8-K

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 8-K

CURRENT REPORT

Pursuant to Section 13 OR 15(d) of

The Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): February 12, 2013

Fortress Investment Group LLC

(Exact name of registrant as specified in its charter)

Delaware	001-33294	20-5837959
(State or other jurisdiction of incorporation)	(Commission File Number)	(IRS Employer Identification No.)

1345 Avenue of the Americas, 46th Floor, New York, New York	10105
(Address of principal executive offices)	(Zip Code)

Registrant’s telephone number, including area code: (212) 798-6100

N/A

(Former name or former address, if changed since last report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):

¨ Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)

¨ Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)

¨ Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))

¨ Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Item 7.01. Regulation FD Disclosure.

Fortress Investment Group LLC (“Fortress”) will present at the Credit Suisse Financial Services Forum on February 12, 2013 at 8:45 a.m. (Eastern Time). A copy of the presentation is attached as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein. The presentation will also be available on Fortress’s website, www.fortress.com, in the “Public Shareholders” section.

* * *

This Current Report is being furnished and shall not be deemed to be filed for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, nor shall it be incorporated by reference into any of the Company’s filings under the Securities Act of 1933, as amended, or the Exchange Act, unless expressly set forth as being incorporated by reference into such filing. This Current Report shall not constitute an offer to sell or the solicitation of an offer to buy any securities nor will there be any sale of these securities in any state or other jurisdiction in which such offer, solicitation or sale would be unlawful prior to registration or qualification under the securities laws of any such state or other jurisdiction.

Item 9.01. Financial Statements and Exhibits.

Exhibit Number	Description
99.1	Presentation for the 2013 Credit Suisse Financial Services Forum

2

SIGNATURE

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.

FORTRESS INVESTMENT GROUP LLC

(Registrant)

/s/ David N. Brooks

David N. Brooks

General Counsel

Date: February 12, 2013

3

EX-99.1

Fortress Investment Group LLC

2013 Credit Suisse Financial Services Forum

February 2013

All

information

contained

herein

is

qualified

in

its

entirety

by

the

disclaimer

on

the

next

page

of

this

document.

Exhibit 99.1

Disclaimer

1

2

Figures as of September 30, 2012.

Executive Summary

Compelling valuation today with tremendous upside potential

Large diversified asset

management firm with

stable & substantial

base earnings

Catalysts in place to

drive earnings growth &

multiple expansion

$51.5 billion of fee-paying AUM across four large, established

investment management businesses

Highly diversified revenue model, product offerings and client base

Recurring management fees from $26 billion of alternative capital in

long-term, locked up structures

Strong investment performance and robust capital raising momentum

across all businesses

Significant incentive income potential based on embedded gains,

continued fund performance and PE realization activity

Rock solid balance sheet with substantial current value and potential

for meaningful further appreciation

Who is Fortress Investment Group?

3

Figures as of September 30, 2012.

Founded as a pure private equity firm in 1998, Fortress has transitioned into a highly diversified,

global investment manager with $51.5 billion of AUM

1998 –

Launched first private equity fund

2002 –

Added credit and liquid markets businesses

2007 –

First publicly traded alternative asset manager with IPO on the NYSE

2010 –

Acquired Logan Circle Partners, an established, highly scalable traditional fixed income business

Credit

Private Equity

Liquid Markets

Logan Circle

Fee-Paying Assets Under Management

($ billions)

0

10

20

30

40

50

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

3Q12

Fortress Today: A Diversified Business Model for All Seasons

4

Figures as of September 30, 2012.

