As of March 31, 2016 or for the quarter then ended:
- Management fees rose to a
quarterly record of $201.3 million, driving an increase in
fee-related earnings to $62.4 million, up 6% and 25%,
respectively, from the first quarter of 2015.
- Adjusted net income was $105.0
million (or $0.49 per Class A unit), down from $150.0 million
($0.81 per unit) for the first quarter of 2015, on lower incentive
income and investment income, partially offset by higher
fee-related earnings.
- Distributable earnings were
$125.7 million (or $0.68 per Class A unit), down from $135.2
million ($0.77 per unit) for the first quarter of 2015, on lower
incentive income.
- Assets under management were
$96.9 billion, down 1% for the quarter and 3% over the last 12
months. Management fee-generating assets under management
reached $79.9 billion, up 1% for the quarter and 2% over the last
12 months.
- GAAP net income attributable to
Oaktree Capital Group, LLC was $28.1 million, as compared with
$38.3 million for the first quarter of 2015.
- A distribution was declared of
$0.55 per Class A unit, bringing aggregate distributions
relating to the last 12 months to $1.92.
Oaktree Capital Group, LLC (NYSE: OAK) today reported its
unaudited financial results for the first quarter ended March 31,
2016.
Jay Wintrob, Chief Executive Officer, said, “Despite significant
market volatility in the first quarter, we had a good beginning to
2016, highlighted by growing management fees and a 25% increase in
fee-related earnings over the same quarter a year ago. We continue
to make steady progress on a number of important closed-end
fundraises and are increasingly optimistic about our ability to
prudently deploy our near-record amount of dry powder.”
Assets under management (“AUM”) were $96.9 billion as of March
31, 2016, down 1% from $97.4 billion as of December 31, 2015 and 3%
from $99.9 billion as of March 31, 2015. Management fee-generating
assets under management (“management fee-generating AUM”) reached
$79.9 billion as of March 31, 2016, up 1% from $78.9 billion as of
December 31, 2015 and 2% from $78.5 billion as of March 31,
2015.
The year-over-year growth in management fee-generating AUM
stemmed largely from the commencement of investment periods by four
closed-end funds. As of March 31, 2016, total uncalled capital
commitments (so-called “dry powder”) were $21.4 billion. Of this,
$12.2 billion was not yet generating management fees (so-called
“shadow AUM”). Gross capital raised was $1.7 billion for the first
quarter of 2016 and $13.4 billion for the last twelve months.
Adjusted net income (“ANI”) declined to $105.0 million for the
first quarter of 2016, from $150.0 million for the first quarter of
2015. Distributable earnings declined to $125.7 million for the
first quarter of 2016, from $135.2 million for the first quarter of
2015. Both declines reflected lower incentive income and, for ANI,
lower investment income, partially offset by higher fee-related
earnings.
In addition to ANI, Oaktree calculates economic net income
(“ENI”) to facilitate comparisons with other alternative asset
managers that report a measure similar to ENI as a performance
metric. Unlike ANI, ENI measures incentive income based on the
market values of the funds’ holdings. ENI was $41.2 million for the
first quarter of 2016, as compared to $223.5 million for the first
quarter of 2015. Per Class A unit, ENI was $0.13 for the first
quarter of 2016, as compared to $1.24 for the first quarter of
2015.
GAAP-basis results for the first quarter of 2016 included net
income attributable to Oaktree Capital Group, LLC of $28.1 million,
as compared to $38.3 million for the first quarter of 2015.
Closed-end funds that Oaktree is currently marketing include
Oaktree Real Estate Opportunities Fund VII, Oaktree Opportunities
Fund Xb, Oaktree Infrastructure Fund, Oaktree European Capital
Solutions Fund, Oaktree European Principal Fund IV and Oaktree Real
Estate Debt Fund II.
The table below presents (a) segment revenues, distributable
earnings revenues, fee-related earnings revenues and economic net
income revenues, in each case for the Operating Group;
(b) 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; and (c) assets
under management and accrued incentives (fund level) data. Please
refer to the Glossary for definitions.
As of or for the Three Months
Ended March 31, 2016 2015
Segment Results: (1)
(in thousands, except per unit data or
as otherwise indicated)
Segment revenues $ 312,935 $ 396,432 Adjusted net income
105,025 150,026 Distributable earnings revenues 324,339 375,731
Distributable earnings 125,725 135,196 Fee-related earnings
revenues 201,270 190,095 Fee-related earnings 62,359 49,756
Economic net income revenues 170,077 509,015 Economic net income
41,196 223,548
Per Class A Unit: (1) Adjusted net
income $ 0.49 $ 0.81 Distributable earnings 0.68 0.77 Fee-related
earnings 0.37 0.28 Economic net income 0.13 1.24
Operating
Metrics: Assets under management (in millions): Assets under
management $ 96,874 $ 99,903 Management fee-generating assets under
management 79,908 78,497 Incentive-creating assets under management
31,205 34,458 Uncalled capital commitments 21,400 17,196 Accrued
incentives (fund level): Incentives created (fund level) (46,270 )
265,462 Incentives created (fund level), net of associated
incentive income compensation expense (16,991 ) 136,299 Accrued
incentives (fund level) 1,442,359 2,061,990 Accrued incentives
(fund level), net of associated incentive income compensation
expense 747,711 1,073,445 (1) In the
fourth quarter of 2015, the definition of adjusted net income was
modified to reflect differences with respect to (a) third-party
placement costs associated with closed-end funds, which under GAAP
are expensed as incurred, but for ANI are capitalized and amortized
as general and administrative expense in proportion to the
associated management fee stream, and (b) gains and losses
resulting from foreign-currency transactions and hedging
activities, which under GAAP are recognized as general and
administrative expense whether realized or unrealized in the
current period, whereas for ANI unrealized gains and losses from
foreign-currency hedging activities are deferred until realized, at
which time they are included in the same revenue or expense line
item as the underlying exposure that was hedged. Foreign-currency
transaction gains and losses are included in other income
(expense), net. Prior periods have not been recast for the change
related to third-party placement costs, but have been recast to
retroactively reflect the change related to foreign-currency
hedging. Placement costs associated with closed-end funds amounted
to $1.0 million for the first quarter of 2015, and remain expensed
as incurred in that period for both GAAP and ANI purposes. Please
refer to the Glossary for more information.
Note: Oaktree discloses in this earnings release certain
revenues and financial measures, including segment 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 a basis other than generally accepted
accounting principles in the United States (“non-GAAP”).
Reconciliations of those non-GAAP financial measures to the most
directly comparable GAAP financial measures are presented at
Exhibit A. All non-GAAP measures and all interim results presented
in this release are unaudited.
Operating Metrics
Assets Under Management
AUM was $96.9 billion as of March 31, 2016, $97.4 billion as of
December 31, 2015 and $99.9 billion as of March 31, 2015. The $0.5
billion decrease since December 31, 2015 reflected $2.0 billion of
distributions to closed-end fund investors and $1.0 billion of net
outflows from open-end funds, partially offset by $1.0 billion in
aggregate market-value gains, $0.9 billion of aggregate capital
inflows for closed-end funds and $0.6 billion of favorable
foreign-currency translation.
The $3.0 billion decrease in AUM since March 31, 2015 reflected
$5.3 billion of distributions to closed-end fund investors, $3.7
billion of net outflows from open-end funds, $3.6 billion in
aggregate market-value declines and a $0.5 billion decline in
uncalled capital commitments for closed-end funds entering or in
liquidation, partially offset by $9.3 billion of aggregate capital
inflows for closed-end funds and $0.7 billion of favorable
foreign-currency translation. Capital inflows for closed-end funds
included $3.8 billion for Oaktree Opportunities Funds X and Xb
(“Opps X and Xb”), $2.1 billion for Oaktree Real Estate
Opportunities Fund VII (“ROF VII”), $0.9 billion for collateralized
loan obligation vehicles (“CLOs”) and $0.6 billion for Oaktree
Principal Fund VI (“PF VI”). Distributions to closed-end fund
investors included $1.8 billion from Distressed Debt funds, $1.6
billion from Control Investing funds and $1.0 billion from Real
Estate funds.
Management Fee-generating Assets Under
Management
Management fee-generating AUM, a forward-looking metric, was
$79.9 billion as of March 31, 2016, $78.9 billion as of December
31, 2015 and $78.5 billion as of March 31, 2015. The $1.0 billion
increase since December 31, 2015 reflected an aggregate $0.9
billion increase from capital drawn by funds that pay fees based on
drawn capital, NAV or cost basis and additional capital commitments
for Opps X, as well as $0.8 billion of aggregate market-value gains
and $0.5 billion of favorable foreign-currency translation. The
increase was partially offset by $1.0 billion of net outflows from
open-end funds and a $0.4 billion decline attributable to
closed-end funds in liquidation.
The $1.4 billion increase in management fee-generating AUM since
March 31, 2015 reflected an aggregate $6.9 billion from the
investment-period commencement of Oaktree Power Opportunities Fund
IV (“Power Fund IV”) and PF VI in November 2015, and of Opps X and
ROF VII as of January 1, 2016, $1.7 billion of aggregate
fee-generating leverage and drawdowns by closed-end funds for which
management fees are based on drawn capital, NAV or cost basis, and
$0.5 billion of favorable foreign-currency translation. These
increases were partially offset by $3.7 billion of net outflows
from open-end funds, $2.4 billion in aggregate market-value
declines and $2.3 billion attributable to closed-end funds in
liquidation.
Incentive-creating Assets Under
Management
Incentive-creating assets under management (“incentive-creating
AUM”) were $31.2 billion as of March 31, 2016, $31.9 billion as of
December 31, 2015 and $34.5 billion as of March 31, 2015. The $0.7
billion decrease since December 31, 2015 reflected the net effect
of $0.7 billion in drawdowns by closed-end funds, $2.0 billion in
distributions from closed-end funds, $0.3 billion in aggregate
market-value gains and $0.2 billion of favorable foreign-currency
translation. The $3.3 billion decrease since March 31, 2015
reflected the net effect of $3.5 billion in drawdowns by closed-end
funds, $5.6 billion in distributions from closed-end funds, $1.5
billion in aggregate market-value declines and $0.3 billion of
favorable foreign-currency translation.
Of the $31.2 billion in incentive-creating AUM as of March 31,
2016, $16.5 billion, or 53%, was generating incentives at the fund
level, as compared with $25.4 billion, or 74%, of the $34.5 billion
of incentive-creating AUM as of March 31, 2015.
