XML 58 R23.htm IDEA: XBRL DOCUMENT v3.20.2
CONSOLIDATION
6 Months Ended
Jun. 30, 2020
Condensed Financial Information Disclosure [Abstract]  
CONSOLIDATION
15. CONSOLIDATION
Investments in Consolidated Variable Interest Entities
The Company consolidates entities in which the Company has a variable interest and as the general partner or investment manager, has both the power to direct the most significant activities and a potentially significant economic interest. Investments in the consolidated VIEs are reported at fair value and represent the Company’s maximum exposure to loss.
Investments in Non-Consolidated Variable Interest Entities
The Company holds interests in certain VIEs that are not consolidated as the Company is not the primary beneficiary. The Company's interest in such entities generally is in the form of direct equity interests, fixed fee arrangements or both. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. Investments in the non-consolidated VIEs are carried at fair value.
The Company's interests in consolidated and non-consolidated VIEs, as presented in the Condensed Consolidated Statements of Financial Condition, and its respective maximum exposure to loss relating to non-consolidated VIEs are as follows:

As of June 30,As of December 31,
20202019
Maximum exposure to loss attributable to the Company's investment in non-consolidated VIEs(1)
$252,564  $260,520  
Maximum exposure to loss attributable to the Company's investment in consolidated VIEs(1)
151,144  181,856  
Assets of consolidated VIEs10,575,113  9,454,572  
Liabilities of consolidated VIEs9,960,904  8,679,869  

(1)As of June 30, 2020 and December 31, 2019, the Company's maximum exposure of loss for CLO securities was equal to the cumulative fair value of our capital interest in CLOs that are managed and totaled $79.5 million and $104.7 million, respectively.


Three months ended June 30,Six months ended June 30,
2020201920202019
Net income (loss) attributable to non-controlling interests related to consolidated VIEs$85,186  $8,346  $(81,220) $25,970  
Consolidating Schedules
The following supplemental financial information illustrates the consolidating effects of the Consolidated Funds on the Company's financial condition, results from operations and cash flows:
 As of June 30, 2020
 Consolidated
Company 
Entities 
Consolidated
Funds 
Eliminations Consolidated 
Assets    
Cash and cash equivalents$890,040  $—  $—  $890,040  
Investments (includes $1,003,827 of accrued carried interest)
1,630,631  —  (151,144) 1,479,487  
Due from affiliates278,480  —  (20,354) 258,126  
Other assets368,696  —  —  368,696  
Right-of-use operating lease assets140,041  —  —  140,041  
Assets of Consolidated Funds   
Cash and cash equivalents—  258,400  —  258,400  
Investments, at fair value—  9,997,178  8,454  10,005,632  
Due from affiliates—  7,201  —  7,201  
Receivable for securities sold—  276,692  —  276,692  
Other assets—  35,642  —  35,642  
Total assets$3,307,888  $10,575,113  $(163,044) $13,719,957  
Liabilities    
Accounts payable, accrued expenses and other liabilities$104,017  $—  $—  $104,017  
Accrued compensation123,123  —  —  123,123  
Due to affiliates61,025  —  —  61,025  
Performance related compensation payable715,181  —  —  715,181  
Debt obligations642,474  —  —  642,474  
Operating lease liabilities164,521  —  —  164,521  
Liabilities of Consolidated Funds   
Accounts payable, accrued expenses and other liabilities—  60,975  —  60,975  
Due to affiliates—  11,900  (11,900) —  
Payable for securities purchased—  449,169  —  449,169  
CLO loan obligations, at fair value—  9,271,823  (43,136) 9,228,687  
Fund borrowings—  167,037  —  167,037  
Total liabilities1,810,341  9,960,904  (55,036) 11,716,209  
Commitments and contingencies
Non-controlling interest in Consolidated Funds—  614,209  (108,008) 506,201  
Non-controlling interest in Ares Operating Group entities552,490  —  —  552,490  