Non-correlated alternative strategies complemented by long-only fixed income strategies

Specialized expertise and deep experience across various market cycles, geographies and asset classes

Strong investment performance and capital raising momentum across all businesses

Sector-

and asset-specific investment expertise aligned with large scale market opportunities

Financial Services /

Mortgage Servicing

Transportation &

Infrastructure

Senior Living & Care

Permanent Equity Vehicles

Credit

Private Equity

Liquid Markets

Logan Circle

Undervalued & Distressed

Assets

Operationally Intense,

Complex Deals

Restructuring

Real Estate

Lending

Global Macro

Asia Macro

Convex Asia

Endowment-Style

Core fixed income

Short & Long Duration

High Yield

Emerging Markets

Multi-Sector

$14.7B of AUM

$11.8B of AUM

$4.4B of AUM

$20.6B of AUM

5

Earnings have stabilized and balance sheet is stronger than ever

Tremendous results in 2007 demonstrate earnings power of the business model

Navigated the crisis and have since emerged consistently profitable and with greater financial flexibility

In 4Q12 paid in full $181 million of outstanding corporate debt (from peak of $800 million in 2008)

Year-end pro-forma total debt balance of $149.5 million (short-term note issued to repurchase shares)

Pre-Tax

Distributable

Earnings

(1)

($ millions)

Financial Performance Since IPO

Net

Cash

&

Investments

(3)

($ millions)

-$0.50

$0.00

$0.50

$1.00

$1.50

-$200

$0

$200

$400

$600

2007

2008

2009

2010

2011

Ann. 2012

Pre-Tax DE

Per Share

$0.00

$0.50

$1.00

$1.50

$2.00

$2.50

$0

$200

$400

$600

$800

$1,000

$1,200

$1,400

2007

2008

2009

2010

2011

3Q2012

Net Cash & Investments

Per Share

(per share)

(per share)

$0.43

$2.37

(2)

(1)

Pre-Tax

Distributable

Earnings

is

a

non-GAAP

financial

measure

described

in

Fortress’s

third

quarter

2012

earnings

release.

The

release

is

available

in

the

“Public

Shareholders

–

News”

section of

Fortress’s website, www.fortress.com. For a reconciliation of GAAP Net Income to Pre-Tax Distributable Earnings please see appendix slide #1. Annualized 2012 figures reflect annualized nine months

ended September 30, 2012 pre-tax distributable earnings.

(2)

For a reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average Dividend Paying Shares and Units Outstanding (Used for DEPS) please see appendix

slide #2.

(3)

Net Cash and Investments means cash & cash equivalents plus investments less debt outstanding, which is a non-GAAP financial measure described in Fortress’s third quarter 2012

earnings

release.

The

release

is

available

in

the

“Public

Shareholders

–

News”

section

of

Fortress’s

website,

www.fortress.com.

For

a

reconciliation

of

GAAP

Book

Value

Per

Share

to

Net Cash and

Investments Per Share please see appendix slide #3.

Business Segment Overview

6

2007

2008

2009

2010

2011

Annualized

2012

(2)

Average

High

PE & Castles

312

81

137

145

118

112

151

312

(3)

Credit

61

35

44

168

138

107

92

168

Liquid

161

102

28

64

14

20

65

161

Logan Circle

n/a

n/a

n/a

(15)

(17)

(9)

(14)

(9)

Total

534

(4)

216

208

358

253

230

294

632

Per share

$1.25

$0.48

$0.42

$0.69

$0.48

$0.43

$0.61

(5)

$1.31

(5)

7

($ millions)

Fund Management Distributable Earnings –

By Business

(1)

Earnings Breakdown by Business

Peak performance years in alternatives businesses point to significant upside potential

Core alternatives businesses poised for growth and increased earnings

Logan Circle approaching profitability with substantial scale-based potential

(1)

Fund Management Distributable Earnings is a non-GAAP financial measure described in Fortress’s third quarter 2012 earnings release.  The release is available in the “Public

Shareholders – News” section of Fortress’s website, www.fortress.com. For a reconciliation of GAAP Net Income to Pre-Tax Distributable Earnings and Fund Management

Distributable Earnings please see appendix slide #1.

(2)

Annualized 2012 figures reflect annualized nine months ended September 30, 2012 fund management distributable earnings.

(3)

Fortress has reserved $60 million of net intrinsic clawback liabilities in respect of DE previously distributed.

(4)

2007 total does not include unallocated expenses of $9 million.

(5)

Pro-forma share count based on repurchase of 51.3 million shares completed in 4Q2012.

