnings per Class A unit, fee-related earnings
revenues, fee-related earnings, fee-related earnings per
Class A unit, economic net income revenues, economic net
income and economic net income per Class A unit, that are
calculated and presented on the basis of methodologies other than
in accordance with generally accepted accounting principles in the
United States (“non-GAAP”). Reconciliations of these non-GAAP
financial measures to the most directly comparable financial
measures calculated and presented in accordance with GAAP are
presented at Exhibit A.
Operating Metrics
Assets under management
Assets under management (“AUM”) were $78.8 billion as of March
31, 2013, as compared with $77.1 billion as of December 31, 2012
and $77.9 billion as of March 31, 2012. The $1.7 billion increase
since December 31, 2012 primarily reflected $3.3 billion of
aggregate market-value gains and $1.8 billion of new capital
commitments and fee-generating leverage in our closed-end funds,
partially offset by $3.2 billion in distributions to investors in
our closed-end funds. The $3.2 billion of closed-end fund
distributions included $0.8 billion by Opps VIIb, $1.3 billion by
other distressed debt funds and $0.8 billion by control investing
funds.
The $0.9 billion increase in AUM since March 31, 2012 was
attributable primarily to new closed-end fund capital commitments
and fee-generating leverage of $6.7 billion and market-value gains
of $9.4 billion, less $13.3 billion of distributions to investors
in closed-end funds. Of the new capital commitments, Oaktree
Opportunities Fund IX, L.P. (“Opps IX”) represented $3.8 billion.
Net inflows to open-end funds were $0.1 billion, driven by $0.9
billion in net inflows to our U.S. senior loans strategy.
Management fee-generating assets under
management
Management fee-generating assets under management (“management
fee-generating AUM”) were $66.4 billion as of March 31, 2013, as
compared to $66.8 billion as of December 31, 2012 and $68.0 billion
as of March 31, 2012. The decrease of $0.4 billion in the first
quarter of 2013 represented increases of $1.0 billion from
market-value gains in funds for which management fees are based on
NAV and $0.7 billion of drawdowns by closed-end funds that generate
fees based on drawn capital or NAV, offset by a decrease of $2.7
billion attributable to asset sales by closed-end funds in
liquidation. Of the latter, Opps VIIb accounted for $1.6 billion.
As of March 31, 2013, Opps IX had made an initial 5% drawdown
against its $5.0 billion of committed capital. Oaktree has not yet
commenced Opps IX's investment period and, as a result, as of March
31, 2013 management fees were assessed only on its drawn capital
and management fee-generating AUM included only that portion of
committed capital.
As compared to March 31, 2012, management fee-generating AUM
decreased $1.6 billion, reflecting the net effect of a $7.1 billion
decline from asset sales by closed-end funds in liquidation and
increases of $3.3 billion from market-value gains in funds for
which management fees are based on NAV and $2.8 billion from
closings for ROF VI and drawdowns in our Strategic Credit strategy,
Opps IX, EIF and Oaktree PPIP Fund, L.P., including leverage.
Incentive-creating assets under
management
Incentive-creating assets under management (“incentive-creating
AUM”) were $34.0 billion as of March 31, 2013, unchanged from
December 31, 2012, and down from $36.6 billion as of March 31,
2012. The $2.6 billion decrease since March 31, 2012 primarily
reflected the net effect of $13.1 billion in closed-end fund
distributions, $4.4 billion in closed-end fund drawdowns and $5.7
billion in market-value gains. Of the $34.0 billion in
incentive-creating AUM as of March 31, 2013, $25.1 billion, or
73.8%, was generating incentives at the fund level.
Accrued incentives (fund level) and
incentives created (fund level)
Accrued incentives (fund level) amounted to $2.3 billion as of
March 31, 2013, as compared with $2.1 billion as of December 31,
2012 and $1.9 billion as of March 31, 2012. The $0.2 billion
increase in the first quarter of 2013 resulted from $459.7 million
of incentives created, on the period's relatively strong fund
returns, less $327.2 million of segment incentive income
recognized.
Net of incentive income compensation expense, accrued incentives
(fund level) amounted to $1.3 billion, $1.3 billion and $1.1
billion as of March 31, 2013, December 31, 2012 and March 31,
2012, respectively.
Uncalled capital commitments
Uncalled capital commitments amounted to $11.2 billion as of
March 31, 2013, as compared with $11.2 billion as of December 31,
2012 and $12.1 billion as of March 31, 2012.
Segment Results
Revenues
Total segment revenues increased $275.1 million, or 86.4%, to
$593.4 million for the first quarter of 2013 from $318.3 million
for the first quarter of 2012, as a result of growth of $264.5
million in incentive income and $17.8 million in investment income,
partially offset by a decline of $7.1 million in management
fees.
Management fees
Management fees decreased $7.1 million, or 3.7%, to $184.2
million for the first quarter of 2013 from $191.3 million in the
prior year’s first quarter. The decline reflected a decrease of
$19.7 million in fees attributable to closed-end funds in
liquidation, partially offset by increases of $5.6 million from
open-end funds and $4.0 million from new commitments to closed-end
funds. Additionally, a portion of Oaktree Mezzanine Fund III,
L.P.'s management fees is dependent on the fund's cash flow, which
resulted in $4.5 million and zero such fees in the first quarters
of 2013 and 2012, respectively. Of the $19.7 million decline
attributable to closed-end funds in liquidation, Opps VIIb
accounted for $10.0 million. During the first quarter of 2013,
closed-end funds represented $139.0 million, or 75.5%, of total
management fees.
Incentive income
Incentive income increased $264.5 million, or 421.9%, to $327.2
million for the first quarter of 2013, from $62.7 million for the
prior year's first quarter. Opps VIIb accounted for $195.2 million
of the $327.2 million, another $18.6 million arose from other funds
making incentive distributions, and the remaining $113.4 million
was attributable to tax-related incentive distributions from
certain closed-end funds for their 2012 taxable income. In the
first quarter of 2012, tax-related incentive distributions by
closed-end funds accounted for $38.0 million of that quarter's
$62.7 million in incentive income.
Investment income
Investment income rose $17.8 million, or 27.7%, to $82.1 million
for the first quarter of 2013 from $64.3 million for the first
quarter of 2012, reflecting increases of $11.8 million and $6.0
million from Oaktree's investments in funds and companies,
respectively. The higher income from fund investments reflected a
blended average return of approximately 6.6% in the first quarter
of 2013 on an average invested balance that declined 5.0% from the
first quarter of 2012. The higher income from investments in
companies stemmed from our one-fifth ownership of DoubleLine, which
accounted for investment income of $11.0 million and $4.1 million
in the first quarters of 2013 and 2012, respectively. Performance
fees accounted for $2.0 million and $1.6 million of the
current-year and prior-year amounts, respectively.
Expenses
Compensation and benefits
Compensation and benefits for the first quarter of 2013 amounted
to $93.6 million, an increase of $9.2 million, or 10.9%, from $84.4
million in the first quarter of 2012, primarily reflecting growth
in headcount of 10.1% between March 31, 2012 and March 31,
2013.
Equity-based compensation
Equity-based compensation increased to $0.7 million for the
first quarter of 2013 from zero in the first quarter of 2012,
reflecting non-cash amortization expense upon vesting of restricted
unit grants made to employees and directors subsequent to our
initial public offering in April 2012.
Incentive income compensation
Incentive income compensation expense rose $102.5 million, or
368.7%, to $130.3 million for the first quarter of 2013 from $27.8
million for the first quarter of 2012, reflecting the 421.9%
increase in incentive income over the same period. The increase
would have been $15.2 million greater had we not acquired and
expensed in 2011 a small portion of certain investment
professionals' carried interest in Opps VIIb.
General and administrative
General and administrative expenses decreased $0.8 million, or
3.2%, to $24.0 million for the first quarter of 2013 from $24.8
million in the first quarter of 2012. Excluding the impact of
foreign currency-related items, as well as $2.1 million in
non-recurring costs associated with our initial public offering
that were incurred in the first quarter of 2012, general and
administrative expenses increased $2.5 million, or 11.2%, to $24.8
million for the first quarter of 2013 from $22.3 million in the
first quarter of 2012. The increase reflected costs associated with
corporate growth, enhancements to our operational infrastructure
and being a public company.
Adjusted net income
Adjusted net income rose $162.2 million, or 93.4%, to $335.8
million for the first quarter of 2013 from $173.6 million in the
first quarter of 2012, reflecting increases of $162.0 million in
incentive income, net of incentive income compensation expense, and
$17.8 million in investment income, and a decrease of $16.1 million
in fee-related earnings. The portion of adjusted net income
attributable to our Class A units was $58.7 million and $20.4
million for the first quarters of 2013 and 2012, respectively. Per
Class A unit, adjusted net income-OCG amounted to $1.95 and $0.90
for the first quarters of 2013 and 2012, respectively.
The effective income tax rates applied to ANI for the three
months ended March 31, 2013 and 2012 were 12% and 21%,
respectively. The effective income tax rate is a function of the
mix of income and other factors, each of which often varies
significantly within or between years and can have a material
impact on the particular year’s income tax expense. The rate used
for interim fiscal periods is based on the estimated full-year
effective income tax rate, which is subject to change as the year
progresses.
Distributable earnings
Distributable earnings increased $157.7 million, or 114.9%, to
$295.0 million for the first quarter of 2013 from $137.3 million
for the first quarter of 2012, reflecting increases of $162.0
million in incentive income, net of incentive income compensation
expense, and $12.4 million in receipts of investment income,
slightly offset by a decline of $16.1 million in fee-related
earnings. For the first quarter of 2013, receipts of investment
income totaled $43.0 million, including $34.0 million from fund
liquidations and $9.0 million from Oaktree’s one-fifth equity
ownership in DoubleLine, of which the latter included $2.0 million
attributable to performance fees. The portion of distributable
earnings attributable to our Class A units was $1.79 and $0.67
per unit for the first quarters of 2013 and 2012, respectively,
reflecting distributable earnings per Operating Group unit of $1.96
and $0.91, respectively, less costs borne by Class A
unitholders for professional fees and other expenses, cash taxes
attributable to the Intermediate Holding Companies and amounts
payable pursuant to the tax receivable agreement.
