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SEGMENT REPORTING (Tables)
6 Months Ended
Jun. 30, 2014
Segment Reporting [Abstract]  
Adjusted Net Income
ANI was as follows:
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Revenues:
 

 
 

 
 

 
 

Management fees
$
189,119

 
$
182,487

 
$
377,519

 
$
366,701

Incentive income
59,198

 
338,057

 
352,074

 
665,241

Investment income
54,199

 
34,576

 
100,679

 
116,626

Total revenues
302,516

 
555,120

 
830,272

 
1,148,568

Expenses:
 
 
 

 
 
 
 

Compensation and benefits
(92,638
)
 
(90,166
)
 
(190,832
)
 
(183,783
)
Equity-based compensation
(5,111
)
 
(924
)
 
(9,094
)
 
(1,576
)
Incentive income compensation
(30,147
)
 
(128,953
)
 
(167,975
)
 
(259,224
)
General and administrative
(31,131
)
 
(29,512
)
 
(61,693
)
 
(53,500
)
Depreciation and amortization
(1,815
)
 
(1,732
)
 
(3,736
)
 
(3,475
)
Total expenses
(160,842
)
 
(251,287
)
 
(433,330
)
 
(501,558
)
Adjusted net income before interest and other income (expense)
141,674

 
303,833

 
396,942

 
647,010

Interest expense, net of interest income (1)
(6,934
)
 
(7,136
)
 
(13,559
)
 
(14,543
)
Other income (expense), net
9

 
284

 
(1,689
)
 
264

Adjusted net income
$
134,749

 
$
296,981

 
$
381,694

 
$
632,731

 
 
 
 
 
(1)
Interest income was $0.7 million and $0.9 million for the three months ended June 30, 2014 and 2013, respectively, and $1.8 million and $1.5 million for the six months ended June 30, 2014 and 2013, respectively.
Reconciliation of Net Income (Loss) Attributable to Oaktree Capital Group, LLC to Adjusted Net Income
A reconciliation of net income attributable to Oaktree Capital Group, LLC to adjusted net income of the investment management segment is presented below.  
 
Three Months Ended June 30,
 
Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Net income attributable to Oaktree Capital Group, LLC
$
31,186

 
$
56,577

 
$
82,980

 
$
114,143

Incentive income (1)
(6,102
)
 

 
58,358

 

Incentive income compensation (1)
6,112

 

 
(40,222
)
 

Equity-based compensation (2) 
5,376

 
6,181

 
10,575

 
11,981

Income taxes (3)
5,761

 
7,991

 
13,747

 
18,148

Non-Operating Group expenses (4)
603

 
466

 
885

 
676

OCGH non-controlling interest (4) 
91,813

 
225,766

 
255,371

 
487,783

Adjusted net income
$
134,749

 
$
296,981

 
$
381,694

 
$
632,731

 
 
 
 
 
(1)
This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense between adjusted net income and net income attributable to OCG. There were no adjustments attributable to timing differences for the three and six months ended June 30, 2013.
(2)
This adjustment adds back the effect of equity-based compensation charges related to unit grants made before the Company’s initial public offering, which is excluded from adjusted net income because it is a non-cash charge that does not affect the Company’s financial position.
(3)
Because adjusted net income is a pre-tax measure, this adjustment eliminates the effect of income tax expense from adjusted net income.
(4)
Because adjusted net income is 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.
Schedule of Reconciliation of Total Segments to Income Loss Attributable to Oaktree Capital Group, LLC and Total Assets
The following tables reconcile the Company’s segment information to the condensed consolidated financial statements:
 
As of or for the Three Months Ended June 30, 2014
 
Segment
 
Adjustments
 
Consolidated
Management fees (1)
$
189,119

 
$
(137,559
)
 
$
51,560

Incentive income (1)
59,198

 
(59,198
)
 

Investment income (1)
54,199

 
(49,809
)
 
4,390

Total expenses (2) 
(160,842
)
 
(54,543
)
 
(215,385
)
Interest expense, net (3)
(6,934
)
 
(18,765
)
 
(25,699
)
Other income, net
9

 

 
9

Other income of consolidated funds (4)

 
1,498,129

 
1,498,129

Income taxes

 
(5,761
)
 
(5,761
)
Net income attributable to non-controlling interests in consolidated funds

 
(1,184,244
)
 
(1,184,244
)
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries

 
(91,813
)
 
(91,813
)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC
$
134,749

 
$
(103,563
)
 
$
31,186

Corporate investments (5)
$
1,468,517

 
$
(1,300,354
)
 
$
168,163

Total assets(6) 
$
2,909,825

 
$
48,340,012

 
$
51,249,837

 
 
 
 
 
(1)
The adjustment represents the elimination of amounts attributable to the consolidated funds.
(2)
The expense adjustment consists of (a) equity-based compensation charges of $5,376 related to unit grants made before the Company’s initial public offering, (b) consolidated fund expenses of $42,452, (c) expenses incurred by the Intermediate Holding Companies of $603 and (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $6,112.
(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 Company’s investments in the consolidated funds, including investments in its CLOs, that are treated as equity- or cost-method investments for segment reporting purposes. Of the $1.5 billion, equity-method investments accounted for $1.3 billion.
(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, 2013
 
Segment
 
Adjustments
 
Consolidated
Management fees (1) 
$
182,487

 
$
(132,390
)
 
$
50,097

Incentive income (1)
338,057

 
(335,740
)
 
2,317

Investment income (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 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 (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 adjustment consists of (a) equity-based compensation charges of $6,181 related to unit grants made before the Company’s 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 Company’s investments in 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, 2014
 
Segment
 
Adjustments
 
Consolidated
Management fees (1)
$
377,519

 
$
(285,528
)
 
$
91,991

Incentive income (1)
352,074

 
(352,074
)
 

Investment income (1)
100,679

 
(91,298
)
 
9,381

Total expenses (2) 
(433,330
)
 
(40,374
)
 
(473,704
)
Interest expense, net (3)
(13,559
)
 
(36,140
)
 
(49,699
)
Other income, net
(1,689
)
 

 
(1,689
)
Other income of consolidated funds (4)

 
3,284,894

 
3,284,894

Income taxes

 
(13,747
)
 
(13,747
)
Net income attributable to non-controlling interests in consolidated funds

 
(2,509,076
)
 
(2,509,076
)
Net income attributable to OCGH non-controlling interest in consolidated subsidiaries

 
(255,371
)
 
(255,371
)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC
$
381,694

 
$
(298,714
)
 
$
82,980

Corporate investments (5)
$
1,468,517

 
$
(1,300,354
)
 
$
168,163

Total assets(6) 
$
2,909,825

 
$
48,340,012

 
$
51,249,837

 
 
 
 
 
(1)
The adjustment represents the elimination of amounts attributable to the consolidated funds.
(2)
The expense adjustment consists of (a) equity-based compensation charges of $10,575 related to unit grants made before the Company’s initial public offering, (b) consolidated fund expenses of $69,136, (c) expenses incurred by the Intermediate Holding Companies of $885 and (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $40,222.
(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 Company’s investments in the consolidated funds, including investments in its CLOs, that are treated as equity- or cost-method investments for segment reporting purposes. Of the $1.5 billion, equity-method investments accounted for $1.3 billion.
(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, 2013
 
Segment
 
Adjustments
 
Consolidated
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 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 (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 adjustment consists of (a) equity-based compensation charges of $11,981 related to unit grants made before the Company’s 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 Company’s investments in 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.