8

Catalysts for Business Earnings Growth

Private Equity

Credit

Logan Circle

Liquid Markets

Significant value generation potential from legacy buyout funds

Transition to permanent capital vehicles and sector-specific funds to capitalize

on enormous current market opportunity set

Industry leading credit fund performance

Substantial embedded earnings potential from unrecognized incentive income

Ample dry powder for global investment opportunities

Outstanding 2012 performance across flagship Macro and Asia Macro funds

Increased capital inflow momentum

Well-positioned to generate higher levels of incentive income

Tremendous recent AUM growth, driven by strong investment performance

Highly scalable platform and experience managing substantially more capital

9

Private Equity: Strategic Evolution of the Business

Goal is to generate stable net mgmt fees of $100mm+ through general and new investment vehicles

Transformation from traditional buyout funds to opportunistic, sector-specific funds and permanent capital vehicles

Permanent

equity

capital

–

primarily

listed

vehicles

that

own

assets

and

provide

financing

Sector-specific

private

equity

funds

–

to

make

opportunistic

investments

in

large

industries

where

Fortress

has

deep knowledge and expertise; may also seed public companies

In certain

sectors,

permanent

capital

vehicles

are

or

may

be

paired

with

sector

focused

funds

Newcastle

New Residential

(1)

MSR Fund (existing)

Eurocastle

Italian NPL Fund

(4)

WWTAI

(2)

Infrastructure Fund

(4)

Senior Housing

(3)

China Senior Housing Fund

(4)

General Buyout Funds

Sector-Focused Funds

Permanent Capital

Diversified private equity funds

investing across multiple

industries

Fortress Investment Fund I

Fortress Investment Fund II

Fortress Investment Fund III

Fortress Investment Fund IV

Fortress Investment Fund V

Fortress Coinvestment Funds

Existing AUM: $11.0B

Fortress-managed public

companies

Existing AUM: $3.7B

Sector-specific private equity

funds

Existing AUM: $0.6B

(5)

Traditional Model

New Model

(1)

Newcastle’s ability to complete a spin-off of New Residential is subject to certain conditions, such as the SEC declaring the registration statement relating to

the spin-off effective, the filing and approval of an application to list New Residential’s common stock on the NYSE, and the formal declaration of the

distribution by the Board of Directors.

(2)

WWTAI is currently a private Fortress PE fund.

(3)

Senior housing properties currently owned by Newcastle and managed by FHC (FIG subsidiary).

(4)

Potential fund strategies.

(5)

Includes $0.6 billion raised for MSR Opportunities Fund not included in fee-paying AUM as of September 30, 2012.

New Model

10

Private Equity: Harvesting Gains From Legacy Funds

Continue

to

harvest

the

earnings

from

Funds

I

–

V:

high

operating

margins,

substantial

potential

for

promote

and

balance

sheet appreciation

Strong performance for older vintage funds; potential for newer vintage funds to generate attractive multiples & promote

PE Fund (vintage)

Current Fund NAV

Current Gross

Multiple

(1)

Key Drivers of Potential Future Value Generation

Fund I (1999)

$0.1bn

3.0x

Italfondiario

Fund II(2002)

$0.1bn

1.8x

GAGFAH

Fund III (2004)

$2.1bn

1.4x

Nationstar, GAGFAH

Fund IV (2006)

$4.0bn

1.2x

Nationstar, Holiday, Florida

(3)

Fund V (2007)

$3.7bn

1.0x

Florida

(3)

, Springleaf,Penn National Gaming, CW Financial

Total Main Funds

$10.0bn

1.4x

Co-investments

(2)

$5.3bn

1.0x

Florida

(3)

, Holiday

Total PE Funds

$15.3bn

1.3x

Figures as of September 30, 2012.

(1)

Multiple equals current NAV plus inception to date distributions, divided by the lesser of capital committed or equity invested.  For purposes of calculating the gross multiple, equity invested

excludes capital called for management fees and other expenses.  The inclusion of such amounts would reduce the gross multiple.  Gross multiple is not an accurate indicator of the Company’s

proximity to incentive income thresholds and is different from the statistic which would be computed based on the Company’s periodic 34 Act reporting, which reports net amounts.