Fee-related earnings
Fee-related earnings decreased $16.1 million, or 20.0%, to $64.2
million for the first quarter of 2013 from $80.3 million for the
first quarter of 2012, reflecting the $7.1 million decline in
management fees and $9.2 million increase in compensation and
benefits. The portion of FRE attributable to our Class A units
was $0.34 and $0.41 per Class A unit for the first quarters of 2013
and 2012, respectively.
The effective income tax rates applied to FRE for the three
months ended March 31, 2013 and 2012 were 18% and 22%,
respectively. The effective income tax rate used for interim fiscal
periods is based on the estimated full-year income tax rate, which
is a function of various factors and is subject to change as the
year progresses.
GAAP-Basis Results
Net income attributable to Oaktree Capital Group, LLC was $57.6
million for the first quarter of 2013. The comparable amount in the
first quarter of 2012 was $18.6 million.
Capital and Liquidity
As of March 31, 2013, Oaktree had a cash balance of $687.4
million, or $1.0 billion when including investments in U.S.
Treasury and government agency securities, and $608.9 million in
outstanding debt. Oaktree had then and currently has no borrowings
outstanding against its $500 million revolving credit facility.
Oaktree’s investments in funds and companies had a carrying value
of $1.1 billion as of March 31, 2013. While all of these
investments in funds and companies follow the equity method of
accounting, whereby original cost is adjusted for Oaktree’s share
of income/loss and distributions, investments in funds reflect each
fund’s holdings at fair value, whereas investments in DoubleLine
and other companies are not adjusted to reflect the fair value of
the underlying companies.
Distribution
Oaktree Capital Group, LLC has declared a distribution
attributable to the first quarter of 2013 of $1.41 per Class A
unit. This distribution will be paid on May 21, 2013 to
Class A unitholders of record at the close of business on May
17, 2013.
Conference Call
Oaktree will host a conference call to discuss first quarter
2013 results today at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific
Time. The conference call may be accessed by dialing
(888) 769-9724 (U.S. callers) or +1 (415) 228-4639
(non-U.S. callers), participant password OAKTREE. Alternatively, a
live webcast of the conference call can be accessed through the
Unitholders – Investor Relations section of the Oaktree website,
http://ir.oaktreecapital.com/.
For those individuals unable to listen to the live broadcast of
the conference call, a replay will be available for 30 days on
Oaktree’s website, or by dialing (888) 293-8914 (U.S. callers)
or +1 (203) 369-3603 (non-U.S. callers), beginning
approximately one hour after the broadcast.
About Oaktree
Oaktree is a leading global investment management firm focused
on alternative markets, with $78.8 billion in assets under
management as of March 31, 2013. The firm emphasizes an
opportunistic, value-oriented and risk-controlled approach to
investments in distressed debt, corporate debt (including high
yield debt and senior loans), control investing, convertible
securities, real estate and listed equities. Headquartered in Los
Angeles, the firm has over 700 employees and offices in 13 cities
worldwide. For additional information, please visit Oaktree’s
website at www.oaktreecapital.com.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933 (the
“Securities Act”) and Section 21E of the U.S. Securities
Exchange Act of 1934, each as amended, which reflect the current
views of Oaktree Capital Group, LLC (“OCG”), with respect to, among
other things, its future results of operations and financial
performance. In some cases, you can identify forward-looking
statements by words such as “anticipate,” “approximately,”
“believe,” “continue,” “could,” “estimate,” “expect,” “intend,”
“may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,”
“will” and “would” or the negative version of these words or other
comparable or similar words. These statements identify prospective
information. Important factors could cause actual results to
differ, possibly materially, from those indicated in these
statements. Forward-looking statements are based on OCG’s beliefs,
assumptions and expectations of its future performance, taking into
account all information currently available to OCG. Such
forward-looking statements are subject to risks and uncertainties
and assumptions relating to OCG’s operations, financial results,
financial condition, business prospects, growth strategy and
liquidity, including, but not limited to, changes in our
anticipated revenue and income, which are inherently volatile;
changes in the value of our investments; the pace of our raising of
new funds; the timing and receipt of and impact of taxes on carried
interest; distributions from and liquidation of our existing funds;
changes in our operating or other expenses; the degree to which we
encounter competition; and general economic and market conditions.
The factors listed in the item captioned “Risk Factors” in OCG’s
Annual Report on Form 10-K for the year ended December 31, 2012
filed with the SEC on March 14, 2013, which is accessible on the
SEC’s website at www.sec.gov, provide examples of risks,
uncertainties and events that may cause OCG’s actual results to
differ materially from the expectations described in its
forward-looking statements.
Forward-looking statements speak only as of the date the
statements are made. Except as required by law, OCG does not
undertake any obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
This release and its contents do not constitute and should not
be construed as (a) a recommendation to buy, (b) an offer
to buy or solicitation of an offer to buy, (c) an offer to
sell or (d) advice in relation to, any securities of OCG or
securities of any Oaktree investment fund.
Consolidated Statements of Operations Data (GAAP
basis)
Three Months Ended March
31, 2013 2012 (in
thousands, except per unit data) Revenues: Management fees $
42,539 $ 32,020 Incentive income — 5,048 Total
revenues 42,539 37,068 Expenses: Compensation and
benefits (93,715 ) (84,464 ) Equity-based compensation (6,452 )
(12,189 ) Incentive income compensation (130,271 ) (27,757 ) Total
compensation and benefits expense (230,438 ) (124,410 ) General and
administrative (21,484 ) (25,935 ) Consolidated fund expenses
(23,583 ) (17,222 ) Total expenses (275,505 ) (167,567 ) Other
income (loss): Interest expense (11,581 ) (10,990 ) Interest and
dividend income 406,252 539,618 Net realized gain on consolidated
funds' investments 1,198,260 1,074,138 Net change in unrealized
appreciation on consolidated funds' investments 1,021,517 805,823
Investment income 12,243 5,680 Other income (expense), net (20 )
2,267 Total other income 2,626,671 2,416,536
Income before income taxes 2,393,705 2,286,037 Income taxes (10,157
) (7,767 ) Net income 2,383,548 2,278,270 Less: Net income
attributable to non-controlling redeemable interests in
consolidated funds (2,063,965 ) (2,124,772 ) Net income
attributable to OCGH non-controlling interest (262,017 ) (134,890 )
Net income attributable to Oaktree Capital Group, LLC $ 57,566
$ 18,608 Distributions declared per Class A unit $
1.05 $ 0.42 Net income per unit (basic and diluted):
Net income per Class A unit $ 1.91 $ 0.82 Weighted
average number of Class A units outstanding 30,186 22,688
Segment Financial Data
As of or for the ThreeMonths
Ended March 31,
2013
2012
(in thousands, except per unit
dataor as otherwise indicated)
Segment Statements of Operations Data: (1) Revenues:
Management fees $ 184,214 $ 191,262 Incentive income 327,184 62,669
Investment income 82,050 64,340 Total revenues
593,448 318,271 Expenses: Compensation and benefits
(93,617 ) (84,404 ) Equity-based compensation (652 ) — Incentive
income compensation (130,271 ) (27,757 ) General and administrative
(23,988 ) (24,794 ) Depreciation and amortization (1,743 ) (1,787 )
Total expenses (250,271 ) (138,742 ) Adjusted net income before
interest and other income (expense) 343,177 179,529 Interest
expense, net of interest income (2) (7,407 ) (8,164 ) Other income
(expense), net (20 ) 2,267 Adjusted net income $ 335,750
$ 173,632 Adjusted net income-OCG $ 58,727 $ 20,447
Adjusted net income per Class A unit 1.95 0.90 Distributable
earnings 295,027 137,329 Distributable earnings-OCG 54,076 15,227
Distributable earnings per Class A unit 1.79 0.67 Fee-related
earnings 64,214 80,277 Fee-related earnings-OCG 10,407 9,268
Fee-related earnings per Class A unit 0.34 0.41 Economic net income
400,574 278,391 Economic net income-OCG 62,579 32,882 Economic net
income per Class A unit 2.07 1.45 Weighted average number of
Operating Group units outstanding 150,814 150,441 Weighted average
number of Class A units outstanding 30,186 22,688
Operating
Metrics: Assets under management (in millions): Assets under
management $ 78,801 $ 77,850 Management fee-generating assets under
management 66,350 67,973 Incentive-creating assets under management
33,950 36,593 Uncalled capital commitments (3) 11,198 12,141
Accrued incentives (fund level): (4) Incentives created (fund
level) 459,700 265,162 Incentives created (fund level), net of
associated incentive income compensation expense 262,758 159,435
Accrued incentives (fund level) 2,270,314 1,889,460 Accrued
incentives (fund level), net of associated incentive income
compensation expense 1,347,018 1,132,470 (1) Our
business is comprised of one segment, our investment management
segment, which consists of the investment management services that
we provide to our clients. The components of revenues and expenses
used in determining adjusted net income do not give effect to the
consolidation of the funds that we manage. In addition, adjusted
net income excludes the effect of: (a) non-cash equity-based
compensation charges related to unit grants made before our initial
public offering, (b) income taxes, (c) expenses that OCG or its
Intermediate Holding Companies bear directly and (d) the adjustment
for the OCGH non-controlling interest. Adjusted net income is
calculated at the Operating Group level. For additional information
regarding the reconciling adjustments discussed above, please see
Exhibit A. (2) Interest income was $0.6 million and $0.5 million
for the three months ended March 31, 2013 and 2012, respectively.
(3) Uncalled capital commitments represent undrawn capital
commitments by partners (including Oaktree as general partner) of
our closed-end funds in their investment periods. If a fund
distributes capital during its investment period, that capital is
typically subject to possible recall, in which case it is included
in uncalled capital commitments. (4) Our funds record as accrued
incentives the incentive income that would be paid to us if the
funds were liquidated at their reported values as of the date of
the financial statements. Incentives created (fund level) refers to
the amount generated by the funds during the period. We refer to
the amount of incentive income recognized as revenue by us as
segment incentive income. We recognize incentive income when it
becomes fixed or determinable, all related contingencies have been
removed and collection is reasonably assured. Amounts recognized by
us as incentive income no longer are included in accrued incentives
(fund level), the term we use for remaining fund-level accruals.
