FORM 8-K |
Oaktree Capital Group, LLC (Exact name of registrant as specified in its charter) | ||
Delaware | 001-35500 | 26-0174894 | ||
(State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) | ||
333 South Grand Avenue, 28th Floor Los Angeles, California | 90071 | |||
(Address of principal executive offices) | (Zip Code) |
¨ | 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 2.02 | Results of Operations. |
Item 9.01 | Financial Statements and Exhibits. |
Exhibit No. | Description | |
Exhibit 99.1 | Press release of Oaktree Capital Group, LLC, dated August 6, 2013. |
Date: August 6, 2013 | OAKTREE CAPITAL GROUP, LLC | |||||
By: | /s/ David M. Kirchheimer | |||||
Name: David M. Kirchheimer | ||||||
Title: Chief Financial Officer, Chief Administrative Officer and Principal |
• | Adjusted net income per Class A unit grew 97% for the second quarter, to $1.75, and 106% for the year's first two quarters, to $3.69, as compared with the corresponding prior-year periods, on gains in incentive income driven by fund realizations. |
• | Distributable earnings per Class A unit grew 90% for the second quarter, to $1.94, and 116% for the year's first two quarters, to $3.73, as compared with the corresponding prior-year periods, on gains in incentive income, as well as higher investment income proceeds. |
• | Economic net income per Class A unit grew 88% for the second quarter, to $1.13, and 63% for the year's first two quarters, to $3.16, as compared with the corresponding prior-year periods, as higher fund returns drove gains in incentives created (fund level) and investment income. |
• | GAAP net income attributable to Oaktree Capital Group, LLC grew 129%, to $56.6 million, and 164%, to $114.1 million, for the second quarter and first two quarters of 2013, respectively, as compared with the corresponding prior-year periods. |
• | Oaktree declares a quarterly distribution for the second quarter of $1.51 per Class A unit, bringing to $2.92 the aggregate distribution for the year's first two quarters, up 91% and 118%, respectively, over the prior-year amounts. |
As of or for the Three Months Ended June 30, | As of or for the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per unit data or as otherwise indicated) | |||||||||||||||
Segment Results: | |||||||||||||||
Adjusted net income revenues | $ | 555,120 | $ | 341,102 | $ | 1,148,568 | $ | 659,373 | |||||||
Adjusted net income | 296,981 | 165,510 | 632,731 | 339,142 | |||||||||||
Distributable earnings revenues | 572,219 | 353,862 | 1,126,656 | 638,428 | |||||||||||
Distributable earnings | 313,157 | 176,355 | 608,184 | 313,684 | |||||||||||
Fee-related earnings revenues | 182,487 | 188,843 | 366,701 | 380,105 | |||||||||||
Fee-related earnings | 60,153 | 82,213 | 124,367 | 162,490 | |||||||||||
Economic net income revenues | 412,306 | 202,968 | 1,138,270 | 723,732 | |||||||||||
Economic net income | 172,582 | 103,637 | 573,156 | 382,028 | |||||||||||
Per Class A unit: | |||||||||||||||
Adjusted net income | $ | 1.75 | $ | 0.89 | $ | 3.69 | $ | 1.79 | |||||||
Distributable earnings | 1.94 | 1.02 | 3.73 | 1.73 | |||||||||||
Fee-related earnings | 0.35 | 0.41 | 0.69 | 0.82 | |||||||||||
Economic net income | 1.13 | 0.60 | 3.16 | 1.94 | |||||||||||
Operating Metrics: | |||||||||||||||
Assets under management (in millions): | |||||||||||||||
Assets under management | $ | 76,400 | $ | 78,713 | $ | 76,400 | $ | 78,713 | |||||||
Management fee-generating assets under management | 64,614 | 66,311 | 64,614 | 66,311 | |||||||||||
Incentive-creating assets under management | 32,095 | 35,996 | 32,095 | 35,996 | |||||||||||
Uncalled capital commitments | 10,986 | 13,737 | 10,986 | 13,737 | |||||||||||
Accrued incentives (fund level): | |||||||||||||||
Incentives created (fund level) | 195,243 | (9,116 | ) | 654,943 | 256,046 | ||||||||||
Incentives created (fund level), net of associated incentive income compensation expense | 96,694 | (589 | ) | 359,452 | 158,846 | ||||||||||
Accrued incentives (fund level) | 2,127,500 | 1,751,326 | 2,127,500 | 1,751,326 | |||||||||||
Accrued incentives (fund level), net of associated incentive income compensation expense | 1,222,619 | 1,070,597 | 1,222,619 | 1,070,597 |
Investor Relations: | Oaktree Capital Group, LLC | |
Andrea D. Williams | ||
(213) 830-6483 | ||
investorrelations@oaktreecapital.com | ||
Press Relations: | Sard Verbinnen & Co | |
John Christiansen | ||
(415) 618-8750 | ||
jchristiansen@sardverb.com | ||
Carissa Ramirez | ||
(312) 895-4701 | ||
cramirez@sardverb.com |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per unit data) | |||||||||||||||
Revenues: | |||||||||||||||
Management fees | $ | 50,097 | $ | 29,207 | $ | 92,636 | $ | 61,227 | |||||||
Incentive income | 2,317 | — | 2,317 | 5,048 | |||||||||||
Total revenues | 52,414 | 29,207 | 94,953 | 66,275 | |||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | (90,263 | ) | (80,302 | ) | (183,978 | ) | (164,766 | ) | |||||||
Equity-based compensation | (7,105 | ) | (7,795 | ) | (13,557 | ) | (19,984 | ) | |||||||
Incentive income compensation | (128,953 | ) | (60,965 | ) | (259,224 | ) | (88,722 | ) | |||||||
Total compensation and benefits expense | (226,321 | ) | (149,062 | ) | (456,759 | ) | (273,472 | ) | |||||||
General and administrative | (31,124 | ) | (24,166 | ) | (52,608 | ) | (50,101 | ) | |||||||
Consolidated fund expenses | (28,095 | ) | (33,780 | ) | (51,678 | ) | (51,002 | ) | |||||||
Total expenses | (285,540 | ) | (207,008 | ) | (561,045 | ) | (374,575 | ) | |||||||
Other income (loss): | |||||||||||||||
Interest expense | (14,013 | ) | (11,860 | ) | (25,594 | ) | (22,850 | ) | |||||||
Interest and dividend income | 580,593 | 463,873 | 986,845 | 1,003,491 | |||||||||||
Net realized gain on consolidated funds' investments | 831,989 | 733,521 | 2,030,249 | 1,807,659 | |||||||||||
Net change in unrealized appreciation (depreciation) on consolidated funds' investments | (111,795 | ) | (180,216 | ) | 909,722 | 625,607 | |||||||||
Investment income (loss) | (1,111 | ) | 3,705 | 11,132 | 9,385 | ||||||||||
Other income (expense), net | 284 | 6,326 | 264 | 8,593 | |||||||||||
Total other income | 1,285,947 | 1,015,349 | 3,912,618 | 3,431,885 | |||||||||||
Income before income taxes | 1,052,821 | 837,548 | 3,446,526 | 3,123,585 | |||||||||||
Income taxes | (7,991 | ) | (13,925 | ) | (18,148 | ) | (21,692 | ) | |||||||
Net income | 1,044,830 | 823,623 | 3,428,378 | 3,101,893 | |||||||||||
Less: | |||||||||||||||
Net income attributable to non-controlling redeemable interests in consolidated funds | (762,487 | ) | (673,673 | ) | (2,826,452 | ) | (2,798,445 | ) | |||||||
Net income attributable to OCGH non-controlling interest | (225,766 | ) | (125,231 | ) | (487,783 | ) | (260,121 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 | |||||||
Distributions declared per Class A unit | $ | 1.41 | $ | 0.55 | $ | 2.46 | $ | 0.97 | |||||||
Net income per unit (basic and diluted): | |||||||||||||||
Net income per Class A unit | $ | 1.71 | $ | 0.84 | $ | 3.61 | $ | 1.66 | |||||||
Weighted average number of Class A units outstanding | 33,020 | 29,586 | 31,611 | 26,137 |
As of or for the Three Months Ended June 30, | As of or for the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per unit data or as otherwise indicated) | |||||||||||||||
Segment Statements of Operations Data: (1) | |||||||||||||||
Revenues: | |||||||||||||||
Management fees | $ | 182,487 | $ | 188,843 | $ | 366,701 | $ | 380,105 | |||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | |||||||||||
Investment income | 34,576 | 23,241 | 116,626 | 87,581 | |||||||||||
Total revenues | 555,120 | 341,102 | 1,148,568 | 659,373 | |||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | (90,166 | ) | (80,303 | ) | (183,783 | ) | (164,707 | ) | |||||||
Equity-based compensation | (924 | ) | — | (1,576 | ) | — | |||||||||
Incentive income compensation | (128,953 | ) | (60,965 | ) | (259,224 | ) | (88,722 | ) | |||||||
General and administrative | (29,512 | ) | (24,398 | ) | (53,500 | ) | (49,236 | ) | |||||||
Depreciation and amortization | (1,732 | ) | (1,929 | ) | (3,475 | ) | (3,672 | ) | |||||||
Total expenses | (251,287 | ) | (167,595 | ) | (501,558 | ) | (306,337 | ) | |||||||
Adjusted net income before interest and other income (expense) | 303,833 | 173,507 | 647,010 | 353,036 | |||||||||||
Interest expense, net of interest income (2) | (7,136 | ) | (8,063 | ) | (14,543 | ) | (16,227 | ) | |||||||
Other income (expense), net | 284 | 66 | 264 | 2,333 | |||||||||||
Adjusted net income | $ | 296,981 | $ | 165,510 | $ | 632,731 | $ | 339,142 | |||||||
Adjusted net income-OCG | $ | 57,928 | $ | 26,247 | $ | 116,655 | $ | 46,694 | |||||||
Adjusted net income per Class A unit | 1.75 | 0.89 | 3.69 | 1.79 | |||||||||||
Distributable earnings | 313,157 | 176,355 | 608,184 | 313,684 | |||||||||||
Distributable earnings-OCG | 63,966 | 30,073 | 118,042 | 45,300 | |||||||||||
Distributable earnings per Class A unit | 1.94 | 1.02 | 3.73 | 1.73 | |||||||||||
Fee-related earnings | 60,153 | 82,213 | 124,367 | 162,490 | |||||||||||
Fee-related earnings-OCG | 11,512 | 12,120 | 21,919 | 21,388 | |||||||||||