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)
298,761  —  —  298,761  
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (135,335,943 shares issued and outstanding)
1,353  —  —  1,353  
Class B common stock, $0.01 par value,1,000 shares authorized (1,000 shares issued and outstanding)
—  —  —  —  
Class C common stock, $0.01 par value, 499,999,000 shares authorized (114,798,404 shares issued and outstanding)
1,148  —  —  1,148  
Additional paid-in-capital800,077  —  —  800,077  
Retained earnings(145,045) —  —  (145,045) 
Accumulated other comprehensive loss, net of tax(11,237) —  —  (11,237) 
       Total stockholders' equity945,057  —  —  945,057  
       Total equity1,497,547  614,209  (108,008) 2,003,748  
       Total liabilities, non-controlling interests and equity$3,307,888  $10,575,113  $(163,044) $13,719,957  
 As of December 31, 2019
 Consolidated
Company 
Entities 
Consolidated
Funds 
EliminationsConsolidated 
Assets    
Cash and cash equivalents$138,384  $—  $—  $138,384  
Investments (includes $1,134,967 of accrued carried interest)
1,845,520  —  (181,856) 1,663,664  
Due from affiliates282,197  —  (14,098) 268,099  
Other assets343,674  —  (2,381) 341,293  
Right-of-use operating lease assets143,406  —  —  143,406  
Assets of Consolidated Funds
Cash and cash equivalents—  606,321  —  606,321  
Investments, at fair value—  8,723,169  4,778  8,727,947  
Due from affiliates—  6,192  6,192  
Receivable for securities sold—  88,809  88,809  
Other assets—  30,081  30,081  
Total assets$2,753,181  $9,454,572  $(193,557) $12,014,196  
Liabilities    
Accounts payable, accrued expenses and other liabilities$88,173  $—  $—  $88,173  
Accrued compensation37,795  —  —  37,795  
Due to affiliates71,445  —  —  71,445  
Performance related compensation payable829,764  —  —  829,764  
Debt obligations316,609  —  —  316,609  
Operating lease liabilities168,817  —  —  168,817  
Liabilities of Consolidated Funds
Accounts payable, accrued expenses and other liabilities—  61,857  —  61,857  
Due to affiliates—  11,700  (11,700) —  
Payable for securities purchased—  500,146  —  500,146  
CLO loan obligations—  7,998,922  (25,174) 7,973,748  
Fund borrowings—  107,244  —  107,244  
Total liabilities1,512,603  8,679,869  (36,874) 10,155,598  
Commitments and contingencies
Non-controlling interest in Consolidated Funds—  774,703  (156,683) 618,020  
Non-controlling interest in Ares Operating Group entities472,288  —  —  472,288  
Stockholders' Equity
Series A Preferred Stock, $0.01 par value, 1,000,000,000 shares authorized (12,400,000 shares issued and outstanding)
298,761  —  —  298,761  
Class A common stock, $0.01 par value, 1,500,000,000 shares authorized (115,242,028 shares issued and outstanding)
1,152  —  —  1,152  
Class B common stock, $0.01 par value, 1,000 shares authorized (1,000 shares issued and outstanding)
—  —  —  —  
Class C common stock, $0.01 par value, 499,999,000 shares authorized (1 share issued and outstanding)
—  —  —  —  
Additional paid-in-capital525,244  —  —  525,244  
Retained earnings(50,820) —  —  (50,820) 
   Accumulated other comprehensive loss, net of tax(6,047) —  —  (6,047) 
       Total stockholders' equity768,290  —  —  768,290  
       Total equity1,240,578  774,703  (156,683) 1,858,598  
       Total liabilities, non-controlling interests and equity$2,753,181  $9,454,572  $(193,557) $12,014,196  
 Three Months Ended June 30, 2020
 Consolidated
Company 
Entities 
Consolidated
Funds 
Eliminations Consolidated 
Revenues    
Management fees (includes ARCC Part I Fees of $41,306)
$278,247  $—  $(11,380) $266,867  
Carried interest allocation303,278  —  —  303,278  
Incentive fees306  —  25  331  
Principal investment income32,957  —  (9,312) 23,645  
Administrative, transaction and other fees13,121  —  (4,484) 8,637  
Total revenues627,909  —  (25,151) 602,758  
Expenses    
