KKR & Co. L.P. (Form: 8-K, Received: 02/23/2011 08:39:59)

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 16, 2011

KKR & CO. L.P.

(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 57 th Street, Suite 4200

New York, New York
(Address of principal executive offices)

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))

Item 1.01 Entry into a Material Definitive Agreement

On February 22, 2011, Kohlberg Kravis Roberts & Co. L.P., KKR Fund Holdings L.P. and KKR Management Holdings L.P. (collectively, the “Borrowers”) entered into an Amended and Restated Credit Agreement (the “Restated Credit Agreement”) by and among the Borrowers and HSBC Bank plc, as Administrative Agent and Lender. Upon the satisfaction of the conditions to effectiveness of the Restated Credit Agreement, it will supersede Kohlberg Kravis Roberts & Co. L.P.’s existing credit agreement, dated February 28, 2008. The effectiveness of the Restated Credit Agreement is subject to the satisfaction of certain customary closing conditions on or before March 9, 2011 (such date of closing, the “Effective Date”).

The Restated Credit Agreement provides the Borrowers with a five-year senior unsecured multicurrency revolving credit facility (the “Credit Facility”) in an aggregate principal amount of $700 million. The Credit Facility is scheduled to mature on the fifth anniversary of the Effective Date, and the Borrowers may prepay, terminate or reduce the commitments under the Credit Facility at any time without penalty. Borrowings under the Credit Facility are available for general corporate purposes, subject to certain limitations. Interest on borrowings under the Credit Facility will be charged at the London Interbank Offered Rate (LIBOR) plus applicable margin of 50 basis points per annum, or at an alternative base rate. The Borrowers have agreed to pay a facility fee of 5 basis points per annum on the total commitment. Borrowings under the Credit Facility will be guaranteed by KKR & Co. L.P., KKR Group Finance Co. LLC and the general partners of present and future material private equity funds managed by Kohlberg Kravis Roberts & Co. L.P. and/or its affiliates.

Certain other material terms of the Restated Credit Agreement include:

· financial covenants which require Kohlberg Kravis Roberts & Co. L.P. and its subsidiaries to maintain a maximum consolidated leverage ratio (the ratio of total indebtedness to Fee Related EBITDA) of no greater than 4.0x and to maintain at least $25 billion in Fee Paying Assets Under Management;

· customary affirmative and negative covenants (subject to certain customary exceptions and baskets) which limit the ability of Kohlberg Kravis Robert & Co. L.P., its subsidiaries and certain other affiliates of KKR & Co. L.P. to, among other things, incur indebtedness and create liens; and

· customary events of default, upon the occurrence of which, after any applicable grace period, the lenders will have the ability to accelerate all outstanding loans thereunder and terminate the commitments.

HSBC Bank plc or its affiliates have provided, and may in the future from time to time provide, certain commercial and investment banking, financial advisory and other services in the ordinary course of business for KKR & Co. L.P. and its subsidiaries, for which they have in the past and may in the future receive customary fees and commissions.

Item 2.02 Results of Operations

On February 23, 2011, KKR & Co. L.P. issued a press release announcing financial results for its fourth quarter and year ended December 31, 2010.

The press 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 Exhibit 99.1 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 2.03 Creation of a Direct Financial Obligation or an Obligation Under an Off-Balance Sheet Arrangement of a Registrant.

The information set forth in Item 1.01 is incorporated by reference into this Item 2.03.

Item 5.02 Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.

Appointment of Thomas M. Schoewe as Director

On February 22, 2011, Thomas M. Schoewe was appointed to the Board of Directors of KKR Management LLC, the managing partner of KKR & Co. L.P., and its Audit Committee and Conflicts Committee, effective March 14, 2011.

Mr. Schoewe will receive the standard independent director compensation arrangement, consisting of a prorated annual cash retainer of $75,000 for independent directors and a prorated annual cash retainer of $25,000 as a member of the Audit Committee. Mr. Schoewe has also entered into an indemnification agreement with KKR Management LLC and KKR & Co. L.P.