Fee-related earnings per Class A unit | 0.35 | 0.41 | 0.69 | 0.82 | |||||||||||
Economic net income | 172,582 | 103,637 | 573,156 | 382,028 | |||||||||||
Economic net income-OCG | 37,157 | 17,824 | 99,736 | 50,706 | |||||||||||
Economic net income per Class A unit | 1.13 | 0.60 | 3.16 | 1.94 | |||||||||||
Weighted average number of Operating Group units outstanding | 150,997 | 150,791 | 150,906 | 150,616 | |||||||||||
Weighted average number of Class A units outstanding | 33,020 | 29,586 | 31,611 | 26,137 | |||||||||||
Operating Metrics: | |||||||||||||||
Assets under management (in millions): | |||||||||||||||
Assets under management | $ | 76,400 | $ | 78,713 | $ | 76,400 | $ | 78,713 | |||||||
Management fee-generating assets under management | 64,614 | 66,311 | 64,614 | 66,311 | |||||||||||
Incentive-creating assets under management | 32,095 | 35,996 | 32,095 | 35,996 | |||||||||||
Uncalled capital commitments (3) | 10,986 | 13,737 | 10,986 | 13,737 | |||||||||||
Accrued incentives (fund level): (4) | |||||||||||||||
Incentives created (fund level) | 195,243 | (9,116 | ) | 654,943 | 256,046 | ||||||||||
Incentives created (fund level), net of associated incentive income compensation expense | 96,694 | (589 | ) | 359,452 | 158,846 | ||||||||||
Accrued incentives (fund level) | 2,127,500 | 1,751,326 | 2,127,500 | 1,751,326 | |||||||||||
Accrued incentives (fund level), net of associated incentive income compensation expense | 1,222,619 | 1,070,597 | 1,222,619 | 1,070,597 |
(1) | Our business is comprised of one segment, our investment management segment, which consists of the investment management services that we provide to our clients. The components of revenues and expenses used in determining adjusted net income do not give effect to the consolidation of the funds that we manage. In addition, adjusted net income excludes the effect of (a) non-cash equity-based compensation charges related to unit grants made before our initial public offering, (b) income taxes, (c) other income or expenses applicable to OCG or its Intermediate Holding Companies and (d) the adjustment for the OCGH non-controlling interest. Adjusted net income is calculated at the Operating Group level. For additional information regarding the reconciling adjustments discussed above, please see Exhibit A. |
(2) | Interest income was $0.9 million and $0.6 million for the three months ended June 30, 2013 and 2012, respectively, and $1.5 million and $1.1 million for the six months ended June 30, 2013 and 2012, respectively. |
(3) | Uncalled capital commitments represent undrawn capital commitments by partners (including Oaktree as general partner) of our closed-end funds in their investment periods 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 amount generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as segment incentive income. We recognize incentive income when it becomes fixed or determinable, all related contingencies have been removed and collection is reasonably assured. Amounts recognized by us as incentive income no longer are included in accrued incentives (fund level), the term we use for remaining fund-level accruals. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among other factors. |
As of | |||||||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||||||
(in millions) | |||||||||||||||
Assets Under Management: | |||||||||||||||
Closed-end funds | $ | 44,197 | $ | 46,381 | $ | 49,795 | |||||||||
Open-end funds | 29,271 | 29,837 | 26,542 | ||||||||||||
Evergreen funds | 2,932 | 2,583 | 2,376 | ||||||||||||
Total | $ | 76,400 | $ | 78,801 | $ | 78,713 | |||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in millions) | |||||||||||||||
Change in Assets Under Management: | |||||||||||||||
Beginning balance | $ | 78,801 | $ | 77,850 | $ | 78,713 | $ | 79,519 | |||||||
Closed-end funds: | |||||||||||||||
New capital commitments | 722 | 3,466 | 3,193 | 8,700 | |||||||||||
Distributions for a realization event/other | (4,711 | ) | (2,723 | ) | (15,253 | ) | (8,848 | ) | |||||||
Uncalled capital commitments at end of investment period | — | — | (1,634 | ) | (18 | ) | |||||||||
Foreign currency translation | 65 | (259 | ) | 151 | (583 | ) | |||||||||
Change in market value (1) | 1,185 | 752 | 6,584 | 841 | |||||||||||
Change in applicable leverage | 555 | (19 | ) | 1,361 | (123 | ) | |||||||||
Open-end funds: | |||||||||||||||
Contributions | 965 | 823 | 4,489 | 3,188 | |||||||||||
Redemptions | (1,364 | ) | (1,105 | ) | (4,471 | ) | (4,339 | ) | |||||||
Foreign currency translation | 7 | (146 | ) | 48 | (398 | ) | |||||||||
Change in market value (1) | (174 | ) | 137 | 2,663 | 1,131 | ||||||||||
Evergreen funds: | |||||||||||||||
Contributions or new capital commitments | 485 | 4 | 858 | 227 | |||||||||||
Redemptions | (144 | ) | (76 | ) | (568 | ) | (427 | ) | |||||||
Distributions from restructured funds | (17 | ) | — | (55 | ) | (69 | ) | ||||||||
Foreign currency translation | 1 | (2 | ) | 2 | (6 | ) | |||||||||
Change in market value (1) | 24 | 11 | 319 | (82 | ) | ||||||||||
Ending balance | $ | 76,400 | $ | 78,713 | $ | 76,400 | $ | 78,713 |
(1) | Change in market value represents the change in NAV of our funds resulting from current income and realized and unrealized gains/losses on investments, less management fees and other fund expenses. |
As of | |||||||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||||||
(in millions) | |||||||||||||||
Management Fee-generating Assets Under Management: | |||||||||||||||
Closed-end funds | $ | 33,119 | $ | 34,412 | $ | 37,709 | |||||||||
Open-end funds | 29,235 | 29,799 | 26,523 | ||||||||||||
Evergreen funds | 2,260 | 2,139 | 2,079 | ||||||||||||
Total | $ | 64,614 | $ | 66,350 | $ | 66,311 | |||||||||
Three Months Ended June 30, | Twelve Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in millions) | |||||||||||||||
Change in Management Fee-generating Assets Under Management: | |||||||||||||||
Beginning balance | $ | 66,350 | $ | 67,973 | $ | 66,311 | $ | 63,869 | |||||||
Closed-end funds: | |||||||||||||||
New capital commitments to funds that pay fees based on committed capital | 551 | — | 1,166 | 7,403 | |||||||||||
Capital drawn by funds that pay fees based on drawn capital or NAV | 610 | 427 | 1,767 | 1,206 | |||||||||||
Change for funds that pay fees based on the lesser of funded capital or cost basis during liquidation (1) | (2,859 | ) | (1,521 | ) | (8,441 | ) | (4,769 | ) | |||||||
Uncalled capital commitments at end of investment period for funds that pay fees based on committed capital | — | — | (57 | ) | — | ||||||||||
Distributions by funds that pay fees based on NAV | (57 | ) | (137 | ) | (339 | ) | (421 | ) | |||||||
Foreign currency translation | 42 | (123 | ) | 158 | (246 | ) | |||||||||
Change in market value (2) | (125 | ) | 63 | (165 | ) | 82 | |||||||||
Change in applicable leverage | 545 | (19 | ) | 1,321 | (122 | ) | |||||||||
Open-end funds: | |||||||||||||||
Contributions | 965 | 824 | 4,474 | 3,188 | |||||||||||
Redemptions | (1,364 | ) | (1,106 | ) | (4,471 | ) | (4,339 | ) | |||||||
Foreign currency translation | 7 | (146 | ) | 48 | (398 | ) | |||||||||
Change in market value | (172 | ) | 136 | 2,661 | 1,130 | ||||||||||
Evergreen funds: | |||||||||||||||
Contributions or capital drawn by funds that pay fees based on drawn capital or NAV | 240 | 4 | 447 | 227 | |||||||||||
Redemptions | (144 | ) | (76 | ) | (568 | ) | (426 | ) | |||||||
Change in market value | 25 | 12 | 302 | (73 | ) | ||||||||||
Ending balance | $ | 64,614 | $ | 66,311 | $ | 64,614 | $ | 66,311 |
(1) | For most closed-end funds, management fees are charged during the liquidation period on the lesser of (a) total funded capital and (b) the cost basis of assets remaining in the fund, with the cost basis of assets generally calculated by excluding cash balances. Thus, changes in fee basis during the liquidation period are not dependent on distributions made from the fund; rather, they are tied to the cost basis of the fund’s investments, which generally declines as the fund sells assets. |
(2) | The change in market value reflects certain funds that pay management fees based on NAV and leverage, as applicable. |
As of | |||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
(in millions) | |||||||||||
Reconciliation of Assets Under Management to Management Fee-generating Assets Under Management: | |||||||||||
Assets under management | $ | 76,400 | $ | 78,801 | $ | 78,713 | |||||
Difference between assets under management and committed capital or cost basis for closed-end funds (1) | (4,761 | ) | (5,160 | ) | (4,128 | ) | |||||
Capital commitments to funds that have not yet begun to generate management fees | (4,855 | ) | (4,994 | ) | (4,713 | ) | |||||
Undrawn capital commitments to funds for which management fees are based on drawn capital or NAV | (733 | ) | (846 | ) | (1,710 | ) | |||||
Oaktree’s general partner investments in management fee-generating funds | (940 | ) | (1,003 | ) | (1,004 | ) | |||||
Closed-end funds that are no longer paying management fees | (289 | ) | (218 | ) | (598 | ) | |||||