Accrued Incentives (Fund Level) and
Incentives Created (Fund Level)
Accrued incentives (fund level) were $1.4 billion as of March
31, 2016, $1.6 billion as of December 31, 2015, and $2.1 billion as
of March 31, 2015. The first quarter of 2016 reflected $46.3
million of negative incentives created (fund level) and $96.6
million of segment incentive income recognized.
Net of incentive income compensation expense, accrued incentives
(fund level) were $747.7 million as of March 31, 2016, $811.5
million as of December 31, 2015, and $1.1 billion as of March 31,
2015. As of March 31, 2016, December 31, 2015 and March 31, 2015,
the portion of net accrued incentives (fund level) represented by
funds that were currently paying incentives was $294.1 million,
$292.1 million and $419.8 million, respectively, with the remainder
arising from funds that as of that date were not at the stage of
their cash distribution waterfall where Oaktree was entitled to
receive incentives, other than possibly tax-related
distributions.
Uncalled Capital Commitments
Uncalled capital commitments were $21.4 billion as of March 31,
2016, $21.7 billion as of December 31, 2015, and $17.2 billion as
of March 31, 2015. Capital drawn by closed-end funds during the
quarter and twelve months ended March 31, 2016 aggregated $0.8
billion and $5.0 billion, respectively, as compared with $1.6
billion and $8.3 billion for the comparable prior-year periods.
Segment Results
Revenues
Segment revenues declined $83.5 million, or 21.1%, to $312.9
million in the first quarter of 2016, from $396.4 million in the
first quarter of 2015, reflecting $11.2 million in higher
management fees, $56.3 million in lower incentive income and $38.4
million in lower investment income.
Management Fees
Management fees grew $11.2 million, or 5.9%, to $201.3 million
in the first quarter of 2016, from $190.1 million in the first
quarter of 2015. The growth reflected an aggregate increase of
$30.3 million principally from the start of investment periods for
Power Fund IV, PF VI, Opps X and ROF VII. This increase was
partially offset by an aggregate decline of $19.1 million primarily
attributable to closed-end funds in liquidation and net outflows
and market-value declines in open-end funds.
Incentive Income
Incentive income decreased $56.3 million, or 36.8%, to $96.6
million in the first quarter of 2016, from $152.9 million in the
first quarter of 2015. The first quarter of 2016 included
tax-related incentive distributions of $72.7 million and other
incentive distributions of $23.9 million, as compared with $129.4
million and $23.5 million, respectively, in the prior-year
period.
Investment Income
Investment income decreased $38.4 million, or 71.8%, to $15.1
million in the first quarter of 2016, from $53.5 million in the
first quarter of 2015. The decline reflected a $23 million
impairment charge on our investments in certain of our CLOs,
predominantly stemming from holdings in energy-related companies.
After giving effect to the impairment charge, as of March 31, 2016
these CLOs represented $59.2 million of our total CLO carrying
value of $144.0 million. Our one-fifth ownership stake in
DoubleLine Capital LP and its affiliates (collectively,
“DoubleLine”) accounted for investment income of $15.1 million and
$14.6 million in the first quarters of 2016 and 2015, respectively,
of which performance fees accounted for $0.6 million and $2.0
million, respectively.
Expenses
Compensation and Benefits
Compensation and benefits decreased $4.6 million, or 4.2%, to
$104.3 million for the first quarter of 2016, from $108.9 million
for the first quarter of 2015, in part reflecting variations in
annual bonus accruals.
Equity-based Compensation
Equity-based compensation increased $3.7 million, or 52.9%, to
$10.7 million for the first quarter of 2016, from $7.0 million for
the first quarter of 2015. The increase reflected non-cash
amortization expense associated with vesting of Class A and OCGH
unit grants made to employees and directors subsequent to our 2012
initial public offering.
Incentive Income Compensation
Incentive income compensation expense decreased $40.4 million,
or 44.8%, to $49.7 million for the first quarter of 2016, from
$90.1 million for the first quarter of 2015. The percentage
decrease was larger than the corresponding decline of 36.8% in
incentive income, primarily as a result of catch-up tax
distributions related to incentive interests awarded to certain
investment professionals.
General and Administrative
General and administrative expense increased $1.9 million, or
6.4%, to $31.5 million for the first quarter of 2016, from $29.6
million for the first quarter of 2015, reflecting higher general
operating expenses.
Depreciation and Amortization
Depreciation and amortization expense increased $1.3 million, or
68.4%, to $3.2 million for the first quarter of 2016, from $1.9
million for the first quarter of 2015, in part reflecting
amortization of leasehold improvements associated with office space
expansion.
Adjusted Net Income
ANI decreased $45.0 million, or 30.0%, to $105.0 million for the
first quarter of 2016, from $150.0 million for the first quarter of
2015, reflecting declines of $16.0 million in incentive income, net
of incentive income compensation expense (“net incentive income”),
and $38.4 million in investment income, partially offset by a $12.6
million increase in fee-related earnings. The portion of ANI
attributable to our Class A units was $30.2 million, or $0.49
per unit, and $36.7 million, or $0.81 per unit, for the first
quarters of 2016 and 2015, respectively.
The effective tax rate applied to ANI for the first quarters of
2016 and 2015 was 28% and 16%, respectively, resulting from
estimated full-year effective rates of 23% and 19%, respectively.
The effective tax rate applied to ANI for the first quarter of 2016
was based on an estimated full-year effective tax rate on income
that can be reliably forecasted, combined with tax expense in the
current period on incentive income and any other income that cannot
be reliably estimated. We would expect variability in tax rates
between quarters and full years, because the effective tax rate is
a function of the mix of income and other factors, each of which
can have a material impact on the particular period’s income tax
expense and often vary significantly within or between years. In
general, the annual effective tax rate increases as the proportion
of ANI arising from fee-related earnings, DoubleLine-related
investment income, and certain incentive and investment income
rises, and vice versa.
Distributable Earnings
Distributable earnings declined $9.5 million, or 7.0%, to $125.7
million for the first quarter of 2016, from $135.2 million for the
first quarter of 2015, reflecting decreases of $16.0 million in net
incentive income and $6.3 million in investment income proceeds,
partially offset by a $12.6 million increase in fee-related
earnings. For the first quarter of 2016, investment income proceeds
totaled $26.5 million, including $12.9 million from fund
distributions and $13.6 million from DoubleLine, as compared with
total investment income proceeds in the prior-year quarter of $32.8
million, of which $24.0 million and $12.4 million was attributable
to fund distributions and DoubleLine, respectively. The portion of
distributable earnings attributable to our Class A units was
$0.68 and $0.77 per unit for the first quarters of 2016 and 2015,
respectively, reflecting distributable earnings per Operating Group
unit of $0.82 and $0.88, 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 grew $12.6 million, or 25.3%, to $62.4
million for the first quarter of 2016, from $49.8 million for the
first quarter of 2015. The increase reflected $11.2 million of
higher management fees, $4.6 million of lower compensation and
benefits, and $1.9 million of higher general and administrative
expense. The portion of fee-related earnings attributable to our
Class A units was $0.37 and $0.28 per unit for the first
quarters of 2016 and 2015, respectively.
The effective tax rate applicable to fee-related earnings for
the first quarters of 2016 and 2015 was 7% and 11%, respectively,
resulting from estimated full-year effective rates of 7% and 10%,
respectively. The rate used for interim fiscal periods is based on
the estimated full-year effective tax rate, which is subject to
change as the year progresses. In general, the annual effective tax
rate increases as annual fee-related earnings increase, and vice
versa.
GAAP-basis Results
Net income attributable to Oaktree Capital Group, LLC was $28.1
million for the first quarter of 2016, as compared to $38.3 million
for the first quarter of 2015.
Capital and Liquidity
As of March 31, 2016, Oaktree had $1.0 billion of cash and U.S.
Treasury securities and $846 million of outstanding debt, net of
debt issuance costs. Oaktree had then, and currently has, no
borrowings outstanding against its $500 million revolving credit
facility. As of March 31, 2016, Oaktree’s investments in funds and
companies had a carrying value of $1.4 billion, with the 20%
investment in DoubleLine carried at cost, as adjusted under the
equity method of accounting. Accrued incentives (fund level), net
of associated compensation expense, represented an additional $748
million as of that date.
Distribution
Oaktree Capital Group, LLC has declared a distribution
attributable to the first quarter of 2016 of $0.55 per Class A
unit. This distribution will be paid on May 13, 2016 to
Class A unitholders of record at the close of business on May
9, 2016.
Conference Call
Oaktree will host a conference call to discuss its first quarter
2016 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 (866) 423-4835 (U.S. callers) or
+1 (203) 369-0847 (non-U.S. callers), beginning approximately
one hour after the broadcast.
About Oaktree
Oaktree is a leader among global investment managers
specializing in alternative investments, with $97 billion in assets
under management as of March 31, 2016. 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 925 employees and offices in 18 cities
worldwide. For additional information, please visit Oaktree’s
website at www.oaktreecapital.com.
Investor Relations Website
Investors and others should note that Oaktree uses the
Unitholders – Investor Relations section of its corporate website
to announce material information to investors and the marketplace.
While not all of the information that Oaktree posts on its
corporate website is of a material nature, some information could
be deemed to be material. Accordingly, Oaktree encourages
investors, the media, and others interested in Oaktree to review
the information that it shares on its corporate website at the
Unitholders – Investor Relations section of the Oaktree website,
http://ir.oaktreecapital.com/. Information contained on, or
available through, our website is not incorporated by reference
into this document.
Forward-Looking Statements
This release contains forward-looking statements within the
meaning of Section 27A of the U.S. Securities Act of 1933, as
amended, and Section 21E of the U.S. Securities Exchange Act
of 1934, as amended, which reflect the current views of Oaktree
Capital Group, LLC (“OCG”), with respect to, among other things,
our 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 our beliefs, assumptions and expectations
of our future performance, taking into account all information
currently available to us. Such forward-looking statements are
subject to risks and uncertainties and assumptions relating to our
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; changes in assets under
management; the timing and receipt of, and impact of taxes on,
carried interest; distributions from and liquidation of our
existing funds; the amount and timing of distributions on our Class
A units; 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 our Annual Report on Form 10-K for the year ended December 31,
2015 filed with the SEC on February 26, 2016, which is accessible
on the SEC’s website at www.sec.gov, provide examples of risks,
uncertainties and events that may cause our actual results to
differ materially from the expectations described in our
forward-looking statements.