A copy of the press release announcing the appointment of Mr. Schoewe to the Board of Directors of KKR Management LLC is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

Grant of Equity to Named Executive Officers

To the extent required, the disclosure in Item 8.01 is incorporated herein by reference.

Item 7.01 Regulation FD Disclosure

A copy of the press release announcing the appointment of Mr. Schoewe to the Board of Directors of KKR Management LLC is furnished as Exhibit 99.2 to this Current Report on Form 8-K.

As provided in General Instruction B.2 of Form 8-K, the information in this Item 7.01 and Exhibit 99.2 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 8.01 Other Events

On February 16, 2011, KKR Holdings L.P. granted units in KKR Holdings L.P. to certain of our named executive officers in the amounts as follows: Todd A. Fisher (108,392), William J. Janetschek (29,021) and David J. Sorkin (31,819). The amount of the grant was calculated in accordance with a formula, the result of which became fixed after the close of trading on December 31, 2010. The units will vest over a period of four years, with vesting occurring in 25% increments beginning on April 1, 2012 and each anniversary thereafter, and are exchangeable for KKR & Co. L.P. common units on a one-for-one basis.

Item 9.01 Financial Statements and Exhibits.

(d) Exhibits

Exhibit No.		Description

Exhibit 99.1		Press release of KKR & Co. L.P., dated February 23, 2011, announcing results for the fourth quarter and year ended December 31, 2010 (This exhibit is furnished and not filed)

Exhibit 99.2		Press release of KKR & Co. L.P., dated February 23, 2011, announcing the appointment of Thomas M. Schoewe as director (This exhibit is furnished and not filed)

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. L.P.
		By:	KKR Management LLC, its general partner


Date: February 23, 2011		By:	/s/ William J. Janetschek
		Name:	William J. Janetschek
		Title:	Chief Financial Officer

EXHIBIT INDEX

Exhibit No.		Description

Exhibit 99.1		Press release of KKR & Co. L.P., dated February 23, 2011, announcing results for the fourth quarter and year ended December 31, 2010 (This exhibit is furnished and not filed)

Exhibit 99.2		Press release of KKR & Co. L.P., dated February 23, 2011, announcing the appointment of Thomas M. Schoewe as director (This exhibit is furnished and not filed)

Exhibit 99.1

KKR & Co. L.P. Announces

Fourth Quarter and Full Year 2010 Results

Assets under management (“AUM”) totaled $61.0 billion as of December 31, 2010, up 16.8% from $52.2 billion as of December 31, 2009.

Fee related earnings (“FRE”) were $95.1 million and $318.3 million for the fourth quarter and year ended December 31, 2010, respectively, up from FRE of $87.5 million and pro forma (1) FRE of $247.4 million in the comparable periods of 2009.

Economic net income (“ENI”) was $714.6 million and $2,139.8 million for the fourth quarter and year ended December 31, 2010, respectively, up from ENI of $515.3 million and pro forma ENI of $1,953.9 million in the comparable periods of 2009.

GAAP net income attributable to KKR & Co. L.P. was $180.6 million and $333.2 million for the fourth quarter and year ended December 31, 2010, respectively (2) .

Book value was $5.7 billion on a segment basis as of December 31, 2010, representing $8.38 per adjusted unit.

After-tax ENI was $1.02 and $2.83 per adjusted unit for the fourth quarter and year ended December 31, 2010, respectively.

KKR & Co. L.P. declares a fourth quarter distribution of $0.29 per common unit, bringing total distributions for 2010 results to $0.60 per common unit.

NEW YORK, February 23, 2011—KKR & Co. L.P. (NYSE: KKR) today reported its fourth quarter and full year 2010 results. ENI was $2.1 billion for the year, an increase of 9.5% versus 2009 driven by accelerated performance across each of KKR’s businesses. The continued appreciation of KKR’s private equity investments, by 11% for the quarter and 33% for the full year, was the key contributor to the strong results.

AUM and fee paying assets under management (“FPAUM”) ended the year at $61.0 billion and $46.0 billion, respectively. The strong growth over the prior quarter and year was a result of continued success in capital raising and significant investment appreciation.