Funds for which management fees were permanently waived | (208 | ) | (230 | ) | (249 | ) | |||||
Management fee-generating assets under management | $ | 64,614 | $ | 66,350 | $ | 66,311 |
(1) | Not applicable to closed-end funds that pay management fees based on NAV or leverage, as applicable. |
As of | ||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | ||||||
Weighted Average Annual Management Fee Rates: | ||||||||
Closed-end funds | 1.49 | % | 1.49 | % | 1.51 | % | ||
Open-end funds | 0.49 | 0.49 | 0.47 | |||||
Evergreen funds | 1.72 | 1.80 | 1.80 | |||||
Overall | 1.04 | 1.05 | 1.10 |
As of | |||||||||||
June 30, 2013 | March 31, 2013 | June 30, 2012 | |||||||||
(in millions) | |||||||||||
Incentive-creating Assets Under Management: | |||||||||||
Closed-end funds | $ | 29,920 | $ | 31,862 | $ | 33,930 | |||||
Evergreen funds | 2,175 | 2,088 | 2,066 | ||||||||
Total | $ | 32,095 | $ | 33,950 | $ | 35,996 |
As of or for the Three Months Ended June 30, | As of or for the Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Accrued Incentives (Fund Level): | |||||||||||||||
Beginning balance | $ | 2,270,314 | $ | 1,889,460 | $ | 2,137,798 | $ | 1,686,967 | |||||||
Incentives created (fund level): | |||||||||||||||
Closed-end funds | 190,245 | (11,465 | ) | 629,831 | 242,729 | ||||||||||
Evergreen funds | 4,998 | 2,349 | 25,112 | 13,317 | |||||||||||
Total incentives created (fund level) | 195,243 | (9,116 | ) | 654,943 | 256,046 | ||||||||||
Less: segment incentive income recognized by us | (338,057 | ) | (129,018 | ) | (665,241 | ) | (191,687 | ) | |||||||
Ending balance | $ | 2,127,500 | $ | 1,751,326 | $ | 2,127,500 | $ | 1,751,326 | |||||||
Accrued incentives (fund level), net of associated incentive income compensation expense | $ | 1,222,619 | $ | 1,070,597 | $ | 1,222,619 | $ | 1,070,597 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands, except per unit data) | ||||||||||||||||
Revenues: | ||||||||||||||||
Management fees | $ | 182,487 | $ | 188,843 | $ | 366,701 | $ | 380,105 | ||||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | ||||||||||||
Investment income | 34,576 | 23,241 | 116,626 | 87,581 | ||||||||||||
Total revenues | 555,120 | 341,102 | 1,148,568 | 659,373 | ||||||||||||
Expenses: | ||||||||||||||||
Compensation and benefits | (90,166 | ) | (80,303 | ) | (183,783 | ) | (164,707 | ) | ||||||||
Equity-based compensation | (924 | ) | — | (1,576 | ) | — | ||||||||||
Incentive income compensation | (128,953 | ) | (60,965 | ) | (259,224 | ) | (88,722 | ) | ||||||||
General and administrative | (29,512 | ) | (24,398 | ) | (53,500 | ) | (49,236 | ) | ||||||||
Depreciation and amortization | (1,732 | ) | (1,929 | ) | (3,475 | ) | (3,672 | ) | ||||||||
Total expenses | (251,287 | ) | (167,595 | ) | (501,558 | ) | (306,337 | ) | ||||||||
Adjusted net income before interest and other income (expense) | 303,833 | 173,507 | 647,010 | 353,036 | ||||||||||||
Interest expense, net of interest income | (7,136 | ) | (8,063 | ) | (14,543 | ) | (16,227 | ) | ||||||||
Other income (expense), net | 284 | 66 | 264 | 2,333 | ||||||||||||
Adjusted net income | 296,981 | 165,510 | 632,731 | 339,142 | ||||||||||||
Adjusted net income attributable to OCGH non-controlling interest | (232,039 | ) | (133,037 | ) | (500,586 | ) | (280,483 | ) | ||||||||
Non-Operating Group other income | — | 6,260 | (1) | — | 6,260 | (1) | ||||||||||
Non-Operating Group expenses | (466 | ) | (100 | ) | (676 | ) | (278 | ) | ||||||||
Adjusted net income-OCG before income taxes | 64,476 | 38,633 | 131,469 | 64,641 | ||||||||||||
Income taxes-OCG | (6,548 | ) | (12,386 | ) | (1) | (14,814 | ) | (17,947 | ) | (1) | ||||||
Adjusted net income-OCG | $ | 57,928 | $ | 26,247 | $ | 116,655 | $ | 46,694 | ||||||||
Adjusted net income per Class A unit | $ | 1.75 | $ | 0.89 | $ | 3.69 | $ | 1.79 | ||||||||
Weighted average number of Class A units outstanding | 33,020 | 29,586 | 31,611 | 26,137 |
(1) | A nonrecurring adjustment in the second quarter of 2012 had the effect of increasing income taxes-OCG by $(7,134) and increasing non-Operating Group other income by $6,260, for a net effect of additional after-tax OCG expense of $(874). This adjustment stemmed from reductions in deferred tax assets and the liability for amounts due to affiliates. The effective income tax rate applicable to adjusted net income-OCG before income taxes for the three months ended June 30, 2012 was 16%, based on an annual rate of 18%, without the $(7,134) nonrecurring expense, and 32%, based on an annual rate of 24%, with it. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Income (loss) from investments in funds: | |||||||||||||||
Oaktree funds: | |||||||||||||||
Distressed debt | $ | 13,830 | $ | 8,610 | $ | 55,192 | $ | 51,792 | |||||||
Control investing | 12,915 | 6,481 | 22,771 | 11,166 | |||||||||||
Real estate | 1,468 | 3,874 | 10,679 | 7,344 | |||||||||||
Corporate debt | 1,692 | 2,469 | 5,464 | 5,342 | |||||||||||
Listed equities | 6,730 | (2,139 | ) | 11,954 | 2,147 | ||||||||||
Convertible securities | 13 | (31 | ) | 63 | 64 | ||||||||||
Non-Oaktree | (1,123 | ) | (613 | ) | 953 | 612 | |||||||||
Income (loss) from investments in companies: | |||||||||||||||
DoubleLine and other | (949 | ) | 4,590 | 9,550 | 9,114 | ||||||||||
Total investment income | $ | 34,576 | $ | 23,241 | $ | 116,626 | $ | 87,581 |
Three Months Ended June 30, | Six Months Ended June 30, | |||||||||||||||
2013 | 2012 | 2013 | 2012 | |||||||||||||
(in thousands, except per unit data) | ||||||||||||||||
Management fees: | ||||||||||||||||
Closed-end funds | $ | 136,176 | $ | 148,232 | $ | 275,224 | $ | 299,780 | ||||||||
Open-end funds | 36,289 | 30,983 | 72,344 | 61,448 | ||||||||||||
Evergreen funds | 10,022 | 9,628 | 19,133 | 18,877 | ||||||||||||
Total management fees | 182,487 | 188,843 | 366,701 | 380,105 | ||||||||||||
Expenses: | ||||||||||||||||
Compensation and benefits | (90,166 | ) | (80,303 | ) | (183,783 | ) | (164,707 | ) | ||||||||
Equity-based compensation | (924 | ) | — | (1,576 | ) | — | ||||||||||
General and administrative | (29,512 | ) | (24,398 | ) | (53,500 | ) | (49,236 | ) | ||||||||
Depreciation and amortization | (1,732 | ) | (1,929 | ) | (3,475 | ) | (3,672 | ) | ||||||||
Total expenses | (122,334 | ) | (106,630 | ) | (242,334 | ) | (217,615 | ) | ||||||||
Fee-related earnings | 60,153 | 82,213 | 124,367 | 162,490 | ||||||||||||
Fee-related earnings attributable to OCGH non-controlling interest | (46,998 | ) | (66,082 | ) | (98,360 | ) | (134,252 | ) | ||||||||
Non-Operating Group other income | — | 6,260 | (1) | — | 6,260 | (1) | ||||||||||
Non-Operating Group expenses | (467 | ) | (97 | ) | (677 | ) | (276 | ) | ||||||||
Fee-related earnings-OCG before income taxes | 12,688 | 22,294 | 25,330 | 34,222 | ||||||||||||
Fee-related earnings-OCG income taxes | (1,176 | ) | (10,174 | ) | (1) | (3,411 | ) | (12,834 | ) | (1) | ||||||
Fee-related earnings-OCG | $ | 11,512 | $ | 12,120 | $ | 21,919 | $ | 21,388 | ||||||||
Fee-related earnings per Class A unit | $ | 0.35 | $ | 0.41 | $ | 0.69 | $ | 0.82 | ||||||||
Weighted average number of Class A units outstanding | 33,020 | 29,586 | 31,611 | 26,137 |
(1) | A nonrecurring adjustment in the second quarter of 2012 had the effect of increasing income taxes-OCG by $(7,134) and increasing non-Operating Group other income by $6,260, for a net effect of additional after-tax OCG expense of $(874). This adjustment stemmed from reductions in deferred tax assets and the liability for amounts due to affiliates. The effective income tax rate applicable to fee-related earnings-OCG before income taxes for the three months ended June 30, 2012 was |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
Distributable Earnings: | (in thousands, except per unit data) | ||||||||||||||
Revenues: | |||||||||||||||
Management fees | $ | 182,487 | $ | 188,843 | $ | 366,701 | $ | 380,105 | |||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | |||||||||||
Receipts of investment income from funds (1) | 49,472 | 30,744 | 83,498 | 58,424 | |||||||||||
Receipts of investment income from DoubleLine and other companies | 2,203 | 5,257 | 11,216 | 8,212 | |||||||||||
Total distributable earnings revenues | 572,219 | 353,862 | 1,126,656 | 638,428 | |||||||||||
Expenses: | |||||||||||||||
Compensation and benefits | (90,166 | ) | (80,303 | ) | (183,783 | ) | (164,707 | ) | |||||||
Incentive income compensation | (128,953 | ) | (60,965 | ) | (259,224 | ) | (88,722 | ) | |||||||
General and administrative | (29,512 | ) | (24,398 | ) | (53,500 | ) | (49,236 | ) | |||||||
Depreciation and amortization | (1,732 | ) | (1,929 | ) | (3,475 | ) | (3,672 | ) | |||||||
Total expenses | (250,363 | ) | (167,595 | ) | (499,982 | ) | (306,337 | ) | |||||||
Other income (expense): | |||||||||||||||
Interest expense, net of interest income | (7,136 | ) | (8,063 | ) | (14,543 | ) | (16,227 | ) | |||||||
Operating Group income taxes | (1,847 | ) | (1,915 | ) | (4,211 | ) | (4,513 | ) | |||||||
Other income (expense), net | 284 | 66 | 264 | 2,333 | |||||||||||
Distributable earnings | $ | 313,157 | $ | 176,355 | $ | 608,184 | $ | 313,684 | |||||||