Forward-looking statements speak only as of the date the
statements are made. Except as required by law, we do 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) (1)
Three Months Ended March 31,
2016 2015 (in thousands,
except per unit data) Revenues: Management fees $ 198,553 $
50,819 Incentive income 55,937 — Total
revenues 254,490 50,819 Expenses:
Compensation and benefits (108,405 ) (110,143 ) Equity-based
compensation (13,896 ) (11,706 ) Incentive income compensation
(9,807 ) (66,892 ) Total compensation and benefits
expense (132,108 ) (188,741 ) General and administrative (47,831 )
(6,580 ) Depreciation and amortization (4,161 ) (2,892 )
Consolidated fund expenses (1,084 ) (37,761 ) Total
expenses (185,184 ) (235,974 ) Other income (loss):
Interest expense (27,705 ) (46,569 ) Interest and dividend income
36,270 522,929 Net realized gain on consolidated funds’ investments
3,401 474,830 Net change in unrealized appreciation (depreciation)
on consolidated funds’ investments (20,672 ) 507,483 Investment
income 29,447 12,682 Other income (expense), net 5,801
4,694 Total other income 26,542
1,476,049 Income before income taxes 95,848 1,290,894
Income taxes (12,680 ) (7,875 ) Net income 83,168
1,283,019 Less: Net (income) loss attributable to non-controlling
interests in consolidated funds 4,944 (1,136,665 ) Net income
attributable to non-controlling interests in consolidated
subsidiaries (60,034 ) (108,101 ) Net income
attributable to Oaktree Capital Group, LLC $ 28,078 $ 38,253
Distributions declared per Class A unit $ 0.47 $ 0.56
Net income per unit (basic and diluted): Net income per
Class A unit $ 0.45 $ 0.85 Weighted average number of
Class A units outstanding 61,894 45,063
(1) In the first quarter of 2016,
Oaktree adopted the new consolidation and collateralized financing
entity guidance under the modified retrospective approach. The
modified retrospective approach did not require prior periods to be
recast. The adoption resulted in the deconsolidation of
substantially all of Oaktree’s closed-end and commingled open-end
and evergreen funds.
Segment Financial Data
As of or for the Three Months
Ended March 31,
2016 2015 Segment Statements
of Operations Data: (1)
(in thousands, except per unit data
or as otherwise indicated) Revenues: Management fees $ 201,270
$ 190,095 Incentive income 96,588 152,879 Investment income
15,077 53,458 Total revenues 312,935
396,432 Expenses: Compensation and benefits
(104,270 ) (108,881 ) Equity-based compensation (10,703 ) (7,023 )
Incentive income compensation (49,749 ) (90,102 ) General and
administrative (31,481 ) (29,567 ) Depreciation and amortization
(3,160 ) (1,891 ) Total expenses (199,363 )
(237,464 ) Adjusted net income before interest and other
income (expense) 113,572 158,968 Interest expense, net of interest
income (2). (8,682 ) (8,933 ) Other income (expense), net
135 (9 ) Adjusted net income $ 105,025 $
150,026 Adjusted net income-OCG $ 30,160 $ 36,723
Adjusted net income per Class A unit 0.49 0.81 Distributable
earnings 125,725 135,196 Distributable earnings-OCG 41,843 34,733
Distributable earnings per Class A unit 0.68 0.77 Fee-related
earnings 62,359 49,756 Fee-related earnings-OCG 23,059 12,733
Fee-related earnings per Class A unit 0.37 0.28 Economic net income
41,196 223,548 Economic net income-OCG 7,803 55,917 Economic net
income per Class A unit 0.13 1.24 Weighted average number of
Operating Group units outstanding 153,808 153,237 Weighted average
number of Class A units outstanding 61,894 45,063
Operating Metrics: Assets under management (in millions):
Assets under management $ 96,874 $ 99,903 Management fee-generating
assets under management 79,908 78,497 Incentive-creating assets
under management 31,205 34,458 Uncalled capital commitments (3).
21,400 17,196 Accrued incentives (fund level): (4) Incentives
created (fund level) (46,270 ) 265,462 Incentives created (fund
level), net of associated incentive income compensation expense
(16,991 ) 136,299 Accrued incentives (fund level) 1,442,359
2,061,990 Accrued incentives (fund level), net of associated
incentive income compensation expense 747,711 1,073,445
(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.
Segment revenues include investment income (loss) that is
classified in other income (loss) in the GAAP-basis statements of
operations. Segment revenues and expenses also reflect Oaktree's
proportionate economic interest in Highstar, whereby amounts
received for contractually reimbursable costs are classified for
segment reporting as expenses and under GAAP as other income. In
addition, adjusted net income excludes the effect of (a) non-cash
equity-based compensation expense related to unit grants made
before our initial public offering, (b) acquisition-related items,
including amortization of intangibles and changes in the contingent
consideration liability, (c) differences arising from equity value
units (“EVUs”) that are classified as liability awards under GAAP
but as equity awards for segment reporting, (d) income taxes, (e)
other income or expenses applicable to OCG or its Intermediate
Holding Companies, and (f) the adjustment for non-controlling
interests. In the fourth quarter of 2015, the definition of
adjusted net income was modified to reflect differences with
respect to (a) third-party placement costs associated with
closed-end funds, which under GAAP are expensed as incurred, but
for adjusted net income are capitalized and amortized as general
and administrative expense in proportion to the associated
management fee stream, and (b) gains and losses resulting from
foreign-currency transactions and hedging activities, which under
GAAP are recognized as general and administrative expense whether
realized or unrealized in the current period, but for adjusted net
income unrealized gains and losses from foreign-currency hedging
activities are deferred until realized, at which time they are
included in the same revenue or expense line item as the underlying
exposure that was hedged. Foreign-currency transaction gains and
losses are included in other income (expense), net. Prior periods
have not been recast for the change related to third-party
placement costs, but have been recast to retroactively reflect the
change related to foreign-currency hedging. Incentive income and
incentive income compensation expense are included in adjusted net
income when the underlying fund distributions are known or knowable
as of the respective quarter end, which may be later than the time
at which the same revenue or expense is included in the GAAP-basis
statements of operations, for which the revenue standard is fixed
or determinable and the expense standard is probable and reasonably
estimable. CLO investments are carried at fair value for GAAP
reporting, whereas for segment reporting they are carried at
amortized cost, subject to any impairment charges. Investment
income on CLO investments is recognized in adjusted net income when
cash distributions are received. Cash distributions are allocated
between income and return of capital based on the effective yield
method. 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 $1.3 million and $1.0 million for the three months ended
March 31, 2016 and 2015, respectively. (3) Uncalled capital
commitments represent undrawn capital commitments by partners
(including Oaktree as general partner) of our closed-end funds
through their investment periods and certain evergreen funds. 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 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. Amounts
recognized by us as incentive income are no longer 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 many factors.
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, December 31,
March 31, 2016 2015
2015 (in millions) Assets Under Management:
Closed-end funds $ 59,081 $ 59,430 $ 56,259 Open-end funds 33,008
33,202 38,340 Evergreen funds 4,785 4,727
5,304 Total $ 96,874 $ 97,359 $
99,903
Three Months Ended
Twelve Months Ended March 31, March 31,
2016 2015 2016 2015 (in
millions) Change in Assets Under Management: Beginning
balance $ 97,359 $ 90,831 $ 99,903 $ 86,226 Closed-end funds:
Capital commitments/other (1)
866 9,440 9,294 12,529 Acquisition (Highstar) — — — 2,349
Distributions for a realization
event/other (2)
(2,014 ) (1,937 ) (5,302 ) (6,941 ) Change in uncalled capital
commitments for funds entering or in liquidation (3) — (240 ) (527
) (409 ) Foreign-currency translation 341 (776 ) 411 (1,645 )
Change in market value (4)
365 1,197 (1,354 ) 2,107 Change in applicable leverage 93 372 300
1,367 Open-end funds: Contributions 735 1,710 3,944 9,138
Redemptions (1,771 ) (1,429 ) (7,602 ) (5,265 ) Foreign-currency
translation 222 (444 ) 244 (980 )
Change in market value (4)
620 1,051 (1,918 ) 536 Evergreen funds: Contributions or new
capital commitments 66 204 211 1,383 Redemptions or
distributions/other (50 ) (56 ) (353 ) (260 ) Distributions from
restructured funds (9 ) (5 ) (51 ) (44 ) Foreign-currency
translation (3 ) (1 ) (2 ) 6
Change in market value (4)
54 (14 ) (324 ) (194 ) Ending
balance $ 96,874 $ 99,903 $ 96,874 $ 99,903
(1) These amounts represent
capital commitments, as well as the aggregate par value of
collateral assets and principal cash related to new CLO formations.
(2) These amounts represent distributions for a realization event,
tax-related distributions, reductions in the par value of
collateral assets and principal cash resulting from the repayment
of debt as return of principal by CLOs, and recallable
distributions at the end of the investment period. (3) The change
in uncalled capital commitments reflects declines attributable to
funds entering their liquidation periods, as well as capital
contributions to funds in their liquidation periods for deferred
purchase obligations or other reasons. (4) The change in market
value reflects the change in NAV of our funds, less management fees
and other fund expenses, as well as changes in the aggregate par
value of collateral assets and principal cash held by CLOs.
Management Fee-generating AUM
As of March 31, December
31, March 31, 2016
2015 2015 Management Fee-generating Assets Under
Management: (in millions) Closed-end funds: Senior Loans
$ 7,184 $ 6,580 $ 6,032 Other closed-end funds 35,956 35,709 30,614
Open-end funds 32,939 33,135 38,257 Evergreen funds 3,829
3,473 3,594 Total $ 79,908
$ 78,897 $ 78,497
Three Months EndedMarch
31,
Twelve Months EndedMarch
31,
2016 2015 2016 2015 Change in
Management Fee-generating Assets Under Management: (in
millions) Beginning balance $ 78,897 $ 78,079 $ 78,497 $
74,027 Closed-end funds:
Capital commitments to funds that pay fees
based on committed capital/other (1)
686 607 7,433 1,714 Acquisition (Highstar) — — — 1,882 Capital
drawn by funds that pay fees based on drawn capital, NAV or cost
basis 201 264 1,112 1,116
Change attributable to funds in
liquidation (2)
(381 ) (861 ) (2,332 ) (3,266 ) Change in uncalled capital
commitments for funds entering or in liquidation that pay fees
based on committed capital (3) — (435 ) 26 (604 )
Distributions by funds that pay fees based
on NAV/other (4)
(113 ) (109 ) (385 ) (512 ) Foreign-currency translation 229 (467 )
253 (1,113 )
Change in market value (5)
85 17 (226 ) (63 ) Change in applicable leverage 144 358 613 1,316
Open-end funds: Contributions 735 1,696 3,942 9,111 Redemptions
(1,772 ) (1,413 ) (7,602 ) (5,250 ) Foreign-currency translation
222 (444 ) 245 (979 ) Change in market value 619 1,035 (1,903 ) 520
Evergreen funds: Contributions or capital drawn by funds that pay
fees based on drawn capital or NAV 337 233 864 1,034 Redemptions or
distributions (28 ) (41 ) (309 ) (241 ) Change in market value
47 (22 ) (320 ) (195 ) Ending
balance $ 79,908 $ 78,497 $ 79,908 $ 78,497
(1) These amounts represent
capital commitments to funds that pay fees based on committed
capital, as well as the aggregate par value of collateral assets
and principal cash related to new CLO formations. (2) These amounts
represent the change for funds that pay fees based on the lesser of
funded capital or cost basis during the liquidation period, as well
as recallable distributions at the end of the investment period.
