0001404912-19-000004.txt : 20190201 0001404912-19-000004.hdr.sgml : 20190201 20190201064923 ACCESSION NUMBER: 0001404912-19-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 4 CONFORMED PERIOD OF REPORT: 20190201 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20190201 DATE AS OF CHANGE: 20190201 FILER: COMPANY DATA: COMPANY CONFORMED NAME: KKR & Co. Inc. CENTRAL INDEX KEY: 0001404912 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 260426107 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-34820 FILM NUMBER: 19557681 BUSINESS ADDRESS: STREET 1: 9 WEST 57TH STREET STREET 2: SUITE 4200 CITY: NEW YORK STATE: NY ZIP: 10019 BUSINESS PHONE: 212-750-8300 MAIL ADDRESS: STREET 1: 9 WEST 57TH STREET STREET 2: SUITE 4200 CITY: NEW YORK STATE: NY ZIP: 10019 FORMER COMPANY: FORMER CONFORMED NAME: KKR & Co. L.P. DATE OF NAME CHANGE: 20070627 8-K 1 q418earningsreleasewrapper.htm 8-K Document




UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, DC 20549
______________
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): February 1, 2019

KKR & CO. INC.
(Exact name of registrant as specified in its charter) 
 
Delaware 
(State or other jurisdiction
of incorporation)
001-34820
(Commission
File Number)
26-0426107
(IRS Employer
Identification No.)
 
9 West 57th Street, Suite 4200, New York, NY 
(Address of principal executive office)
10019 
(Zip Code)
 
(212) 750-8300
 
(Registrant's telephone number, including area code)

NOT APPLICABLE 
(Former name or former address, if changed since last report) 
 
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
o
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
o
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
o
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
o
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
o
 
Emerging growth company
o
 
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
 






Item 2.02    Results of Operations and Financial Condition

On February 1, 2019, KKR & Co. Inc. (“KKR”) issued an earnings release announcing its financial results for the quarter and year ended December 31, 2018.
The earnings release is furnished as Exhibit 99.1 to this Report.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and the exhibit furnished by this Form 8-K shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such a filing.

Item 9.01    Financial Statements and Exhibits.
(d)     Exhibits






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

Date:
February 1, 2019
By:  /s/ William J. Janetschek        
Name: William J. Janetschek
Title: Chief Financial Officer
 
 
 







EX-99.1 2 q418earningsrelease.htm EXHIBIT 99.1 Exhibit


logoa01.jpg
KKR & Co. Inc. Reports Fourth Quarter and Full Year 2018 Results
__________________________________________________________________________________________________________________________________________________________________________
NEW YORK, February 1, 2019 - KKR & Co. Inc. (NYSE: KKR) today reported its fourth quarter and full year 2018 results.

GAAP Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders was $(393.0) million and $1,097.7 million for the quarter and full year ended December 31, 2018, respectively. On a diluted basis, Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock was $(0.74) and $2.06 for the quarter and full year ended December 31, 2018, respectively. KKR & Co. Inc. Stockholders' Equity - Common Stockholders was $8.2 billion (1) as of December 31, 2018, or $15.27 per outstanding share of Class A common stock.

After-tax Distributable Earnings and After-tax Distributable Earnings Per Adjusted Share(2) were $460.1 million and $0.55, respectively, for the quarter ended December 31, 2018. After-tax Distributable Earnings and After-tax Distributable Earnings Per Adjusted Share were $1,597.2 million and $1.93, respectively, for the full year ended December 31, 2018.


Highlights


Monetization activity in Private Markets drove After-tax Distributable Earnings of $460.1 million, or $0.55 per adjusted share for the fourth quarter.  For 2018, After-tax Distributable Earnings were $1.93 per adjusted share, up 16% on a year-over-year basis.

As of December 31, 2018, Assets Under Management were $195 billion, up 16% on a year-over-year basis driven primarily by organic new capital raised.

As of December 31, 2018, Fee Paying Assets Under Management were $141 billion, up 20% on a year-over-year basis.  Uncalled commitments that will contribute to Fee Paying Assets Under Management as that capital is either invested or enters its investment period was $23 billion.  

Capital Invested and Syndicated Capital totaled $10.3 billion for the quarter ended December 31, 2018, anchored by strong deployment activity in KKR’s Private Equity and Alternative Credit strategies.    

Book value was $13.0 billion as of December 31, 2018, or $15.57 per outstanding adjusted share.

 

___________________________




“We had a solid finish to a strong year, generating one of the highest Distributable Earnings quarters in our history,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Through our integrated model - the combination of our investment funds, balance sheet and capital markets capabilities - and the creativity of our investment teams, we had an active deployment quarter investing and syndicating over $10 billion of capital on behalf of our limited partners and clients on a global basis.”



 
 
 
 
Note: Certain financial measures, including after-tax distributable earnings, book value, adjusted shares, adjusted shares eligible for distribution and outstanding adjusted shares, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). After-tax distributable earnings and book value are among the segment measures provided in our GAAP financial statements. See information that follows for a reconciliation of such measures to financial results prepared in accordance with GAAP.

(1)
KKR & Co. Inc. Stockholders' Equity - Common Stockholders represents only that portion of the business held by KKR & Co. Inc. and does not include the economic interests that are held by KKR Holdings L.P. Our reportable segment is presented prior to giving effect to the allocation of ownership interests between KKR & Co. Inc. and KKR Holdings L.P. and as such represents the business in total.
(2)
Based on weighted average adjusted shares eligible for distribution.

Page 1



GAAP RESULTS COMMENTARY
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders was $(393.0) million for the quarter ended December 31, 2018, compared to $166.4 million for the quarter ended December 31, 2017. Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders was $1,097.7 million for the year ended December 31, 2018, compared to $984.9 million for the year ended December 31, 2017.
Revenues were $(178.1) million for the quarter ended December 31, 2018, compared to $1,024.1 million for the quarter ended December 31, 2017. The decrease was primarily due to net unrealized carried interest losses in the current period, partially offset by a higher level of transaction fees. Revenues were $2,395.8 million for the year ended December 31, 2018, compared to $3,557.3 million for the year ended December 31, 2017. The decrease was primarily due to a lower level of capital allocation-based income driven by a lower level of net appreciation in our investment funds, partially offset by a higher level of transaction fees each as compared to the prior period.
Expenses for the quarter and year ended December 31, 2018 were $237.7 million and $2,089.5 million, respectively, compared to $636.7 million and $2,336.7 million for the comparable periods of 2017. The decrease in both periods was primarily due to the reversal of carried interest compensation resulting from net unrealized carried interest losses for the quarterly period and a lower level of net appreciation in the value of our investment funds for the annual period.
Total investment income (loss) was $(798.1) million for the quarter ended December 31, 2018, compared to $274.1 million for the quarter ended December 31, 2017. The decrease was primarily due to net investment losses that were recognized in the current quarter resulting primarily from a decline in the value of our investment portfolio. Total investment income (loss) was $1,950.5 million for the year ended December 31, 2018, compared to $1,563.8 million for the year ended December 31, 2017. The increase was primarily due to a higher level of net gains in our investment portfolio compared to the prior period.
KKR's conversion from a limited partnership to a corporation on July 1, 2018 (the "Conversion") resulted in KKR obtaining a partial step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized. On the date of the Conversion, we recorded an estimated net tax benefit and estimated net deferred tax asset of $257.1 million relating to this partial step-up in tax basis. Our overall tax provision is based on, among other things, an estimate of the amount of such partial step-up in tax basis that is derived from an analysis of the basis of our unitholders in their ownership of KKR common units at December 31, 2017, as adjusted by partial information received by KKR for some trades made in KKR common units in 2018. While this information does not completely reflect the actual basis of our unitholders at June 30, 2018, our estimate is based on the most recent unitholder basis information available to us. Since the unitholder basis information currently available to us does not completely reflect the actual basis of our unitholders at June 30, 2018, the amount of partial step-up in tax basis as finally determined is expected to differ, possibly materially, from the current estimate, which in turn is expected to cause KKR’s income tax provision and effective tax rate under GAAP to differ, possibly to a material extent, from the current estimate described above.

SEGMENT RESULTS COMMENTARY
AFTER-TAX DISTRIBUTABLE EARNINGS
After-tax distributable earnings were $460.1 million for the quarter ended December 31, 2018, compared with $372.6 million in the comparable prior period. After-tax distributable earnings were $1,597.2 million for the year ended December 31, 2018, compared with $1,355.6 million in the comparable prior period. The increase in both periods was primarily due to (i) an increase in transaction fees primarily in our Capital Markets business line, (ii) an increase in net realized gains at our Principal Activities business line, reflecting higher net realizations in our private equity strategy, (iii) an increase in management fees as described below, and (iv) a higher level of incentive fees relating to both our business development companies ("BDCs") and strategic partnership with Marshall Wace. These increases were partially offset by an increase in income taxes paid reflecting the increased amount of corporate taxes payable following the Conversion and an increase in compensation reflecting a higher level of total segment revenues in the current periods.
ASSETS UNDER MANAGEMENT
AUM was $194.7 billion as of December 31, 2018 compared to $194.6 billion as of September 30, 2018 and $168.5 billion as of December 31, 2017. For the fourth quarter, $11.3 billion of new capital raised was driven by fundraising activities in our private equity and leveraged credit strategies.  These increases were partially offset by: i) a decrease in the value of our private equity portfolio and various credit strategies reflecting, in part, the volatility seen across markets evidenced by the 13.5% decline in the S&P 500 index in the fourth quarter on a total return basis; and ii) distributions to limited partners of our private equity funds arising from realizations and distributions made in our Public Markets business line.
FEE PAYING ASSETS UNDER MANAGEMENT
FPAUM was $141.0 billion as of December 31, 2018 compared to $139.3 billion as of September 30, 2018 and $117.4 billion as of December 31, 2017. The increase was primarily driven by new capital raised in our leveraged credit strategy. The increase was partially offset by distributions made in our Public Markets business line and distributions to limited partners of our private equity funds arising from realizations.