“We continue to show great progress in the two areas that drive our business: investment performance and capital raising. Our investment returns across all strategies compared favorably to their benchmarks. Our private equity funds returned 33% for the year, significantly outperforming the S&P 500 return of 15%, while each of our credit strategies also beat benchmark indices. In addition, despite a challenging fundraising environment in 2010, we raised $5 billion of capital to support our China growth equity, oil & gas, infrastructure, mezzanine, special situations and other strategies. All of this provides us with strong momentum heading into 2011,” said Henry R. Kravis and George R. Roberts, Co-Founders, Co-Chairmen and Co-Chief Executive Officers of KKR.

Note: Certain financial measures, including FRE, ENI, after-tax ENI and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP.

(1) On October 1, 2009, KKR & Co. L.P. and KKR & Co. (Guernsey) L.P. completed a transaction to combine their businesses (the “Business Combination”). Amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they had been completed on January 1, 2009.

(2) For the years ended December 31, 2010 and 2009, the GAAP financial information is not directly comparable as GAAP financial information prior to October 1, 2009 did not reflect certain adjustments that are applicable as a result of the Business Combination.

GAAP Results

GAAP results for the quarter and year ended December 31, 2010 included net income attributable to KKR & Co. L.P. of $180.6 million and $333.2 million, respectively, and net income per common unit attributable to KKR & Co. L.P. of $0.86 and $1.62, respectively. For the quarter and year ended December 31, 2009, net income (loss) attributable to KKR & Co. L.P. was ($78.2) million and $849.7 million, respectively.

The quarter over quarter increase is primarily due to a higher level of appreciation of KKR’s investments and a one-time recognition of non-cash compensation charges in connection with the Business Combination and related transactions in the fourth quarter of 2009.

The year over year decrease is primarily due to certain adjustments applicable to periods after October 1, 2009 as a result of the Business Combination and related transactions including: (i) the allocation of earnings of KKR to KKR Holdings L.P. (the vehicle through which KKR principals own interests in KKR), (ii) the recognition of non-cash compensation charges, and (iii) the recognition of corporate income taxes. These factors were partially offset by the inclusion of income from KKR’s principal investments for all of 2010.

Total Reportable Segments

AUM was $61.0 billion as of December 31, 2010, an increase of $5.5 billion or 9.9% compared to AUM of $55.5 billion as of September 30, 2010. The increase was primarily due to appreciation in the fair value of KKR’s private equity portfolio as well as new capital raised, partially offset by distributions to limited partners arising from realizations.

FPAUM was $46.0 billion as of December 31, 2010, an increase of $3.3 billion or 7.7% compared to FPAUM of $42.7 billion as of September 30, 2010. The increase was primarily due to new capital raised across many of KKR’s strategies.

FRE was $95.1 million for the quarter ended December 31, 2010, an increase of $7.6 million or 8.7% compared to FRE of $87.5 million for the quarter ended December 31, 2009. The increase is primarily due to higher capital markets fees as a result of increased activity and incentive fees earned in the public markets segment. These increases were partially offset by lower monitoring fees in the private markets segment as a result of a termination payment on a monitoring agreement with a portfolio company received during the fourth quarter of 2009.

For the year ended December 31, 2010, FRE was $318.3 million, an increase of $70.9 million or 28.7% compared to pro forma FRE of $247.4 million for the year ended December 31, 2009. The increase was primarily due to (i) higher capital markets fees as a result of increased activity, (ii) higher incentive fees earned in the public markets segment, and (iii) higher transaction fees in the private markets segment as a result of more transactions closing. These increases were partially offset by higher compensation expense as a result of improved performance and the expansion of KKR’s business as well as lower monitoring fees as a result of monitoring agreement termination payments received during 2009.

ENI was $714.6 million for the quarter ended December 31, 2010, an increase of $199.3 million or 38.7% compared to ENI of $515.3 million for the quarter ended December 31, 2009. The increase primarily reflects a higher level of appreciation of KKR’s private equity portfolio, which drove increases in both net carried interest and the income from principal investments.