For most closed-end funds, management fees are charged during the
liquidation period on the lesser of (a) total funded capital or (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. (3) The change in uncalled
capital commitments reflects declines attributable to funds
entering their liquidation periods, as well as capital
contributions to funds in their liquidation periods for deferred
purchase obligations or other reasons. (4) These amounts represent
distributions by funds that pay fees based on NAV, as well as
reductions in the par value of collateral assets and principal cash
resulting from the repayment of debt as return of principal by
CLOs. (5) The change in market value reflects certain funds that
pay management fees based on NAV and leverage, as applicable, as
well as changes in the aggregate par value of collateral assets and
principal cash held by CLOs.
As
of March 31, December 31,
March 31, 2016 2015
2015 Reconciliation of Assets Under Management to
Management Fee-generating Assets Under Management: (in
millions) Assets under management $ 96,874 $ 97,359 $ 99,903
Difference between assets under management
and committed capital or cost basis for applicable closed-end funds
(1)
(1,829 ) (2,958 ) (5,620 ) Undrawn capital commitments to funds
that have not yet commenced their investment periods (8,143 )
(8,215 ) (9,190 ) Undrawn capital commitments to funds for which
management fees are based on drawn capital, NAV or cost basis
(4,095 ) (4,754 ) (4,238 ) Oaktree’s general partner investments in
management fee-generatingfunds (1,727 ) (1,357 ) (1,200 ) Funds
that are no longer paying management fees and co-investments that
pay no management fees (1,172 ) (1,178 )
(1,158 ) Management fee-generating assets under management $ 79,908
$ 78,897 $ 78,497 (1)
This difference is not applicable to closed-end funds that
pay management fees based on NAV or leverage.
The period-end weighted average annual management fee rates
applicable to the respective management fee-generating AUM balances
above are set forth below.
As of March 31,
December 31, March 31,
Weighted Average Annual Management Fee Rates: 2016
2015 2015 Closed-end funds: Senior Loans 0.50 % 0.50
% 0.50 % Other closed-end funds 1.52 1.52 1.54 Open-end funds 0.47
0.48 0.47 Evergreen funds 1.33 1.43 1.50 Overall 0.98 0.99 0.94
Incentive-creating AUM
As of March 31,
December 31, March
31, 2016 2015 2015 Incentive-creating
Assets Under Management: (in millions) Closed-end funds
$ 29,251 $ 30,100 $ 32,374 Evergreen funds 1,954
1,823 2,084 Total $ 31,205 $ 31,923 $ 34,458
Accrued Incentives (Fund Level) and
Incentives Created (Fund Level)
As of or for the Three Months
Ended March 31, 2016 2015
Accrued Incentives (Fund Level): (in thousands)
Beginning balance $ 1,585,217 $ 1,949,407 Incentives
created (fund level): Closed-end funds (46,845 ) 265,457 Evergreen
funds 575 5 Total incentives created
(fund level) (46,270 ) 265,462 Less: segment
incentive income recognized by us (96,588 ) (152,879
) Ending balance $ 1,442,359 $ 2,061,990 Accrued
incentives (fund level), net of associated incentive income
compensation expense $ 747,711 $ 1,073,445
Uncalled Capital Commitments
Uncalled capital commitments were $21.4 billion as of March 31,
2016, $21.7 billion as of December 31, 2015 and $17.2 billion as of
March 31, 2015.
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 (1)
Adjusted net income and adjusted net income-OCG, as well as per
unit data, are set forth below:
Three Months Ended March 31,
2016 2015 (in thousands,
except per unit data) Revenues: Management fees $ 201,270 $
190,095 Incentive income 96,588 152,879 Investment income
15,077 53,458 Total revenues 312,935
396,432 Expenses: Compensation and benefits
(104,270 ) (108,881 ) Equity-based compensation (10,703 ) (7,023 )
Incentive income compensation (49,749 ) (90,102 ) General and
administrative (31,481 ) (29,567 ) Depreciation and amortization
(3,160 ) (1,891 ) Total expenses (199,363 )
(237,464 ) Adjusted net income before interest and other
income (expense) 113,572 158,968 Interest expense, net of interest
income (8,682 ) (8,933 ) Other income (expense), net 135
(9 ) Adjusted net income 105,025 150,026 Adjusted net
income attributable to OCGH non-controlling interest (62,762 )
(105,907 ) Non-Operating Group expenses (264 ) (334 )
Adjusted net income-OCG before income taxes 41,999 43,785 Income
taxes-OCG (11,839 ) (7,062 ) Adjusted net income-OCG
$ 30,160 $ 36,723 Adjusted net income per Class A
unit $ 0.49 $ 0.81 Weighted average number of Class A
units outstanding 61,894 45,063
(1) In the fourth quarter of 2015, the
definition of adjusted net income was modified to reflect
differences with respect to (a) third-party placement costs
associated with closed-end funds, which under GAAP are expensed as
incurred, but for adjusted net income are capitalized and amortized
as general and administrative expense in proportion to the
associated management fee stream, and (b) gains and losses
resulting from foreign-currency transactions and hedging
activities, which under GAAP are recognized as general and
administrative expense whether realized or unrealized in the
current period, whereas for adjusted net income unrealized gains
and losses from foreign-currency hedging activities are deferred
until realized, at which time they are included in the same revenue
or expense line item as the underlying exposure that was hedged.
Foreign-currency transaction gains and losses are included in other
income (expense), net. Prior periods have not been recast for the
change related to third-party placement costs, but have been recast
to retroactively reflect the change related to foreign-currency
hedging. Placement costs associated with closed-end funds amounted
to $1.0 million for the first quarter of 2015, and remain expensed
as incurred in that period for both GAAP and ANI purposes.
Investment Income
Three Months Ended March 31,
2016 2015 Income (loss) from
investments in funds:
(in thousands) Oaktree funds:
Corporate Debt $ (13,543 ) $ 11,351 Convertible Securities (944 )
948 Distressed Debt 8,891 1,936 Control Investing (1,447 ) 17,757
Real Estate 3,105 5,769 Listed Equities 3,488 3,140 Non-Oaktree
funds 420 2,593 Income from investments in companies 15,107
9,964 Total investment income $ 15,077 $
53,458
Distributable Earnings and Distribution Calculation
Distributable earnings and the calculation of distributions are
set forth below:
Three Months Ended March 31,
2016 2015 Distributable
Earnings: (in thousands, except per unit data) Revenues:
Management fees $ 201,270 $ 190,095 Incentive income 96,588 152,879
Receipts of investment income from funds
(1)
12,923 23,961 Receipts of investment income from companies
13,558 8,796 Total distributable earnings
revenues 324,339 375,731 Expenses:
Compensation and benefits (104,270 ) (108,881 ) Incentive income
compensation (49,749 ) (90,102 ) General and administrative (31,481
) (29,567 ) Depreciation and amortization (3,160 )
(1,891 ) Total expenses (188,660 ) (230,441 ) Other
income (expense): Interest expense, net of interest income (8,682 )
(8,933 ) Operating Group income taxes (1,407 ) (1,152 ) Other
income (expense), net 135 (9 ) Distributable
earnings $ 125,725 $ 135,196
Distribution
Calculation: Operating Group distribution with respect to the
period $ 108,545 $ 118,458 Distribution per Operating Group unit $
0.70 $ 0.77 Adjustments per Class A unit: Distributable
earnings-OCG income tax expense (0.06 ) (0.02 ) Tax receivable
agreement (0.08 ) (0.10 ) Non-Operating Group expenses (0.01
) (0.01 )
Distribution per Class A unit (2)
$ 0.55 $ 0.64 (1) This
adjustment characterizes a portion of the distributions received
from funds as receipts of investment income or loss. In general,
the income or loss component of a fund distribution 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.
Additionally, any impairment charges on our CLO investments
included in adjusted net income are, for distributable earnings
purposes, amortized over the remaining investment period of the
respective CLO, in order to align with the timing of expected cash
flows. (2) With respect to the quarter ended March 31, 2016, the
distribution was announced on April 28, 2016 and is payable on May
13, 2016.
Units Outstanding
Three Months Ended March 31,
2016 2015 (in thousands)
Weighted Average Units: OCGH 91,914 108,174 Class A 61,894
45,063 Total 153,808 153,237
Units Eligible for Fiscal Period
Distribution: OCGH 92,445 105,469 Class A 62,619 48,372 Total
155,064 153,841
On March 31, 2016, Oaktree issued 758,417 Class A units and
622,676 OCGH units to its employees and directors as part of its
year-end 2015 annual compensation review process. These issuances
are subject to annual vesting over a weighted average period of
approximately 4.2 years. They are reflected above in the units
eligible for fiscal period distribution.