Page 2



MANAGEMENT FEES
Management fees were $279.4 million for the quarter ended December 31, 2018, compared with $234.4 million in the comparable prior period. Management fees were $1,069.1 million for the year ended December 31, 2018, compared to $905.2 million in the comparable prior period. The increase in both periods reflects an overall higher level of FPAUM in each of the Private Markets and Public Markets business lines.
BOOK VALUE PER SHARE
Book value per adjusted share was $15.57 as of December 31, 2018, up 10%, compared with $14.20 as of December 31, 2017. The increase was primarily attributable to net appreciation in the value of our investment portfolio as well as after-tax distributable earnings, net of dividends to Class A common stockholders, over the last twelve months.

DIVIDENDS AND OTHER
A dividend of $0.125 per share of Class A common stock has been declared for the fourth quarter of 2018, which will be paid on February 26, 2019 to holders of record of Class A common stock as of the close of business on February 11, 2019. Under KKR's current dividend policy, KKR expects to pay its Class A common stockholders an annualized dividend of $0.50 per share of Class A common stock, equal to a quarterly dividend of $0.125 per share of Class A common stock.
A dividend of $0.421875 per share of Series A Preferred Stock has been declared and set aside for payment on March 15, 2019 to holders of record of Series A Preferred Stock as of the close of business on March 1, 2019. A dividend of $0.406250 per share of Series B Preferred Stock has been declared and set aside for payment on March 15, 2019 to holders of record of Series B Preferred Stock as of the close of business on March 1, 2019.
The declaration and payment of any future dividends on preferred or common stock will be subject to the discretion of the board of directors of KKR & Co. Inc. based on a number of factors, including KKR’s future financial performance and other considerations that the board deems relevant, the terms of KKR & Co. Inc.'s certificate of incorporation and applicable law.  There can be no assurance that future dividends will be made as intended or at all or that any particular dividend policy for Class A common stock will be maintained.
On December 7, 2018, KKR amended and restated its $1.0 billion corporate revolving credit facility (the “Credit Facility”) by extending the maturity to December 7, 2023. Borrowings under the Credit Facility are available for general corporate purposes.

SHARE REPURCHASE ACTIVITY (1) 
KKR has authorized a repurchase program which may be used to repurchase shares in the open market as well as to reduce shares issuable to participants in its equity incentive plan. In total, as can be seen in the table below, KKR has used approximately $895 million to either repurchase shares or retire equity awards since the inception of KKR’s share repurchase plan on October 27, 2015 through January 25, 2019.

Share Repurchase Activity -- October 27, 2015 through January 25, 2019 (2)
(Amounts in millions, except per share amounts)
 
Inception to Date
Open Market Share Repurchases
 
40.5

Reduction of Shares Issuable to Participants (3)
 
12.6

Total Repurchased Shares and Retired Equity Awards
 
53.1

Total Capital Used
 
$
895

Average Price Paid Per Share (4)
 
$
16.85

Remaining Availability under Current Share Repurchase Plan
 
$
254


From September 30, 2018 through January 25, 2019, KKR used a total of approximately $167 million to repurchase 5.5 million shares in the open market and to retire equity awards representing 1.6 million shares that otherwise would have been issued to participants in its equity incentive plan. During this period, open market purchases were made at an average cost of $22.00 per share.
 
 
 
 
(1)
References to the repurchase and reduction of shares relate to shares of KKR Class A common stock
(2)
KKR & Co. Inc.'s initial repurchase authorization was announced on October 27, 2015.
(3)
Refers to the retirement of equity awards issued pursuant to the Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (and any successor equity plan thereto).
(4)
Average price paid per share reflects total capital used to repurchase shares and to retire equity awards from inception to January 25, 2019 divided by the total number of repurchased shares and retired equity awards.

Page 3



CONFERENCE CALL
A conference call to discuss KKR's financial results will be held on Friday, February 1, 2019 at 10:00 a.m. ET. The conference call may be accessed by dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Investor Center section of KKR's website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR's website or by dialing (855) 859-2056 (U.S. callers) or +1 (404) 537-3406 (non-U.S. callers), pass code 6389788, beginning approximately two hours after the broadcast.
A slide presentation containing supplemental commentary about KKR's financial results for the fiscal quarter and year ended December 31, 2018 may be accessed through the Investor Center of the KKR website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. The presentation will be referenced on the conference call discussed above.
From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. Inc. at http://ir.kkr.com/kkr_ir/kkr_events.cfm. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the “Email Alerts” area of the Investor Center on the website.

ABOUT KKR
KKR is a leading global investment firm that manages multiple alternative asset classes, including private equity, energy, infrastructure, real estate and credit, with strategic partners that manage hedge funds. KKR aims to generate attractive investment returns for its fund investors by following a patient and disciplined investment approach, employing world-class people, and driving growth and value creation with KKR portfolio companies. KKR invests its own capital alongside the capital it manages for fund investors and provides financing solutions and investment opportunities through its capital markets business. References to KKR’s investments may include the activities of its sponsored funds. For additional information about KKR & Co. Inc. (NYSE: KKR), please visit KKR's website at www.kkr.com and on Twitter @KKR_Co.

FORWARD-LOOKING STATEMENTS
This release contains certain forward-looking statements. Forward-looking statements relate to expectations, estimates, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts, including the statements with respect to the declaration and payment of dividends in future quarters and the timing, manner and volume of repurchase of Class A common stock pursuant to its repurchase program. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKR’s business, financial condition, liquidity and results of operations, including but not limited to dividends, tax assets, tax liabilities, AUM, FPAUM, after-tax distributable earnings, capital invested, syndicated capital, uncalled commitments, cash and short-term investments, fee related earnings, segment EBITDA, core interest expense and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: whether KKR realizes all or any of the anticipated benefits from converting to a corporation and the timing of realizing such benefits; whether there are increased or unforeseen costs associated with the conversion, including any adverse change in tax law; the volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions, strategic partnerships or other transactions; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKR’s competition. All forward-looking statements speak only as of the date hereof. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKR’s business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. Inc.’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017, filed with the SEC on February 23, 2018, quarterly reports on Form 10-Q for subsequent quarters and other filings with the SEC, which are available at www.sec.gov.
___________________________

CONTACT INFORMATION
Investor Relations:                                        
Craig Larson                        
Tel: +1-877-610-4910 (U.S.) / +1-212-230-9410            
investor-relations@kkr.com                     

Media:
Kristi Huller
Tel: +1-212-750-8300
media@kkr.com

Page 4



KKR
CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Revenues
 
 
 
 
 
 
 
 
Fees and Other
 
$
541,583

 
$
425,222

 
$
1,841,326

 
$
1,541,604

Capital Allocation-Based Income (1)
 
(719,639
)
 
598,851

 
554,510

 
2,015,676

Total Revenues
 
(178,056
)
 
1,024,073

 
2,395,836

 
3,557,280

Expenses
 
 
 
 
 
 
 
 
Compensation and Benefits
 
43,293

 
461,173

 
1,374,363

 
1,695,490

Occupancy and Related Charges
 
14,919

 
14,572

 
59,706

 
58,722

General, Administrative and Other
 
179,524

 
160,958

 
655,408

 
582,480

Total Expenses
 
237,736

 
636,703

 
2,089,477

 
2,336,692

Investment Income (Loss)
 
 
 
 
 
 
 
 
Net Gains (Losses) from Investment Activities
 
(1,001,286
)
 
35,079

 
1,254,832

 
928,144

Dividend Income
 
37,501

 
101,971

 
175,154

 
202,115

Interest Income
 
407,178

 
348,587

 
1,396,532

 
1,242,419

Interest Expense
 
(241,508
)
 
(211,495
)
 
(876,029
)
 
(808,898
)
Total Investment Income (Loss)
 
(798,115
)
 
274,142

 
1,950,489

 
1,563,780

 
 
 
 
 
 
 
 
 
Income (Loss) Before Taxes
 
(1,213,907
)
 
661,512

 
2,256,848

 
2,784,368

 
 
 
 
 
 
 
 
 
Income Tax (Benefit)
 
(143,294
)
 
146,826

 
(194,098
)
 
224,326

 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
(1,070,613
)
 
514,686

 
2,450,946

 
2,560,042

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests
 
(57,246
)
 
9,776

 
(37,352
)
 
73,972

Net Income (Loss) Attributable to Noncontrolling Interests
 
(628,726
)
 
330,180

 
1,357,235

 
1,467,765

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc.
 