Incentives created (fund level), incentive income and accrued
incentives (fund level) are presented gross, without deduction for
direct compensation expense that is owed to our investment
professionals associated with the particular fund when we earn the
incentive income. We call that charge “incentive income
compensation expense.” Incentive income compensation expense varies
by the investment strategy and vintage of the particular fund,
among other factors, but generally equals between 40% and 55% of
segment incentive income revenue.
Operating Metrics
We monitor certain operating metrics that are either common to
the alternative asset management industry or that we believe
provide important data regarding our business. As described below,
these operating metrics include AUM, management fee-generating AUM,
incentive-creating AUM, incentives created (fund level), accrued
incentives (fund level) and uncalled capital commitments.
Assets Under Management
As of
March 31,2013
December 31,2012
March 31,2012
(in millions) Assets Under Management: Closed-end
funds $ 46,381 $ 45,700 $ 48,578 Open-end funds 29,837 29,092
26,833 Evergreen funds 2,583 2,259 2,439 Total
$ 78,801 $ 77,051 $ 77,850
Three
Months Ended March 31, Twelve Months Ended March 31,
2013 2012 2013 2012 (in
millions) Change in Assets Under Management: Beginning
balance $ 77,051 $ 74,857 $ 77,850 $ 85,691 Closed-end funds: New
capital commitments 1,215 1,734 5,937 5,796 Distributions for a
realization event/other (3,180 ) (2,578 ) (13,265 ) (11,440 )
Uncalled capital commitments at end of investment period — — (1,634
) (1,227 ) Foreign currency translation (133 ) 139 (173 ) (266 )
Change in market value (1) 2,235 1,894 6,151 438 Change in
applicable leverage 544 (36 ) 787 (112 ) Open-end funds:
Contributions 1,127 1,174 4,347 3,354 Redemptions (1,229 ) (886 )
(4,212 ) (4,484 ) Foreign currency translation (94 ) 76 (105 ) (181
) Change in market value (1) 941 1,427 2,974 905 Evergreen funds:
Contributions 34 — 174 288 New capital commitments 203 — 203 —
Redemptions (17 ) (65 ) (500 ) (551 ) Distributions from
restructured funds (15 ) (34 ) (38 ) (309 ) Foreign currency
translation (1 ) 1 (1 ) — Change in market value (1) 120 147
306 (52 ) Ending balance $ 78,801 $ 77,850
$ 78,801 $ 77,850 (1) Change in
market value represents the change in NAV of our funds resulting
from current income and realized and unrealized gains/losses on
investments, less management fees and other fund expenses.
Management Fee-generating AUM
As of
March 31,2013
December 31,2012
March 31,2012
(in millions) Management Fee-generating Assets Under
Management: Closed-end funds $ 34,412 $ 35,750 $ 39,019
Open-end funds 29,799 29,056 26,815 Evergreen funds 2,139
1,978 2,139 Total $ 66,350 $ 66,784 $
67,973
Three Months Ended March 31, Twelve
Months Ended March 31, 2013 2012 2013
2012 (in millions) Change in Management
Fee-generating Assets Under Management: Beginning balance $
66,784 $ 66,964 $ 67,973 $ 67,158 Closed-end funds: New capital
commitments to funds that pay fees based on committed capital 381
251 616 7,874 Capital drawn by funds that pay fees based on drawn
capital or NAV 702 88 1,582 1,037 Change for funds that pay fees
based on the lesser of funded capital or cost basis during
liquidation (1) (2,747 ) (1,102 ) (7,102 ) (4,759 ) Change in fee
basis from committed capital to drawn capital — — — (978 ) Uncalled
capital commitments at end of investment period for funds that pay
fees based on committed capital — — (57 ) (1,066 ) Distributions by
funds that pay fees based on NAV (61 ) (154 ) (419 ) (355 ) Foreign
currency translation (145 ) 10 (7 ) (104 ) Change in market value
(2) (8 ) 94 23 15 Change in applicable leverage 540 (35 ) 757 (111
) Open-end funds: Contributions 1,127 1,174 4,333 3,353 Redemptions
(1,229 ) (886 ) (4,212 ) (4,484 ) Foreign currency translation (94
) 76 (105 ) (181 ) Change in market value 939 1,426 2,968 906
Evergreen funds: Contributions 34 — 174 288 Capital drawn by funds
that pay fees based on drawn capital or NAV 37 — 37 — Redemptions
(17 ) (66 ) (499 ) (548 ) Change in market value 107 133
288 (72 ) Ending balance $ 66,350 $ 67,973
$ 66,350 $ 67,973 (1) For most
closed-end funds, management fees are charged during the
liquidation period on the lesser of (a) total funded capital and
(b) the cost basis of assets remaining in the fund, with the cost
basis of assets generally calculated by excluding cash balances.
Thus, changes in fee basis during the liquidation period are not
dependent on distributions made from the fund; rather, they are
tied to the cost basis of the fund’s investments, which generally
declines as the fund sells assets. (2) The change in market value
reflects certain funds that pay management fees based on NAV and
leverage, as applicable.
As of
March 31, 2013
December 31,2012
March 31, 2012 (in millions)
Reconciliation of Assets Under Management to Management
Fee-generating Assets Under Management: Assets under management
$ 78,801 $ 77,051 $ 77,850 Difference between assets under
management and committed capital or cost basis for closed-end funds
(1) (5,160 ) (3,164 ) (4,726 ) Capital commitments to funds that
have not yet begun to generate management fees (4,994 ) (5,016 )
(1,306 ) Undrawn capital commitments to funds for which management
fees are based on drawn capital or NAV (846 ) (584 ) (2,145 )
Oaktree’s general partner investments in management fee-generating
funds (1,003 ) (1,041 ) (1,032 ) Closed-end funds that are no
longer paying management fees (218 ) (231 ) (418 ) Funds for which
management fees were permanently waived (230 ) (231 ) (250 )
Management fee-generating assets under management $ 66,350 $
66,784 $ 67,973 (1) Not applicable to
closed-end funds that pay management fees based on NAV or leverage,
as applicable.
The period-end weighted average annual management fee rates
applicable to the respective management fee-generating AUM balances
are set forth below:
As of March 31,
2013
December 31,2012
March 31, 2012 Weighted Average
Annual Management Fee Rates: Closed-end funds 1.49 % 1.51 %
1.48 % Open-end funds 0.49 0.49 0.47 Evergreen funds 1.80 1.82 1.80
Overall 1.05 1.07 1.09
Incentive-creating AUM
As of
March 31,2013
December 31,2012
March 31,2012
(in millions) Incentive-creating Assets Under
Management: Closed-end funds $ 31,862 $ 32,058 $ 34,463
Evergreen funds 2,088 1,931 2,130 Total $ 33,950
$ 33,989 $ 36,593
Accrued Incentives and Incentives Created (Fund
Level)
As of or for the ThreeMonths
Ended March 31,
2013 2012 (in
thousands) Accrued Incentives (Fund Level): Beginning
balance $ 2,137,798 $ 1,686,967 Incentives created
(fund level): Closed-end funds 439,586 254,194 Evergreen funds
20,114 10,968 Total incentives created (fund level)
459,700 265,162 Less: segment incentive income
recognized by us (327,184 ) (62,669 ) Ending balance $ 2,270,314
$ 1,889,460 Accrued incentives (fund level), net of
associated incentive income compensation expense $ 1,347,018
$ 1,132,470
Uncalled Capital Commitments
Uncalled capital commitments amounted to $11.2 billion as of
March 31, 2013, as compared with $11.2 billion as of December 31,
2012 and $12.1 billion as of March 31, 2012.
Segment Results
Our business is comprised of one segment, our investment
management segment, which consists of the investment management
services that we provide to our clients.
Adjusted Net Income
Adjusted net income and adjusted net income-OCG, as well as per
unit data, for the three months ended March 31, 2013 and 2012, are
set forth below:
Three Months Ended March
31, 2013 2012 (in
thousands, except per unit data) Revenues: Management fees $
184,214 $ 191,262 Incentive income 327,184 62,669 Investment income
82,050 64,340 Total revenues 593,448 318,271
Expenses: Compensation and benefits (93,617 ) (84,404 )
Equity-based compensation (652 ) — Incentive income compensation
(130,271 ) (27,757 ) General and administrative (23,988 ) (24,794 )
Depreciation and amortization (1,743 ) (1,787 ) Total expenses
(250,271 ) (138,742 ) Adjusted net income before interest and other
income (expense) 343,177 179,529 Interest expense, net of interest
income (1) (7,407 ) (8,164 ) Other income (expense), net (20 )
2,267 Adjusted net income 335,750 173,632 Adjusted net
income attributable to OCGH non-controlling interest (268,547 )
(147,446 ) Non-Operating Group expenses (210 ) (178 ) Adjusted net
income-OCG before income taxes 66,993 26,008 Income taxes-OCG
(8,266 ) (5,561 ) Adjusted net income-OCG $ 58,727 $ 20,447
Adjusted net income per Class A unit $ 1.95 $ 0.90
Weighted average number of Class A units outstanding 30,186
22,688 (1) Interest income was $0.6
million and $0.5 million for the three months ended March 31, 2013
and 2012, respectively.