Fee-related Earnings
Fee-related earnings and fee-related earnings-OCG, as well as
per unit data, are set forth below:
Three Months Ended March 31,
2016 2015 (in thousands,
except per unit data) Management fees: Closed-end funds $
148,251 $ 131,647 Open-end funds 38,413 44,441 Evergreen funds
14,606 14,007 Total management fees
201,270 190,095 Expenses: Compensation
and benefits (104,270 ) (108,881 ) General and administrative
(31,481 ) (29,567 ) Depreciation and amortization (3,160 )
(1,891 ) Total expenses (138,911 ) (140,339 )
Fee-related earnings 62,359 49,756 Fee-related earnings
attributable to OCGH non-controlling interest (37,264 ) (35,124 )
Non-Operating Group expenses (295 ) (335 )
Fee-related earnings-OCG before income taxes 24,800 14,297
Fee-related earnings-OCG income taxes (1,741 ) (1,564
) Fee-related earnings-OCG $ 23,059 $ 12,733
Fee-related earnings per Class A unit $ 0.37 $ 0.28
Weighted average number of Class A units outstanding 61,894
45,063
Segment Statements of Financial
Condition
As of March 31,
December 31, March
31, 2016 2015 2015 (in thousands)
Assets: Cash and cash-equivalents $ 342,079 $ 476,046 $
434,232 U.S. Treasury securities 618,899 661,116 570,749 Corporate
investments 1,352,362 1,434,109 1,503,621 Deferred tax assets
425,904 425,798 430,873 Receivables and other assets
397,416
257,013 309,375 Total assets $
3,136,660
$ 3,254,082 $ 3,248,850
Liabilities and Capital:
Liabilities: Accounts payable and accrued expenses $
253,305
$ 368,980 $ 252,006 Due to affiliates 356,851 356,851 371,988 Debt
obligations (1) 845,736 846,354 845,776 Total
liabilities
1,455,892
1,572,185 1,469,770 Capital: OCGH non-controlling
interest in consolidated subsidiaries
945,519
944,882 1,159,339 Unitholders’ capital attributable to Oaktree
Capital Group, LLC
735,249
737,015 619,741 Total capital
1,680,768
1,681,897 1,779,080 Total liabilities and capital $
3,136,660
$ 3,254,082 $ 3,248,850 (1) In the
first quarter of 2016, Oaktree adopted accounting guidance that
requires debt issuance costs, which were previously included in
receivables and other assets, to be netted with the associated
outstanding borrowings. The guidance requires prior periods to be
recast for this change.
Corporate Investments
As of March 31,
December 31, March
31, 2016 2015 2015 Investments in funds:
(in thousands) Oaktree funds: Corporate Debt $ 381,456 $
432,228 $ 426,543 Convertible Securities 1,579 18,497 19,647
Distressed Debt 379,507 379,676 429,173 Control Investing 258,753
267,692 262,492 Real Estate 127,731 135,922 145,330 Listed Equities
111,185 105,631 148,383 Non-Oaktree funds 66,321 65,901 49,706
Investments in companies 25,830 28,562 22,347
Total corporate investments $ 1,352,362 $ 1,434,109 $ 1,503,621
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, 2016 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 Oaktree Opportunities Fund Xb
TBD — $7,743 $— $— $— $—
$—
$—
$— $— n/a n/a n/a
Oaktree Opportunities Fund X (6)
Jan. 2016 Jan. 2019 3,205 481 37 1 517 3,125 — 7 502 nm nm 1.1x
Oaktree Opportunities Fund IX Jan. 2014 Jan. 2017 5,066 5,066 (218)
4 4,844 4,966 — — 5,873 0.9% (2.4)% 1.0 Oaktree Opportunities Fund
VIIIb Aug. 2011 Aug. 2014 2,692 2,692 454 1,133 2,013 2,190 52 —
2,422 7.4 4.1 1.3 Special Account B Nov. 2009 Nov. 2012 1,031 1,099
440 1,062 477 464 15 — 483 12.4 9.8 1.5 Oaktree Opportunities Fund
VIII Oct. 2009 Oct. 2012 4,507 4,507 1,816 4,327 1,996 2,040 144 94
1,852 11.7 8.3 1.5 Special Account A Nov. 2008 Oct. 2012 253 253
276 463 66 75 42 13 — 27.8 22.4 2.1 OCM Opportunities Fund VIIb May
2008 May 2011 10,940 9,844 8,726 17,329 1,241 1,378 1,453 243 —
22.0 16.7 2.0 OCM Opportunities Fund VII Mar. 2007 Mar. 2010 3,598
3,598 1,454 4,597 455 769 81 — 572 10.3 7.6 1.5 OCM Opportunities
Fund VI Jul. 2005 Jul. 2008 1,773 1,773 1,301 2,833 241 391 134 120
— 12.0 8.8 1.8 OCM Opportunities Fund V Jun. 2004 Jun. 2007 1,179
1,179 965 2,097 47 — 179 10 — 18.5 14.2 1.9
Legacy funds (7)
Various Various 9,543 9,543 8,205 17,695 53 — 1,113 11 — 24.2 19.3
1.9 22.1% 16.3%
Real Estate Opportunities Oaktree Real
Estate Opportunities Fund VII (8) Jan. 2016 Jan. 2020 $2,104 $—
$(5) $3 $(8) $1,542 $— $— $— n/a n/a n/a Oaktree Real Estate
Opportunities Fund VI Aug. 2012 Aug. 2016 2,677 2,677 1,022 513
3,186 2,610 10 187 2,637 20.7% 14.0% 1.4x Oaktree Real Estate
Opportunities Fund V Mar. 2011 Mar. 2015 1,283 1,283 888 1,202 969
538 56 113 528 18.2 13.3 1.8 Special Account D Nov. 2009 Nov. 2012
256 264 163 285 142 88 3 13 96 14.3 12.2 1.7 Oaktree Real Estate
Opportunities Fund IV Dec. 2007 Dec. 2011 450 450 385 647 188 127
23 49 25 16.2 11.1 2.0 OCM Real Estate Opportunities Fund III Sep.
2002 Sep. 2005 707 707 620 1,290 37 — 115 7 — 15.3 11.3 2.0
Legacy funds (7)
Various Various 1,634 1,610 1,399 3,009 — — 112 — — 15.2 12.0 1.9
15.7% 12.2%
Real Estate Debt
Oaktree Real Estate Debt Fund (9)
Sep. 2013 Sep. 2016 $1,112 $415 $48 $276 $187 $404 $— $7 $155 21.5%
15.1% 1.2x
Oaktree PPIP Fund (10)
Dec. 2009 Dec. 2012 2,322 1,113 457 1,570 — — 47 — — 28.2 n/a 1.4
European Principal Investments (11) Oaktree
European Principal Fund III Nov. 2011 Nov. 2016 €3,164 €2,750
€1,373 €285 €3,838 €3,240 €— €267 €3,031 22.1% 14.5% 1.6x OCM
European Principal Opportunities Fund II Dec. 2007 Dec. 2012 €1,759
€1,731 €495 €1,476 €750 €1,079 €29 €— €1,008 9.6 5.6 1.4 OCM
European Principal Opportunities Fund Mar. 2006 Mar. 2009 $495 $473
$458 $846 $85 $— $48 $39 $— 11.8 9.0 2.1 14.0% 9.3%
European
Private Debt Oaktree European Capital Solutions Fund (6) Dec.
2015 Dec. 2018 €140 €11 €(1) €— €10 €28 €— €— €11 nm nm n/a
Oaktree European Dislocation Fund (9)
Oct. 2013 Oct. 2016 €294 €172 €25 €139 €58 €168 €— €4 €43 22.6%
16.1% 1.2x Special Account E Oct. 2013 Apr. 2015 €379 €261 €44 €167
€138 €158 €— €7 €122 14.0 10.7 1.2 16.3% 12.0%
As of March 31, 2016 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) Global Principal Investments
Oaktree Principal Fund VI (6) Nov. 2015 Nov. 2018 $1,223 $177 $24
$31 $170 $1,167 $— $5 $153 nm nm 1.2x Oaktree Principal Fund V Feb.
2009 Feb. 2015 2,827 2,586 387 1,277 1,696 1,839 50 — 2,222 8.1%
3.3% 1.3 Special Account C Dec. 2008 Feb. 2014 505 460 185 352 293
354 21 — 292 11.4 8.0 1.5 OCM Principal Opportunities Fund IV Oct.
2006 Oct. 2011 3,328 3,328 2,028 3,701 1,655 1,037 22 96 1,536 10.7
8.1 1.7 OCM Principal Opportunities Fund III Nov. 2003 Nov. 2008
1,400 1,400 879 2,166 113 — 149 22 — 13.8 9.5 1.8
Legacy funds (7)
Various Various 2,301 2,301 1,839 4,138 2 — 236 — — 14.5 11.6 1.8
12.7% 9.2%
Power Opportunities Oaktree Power Opportunities
Fund IV (6) Nov. 2015 Nov. 2020 $1,106 $75 $(6) $— $69 $1,078 $— $—
$76 nm nm 1.0x Oaktree Power Opportunities Fund III Apr. 2010 Apr.