Distribution Calculation: | |||||||||||||||
Operating Group distribution with respect to the period | $ | 250,610 | $ | 141,433 | $ | 484,665 | $ | 251,539 | |||||||
Distribution per Operating Group unit | $ | 1.66 | $ | 0.94 | $ | 3.21 | $ | 1.67 | |||||||
Adjustments per Class A unit: | |||||||||||||||
Distributable earnings-OCG income taxes | (0.07 | ) | (0.09 | ) | (0.14 | ) | (0.20 | ) | |||||||
Tax receivable agreement | (0.07 | ) | (0.05 | ) | (0.13 | ) | (0.11 | ) | |||||||
Non-Operating Group expenses | (0.01 | ) | (0.01 | ) | (0.02 | ) | (0.02 | ) | |||||||
Distribution per Class A unit (2) | $ | 1.51 | $ | 0.79 | $ | 2.92 | $ | 1.34 |
(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 distribution from a fund is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends. |
(2) | With respect to the quarter ended June 30, 2013, the distribution was announced on August 6, 2013 and is payable on August 20, 2013. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||
(in thousands) | |||||||||||
Weighted Average Units: | |||||||||||
OCGH | 117,977 | 121,205 | 119,295 | 124,479 | |||||||
Class A | 33,020 | 29,586 | 31,611 | 26,137 | |||||||
Total | 150,997 | 150,791 | 150,906 | 150,616 | |||||||
Units Eligible for Fiscal Period Distribution: | |||||||||||
OCGH | 112,730 | 120,281 | |||||||||
Class A | 38,239 | 30,180 | |||||||||
Total | 150,969 | 150,461 |
As of | |||||||||||
June 30, 2013 | December 31, 2012 | June 30, 2012 | |||||||||
(in thousands) | |||||||||||
Assets: | |||||||||||
Cash and cash-equivalents | $ | 196,151 | $ | 458,191 | $ | 279,311 | |||||
U.S. Treasury and government agency securities | 938,070 | 370,614 | 376,224 | ||||||||
Management fees receivable | 35,339 | 27,351 | 22,782 | ||||||||
Incentive income receivable | 8,320 | 82,182 | 12,849 | ||||||||
Corporate investments, at equity | 1,061,793 | 1,115,952 | 1,195,084 | ||||||||
Deferred tax assets | 293,579 | 159,171 | 168,110 | ||||||||
Other assets | 144,935 | 146,087 | 140,349 | ||||||||
Total assets | $ | 2,678,187 | $ | 2,359,548 | $ | 2,194,709 | |||||
Liabilities and Capital: | |||||||||||
Liabilities: | |||||||||||
Accounts payable and accrued expenses | $ | 222,666 | $ | 214,311 | $ | 173,363 | |||||
Due to affiliates | 249,684 | 136,165 | 140,239 | ||||||||
Debt obligations | 591,964 | 615,179 | 626,429 | ||||||||
Total liabilities | 1,064,314 | 965,655 | 940,031 | ||||||||
Capital: | |||||||||||
OCGH non-controlling interest in consolidated subsidiaries | 1,167,819 | 1,087,491 | 975,908 | ||||||||
Unitholders’ capital attributable to Oaktree Capital Group, LLC | 446,054 | 306,402 | 278,770 | ||||||||
Total capital | 1,613,873 | 1,393,893 | 1,254,678 | ||||||||
Total liabilities and capital | $ | 2,678,187 | $ | 2,359,548 | $ | 2,194,709 |
As of | |||||||||||
June 30, 2013 | December 31, 2012 | June 30, 2012 | |||||||||
(in thousands) | |||||||||||
Investments in funds: | |||||||||||
Oaktree funds: | |||||||||||
Distressed debt | $ | 429,978 | $ | 475,476 | $ | 515,354 | |||||
Control investing | 249,321 | 264,186 | 262,846 | ||||||||
Real estate | 112,400 | 107,408 | 93,500 | ||||||||
Corporate debt | 107,081 | 115,250 | 148,472 | ||||||||
Listed equities | 95,354 | 69,222 | 53,951 | ||||||||
Convertible securities | 1,454 | 1,392 | 1,315 | ||||||||
Non-Oaktree | 53,866 | 53,591 | 96,558 | ||||||||
Investments in companies: | |||||||||||
DoubleLine and other | 12,339 | 29,427 | 23,088 | ||||||||
Total corporate investments, at equity | $ | 1,061,793 | $ | 1,115,952 | $ | 1,195,084 |
As of June 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||
Investment Period | Total Committed Capital | Drawn Capital (1) | Fund Net Income Since Inception | Distri-butions Since Inception | Net Asset Value | Manage-ment Fee-gener-ating AUM | Oaktree Segment Incentive Income Recog-nized | 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 | |||||||||||||||||||||||||||||||||||||||||||||||
OCM Opportunities Fund V, L.P. | Jun. 2004 | Jun. 2007 | $ | 1,179 | $ | 1,179 | $ | 945 | $ | 1,955 | $ | 169 | $ | 220 | $ | 151 | $ | 34 | $ | — | 18.7 | % | 14.3 | % | 1.9x | ||||||||||||||||||||||
OCM Opportunities Fund VI, L.P. | Jul. 2005 | Jul. 2008 | 1,773 | 1,773 | 1,303 | 2,416 | 660 | 701 | 90 | 164 | 325 | 12.4 | 9.1 | 1.8 | |||||||||||||||||||||||||||||||||
OCM Opportunities Fund VII, L.P. | Mar. 2007 | Mar. 2010 | 3,598 | 3,598 | 1,583 | 4,161 | 1,020 | 1,007 | 25 | 169 | 810 | 11.4 | 8.3 | 1.5 | |||||||||||||||||||||||||||||||||
OCM Opportunities Fund VIIb, L.P. | May 2008 | May 2011 | 10,940 | 9,844 | 9,113 | 14,988 | 3,969 | 2,659 | 998 | 773 | — | 23.8 | 18.2 | 2.0 | |||||||||||||||||||||||||||||||||
Special Account A | Nov. 2008 | Oct. 2012 | 253 | 253 | 321 | 393 | 181 | 115 | 28 | 36 | — | 33.5 | 27.3 | 2.3 | |||||||||||||||||||||||||||||||||
Oaktree Opportunities Fund VIII, L.P. | Oct. 2009 | Oct. 2012 | 4,507 | 4,507 | 1,878 | 1,572 | 4,813 | 3,476 | 65 | 301 | 3,964 | 17.7 | 12.4 | 1.5 | |||||||||||||||||||||||||||||||||
Special Account B | Nov. 2009 | Nov. 2012 | 1,031 | 1,068 | 467 | 500 | 1,035 | 1,014 | 3 | 64 | 834 | 19.2 | 15.0 | 1.5 | |||||||||||||||||||||||||||||||||
Oaktree Opportunities Fund VIIIb, L.P. | Aug. 2011 | Aug. 2014 | 2,692 | 2,423 | 304 | 10 | 2,717 | 2,625 | 1 | 58 | 2,617 | 17.0 | 10.1 | 1.2 | |||||||||||||||||||||||||||||||||
Oaktree Opportunities Fund IX, L.P. (6) | — (7) | — | 5,028 | 503 | (7 | ) | — | 496 | 493 | — | — | 511 | nm | nm | 1.0 | ||||||||||||||||||||||||||||||||
Legacy funds (8) | Various | Various | 9,543 | 9,543 | 8,176 | 17,675 | 44 | — | 1,109 | 9 | — | 24.2 | 19.3 | 1.9 | |||||||||||||||||||||||||||||||||
23.0 | % | 17.6 | % | ||||||||||||||||||||||||||||||||||||||||||||
Global Principal Investments | |||||||||||||||||||||||||||||||||||||||||||||||
OCM Principal Opportunities Fund III, L.P. | Nov. 2003 | Nov. 2008 | $ | 1,400 | $ | 1,400 | $ | 974 | $ | 1,770 | $ | 604 | $ | 550 | $ | 51 | $ | 138 | $ | 207 | 14.9 | % | 10.5 | % | 1.8x | ||||||||||||||||||||||
OCM Principal Opportunities Fund IV, L.P. | Oct. 2006 | Oct. 2011 | 3,328 | 3,328 | 1,483 | 2,405 | 2,406 | 1,946 | — | — | 2,421 | 10.4 | 8.0 | 1.6 | |||||||||||||||||||||||||||||||||
Oaktree Principal Fund V, L.P. | Feb. 2009 | Feb. 2014 | 2,827 | 2,021 | 467 | 385 | 2,103 | 2,756 | — | 70 | 2,013 | 15.8 | 8.4 | 1.3 | |||||||||||||||||||||||||||||||||
Special Account C | Dec. 2008 | Feb. 2014 | 505 | 414 | 252 | 133 | 533 | 355 | 10 | 40 | 380 | 21.9 | 16.2 | 1.7 | |||||||||||||||||||||||||||||||||
Legacy funds (8) | Various | Various | 2,301 | 2,301 | 1,838 | 4,112 | 27 | — | 235 | 1 | — | 14.5 | 11.6 | 1.8 | |||||||||||||||||||||||||||||||||
13.7 | % | 10.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
Asia Principal Investments | |||||||||||||||||||||||||||||||||||||||||||||||
OCM Asia Principal Opportunities Fund, L.P. | May 2006 | May 2011 | $ | 578 | $ | 503 | $ | 6 | $ | 100 | $ | 409 | $ | 344 | $ | — | $ | — | $ | 605 | 4.5 | % | 0.2 | % | 1.2x | ||||||||||||||||||||||
European Principal Investments (9) | |||||||||||||||||||||||||||||||||||||||||||||||
OCM European Principal Opportunities Fund, L.P. | Mar. 2006 | Mar. 2009 | $ | 495 | $ | 460 | $ | 354 | $ | 194 | $ | 620 | $ | 342 | $ | 3 | $ | 44 | $ | 563 | 10.7 | % | 8.3 | % | 1.9x | ||||||||||||||||||||||
OCM European Principal Opportunities Fund II, L.P. | Dec. 2007 | Dec. 2012 | € | 1,759 | € | 1,685 | € | 406 | € | 605 | € | 1,486 | € | 1,281 | € | 11 | € | — | € | 1,572 | 10.9 | 6.9 | 1.4 | ||||||||||||||||||||||||
Oaktree European Principal Fund III, L.P. | Nov. 2011 | Nov. 2016 | € | 3,164 | € | 1,265 | € | 95 | € | 3 | € | 1,357 | € | 3,072 | € | — | € | — | € | 1,386 | 12.5 | 6.2 | 1.1 | ||||||||||||||||||||||||
11.0 | % | 7.2 | % | ||||||||||||||||||||||||||||||||||||||||||||
Power Opportunities | |||||||||||||||||||||||||||||||||||||||||||||||
OCM/GFI Power Opportunities Fund, L.P. | Nov. 1999 | Nov. 2004 | $ | 449 | $ | 383 | $ | 251 | $ | 634 | $ | — | $ | — | $ | 23 | $ | — | $ | — | 20.1 | % | 13.1 | % | 1.8x | ||||||||||||||||||||||
OCM/GFI Power Opportunities Fund II, L.P. | Nov. 2004 | Nov. 2009 | 1,021 | 541 | 1,460 | 1,899 | 102 | 39 | 94 | 7 | — | 76.3 | 59.1 | 3.9 | |||||||||||||||||||||||||||||||||
Oaktree Power Opportunities Fund III, L.P. | Apr. 2010 | Apr. 2015 | 1,062 | 326 | 126 | 5 | 447 | 1,036 | — | 24 | 362 | 37.4 | 19.4 | 1.6 | |||||||||||||||||||||||||||||||||
35.3 | % | 27.4 | % | ||||||||||||||||||||||||||||||||||||||||||||
Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||
OCM Real Estate Opportunities Fund III, L.P. | Sep. 2002 | Sep. 2005 | $ | 707 | $ | 707 | $ | 647 | $ | 1,238 | $ | 116 | $ | — | $ | 105 | $ | 23 | $ | — | 15.8 | % | 11.8 | % | 2.0x | ||||||||||||||||||||||
Oaktree Real Estate Opportunities Fund IV, L.P. | Dec. 2007 | Dec. 2011 | 450 | 450 | 280 | 224 | 506 | 335 | 8 | 44 | 379 | 17.9 | 11.8 | 1.7 | |||||||||||||||||||||||||||||||||
Special Account D | Nov. 2009 | Nov. 2012 | 256 | 263 | 155 | 191 | 227 | 130 | 1 | 14 | 148 | 20.1 | 17.2 | 1.6 | |||||||||||||||||||||||||||||||||