For the year ended December 31, 2010, ENI was $2,139.8 million, an increase of $185.9 million or 9.5% compared to pro forma ENI of $1,953.9 million for the year ended December 31, 2009. The increase primarily reflects a higher level of net carried interest and the growth in FRE discussed above.

Private Markets

AUM in the private markets segment was $46.2 billion as of December 31, 2010, an increase of $4.3 billion or 10.3% compared to AUM of $41.9 billion as of September 30, 2010. The increase was primarily due to appreciation in the fair value of KKR’s private equity portfolio as well as new capital raised, partially offset by distributions to limited partners arising from realizations.

FPAUM in the private markets segment was $38.2 billion as of December 31, 2010, an increase of $2.2 billion or 6.1% compared to FPAUM of $36.0 billion as of September 30, 2010. The increase was primarily due to new capital raised.

FRE in the private markets segment was $41.1 million for the quarter ended December 31, 2010, a decrease of $28.1 million or 40.6% compared to FRE of $69.2 million for the quarter ended December 31, 2009. The decrease was primarily due to (i) lower monitoring fees as a result of a $46.1 million termination payment on a monitoring agreement with a portfolio company during the fourth quarter of 2009, which impacted FRE by $28.6 million net of associated fee credits, and (ii) higher compensation and other operating expenses in connection with the expansion of KKR’s business and increased transaction activity. These downward drivers were partially offset by higher transaction fees as a result of more transactions closing.

FRE in the private markets segment was $182.3 million for the year ended December 31, 2010, a decrease of $34.7 million or 16.0% compared to pro forma FRE of $217.0 million for the year ended December 31, 2009. The decrease was primarily due to (i) lower monitoring fees as a result of $72.2 million in payments received during 2009 related to the termination of monitoring agreements with portfolio companies, which impacted FRE by $37.8 million net of associated fee credits, and (ii) higher compensation and other operating expenses in connection with the expansion of KKR’s business and increased transaction activity. These downward drivers were partially offset by higher transaction fees as a result of more transactions closing.

ENI in the private markets segment was $262.0 million for the quarter ended December 31, 2010, an increase of $116.4 million or 79.9% compared to ENI of $145.6 million for the quarter ended December 31, 2009. The increase was primarily due to higher net carried interest resulting from a higher level of appreciation of KKR’s private equity portfolio.

ENI in the private markets segment was $784.6 million for the year ended December 31, 2010, an increase of $123.1 million or 18.6% compared to pro forma ENI of $661.5 million for the year ended December 31, 2009. The increase was primarily due to higher net carried interest driven by certain private equity funds that were not in a carry-earning position during 2009 earning carried interest in 2010 as a result of appreciation above their cost basis.

Public Markets

AUM in the public markets segment was $14.8 billion as of December 31, 2010, an increase of $1.2 billion or 8.8% compared to AUM of $13.6 billion as of September 30, 2010. The increase was primarily due to new capital raised during the quarter and appreciation in the net asset value of certain vehicles.

FPAUM in the public markets segment was $7.8 billion as of December 31, 2010, an increase of $1.1 billion or 16.4% compared to FPAUM of $6.7 billion as of September 30, 2010. The increase was primarily due to new capital raised during the quarter and appreciation in the net asset value of certain vehicles.

FRE in the public markets segment was $16.3 million for the quarter ended December 31, 2010, an increase of $13.9 million compared to FRE of $2.4 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, FRE was $57.0 million, an increase of $45.2 million compared to pro forma FRE of $11.8 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to (i) higher incentive fees and (ii) higher transaction fees arising primarily from new strategies that drive such fees.

ENI in the public markets segment was $17.8 million for the quarter ended December 31, 2010, an increase of $16.3 million compared to ENI of $1.5 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, ENI was $60.1 million, an increase of $53.7 million compared to pro forma ENI of $6.4 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to the growth in FRE discussed above.

Capital Markets and Principal Activities

FRE in the capital markets and principal activities segment was $37.7 million for the quarter ended December 31, 2010, an increase of $21.9 million compared to FRE of $15.8 million for the quarter ended December 31, 2009. For the year ended December 31, 2010, FRE was $79.1 million, an increase of $60.4 million compared to pro forma FRE of $18.7 million for the year ended December 31, 2009. The increase in both comparative periods was primarily due to an increase in overall capital markets transaction activity resulting from an improved environment and the continued growth of this business.