2015 1,062 685 346 570 461 397 14 52 274 23.5% 14.0% 1.6 OCM/GFI
Power Opportunities Fund II Nov. 2004 Nov. 2009 1,021 541 1,450
1,982 9 — 100 1 — 76.1 58.8 3.9 OCM/GFI Power Opportunities Fund
Nov. 1999 Nov. 2004 449 383 251 634 — — 23 — — 20.1 13.1 1.8 34.8%
26.6%
Infrastructure Investing
Highstar Capital IV (12)
Nov. 2010 Nov. 2016 $2,484 $1,977 $499 $409 $2,067 $1,882 $— $7
$1,568 18.0% 9.8% 1.4x
Mezzanine Finance Oaktree
Mezzanine Fund IV (6) (9) Oct. 2014 Oct. 2019 $852 $186 $11 $9 $188
$182 $— $— $189 nm nm 1.1x
Oaktree Mezzanine Fund III (13)
Dec. 2009 Dec. 2014 1,592 1,423 356 1,318 461 431 10 16 443 15.1%
10.3% / 8.1%
1.3 OCM Mezzanine Fund II Jun. 2005 Jun. 2010 1,251 1,107 530 1,489
148 164 — — 160 11.4 7.9 1.6
OCM Mezzanine Fund (14)
Oct. 2001 Oct. 2006 808 773 302 1,073 2 — 38 — — 15.4 10.8 / 10.5
1.5 13.2% 8.9%
Emerging Markets Opportunities Oaktree
Emerging Market Opportunities Fund Sep. 2013 Sep. 2016 $384 $220 $8
$— $228 $364 $— $— $245 6.2% 2.4% 1.1x Special Account F Jan. 2014
Jan. 2017 253 142 6 — 148 146 — — 159 5.1 2.9 1.1 72,403 (11)
35,073 (11) 1,429 (11) 5.8% 2.6% Other (15) 12,107 8,080 9 Total
(16) $84,510 (17) $43,153 $1,438 (1)
Drawn capital reflects the capital contributions of investors in
the fund, net of any distributions to such investors of uninvested
capital. (2) Accrued incentives (fund level) exclude Oaktree
segment incentive income previously recognized. (3) Unreturned
drawn capital plus accrued preferred return 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. To the extent material,
gross returns include certain transaction, advisory, directors or
other ancillary fees (“fee income”) paid directly to us in
connection with our funds’ activities (we credit all such fee
income back to the respective fund(s) so that our funds’ investors
share pro rata in the fee income’s economic benefit). 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) Multiple of drawn capital is calculated
as drawn capital plus gross income and, if applicable, fee income
before fees and expenses divided by drawn capital. (6) The IRR is
not considered meaningful (“nm”) as the period from the initial
capital contribution through March 31, 2016 was less than 18
months. (7) Legacy funds represent certain predecessor funds within
the relevant strategy that have substantially or completely
liquidated their assets, including funds 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. (8) A portion of this fund pays management fees based on
drawn, rather than committed, capital. (9) Management fees during
the investment period are calculated on drawn, rather than
committed, capital. As a result, as of March 31, 2016 management
fee-generating AUM included only that portion of committed capital
that had been drawn. (10) Due to differences in the allocation of
income and expenses to this fund’s two primary limited partners,
the U.S. Treasury and Oaktree PPIP Private Fund, a combined net IRR
is not presented. Of the $2,322 million in capital commitments,
$1,161 million related to the Oaktree PPIP Private Fund, whose
gross and net IRR were 24.7% and 18.6%, respectively. (11)
Aggregate IRRs or totals are based on the conversion of cash flows
or amounts, respectively, from euros to USD using the March 31,
2016 spot rate of $1.14. (12) The fund includes co-investments of
$482 million in AUM, most of which do not pay management fees or an
incentive allocation. These co-investments have been excluded from
the calculation of gross and net IRR, as well as the unreturned
drawn capital plus accrued preferred return amount and multiple of
drawn capital. The fund follows the American-style distribution
waterfall, whereby the general partner may receive an incentive
allocation as soon as it has returned the drawn capital and paid a
preferred return on the fund’s realized investments (i.e., on a
deal-by-deal basis). However, such cash distributions of incentives
may be subject to repayment, or clawback. As of March 31, 2016,
Oaktree had not recognized any incentive income from this fund. The
accrued incentives (fund level) amount shown for this fund
represents Oaktree’s effective 8% of the potential incentives
generated by this fund in accordance with the terms of the Highstar
acquisition. (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. The net IRR for Class A interests was 10.3%
and Class B interests was 8.1%. The combined net IRR for Class A
and Class B interests was 9.5%. (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. The net IRR for Class A
interests was 10.8% and Class B interests was 10.5%. The combined
net IRR for the Class A and Class B interests was 10.6%. (15) This
includes our closed-end Senior Loan funds, Oaktree Asia Special
Situations Fund, OCM Asia Principal Opportunities Fund, CLOs, a
non-Oaktree fund, certain separate accounts, co-investments and
certain evergreen separate accounts in our Real Estate Debt,
Emerging Markets Opportunities and Emerging Markets Total Return
strategies. (16) This excludes two closed-end funds with management
fee-generating AUM aggregating $534 million as of March 31, 2016,
which has been included as part of the Strategic Credit strategy
within the evergreen funds table, and includes certain evergreen
separate accounts in our Real Estate Debt, Emerging Markets
Opportunities and Emerging Markets Total Return strategies with an
aggregate $547 million of management fee-generating AUM. (17) The
aggregate change in drawn capital for the three months ended March
31, 2016 was $0.8 billion.
Open-end Funds
Management Fee-generating AUM
as of
March 31, 2016
Twelve Months Ended
March 31, 2016
Since Inception through March 31, 2016 Strategy
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 $
15,029 (2.9 )% (3.4 )% (4.6 )% 9.2 % 8.7 % 8.2 % 0.77 0.52 Global
High Yield Bonds Nov. 2010 4,189 (2.4 ) (2.9 ) (3.3 ) 6.4 5.9 5.5
0.93 0.83 European High Yield Bonds May 1999 1,309 2.4 1.9 1.5 8.0
7.5 6.1 0.67 0.40 U.S. Convertibles Apr. 1987 3,539 (9.7 ) (10.1 )
(7.3 ) 9.2 8.7 7.9 0.46 0.33 Non-U.S. Convertibles Oct. 1994 1,709
(2.3 ) (2.8 ) (2.2 ) 8.4 7.9 5.7 0.76 0.39 High Income Convertibles
Aug. 1989 761 0.0 (0.7 ) (4.7 ) 11.2 10.4 7.9 1.01 0.55 U.S. Senior
Loans Sept. 2008 1,607 (3.5 ) (4.0 ) (1.1 ) 5.6 5.1 4.8 0.96 0.56
European Senior Loans May 2009 1,643 2.9 2.4 1.7 8.6 8.1 9.3 1.67
1.67 Emerging Markets Equities Jul. 2011 3,153 (15.6 ) (16.3
) (12.0 ) (4.0 ) (4.8 ) (4.1 ) (0.20 ) (0.22 )
Total
$ 32,939 (1) Returns represent
time-weighted rates of return, including reinvestment of income,
net of commissions and transaction costs. The returns for Relevant
Benchmarks are presented on a gross basis.
Evergreen Funds
As of March 31, 2016
Twelve Months Ended March 31,
2016
Since Inception through March 31,
2016
AUM
Management
Fee-generating AUM
Accrued Incentives (Fund Level)
Strategy Inception Rates of Return (1)
Annualized Rates
of Return (1)
Gross Net Gross Net
(in millions) Strategic Credit (2) Jul. 2012 $ 2,975
$ 2,247 $ n/a (5.5 )% (6.1 )% 6.2 % 4.2 % Value Opportunities Sept.
2007 1,265 1,210
—
(3)
(13.9 ) (15.8 ) 8.1 4.0 Value Equities (4) May 2012 299 234 —
(3)
(14.4 ) (15.7 ) 15.0 9.6 Emerging Markets Absolute Return Apr. 1997
145 125 —
(3)
(0.2 ) (1.7 ) 13.2 8.9 3,816 —
Restructured funds
— 4
Total (2) (5)
$ 3,816 $ 4 (1) Returns represent
time-weighted rates of return. (2) Includes two closed-end funds
with an aggregate $738 million and $534 million of AUM and
management fee-generating AUM, respectively. (3) As of March 31,
2016, the aggregate depreciation below high-water marks previously
established for individual investors in the fund totaled
approximately $272 million for Value Opportunities, $28 million for
Value Equities and $7 million for Emerging Markets Absolute Return.
(4) Includes performance results of a proprietary fund with an
initial capital commitment of $25 million since its inception on
May 1, 2012. (5) Total excludes certain evergreen separate accounts
in our Real Estate Debt, Emerging Markets Opportunities and
Emerging Markets Total Return strategies with an aggregate $547
million of management fee-generating AUM as of March 31, 2016.
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. Amounts recognized by us as incentive
income are no longer 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
(“segment revenues”) and expenses used in the determination of ANI
do not give effect to the consolidation of the funds that we
manage. Segment revenues include investment income (loss) that is
classified in other income (loss) in the GAAP-basis statements of
operations. Segment revenues and expenses also reflect Oaktree's
proportionate economic interest in Highstar, whereby amounts
received for contractually reimbursable costs are classified for
segment reporting as expenses and under GAAP as other income. In
addition, ANI excludes the effect of (a) non-cash equity-based
compensation expense related to unit grants made before our initial
public offering, (b) acquisition-related items, including
amortization of intangibles and changes in the contingent
consideration liability, (c) differences arising from equity value
units (“EVUs”) that are classified as liability awards under GAAP
but as equity awards for segment reporting, (d) income taxes,
(e) other income or expenses applicable to OCG or its
Intermediate Holding Companies, and (f) the adjustment for
non-controlling interests. In the fourth quarter of 2015, the
definition of ANI was modified to reflect differences with respect
to (a) third-party placement costs associated with closed-end
funds, which under GAAP are expensed as incurred, but for ANI are
capitalized and amortized as general and administrative expense in
proportion to the associated management fee stream, and (b) gains
and losses resulting from foreign-currency transactions and hedging
activities, which under GAAP are recognized as general and
administrative expense whether realized or unrealized in the
current period, but for ANI unrealized gains and losses from
foreign-currency hedging activities are deferred until realized, at
which time they are included in the same revenue or expense line
item as the underlying exposure that was hedged. Foreign-currency
transaction gains and losses are included in other income
(expense), net. Prior periods have not been recast for the change
related to third-party placement costs, but have been recast to
retroactively reflect the change related to foreign-currency
hedging. Incentive income and incentive income compensation expense
are included in ANI when the underlying fund distributions are
known or knowable as of the respective quarter end, which may be
later than the time at which the same revenue or expense is
included in the GAAP-basis statements of operations, for which the
revenue standard is fixed or determinable and the expense standard
is probable and reasonably estimable. CLO investments are carried
at fair value for GAAP reporting, whereas for segment reporting
they are carried at amortized cost, subject to any impairment
charges. Investment income on CLO investments is recognized in ANI
when cash distributions are received. Cash distributions are
allocated between income and return of capital based on the
effective yield method. 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) other income or expenses, such as income tax
expense, applicable to OCG or its Intermediate Holding Companies
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 and investment income arising
from our one-fifth ownership stake in DoubleLine 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 and DoubleLine-related investment income
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, the
undrawn capital that we are entitled to call from investors in our
funds pursuant to their capital commitments and the aggregate par
value of collateral assets and principal cash held by our CLOs. Our
AUM includes amounts for which we charge no management fees.
- Management fee-generating assets
under management (“management fee-generating AUM”) is a
forward-looking metric and reflects the beginning AUM on which we
will earn management fees in the following quarter. Our closed-end
funds typically pay management fees based on committed capital or
drawn capital during the investment period, without regard to
changes in NAV, and during the liquidation period on the lesser of
(a) total funded capital or (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 typically pay management
fees based on their NAV, and our CLOs pay management fees based on
the aggregate par value of collateral assets and principal cash
held by them, as defined in the applicable CLO indentures. As
compared with AUM, management fee-generating AUM generally excludes
the following:
- Differences between AUM and either
committed capital or cost basis for most closed-end funds, other
than for closed-end funds that pay management fees based on NAV and
leverage, as applicable;
- Undrawn capital commitments to
closed-end funds that have not yet commenced their investment
periods;
- Undrawn capital commitments to funds
for which management fees are based on drawn capital or NAV;
- 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 co-investments that
pay no 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 CLOs and 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.
Consolidated funds refers to the funds and CLOs that
Oaktree is required to consolidate as of the respective reporting
date.