(384,641
)
 
174,730

 
1,131,063

 
1,018,305

 
 
 
 
 
 
 
 
 
Preferred Stock Dividends
 
8,341

 
8,341

 
33,364

 
33,364

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
(392,982
)
 
$
166,389

 
$
1,097,699

 
$
984,941

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock
 
 
 
 
 
 
 
 
Basic
 
$
(0.74
)
 
$
0.35

 
$
2.14

 
$
2.10

Diluted (2)
 
$
(0.74
)
 
$
0.32

 
$
2.06

 
$
1.95

Weighted Average Shares of Class A Common Stock Outstanding
 
 
 
 
 
 
 
 
Basic
 
532,266,521

 
481,165,742

 
514,102,571

 
468,282,642

Diluted (2)
 
532,266,521

 
520,156,583

 
533,707,039

 
506,288,971

 
CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
As of
 
 
December 31, 2018
 
December 31, 2017
 
 
 
 
 
Assets
 
 
 
 
Cash and Cash Equivalents
 
$
1,751,287

 
$
1,876,687

Investments
 
44,907,982

 
39,013,934

Other Assets
 
4,084,106

 
4,944,098

Total Assets
 
50,743,375

 
45,834,719

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Debt Obligations
 
22,341,192

 
21,193,859

Other Liabilities
 
3,019,574

 
3,978,060

Total Liabilities
 
25,360,766

 
25,171,919

 
 
 
 
 
Redeemable Noncontrolling Interests
 
1,122,641

 
610,540

 
 
 
 
 
Stockholders' Equity
 
 
 
 
Preferred Stock
 
482,554

 
482,554

KKR & Co. Inc. Stockholders' Equity - Common Stockholders
 
8,167,056

 
6,703,382

Noncontrolling Interests
 
15,610,358

 
12,866,324

Total Equity
 
24,259,968

 
20,052,260

Total Liabilities and Equity
 
$
50,743,375

 
$
45,834,719

 
 
 
 
 
KKR & Co. Inc. Stockholders' Equity Per Outstanding Share of Class A Common Stock - Basic
 
$
15.27

 
$
13.79

 
 
 
 
(1)
Prior to January 1, 2018, to the extent an investment fund was not consolidated, KKR accounted for carried interest within Fees and Other separately from its capital interest, which was included in Net Gains (Losses) from Investment Activities in the statements of operations. Effective January 1, 2018, the carried interest component of the general partner interest and the capital interest KKR holds in its investment funds as the general partner are accounted for as a single unit of account and reported in Capital Allocation-Based Income within Revenues in the statements of operations. This change in accounting has been applied on a full retrospective basis.
(2)
KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per share of Class A common stock since the exchange of these units would not dilute KKR’s respective ownership interests in the KKR Group Partnerships. For the quarter ended December 31, 2018, unvested shares of Class A common stock are excluded from the calculation of diluted earnings per share of Class A common stock because inclusion of such unvested shares of Class A common stock would be anti-dilutive having the effect of decreasing the loss per share of Class A common stock.

Page 5



KKR
SEGMENT RESULTS AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED) (1)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Segment Revenues
 
 
 
 
 
 
 
 
 
 
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
279,444

 
$
276,595

 
$
234,381

 
$
1,069,074

 
$
905,188

Transaction Fees
 
367,685

 
289,030

 
198,580

 
977,485

 
777,247

Monitoring Fees
 
24,420

 
20,176

 
22,949

 
87,520

 
81,021

Fee Credits
 
(101,154
)
 
(82,187
)
 
(50,281
)
 
(280,136
)
 
(261,429
)
Total Fees and Other, Net
 
570,395


503,614

 
405,629

 
1,853,943

 
1,502,027

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 
259,394

 
414,609

 
308,671

 
1,218,647

 
1,198,981

Incentive Fees
 
86,271

 
18,001

 
65,011

 
138,330

 
73,395

Total Realized Performance Income (Loss)
 
345,665


432,610

 
373,682

 
1,356,977

 
1,272,376

 
 
 
 
 
 
 
 
 
 
 
Realized Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Net Realized Gains (Losses)
 
78,943

 
181,026

 
31,336

 
365,324

 
194,020

Interest Income and Dividends
 
80,946

 
61,717

 
90,421

 
286,468

 
285,696

Total Realized Investment Income (Loss)
 
159,889

 
242,743

 
121,757

 
651,792

 
479,716

 
 
 
 
 
 
 
 
 
 
 
Total Segment Revenues
 
1,075,949

 
1,178,967

 
901,068

 
3,862,712

 
3,254,119

 
 
 
 
 
 
 
 
 
 
 
Segment Expenses
 
 
 
 
 
 
 
 
 
 
Compensation and Benefits (2)
 
395,282

 
469,107

 
349,638

 
1,533,431

 
1,282,745

Occupancy and Related Charges
 
14,203

 
14,571

 
13,962

 
57,022

 
56,410

Other Operating Expenses
 
98,753

 
73,402

 
66,688

 
293,621

 
243,772

Total Segment Expenses
 
508,238

 
557,080

 
430,288

 
1,884,074

 
1,582,927

 
 
 
 
 
 
 
 
 
 
 
Segment Operating Earnings
 
567,711

 
621,887

 
470,780

 
1,978,638

 
1,671,192

 
 
 
 
 
 
 
 
 
 
 
Interest Expense
 
47,017

 
44,696

 
47,264

 
187,379

 
181,612

Preferred Dividends
 
8,341

 
8,341

 
8,341

 
33,364

 
33,364

Income (Loss) Attributable to Noncontrolling Interests
 
4,250

 
2,272

 
2,741

 
8,807

 
6,551

Income Taxes Paid
 
47,980

 
69,880

 
39,837

 
151,848

 
94,065

After-tax Distributable Earnings
 
$
460,123

 
$
496,698

 
$
372,597

 
$
1,597,240

 
$
1,355,600

 
 
 
 
 
 
 
 
 
 
 
Per Adjusted Share Eligible for Distribution
 
$
0.55

 
$
0.60

 
$
0.45

 
$
1.93

 
$
1.66

Weighted Average Adjusted Shares Eligible for Distribution
 
833,010,571

 
829,125,784

 
821,280,755

 
829,443,128

 
816,466,568

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
194,720,400

 
$
194,613,800

 
$
168,470,600

 
$
194,720,400

 
$
168,470,600

Fee Paying Assets Under Management
 
$
141,007,700

 
$
139,285,700

 
$
117,437,500

 
$
141,007,700

 
$
117,437,500

Capital Invested and Syndicated Capital
 
$
10,304,800

 
$
7,075,800


$
5,971,800

 
$
26,493,900

 
$
23,045,100

Uncalled Commitments
 
$
57,959,000

 
$
57,880,100


$
56,553,100

 
$
57,959,000

 
$
56,553,100

 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
 
$
331,188

 
$
291,194

 
$
236,448

 
$
1,064,884

 
$
865,520








 
 
 
 
Note: See "Information on Key Segment & Other Measures" for more information about certain non-GAAP financial measures and Exhibit A for a reconciliation of such measures to the financial results presented in accordance with GAAP.

(1)
See Exhibit A for reconciliations of (i) Net Income (Loss) attributable to KKR & Co. Inc. Per Share of Class A Common Stock (GAAP basis) to After-tax Distributable Earnings, (ii) Total GAAP Revenues to Total Segment Revenues, and (iii) Total GAAP Expenses to Total Segment Expenses. See reconciliation of GAAP Shares of Class A Common Stock Outstanding to Adjusted Shares Eligible for Distribution in the information that follows.
(2)
Includes equity-based compensation of $57,016, $59,801, and $54,468 for the quarters ended December 31, 2018, September 30, 2018, and December 31, 2017, respectively, and $242,811 and $204,308 for the year ended December 31, 2018 and 2017, respectively.

Page 6



KKR
SCHEDULE OF SEGMENT REVENUES AND OTHER SELECTED FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
PRIVATE MARKETS BUSINESS LINE
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
174,470

 
$
176,071

 
$
155,845

 
$
665,026

 
$
575,451

Transaction Fees
 
114,780

 
93,866

 
51,487

 
303,902

 
288,879

Monitoring Fees
 
24,420

 
20,176

 
22,949

 
87,520

 
81,021

Fee Credits
 
(81,278
)
 
(73,571
)
 
(43,456
)
 
(239,441
)
 
(220,710
)
Total Fees and Other, Net
 
232,392

 
216,542

 
186,825

 
817,007

 
724,641

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 
259,394

 
404,709

 
308,671

 
1,208,747

 
1,198,981

Incentive Fees
 
1,041

 

 

 
1,041

 

Total Realized Performance Income (Loss)
 
$
260,435

 
$
404,709

 
$
308,671

 
$
1,209,788

 
$
1,198,981

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
103,396,500

 
$
103,656,200

 
$
97,527,100

 
$
103,396,500

 
$
97,527,100

Fee Paying Assets Under Management
 
$
66,830,000

 
$
66,060,400

 
$
61,678,600

 
$
66,830,000

 
$
61,678,600

Capital Invested 
 
$
4,337,600

 
$
3,887,700

 
$
2,262,600

 
$
13,224,100

 
$
13,342,400

Uncalled Commitments
 
$
48,160,900

 
$
48,104,700

 
$
47,405,100

 
$
48,160,900

 
$
47,405,100


PUBLIC MARKETS BUSINESS LINE
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
104,974

 
$
100,524

 
$
78,536

 
$
404,048

 
$
329,737

Transaction Fees
 
20,634

 
8,666

 
7,330

 
42,531

 
48,370

Fee Credits
 
(19,876
)
 
(8,616
)
 
(6,825
)
 
(40,695
)
 
(40,719
)
Total Fees and Other, Net
 
105,732

 
100,574

 
79,041

 
405,884

 
337,388

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 

 
9,900

 