(2)

Co-investments include Fund III Co, Fund IV Co, Fund V Co, FHIF, FECI, FRIC, FRID, FICO, GAGACQ-Co and FFPF.

(3)

Florida includes Florida East Coast and Flagler.

Legacy PE funds have potential to generate substantial fees over next 5 years

11

Dry powder: if deployed/called will become AUM and begin generating management fees

Unrecognized Incentive Income: will be recognized in distributable earnings with investment realizations

Credit: Embedded Value Yet to Impact Earnings

(1)

Reflects

incentive

income

generated

by

our

credit

PE

funds

gross

of

profit-sharing

expenses.

(2)

The hypothetical assumptions for capital deployed, revenues, expenses and earnings are presented solely for illustrative purposes and actual results could differ materially.

(3)

There can be no assurance that Fortress will achieve any given target return or that dry powder will be deployed into AUM. Target returns are subject to a number of trends and uncertainties, many of

which

are

beyond

our

control,

that

could

cause

actual

results

to

differ

materially.

(4)

Assumes management fee rate of 1.4% on fee-paying AUM.

(5)

Assumes incentive fee rate of 20%. Incentive income for credit PE funds will be recognized in distributable earnings when investments are realized.

(6)

Pro-forma share count based on repurchase of 51.3 million shares completed in 4Q2012.

Return Assumptions

(3)

($ millions)

10%

15%

20%

25%

Gross

Management

Fees

(4)

$14

$14

$14

$14

Gross

Incentive

Income

(5)

$20

$30

$40

$50

Gross Segment Revenues

$34

$44

$54

$64

Operating Margin

35%

35%

35%

35%

Fund Mgmt DE

$12

$15

$19

$22

Fund Mgmt DE/share

(6)

$0.02

$0.03

$0.04

$0.05

Hypothetical Annual Impact From Every $1bn

of Capital Deployed

(2)

Unrecognized Credit PE Incentive Income

(1)

(millions)

(per share)

$0.00

$0.25

$0.50

$0.75

$1.00

$0

$100

$200

$300

$400

$500

4Q2011

1Q2012

2Q2012

3Q2012

Unrecognized Incentive Income

Per Share

$0.80

FCO I and FCO II have generated annualized inception-to-date net returns of 26.9% and 17.8%, respectively

Credit PE funds currently have $6.5 billion of “dry powder” and $430 million of embedded

unrecognized incentive income

12

Liquid Markets: Significant Incentive Income Potential

Strong investment performance and capital raising momentum

Top-tier Macro Fund and Asia Macro Fund performance in 2012 has led to positive capital inflow momentum

Nearly 100% of main Macro Fund and Asia Macro Fund NAV were above high-water marks at year-end

Significant earnings potential from continued investment performance, growing AUM and higher incentive income

(1)

The

hypothetical

assumptions

for

capital

inflows,

revenues,

expenses

and

earnings

are

presented

solely

for

illustrative

purposes

and

actual

results

could

differ

materially.

(2)

Assumes 1.7% management fee rate on AUM. Includes management fees earned from $1.4 billion of AUM in the Fortress Partners Funds. Assumes 20% margin on gross management fees.

(3)

Assumes 20% incentive fee rate on incentive-eligible NAV above respective performance thresholds. Assumes 50% margin on gross incentive income.

(4)

There

can

be

no

assurance

that

Fortress

will

achieve

any

given

target

return.

Target

returns

are

subject

to

a

number

of

trends

and

uncertainties,

many

of

which

are

beyond

our

control,

that

could

cause

actual results to differ materially.

(5)

Pro-forma share count based on repurchase of 51.3 million shares completed in 4Q2012.