ENI in the capital markets and principal activities segment was $434.9 million for the quarter ended December 31, 2010, an increase of $66.7 million or 18.1% compared to ENI of $368.2 million for the quarter ended December 31, 2009. The increase was primarily due to a higher level of investment income.

For the year ended December 31, 2010, ENI was $1,295.1 million, an increase of $9.1 million or 0.7% compared to pro forma ENI of $1,286.0 million for the year ended December 31, 2009. The increase was primarily due to the growth in FRE discussed above partially offset by a lower level of investment income. While the fair value of KKR’s principal investments increased in 2010, the overall level of appreciation was slightly lower than in 2009.

CAPITAL AND LIQUIDITY

As of December 31, 2010, KKR had an available cash balance of $756.3 million and $500.0 million of outstanding debt obligations. On February 22, 2011, KKR entered into an amended and restated credit agreement with HSBC Bank plc, which will become effective upon the satisfaction of certain customary closing conditions. Upon effectiveness, the current availability for borrowings under this facility will be reduced from $1.0 billion to $700.0 million, and the scheduled maturity will be extended by three years to expire on the fifth anniversary of the date of closing. The rates for borrowings and the facility fee will remain the

same. Following the amendment, KKR’s availability for further borrowings was approximately $1.6 billion (which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of December 31, 2010).

As of December 31, 2010, KKR’s portion of total uncalled commitments to its investment funds was $923.7 million, consisting of the following (amounts in thousands):

	Commitments
Private Markets
2006 Fund	$	362,684
European Fund III	300,540
Asian Fund	117,396
Infrastructure Fund	50,000
E2 Investors (Annex Fund)	30,833
China Growth Fund	8,506
Natural Resources I	5,413
Other Private Markets Commitments	1,264
Total Private Markets Commitments	876,636

Public Markets
Mezzanine Fund	34,100
Capital Solutions Vehicles	13,000
Total Public Markets Commitments	47,100

Total Uncalled Commitments	$	923,736

DISTRIBUTION

A distribution of $0.29 per common unit will be paid on March 21, 2011 to unitholders of record as of the close of business on March 7, 2011.

OTHER

KKR will hold its first investor day on March 15, 2011. Additional details will follow in a press release that will be issued prior to the event. The investor day will be broadcast live over the Internet and will be accessible by all interested parties.

CONFERENCE CALL

A conference call to discuss KKR’s financial results will be held on Wednesday, February 23, 2011 at 10:00 a.m. EST. The conference call may be accessed by dialing (877) 857-6144 (U.S. callers) or +1 (719) 325-4932 (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 Relations section of KKR’s website at http://www.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing (888) 203-1112 (U.S. callers) and +1 (719) 457-0820 (non-U.S. callers), pass code 2815232, beginning approximately two hours after the broadcast.

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 Relations section of KKR’s website at www.kkr.com. In addition, you may automatically receive email alerts and other information about KKR by enrolling your email within the “Email Alerts” area of the Investor Relations section of the website.

ABOUT KKR

Founded in 1976 and led by Henry Kravis and George Roberts, KKR is a leading global investment firm with $61.0 billion in assets under management as of December 31, 2010. With 14 offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with investors through its client relationships and capital markets platforms. KKR is

publicly traded on the New York Stock Exchange (NYSE: KKR). For additional information, please visit KKR’s website at www.kkr.com.

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKR’s beliefs, assumptions and expectations of its future performance, 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 assets under management, fee paying assets under management, fee related earnings, economic net income, committed dollars invested, uncalled commitments 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: the general volatility of the capital markets; failure to realize the benefits of or changes in KKR’s business strategies; 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. 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. L.P.’s prospectus filed with the SEC on October 5, 2010 and other filings with the SEC, which are available at www.sec.gov.

CONTACT INFORMATION

Investor Relations:

Jonathan Levin

Kohlberg Kravis Roberts & Co. L.P.