 
9,900

 

Incentive Fees
 
85,230

 
18,001

 
65,011

 
137,289

 
73,395

Total Realized Performance Income (Loss)
 
$
85,230

 
$
27,901

 
$
65,011

 
$
147,189

 
$
73,395

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
91,323,900

 
$
90,957,600

 
$
70,943,500

 
$
91,323,900

 
$
70,943,500

Fee Paying Assets Under Management
 
$
74,177,700

 
$
73,225,300

 
$
55,758,900

 
$
74,177,700

 
$
55,758,900

Capital Invested
 
$
1,978,200

 
$
1,631,100

 
$
1,191,200

 
$
6,932,400

 
$
5,017,100

Uncalled Commitments
 
$
9,798,100

 
$
9,775,400

 
$
9,148,000

 
$
9,798,100

 
$
9,148,000


CAPITAL MARKETS BUSINESS LINE
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Transaction Fees
 
$
232,271

 
$
186,498

 
$
139,763

 
$
631,052

 
$
439,998

 
 
 
 
 
 
 
 
 
 
 
Syndicated Capital
 
$
3,989,000


$
1,557,000


$
2,518,000

 
$
6,337,400

 
$
4,685,600


PRINCIPAL ACTIVITIES BUSINESS LINE
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
 
December 31, 2018
 
December 31, 2017
Realized Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Net Realized Gains (Losses)
 
$
78,943

 
$
181,026

 
$
31,336

 
365,324

 
194,020

Interest Income and Dividends
 
80,946

 
61,717

 
90,421

 
286,468

 
285,696

Total Realized Investment Income (Loss)
 
$
159,889

 
$
242,743

 
$
121,757

 
$
651,792

 
$
479,716


Page 7



KKR
SEGMENT BALANCE SHEET (UNAUDITED)
(Amounts in thousands, except per outstanding adjusted share amounts)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
As of
 
 
 
December 31, 2018
 
December 31, 2017
 
Cash and Short-term Investments
 
$
2,502,239

 
$
3,214,794

 
Investments
 
9,847,464

(1)
8,488,606

 
Unrealized Carried Interest
 
1,223,084

(2)
1,620,401

(2)
Corporate Real Estate
 
161,225

 
161,225

 
Tax Assets
 
561,114

 

 
Other Assets
 
3,292,510

 
2,276,286

 
Total Assets
 
$
17,587,636

 
$
15,761,312

 
 
 
 
 
 
 
Debt Obligations - KKR (ex-KFN)
 
$
2,367,801

 
$
2,000,000

 
Debt Obligations - KFN
 
948,517

 
764,767

 
Preferred Shares - KFN
 

 
373,750

 
Tax Liabilities
 
174,395

 

 
Other Liabilities
 
590,981

 
426,699

 
Total Liabilities
 
4,081,694

 
3,565,216

 
 
 
 
 
 
 
Noncontrolling Interests
 
25,382

 
22,187

 
Preferred Stock
 
500,000

 
500,000

 
 
 
 
 
 
 
Book Value
 
$
12,980,560

 
$
11,673,909

 
 
 
 
 
 
 
Book Value Per Outstanding Adjusted Share
 
$
15.57

 
$
14.20

 
 
 
 
 
 
 

 
 
 
 
Note: As of December 31, 2018, KKR had a $1.0 billion revolving credit facility, which was undrawn. In addition, KKR has $1.3 billion in revolving credit facilities for use in its capital markets business, which were undrawn as of December 31, 2018.

(1)
See schedule of investments that follows on the next page.
(2)
The following table provides unrealized carried interest by business line:
 
 
As of
 
 
 
 
December 31, 2018
 
 
 
December 31, 2017
 
 
Private Markets Business Line
 
$
1,083,163

 
 
 
$
1,480,142

 
 
Public Markets Business Line
 
139,921

 
 
 
140,259

 
 
Total
 
$
1,223,084

 
 
 
$
1,620,401

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 





Page 8



KKR
SEGMENT SCHEDULE OF INVESTMENTS (UNAUDITED) (1)
(Amounts in thousands, except percentage amounts)
 
 
As of December 31, 2018
 
 
 
Investments
 
Fair Value
 
 
 
Private Equity Co-Investments and Other Equity
 
$
4,013,910

Private Equity Funds
 
1,693,992

Private Equity Total
 
5,707,902

 
 
 
Energy
 
667,798

Real Estate
 
794,835

Infrastructure
 
500,088

Real Assets Total
 
1,962,721

 
 
 
Special Situations
 
565,571

Direct Lending
 
97,541

Mezzanine
 
32,476

Alternative Credit Total
 
695,588

CLOs
 
626,661

Other Credit
 
262,645

Credit Total
 
1,584,894

 
 
 
Other
 
591,947

 
 
 
Total Investments
 
$
9,847,464

 
 
 
chart-586489d1cc3a5ff69ed.jpg


 
 
As of December 31, 2018
 
 
 
 
 
Significant Investments: (3)
 
Fair Value
 
Fair Value
as a % of Total Investments
First Data Corporation
 
$
998,113

 
10.1
%
USI, Inc.
 
650,144

 
6.6
%
Heartland Dental
 
332,480

 
3.4
%
KKR Real Estate Finance Trust Inc.
 
311,188

 
3.2
%
PetVet
 
291,826

 
3.0
%
Total Significant Investments
 
2,583,751

 
26.3
%
 
 
 
 
 
Other Investments
 
7,263,713

 
73.7
%
Total Investments
 
$
9,847,464

 
100.0
%
 
 
 
 
 








 
 
 
 
(1)
Investments is a term used solely for purposes of financial presentation of a portion of KKR’s balance sheet and includes majority ownership of subsidiaries that operate KKR’s asset management and broker-dealer businesses, including the general partner interests of KKR’s investment funds.
(2)
Private Equity includes KKR private equity funds, co-investments alongside such KKR sponsored private equity and core private equity funds, core private equity co-investments, and other opportunistic investments. However, equity investments in other asset classes, such as real estate, alternative credit, and energy appear in these other asset classes.
(3)
Significant Investments include the top five investments (other than investments expected to be syndicated or transferred in connection with new fundraising) based on their fair values as of December 31, 2018. The fair value figures include the co-investment and the limited partner and/or general partner interests held by KKR in the underlying investment, if applicable.

Page 9



KKR
ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Markets
Business Line
 
Public Markets
Business Line
 
Total
Quarter Ended December 31, 2018
 
 
 
 
 
 
September 30, 2018
 
$
103,656,200

 
$
90,957,600

 
$
194,613,800

New Capital Raised
 
5,426,900

 
5,890,000

 
11,316,900

Impact of Other Transactions
 

 
(1,149,500
)
(1) 
(1,149,500
)
Distributions and Other
 
(2,429,700
)
 
(2,194,400
)
(2) 
(4,624,100
)
Change in Value
 
(3,256,900
)
 
(2,179,800
)
 
(5,436,700
)
December 31, 2018
 
$
103,396,500

 
$
91,323,900

 
$
194,720,400

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018
 
 
 
 
 
 
December 31, 2017
 
$
97,527,100

 
$
70,943,500

 
$
168,470,600

New Capital Raised
 
14,755,500

 
19,253,900

 
34,009,400

Impact of Other Transactions
 

 
12,039,600

(3) 
12,039,600

Distributions and Other
 
(12,751,000
)
(4) 
(9,279,000
)
(5) 
(22,030,000
)
Change in Value
 
3,864,900

 
(1,634,100
)
 
2,230,800

December 31, 2018
 
$
103,396,500

 
$
91,323,900

 
$
194,720,400

 
 
 
 
 
 
 

KKR
FEE PAYING ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Markets
Business Line
 
Public Markets
Business Line
 
Total
Quarter Ended December 31, 2018
 
 
 
 
 
 
September 30, 2018
 
$
66,060,400

 
$
73,225,300

 
$
139,285,700

New Capital Raised
 
1,501,000

 
6,225,800

 
7,726,800

Impact of Other Transactions
 

 
(1,149,500
)
(1) 
(1,149,500
)
Distributions and Other
 
(870,600
)
 
(2,214,200
)
(2) 
(3,084,800
)
Change in Value
 
139,200

 
(1,909,700
)
 
(1,770,500
)
December 31, 2018
 
$
66,830,000

 
$
74,177,700

 
$
141,007,700

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2018
 
 
 
 
 
 
December 31, 2017
 
$
61,678,600

 
$
55,758,900

 
$
117,437,500

New Capital Raised
 
11,079,900

 
17,871,900

 
28,951,800

Impact of Other Transactions
 

 
12,039,600

(3) 
12,039,600

Distributions and Other
 
(5,233,200
)
 
(9,567,000
)
(5) 
(14,800,200
)
Net Changes in Fee Base of Certain Funds (6)
 
(1,040,300
)
 

 
(1,040,300
)
Change in Value
 
345,000

 
(1,925,700
)
 
(1,580,700
)
December 31, 2018
 
$
66,830,000

 
$
74,177,700

 
$
141,007,700

 
 
 
 
 
 
 

 
 
 
 
(1)
Includes (i) a reduction of $3,060.7 million of AUM and FPAUM in connection with the sale of KKR's equity interest in Nephila Capital and (ii) KKR's incremental pro rata portion of AUM and FPAUM of $1,911.2 million managed by Marshall Wace LLP due to an additional 5% interest acquired by KKR on November 30, 2018.
(2)
Includes $1,407.6 million of redemptions by fund investors.
(3)
Includes (i) $13,189.1 million of AUM and FPAUM managed by FS Investments in connection with the completion of the FS Investments transaction, (ii) KKR's incremental pro rata portion of AUM and FPAUM of $1,911.2 million managed by Marshall Wace LLP due to an additional 5% interest acquired by KKR on November 30, 2018 and (iii) a reduction of $3,060.7 million of AUM and FPAUM in connection with the sale of KKR's equity interest in Nephila Capital.
(4)
Includes $812.0 million of expired commitments that are no longer eligible to be called.
(5)
Includes $5,746.4 million of redemptions by fund investors.
(6)
Represents the impact of certain funds entering their post-investment period.