Current NAV

Incremental Capital Inflows

~$3,000

+$1,000

+$2,000

+$3,000

Net Management Fees

(2)

$16

$18

$20

$22

10% annual return

(4)

$31

$38

$44

$50

15% annual return

(4)

$48

$57

$67

$77

20% annual return

(4)

$65

$78

$91

$104

25% annual return

(4)

$82

$99

$116

$132

Fund Mgmt DE

$47 -

$98

$56 -

$117

$64 -

$136

$72 -

$155

Fund Mgmt DE/share

(5)

$0.10 -

$0.20

$0.11 -

$0.24

$0.13 -

$0.28

$0.15 -

$0.32

Hypothetical Liquid Hedge Fund Distributable Earnings

(1)

($ millions)

Liquid Hedge Fund Incentive-Eligible NAV Above Threshold

13

Logan Circle: AUM Growth & Scalability

Substantial LCP Asset Flow Momentum

(LCP AUM in billions)

LCP AUM Growth to $40 Billion

($ millions)

$40,000

$40,000

$40,000

Mgmt Fee Rate (bps)

15

15

15

Gross Annual Mgmt Fees

$60

$60

$60

Operating Margin

30%

40%

50%

Annual Fund Mgmt DE

$18

$24

$30

Annual Fund Mgmt DE/share

(2)

$0.04

$0.05

$0.06

Hypothetical Annual Impact to DE from LCP AUM Growth

(1)

Established global platform built for enormous scalability and the potential to generate substantial fee earnings

Since the acquisition of Logan Circle in 2010,  AUM has grown over 75% to $20.6 billion

Asset flow momentum has picked up substantially with $5.9 billion of client flows for the first nine months of 2012

14 of 15 Logan Circle strategies have outperformed their respective benchmarks since inception

(1)

The hypothetical assumptions for AUM growth, management fees, expenses and earnings are presented solely for illustrative purposes and actual results could differ materially.

(2)

Pro-forma share count based on repurchase of 51.3 million shares completed in 4Q2012.

14

Catalysts Sum to Substantial FIG Upside

In every Fortress business, specific catalysts point to potential for significant earnings growth

Business

Annualized 2012

Earnings

(1)

Private Equity

$112mm

Credit

$107mm

Liquid Markets

$20mm

Logan Circle

$(9)mm

TOTAL

$230mm

$0.43 per share

Incentive income from legacy buyout funds

Management & Incentive fees from new permanent capital vehicles

and sector-focused funds

Deployment of dry powder

Realization of unrecognized incentive income

Continued strong performance

Incremental capital inflows to existing and new strategies

Continued strong performance coupled with NAV above high-water

marks

Continued fund outperformance and asset flow momentum

Near-Term Growth Catalysts

Increased Potential Earnings

(1)

Annualized 2012 figures reflect annualized nine months ended September 30, 2012 fund management distributable earnings.

15

Substantial Valuation Discount Based on Current Multiples

Price / EPS Multiple Comparison

(2)

Price / EPS Multiple Calculation

Per Share

Current FIG Stock Price

(1)

$5.53

Less: Net Cash & Investments

$2.37

Stock Price ex. B/S Value

$3.16

2013 Consensus DEPS

0.59

Price / Earnings Multiple

5.4x

Enormous valuation disconnect from large, traditional non-diversified asset managers

Net

of

balance

sheet

value,

Fortress

currently

trades

at

5x

2013

consensus

DE

per

share

Traditional

asset

managers

trade

at

an

average

of

15x

earnings

without

the

benefits

of

incentive

income

and

long-term /

perpetual capital commitments

5.4 x

13.1 x

14.9 x

15.0 x

0.0 x

5.0 x

10.0 x

15.0 x

FIG

Financial Select

SPDR

S&P 500

Traditional Asset

Managers

(1)

FIG stock price as of February 8, 2013.

(2)

Sources: State Street Global Advisors, Bloomberg, Credit Suisse.

16

Recent FIG Highlights

(1)

Newcastle’s

ability

to

complete

a

spin-off

of

New

Residential

is

subject

to

certain

conditions,

such

as

the

SEC

declaring

the

registration

statement

relating

to

the

spin-off

effective,

the

filing

and

approval of an application to list New Residential’s common stock on the NYSE, and the formal declaration of the distribution by the Board of Directors.