Oaktree Real Estate Opportunities Fund V, L.P. | Mar. 2011 | Mar. 2015 | 1,283 | 1,283 | 330 | 120 | 1,493 | 1,251 | 5 | 58 | 1,343 | 18.5 | 12.6 | 1.3 | |||||||||||||||||||||||||||||||||
Oaktree Real Estate Opportunities Fund VI, L.P. (6) | Aug. 2012 | Aug. 2016 | 1,204 | 843 | (7 | ) | 1 | 835 | 1,166 | — | — | 863 | nm | nm | 1.0 | ||||||||||||||||||||||||||||||||
Legacy funds (8) | Various | Various | 1,634 | 1,610 | 1,399 | 3,004 | 5 | — | 111 | 1 | 54 | 15.2 | 12.0 | 1.9 | |||||||||||||||||||||||||||||||||
15.5 | % | 12.0 | % |
As of June 30, 2013 | |||||||||||||||||||||||||||||||||||||||||||||||||
Investment Period | Total Committed Capital | Drawn Capital (1) | Fund Net Income Since Inception | Distri-butions Since Inception | Net Asset Value | Manage- ment Fee-gener- ating AUM | Oaktree Segment Incentive Income Recog-nized | 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) | |||||||||||||||||||||||||||||||||||||||||||||||||
Asia Real Estate | |||||||||||||||||||||||||||||||||||||||||||||||||
Oaktree Asia Special Situations Fund, L.P. | May 2008 | Apr. 2009 | $ | 50 | $ | 19 | $ | 14 | $ | 2 | $ | 31 | $ | — | $ | — | $ | 2 | $ | 26 | 17.4 | % | 9.8 | % | 2.0x | ||||||||||||||||||||||||
PPIP | |||||||||||||||||||||||||||||||||||||||||||||||||
Oaktree PPIP Fund, L.P. (10) | Dec. 2009 | Dec. 2012 | $ | 2,322 | $ | 1,113 | $ | 458 | $ | 1,489 | $ | 82 | $ | — | $ | 32 | $ | 15 | (11 | ) | $ | — | 28.2 | % | N/A | 1.4x | |||||||||||||||||||||||
Mezzanine Finance | |||||||||||||||||||||||||||||||||||||||||||||||||
OCM Mezzanine Fund, L.P. (12) | Oct. 2001 | Oct. 2006 | $ | 808 | $ | 773 | $ | 279 | $ | 1,038 | $ | 14 | $ | — | $ | 32 | $ | 2 | $ | — | 14.3 | % | 10.7% /10.0% | 1.4x | |||||||||||||||||||||||||
OCM Mezzanine Fund II, L.P. | Jun. 2005 | Jun. 2010 | 1,251 | 1,107 | 429 | 1,160 | 376 | 505 | — | — | 426 | 10.5 | 7.3 | 1.5 | |||||||||||||||||||||||||||||||||||
Oaktree Mezzanine Fund III, L.P. (13) | Dec. 2009 | Dec. 2014 | 1,592 | 1,130 | 120 | 397 | 853 | 1,552 | — | — | 895 | 12.9 | 10.4 / (0.9) | 1.2 | |||||||||||||||||||||||||||||||||||
12.1 | % | 8.2 | % | ||||||||||||||||||||||||||||||||||||||||||||||
U.S. Senior Loans | |||||||||||||||||||||||||||||||||||||||||||||||||
Oaktree Loan Fund, L.P. | Sep. 2007 | Sep. 2012 | $ | 2,193 | $ | 2,193 | $ | 95 | $ | 2,288 | $ | — | $ | — | N/A | N/A | N/A | 2.5 | % | 1.9 | % | 1.1x | |||||||||||||||||||||||||||
Oaktree Loan Fund, 2x, L.P. | Sep. 2007 | Sep. 2015 | 1,722 | 1,722 | 103 | 1,773 | 52 | 51 | N/A | N/A | N/A | 2.7 | 2.0 | 1.1 | |||||||||||||||||||||||||||||||||||
Oaktree Enhanced Income Fund, L.P. (6) | Sep. 2012 | Aug. 2015 | 755 | 755 | 19 | — | 774 | 2,190 | (14) | N/A | N/A | N/A | nm | nm | 1.0 | ||||||||||||||||||||||||||||||||||
32,517 | (15) | 2,091 | (15) | ||||||||||||||||||||||||||||||||||||||||||||||
Other (16) | 202 | 4 | |||||||||||||||||||||||||||||||||||||||||||||||
Total (17) | $ | 32,719 | $ | 2,095 |
(1) | Reflects the capital contributions of investors in the fund, net of any distributions to such investors of uninvested capital. |
(2) | Excludes Oaktree segment incentive income recognized since inception. |
(3) | Reflects the amount the fund needs to distribute to its investors as a return of capital and a preferred return (as applicable) before Oaktree is entitled to receive incentive income (other than tax distributions) from the fund. |
(4) | The internal rate of return (“IRR”) is the annualized implied discount rate calculated from a series of cash flows. It is the return that equates the present value of all capital invested in an investment to the present value of all returns of capital, or the discount rate that will provide a net present value of all cash flows equal to zero. Fund-level IRRs are calculated based upon the actual timing of cash contributions/distributions to investors and the residual value of such investor's capital accounts at the end of the applicable period being measured. Gross IRRs reflect returns before allocation of management fees, expenses and any incentive allocation to the fund's general partner. Net IRRs reflect returns to non-affiliated investors after allocation of management fees, expenses and any incentive allocation to the fund's general partner. |
(5) | Calculated as Drawn Capital plus gross income before fees and expenses divided by Drawn Capital. |
(6) | The IRR is not considered meaningful (“nm”) as the period from the initial contribution through June 30, 2013 is less than one year. |
(7) | As of June 30, 2013, Oaktree Opportunities Fund IX, L.P. had made an aggregate 10% drawdown against its $5.0 billion of committed capital. Oaktree has not yet commenced the fund's investment period and, as a result, as of June 30, 2013 management fees were assessed only on the drawn capital, and management fee-generating AUM included only that portion of committed capital. |
(8) | Represents certain predecessor funds within the relevant strategy that have completely liquidated their assets or whose remaining assets represent less than 5% of the committed capital of such fund. Includes 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. |
(9) | Aggregate IRRs based on conversion of OCM European Principal Opportunities Fund II, L.P. and Oaktree European Principal Fund III, L.P. cash flows from Euros to USD at the June 30, 2013 spot rate of $1.30. |
(10) | Due to the differences in allocations of income and expenses to this fund's two primary limited partners, the U.S. Treasury and Oaktree PPIP Private Fund, L.P., a combined net IRR is not presented. Of the $2,322 million in capital commitments, $1,161 million relates to the Oaktree PPIP Private Fund, L.P. The gross and net IRR for the Oaktree PPIP Private Fund, L.P. were 24.8% and 18.7%, respectively, as of June 30, 2013. |
(11) | Represents amounts related to the Oaktree PPIP Private Fund, L.P. only. |
(12) | The fund's partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. Net IRR for Class A interests is 10.7% and Class B interests is 10.0%. Combined net IRR for the Class A and Class B interests is 10.3%. |
(13) | The fund's partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. Net IRR for Class A interests is 10.4% and Class B interests is (0.9)%. Combined net IRR for Class A and Class B interests is 7.5%. |
(14) | Represents gross assets, including leverage of $1,437 million. |
(15) | Totals based on conversion of Euro amounts to USD at the June 30, 2013 spot rate of $1.30. |
(16) | Includes separate accounts and a non-Oaktree fund. |
(17) | Excludes one separate account with management fee-generating AUM of $400 million as of June 30, 2013, which has been included as part of the Strategic Credit strategy within the evergreen funds table. |
Manage-ment Fee-gener- ating AUM as of June 30, 2013 | Twelve Months Ended June 30, 2013 | Since Inception through June 30, 2013 | |||||||||||||||||||||||||
Composite Inception | Rates of Return (1) | Annualized Rates of Return (1) | Sharpe Ratio | ||||||||||||||||||||||||
Oaktree | Rele- vant Bench- mark | Oaktree | Rele- vant Bench- mark | Oaktree Gross | Rele- vant Bench- mark | ||||||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||||
U.S. High Yield Bonds | Jan. 1986 | $ | 16,549 | 8.3 | % | 7.7 | % | 8.9 | % | 9.9 | % | 9.4 | % | 8.8 | % | 0.80 | 0.54 | ||||||||||
European High Yield Bonds | May 1999 | 1,267 | 13.4 | 12.8 | 13.5 | 8.2 | 7.6 | 6.1 | 0.60 | 0.34 | |||||||||||||||||
U.S. Convertibles | Apr. 1987 | 4,564 | 19.3 | 18.7 | 18.6 | 10.0 | 9.4 | 8.0 | 0.48 | 0.31 | |||||||||||||||||
Non-U.S. Convertibles | Oct. 1994 | 2,407 | 11.3 | 10.8 | 10.3 | 9.0 | 8.3 | 5.8 | 0.75 | 0.35 | |||||||||||||||||
High Income Convertibles | Aug. 1989 | 1,078 | 11.5 | 11.0 | 9.2 | 12.0 | 11.4 | 8.6 | 1.02 | 0.58 | |||||||||||||||||
U.S. Senior Loans | Sep. 2008 | 2,077 | 6.5 | 6.0 | 7.6 | 8.1 | 7.6 | 6.2 | 1.19 | 0.59 | |||||||||||||||||
European Senior Loans | May 2009 | 1,219 | 8.0 | 7.5 | 8.7 | 11.8 | 11.2 | 13.1 | 1.84 | 1.91 | |||||||||||||||||
Emerging Markets Equity | Jul. 2011 | 74 | 9.0 | 8.1 | 2.9 | (2.9 | ) | (3.7 | ) | (7.0 | ) | (0.13) | (0.33) | ||||||||||||||
Total | $ | 29,235 |
(1) | Represents Oaktree’s time-weighted rates of return, including reinvestment of income, net of commissions and transaction costs. Returns for Relevant Benchmarks are presented on a gross basis. |
As of June 30, 2013 | Twelve Months Ended June 30, 2013 | Since Inception through June 30, 2013 | |||||||||||||||||||||||
Strategy AUM | Manage- ment Fee-gener- ating AUM | Accrued Incen- tives (Fund Level) (1) | |||||||||||||||||||||||
Strategy Inception | Rates of Return | Annualized Rates of Return | |||||||||||||||||||||||
Gross | Net | Gross | Net | ||||||||||||||||||||||
(in millions) | |||||||||||||||||||||||||
Value Opportunities | Sep. 2007 | $ | 1,772 | $ | 1,712 | $ | 22 | 19.5 | % | 13.6 | % | 13.7 | % | 8.8 | % | ||||||||||
Emerging Markets Absolute Return | Apr. 1997 | 324 | 302 | N/A | (3) | 6.8 | 4.5 | 15.5 | 10.6 | ||||||||||||||||
Strategic Credit (2) | Jul. 2012 | 1,208 | 646 | 1 | 18.3 | 17.7 | 18.3 | 17.7 | |||||||||||||||||
2,660 | 23 | ||||||||||||||||||||||||
Restructured funds (4) | — | 10 | |||||||||||||||||||||||