Page 10



KKR
INVESTMENT VEHICLE SUMMARY (UNAUDITED)
As of December 31, 2018
(Amounts in millions, except percentages)
 
 
Investment Period
 
Amount
 
Start
Date
End Date
 
Commitment
Uncalled
Commitments
Percentage
Committed
by General
Partner
Invested
Realized
Remaining
Cost
Remaining Fair Value
Private Markets Business Line
 
 
 
 
 
 
 
 

 
 
 
 
 
 
 
 
 
 
 
 
 
Private Equity and Growth Funds
 
 
 
 
 
 
 
 
 
 
European Fund V
(4)
(5)
 
$
4,948.0

$
4,948.0

8.1%
$

$

$

$

Asian Fund III
4/2017
4/2023
 
9,000.0

7,433.2

5.6%
1,566.8


1,566.8

1,929.8

Americas Fund XII
1/2017
1/2023
 
13,500.0

8,874.7

6.0%
4,643.9

89.0

4,640.2

4,760.5

Health Care Strategic Growth Fund
12/2016
12/2021
 
1,331.0

1,162.5

11.3%
168.5


168.5

243.6

Next Generation Technology Growth Fund
3/2016
3/2021
 
658.9

244.8

22.5%
414.1


414.1

708.8

European Fund IV
12/2014
12/2020
 
3,511.7

918.1

5.6%
2,686.4

461.2

2,303.3

3,632.2

Asian Fund II
4/2013
4/2017
 
5,825.0

649.2

1.3%
6,182.4

2,702.5

4,582.8

6,397.1

North America Fund XI
9/2012
1/2017
 
8,718.4

851.9

2.9%
9,300.5

8,095.0

5,934.6

9,799.7

China Growth Fund (1)
11/2010
11/2016
 
1,010.0


1.0%
1,010.0

721.8

584.2

557.7

European Fund III (1)
3/2008
3/2014
 
5,559.8

222.9

5.1%
5,336.9

9,776.0

755.4

1,174.3

Asian Fund (1)
7/2007
4/2013
 
3,983.3


2.5%
3,945.9

8,409.6

239.2

294.4

2006 Fund (1)
9/2006
9/2012
 
17,642.2

337.7

2.1%
17,304.5

29,606.2

3,668.8

4,268.1

European Fund II (1)
11/2005
10/2008
 
5,750.8


2.1%
5,750.8

8,479.3


58.6

Millennium Fund (1)
12/2002
12/2008
 
6,000.0


2.5%
6,000.0

14,123.1


6.1

Total Private Equity and Growth Funds
 
 
 
87,439.1

25,643.0

 
64,310.7

82,463.7

24,857.9

33,830.9

 
 
 
 
 
 
 
 
 
 
 
Co-Investment Vehicles and Other
Various
Various
 
8,037.0

2,785.5

Various
5,470.7

3,547.5

3,734.7

5,191.4

 
 
 
 
 
 
 
 
 
 
 
Total Private Equity
 
 
 
95,476.1

28,428.5

 
69,781.4

86,011.2

28,592.6

39,022.3

 
 
 
 
 
 
 
 
 
 
 
Real Assets
 
 
 
 
 
 
 
 
 
 
Energy Income and Growth Fund
9/2013
6/2018
 
1,974.2

59.3

12.9%
1,961.1

611.7

1,441.0

1,582.3

Natural Resources Fund (1)
Various
Various
 
887.4

2.6

Various
884.8

115.9

201.5

165.0

Global Energy Opportunities
Various
Various
 
979.2

327.1

Various
479.6

87.9

350.7

306.2

Global Infrastructure Investors
9/2011
10/2014
 
1,040.2

25.4

4.8%
1,047.6

1,292.4

380.7

540.0

Global Infrastructure Investors II
10/2014
6/2018
 
3,040.3

359.1

4.1%
2,911.0

318.7

2,665.8

3,223.9

Global Infrastructure Investors III
6/2018
6/2024
 
7,162.1

6,663.2

3.8%
498.9


498.9

479.5

Real Estate Partners Americas
5/2013
5/2017
 
1,229.1

352.7

16.3%
1,004.3

1,111.3

363.0

367.1

Real Estate Partners Americas II
5/2017
12/2020
 
1,921.2

1,441.0

7.8%
487.6

24.4

475.6

515.4

Real Estate Partners Europe
9/2015
6/2020
 
709.3

351.8

9.7%
375.8

22.3

360.2

427.8

Real Estate Credit Opportunity Partners
2/2017
2/2019
 
1,130.0

293.5

4.4%
836.5

52.9

836.5

859.6

Co-Investment Vehicles and Other
Various
Various
 
2,135.4

743.9

Various
1,391.5

680.2

1,388.3

1,628.0

Total Real Assets
 
 
 
22,208.4

10,619.6

 
11,878.7

4,317.7

8,962.2

10,094.8

 
 
 
 
 
 
 
 
 
 
 
Core Investment Vehicles
Various
Various
 
9,500.0

6,560.7

36.8%
2,939.3


2,939.3

3,462.5

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (2)
 
 
 
2,552.1

2,552.1

Various




 
 
 
 
 
 
 
 
 
 
 
Private Markets Total
 
 
 
129,736.6

48,160.9

 
84,599.4

90,328.9

40,494.1

52,579.6

 
 
 
 
 
 
 
 
 
 
 
Public Markets Business Line (3)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alternative Credit
 
 
 
 
 
 
 
 
 
 
Special Situations Fund
12/2012
1/2016
 
2,274.3

1.6

11.6%
2,272.7

1,436.2

1,447.4

1,248.6

Special Situations Fund II
12/2014
3/2019
 
3,475.9

1,335.5

9.0%
2,140.4

127.9

2,140.3

2,235.8

Mezzanine Partners
3/2010
3/2015
 
1,022.8

108.9

4.4%
913.9

1,060.1

256.4

302.0

Private Credit Opportunities Partners II
12/2015
12/2020
 
2,245.1

1,396.6

2.2%
848.5

27.0

848.5

821.8

Lending Partners
12/2011
12/2014
 
460.2

54.9

15.2%
405.3

434.9

129.2

70.4

Lending Partners II
6/2014
6/2017
 
1,335.9

156.8

3.7%
1,179.1

900.7

690.5

630.0

Lending Partners III
4/2017
11/2021
 
1,497.8

1,100.9

1.7%
396.9


396.9

446.7

Lending Partners Europe
3/2015
3/2019
 
847.6

309.5

5.0%
538.1

87.4

538.1

512.7

Total Alternative Credit
 
 
 
13,159.6

4,464.7

 
8,694.9

4,074.2

6,447.3

6,268.0

 
 
 
 
 
 
 
 
 
 
 
Other Alternative Credit Vehicles
Various
Various
 
8,409.0

4,011.1

Various
4,397.9

2,820.6

2,961.9

3,019.7

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (2)
 
 
 
450.0

450.0

Various




 
 
 
 
 
 
 
 
 
 
 
Public Markets Total
 
 
 
22,018.6

8,925.8

 
13,092.8

6,894.8

9,409.2

9,287.7

 
 
 
 
 
 
 
 
 
 
 
Total Eligible To Receive Carried Interest
 
 
 
$
151,755.2

$
57,086.7

 
$
97,692.2

$
97,223.7

$
49,903.3

$
61,867.3

 
 
 
 

(1)
The “Invested” and “Realized” columns do not include the amounts of any realized investments that restored the unused capital commitments of the fund investors, if any.
(2)
Represents unallocated commitments from our strategic investor partnerships.
(3)
The "Commitment" and "Uncalled Commitments" columns include income that is eligible to be reinvested if permitted under the terms of the investment vehicle agreements.
(4)
Upon end date of predecessor fund.
(5)
Six years from first investment date.

Page 11



KKR
INVESTMENT VEHICLE SUMMARY (UNAUDITED) (CONTINUED)
As of December 31, 2018
(Amounts in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncalled
Commitments
 
Remaining
Fair Value
 
Total
 
 
 
 
 
 
 
Carried Interest Eligible
 
$
57,086.7

 
$
61,867.3

 
$
118,954.0

Incentive Fee Eligible
 
 
 
 
 
 
Hedge Fund Partnerships (1)
 

 
14,844.9

 
14,844.9

BDCs
 

 
16,778.5

 
16,778.5

KKR Real Estate Finance Trust Inc.
 