Investment Income
Three Months Ended March
31, 2013 2012 (in
thousands) Income from investments in funds: Oaktree
funds: Distressed debt $ 41,362 $ 43,182 Control investing 9,856
4,685 Real estate 9,211 3,470 Corporate debt 3,772 2,873 Listed
equities 5,224 4,286 Convertible securities 50 95 Non-Oaktree 2,076
1,225
Income from investments in companies: DoubleLine and
other 10,499 4,524 Total investment income $ 82,050 $
64,340
Fee-related Earnings
Fee-related earnings and fee-related earnings-OCG, as well as
per unit data, for the three months ended March 31, 2013 and 2012,
are set forth below:
Three Months Ended March
31, 2013 2012 (in
thousands, except per unit data) Management fees: Closed-end
funds $ 139,048 $ 151,548 Open-end funds 36,055 30,465 Evergreen
funds 9,111 9,249 Total management fees 184,214
191,262 Expenses: Compensation and benefits (93,617 )
(84,404 ) Equity-based compensation (652 ) — General and
administrative (23,988 ) (24,794 ) Depreciation and amortization
(1,743 ) (1,787 ) Total expenses (120,000 ) (110,985 ) Fee-related
earnings 64,214 80,277 Fee-related earnings attributable to OCGH
non-controlling interest (51,362 ) (68,170 ) Non-Operating Group
expenses (210 ) (179 ) Fee-related earnings-OCG before income taxes
12,642 11,928 Fee-related earnings-OCG income taxes (2,235 ) (2,660
) Fee-related earnings-OCG $ 10,407 $ 9,268
Fee-related earnings per Class A unit $ 0.34 $ 0.41
Weighted average number of Class A units outstanding 30,186
22,688
Distributable Earnings and Distribution Calculation
Distributable earnings and the calculations of the distributions
attributable to the three months ended March 31, 2013 and 2012, are
set forth below:
Three Months Ended March
31, 2013 2012
Distributable Earnings: (in thousands, except per unit
data) Revenues: Management fees $ 184,214 $ 191,262 Incentive
income 327,184 62,669 Receipts of investment income from funds (1)
34,026 27,680 Receipts of investment income from DoubleLine and
other companies 9,013 2,955 Total distributable
earnings revenues 554,437 284,566 Expenses:
Compensation and benefits (93,617 ) (84,404 ) Incentive income
compensation (130,271 ) (27,757 ) General and administrative
(23,988 ) (24,794 ) Depreciation and amortization (1,743 ) (1,787 )
Total expenses (249,619 ) (138,742 ) Other income (expense):
Interest expense, net of interest income (2) (7,407 ) (8,164 )
Operating Group income taxes (2,364 ) (2,598 ) Other income
(expense), net (20 ) 2,267 Distributable earnings $ 295,027
$ 137,329
Distribution Calculation: Operating
Group distribution with respect to the period $ 234,055 $ 110,106
Distribution per Operating Group unit $ 1.55 $ 0.73 Adjustments per
Class A unit: Distributable earnings-OCG income taxes (0.07 ) (0.11
) Tax receivable agreement (0.06 ) (0.06 ) Non-Operating Group
expenses (0.01 ) (0.01 ) Distribution per Class A unit (3) $ 1.41
$ 0.55 (1) This adjustment
characterizes a portion of the distributions received from Oaktree
and non-Oaktree funds as receipts of investment income or loss. In
general, the income or loss component of a distribution from a fund
is calculated by multiplying the amount of the distribution by the
ratio of our investment’s undistributed income or loss to our
remaining investment balance. In addition, if the distribution is
made during the investment period, it is generally not reflected in
distributable earnings until after the investment period ends. (2)
Interest income was $0.6 million and $0.5 million for the three
months ended March 31, 2013 and 2012, respectively. (3) With
respect to the three months ended March 31, 2013, the distribution
was announced on May 7, 2013 and is payable on May 21, 2013.
Units Outstanding
Three Months Ended March
31, 2013 2012 (in
thousands) Weighted Average Units: OCGH 120,628 127,753
Class A 30,186 22,688 Total 150,814 150,441
Units
Eligible for Fiscal Period Distribution: OCGH 120,814 120,251
Class A 30,189 30,580 Total 151,003 150,831
Segment Statements of Financial Condition
As of March 31,
2013
December 31,2012
March 31, 2012 (in thousands)
Assets: Cash and cash-equivalents $ 687,412 $ 458,191 $
276,420 U.S. Treasury and government agency securities 350,760
370,614 371,552 Management fees receivable 32,075 27,351 24,682
Incentive income receivable 7,564 82,182 13,846 Corporate
investments, at equity 1,117,848 1,115,952 1,178,784 Deferred tax
assets 159,171 159,171 72,986 Other assets 145,537 146,087
134,154 Total assets $ 2,500,367 $ 2,359,548 $
2,072,424
Liabilities and Capital: Liabilities: Accounts
payable and accrued expenses $ 223,118 $ 214,311 $ 166,941 Due to
affiliates 136,454 136,165 58,601 Debt obligations 608,929
615,179 644,643 Total liabilities 968,501 965,655
870,185 Capital: OCGH non-controlling interest in
consolidated subsidiaries 1,199,745 1,087,491 1,005,497
Unitholders’ capital attributable to Oaktree Capital Group, LLC
332,121 306,402 196,742 Total capital 1,531,866
1,393,893 1,202,239 Total liabilities and capital $
2,500,367 $ 2,359,548 $ 2,072,424
Corporate Investments, at Equity
As of March 31,
2013
December 31,2012
March 31, 2012 (in thousands)
Investments in funds: Oaktree funds: Distressed debt $
468,308 $ 475,476 $ 543,302 Control investing 256,034 264,186
244,445 Real estate 125,116 107,408 88,647 Corporate debt 106,255
115,250 137,440 Listed equities 81,393 69,222 46,586 Convertible
securities 1,441 1,392 1,346 Non-Oaktree 56,237 53,591 94,224
Investments in companies: DoubleLine and other 23,064
29,427 22,794 Total corporate investments, at equity $
1,117,848 $ 1,115,952 $ 1,178,784
Fund Data
Information regarding our closed-end, open-end and evergreen
funds, together with benchmark data where applicable, is set forth
below. For our closed-end and evergreen funds, no benchmarks are
presented in the tables as there are no known comparable benchmarks
for these funds' investment philosophy, strategy and
implementation.
Closed-end Funds
As of March 31, 2013 Investment Period
Total Committed Capital Drawn Capital (1)
Fund Net Income Since Inception
Distributions Since Inception
Net Asset Value
Management Fee-generating AUM
Oaktree Segment Incentive Income
Recognized
Accrued Incentives (Fund Level) (2) Unreturned
Drawn Capital Plus Accrued Preferred Return (3)
IRR Since Inception (4) Multiple of
Drawn Capital (5) Start Date End Date
Gross Net (in millions) Distressed
Debt TCW Special Credits Fund I, L.P. (6) Oct. 1988 Oct. 1991
$
97
$
97
$
121
$
218
$
—
$
—
$
—
$
—
$
—
29.0 % 24.7 % 2.3x TCW Special Credits Fund II, L.P. (6) Jul. 1990
Jul. 1993 261 261 505 766 — — — — — 41.6 35.7 3.1 TCW Special
Credits Fund IIb, L.P. (6) Dec. 1990 Dec. 1993 153 153 323 476 — —
— — — 44.0 37.9 3.1 TCW Special Credits Fund III, L.P. (6) Nov.
1991 Nov. 1994 329 329 470 799 — — — — — 26.2 22.1 2.5 TCW Special
Credits Fund IIIb, L.P. (6) Apr. 1992 Apr. 1995 447 447 459 906 — —
— — — 21.2 17.9 2.1 TCW Special Credits Fund IV, L.P. (6) Jun. 1993
Jun. 1996 394 394 462 856 — — — — — 21.1 17.3 2.2 OCM Opportunities
Fund, L.P. Oct. 1995 Oct. 1998 771 771 568 1,339 — — 74 — — 12.4
10.2 1.8 OCM Opportunities Fund II, L.P. Oct. 1997 Oct. 2000 1,550
1,550 989 2,539 — — 197 — — 11.0 8.5 1.7 OCM Opportunities Fund
III, L.P. Sep. 1999 Sep. 2002 2,077 2,077 1,287 3,335 28 — 248 6 —
15.4 11.9 1.7 OCM Opportunities Fund IV, L.P. Sep. 2001 Sep. 2004
2,125 2,125 1,727 3,845 7 — 340 1 — 35.0 28.1 1.9 OCM Opportunities
Fund IVb, L.P. May 2002 May 2005 1,339 1,339 1,260 2,596 3 — 248 1
— 57.8 47.3 2.0 OCM Opportunities Fund V, L.P. Jun. 2004 Jun. 2007
1,179 1,179 934 1,905 208 258 142 41 — 18.6 14.3 1.9 OCM
Opportunities Fund VI, L.P. Jul. 2005 Jul. 2008 1,773 1,773 1,242
2,215 800 917 90 153 518 12.2 8.9 1.8 OCM Opportunities Fund VII,
L.P. Mar. 2007 Mar. 2010 3,598 3,598 1,568 3,806 1,360 1,334 22 174
1,132 11.5 8.3 1.5 OCM Opportunities Fund VIIb, L.P. May 2008 May
2011 10,940 9,844 9,104 13,589 5,361 3,413 725 1,044 — 24.2 18.5
2.0 Special Account A Nov. 2008 Oct. 2012 253 253 302 350 205 135
19 41 — 33.1 26.8 2.2 Oaktree Opportunities Fund VIII, L.P. Oct.
2009 Oct. 2012 4,507 4,507 1,608 1,101 5,014 3,967 63 250 4,337
17.0 11.7 1.4 Special Account B Nov. 2009 Nov. 2012 1,031 1,064 394
288 1,171 1,136 2 32 1,009 18.3 15.0 1.4 Oaktree Opportunities Fund
VIIIb, L.P. Aug. 2011 Aug. 2014 2,692 2,154 264 2 2,416 2,625 — 51
2,299 19.6 11.8 1.2 Oaktree Opportunities Fund IX, L.P. (9)
— (7)
— 5,016 251
(2)
— 249 246 — — 251 nm nm 1.0 23.0 % 17.6 %
Global Principal
Investments TCW Special Credits Fund V, L.P. (6) Apr. 1994 Apr.
1997
$
401
$
401
$
349
$
750
$
—
$
—
$
—
$
—
$
—
17.2 % 14.6 % 1.9x OCM Principal Opportunities Fund, L.P. Jul. 1996
Jul. 1999 625 625 282 907 — — — — — 6.4 5.4 1.5 OCM Principal
Opportunities Fund II, L.P. Dec. 2000 Dec. 2005 1,275 1,275 1,208
2,455 27 — 231 5 — 23.3 17.8 2.0 OCM Principal Opportunities Fund
III, L.P. Nov. 2003 Nov. 2008 1,400 1,400 952 1,769 583 565 51 134
204 14.9 10.4 1.8 OCM Principal Opportunities Fund IV, L.P. Oct.