(2)

Transaction

expected

to

close

in

the

first

half

of

2013

and

is

subject

to

customary

closing

conditions,

including

foreign

and

U.S.

regulatory

approvals.

In

addition,

the

transaction

is

subject

to

approval

by the shareholders of SeaCube.

Fund Investment

Performance

Drawbridge Special Opportunities Fund up 18% net in 2012; Fortress named “Credit-Focused Hedge Fund of

the Year”

by Institutional Investor for second consecutive year

Fortress

Asia

Macro

Funds

FY

2012

net

returns

of

21%;

named

“Best

Global

Macro

Fund”

at

the

HFMWeek

2012

Asia Performance Awards

Fortress Macro Funds FY 2012 net returns of 18%

PE main fund NAV up 21% YTD through 3Q 2012

14 of 15 LCP strategies have outperformed their respective benchmarks YTD through 3Q 2012

Fundraising Activity

FCO

III

Funds:

held

final

close

with

$4.3

billion

in

commitments

FJOF

II

Funds:

held

final

close

with

$1.6

billion

in

commitments

Liquid

&

Credit

Hedge

Funds:

over

$1

billion

in

third-party

capital

raised

in

2012

MSR

Fund:

nearly

$600

million

raised

in

2012

(newly

launched

sector-specific

PE

fund)

Newcastle

REIT:

nearly

$1

billion

raised

in

last

12

months

(through

January

2013)

Business Initiatives

Launched Credit Real Estate platform (nearly $300mm raised to date)

Launched Fortress Convex Asia Funds

Shanghai Starcastle senior living joint venture established; US investments in additional senior living properties

In January 2013, Newcastle announced creation of a new publicly traded residential-focused mortgage REIT

(New Residential Investment Corp.)

(1)

Notable PE Liquidity

& Realization Events

(2)

Appendix

17

18

Appendix Slide #1

Reconciliation of GAAP Net Income (Loss) to Pre-tax Distributable Earnings and Fund Management DE

(dollars in millions)

Nine Months Ended

September 30,

2009

2010

2011

2012

GAAP Net Income (Loss)

(909)

$                        

(782)

$                        

(1,117)

$                     

(3)

$                               

Principals' and Others' Interests in Income (Losses) of Consolidated Subsidiaries

654

497

685

(21)

GAAP Net Income (Loss) Attributable to Class A Shareholders

(255)

$                        

(285)

$                        

(432)

$                        

(24)

$                             

Private Equity incentive income

(3)

38

44

10

Hedge Fund incentive income

-

3

-

108

Reserve for clawback

27

-

(5)

6

Distributions of earnings from equity method investees

1

15

11

4

Losses (earnings) from equity method investees

(20)

(87)

(34)

(100)

Losses (gains) on options

(1)

(2)

5

2

Losses (gains) on other Investments

(24)

(1)

23

(31)

Incentive income guarantee recorded as a loss

(3)

-

-

-

Impairment of investments

(101)

(5)

(4)

(1)

Adjust income from the receipt of options

-

-

(13)

(22)

Mark-to-market of contingent consideration in business combination

-

(1)

(3)

-

Amortization of intangible assets and impairment of goodwill

-

1

22

-

Employee, Principal and director compensation

218

218

235

162

Principals' forfeiture agreement expense (expired in 2011)

952

952

1,051

-

Adjust non-controlling interests related to Fortress Operating Group units

(660)

(507)

(691)

15

Tax receivable agreement liability reduction

-

(22)

(3)

7

Taxes

(5)

55

36

35

Pre-tax Distributable Earnings

126

$                         

372

$                         

242

$                         

171

$                             

Investment Loss (income)

58

(34)

(8)

(10)

Interest Expense

24

20

19

11

Fund Management DE

208

$                         

358

$                         

253

$                         

172

$                             

Twelve Months Ended December 31,

19

Appendix Slide #1A

‘‘Distributable

earnings’’

is

Fortress’s

supplemental

measure

of

operating

performance.