Total (2) | $ | 2,660 | $ | 33 |
(1) | For the three and six months ended June 30, 2013, segment incentive income recognized by Oaktree totaled $1.7 million and $3.7 million, respectively. |
(2) | Includes a separate account with a closed-end fund structure with $550 million of AUM and $400 million of management fee-generating AUM. Returns presented are time-weighted rates of return for the closed-end separate account. |
(3) | As of June 30, 2013, the aggregate depreciation below high-water marks previously established for individual investors in the fund totaled approximately $4.6 million. |
(4) | Oaktree manages three restructured evergreen funds that are in liquidation: Oaktree European Credit Opportunities Fund, L.P., Oaktree High Yield Plus Fund, L.P. and Oaktree Japan Opportunities Fund, L.P. (Yen class). As of June 30, 2013, these funds had gross and net IRRs since inception of (2.1)% and (4.6)%, 8.0% and 5.6%, and (8.1)% and (9.2)%, respectively, and in the aggregate had AUM of $177.7 million. Additionally, Oaktree High Yield Plus Fund, L.P. had accrued incentives (fund level) of $9.5 million as of June 30, 2013. |
• | Management fee-generating assets under management (“management fee-generating AUM”) reflects the AUM on which we will earn management fees in the following quarter. Our closed-end funds typically pay management fees based on committed capital during the investment period, without regard to changes in NAV or the pace of capital drawdowns, and during the liquidation period on the lesser of (a) total funded capital and (b) the cost basis of assets remaining in the fund. The annual management fee rate remains unchanged from the investment period through the liquidation period. Our open-end and evergreen funds pay management fees based on their NAV. As compared with AUM, management fee-generating AUM generally excludes the following: |
◦ | Differences between AUM and either committed capital or cost basis for closed-end funds, other than for closed-end funds that pay management fees based on NAV and leverage, as applicable; |
◦ | Undrawn capital commitments to funds for which management fees are based on NAV or drawn capital; |
◦ | Undrawn capital commitments to closed-end funds that have not yet commenced their investment periods; |
◦ | The investments we make in our funds as general partner; |
◦ | Closed-end funds that are beyond the term during which they pay management fees; and |
◦ | AUM in restructured and liquidating evergreen funds for which management fees were waived. |
• | Incentive-creating assets under management (“incentive-creating AUM”) refers to the AUM that may eventually produce incentive income. It represents the NAV of our funds for which we are entitled to receive an incentive allocation, excluding investments made by us and our employees and directors (which are not subject to an incentive allocation). All funds for which we are entitled to receive an incentive allocation are included in incentive-creating AUM, regardless of whether or not they are currently generating incentives. Incentive-creating AUM does not include undrawn capital commitments because they are not part of the NAV. |
• | our U.S. high yield bond strategy, to the Citigroup U.S. High Yield Cash-Pay Capped Index; |
• | our European high yield bond strategy, to the BofA Merrill Lynch Global Non-Financial High Yield European Issuers excluding Russia 3% Constrained Index (USD Hedged); |
• | our U.S. senior loan strategy (with the exception of the closed-end funds), to the Credit Suisse Leveraged Loan Index; |
• | our European senior loan strategy, to the Credit Suisse Western European Leveraged Loan Index (EUR Hedged); |
• | our U.S. convertible securities strategy, to an Oaktree custom convertible index that represents the Credit Suisse Convertible Securities Index from inception through December 31, 1999, the Goldman Sachs/Bloomberg Convertible 100 Index from January 1, 2000 through June 30, 2004 and the BofA Merrill Lynch All U.S. Convertibles Index thereafter; |
• | our non-U.S. convertible securities strategy, to the JACI Global ex-U.S. (Local) Index; |
• | our high income convertible securities strategy, to the Citigroup U.S. High Yield Market Index; and |
• | our emerging markets equity strategy, to the Morgan Stanley Capital International Emerging Markets Index (Net). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Fee-related earnings (1) | $ | 60,153 | $ | 82,213 | $ | 124,367 | $ | 162,490 | |||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | |||||||||||
Incentive income compensation | (128,953 | ) | (60,965 | ) | (259,224 | ) | (88,722 | ) | |||||||
Investment income | 34,576 | 23,241 | 116,626 | 87,581 | |||||||||||
Interest expense, net of interest income | (7,136 | ) | (8,063 | ) | (14,543 | ) | (16,227 | ) | |||||||
Other income (expense), net | 284 | 66 | 264 | 2,333 | |||||||||||
Adjusted net income | 296,981 | 165,510 | 632,731 | 339,142 | |||||||||||
Equity-based compensation (2) | (6,181 | ) | (7,795 | ) | (11,981 | ) | (19,984 | ) | |||||||
Income taxes (3) | (7,991 | ) | (13,925 | ) | (18,148 | ) | (21,692 | ) | |||||||
Non-Operating Group other income (4) | — | 6,260 | — | 6,260 | |||||||||||
Non-Operating Group expenses (4) | (466 | ) | (100 | ) | (676 | ) | (278 | ) | |||||||
OCGH non-controlling interest (4) | (225,766 | ) | (125,231 | ) | (487,783 | ) | (260,121 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(1) | Fee-related earnings is a component of adjusted net income and is comprised of segment management fees less segment operating expenses other than incentive income compensation expense. |
(2) | This adjustment adds back the effect of equity-based compensation charges related to unit grants made before our initial public offering, which is excluded from adjusted net income and fee-related earnings because it is a non-cash charge that does not affect our financial position. |
(3) | Because adjusted net income and fee-related earnings are pre-tax measures, this adjustment adds back the effect of income tax expense. |
(4) | Because adjusted net income and fee-related earnings are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or the OCGH non-controlling interest. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Fee-related earnings-OCG (1) | $ | 11,512 | $ | 12,120 | $ | 21,919 | $ | 21,388 | |||||||
Incentive income attributable to OCG | 73,927 | 25,315 | 139,414 | 34,766 | |||||||||||
Incentive income compensation attributable to OCG | (28,200 | ) | (11,962 | ) | (54,274 | ) | (16,148 | ) | |||||||
Investment income attributable to OCG | 7,560 | 4,561 | 23,984 | 14,264 | |||||||||||
Interest expense, net of interest income attributable to OCG | (1,560 | ) | (1,584 | ) | (3,042 | ) | (2,815 | ) | |||||||
Other income (expense) attributable to OCG | 61 | 9 | 57 | 352 | |||||||||||
Non-fee-related earnings income taxes attributable to OCG (2) | (5,372 | ) | (2,212 | ) | (11,403 | ) | (5,113 | ) | |||||||
Adjusted net income-OCG (1) | 57,928 | 26,247 | 116,655 | 46,694 | |||||||||||
Equity-based compensation attributable to OCG (3) | (1,351 | ) | (1,528 | ) | (2,512 | ) | (3,367 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(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 income taxes associated with segment incentive income, incentive income compensation expense or investment income (loss), which are not included in the calculation of fee-related earnings-OCG. |
(3) | This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income-OCG and fee-related earnings-OCG because it is a non-cash charge that does not affect our financial position. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Fee-related earnings revenues | $ | 182,487 | $ | 188,843 | $ | 366,701 | $ | 380,105 | |||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | |||||||||||
Investment income | 34,576 | 23,241 | 116,626 | 87,581 | |||||||||||
Adjusted net income revenues | 555,120 | 341,102 | 1,148,568 | 659,373 | |||||||||||
Consolidated funds (1) | (503,817 | ) | (308,190 | ) | (1,042,483 | ) | (583,713 | ) | |||||||
Investment income (2) | 1,111 | (3,705 | ) | (11,132 | ) | (9,385 | ) | ||||||||
GAAP revenues | $ | 52,414 | $ | 29,207 | $ | 94,953 | $ | 66,275 |
(1) | This adjustment reflects the elimination of amounts attributable to the consolidated funds. |
(2) | This adjustment reclassifies consolidated investment income from revenues to other income (loss). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Distributable earnings | $ | 313,157 | $ | 176,355 | $ | 608,184 | $ | 313,684 | |||||||
Investment income (1) | 34,576 | 23,241 | 116,626 | 87,581 | |||||||||||
Receipts of investment income from funds (2) | (49,472 | ) | (30,744 | ) | (83,498 | ) | (58,424 | ) | |||||||
Receipts of investment income from DoubleLine and other companies | (2,203 | ) | (5,257 | ) | (11,216 | ) | (8,212 | ) | |||||||
Equity-based compensation (3) | (924 | ) | — | (1,576 | ) | — | |||||||||
Operating Group income taxes | 1,847 | 1,915 | 4,211 | 4,513 | |||||||||||
Adjusted net income | 296,981 | 165,510 | 632,731 | 339,142 | |||||||||||