 
1,171.9

 
1,171.9

Other
 

 
2,936.3

 
2,936.3

Total Carried Interest and Incentive Fee Eligible
 
57,086.7

 
97,598.9

 
154,685.6

Collateralized Loan Obligations (CLOs)
 

 
13,025.9

 
13,025.9

Leveraged Credit / Hedge Fund Partnerships (1) / Other
 
872.3

 
26,136.6

 
27,008.9

Total Assets Under Management
 
$
57,959.0

 
$
136,761.4

 
$
194,720.4

 
 
 
 
(1)
Represents KKR's pro rata portion of AUM of hedge fund managers in which KKR holds a minority ownership interest. Total AUM for Hedge Fund Partnerships is $25,685.4 million, of which $14,844.9 million is incentive fee eligible.













KKR’S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
As of
 
 
December 31, 2018
 
 
 
December 31, 2017
Private Markets
 
$
4,966,600

 
 
 
$
5,345,500

Public Markets
 
307,400

 
 
 
351,500

Total
 
$
5,274,000

 
 
 
$
5,697,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 


Page 12



KKR
CLASS A COMMON STOCK OUTSTANDING AND ADJUSTED SHARES ELIGIBLE FOR DISTRIBUTION
 
 
The following table provides a reconciliation of KKR's Weighted Average GAAP Shares of Class A Common Stock Outstanding to Weighted Average Adjusted Shares Eligible for Distribution:
 
 
 
 
 
Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Weighted Average GAAP Shares of Class A Common Stock Outstanding - Basic
 
532,266,521

(1) 
525,240,214

 
481,165,742

Adjustments:
 
 
 
 
 
 
Weighted Average Other Securities (2)
 

 
354,338

 
2,501,282

Weighted Average KKR Holdings Units (3)
 
300,744,050

 
303,531,232

 
337,613,731

Weighted Average Adjusted Shares Eligible for Distribution (4)
 
833,010,571

 
829,125,784

 
821,280,755

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
Weighted Average GAAP Shares of Class A Common Stock Outstanding - Basic
 
514,102,571

(1) 
468,282,642

 
 
Adjustments:
 
 
 
 
 
 
Weighted Average Other Securities (2)
 
881,800

 
3,761,831

 
 
Weighted Average KKR Holdings Units (3)
 
314,458,757

 
344,422,095

 
 
Weighted Average Adjusted Shares Eligible for Distribution (4)
 
829,443,128

 
816,466,568

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table provides a reconciliation of KKR's GAAP Shares of Class A Common Stock Outstanding to Adjusted Shares Eligible for Distribution and Outstanding Adjusted Shares:
 
 
 
 
 
 
 
 
 
As of
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
GAAP Shares of Class A Common Stock Outstanding
 
534,857,237

(1) 
486,174,736

 
 
Adjustments:
 
 
 
 
 
 
Other Securities (2)
 

 
2,299,421

 
 
KKR Holdings Units (3)
 
299,081,239

 
335,971,334

 
 
Adjusted Shares Eligible for Distribution (4)
 
833,938,476

 
824,445,491

 
 
Adjustments:
 
 
 
 
 
 
Other Securities
 

 
(2,299,421
)
 
 
Outstanding Adjusted Shares
 
833,938,476

 
822,146,070

 
 
 
 
 
 
 
 
 
Unvested Shares of Class A Common Stock
 
33,408,491

 
46,475,176

 
 















 
 
 
 
(1)
Includes 5.2 million shares of Class A common stock issued to affiliates of Marshall Wace LLP as partial consideration for an additional 5% interest acquired by KKR on November 30, 2018.
(2)
Represents vested other securities that are exchangeable into shares of Class A common stock. The issuance of shares of Class A common stock pursuant to such other securities dilutes KKR common stockholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.
(3)
Shares that may be issued by KKR & Co. Inc. upon exchange of units in KKR Holdings L.P. for KKR Class A common stock.
(4)
Amounts exclude unvested shares granted under the Equity Incentive Plan.

Page 13



KKR
INFORMATION ON KEY SEGMENT & OTHER MEASURES (UNAUDITED)
KKR's segment reporting is presented prior to giving effect to the allocation of income (loss) between KKR & Co. Inc. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR's segment reporting is presented without giving effect to the consolidation of the investment funds and collateralized financing entities that KKR manages as well as other consolidated entities that are not subsidiaries of KKR & Co. Inc. Effective with the quarter ended June 30, 2018, we are reporting as a single segment, which is consistent with KKR’s internal management reporting to its chief operating decision makers.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to stockholders in assessing the overall performance of KKR’s business. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in Exhibit A.
Adjusted shares are used as a measure of the total common equity ownership of KKR that is held by KKR & Co. Inc. (including equity awards issued under the Amended and Restated KKR & Co. Inc. 2010 Equity Incentive Plan (the "Equity Incentive Plan"), but excluding preferred stock), KKR Holdings, and other holders of securities exchangeable into Class A common stock of KKR & Co. Inc. and represent the fully diluted share count of Class A common stock using the if-converted method. We believe this measure is useful to stockholders as it provides an indication of the total common equity ownership of KKR as if all outstanding KKR Holdings units, equity awards issued under the Equity Incentive Plan and other exchangeable securities had been exchanged for Class A common stock of KKR & Co. Inc. The 6.75% Series A Preferred Stock ("Series A Preferred Stock") and 6.50% Series B Preferred Stock ("Series B Preferred Stock") are not exchangeable for Class A common stock of KKR & Co. Inc.
Adjusted shares eligible for distribution represents the portion of total adjusted shares that are eligible to receive a dividend. We believe this measure is useful to stockholders as it provides insight into the calculation of amounts available for distribution as dividends on a per share basis. Weighted average adjusted shares eligible for distribution is used in the calculation of after-tax distributable earnings per share.
After-tax distributable earnings is a measure of KKR’s earnings on a segment basis excluding mark-to-market gains (losses). Starting with the second quarter of 2018, it is defined as the amount of realized earnings of KKR that would be available for distribution as dividends to Class A common stockholders for a given reporting period, after deducting equity-based compensation. KKR revised the definition of after-tax distributable earnings starting in the second quarter of 2018, because it currently reflects how the chief operating decision makers allocate resources and assess performance of KKR’s business. KKR believes that after-tax distributable earnings is useful to stockholders as it aligns KKR’s net realization performance with the manner in which KKR receives its revenues and determines the compensation of its employees. After-tax distributable earnings does not represent and is not used to calculate actual dividends under KKR’s dividend policy. Historically equity-based compensation expense relating to the Equity Incentive Plan was not reflected in our calculation of after-tax distributable earnings. Under KKR’s current segment presentation, equity-based compensation expense is included in after-tax distributable earnings as a component of compensation expense in order to reflect the dilutive nature of these non-cash equity-based awards. For comparability, after-tax distributable earnings for the comparable prior periods have been calculated using this new definition.
Assets under management ("AUM") represent the assets managed or advised by KKR from which KKR is entitled to receive fees or a carried interest (either currently or upon deployment of capital), general partner capital, and assets managed or advised by strategic BDC partnership and hedge fund managers in which KKR holds a minority ownership interest. We believe this measure is useful to stockholders as it provides additional insight into the capital raising activities of KKR and its hedge fund managers and the overall activity in their investment funds and other managed capital. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR's investment funds; (ii) uncalled capital commitments from these funds, including uncalled capital commitments from which KKR is currently not earning management fees or carried interest; (iii) the fair value of investments in KKR's co-investment vehicles; (iv) the par value of outstanding CLOs (excluding CLOs wholly-owned by KKR); (v) KKR's pro rata portion of the AUM of hedge fund managers in which KKR holds a minority ownership interest; (vi) all of AUM of the strategic BDC partnership with FS Investments; and (vii) the fair value of other assets managed by KKR. The pro rata portion of the AUM of hedge fund managers is calculated based on KKR’s percentage ownership interest in such entities multiplied by such entity’s respective AUM. KKR's definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.
Book value is a measure of the net assets of KKR’s reportable segment and is used by management primarily in assessing the unrealized value of KKR’s investments and other assets, including carried interest. We believe this measure is useful to stockholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders and to the holders of the Series A and Series B Preferred Stock. As of September 30, 2018, KKR's segment balance sheet reflects KKR's tax assets and liabilities as prepared under GAAP.