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 or
loss and include the receipt of investment income or loss from
distributions by our investments in funds and companies.
Additionally, any impairment charges on our CLO investments
included in ANI are, for distributable earnings purposes, amortized
over the remaining investment period of the respective CLO, in
order to align with the timing of expected cash flows. In addition,
distributable earnings differs from ANI in that it is net of
Operating Group income taxes and excludes non-cash equity-based
compensation expense related to unit grants made after our initial
public offering.
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, applicable
to OCG or its Intermediate Holding Companies 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,” revenue
recognition approach to accounting for incentive income. ANI
follows Method 1, except incentive income is recognized when the
underlying fund distributions are known or knowable as of the
respective quarter end, as opposed to the fixed or determinable
standard of Method 1. 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 and under the definition of ANI.
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) other income or expenses, such as income tax
expense, applicable to OCG or its Intermediate Holding Companies
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.
Equity value units (“EVUs”) represent special limited
partnership units in Oaktree Capital Group Holdings, L.P. (“OCGH”)
that entitle the holder the right to receive a one-time special
distribution that will be settled in OCGH units, based on value
created during a specified period (“Term”) in excess of a fixed
“Base Value.” The value created will be measured on a per unit
basis, based on Class A unit trading prices and certain components
of quarterly distributions with respect to the period during the
Term. EVUs also give the holder the right, subject to service
vesting and Oaktree performance relative to the accreting Base
Value, to receive certain quarterly distributions from OCGH. EVUs
do not entitle the holder to any voting rights.
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 and non-cash equity-based compensation
expense related to unit grants made after our initial public
offering. FRE is considered baseline because it applies all cash
compensation and benefits other than incentive income compensation
expense, as well as all general and administrative expenses, to
management fees, even though a significant portion of those
expenses is attributable to incentive and investment income. 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) other income or expenses, such
as income tax expense, applicable to OCG or its Intermediate
Holding Companies 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 the Company refers to
Oaktree Capital Group, LLC and, where applicable, its subsidiaries
and affiliates.
Oaktree Operating Group (“Operating Group”) refers
collectively to the entities in which we have a minority economic
interest and indirect control that either (i) act as or control the
general partners and investment advisers of our funds or (ii) hold
interests in other entities or investments generating income for
us.
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 Global High Yield Bond strategy, to
an Oaktree custom global high yield index that represents 60% BofA
Merrill Lynch High Yield Master II Constrained Index and 40% BofA
Merrill Lynch Global Non-Financial High Yield European Issuers 3%
Constrained, ex-Russia Index – USD Hedged from inception through
December 31, 2012, and the BofA Merrill Lynch Non-Financial
Developed Markets High Yield Constrained Index – USD Hedged
thereafter;
- 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 an Oaktree custom non-U.S. convertible index that
represents the JACI Global ex-U.S. (Local) Index from inception
through December 31, 2014 and the Thomson Reuters Global Focus
ex-U.S. (USD hedged) Index thereafter;
- our High Income Convertible Securities
strategy, to the Citigroup U.S. High Yield Market Index; and
- our Emerging Markets Equities 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 non-GAAP financial measures 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,
2016 2015 (in thousands)
Fee-related earnings (1) $ 62,359 $ 49,756 Incentive income 96,588
152,879 Incentive income compensation (49,749 ) (90,102 )
Investment income 15,077 53,458 Equity-based compensation (2)
(10,703 ) (7,023 ) Interest expense, net of interest income (8,682
) (8,933 ) Other income (expense), net 135 (9
) Adjusted net income 105,025 150,026 Incentive income (3) (39,942
) (17,378 ) Incentive income compensation (3) 39,942 23,210
Investment income (4) 10,429 — Equity-based compensation (5) (3,192
) (4,683 ) Placement costs (6) (6,704 ) — Foreign-currency hedging
(7) (5,866 ) 5,312 Acquisition-related items (8) (391 ) (1,807 )
Income taxes (9) (12,680 ) (7,875 ) Non-Operating Group expenses
(10) (264 ) (334 ) Non-controlling interests (10) (58,279 )
(108,218 ) Net income attributable to Oaktree Capital Group,
LLC $ 28,078 $ 38,253 (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 and
non-cash equity-based compensation expense related to unit grants
made after our initial public offering. (2) This adjustment adds
back the effect of equity-based compensation expense related to
unit grants made after our initial public offering, which is
excluded from fee-related 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
timing differences associated with the recognition of incentive
income and incentive income compensation expense between adjusted
net income and net income attributable to OCG. (4) This adjustment
adds back the effect of differences in the recognition of
investment income related to corporate investments in CLOs which
under GAAP are marked-to-market but for segment reporting are
accounted for at amortized cost, subject to impairment between
adjusted net income and net income attributable to OCG. (5) This
adjustment adds back the effect of (a) equity-based compensation
expense 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, and (b) differences arising from
EVUs that are classified as liability awards under GAAP but as
equity awards for segment reporting. (6) This adjustment adds back
the effect of timing differences with respect to the recognition of
third-party placement costs associated with closed-end funds
between adjusted net income and net income attributable to OCG. (7)
This adjustment adds back the effect of timing differences
associated with the recognition of unrealized gains and losses
related to foreign-currency hedging between adjusted net income and
net income attributable to OCG. (8) This adjustment adds back the
effect of acquisition-related items associated with the
amortization of intangibles and changes in the contingent
consideration liability. (9) Because adjusted net income and
fee-related earnings are pre-tax measures, this adjustment adds
back the effect of income tax expense. (10)
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 non-controlling
interests.
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,
2016 2015 (in thousands)
Fee-related earnings-OCG (1) $ 23,059 $ 12,733 Incentive income
attributable to OCG 38,868 44,958 Incentive income compensation
attributable to OCG (20,020 ) (26,497 ) Investment income
attributable to OCG 6,067 15,721 Equity-based compensation
attributable to OCG (2) (4,307 ) (2,065 ) Interest expense, net of
interest income attributable to OCG (3,463 ) (2,626 ) Other income
(expense) attributable to OCG 54 (3 ) Non-fee-related earnings
income taxes attributable to OCG (3) (10,098 ) (5,498
) Adjusted net income-OCG (1) 30,160 36,723 Incentive income
attributable to OCG (4) (16,073 ) (5,110 ) Incentive income
compensation attributable to OCG (4) 16,073 6,825 Investment income
attributable to OCG (5) 4,197 — Equity-based compensation
attributable to OCG (6) (1,285 ) (1,377 ) Placement costs
attributable to OCG (7) (2,698 ) — Foreign-currency hedging
attributable to OCG (8) (2,359 ) 1,562 Acquisition-related items
attributable to OCG (9) (158 ) (531 ) Non-controlling interests
attributable to OCG (9) 221 161 Net
income attributable to Oaktree Capital Group, LLC $ 28,078 $
38,253 (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 other income or expenses applicable to OCG or its
Intermediate Holding Companies. (2) This adjustment adds back the
effect of equity-based compensation expense attributable to OCG
related to unit grants made after our initial public offering,
which is excluded from fee-related earnings-OCG 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 income taxes associated with segment incentive income,
incentive income compensation expense or investment income or loss,
which are not included in the calculation of fee-related
earnings-OCG. (4) This adjustment adds back the effect of timing
differences associated with the recognition of incentive income and
incentive income compensation expense between adjusted net
income-OCG and net income attributable to OCG. (5) This adjustment
adds back the effect of differences in the recognition of
investment income related to corporate investments in CLOs which
under GAAP are marked-to-market but for segment reporting are
accounted for at amortized cost, subject to impairment between
adjusted net income-OCG and net income attributable to OCG. (6)
This adjustment adds back the effect of (a) equity-based
compensation expense 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, and
(b) differences arising from EVUs that are classified as liability
awards under GAAP but as equity awards for segment reporting. (7)
This adjustment adds back the effect of timing differences with
respect to the recognition of third-party placement costs
associated with closed-end funds between adjusted net income-OCG
and net income attributable to OCG. (8) This adjustment adds back
the effect of timing differences associated with the recognition of
unrealized gains and losses related to foreign-currency hedging
between adjusted net income-OCG and net income attributable to OCG.
(9) This adjustment adds back the effect of (a) acquisition-related
items associated with the amortization of intangibles and changes
in the contingent consideration liability and (b) non-controlling
interests.
The following table reconciles fee-related earnings revenues and
segment revenues to GAAP revenues.
Three Months Ended March 31,
2016 2015 (in thousands)
Fee-related earnings revenues $ 201,270 $ 190,095 Incentive income
96,588 152,879 Investment income 15,077 53,458
Segment revenues 312,935 396,432 Consolidated funds (1)
(28,998 ) (332,931 ) Investment income (2) (29,447 )
(12,682 ) GAAP revenues $ 254,490 $ 50,819
(1) This adjustment reflects the elimination
of amounts attributable to the consolidated funds, as well as the
reclassification of gains and losses related to foreign-currency
hedging activities to general and administrative expense. (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,
2016 2015 (in thousands)
Distributable earnings $ 125,725 $ 135,196 Investment income (1)
15,077 53,458 Receipts of investment income from funds (2) (12,923
) (23,961 ) Receipts of investment income from companies (13,558 )
(8,796 ) Equity-based compensation (3) (10,703 ) (7,023 ) Operating
Group income taxes 1,407 1,152 Adjusted
net income 105,025 150,026 Reconciling adjustments (4)
(76,947 ) (111,773 ) Net income attributable to Oaktree
Capital Group, LLC $ 28,078 $ 38,253
(1) This adjustment adds back segment investment
income, which with respect to investments 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
eliminates the portion of distributions received from funds
characterized 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
expense 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) Please refer to the
table on page 30 for a detailed reconciliation of adjusted net
income to net income attributable to Oaktree Capital Group, LLC.
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,
2016 2015 (in thousands)
Distributable earnings-OCG (1) $ 41,843 $ 34,733 Investment income
attributable to OCG 6,067 15,721 Receipts of investment income from
funds attributable to OCG (5,200 ) (7,046 ) Receipts of investment
income from companies attributable to OCG (5,456 ) (2,587 )
Equity-based compensation attributable to OCG (2) (4,307 ) (2,065 )
Distributable earnings-OCG income taxes 3,380 280 Tax receivable
agreement 5,106 4,410 Income taxes of Intermediate Holding
Companies (11,273 ) (6,723 ) Adjusted net income-OCG
(1) 30,160 36,723 Reconciling adjustments (3) (2,082 )
1,530 Net income attributable to Oaktree Capital
Group, LLC $ 28,078 $ 38,253 (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 applicable to OCG or
its Intermediate Holding Companies. A reconciliation of
distributable earnings to distributable earnings-OCG is presented
below.