2006 Oct. 2011 3,328 3,328 1,259 1,642 2,945 2,218 — — 3,128 9.6
7.1 1.5 Oaktree Principal Fund V, L.P. Feb. 2009 Feb. 2014 2,827
2,021 411 384 2,049 2,756 — 57 1,975 16.0 8.4 1.3 Special Account C
Dec. 2008 Feb. 2014 505 414 222 133 503 355 10 34 373 21.5
15.8 1.6 13.5 % 10.0 %
Asia Principal Investments OCM
Asia Principal Opportunities Fund, L.P. May 2006 May 2011
$
578
$
503
$
36
$
100
$
439
$
331
$
—
$ — $ 594 6.0 % 1.7 % 1.2x
European Principal
Investments (8) OCM European Principal Opportunities
Fund, L.P. Mar. 2006 Mar. 2009
$
495
$
460
$
308
$
161
$
608
$
370
$
3
$
17
$
584
10.0 % 8.1 % 1.8x OCM European Principal Opportunities Fund II,
L.P. Dec. 2007 Dec. 2012
€
1,759
€
1,685
€
373
€
535
€
1,523
€
1,387
€
13
€
—
€
1,612
10.8 6.8 1.3 Oaktree European Principal Fund III, L.P. Nov. 2011
Nov. 2016
€
3,164
€
1,265
€
49
€
3
€
1,311
€
3,094
€
—
€
—
€
1,360
11.3 4.0 1.1 10.6 % 6.9 %
Power Opportunities
OCM/GFI Power Opportunities Fund, L.P. Nov. 1999 Nov. 2004
$
449
$
383
$
251
$
634
$
—
$
—
$
23
$
—
$
—
20.1 % 13.1 % 1.8x OCM/GFI Power Opportunities Fund II, L.P. Nov.
2004 Nov. 2009 1,021 541 1,460 1,888 113 39 93 7 — 76.3 59.1 3.9
Oaktree Power Opportunities Fund III, L.P. Apr. 2010 Apr. 2015
1,062 326 45 5 366 1,036 — 8 355 25.0 8.6 1.3 35.2 %
27.2 %
As of March 31, 2013
Investment Period Total Committed Capital
Drawn Capital (1) Fund Net Income Since
Inception
Distributions Since Inception
Net Asset Value
Management Fee-generating AUM
Oaktree Segment Incentive Income
Recognized
Accrued Incentives (Fund Level)
(2)
Unreturned Drawn Capital Plus Accrued Preferred
Return (3) IRR Since Inception (4)
Multiple of Drawn Capital (5) Start
Date End Date Gross
Net (in millions) Real Estate TCW Special
Credits Fund VI, L.P. (6) Aug. 1994 Aug. 1997 $ 506 $ 506 $ 666 $
1,172 $ — $ — $ — $ — $ — 21.1 % 17.4 % 2.4x OCM Real Estate
Opportunities Fund A, L.P. Feb. 1996 Feb. 1999 379 379 296 665 10 —
56 4 — 10.5 8.4 1.9 OCM Real Estate Opportunities Fund B, L.P. Mar.
1997 Mar. 2000 285 285 172 455 2 — — — 53 8.2 7.1 1.7 OCM Real
Estate Opportunities Fund II, L.P. Dec. 1998 Dec. 2001 464 440 266
705 1 — 52 — — 15.2 11.1 1.7 OCM Real Estate Opportunities Fund
III, L.P. Sep. 2002 Sep. 2005 707 707 653 1,238 122 — 105 24 — 15.9
11.9 2.0 Oaktree Real Estate Opportunities Fund IV, L.P. Dec. 2007
Dec. 2011 450 450 289 200 539 354 8 46 394 19.1 12.8 1.8 Special
Account D Nov. 2009 Nov. 2012 256 263 129 168 224 149 1 12 167 18.4
15.5 1.5 Oaktree Real Estate Opportunities Fund V, L.P. Mar. 2011
Mar. 2015 1,283 1,283 240 27 1,496 1,251 5 41 1,406 16.8 11.0 1.2
Oaktree Real Estate Opportunities Fund VI, L.P. (9) Aug. 2012 Aug.
2016 653 457
(4)
— 453 615 — — 467 nm nm 1.0 15.5 % 12.0 %
Asia Real Estate
Oaktree Asia Special Situations Fund, L.P. May 2008 Apr. 2009 $ 50
$ 19 $ 17 $ 2 $ 34 $ — $ — $ 2 $ 25 20.6 % 12.3 % 2.2x
PPIP Oaktree PPIP Fund, L.P. (10) Dec. 2009 Dec. 2012 $
2,322 $ 1,113 $ 445 $ 703 $ 855 $ 531
(11)
$ — $ 49
(12)
$ 215
(12)
29.2 % N/A 1.4x
Mezzanine Finance OCM Mezzanine Fund,
L.P. (13) Oct. 2001 Oct. 2006 $ 808 $ 773 $ 280 $ 1,038 $ 15 $ — $
32 $ 3 $ —
14.3
%
10.7% /10.1%
1.4x OCM Mezzanine Fund II, L.P. Jun. 2005 Jun. 2010 1,251 1,107
419 1,160 367 511 — — 418 10.5 7.3 1.5 Oaktree Mezzanine Fund III,
L.P. (14) Dec. 2009 Dec. 2014 1,592 1,106 85 291 900 1,552 — — 957
11.9
9.9 / (5.2)
1.1 11.9 % 8.1 %
U.S. Senior Loans Oaktree Loan Fund, L.P.
Sep. 2007 Sep. 2012 $ 2,193 $ 2,193 $ 95 $ 2,288 $ — $ — N/A N/A
N/A 2.5 % 1.9 % 1.1x Oaktree Loan Fund, 2x, L.P. Sep. 2007 Sep.
2015 1,722 1,722 103 1,715 110 108
N/A N/A N/A 2.8 2.0 1.1 Oaktree Enhanced Income Fund, L.P. (9) Sep.
2012 Aug. 2015 755 562 21 — 583 1,457
(15)
N/A N/A N/A nm nm 1.0 33,983
(16)
2,237
(16)
Other (17) 429 4 Total closed-end funds $ 34,412 $ 2,241 (1)
Reflects the capital contributions of investors in the fund,
net of any distributions to such investors of uninvested capital.
(2) Excludes Oaktree segment incentive income recognized since
inception. (3) Reflects the amount the fund needs to distribute to
its investors as a return of capital and a preferred return (as
applicable) before Oaktree is entitled to receive incentive income
(other than tax distributions) from the fund. (4) The internal rate
of return (“IRR”) is the annualized implied discount rate
calculated from a series of cash flows. It is the return that
equates the present value of all capital invested in an investment
to the present value of all returns of capital, or the discount
rate that will provide a net present value of all cash flows equal
to zero. Fund-level IRRs are calculated based upon the actual
timing of cash contributions/distributions to investors and the
residual value of such investor's capital accounts at the end of
the applicable period being measured. Gross IRRs reflect returns
before allocation of management fees, expenses and any incentive
allocation to the fund's general partner. Net IRRs reflect returns
to non-affiliated investors after allocation of management fees,
expenses and any incentive allocation to the fund's general
partner. (5) Calculated as Drawn Capital plus gross income before
fees and expenses divided by Drawn Capital. (6) The fund was
managed by certain Oaktree investment professionals while employed
at the Trust Company of the West prior to Oaktree's founding in
1995. When these employees joined Oaktree upon, or shortly after,
its founding, they continued to manage the fund through the end of
its term pursuant to a sub-advisory relationship between the Trust
Company of the West and Oaktree. (7) As of March 31, 2013, Oaktree
Opportunities Fund IX, L.P. had made an initial 5% drawdown against
its $5.0 billion of committed capital. Oaktree has not yet
commenced the fund's investment period and, as a result, as of
March 31, 2013 management fees were assessed only on its drawn
capital, and management fee-generating AUM included only that
portion of committed capital. (8) Aggregate IRRs based on
conversion of OCM European Principal Opportunities Fund II, L.P.
and Oaktree European Principal Fund III, L.P. cash flows from Euros
to USD at the March 31, 2013 spot rate of $1.2840. (9) The IRR is
not considered meaningful (“nm”) as the period from the initial
contribution through March 31, 2013 is less than one year. (10) Due
to the differences in allocations of income and expenses to this
fund's two primary limited partners, the U.S. Treasury and Oaktree
PPIP Private Fund, L.P., a combined net IRR is not presented. Of
the $2,322 million in capital commitments, $1,161 million relates
to the Oaktree PPIP Private Fund, L.P. The gross and net IRR for
the Oaktree PPIP Private Fund, L.P. were 26.2% and 19.3%,
respectively, as of March 31, 2013. (11) The U.S. Treasury incurs
management fees for the Oaktree PPIP Fund, L.P., paid quarterly in
arrears, based on their interest value as of March 31, 2013.
Limited Partners of the Oaktree PPIP Private Fund, L.P. incur
management fees based on invested capital as of March 31, 2013
totaling $195.6 million, paid quarterly in advance. (12) Represents
amounts related to the Oaktree PPIP Private Fund, L.P. only. (13)
The fund's partnership interests are divided into Class A and Class
B interests, with the Class A interests having priority with
respect to the distribution of current income and disposition
proceeds. Net IRR for Class A interests is 10.7% and Class B
interests is 10.1%. Combined net IRR for the Class A and Class B
interests is 10.3%. (14) The fund's partnership interests are
divided into Class A and Class B interests, with the Class A
interests having priority with respect to the distribution of
current income and disposition proceeds. Net IRR for Class A
interests is 9.9% and Class B interests is (5.2)%. Combined net IRR
for Class A and Class B interests is 6.2%. (15) Represents gross
assets, including leverage of $893 million. (16) Totals based on
conversion of Euro amounts to USD at the March 31, 2013 spot rate
of $1.2840. (17) Includes separate accounts and a non-Oaktree fund.