Compensation and benefits185,131  —  —  185,131  
Performance related compensation237,108  —  —  237,108  
General, administrative and other expense58,084  —  —  58,084  
Expenses of the Consolidated Funds—  14,601  (11,357) 3,244  
Total expenses480,323  14,601  (11,357) 483,567  
Other income (expense)    
Net realized and unrealized gains on investments8,032  —  (7,742) 290  
Interest and dividend income3,898  —  (1,920) 1,978  
Interest expense(6,082) —  —  (6,082) 
Other income, net2,475  —  (294) 2,181  
Net realized and unrealized gains on investments of the Consolidated Funds—  71,497  12,025  83,522  
Interest and other income of the Consolidated Funds—  116,314  —  116,314  
Interest expense of the Consolidated Funds—  (78,417) 2,120  (76,297) 
Total other income8,323  109,394  4,189  121,906  
Income before taxes155,909  94,793  (9,605) 241,097  
Income tax expense24,419   —  24,421  
Net income131,490  94,791  (9,605) 216,676  
Less: Net income attributable to non-controlling interests in Consolidated Funds—  94,791  (9,605) 85,186  
Less: Net income attributable to non-controlling interests in Ares Operating Group entities75,119  —  —  75,119  
Net income attributable to Ares Management Corporation56,371  —  —  56,371  
Less: Series A Preferred Stock dividends paid5,425  —  —  5,425  
Net income attributable to Ares Management Corporation Class A common stockholders$50,946  $—  $—  $50,946  
 Three Months Ended June 30, 2019
 Consolidated
Company 
Entities 
Consolidated
Funds 
Eliminations Consolidated 
Revenues    
Management fees (includes ARCC Part I Fees of $39,157)
$246,581  $—  $(8,735) $237,846  
Carried interest allocation119,712  —  —  119,712  
Incentive fees14,970  —  (4,750) 10,220  
Principal investment income1,579  —  4,265  5,844  
Administrative, transaction and other fees11,200  —  —  11,200  
Total revenues394,042  —  (9,220) 384,822  
Expenses
Compensation and benefits162,170  —  —  162,170  
Performance related compensation92,688  —  —  92,688  
General, administrative and other expense65,416  —  —  65,416  
Expenses of the Consolidated Funds—  28,912  (13,485) 15,427  
Total expenses320,274  28,912  (13,485) 335,701  
Other income (expense)
Net realized and unrealized gains on investments927  —  (406) 521  
Interest and dividend income2,324  —  (672) 1,652  
Interest expense(5,793) —  —  (5,793) 
Other income, net5,078  —  (281) 4,797  
Net realized and unrealized losses on investments of the Consolidated Funds—  (486) 370  (116) 
Interest and other income of the Consolidated Funds—  102,206  —  102,206  
Interest expense of the Consolidated Funds—  (68,712) 707  (68,005) 
Total other income2,536  33,008  (282) 35,262  
Income before taxes76,304  4,096  3,983  84,383  
Income tax expense (benefit)9,772  (267) —  9,505  
Net income66,532  4,363  3,983  74,878  
Less: Net income attributable to non-controlling interests in Consolidated Funds—  4,363  3,983  8,346  
Less: Net income attributable to non-controlling interests in Ares Operating Group entities34,393  —  —  34,393  
Net income attributable to Ares Management Corporation32,139  —  —  32,139  
Less: Series A Preferred Stock dividends paid5,425  —  —  5,425  
Net income attributable to Ares Management Corporation Class A common stockholders$26,714  $—  $—  $26,714  
 Six Months Ended June 30, 2020
 Consolidated
Company 
Entities 
Consolidated
Funds 
Eliminations Consolidated
Revenues    
Management fees (includes ARCC Part I Fees of $85,229)
$552,598  $—  $(21,882) $530,716  
Carried interest allocation72,402  —  —  72,402  
Incentive fees(2,988) —  70  (2,918) 
Principal investment income (43,031) —  39,953  (3,078) 
Administrative, transaction and other fees26,846  —  (7,801) 19,045  
Total revenues605,827  —  10,340  616,167  
Expenses    
Compensation and benefits365,215  —  —  365,215  
Performance related compensation69,209  —  —  69,209  