Three
Months Ended March 31, 2016
2015 (in thousands, except per unit data)
Distributable earnings $ 125,725 $ 135,196 Distributable earnings
attributable to OCGH non-controlling interest (75,132 ) (95,439 )
Non-Operating Group expenses (264 ) (334 ) Distributable
earnings-OCG income taxes (3,380 ) (280 ) Tax receivable agreement
(5,106 ) (4,410 ) Distributable earnings-OCG $ 41,843
$ 34,733 Distributable earnings-OCG per Class A unit
$ 0.68 $ 0.77 (2) This
adjustment adds back the effect of equity-based compensation
expense 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)
Please refer to the table on page 31 for a detailed reconciliation
of adjusted net income-OCG to net income attributable to Oaktree
Capital Group, LLC.
The following table reconciles distributable earnings revenues
and segment revenues to GAAP revenues.
Three Months Ended March 31,
2016 2015 (in thousands)
Distributable earnings revenues $ 324,339 $ 375,731 Investment
income 15,077 53,458 Receipts of investment income from funds
(12,923 ) (23,961 ) Receipts of investment income from companies
(13,558 ) (8,796 ) Segment revenues 312,935 396,432
Consolidated funds (1) (28,998 ) (332,931 ) Investment income (2)
(29,447 ) (12,682 ) GAAP revenues $ 254,490 $
50,819 (1) This adjustment
reflects the elimination of amounts attributable to the
consolidated funds, as well as the reclassification of gains and
losses related to foreign-currency hedging activities to general
and administrative expense. (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,
2016 2015 (in thousands)
Economic net income (1) $ 41,196 $ 223,548
Change in accrued incentives (fund level),
net of associated incentive income compensation (2)
63,829 (73,522 ) Adjusted net income 105,025
150,026 Reconciling adjustments (3) (76,947 )
(111,773 ) Net income attributable to Oaktree Capital Group, LLC $
28,078 $ 38,253 (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 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) Please refer to the table on page 30 for
a detailed reconciliation of adjusted net income to net income
attributable to Oaktree Capital Group, LLC.
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,
2016 2015 (in thousands)
Economic net income-OCG (1) $ 7,803 $ 55,917 Change in accrued
incentives (fund level), net of associated incentive income
compensation attributable to OCG 25,686 (21,622 ) Economic net
income-OCG income taxes 8,510 9,490 Income taxes-OCG (11,839
) (7,062 ) Adjusted net income-OCG (1) 30,160 36,723
Reconciling adjustments (2) (2,082 ) 1,530 Net
income attributable to Oaktree Capital Group, LLC $ 28,078 $
38,253 (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 other income or expenses applicable to OCG or its
Intermediate Holding Companies. A reconciliation of economic net
income to economic net income-OCG is presented below.
Three Months Ended March
31, 2016 2015 (in
thousands, except per unit data) Economic net income $ 41,196 $
223,548 Economic net income attributable to OCGH non-controlling
interest (24,619 ) (157,807 ) Non-Operating Group expenses (264 )
(334 ) Economic net income-OCG income taxes (8,510 )
(9,490 ) Economic net income-OCG $ 7,803 $ 55,917
Economic net income per Class A unit $ 0.13 $ 1.24
(2) Please refer to the table on page 31 for a
detailed reconciliation of adjusted net income-OCG to net income
attributable to Oaktree Capital Group, LLC.
The following table reconciles economic net income revenues and
segment revenues to GAAP revenues.
Three Months Ended March 31,
2016 2015 (in thousands)
Economic net income revenues $ 170,077 $ 509,015 Incentives created
46,270 (265,462 ) Incentive income 96,588
152,879 Segment revenues 312,935 396,432 Consolidated funds
(1) (28,998 ) (332,931 ) Investment income (2) (29,447 )
(12,682 ) GAAP revenues $ 254,490 $ 50,819
(1) This adjustment reflects the
elimination of amounts attributable to the consolidated funds, as
well as the reclassification of gains and losses related to
foreign-currency hedging activities to general and administrative
expense. (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, 2016 Segment Adjustments
Consolidated (in thousands)
Management fees (1) $ 201,270 $ (2,717 ) $ 198,553 Incentive income
(1) 96,588 (40,651 ) 55,937 Investment income (1) 15,077 14,370
29,447 Total expenses (2) (199,363 ) 14,179 (185,184 ) Interest
expense, net (3) (8,682 ) (19,023 ) (27,705 ) Other income
(expense), net (4) 135 5,666 5,801 Other income of consolidated
funds (5) — 18,999 18,999 Income taxes — (12,680 ) (12,680 ) Net
loss attributable to non-controlling interests in consolidated
funds — 4,944 4,944 Net income attributable to non-controlling
interests in consolidated subsidiaries —
(60,034 ) (60,034 ) Adjusted net income/net income
attributable to Oaktree Capital Group, LLC $ 105,025 $
(76,947 ) $ 28,078 Corporate investments (6) $ 1,352,362
$ (306,785 ) $ 1,045,577 Total assets (7) $
3,136,660
$
3,222,154
$
6,358,814
(1) The adjustment represents
(a) the elimination of amounts earned from the consolidated funds,
(b) for management fees, the reclassification of $662 of net gains
related to foreign-currency hedging activities to general and
administrative expense, and (c) for investment income, differences
of $10,429 related to corporate investments in CLOs which under
GAAP are marked-to-market but for segment reporting accounted for
at amortized cost, subject to impairment. (2)
The expense adjustment consists of (a)
equity-based compensation expense of $3,245 related to unit grants
made before our initial public offering, (b) consolidated fund
expenses of $4,311, (c) expenses incurred by the Intermediate
Holding Companies of $295, (d) the effect of timing differences in
the recognition of incentive income compensation expense between
adjusted net income and net income attributable to OCG of $39,942,
(e) acquisition-related items of $391, (f) adjustments of $5,801
related to amounts received for contractually reimbursable costs
that are classified as expenses for segment reporting and as other
income under GAAP, (g) differences of $53 arising from EVUs that
are classified as liability awards under GAAP but as equity awards
for segment reporting, (h) $6,704 related to third-party placement
costs, and (i) $5,069 of net losses related to foreign-currency
hedging activities.
(3) The interest expense adjustment represents the inclusion of
interest expense attributable to third-party investors in our CLOs,
non-controlling interests of the consolidated funds and the
exclusion of segment interest income. (4) The adjustment to other
income (expense), net represents adjustments related to (a) amounts
received for contractually reimbursable costs of $5,801 that are
classified as expenses for segment reporting and as other income
under GAAP, and (b) the reclassification of $135 in net gains
related to foreign-currency hedging activities to general and
administrative expense. (5) The adjustment to other income of
consolidated funds primarily represents the inclusion of interest,
dividend and other investment income attributable to third-party
investors in our CLOs and non-controlling interests of the
consolidated funds. (6) The adjustment to corporate investments is
to remove from segment assets our investments in the consolidated
funds, including investments in our CLOs, that are treated as
equity- or cost-method investments for segment reporting. The $1.4
billion of corporate investments included $1.2 billion of
equity-method investments. (7) 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, 2015 Segment
Adjustments
Consolidated (in thousands) Management fees (1) $
190,095 $ (139,276 ) $ 50,819 Incentive income (1) 152,879 (152,879
) — Investment income (1) 53,458 (40,776 ) 12,682 Total expenses
(2) (237,464 ) 1,490 (235,974 ) Interest expense, net (3) (8,933 )
(37,636 ) (46,569 ) Other income (expense), net (4) (9 ) 4,703
4,694 Other income of consolidated funds (5) — 1,505,242 1,505,242
Income taxes — (7,875 ) (7,875 ) Net income attributable to
non-controlling interests in consolidated funds — (1,136,665 )
(1,136,665 ) Net income attributable to non-controlling interests
in consolidated subsidiaries — (108,101 )
(108,101 ) Adjusted net income/net income attributable to
Oaktree Capital Group, LLC $ 150,026 $ (111,773 ) $ 38,253
Corporate investments (6) $ 1,503,621 $ (1,335,622 )
$ 167,999 Total assets (7) $ 3,248,850 $ 51,784,503
$ 55,033,353 (1) The
adjustment represents (a) the elimination of amounts earned from
the consolidated funds and (b) for management fees, the
reclassification of $2,045 of net gains related to foreign-currency
hedging activities to general and administrative expense. (2) The
expense adjustment consists of (a) equity-based compensation
expense of $4,595 related to unit grants made before our initial
public offering, (b) consolidated fund expenses of $17,511, (c)
expenses incurred by the Intermediate Holding Companies of $334,
(d) the effect of timing differences in the recognition of
incentive income compensation expense between adjusted net income
and net income attributable to OCG of $23,210, (e)
acquisition-related items of $1,807, (f) adjustments of $5,590
related to amounts received for contractually reimbursable costs
that are classified as expenses for segment reporting and as other
income under GAAP, (g) differences of $88 arising from EVUs that
are classified as liability awards under GAAP but as equity awards
for segment reporting, (h) $8,244 of net gains related to
foreign-currency hedging activities, and (i) other expenses of $39.
(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 (expense), net represents
adjustments related to (a) amounts received for contractually
reimbursable costs of $5,590 that are classified as expenses for
segment reporting and as other income under GAAP, and (b) the
reclassification of $887 of net gains related to foreign-currency
hedging activities to general and administrative expense. (5) The
adjustment to other income of consolidated funds primarily
represents the inclusion of interest, dividend and other investment
income (loss) attributable to non-controlling interests of the
consolidated funds. (6) The adjustment to corporate investments is
to remove from segment assets our investments in the consolidated
funds, including investments in our CLOs, that are treated as
equity- or cost-method investments for segment reporting. The $1.5
billion of corporate investments included $1.3 billion of
equity-method investments. (7) 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.
View source
version on businesswire.com: http://www.businesswire.com/news/home/20160428005562/en/
Investor Relations:Oaktree Capital Group, LLCAndrea D.
Williams(213)
830-6483investorrelations@oaktreecapital.comorPress
Relations:Sard Verbinnen & CoJohn Christiansen(415)
618-8750jchristiansen@sardverb.comorAlyssa Linn(310)
201-2040alinn@sardverb.com
Oaktree Capital (NYSE:OAK)
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Oaktree Capital (NYSE:OAK)
過去 株価チャート
から 7 2023 まで 7 2024
