SEGMENT REPORTING

KKR operates through four reportable business segments. These segments, which are differentiated primarily by their business objectives and investment strategies, are presented below. These financial results represent the combined financial results of the KKR Group Partnerships on a segment basis. KKR earns the majority of its fees from subsidiaries located in the United States.

Private Markets

Through KKR’s Private Markets segment, KKR manages and sponsors private equity funds and co-investment vehicles, which invest capital for long-term appreciation, either through controlling ownership of a company or strategic minority positions. KKR also manages and sponsors investment funds and co-investment vehicles that invest capital in real assets, such as infrastructure, energy and real estate, and growth equity investments.

Public Markets

KKR operates and reports its combined credit and hedge funds businesses through the Public Markets segment. KKR’s credit business invests capital in leveraged credit strategies, such as leveraged loans and high yield bonds, and alternative credit strategies such as special situations, mezzanine or corporate credit opportunities, direct lending, and revolving credit. KKR’s Public Markets segment also includes its hedge funds business, which includes customized hedge fund portfolios, hedge fund-of-fund solutions and strategic partnerships consisting of minority stakes in other hedge fund managers.

Capital Markets

KKR’s global capital markets business supports the firm, portfolio companies, and third-party clients by developing and implementing both traditional and non-traditional capital solutions for investments or companies seeking financing. These services include arranging debt and equity financing for transactions, placing and underwriting securities offerings and providing other types of capital markets services.

Principal Activities

Through KKR's Principal Activities segment, we manage the firm’s assets and deploy capital to support and grow our businesses.

KKR's Principal Activities segment uses its balance sheet assets to support KKR's investment management and capital markets businesses, including to make capital commitments as general partner to its funds, to seed new businesses or investments for new funds or to bridge capital selectively for its funds’ investments.

The Principal Activities segment also provides the required capital to fund the various commitments of KKR's Capital Markets business or to meet regulatory capital requirements.

Key Performance Measure - Economic Net Income (“ENI”)

ENI is used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings and as such represents the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.

ENI is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. ENI is comprised of total segment revenues; less total segment expenses and certain economic interests in KKR’s segments held by third parties.

The following tables present the financial data for KKR’s reportable segments:



	As of and for the Three Months Ended March 31, 2017
	Private Markets			Public Markets			Capital Markets		Principal Activities			Total Reportable Segments
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees	$	123,512		$	84,772		$	—	$	—		$	208,284
Monitoring Fees	13,220			—			—		—			13,220
Transaction Fees	117,882			4,056			121,097		—			243,035
Fee Credits	(85,650		)	(3,367		)	—		—			(89,017		)
Total Management, Monitoring and Transaction Fees, Net	168,964			85,461			121,097		—			375,522

Performance Income (Loss)
Realized Incentive Fees	—			1,686			—		—			1,686
Realized Carried Interest	206,204			—			—		—			206,204
Unrealized Carried Interest	123,506			17,120			—		—			140,626
Total Performance Income (Loss)	329,710			18,806			—		—			348,516

Investment Income (Loss)
Net Realized Gains (Losses)	—			—			—		79,451			79,451
Net Unrealized Gains (Losses)	—			—			—		204,036			204,036
Total Realized and Unrealized	—			—			—		283,487			283,487
Interest Income and Dividends	—			—			—		56,882			56,882
Interest Expense	—			—			—		(41,709		)	(41,709		)
Net Interest and Dividends	—			—			—		15,173			15,173
Total Investment Income (Loss)	—			—			—		298,660			298,660

Total Segment Revenues	498,674			104,267			121,097		298,660			1,022,698

Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits	60,008			19,784			22,561		37,082			139,435
Realized Performance Income Compensation	87,393			674			—		—			88,067
Unrealized Performance Income Compensation	50,366			6,848			—		—			57,214
Total Compensation and Benefits	197,767			27,306			22,561		37,082			284,716
Occupancy and Related Charges	8,107			1,856			664		3,742			14,369
Other Operating Expenses	26,887			8,338			5,328		12,945			53,498
Total Segment Expenses	232,761			37,500			28,553		53,769			352,583

Income (Loss) attributable to noncontrolling interests	—			—			1,584		—			1,584

Economic Net Income (Loss)	$	265,913		$	66,767		$	90,960	$	244,891		$	668,531

Total Assets	$	1,815,404		$	1,191,199		$	573,162	$	10,758,695		$	14,338,460



	As of and for the Three Months Ended March 31, 2016
	Private Markets			Public Markets			Capital Markets		Principal Activities			Total Reportable Segments
Segment Revenues
Management, Monitoring and Transaction Fees, Net
Management Fees	$	117,798		$	76,802		$	—	$	—		$	194,600
Monitoring Fees	12,037			—			—		—			12,037
Transaction Fees	37,398			1,132			57,555		—			96,085
Fee Credits	(22,596		)	(211		)	—		—			(22,807		)
Total Management, Monitoring and Transaction Fees, Net	144,637			77,723			57,555		—			279,915