Tel: +1 (877) 610-4910 (U.S.) / +1 (212) 230-9410

investor-relations@kkr.com

Media Contact:

Peter McKillop or Kristi Huller

Kohlberg Kravis Roberts & Co. L.P.

Tel: +1 (212) 750-8300
media@kkr.com

* * * * *

KKR

CONSOLIDATED AND COMBINED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)

(Amounts in thousands, except common unit and per common unit amounts)

	Quarter Ended						Year Ended
	December 31, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Revenues
Fees	$	146,267		$	129,856		$	435,386		$	331,271
Expenses
Employee Compensation and Benefits	299,123			686,021			1,344,455			838,072
Occupancy and Related Charges	10,124			9,896			39,692			38,013
General, Administrative and Other	81,377			124,498			311,147			264,396
Fund Expenses	28,278			18,218			67,369			55,229
Total Expenses	418,902			838,633			1,762,663			1,195,710
Investment Income (Loss)
Net Gains (Losses) from Investment Activities	2,986,845			1,959,537			7,755,090			7,505,005
Dividend Income	441,781			3,831			1,250,293			186,324
Interest Income	55,766			45,137			226,824			142,117
Interest Expense	(18,706		)	(18,797		)	(53,099		)	(79,638		)
Total Investment Income (Loss)	3,465,686			1,989,708			9,179,108			7,753,808
Income (Loss) Before Taxes	3,193,051			1,280,931			7,851,831			6,889,369
Income Taxes	14,362			31,193			75,360			36,998
Net Income (Loss)	3,178,689			1,249,738			7,776,471			6,852,371
Less: Net Income (Loss) Attributable to
Noncontrolling Interests in Consolidated Entities	2,586,697			1,444,655			6,544,016			6,119,382
Less: Net Income (Loss) Attributable to
Noncontrolling Interests Held by KKR Holdings L.P.	411,413			(116,696		)	899,277			(116,696		)
Net Income (Loss) Attributable to KKR & Co. L.P.	$	180,579		$	(78,221	)	$	333,178		$	849,685

Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic	$	0.86		$	(0.38	)	$	1.62
Diluted (a)	$	0.86		$	(0.38	)	$	1.62
Weighted Average Common Units
Basic	209,383,219			204,902,226			206,031,682
Diluted (a)	209,413,219			204,902,226			206,039,244

Note: Prior to the Business Combination and related transactions, there was no single capital structure upon which to calculate historical earnings per common unit since KKR’s business was conducted through a large number of entities for which there was no single holding entity. Accordingly, earnings per common unit has not been presented for periods prior to the Transactions.

(a) KKR Holdings units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.’s interests in KKR’s business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange.

KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION

TOTAL REPORTABLE SEGMENTS (UNAUDITED)

(Amounts in thousands, except unit and per unit amounts)

	Quarter Ended									Year Ended
	Actual			Actual			Actual			Actual			Pro Forma*
	December 31, 2010			September 30, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Fees
Management and incentive fees:
Management fees	$	119,043		$	112,545		$	113,615		$	453,286		$	437,716
Incentive fees	8,427			9,555			—			38,832			4,472
Management and incentive fees	127,470			122,100			113,615			492,118			442,188

Monitoring and transaction fees:
Monitoring fees	22,108			21,780			68,383			86,932			158,243
Transaction fees	86,774			40,634			39,842			220,383			91,828
Fee credits	(21,671		)	(13,683		)	(26,260		)	(64,899		)	(73,901		)
Net monitoring and transaction fees	87,211			48,731			81,965			242,416			176,170

Total fees	214,681			170,831			195,580			734,534			618,358

Expenses
Employee compensation and benefits	55,594			49,056			48,018			206,334			168,597
Occupancy and related charges	10,124			10,373			9,896			39,715			38,013
Other operating expenses	53,872			41,896			50,199			170,163			164,331
Total expenses	119,590			101,325			108,113			416,212			370,941