Open-end Funds
Management Fee-generating AUM
as of
March 31, 2013
Twelve Months Ended
March 31, 2013
Since Inception through March 31,
2013 Composite Inception Rates of Return
(1) Annualized Rates of Return (1)
Sharpe Ratio Oaktree
Relevant Benchmark
Oaktree
Relevant Benchmark
Oaktree Gross
Relevant Benchmark
Gross Net Gross
Net (in millions) U.S. High
Yield Bonds Jan. 1986 $ 17,194 12.6 % 12.1 % 12.1 % 10.1 % 9.6 %
8.9 % 0.82 0.55 European High Yield Bonds May 1999 1,318 13.9 13.3
14.3 8.3 7.8 6.2 0.61 0.35 U.S. Convertibles Apr. 1987 4,568 12.6
12.0 12.2 10.0 9.4 8.0 0.47 0.30 Non-U.S. Convertibles Oct. 1994
2,312 8.7 8.1 8.3 9.0 8.2 5.8 0.75 0.35 High Income Convertibles
Aug. 1989 1,083 6.8 6.3 12.6 12.0 11.2 8.8 1.02 0.59 U.S. Senior
Loans Sep. 2008 2,045 7.7 7.2 8.3 8.6 8.0 6.4 1.23 0.60 European
Senior Loans May 2009 1,211 8.6 8.0 8.2 12.5 11.8 13.6 1.92 1.95
Emerging Markets Equity Jul. 2011 68 10.1 9.2 2.0 1.3 0.4
(3.4 ) 0.05 (0.15 ) Total open-end funds $ 29,799 (1)
Represents Oaktree’s time-weighted rates of return,
including reinvestment of income, net of commissions and
transaction costs. Returns for Relevant Benchmarks are presented on
a gross basis.
Evergreen Funds
As of March 31, 2013
Twelve Months Ended March 31, 2013
Since Inception through March 31,
2013
Management Fee-generating AUM
Accrued Incentives (Fund Level)
(1)
Inception Rates of Return Annualized
Rates
of Return
Gross Net Gross
Net (in millions) Value
Opportunities Sep. 2007 $ 1,785 $ 18 18.3 % 12.7 % 13.9 % 9.0 %
Emerging Markets Absolute Return Apr. 1997 317 1 10.5
7.7 15.9 10.9 2,102 19
Restructured and other funds (2)
37 10 Total evergreen funds $ 2,139 $ 29
(1) For the three months ended March 31, 2013,
segment incentive income recognized by Oaktree totaled $1.7
million. (2) Oaktree manages three restructured evergreen funds
that are in liquidation: European Credit Opportunities Fund, L.P.,
Oaktree High Yield Plus Fund, L.P. and OCM Japan Opportunities
Fund, L.P. (Yen class). As of March 31, 2013, these funds had gross
and net IRRs since inception of (2.0)% and (4.5)%, 8.1% and 5.7%,
and (8.4)% and (9.5)%, respectively, and in the aggregate had AUM
of $196.0 million. Additionally, Oaktree High Yield Plus Fund, L.P.
had accrued incentives (fund level) of $9.9 million as of March 31,
2013.
GLOSSARY
Accrued Incentives (Fund Level) represents the incentive
income that would be paid to us if the funds were liquidated at
their reported values as of the date of the financial statements.
Incentives created (fund level) refers to the gross amount of
potential incentives generated by the funds during the period. We
refer to the amount of incentive income recognized as revenue by us
as segment incentive income. We recognize incentive income when it
becomes fixed or determinable, all related contingencies have been
removed and collection is reasonably assured. Amounts recognized by
us as incentive income no longer are included in accrued incentives
(fund level), the term we use for remaining fund-level
accruals.
Adjusted net income (“ANI”) is a measure of profitability
for our investment management segment. The components of revenues
(“adjusted net income revenues”) and expenses used in the
determination of ANI do not give effect to the consolidation of the
funds that we manage. Adjusted net income revenues include
investment income (loss) that is classified in other income (loss)
in the GAAP-basis statements of operations. In addition, ANI
excludes the effect of: (a) non-cash equity-based compensation
charges related to unit grants made before our initial public
offering, (b) income taxes, (c) expenses that OCG or its
Intermediate Holding Companies bear directly and (d) the
adjustment for the OCGH non-controlling interest. ANI is calculated
at the Operating Group level.
Adjusted net income–OCG, or adjusted net income per Class A
unit, a non-GAAP measure, is calculated to provide Class A
unitholders with a measure that shows the portion of ANI
attributable to their ownership. Adjusted net income-OCG represents
ANI including the effect of (a) the OCGH non-controlling
interest, (b) expenses, such as income tax expense, that OCG
or its Intermediate Holding Companies bear directly and
(c) any Operating Group income taxes attributable to OCG. Two
of our Intermediate Holding Companies incur federal and state
income taxes for their shares of Operating Group income. Generally,
those two corporate entities hold an interest in the Operating
Group’s management fee-generating assets and a small portion of its
incentive and investment income-generating assets. As a result,
historically our fee-related earnings generally have been subject
to corporate-level taxation, and most of our incentive income and
investment income generally has not been subject to corporate-level
taxation. Thus, the blended effective income tax rate has generally
tended to be higher to the extent that fee-related earnings
represented a larger proportion of our ANI. Myriad other factors
affect income tax expense and the effective income tax rate, and
there can be no assurance that this historical relationship will
continue going forward.
Assets under management (“AUM”) generally refers to the
assets we manage and equals the NAV of the assets we manage, the
fund-level leverage on which management fees are charged and the
undrawn capital that we are entitled to call from investors in our
funds pursuant to their capital commitments.
- Management fee-generating assets
under management (“management fee-generating AUM”) reflects the
AUM on which we will earn management fees in the following quarter.
Our closed-end funds typically pay management fees based on
committed capital during the investment period, without regard to
changes in NAV or the pace of capital drawdowns, and during the
liquidation period on the lesser of (a) total funded capital
and (b) the cost basis of assets remaining in the fund. The
annual management fee rate remains unchanged from the investment
period through the liquidation period. Our open-end and evergreen
funds pay management fees based on their NAV. As compared with AUM,
management fee-generating AUM generally excludes the following:
- Differences between AUM and either
committed capital or cost basis for closed-end funds, other than
for closed-end funds that pay management fees based on NAV and
leverage, as applicable;
- Undrawn capital commitments to funds
for which management fees are based on NAV or drawn capital;
- Undrawn capital commitments to
closed-end funds that have not yet commenced their investment
periods;
- The investments we make in our funds as
general partner;
- Closed-end funds that are beyond the
term during which they pay management fees; and
- AUM in restructured and liquidating
evergreen funds for which management fees were waived.
- Incentive-creating assets under
management (“incentive-creating AUM”) refers to the AUM that
may eventually produce incentive income. It represents the NAV of
our funds for which we are entitled to receive an incentive
allocation, excluding investments made by us and our employees and
directors (which are not subject to an incentive allocation). All
funds for which we are entitled to receive an incentive allocation
are included in incentive-creating AUM, regardless of whether or
not they are currently generating incentives. Incentive-creating
AUM does not include undrawn capital commitments because they are
not part of the NAV.
Consolidated funds refers to those funds that Oaktree
consolidates through a majority voting interest or otherwise,
including those funds in which Oaktree as the general partner is
presumed to have control.
Distributable earnings is a non-GAAP performance measure
derived from our segment results that we use to measure our
earnings at the Operating Group level without the effects of the
consolidated funds for the purpose of, among other things,
assisting in the determination of equity distributions from the
Operating Group. However, the declaration, payment and
determination of the amount of equity distributions, if any, is at
the sole discretion of our board of directors, which may change our
distribution policy at any time.
Distributable earnings and distributable earnings revenues
differ from ANI in that they exclude segment investment income
(loss) and include the receipt of investment income or loss from
distributions by our investments in funds and companies. In
addition, distributable earnings differs from ANI in that it is net
of Operating Group income taxes and excludes non-cash equity-based
compensation charges related to unit grants made after our initial
public offering. In contrast to the GAAP measure of net income or
loss attributable to OCG, distributable earnings also excludes the
effect of: (a) non-cash equity-based compensation charges
related to unit grants made before our initial public offering,
(b) income taxes and expenses that OCG or its Intermediate
Holding Companies bear directly and (c) the adjustment for the
OCGH non-controlling interest.
Distributable earnings–OCG, or distributable earnings per
Class A unit, a non-GAAP measure, is calculated to provide
Class A unitholders with a measure that shows the portion of
distributable earnings attributable to their
ownership. Distributable earnings-OCG represents distributable
earnings including the effect of (a) the OCGH non-controlling
interest, (b) expenses, such as current income tax expense,
that OCG or its Intermediate Holding Companies bear directly and
(c) amounts payable under a tax receivable agreement. The
income tax expense included in distributable earnings-OCG
represents the implied current provision for income taxes
calculated using an approach similar to that which is used in
calculating the income tax provision for adjusted net
income-OCG.
Economic net income (“ENI”) is a non-GAAP measure that we
use to evaluate the financial performance of our segment by
applying the “method 2,” instead of the “method 1,” approach to
accounting for incentive income. ANI follows method 1, for which
incentive income is recognized by us when it becomes fixed or
determinable, all related contingencies have been removed and
collection is reasonably assured. The method 2 approach followed by
ENI recognizes incentive income as if the funds were liquidated at
their reported values as of the date of the financial statements.
ENI is computed by adjusting ANI for the change in accrued
incentives (fund level), net of associated incentive income
compensation expense, during the period.
Economic net income revenues is a non-GAAP measure applying the
“method 2,” instead of the “method 1,” approach to accounting for
segment incentive income and reflects the adjustments described
above.
Economic net income–OCG, or economic net income per Class A
unit, a non-GAAP measure, is calculated to provide Class A
unitholders with a measure that shows the portion of ENI
attributable to their ownership. Economic net income-OCG
represents ENI, including the effect of (a) the OCGH
non-controlling interest, (b) expenses, such as income tax
expense, that OCG or its Intermediate Holding Companies bear
directly and (c) any Operating Group income taxes attributable
to OCG. The income tax expense included in economic net
income-OCG represents the implied provision for income taxes
calculated using an approach similar to that which is used in
calculating the income tax provision for adjusted net
income-OCG.
Fee-related earnings (“FRE”) is a non-GAAP measure that
we use to monitor the baseline earnings of our business. FRE is
comprised of segment management fees (“fee-related earnings
revenues”) less segment operating expenses other than incentive
income compensation expense. This calculation is considered
baseline because it applies all bonus and other general expenses to
management fees, even though a significant portion of those
expenses is attributable to incentive and investment income. FRE
includes non-cash equity-based compensation charges related to unit
grants made after our initial public offering. FRE is presented
before income taxes.