Equity-based compensation (4) | (6,181 | ) | (7,795 | ) | (11,981 | ) | (19,984 | ) | |||||||
Income taxes (5) | (7,991 | ) | (13,925 | ) | (18,148 | ) | (21,692 | ) | |||||||
Non-Operating Group other income (6) | — | 6,260 | — | 6,260 | |||||||||||
Non-Operating Group expenses (6) | (466 | ) | (100 | ) | (676 | ) | (278 | ) | |||||||
OCGH non-controlling interest (6) | (225,766 | ) | (125,231 | ) | (487,783 | ) | (260,121 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(1) | This adjustment eliminates our segment investment income, which with respect to investment in funds is initially largely non-cash in nature and is thus not available to fund our operations or make equity distributions. |
(2) | This adjustment characterizes a portion of the distributions received from funds as receipts of investment income or loss. In general, the income or loss component of a distribution from a fund is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends. |
(3) | This adjustment adds back the effect of equity-based compensation charges related to unit grants made after our initial public offering, which is excluded from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions. |
(4) | This adjustment adds back the effect of equity-based compensation charges related to unit grants made before our initial public offering, which is excluded from adjusted net income because it does not affect our financial position and from distributable earnings because it is non-cash in nature and does not impact our ability to fund operations or make equity distributions. |
(5) | Because adjusted net income and distributable earnings are pre-tax measures, this adjustment adds back the effect of income tax expense. |
(6) | Because adjusted net income and distributable earnings are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or the OCGH non-controlling interest. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Distributable earnings-OCG (1) | $ | 63,966 | $ | 30,073 | $ | 118,042 | $ | 45,300 | |||||||
Investment income attributable to OCG | 7,560 | 4,561 | 23,984 | 14,264 | |||||||||||
Receipts of investment income from funds attributable to OCG | (10,819 | ) | (6,032 | ) | (17,629 | ) | (10,206 | ) | |||||||
Receipts of investment income from DoubleLine and other companies attributable to OCG | (482 | ) | (1,032 | ) | (2,286 | ) | (1,478 | ) | |||||||
Equity-based compensation attributable to OCG (2) | (202 | ) | — | (333 | ) | — | |||||||||
Distributable earnings-OCG income taxes | 1,201 | 2,818 | 4,121 | 6,179 | |||||||||||
Tax receivable agreement | 2,848 | 1,609 | 4,693 | 3,554 | |||||||||||
Non-Operating Group other income | — | 6,260 | — | 6,260 | |||||||||||
Income taxes of Intermediate Holding Companies | (6,144 | ) | (12,010 | ) | (13,937 | ) | (17,179 | ) | |||||||
Adjusted net income-OCG (1) | 57,928 | 26,247 | 116,655 | 46,694 | |||||||||||
Equity-based compensation attributable to OCG (3) | (1,351 | ) | (1,528 | ) | (2,512 | ) | (3,367 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(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. |
(2) | This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made after our initial public offering, which is excluded from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions. |
(3) | This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income because it does not affect our financial position and from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per unit data) | |||||||||||||||
Distributable earnings | $ | 313,157 | $ | 176,355 | $ | 608,184 | $ | 313,684 | |||||||
Distributable earnings attributable to OCGH non-controlling interest | (244,676 | ) | (141,755 | ) | (480,652 | ) | (258,373 | ) | |||||||
Non-Operating Group expenses | (466 | ) | (100 | ) | (676 | ) | (278 | ) | |||||||
Distributable earnings-OCG income taxes | (1,201 | ) | (2,818 | ) | (4,121 | ) | (6,179 | ) | |||||||
Tax receivable agreement | (2,848 | ) | (1,609 | ) | (4,693 | ) | (3,554 | ) | |||||||
Distributable earnings-OCG | $ | 63,966 | $ | 30,073 | $ | 118,042 | $ | 45,300 | |||||||
Distributable earnings-OCG per Class A unit | $ | 1.94 | $ | 1.02 | $ | 3.73 | $ | 1.73 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Distributable earnings revenues | $ | 572,219 | $ | 353,862 | $ | 1,126,656 | $ | 638,428 | |||||||
Investment income | 34,576 | 23,241 | 116,626 | 87,581 | |||||||||||
Receipts of investment income from funds | (49,472 | ) | (30,744 | ) | (83,498 | ) | (58,424 | ) | |||||||
Receipts of investment income from DoubleLine and other companies | (2,203 | ) | (5,257 | ) | (11,216 | ) | (8,212 | ) | |||||||
Adjusted net income revenues | 555,120 | 341,102 | 1,148,568 | 659,373 | |||||||||||
Consolidated funds (1) | (503,817 | ) | (308,190 | ) | (1,042,483 | ) | (583,713 | ) | |||||||
Investment income (2) | 1,111 | (3,705 | ) | (11,132 | ) | (9,385 | ) | ||||||||
GAAP revenues | $ | 52,414 | $ | 29,207 | $ | 94,953 | $ | 66,275 |
(1) | This adjustment reflects the elimination of amounts attributable to the consolidated funds. |
(2) | This adjustment reclassifies consolidated investment income from revenues to other income (loss). |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Economic net income (1) | $ | 172,582 | $ | 103,637 | $ | 573,156 | $ | 382,028 | |||||||
Change in accrued incentives (fund level), net of associated incentive income compensation expense (2) | (124,399 | ) | 61,873 | (59,575 | ) | (42,886 | ) | ||||||||
Adjusted net income | 296,981 | 165,510 | 632,731 | 339,142 | |||||||||||
Equity-based compensation (3) | (6,181 | ) | (7,795 | ) | (11,981 | ) | (19,984 | ) | |||||||
Income taxes (4) | (7,991 | ) | (13,925 | ) | (18,148 | ) | (21,692 | ) | |||||||
Non-Operating Group other income (5) | — | 6,260 | — | 6,260 | |||||||||||
Non-Operating Group expenses (5) | (466 | ) | (100 | ) | (676 | ) | (278 | ) | |||||||
OCGH non-controlling interest (5) | (225,766 | ) | (125,231 | ) | (487,783 | ) | (260,121 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(1) | Please see Glossary for the definition of economic net income. |
(2) | The change in accrued incentives (fund level), net of associated incentive income compensation expense, represents the difference between (a) our recognition of net incentive income when it becomes fixed or determinable, all related contingencies have been removed and collection is reasonably assured, and (b) the incentive income generated by the funds during the period that would be due to us if the funds were liquidated at their reported values as of that date, net of associated incentive income compensation expense. |
(3) | This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income and economic net income because it is a non-cash charge that does not affect our financial position. |
(4) | Because adjusted net income and economic net income are pre-tax measures, this adjustment adds back the effect of income tax expense. |
(5) | Because adjusted net income and economic net income are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or the OCGH non-controlling interest. |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Economic net income-OCG (1) | $ | 37,157 | $ | 17,824 | $ | 99,736 | $ | 50,706 | |||||||
Change in accrued incentives (fund level), net of associated incentive income compensation expense attributable to OCG | 27,204 | 12,140 | 14,230 | (3,659 | ) | ||||||||||
Economic net income-OCG income taxes | 115 | 8,669 | 17,503 | 17,594 | |||||||||||
Income taxes-OCG | (6,548 | ) | (12,386 | ) | (14,814 | ) | (17,947 | ) | |||||||
Adjusted net income-OCG (1) | 57,928 | 26,247 | 116,655 | 46,694 | |||||||||||
Equity-based compensation attributable to OCG | (1,351 | ) | (1,528 | ) | (2,512 | ) | (3,367 | ) | |||||||
Net income attributable to Oaktree Capital Group, LLC | $ | 56,577 | $ | 24,719 | $ | 114,143 | $ | 43,327 |
(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 June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands, except per unit data) | |||||||||||||||
Economic net income | $ | 172,582 | $ | 103,637 | $ | 573,156 | $ | 382,028 | |||||||
Economic net income attributable to OCGH non-controlling interest | (134,844 | ) | (83,304 | ) | (455,241 | ) | (319,710 | ) | |||||||
Non-Operating Group expenses | (466 | ) | (100 | ) | (676 | ) | (278 | ) | |||||||
Non-Operating Group other income | — | 6,260 | — | 6,260 | |||||||||||
Economic net income-OCG income taxes | (115 | ) | (8,669 | ) | (17,503 | ) | (17,594 | ) | |||||||
Economic net income-OCG | $ | 37,157 | $ | 17,824 | $ | 99,736 | $ | 50,706 | |||||||
Economic net income-OCG per Class A unit | $ | 1.13 | $ | 0.60 | $ | 3.16 | $ | 1.94 |
Three Months Ended June 30, | Six Months Ended June 30, | ||||||||||||||
2013 | 2012 | 2013 | 2012 | ||||||||||||
(in thousands) | |||||||||||||||
Economic net income revenues | $ | 412,306 | $ | 202,968 | $ | 1,138,270 | $ | 723,732 | |||||||
Incentives created | (195,243 | ) | 9,116 | (654,943 | ) | (256,046 | ) | ||||||||
Incentive income | 338,057 | 129,018 | 665,241 | 191,687 | |||||||||||
Adjusted net income revenues | 555,120 | 341,102 | 1,148,568 | 659,373 | |||||||||||