It

reflects

the

value

created

which

management

considers

available for distribution during any period. As compared to generally accepted accounting principles (‘‘GAAP’’) net income, distributable earnings

excludes

the

effects

of

unrealized

gains

(or

losses)

on

illiquid

investments,

reflects

contingent

revenue

which

has

been

received

as

income

to

the

extent

it

is

not

expected

to

be

reversed,

and

disregards

expenses

which

do

not

require

an

outlay

of

assets,

whether

currently

or

on

an

accrued

basis.

Distributable earnings is reflected on an unconsolidated and pre-tax basis, and, therefore, the interests in consolidated subsidiaries related to

Fortress

Operating

Group

units

(held

by

the

principals)

and

income

tax

expense

are

added

back

in

its

calculation.

Distributable

earnings

is

not

a

measure of cash generated by operations which is available for distribution nor should it be considered in isolation or as an alternative to cash flow

or net income and it is not necessarily indicative of liquidity or cash available to fund the Company’s operations. For a complete discussion of

distributable earnings and its reconciliation to GAAP, as well as an explanation of the calculation of distributable earnings impairment, see note 10

to the financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2012.

Fortress’s management uses distributable earnings:

Growing distributable earnings is a key component to the Company’s business strategy and distributable earnings is the supplemental measure

used by management to evaluate the economic profitability of each of the Company’s businesses and total operations. Therefore, Fortress believes

that it provides useful information to investors in evaluating its operating performance. Fortress’s definition of distributable earnings is not based

on any definition contained in its amended and restated operating agreement.

“Fund

Management

DE”

is

equal

to

pre-tax

distributable

earnings

excluding

our

direct

investment-related

results.

It

is

comprised

of

“Segment

Revenues”

net of “Segment Expenses”

and “Principal Performance Payments.”

Fund management DE and its components are used by the Company

to analyze and measure the performance of our management business on a stand-alone basis.  We define our segment operating margin to be equal

to fund management DE divided by segment revenues. We believe that it is useful to provide investors with the opportunity to review our

management business using the same metrics.  Fund management DE and its components are subject to the same limitations as pre-tax distributable

earnings, as described above.

in its determination of periodic distributions to equity holders;

in making operating decisions and assessing the performance of each of the Company’s core businesses;

for planning purposes, including the preparation of annual operating budgets; and

as a valuation measure in strategic analyses in connection with the performance of its funds and the performance of its employees.

20

Appendix Slide #2

(1)

Includes both fully vested and nonvested restricted Class A shares.

(2)

Includes both fully vested and nonvested Fortress Operating Group RPUs.

Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average

Dividend Paying Shares and Units Outstanding (Used for DEPS)

Nine Months

Ended

September 30,

2009

2010

2011

2012

Weighted Average Class A Shares Outstanding (Used for Basic EPS)

125,740,897

165,446,404

186,662,670

212,297,285

Weighted average fully vested restricted Class A share units with dividend equivalent rights

(1,185,375)

(4,450,465)

(4,082,385)

(4,068,945)

Weighted average fully vested restricted Class A shares

(94,561)

(174,203)

(480,777)

(706,787)

Weighted Average Class A Shares Outstanding

124,460,961

160,821,736

182,099,508

207,521,553

Weighted average restricted Class A shares

(1)

158,500

339,533

522,365

722,413

Weighted average fully vested restricted Class A share units which are entitled to dividend

equivalent payments

1,185,375

4,450,465

4,082,385

4,068,945

Weighted average nonvested restricted Class A share units which are entitled to dividend

equivalent payments

24,153,521

19,695,924

13,994,757

6,667,917

Weighted average Fortress Operating Group units

310,576,187

302,123,167

304,832,761

301,815,314

Weighted average Fortress Operating Group RPUs

(2)

31,000,000

31,000,000

22,563,471

13,652,069

Weighted Average Class A Shares Outstanding (Used for DEPS)

491,534,544

518,430,825

528,095,247

534,448,211

Weighted average vested and nonvested restricted Class A share units which are not entitled to

dividend equivalent payments

25,069,721

26,436,872

23,439,170

19,212,189

Weighted Average Fully Diluted Shares and Units Outstanding (Used for Diluted DEPS)