Fee-related earnings–OCG, or fee-related earnings per Class A
unit, is a non-GAAP measure calculated to provide Class A
unitholders with a measure that shows the portion of FRE
attributable to their ownership. Fee-related earnings–OCG
represents FRE including the effect of (a) the OCGH
non-controlling interest, (b) expenses, such as income tax
expense, that OCG or its Intermediate Holding Companies bear
directly and (c) any Operating Group income taxes attributable
to OCG. Fee-related earnings–OCG income taxes is calculated
excluding any segment incentive income or investment income
(loss).
Intermediate Holding Companies collectively refers to the
subsidiaries wholly owned by us.
Net asset value (“NAV”) refers to the value of all the
assets of a fund (including cash and accrued interest and
dividends) less all liabilities of the fund (including accrued
expenses and any reserves established by us, in our discretion, for
contingent liabilities) without reduction for accrued incentives
(fund level) because they are reflected in the partners’ capital of
the fund.
Oaktree, OCG, we, us, our or our company refers to
Oaktree Capital Group, LLC and, where applicable, its subsidiaries
and affiliates.
Oaktree Operating Group (“Operating Group”) refers
collectively to the entities that control the general partners and
investment advisors of our funds in which we have a minority
economic interest and indirect control.
Relevant Benchmark refers, with respect to:
- our U.S. high yield bond strategy, to
the Citigroup U.S. High Yield Cash-Pay Capped Index;
- our European high yield bond strategy,
to the BofA Merrill Lynch Global Non-Financial High Yield European
Issuers excluding Russia 3% Constrained Index (USD Hedged);
- our U.S. senior loan strategy (with the
exception of the closed-end funds), to the Credit Suisse Leveraged
Loan Index;
- our European senior loan strategy, to
the Credit Suisse Western European Leveraged Loan Index (EUR
Hedged);
- our U.S. convertible securities
strategy, to an Oaktree custom convertible index that represents
the Credit Suisse Convertible Securities Index from inception
through December 31, 1999, the Goldman Sachs/Bloomberg
Convertible 100 Index from January 1, 2000 through
June 30, 2004 and the BofA Merrill Lynch All U.S. Convertibles
Index thereafter;
- our non-U.S. convertible securities
strategy, to the JACI Global ex-U.S. (Local) Index;
- our high income convertible securities
strategy, to the Citigroup U.S. High Yield Market Index; and
- our emerging markets equity strategy,
to the Morgan Stanley Capital International Emerging Markets Index
(Net).
Sharpe Ratio refers to a metric used to calculate
risk-adjusted return. The Sharpe Ratio is the ratio of excess
return to volatility, with excess return defined as the return
above that of a riskless asset (based on the three-month U.S.
Treasury bill, or for our European senior loan strategy, the Euro
Overnight Index Average) divided by the standard deviation of such
return. A higher Sharpe Ratio indicates a return that is higher
than would be expected for the level of risk compared to the
risk-free rate.
EXHIBIT
A
Use of Non-GAAP financial information
Oaktree discloses certain 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 (“non-GAAP”) in this earnings release.
Reconciliations of these non-GAAP financial measures to the most
directly comparable financial measures calculated and presented in
accordance with GAAP are presented below. Management makes
operating decisions and assesses the performance of Oaktree’s
business based on these non-GAAP financial measures. 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.
Reconciliation of Segment Results to GAAP Net Income
The following table reconciles fee-related earnings and adjusted
net income to net income attributable to Oaktree Capital Group,
LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Fee-related earnings (1) $ 64,214 $ 80,277 Incentive
income 327,184 62,669 Incentive income compensation (130,271 )
(27,757 ) Investment income 82,050 64,340 Interest expense, net of
interest income (2) (7,407 ) (8,164 ) Other income (expense), net
(20 ) 2,267 Adjusted net income 335,750 173,632 Equity-based
compensation (3) (5,800 ) (12,189 ) Income taxes (4) (10,157 )
(7,767 ) Non-Operating Group expenses (5) (210 ) (178 ) OCGH
non-controlling interest (5) (262,017 ) (134,890 ) Net income
attributable to Oaktree Capital Group, LLC $ 57,566 $ 18,608
(1) Fee-related earnings is a component of
adjusted net income and is comprised of segment management fees
less segment operating expenses other than incentive income
compensation expense. (2) Interest income was $0.6 million and $0.5
million for the three months ended March 31, 2013 and 2012,
respectively. (3) This adjustment adds back the effect of
equity-based compensation charges related to unit grants made
before our initial public offering, which is excluded from adjusted
net income and fee-related earnings because it is a non-cash charge
that does not affect our financial position. (4) Because adjusted
net income and fee-related earnings are pre-tax measures, this
adjustment adds back the effect of income tax expense. (5) Because
adjusted net income and fee-related earnings are calculated at the
Operating Group level, this adjustment adds back the effect of
items applicable to OCG, its Intermediate Holding Companies or the
OCGH non-controlling interest.
The following table reconciles fee-related earnings-OCG and
adjusted net income-OCG to net income attributable to Oaktree
Capital Group, LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Fee-related earnings-OCG (1) $ 10,407 $ 9,268
Incentive income attributable to OCG 65,487 9,451 Incentive income
compensation attributable to OCG (26,074 ) (4,186 ) Investment
income attributable to OCG 16,424 9,703 Interest expense, net of
interest income attributable to OCG (1,482 ) (1,231 ) Other income
(expense) attributable to OCG (4 ) 343 Non-fee-related earnings
income taxes attributable to OCG (2) (6,031 ) (2,901 ) Adjusted net
income-OCG (1) 58,727 20,447 Equity-based compensation (3) (1,161 )
(1,839 ) Net income attributable to Oaktree Capital Group, LLC $
57,566 $ 18,608 (1) Fee-related
earnings-OCG and adjusted net income-OCG are calculated to evaluate
the portion of adjusted net income and fee-related earnings
attributable to Class A unitholders. These measures are net of
income taxes and expenses that OCG or its Intermediate Holding
Companies bear directly. (2) This adjustment adds back income taxes
associated with segment incentive income, incentive income
compensation expense or investment income (loss), which are not
included in the calculation of fee-related earnings-OCG. (3) This
adjustment adds back the effect of equity-based compensation
charges attributable to OCG related to unit grants made before our
initial public offering, which is excluded from adjusted net
income-OCG and fee-related earnings-OCG because it is a non-cash
charge that does not affect our financial position.
The following table reconciles fee-related earnings revenues and
adjusted net income revenues to GAAP revenues.
Three Months Ended March
31, 2013 2012 (in
thousands) Fee-related earnings revenues $ 184,214 $ 191,262
Incentive income 327,184 62,669 Investment income 82,050
64,340 Adjusted net income revenues 593,448 318,271
Consolidated funds (1) (538,666 ) (275,523 ) Investment income (2)
(12,243 ) (5,680 ) GAAP revenues $ 42,539 $ 37,068
(1) This adjustment reflects the elimination of
amounts attributable to the consolidated funds. (2) This adjustment
reclassifies consolidated investment income from revenues to other
income (loss).
The following table reconciles distributable earnings and
adjusted net income to net income attributable to Oaktree Capital
Group, LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Distributable earnings $ 295,027 $ 137,329
Investment income (1) 82,050 64,340 Receipts of investment income
from funds (2) (34,026 ) (27,680 ) Receipts of investment income
from DoubleLine and other companies (9,013 ) (2,955 ) Equity-based
compensation (3) (652 ) — Operating Group income taxes 2,364
2,598 Adjusted net income 335,750 173,632 Equity-based
compensation (4) (5,800 ) (12,189 ) Income taxes (5) (10,157 )
(7,767 ) Non-Operating Group expenses (6) (210 ) (178 ) OCGH
non-controlling interest (6) (262,017 ) (134,890 ) Net income
attributable to Oaktree Capital Group, LLC $ 57,566 $ 18,608
(1) This adjustment eliminates our segment
investment income, which with respect to investment in funds is
initially largely non-cash in nature and is thus not available to
fund our operations or make equity distributions. (2) This
adjustment characterizes a portion of the distributions received
from Oaktree and non-Oaktree funds as receipts of investment income
or loss. In general, the income or loss component of a distribution
from a fund is calculated by multiplying the amount of the
distribution by the ratio of our investment’s undistributed income
or loss to our remaining investment balance. In addition, if the
distribution is made during the investment period, it is generally
not reflected in distributable earnings until after the investment
period ends. (3) This adjustment adds back the effect of
equity-based compensation charges related to unit grants made after
our initial public offering, which is excluded from distributable
earnings because it is non-cash in nature and does not impact our
ability to fund our operations or make equity distributions. (4)
This adjustment adds back the effect of equity-based compensation
charges related to unit grants made before our initial public
offering, which is excluded from adjusted net income because it
does not affect our financial position and from distributable
earnings because it is non-cash in nature and does not impact our
ability to fund operations or make equity distributions. (5)
Because adjusted net income and distributable earnings are pre-tax
measures, this adjustment adds back the effect of income tax
expense. (6) Because adjusted net income and distributable earnings
are calculated at the Operating Group level, this adjustment adds
back the effect of items applicable to OCG, its Intermediate
Holding Companies or the OCGH non-controlling interest.
The following table reconciles distributable earnings-OCG and
adjusted net income-OCG to net income attributable to Oaktree
Capital Group, LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Distributable earnings-OCG (1) $ 54,076 $ 15,227
Investment income attributable to OCG 16,424 9,703 Receipts of
investment income from funds attributable to OCG (6,810 ) (4,174 )
Receipts of investment income from DoubleLine and other companies
attributable to OCG (1,804 ) (446 ) Equity-based compensation
attributable to OCG (2) (131 ) — Distributable earnings-OCG income
taxes 2,920 3,361 Tax receivable agreement 1,845 1,945 Income taxes
of Intermediate Holding Companies (7,793 ) (5,169 ) Adjusted net
income-OCG (1) 58,727 20,447 Equity-based compensation attributable
to OCG (3) (1,161 ) (1,839 ) Net income attributable to Oaktree
Capital Group, LLC $ 57,566 $ 18,608 (1)
Distributable earnings-OCG and adjusted net income-OCG are
calculated to evaluate the portion of adjusted net income and
distributable earnings attributable to Class A unitholders. These
measures are net of income taxes and expenses that OCG or its
Intermediate Holding Companies bear directly. A reconciliation of
distributable earnings to distributable earnings-OCG is presented
below. (2) This adjustment adds back the effect of equity-based
compensation charges attributable to OCG related to unit grants
made after our initial public offering, which is excluded from
distributable earnings because it is non-cash in nature and does
not impact our ability to fund our operations or make equity
distributions. (3) This adjustment adds back the effect of
equity-based compensation charges attributable to OCG related to
unit grants made before our initial public offering, which is
excluded from adjusted net income because it does not affect our
financial position and from distributable earnings because it is
non-cash in nature and does not impact our ability to fund our
operations or make equity distributions.