Consolidated funds (1) | (503,817 | ) | (308,190 | ) | (1,042,483 | ) | (583,713 | ) | |||||||
Investment income (2) | 1,111 | (3,705 | ) | (11,132 | ) | (9,385 | ) | ||||||||
GAAP revenues | $ | 52,414 | $ | 29,207 | $ | 94,953 | $ | 66,275 |
(1) | This adjustment reflects the elimination of amounts attributable to the consolidated funds. |
(2) | This adjustment reclassifies consolidated investment income from revenues to other income (loss). |
As of or for the Three Months Ended June 30, 2013 | |||||||||||
Segment | Adjustments | Consolidated | |||||||||
(in thousands) | |||||||||||
Management fees (1) | $ | 182,487 | $ | (132,390 | ) | $ | 50,097 | ||||
Incentive income (1) | 338,057 | (335,740 | ) | 2,317 | |||||||
Investment income (loss) (1) | 34,576 | (35,687 | ) | (1,111 | ) | ||||||
Total expenses (2) | (251,287 | ) | (34,253 | ) | (285,540 | ) | |||||
Interest expense, net (3) | (7,136 | ) | (6,877 | ) | (14,013 | ) | |||||
Other income, net | 284 | — | 284 | ||||||||
Other income of consolidated funds (4) | — | 1,300,787 | 1,300,787 | ||||||||
Income taxes | — | (7,991 | ) | (7,991 | ) | ||||||
Net income attributable to non-controlling redeemable interests in consolidated funds | — | (762,487 | ) | (762,487 | ) | ||||||
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries | — | (225,766 | ) | (225,766 | ) | ||||||
Adjusted net income/net income attributable to Oaktree Capital Group, LLC | $ | 296,981 | $ | (240,404 | ) | $ | 56,577 | ||||
Corporate investments, at equity (5) | $ | 1,061,793 | $ | (977,461 | ) | $ | 84,332 | ||||
Total assets (6) | $ | 2,678,187 | $ | 41,217,230 | $ | 43,895,417 |
(1) | The adjustment represents the elimination of amounts attributable to the consolidated funds. |
(2) | The expense adjustments consist of (a) equity-based compensation charges of $6,181 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $27,606 and (c) expenses incurred by the Intermediate Holding Companies of $466. |
(3) | The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income. |
(4) | The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds. |
(5) | The adjustment to corporate investments is to remove from segment assets the consolidated funds that are treated as equity method investments for segment reporting purposes. |
(6) | The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable. |
As of or for the Three Months Ended June 30, 2012 | |||||||||||
Segment | Adjustments | Consolidated | |||||||||
(in thousands) | |||||||||||
Management fees (1) | $ | 188,843 | $ | (159,636 | ) | $ | 29,207 | ||||
Incentive income (1) | 129,018 | (129,018 | ) | — | |||||||
Investment income (1) | 23,241 | (19,536 | ) | 3,705 | |||||||
Total expenses (2) | (167,595 | ) | (39,413 | ) | (207,008 | ) | |||||
Interest expense, net (3) | (8,063 | ) | (3,797 | ) | (11,860 | ) | |||||
Other income, net (4) | 66 | 6,260 | 6,326 | ||||||||
Other income of consolidated funds (5) | — | 1,017,178 | 1,017,178 | ||||||||
Income taxes | — | (13,925 | ) | (13,925 | ) | ||||||
Net income attributable to non-controlling redeemable interests in consolidated funds | — | (673,673 | ) | (673,673 | ) | ||||||
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries | — | (125,231 | ) | (125,231 | ) | ||||||
Adjusted net income/net income attributable to Oaktree Capital Group, LLC | $ | 165,510 | $ | (140,791 | ) | $ | 24,719 | ||||
Corporate investments, at equity (6) | $ | 1,195,084 | $ | (1,069,050 | ) | $ | 126,034 | ||||
Total assets (7) | $ | 2,194,709 | $ | 42,576,060 | $ | 44,770,769 |
(1) | The adjustment represents the elimination of amounts attributable to the consolidated funds. |
(2) | The expense adjustments consist of (a) equity-based compensation charges of $7,795 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $31,518 and (c) expenses incurred by the Intermediate Holding Companies of $100. |
(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 other income, net adjustment represents other income or expenses of OCG or its Intermediate Holding Companies. This amount is attributable to a reduction in the amount of the deferred tax asset under the tax receivable agreement associated with the sale completed on May 25, 2007 of 23,000,000 of our class A units to Goldman, Sachs & Co., as initial purchaser, as more fully described in “Management's Discussion and Analysis of Financial Condition and Results of Operations—The May 2007 Restructuring and The 2007 Private Offering—The 2007 Private Offering” in our Annual Report (the “2007 Private Offering”), which reduced the tax receivable agreement liability payable to OCGH unitholders. |
(5) | The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds. |
(6) | The adjustment to corporate investments is to remove from segment assets the consolidated funds that are treated as equity method investments for segment reporting purposes. |
(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 Six Months Ended June 30, 2013 | |||||||||||
Segment | Adjustments | Consolidated | |||||||||
(in thousands) | |||||||||||
Management fees (1) | $ | 366,701 | $ | (274,065 | ) | $ | 92,636 | ||||
Incentive income (1) | 665,241 | (662,924 | ) | 2,317 | |||||||
Investment income (1) | 116,626 | (105,494 | ) | 11,132 | |||||||
Total expenses (2) | (501,558 | ) | (59,487 | ) | (561,045 | ) | |||||
Interest expense, net (3) | (14,543 | ) | (11,051 | ) | (25,594 | ) | |||||
Other income, net | 264 | — | 264 | ||||||||
Other income of consolidated funds (4) | — | 3,926,816 | 3,926,816 | ||||||||
Income taxes | — | (18,148 | ) | (18,148 | ) | ||||||
Net income attributable to non-controlling redeemable interests in consolidated funds | — | (2,826,452 | ) | (2,826,452 | ) | ||||||
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries | — | (487,783 | ) | (487,783 | ) | ||||||
Adjusted net income/net income attributable to Oaktree Capital Group, LLC | $ | 632,731 | $ | (518,588 | ) | $ | 114,143 | ||||
Corporate investments, at equity (5) | $ | 1,061,793 | $ | (977,461 | ) | $ | 84,332 | ||||
Total assets (6) | $ | 2,678,187 | $ | 41,217,230 | $ | 43,895,417 |
(1) | The adjustment represents the elimination of amounts attributable to the consolidated funds. |
(2) | The expense adjustments consist of (a) equity-based compensation charges of $11,981 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $46,830 and (c) expenses incurred by the Intermediate Holding Companies of $676. |
(3) | The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income. |
(4) | The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds. |
(5) | The adjustment to corporate investments is to remove from segment assets the consolidated funds that are treated as equity method investments for segment reporting purposes. |
(6) | The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable. |
As of or for the Six Months Ended June 30, 2012 | |||||||||||
Segment | Adjustments | Consolidated | |||||||||
(in thousands) | |||||||||||
Management fees (1) | $ | 380,105 | $ | (318,878 | ) | $ | 61,227 | ||||
Incentive income (1) | 191,687 | (186,639 | ) | 5,048 | |||||||
Investment income (1) | 87,581 | (78,196 | ) | 9,385 | |||||||
Total expenses (2) | (306,337 | ) | (68,238 | ) | (374,575 | ) | |||||
Interest expense, net (3) | (16,227 | ) | (6,623 | ) | (22,850 | ) | |||||
Other income, net (4) | 2,333 | 6,260 | 8,593 | ||||||||
Other income of consolidated funds (5) | — | 3,436,757 | 3,436,757 | ||||||||
Income taxes | — | (21,692 | ) | (21,692 | ) | ||||||
Net income attributable to non-controlling redeemable interests in consolidated funds | — | (2,798,445 | ) | (2,798,445 | ) | ||||||
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries | — | (260,121 | ) | (260,121 | ) | ||||||
Adjusted net income/net income attributable to Oaktree Capital Group, LLC | $ | 339,142 | $ | (295,815 | ) | $ | 43,327 | ||||
Corporate investments, at equity (6) | $ | 1,195,084 | $ | (1,069,050 | ) | $ | 126,034 | ||||
Total assets (7) | $ | 2,194,709 | $ | 42,576,060 | $ | 44,770,769 |
(1) | The adjustment represents the elimination of amounts attributable to the consolidated funds. |
(2) | The expense adjustments consist of (a) equity-based compensation charges of $19,984 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $47,976 and (c) expenses incurred by the Intermediate Holding Companies of $278. |
(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 other income, net adjustment represents other income or expenses of OCG or its Intermediate Holding Companies. This amount is attributable to a reduction in the amount of the deferred tax asset under the tax receivable agreement associated with the 2007 Private Offering, which reduced the tax receivable agreement liability payable to OCGH unitholders. |
(5) | The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds. |
(6) | The adjustment to corporate investments is to remove from segment assets the consolidated funds that are treated as equity method investments for segment reporting purposes. |
(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. |
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