Performance Income (Loss)
Realized Incentive Fees	—			1,593			—		—			1,593
Realized Carried Interest	93,450			3,838			—		—			97,288
Unrealized Carried Interest	(194,699		)	(29,106		)	—		—			(223,805		)
Total Performance Income (Loss)	(101,249		)	(23,675		)	—		—			(124,924		)

Investment Income (Loss)
Net Realized Gains (Losses)	—			—			—		(24,183		)	(24,183		)
Net Unrealized Gains (Losses)	—			—			—		(564,991		)	(564,991		)
Total Realized and Unrealized	—			—			—		(589,174		)	(589,174		)
Interest Income and Dividends	—			—			—		108,120			108,120
Interest Expense	—			—			—		(48,544		)	(48,544		)
Net Interest and Dividends	—			—			—		59,576			59,576
Total Investment Income (Loss)	—			—			—		(529,598		)	(529,598		)

Total Segment Revenues	43,388			54,048			57,555		(529,598		)	(374,607		)

Segment Expenses
Compensation and Benefits
Cash Compensation and Benefits	48,967			19,054			8,168		24,710			100,899
Realized Performance Income Compensation	37,380			2,172			—		—			39,552
Unrealized Performance Income Compensation	(75,000		)	(11,642		)	—		—			(86,642		)
Total Compensation and Benefits	11,347			9,584			8,168		24,710			53,809
Occupancy and Related Charges	8,925			2,675			628		3,722			15,950
Other Operating Expenses	37,126			9,278			4,096		11,386			61,886
Total Segment Expenses	57,398			21,537			12,892		39,818			131,645

Income (Loss) attributable to noncontrolling interests	—			—			667		—			667

Economic Net Income (Loss)	$	(14,010	)	$	32,511		$	43,996	$	(569,416	)	$	(506,919	)

Total Assets	$	1,738,931		$	1,080,077		$	306,996	$	9,663,781		$	12,789,785

The following tables reconcile KKR’s total reportable segments to the most directly comparable financial measures calculated and presented in accordance with GAAP:

Fees and Other



	Three Months Ended
	March 31, 2017			March 31, 2016
Total Segment Revenues	$	1,022,698		$	(374,607	)
Management fees relating to consolidated funds and placement fees	(47,102		)	(38,270		)
Fee credits relating to consolidated funds	939			428
Net realized and unrealized carried interest - consolidated funds	(11,057		)	9,561
Total investment income (loss)	(298,660		)	529,598
Revenue earned by oil & gas producing entities	17,273			13,561
Reimbursable expenses	23,549			15,881
Other	8,312			6,653
Fees and Other	$	715,952		$	162,805

Expenses



	Three Months Ended
	March 31, 2017		March 31, 2016
Total Segment Expenses	$	352,583	$	131,645
Equity based compensation	111,036		63,823
Reimbursable expenses and placement fees	36,123		24,107
Operating expenses relating to consolidated funds, CFEs and other entities	13,430		43,671
Expenses incurred by oil & gas producing entities	11,177		17,826
Intangible amortization	6,366		17,393
Other	9,299		9,858
Total Expenses	$	540,014	$	308,323

Net Income (Loss) Attributable to KKR & Co. L.P. Common Unitholders



	Three Months Ended
	March 31, 2017			March 31, 2016
Economic net income (loss)	$	668,531		$	(506,919	)
Income tax	(40,542		)	(1,890		)
Amortization of intangibles, placement fees and other, net ⁽¹⁾	(32,837		)	(28,882		)
Equity based compensation	(111,036		)	(63,823		)
Net income (loss) attributable to noncontrolling interests held by KKR Holdings	(216,432		)	271,575
Preferred Unit Distributions	(8,341		)	—
Net income (loss) Attributable to KKR & Co. L.P. Common Unitholders	$	259,343		$	(329,939	)

(1) Other primarily represents the statement of operations impact of the accounting convention differences for (i) direct interests in oil & natural gas properties outside of investment funds and (ii) certain interests in consolidated CLOs and other entities. On a segment basis, direct interests in oil & natural gas properties outside of investment funds are carried at fair value with changes in fair value recorded in Economic Net Income (Loss) and certain interests in consolidated CLOs and other entities are carried at cost. See Note 2 "Summary of Significant Accounting Policies" for the GAAP accounting for these direct interests in oil and natural gas producing properties outside investment funds and interests in consolidated CLOs and other entities.

The items that reconcile KKR’s total reportable segments to the corresponding consolidated amounts calculated and presented in accordance with GAAP for net income (loss) attributable to redeemable noncontrolling interests and income (loss) attributable to noncontrolling interests are primarily attributable to the impact of KKR Holdings L.P., KKR's consolidated funds and certain other entities.

Assets



	As of March 31,
	2017		2016
Total Segment Assets	$	14,338,460	$	12,789,785
Impact of Consolidation of Investment Vehicles and Other Entities ⁽¹⁾	25,963,256		20,236,392
Carry Pool Reclassification to Liabilities	1,035,671		1,113,450
Impact of KKR Management Holdings Corp.	298,325		288,956
Total Assets	$	41,635,712	$	34,428,583

(1) Includes accounting basis difference for oil & natural gas properties of $7,700 and $78,416 as of March 31, 2017 and 2016, respectively.