Three Months Ended March 31,
2013 2012 (in
thousands, except per unit data) Distributable earnings $
295,027 $ 137,329 Distributable earnings attributable to OCGH
non-controlling interest (235,976 ) (116,618 ) Non-Operating Group
expenses (210 ) (178 ) Distributable earnings-OCG income taxes
(2,920 ) (3,361 ) Tax receivable agreement (1,845 ) (1,945 )
Distributable earnings-OCG $ 54,076 $ 15,227
Distributable earnings-OCG per Class A unit $ 1.79 $ 0.67
The following table reconciles distributable earnings revenues
and adjusted net income revenues to GAAP revenues.
Three Months Ended March
31, 2013 2012 (in
thousands) Distributable earnings revenues $ 554,437 $ 284,566
Investment income 82,050 64,340 Receipts of investment income from
funds (34,026 ) (27,680 ) Receipts of investment income from
DoubleLine and other companies (9,013 ) (2,955 ) Adjusted net
income revenues 593,448 318,271 Consolidated funds (1) (538,666 )
(275,523 ) Investment income (2) (12,243 ) (5,680 ) GAAP revenues $
42,539 $ 37,068 (1) This adjustment
reflects the elimination of amounts attributable to the
consolidated funds. (2) This adjustment reclassifies consolidated
investment income from revenues to other income (loss).
The following table reconciles economic net income and adjusted
net income to net income attributable to Oaktree Capital Group,
LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Economic net income (1) $ 400,574 $ 278,391 Change
in accrued incentives (fund level), net of associated incentive
income compensation expense (2) (64,824 ) (104,759 ) Adjusted net
income 335,750 173,632 Equity-based compensation (3) (5,800 )
(12,189 ) Income taxes (4) (10,157 ) (7,767 ) Non-Operating Group
expenses (5) (210 ) (178 ) OCGH non-controlling interest (5)
(262,017 ) (134,890 ) Net income attributable to Oaktree Capital
Group, LLC $ 57,566 $ 18,608 (1) Please
see Glossary for the definition of economic net income. (2) The
change in accrued incentives (fund level), net of associated
incentive income compensation expense, represents the difference
between (a) our recognition of net incentive income when it becomes
fixed or determinable, all related contingencies have been removed
and collection is reasonably assured, and (b) the incentive income
generated by the funds during the period that would be due to us if
the funds were liquidated at their reported values as of that date,
net of associated incentive income compensation expense. (3) This
adjustment adds back the effect of equity-based compensation
charges attributable to OCG related to unit grants made before our
initial public offering, which is excluded from adjusted net income
and economic net income because it is a non-cash charge that does
not affect our financial position. (4) Because adjusted net income
and economic net income are pre-tax measures, this adjustment adds
back the effect of income tax expense. (5) Because adjusted net
income and economic net income are calculated at the Operating
Group level, this adjustment adds back the effect of items
applicable to OCG, its Intermediate Holding Companies or the OCGH
non-controlling interest.
The following table reconciles economic net income-OCG and
adjusted net income-OCG to net income attributable to Oaktree
Capital Group, LLC.
Three Months Ended March
31, 2013 2012 (in
thousands) Economic net income-OCG (1) $ 62,579 $ 32,882 Change
in accrued incentives (fund level), net of associated incentive
income compensation expense attributable to OCG (12,974 ) (15,799 )
Economic net income-OCG income taxes 17,388 8,925 Income taxes-OCG
(8,266 ) (5,561 ) Adjusted net income-OCG (1) 58,727 20,447
Equity-based compensation (1,161 ) (1,839 ) Net income attributable
to Oaktree Capital Group, LLC $ 57,566 $ 18,608
(1) Economic net income-OCG and adjusted net
income-OCG are calculated to evaluate the portion of adjusted net
income and economic net income attributable to Class A unitholders.
These measures are net of income taxes and expenses that OCG or its
Intermediate Holding Companies bear directly. A reconciliation of
economic net income to economic net income-OCG is presented below.
Three Months Ended
March 31, 2013 2012
(in thousands, except per unit data) Economic net income $
400,574 $ 278,391 Economic net income attributable to OCGH
non-controlling interest (320,397 ) (236,406 ) Non-Operating Group
expenses (210 ) (178 ) Economic net income-OCG income taxes (17,388
) (8,925 ) Economic net income-OCG $ 62,579 $ 32,882
Economic net income-OCG per Class A unit $ 2.07 $ 1.45
The following table reconciles economic net income revenues and
adjusted net income revenues to GAAP revenues.
Three Months Ended March
31, 2013 2012 (in
thousands) Economic net income revenues $ 725,964 $ 520,764
Incentives created (459,700 ) (265,162 ) Incentive income 327,184
62,669 Adjusted net income revenues 593,448 318,271
Consolidated funds (1) (538,666 ) (275,523 ) Investment income (2)
(12,243 ) (5,680 ) GAAP revenues $ 42,539 $ 37,068
(1) This adjustment reflects the elimination of
amounts attributable to the consolidated funds. (2) This adjustment
reclassifies consolidated investment income from revenues to other
income (loss).
The following tables reconcile segment information to
consolidated financial data:
As of or for the Three Months
Ended March 31, 2013 Segment
Adjustments Consolidated (in
thousands) Management fees (1) $ 184,214 $ (141,675 ) $ 42,539
Incentive income (1) 327,184 (327,184 ) — Investment income (1)
82,050 (69,807 ) 12,243 Total expenses (2) (250,271 ) (25,234 )
(275,505 ) Interest expense, net (3) (7,407 ) (4,174 ) (11,581 )
Other expense, net (20 ) — (20 ) Other income of consolidated funds
(4) — 2,626,029 2,626,029 Income taxes — (10,157 ) (10,157 ) Net
income attributable to non-controlling redeemable interests in
consolidated funds — (2,063,965 ) (2,063,965 ) Net income
attributable to OCGH non-controlling interest in consolidated
subsidiaries — (262,017 ) (262,017 ) Adjusted net income/net
income attributable to Oaktree Capital Group, LLC $ 335,750
$ (278,184 ) $ 57,566 Corporate investments, at equity (5) $
1,117,848 $ (1,022,196 ) $ 95,652 Total assets (6) $
2,500,367 $ 42,416,711 $ 44,917,078 (1)
The adjustment represents the elimination of amounts
attributable to the consolidated funds. (2) The expense adjustments
consist of: (i) equity-based compensation charges of $5,800 related
to unit grants made before our initial public offering, (ii)
consolidated fund expenses of $19,224 and (iii) expenses incurred
by the Intermediate Holding Companies of $210. (3) The interest
expense adjustment represents the inclusion of interest expense
attributable to non-controlling interests of the consolidated funds
and the exclusion of segment interest income. (4) The adjustment to
other income of consolidated funds primarily represents the
inclusion of interest, dividend and other investment income
attributable to non-controlling interests of the consolidated
funds. (5) The adjustment to corporate investments is to remove
from segment assets the consolidated funds that are treated as
equity method investments for segment reporting purposes. (6) The
total assets adjustment represents the inclusion of investments and
other assets of the consolidated funds, net of segment assets
eliminated in consolidation, which are primarily corporate
investments in funds and incentive income receivable.
As of or for the Three Months Ended
March 31, 2012 Segment
Adjustments Consolidated (in
thousands) Management fees (1) $ 191,262 $ (159,242 ) $ 32,020
Incentive income (1) 62,669 (57,621 ) 5,048 Investment income (1)
64,340 (58,660 ) 5,680 Total expenses (2) (138,742 ) (28,825 )
(167,567 ) Interest expense, net (3) (8,164 ) (2,826 ) (10,990 )
Other income, net 2,267 — 2,267 Other income of consolidated funds
(4) — 2,419,579 2,419,579 Income taxes — (7,767 ) (7,767 ) Net
income attributable to non-controlling redeemable interests in
consolidated funds — (2,124,772 ) (2,124,772 ) Net income
attributable to OCGH non-controlling interest in consolidated
subsidiaries — (134,890 ) (134,890 ) Adjusted net income/net
income attributable to Oaktree Capital Group, LLC $ 173,632
$ (155,024 ) $ 18,608 Corporate investments, at equity (5) $
1,178,784 $ (1,053,070 ) $ 125,714 Total assets (6) $
2,072,424 $ 43,425,604 $ 45,498,028 (1)
The adjustment represents the elimination of amounts
attributable to the consolidated funds. (2) The expense adjustments
consist of: (i) equity-based compensation charges of $12,189
related to unit grants made before our initial public offering,
(ii) consolidated fund expenses of $16,458 and (iii) expenses
incurred by the Intermediate Holding Companies of $178. (3) The
interest expense adjustment represents the inclusion of interest
expense attributable to non-controlling interests of the
consolidated funds and the exclusion of segment interest income.
(4) The adjustment to other income of consolidated funds primarily
represents the inclusion of interest, dividend and other investment
income attributable to non-controlling interests of the
consolidated funds. (5) The adjustment to corporate investments is
to remove from segment assets the consolidated funds that are
treated as equity method investments for segment reporting
purposes. (6) The total assets adjustment represents the inclusion
of investments and other assets of the consolidated funds, net of
segment assets eliminated in consolidation, which are primarily
corporate investments in funds and incentive income receivable.
Oaktree Capital (NYSE:OAK)
過去 株価チャート
から 6 2024 まで 7 2024
Oaktree Capital (NYSE:OAK)
過去 株価チャート
から 7 2023 まで 7 2024