General, administrative and other expense120,415  —  —  120,415  
Expenses of the Consolidated Funds—  32,500  (21,813) 10,687  
Total expenses554,839  32,500  (21,813) 565,526  
Other income (expense)    
Net realized and unrealized losses on investments(27,663) —  19,919  (7,744) 
Interest and dividend income6,500  —  (2,732) 3,768  
Interest expense(11,388) —  —  (11,388) 
Other income, net7,437  —  208  7,645  
Net realized and unrealized losses on investments of the Consolidated Funds—  (158,676) (12,563) (171,239) 
Interest and other income of the Consolidated Funds—  229,539  —  229,539  
Interest expense of the Consolidated Funds—  (159,714) 3,176  (156,538) 
Total other expense(25,114) (88,851) 8,008  (105,957) 
Income (loss) before taxes25,874  (121,351) 40,161  (55,316) 
Income tax expense3,775  30  —  3,805  
Net income (loss)22,099  (121,381) 40,161  (59,121) 
Less: Net loss attributable to non-controlling interests in Consolidated Funds—  (121,381) 40,161  (81,220) 
Less: Net loss attributable to non-controlling interests in in Ares Operating Group entities(3,236) —  —  (3,236) 
Net income attributable to Ares Management Corporation25,335  —  —  25,335  
Less: Series A Preferred Stock dividends paid10,850  —  —  10,850  
Net income attributable to Ares Management Corporation Class A common stockholders$14,485  $—  $—  $14,485  
 Six Months Ended June 30, 2019
 Consolidated
Company 
Entities 
Consolidated
Funds 
EliminationsConsolidated 
Revenues    
Management fees (includes ARCC Part I Fees of $77,550)
$479,653  $—  $(17,148) $462,505  
Carried interest allocation317,005  —  —  317,005  
Incentive fees32,219  —  (5,184) 27,035  
Principal investment income31,471  —  3,132  34,603  
Administrative, transaction and other fees20,871  —  —  20,871  
Total revenues881,219  —  (19,200) 862,019  
Expenses
Compensation and benefits319,016  —  —  319,016  
Performance related compensation249,208  —  —  249,208  
General, administrative and other expense116,603  —  —  116,603  
Expenses of the Consolidated Funds—  42,313  (22,332) 19,981  
Total expenses684,827  42,313  (22,332) 704,808  
Other income (expense)
Net realized and unrealized gains on investments5,351  —  (1,354) 3,997  
Interest and dividend income4,648  —  (1,152) 3,496  
Interest expense(11,382) —  —  (11,382) 
Other income, net210  —  90  300  
Net realized and unrealized gains on investments of the Consolidated Funds—  3,262  986  4,248  
Interest and other income of the Consolidated Funds—  195,390  —  195,390  
Interest expense of the Consolidated Funds—  (134,437) 1,520  (132,917) 
Total other income (expense)(1,173) 64,215  90  63,132  
Income before taxes195,219  21,902  3,222  220,343  
Income tax (benefit) expense24,735  (846) —  23,889  
Net income170,484  22,748  3,222  196,454  
Less: Net income attributable to non-controlling interests in Consolidated Funds—  22,748  3,222  25,970  
Less: Net income attributable to non-controlling interests in Ares Operating Group entities93,396  —  —  93,396  
Net income attributable to Ares Management Corporation77,088  —  —  77,088  
Less: Series A Preferred Stock dividends paid10,850  —  —  10,850  
Net income attributable to Ares Management Corporation Class A common stockholders$66,238  $—  $—  $66,238  
 Six Months Ended June 30, 2020
 Consolidated
Company 
Entities 
Consolidated
Funds
EliminationsConsolidated
Cash flows from operating activities:  
Net income (loss)$22,099  $(121,381) $40,161  $(59,121) 
Adjustments to reconcile net income to net cash used in operating activities197,873  (69,037) 128,836  
Adjustments to reconcile net loss to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds(510,528) 13,655  (496,873) 
Cash flows due to changes in operating assets and liabilities111,099  3,875  114,974  
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds:(190,501) 351,846  161,345  
Net cash provided by (used in) operating activities331,071  (822,410) 340,500  (150,839) 