Page 14



Capital invested is the aggregate amount of capital invested by (i) KKR’s investment funds, (ii) KKR's Principal Activities business line as a co-investment, if any, alongside KKR’s investment funds, and (iii) KKR's Principal Activities business line in connection with a syndication transaction conducted by KKR's Capital Markets business line, if any.  Capital invested is used as a measure of investment activity at KKR during a given period. We believe this measure is useful to stockholders as it provides a measure of capital deployment across KKR’s business lines.  Capital invested includes investments made using investment financing arrangements like credit facilities, as applicable.  Capital invested excludes (i) investments in certain leveraged credit strategies, (ii) capital invested by KKR’s Principal Activities business line that is not a co-investment alongside KKR’s investment funds, and (iii) capital invested by KKR’s Principal Activities business line that is not invested in connection with a syndication transaction by KKR’s Capital Markets business line. Capital syndicated by KKR's Capital Markets business line to third parties other than KKR’s investment funds or Principal Activities business line is not included in capital invested.  See also syndicated capital.
Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to stockholders as it provides additional insight into KKR’s available liquidity.
Fee paying AUM ("FPAUM") represents only the AUM from which KKR receives management fees. We believe this measure is useful to stockholders as it provides additional insight into the capital base upon which KKR earns management fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR's and its hedge fund and BDC partnership management fees and differs from AUM in the following respects: (i) assets and commitments from which KKR does not receive a management fee are excluded (e.g., assets and commitments with respect to which it receives only carried interest or is otherwise not currently receiving a management fee) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.
Fee related earnings is a supplemental measure of earnings of KKR on a segment basis before performance income and investment income. KKR believes this measure may be useful to stockholders as it provides additional insight into the profitability of KKR’s fee generating management companies and capital markets businesses. Starting with the second quarter of 2018, fee related earnings is calculated as KKR’s total Fees and Other, Net, multiplied by KKR’s segment operating margin. For purposes of the fee related earnings calculation, segment operating margin is calculated as Segment Operating Earnings, before equity-based compensation, divided by total segment revenues. Historically, fee related earnings was calculated as operating earnings of KKR on a segment basis before performance income, related performance income compensation and investment income. KKR revised the definition of fee related earnings starting in the second quarter of 2018 to provide supplemental information about fees generated from KKR’s management companies and capital markets business because KKR believes it provides increased transparency on KKR’s underlying financial results to the stockholders. Fee related earnings for the comparable prior periods have been calculated using this new definition.
Income taxes paid represents the estimated total tax impact on KKR’s distributable earnings before taxes. This amount is the implied amount of income taxes that would be paid assuming that all pre-tax distributable earnings were allocated to KKR & Co. Inc., which would occur following an exchange of all KKR Holdings units for Class A common stock of KKR & Co. Inc.
Outstanding adjusted shares represents the portion of total adjusted shares that would receive assets of KKR if it were to be liquidated as of a particular date. Outstanding adjusted shares is used to calculate book value per outstanding adjusted share, which we believe is useful to stockholders as it provides a measure of net assets of KKR’s reportable segment on a per share basis.
Segment operating earnings represents segment earnings before interest expense, preferred dividends, income attributable to noncontrolling interests and income taxes paid. We believe segment operating earnings is useful to stockholders as it provides a supplemental measure of our operating performance without taking into account items that we do not believe relate directly to operations.
Syndicated capital is the aggregate amount of capital in transactions originated by KKR and its investment funds and carry-yielding co-investment vehicles, which has been distributed to third parties, generally in exchange for a fee. It does not include (i) capital invested in such transactions by KKR investment funds and carry-yielding co-investment vehicles, which is instead reported in capital invested, (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds, and (iii) debt capital that is either underwritten or arranged on a best efforts basis. Syndicated capital is used as a measure of investment activity for KKR during a given period, and we believe that this measure is useful to stockholders as it provides additional insight into levels of syndication activity in KKR's Capital Markets business line and across KKR's investment platform.
Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to stockholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds to make future investments. Uncalled commitments are not reduced for investments completed using fund-level investment financing arrangements.



 


Page 15



KKR
EXHIBIT A
 
 
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. INC. PER SHARE OF CLASS A COMMON STOCK - BASIC (GAAP BASIS)
TO AFTER-TAX DISTRIBUTABLE EARNINGS PER ADJUSTED SHARE ELIGIBLE FOR DISTRIBUTION AND SEGMENT EBITDA (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock - Basic
 
$
(0.74
)
 
$
1.22

 
$
0.35

Weighted Average Shares of Class A Common Stock Outstanding - Basic
 
532,266,521

 
525,240,214

 
481,165,742

Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
(392,982
)
 
$
640,198

 
$
166,389

 
 
 
 
 
 
 
Add: Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P.
 
(303,468
)
 
293,659

 
153,875

Add: Equity-based and Other Compensation - KKR Holdings L.P.
 
13,153

 
25,537

 
13,863

Add: Amortization of Intangibles and Other, net
 
(31,898
)
 
60,948

 
65,045

Deduct: Unrealized Carried Interest
 
(938,597
)
 
130,420

 
222,535

Deduct: Net Unrealized Gains (Losses)
 
(805,165
)
 
251,346

 
(65,753
)
Add: Unrealized Performance Income Compensation
 
(377,170
)
 
57,407

 
90,439

Deduct: Gain from remeasurement of tax receivable agreement liability (1)
 

 

 
67,221

Add: Income Tax Provision
 
(143,294
)
 
(129,405
)
 
146,826

Deduct: Income Taxes Paid
 
47,980

 
69,880

 
39,837

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
460,123

 
$
496,698

 
$
372,597

Weighted Average Adjusted Shares Eligible for Distribution
 
833,010,571

 
829,125,784

 
821,280,755

After-tax Distributable Earnings Per Adjusted Share Eligible for Distribution
 
$
0.55

 
$
0.60

 
$
0.45

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
460,123

 
$
496,698

 
$
372,597

 
 
 
 
 
 
 
Add: Equity-based Compensation (Equity Incentive Plan)
 
57,016

 
59,801

 
54,468

Add: Income (Loss) Attributable to Segment Noncontrolling Interests
 
4,250

 
2,272

 
2,741

Add: Segment Income Taxes Paid
 
47,980

 
69,880

 
39,837

Add: Preferred Dividends
 
8,341

 
8,341

 
8,341

Add: Core Interest Expense (2)
 
33,143

 
30,869

 
30,361

Add: Depreciation and Amortization
 
3,860

 
3,649

 
3,555

 
 
 
 
 
 
 
Segment EBITDA (3)
 
$
614,713

 
$
671,510

 
$
511,900

 
 
 
 
 
 
 








 
 
 
 

(1)
Represents the impacts of the remeasurement of the tax receivable agreement which arise from changes in the associated deferred tax balance, including the impacts related to the Tax Cuts & Jobs Act enacted on December 22, 2017 (the "TCJA").
(2)
Core interest expense may be used by certain debt investors as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s investment funds, investment vehicles and principal investments and also excludes interest expense incurred by KFN. The financing arrangements excluded from core interest expense are not direct obligations of the general partners of KKR’s private equity funds or its management companies, and in the case of debt obligations of KFN, are non-recourse to KKR beyond the assets of KFN. KKR believes this measure is useful to stockholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds, other noncontrolling interest holders and KFN. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations other than the debt obligations of KFN.
(3)
Segment EBITDA may be useful in evaluating KKR's ability to service its debt and provides insight into the amount of KKR’s distributable earnings before the impact of interest expense, taxes, depreciation and amortization, equity-based compensation, preferred dividends and segment noncontrolling interests.

Page 16



KKR
EXHIBIT A (CONTINUED)
 
 
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. INC. PER SHARE OF CLASS A COMMON STOCK - BASIC (GAAP BASIS)
TO AFTER-TAX DISTRIBUTABLE EARNINGS PER ADJUSTED SHARE ELIGIBLE FOR DISTRIBUTION AND SEGMENT EBITDA (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock - Basic
 
$
2.14

 
$
2.10

 
 
Weighted Average Shares of Class A Common Stock Outstanding - Basic
 
514,102,571

 
468,282,642

 
 
Net Income (Loss) Available to KKR & Co. Inc. Class A Common Stockholders
 
$
1,100,801

 
$
984,941

 
 
Less: Excess of carrying value over consideration transferred on redemption of KFN 7.375% Series A LLC Preferred Shares
 
3,102

 

 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
1,097,699

 
$
984,941

 

 
 
 
 
 
 
 
Add: Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P.
 
561,052

 
791,021

 
 
Add: Equity-based and Other Compensation - KKR Holdings L.P.
 
100,632

 
141,727

 
 
Add: Amortization of Intangibles and Other, net
 
26,116

 
122,870

 
 
Add: One-time Non-recurring Costs (1)
 
11,501

 

 
 
Add: Realized Losses on Certain Investments (2)
 
729,425

 

 
 
Deduct: Unrealized Carried Interest
 
(756,467
)
 
600,242

 
 
Deduct: Net Unrealized Gains (Losses)
 
1,043,912

 
395,358

 
 
Add: Unrealized Performance Income Compensation
 
(295,794
)
 
247,601

 
 
Deduct: Gain from remeasurement of tax receivable agreement liability (3)
 

 
67,221

 
 
Add: Income Tax Provision
 
(194,098
)
 
224,326

 
 
Deduct: Income Taxes Paid
 
151,848

 
94,065

 
 
 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
1,597,240

 
$
1,355,600

 

Weighted Average Adjusted Shares Eligible for Distribution
 
829,443,128

 
816,466,568

 
 
After-tax Distributable Earnings Per Adjusted Share Eligible for Distribution
 
$
1.93

 
$
1.66

 

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
1,597,240

 
$
1,355,600

 

 
 
 
 
 
 
 
Add: Equity-based Compensation (Equity Incentive Plan)
 
242,811

 
204,308

 
 
Add: Income (Loss) Attributable to Segment Noncontrolling Interests
 
8,807

 
6,551

 
 
Add: Segment Income Taxes Paid
 
151,848

 
94,065

 
 
Add: Preferred Dividends
 
33,364

 
33,364

 
 
Add: Core Interest Expense
 
127,763

 
119,752

 
 
Add: Depreciation and Amortization
 
14,993

 
15,305

 
 
 
 
 
 
 
 
 
Segment EBITDA
 
$
2,176,826

 
$
1,828,945

 

 
 
 
 
 
 
 










 
 
 
 

(1)
Represents non-recurring costs in connection with the Conversion.
(2)
Represents losses on certain investments which were realized in the second quarter in advance of the Conversion.
(3)
Represents the impacts of the remeasurement of the tax receivable agreement which arise from changes in the associated deferred tax balance, including the impacts related to the TCJA.