516,604,265

544,867,697

551,534,417

553,660,400

Twelve Months Ended December 31,

21

Appendix Slide #3

Reconciliation of GAAP Book Value Per Share to Net Cash and Investments Per Share

(dollars and shares in thousands)

GAAP

Book Value

Net Cash and

Investments

GAAP

Book Value

Net Cash and

Investments

GAAP

Book Value

Net Cash and

Investments

GAAP

Book Value

Net Cash and

Investments

Cash and Cash equivalents

253,731

$        

253,731

$            

333,166

$        

333,166

$            

210,632

$        

210,632

$            

197,099

$        

197,099

$            

Investments

1,199,622

1,199,622

1,079,777

1,079,777

1,012,883

1,012,883

867,215

867,215

Due from Affilitates

289,889

-

298,689

-

303,043

-

64,511

Deferred Tax Asset

379,372

-

400,196

-

415,990

-

440,639

Other Assets

102,787

-

108,858

-

134,147

-

90,803

Assets

2,225,401

1,453,353

2,220,686

1,412,943

2,076,695

1,223,515

1,660,267

1,064,314

Debt Obligations Payable

180,528

$        

180,528

$            

261,250

$        

261,250

$            

277,500

$        

277,500

$            

397,825

$        

397,825

$            

Accrued Compensation and Benefits

222,719

-

247,024

-

260,790

-

131,134

Due to Affiliates

345,009

-

354,158

-

342,397

-

345,976

Deferred Incentive Income

245,957

-

238,658

-

198,363

-

160,097

Other Liabilities

81,193

-

57,204

-

68,230

-

25,921

Liabilities

1,075,406

180,528

1,158,294

261,250

1,147,280

277,500

1,060,953

397,825

Net

1,149,995

$    

1,272,825

$         

1,062,392

$    

1,151,693

$         

929,415

$        

946,015

$            

599,314

$        

666,489

$            

GAAP

Basic Shares

Dividend Paying

Shares and Units

GAAP

Basic Shares

Dividend Paying

Shares and Units

GAAP

Basic Shares

Dividend Paying

Shares and Units

GAAP

Basic Shares

Dividend Paying

Shares and Units

Class A Shares

219,361

219,361

189,254

189,254

169,110

169,110

145,485

145,485

Restricted Class A Shares

828

828

570

570

427

427

216

216

Fortress Operating Group Units

298,724

298,724

305,858

305,858

300,274

300,274

307,774

307,774

Fully Vested Class A Shares - Dividend Paying

-

637

-

692

-

1,058

-

1,175

Nonvested Class A Shares - Dividend Paying

-

6,434

-

13,668

-

19,258

-

25,218

Fortress Operating Group RPUs

-

10,333

-

20,666

-

31,000

-

31,000

Shares Outstanding

518,913

536,317

495,682

530,708

469,811

521,127

453,475

510,868

Per Share

2.22

$               

2.37

$                    

2.14

$               

2.17

$                    

1.98

$               

1.82

$                    

1.32

$               

1.30

$                    

As of

September 30, 2012

As of

December 31, 2011

As of

December 31, 2010

As of

December 31, 2009

Fortress believes that Net Cash and Investments is a useful supplemental measure because it provides investors with information regarding Fortress’s net investment assets.  Net Cash and

Investments excludes certain assets (due from affiliates, deferred tax asset, other assets) and liabilities (due to affiliates, accrued compensation and benefits, deferred incentive income and other

liabilities), its utility as a measure of financial position is limited.  Accordingly, Net Cash and Investments should be considered only as a supplement to GAAP Book Value as a measure of the

Company’s financial position.  The Company’s calculation of Net Cash and Investments may be different from the calculation used by other companies and, therefore, comparability may be limited

Fortress Investment Group LLC

1345 Avenue of the Americas

New York, NY 10105

Contact:

Gordon Runté, Managing Director of Investor Relations and Corporate Communications

+1 212 798 6082

grunte@fortress.com