Fee Related Earnings	95,091			69,506			87,467			318,322			247,417

Investment income (loss)
Gross carried interest	416,442			237,923			139,034			1,207,070			602,427
Less: allocation to KKR carry pool	(169,305		)	(91,156		)	(40,077		)	(455,872		)	(153,827		)
Less: management fee refunds	(24,412		)	(17,387		)	(22,720		)	(143,446		)	(22,720		)
Net carried interest	222,725			129,380			76,237			607,752			425,880
Other investment income (loss)	398,389			120,006			352,576			1,218,128			1,283,338
Total investment income (loss)	621,114			249,386			428,813			1,825,880			1,709,218

Income (Loss) before noncontrolling interests in Income of consolidated entities	716,205			318,892			516,280			2,144,202			1,956,635
Income (Loss) attributable to noncontrolling interests	1,592			1,567			1,025			4,409			2,691

Economic Net Income (Loss)	$	714,613		$	317,325		$	515,255		$	2,139,793		$	1,953,944

Provision for Income Taxes	17,400			47,784			97,014			210,196

Economic Net Income, After Taxes (a)	$	697,213		$	269,541		$	418,241		$	1,929,597

Economic Net Income, After Taxes per Adjusted Unit (b)	$	1.02		$	0.39		$	0.61		$	2.83

Assets Under Management	$	60,997,500		$	55,498,500		$	52,204,200		$	60,997,500		$	52,204,200
Fee Paying Assets Under Management	$	46,011,100		$	42,705,200		$	42,779,800		$	46,011,100		$	42,779,800
Committed Dollars Invested	$	2,691,000		$	540,400		$	456,700		$	5,253,300		$	2,107,700
Uncalled Commitments	$	14,074,700		$	13,750,900		$	14,544,427		$	14,074,700		$	14,544,427

Other Information
Fee Related Earnings	$	95,091		$	69,506		$	87,467		$	318,322		$	247,417
Plus: Depreciation and Amortization	2,790			2,674			3,191			11,664			9,799
Fee Related EBITDA	$	97,881		$	72,180		$	90,658		$	329,986		$	257,216

GAAP interest expense	$	18,706		$	10,432		$	18,797		$	53,099		$	79,638
Less: interest expense related to debt obligations from investment financing arrangements	7,535			6,849			9,673			$	28,622		$	42,458
Core Interest Expense (c)	$	11,171		$	3,583		$	9,124		$	24,477		$	37,180

(a)	After-tax ENI is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.

(b)	Adjusted units represents the weighted-average fully diluted unit count for Economic Net Income purposes using the if-converted method. See Exhibit B for a reconciliation of this item to the comparable GAAP measure.

(c)	Core interest expense excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s private equity funds and principal investments. These financing arrangements are not direct obligations of the general partners of KKR’s private equity funds or its management companies. On a segment basis, interest expense is included in other investment income.

* All amounts indicated in this press release as being presented on a pro forma basis give effect to the Business Combination and related transactions as if they were completed on January 1, 2009. See notes to reportable segments on page 22 of this press release.

KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION

PRIVATE MARKETS SEGMENT (UNAUDITED)

(Amounts in thousands)

	Quarter Ended									Year Ended
	Actual			Actual			Actual			Actual			Pro Forma*
	December 31, 2010			September 30, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Fees
Management and incentive fees:
Management fees	$	102,684		$	98,337		$	99,221		$	396,227		$	387,112
Incentive fees	—			—			—			—			—
Management and incentive fees	102,684			98,337			99,221			396,227			387,112

Monitoring and transaction fees:
Monitoring fees	22,108			21,780			68,383			86,932			158,243
Transaction fees	30,942			19,816			20,269			96,000			57,699
Fee credits	(15,673		)	(12,941		)	(26,260		)	(52,563		)	(73,901		)
Net monitoring and transaction fees	37,377			28,655			62,392			130,369			142,041

Total fees	140,061			126,992			161,613			526,596			529,153

Expenses
Employee compensation and benefits	42,396			37,861			39,399			159,561			136,465
Occupancy and Related Charges	9,206			9,513			9,080			36,395			34,747
Other operating expenses	47,392			36,733			43,911			148,357			140,989
Total expenses	98,994			84,107			92,390			344,313			312,201