Page 17



KKR
EXHIBIT A (CONTINUED)
 
RECONCILIATION OF TOTAL GAAP REVENUES TO TOTAL SEGMENT REVENUES (UNAUDITED)
(Amounts in thousands)
 
 
Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Total GAAP Revenues
 
$
(178,056
)
 
$
1,129,666

 
$
1,024,073

Add: Management Fees - Consolidated Funds and Other
 
186,931

 
104,356

 
111,614

Deduct: Fee Credits - Consolidated Funds
 
7,015

 
8,283

 
276

Deduct: Capital Allocation-Based Income (GAAP)
 
(719,639
)
 
638,163

 
598,851

Add: Segment Realized Carried Interest
 
259,394

 
414,609

 
308,671

Add: Segment Realized Investment Income (Loss)
 
159,889

 
242,743

 
121,757

Deduct: Revenue Earned by Other Consolidated Entities
 
26,843

 
27,749

 
29,907

Deduct: Expense Reimbursements
 
37,990

 
38,212

 
36,013

Total Segment Revenues
 
$
1,075,949

 
$
1,178,967

 
$
901,068

 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
Total GAAP Revenues
 
$
2,395,836

 
$
3,557,280

 
 
Add: Management Fees - Consolidated Funds and Other
 
457,314

 
267,032

 
 
Deduct: Fee Credits - Consolidated Funds
 
48,193

 
4,028

 
 
Deduct: Capital Allocation-Based Income (GAAP)
 
554,510

 
2,015,676

 
 
Add: Segment Realized Carried Interest
 
1,218,647

 
1,198,981

 
 
Add: Segment Realized Investment Income (Loss)
 
651,792

 
479,716

 
 
Deduct: Revenue Earned by Other Consolidated Entities
 
111,185

 
106,042

 
 
Deduct: Expense Reimbursements
 
146,989

 
123,144

 
 
Total Segment Revenues
 
$
3,862,712

 
$
3,254,119

 
 
RECONCILIATION OF TOTAL GAAP EXPENSES TO TOTAL SEGMENT EXPENSES (UNAUDITED)
(Amounts in thousands)
 
 
Quarter Ended
 
 
December 31, 2018
 
September 30, 2018
 
December 31, 2017
Total GAAP Expenses
 
$
237,736

 
$
740,090

 
$
636,703

Deduct: Equity-based and Other Compensation - KKR Holdings L.P.
 
12,913

 
25,327

 
13,863

Deduct: Segment Unrealized Performance Income Compensation
 
(377,170
)
 
57,407

 
90,439

Deduct: Amortization of Intangibles
 
672

 
681

 
3,920

Deduct: Reimbursable Expenses
 
50,339

 
43,382

 
47,838

Deduct: Operating Expenses relating to Other Consolidated Entities
 
44,550

 
37,845

 
51,229

Add: Other
 
1,806

 
(18,368
)
 
874

Total Segment Expenses
 
$
508,238

 
$
557,080

 
$
430,288

 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2018
 
December 31, 2017
 
 
Total GAAP Expenses
 
$
2,089,477

 
$
2,336,692

 
 
Deduct: Equity-based and Other Compensation - KKR Holdings L.P.
 
100,182

 
141,727

 
 
Deduct: Segment Unrealized Performance Income Compensation
 
(295,794
)
 
247,601

 
 
Deduct: Amortization of Intangibles
 
7,700

 
17,821

 
 
Deduct: Reimbursable Expenses
 
176,126

 
155,173

 
 
Deduct: Operating Expenses relating to Other Consolidated Entities
 
179,818

 
172,920

 
 
Deduct: One-time Non-recurring Costs (1)
 
11,501

 

 
 
Add: Other
 
(25,870
)
 
(18,523
)
 
 
Total Segment Expenses
 
$
1,884,074

 
$
1,582,927

 
 


 
 
 
 
(1)
Represents non-recurring costs in connection with the Conversion

Page 18



KKR
EXHIBIT A (CONTINUED)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (GAAP BASIS)
TO SEGMENT BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2018
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (GAAP BASIS)
 
1
 
2
 
3
 
4
 
SEGMENT BALANCE SHEET
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
1,751,287

 
(88,852
)
 

 
839,804

 

 
$
2,502,239

Cash and Short-term Investments
Investments
44,907,982

 
(30,069,428
)
 
(922,977
)
 
(4,068,113
)
 

 
9,847,464

Investments
 
 
 

 

 
1,223,084

 

 
1,223,084

Unrealized Carried Interest
 
 
 

 

 
161,225

 

 
161,225

Corporate Real Estate
 
 
 

 

 
561,114

 

 
561,114

Tax Assets
Other Assets
4,084,106

 
(1,730,191
)
 

 
938,595

 

 
3,292,510

Other Assets
Total Assets
$
50,743,375

 
(31,888,471
)
 
(922,977
)
 
(344,291
)
 

 
$
17,587,636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
Debt Obligations
22,341,192

 
(19,024,874
)
 

 
(948,517
)
 

 
2,367,801

Debt Obligations - KKR (ex-KFN)
 
 
 

 

 
948,517

 

 
948,517

Debt Obligations - KFN
 
 
 

 

 
174,395

 

 
174,395

Tax Liabilities
Other Liabilities
3,019,574

 
(986,930
)
 
(922,977
)
 
(518,686
)
 

 
590,981

Other Liabilities
Total Liabilities
25,360,766

 
(20,011,804
)
 
(922,977
)
 
(344,291
)
 

 
4,081,694

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
1,122,641

 
(1,122,641
)
 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Stockholders' Equity
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Stock
482,554

 

 

 
(482,554
)
 

 

 
KKR & Co. Inc. Stockholders' Equity - Common Stockholders
8,167,056

 
205,502

 

 
(17,446
)
 
4,625,448

 
12,980,560

Book Value
Noncontrolling Interests
15,610,358

 
(10,959,528
)
 

 

 
(4,625,448
)
 
25,382

Noncontrolling Interests
 
 
 

 

 
500,000

 

 
500,000

Preferred Stock
Total Liabilities and Equity
$
50,743,375

 
(31,888,471
)
 
(922,977
)
 
(344,291
)
 

 
$
17,587,636

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
IMPACT OF CONSOLIDATION OF INVESTMENT VEHICLES AND OTHER ENTITIES
2
CARRY POOL RECLASSIFICATION
 
3
OTHER RECLASSIFICATIONS
 
4
NONCONTROLLING INTERESTS HELD BY KKR HOLDINGS L.P.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 

Page 19



KKR
EXHIBIT A (CONTINUED)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (GAAP BASIS)
TO SEGMENT BALANCE SHEET (UNAUDITED)
DECEMBER 31, 2017
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
CONSOLIDATED STATEMENT OF FINANCIAL CONDITION (GAAP BASIS)
 
1
 
2
 
3
 
4
 
5
 
SEGMENT BALANCE SHEET
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Assets
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Cash and Cash Equivalents
$
1,876,687

 

 

 
1,338,107

 

 

 
$
3,214,794

Cash and Short-term Investments
Investments
39,013,934

 
(27,684,368
)
 
(1,220,559
)
 
(1,620,401
)
 

 

 
8,488,606

Investments
 
 
 

 

 
1,620,401

 

 

 
1,620,401

Unrealized Carried Interest
Other Assets
4,944,098

 
(974,710
)
 

 
(1,499,332
)
 

 
(193,770
)
 
2,276,286

Other Assets
 
 
 

 

 
161,225

 

 

 
161,225

Corporate Real Estate
Total Assets
$
45,834,719

 
(28,659,078
)
 
(1,220,559
)
 

 

 
(193,770
)
 
$
15,761,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Liabilities and Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Debt Obligations
21,193,859

 
(18,429,092
)
 

 
(764,767
)
 

 

 
2,000,000

Debt Obligations - KKR (ex-KFN)
 
 
 

 

 
764,767

 

 

 
764,767

Debt Obligations - KFN
 
 
 

 

 
373,750

 

 

 
373,750

Preferred Shares - KFN
Other Liabilities
3,978,060

 
(2,207,518
)
 
(1,220,559
)
 

 

 
(123,284
)
 
426,699

Other Liabilities
Total Liabilities
25,171,919

 
(20,636,610
)
 
(1,220,559
)
 
373,750

 

 
(123,284
)
 
3,565,216

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Redeemable Noncontrolling Interests
610,540

 
(610,540
)
 

 

 

 

 

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Equity
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Preferred Units
482,554

 

 

 
(482,554
)
 

 

 
 
 
KKR & Co. Inc. Stockholders' Equity - Common Stockholders
6,703,382

 
214,188

 

 
(17,446
)
 
4,844,271

 
(70,486
)
 
11,673,909

Book Value
Noncontrolling Interests
12,866,324

 
(7,626,116
)
 

 
(373,750
)
 
(4,844,271
)
 

 
22,187

Noncontrolling Interests
 
 
 

 

 
500,000

 

 

 
500,000

Preferred Stock
Total Liabilities and Equity
$
45,834,719

 
(28,659,078
)
 
(1,220,559
)
 

 

 
(193,770
)
 
$
15,761,312

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
1
IMPACT OF CONSOLIDATION OF INVESTMENT VEHICLES AND OTHER ENTITIES
 
2
CARRY POOL RECLASSIFICATION
 
3
OTHER RECLASSIFICATIONS
 
4
NONCONTROLLING INTERESTS HELD BY KKR HOLDINGS L.P. AND OTHER
 
5
EQUITY IMPACT OF KKR MANAGEMENT HOLDINGS CORP.
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 




Page 20
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