Cash flows from investing activities: 
Purchase of furniture, equipment and leasehold improvements, net(8,080) —  —  (8,080) 
Acquisitions(35,844) —  —  (35,844) 
Net cash used in investing activities(43,924) —  —  (43,924) 
Cash flows from financing activities: 
Net proceeds from issuance of Class A common stock383,154  —  —  383,154  
Proceeds from credit facility790,000  —  —  790,000  
Proceeds from senior notes399,084  —  —  399,084  
Repayments of credit facility(860,000) —  —  (860,000) 
Dividends and distributions (224,407) —  —  (224,407) 
Series A Preferred Stock dividends(10,850) —  —  (10,850) 
Stock option exercises67,441  —  —  67,441  
Taxes paid related to net share settlement of equity awards(74,335) —  —  (74,335) 
Other financing activities(1,889) —  —  (1,889) 
Allocable to non-controlling interests in Consolidated Funds:
Contributions from non-controlling interests in Consolidated Funds—  138,700  (15,005) 123,695  
Distributions to non-controlling interests in Consolidated Funds—  (172,755) 22,426  (150,329) 
Borrowings under loan obligations by Consolidated Funds—  608,355  —  608,355  
Repayments under loan obligations by Consolidated Funds—  (87,689) —  (87,689) 
Net cash provided by financing activities468,198  486,611  7,421  962,230  
Effect of exchange rate changes(3,689) (12,122) —  (15,811) 
Net change in cash and cash equivalents751,656  (347,921) 347,921  751,656  
Cash and cash equivalents, beginning of period138,384  606,321  (606,321) 138,384  
Cash and cash equivalents, end of period$890,040  $258,400  $(258,400) $890,040  
 Six Months Ended June 30, 2019
 Consolidated
Company 
Entities 
Consolidated
Funds
EliminationsConsolidated
Cash flows from operating activities:  
Net income$170,484  $22,748  $3,222  $196,454  
Adjustments to reconcile net income to net cash used in operating activities37,274  —  10,840  48,114  
Adjustments to reconcile net income to net cash used in operating activities allocable to non-controlling interests in Consolidated Funds—  (1,444,622) 84,516  (1,360,106) 
Cash flows due to changes in operating assets and liabilities(12,712) —  (112) (12,824) 
Cash flows due to changes in operating assets and liabilities allocable to non-controlling interest in Consolidated Funds:—  (171,377) 8,427  (162,950) 
Net cash provided by (used in) operating activities195,046  (1,593,251) 106,893  (1,291,312) 
Cash flows from investing activities: 
Purchase of furniture, equipment and leasehold improvements, net(5,653) —  —  (5,653) 
Net cash used in investing activities(5,653) —  —  (5,653) 
Cash flows from financing activities: 
Proceeds from credit facility235,000  —  —  235,000  
Repayments of credit facility(150,000) —  —  (150,000) 
Dividends and distributions (152,364) —  —  (152,364) 
Series A Preferred Stock dividends(10,850) —  —  (10,850) 
Repurchases of Class A common stock(10,449) —  —  (10,449) 
Stock option exercises78,794  —  —  78,794  
Taxes paid related to net share settlement of equity awards(31,424) —  —  (31,424) 
Other financing activities(3,258) —  —  (3,258) 
Allocable to non-controlling interests in Consolidated Funds: 
Contributions from non-controlling interests in Consolidated Funds—  223,520  (108,021) 115,499  
Distributions to non-controlling interests in Consolidated Funds—  (35,149) 4,194  (30,955) 
Borrowings under loan obligations by Consolidated Funds—  1,938,858  (4,771) 1,934,087  
Repayments under loan obligations by Consolidated Funds—  (538,976) 10,021  (528,955) 
Net cash provided by (used in) financing activities(44,551) 1,588,253  (98,577) 1,445,125  
Effect of exchange rate changes(7,869) (3,318) —  (11,187) 
Net change in cash and cash equivalents136,973  (8,316) 8,316  136,973  
Cash and cash equivalents, beginning of period110,247  384,644  (384,644) 110,247  
Cash and cash equivalents, end of period$247,220  $376,328  $(376,328) $247,220