Fee Related Earnings	41,067			42,885			69,223			182,283			216,952

Investment income (loss)
Gross carried interest	414,025			236,792			139,034			1,202,070			602,427
Less: allocation to KKR carry pool	(168,338		)	(90,704		)	(40,077		)	(453,872		)	(153,827		)
Less: management fee refunds	(24,412		)	(17,387		)	(22,720		)	(143,446		)	(22,720		)
Net carried interest	221,275			128,701			76,237			604,752			425,880
Other investment income (loss)	(111		)	2,524			605			(1,643		)	20,621
Total investment income (loss)	221,164			131,225			76,842			603,109			446,501

Income (Loss) before noncontrolling interests in Income of consolidated entities	262,231			174,110			146,065			785,392			663,453
Income (Loss) attributable to noncontrolling interests	259			394			497			839			1,973

Economic Net Income (Loss)	$	261,972		$	173,716		$	145,568		$	784,553		$	661,480

Assets Under Management	$	46,223,900		$	41,878,700		$	38,842,900		$	46,223,900		$	38,842,900
Fee Paying Assets Under Management	$	38,186,700		$	36,032,300		$	36,484,400		$	38,186,700		$	36,484,400
Committed Dollars Invested	$	2,371,500		$	349,500		$	456,700		$	4,555,700		$	2,107,700
Uncalled Commitments	$	12,625,900		$	12,495,400		$	13,728,100		$	12,625,900		$	13,728,100

KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION

PUBLIC MARKETS SEGMENT (UNAUDITED)

(Amounts in thousands)

	Quarter Ended									Year Ended
	Actual			Actual			Actual			Actual			Pro Forma*
	December 31, 2010			September 30, 2010			December 31, 2009			December 31, 2010			December 31, 2009
Fees
Management and incentive fees:
Management fees	$	16,359		$	14,208		$	14,394		$	57,059		$	50,604
Incentive fees	8,427			9,555			—			38,832			4,472
Management and incentive fees	24,786			23,763			14,394			95,891			55,076

Monitoring and transaction fees:
Monitoring fees	—			—			—			—			—
Transaction fees	9,292			1,672			—			19,117			—
Fee credits	(5,998		)	(742		)	—			(12,336		)	—
Net monitoring and transaction fees	3,294			930			—			6,781			—

Total fees	28,080			24,693			14,394			102,672			55,076

Expenses
Employee compensation and benefits	7,586			7,708			6,909			29,910			22,677
Occupancy and related charges	612			615			624			2,375			2,483
Other operating expenses	3,580			3,160			4,444			13,430			18,104
Total expenses	11,778			11,483			11,977			45,715			43,264

Fee Related Earnings	16,302			13,210			2,417			56,957			11,812

Investment income (loss)
Gross carried interest	2,417			1,131			—			5,000			—
Less: allocation to KKR carry pool	(967		)	(452		)	—			(2,000		)	—
Less: management fee refunds	—			—			—			—			—
Net carried interest	1,450			679			—			3,000			—
Other investment income (loss)	188			148			(952		)	718			(5,259		)
Total investment income (loss)	1,638			827			(952		)	3,718			(5,259		)

Income (Loss) before noncontrolling interests in Income of consolidated entities	17,940			14,037			1,465			60,675			6,553
Income (Loss) attributable to noncontrolling interests	157			125			15			537			109

Economic Net Income (Loss)	$	17,783		$	13,912		$	1,450		$	60,138		$	6,444

Assets Under Management	$	14,773,600		$	13,619,800		$	13,361,300		$	14,773,600		$	13,361,300
Fee Paying Assets Under Management	$	7,824,400		$	6,672,900		$	6,295,400		$	7,824,400		$	6,295,400
Committed Dollars Invested	$	319,500		$	190,900		$	—		$	697,600		$	—
Uncalled Commitments	$	1,448,800		$	1,255,500		$	816,327		$	1,448,800		$	816,327

KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION

CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)

(Amounts in thousands)

	Quarter Ended						Year Ended
	Actual		Actual		Actual		Actual		Pro Forma*
	December 31, 2010		September 30, 2010		December 31, 2009		December 31, 2010		December 31, 2009
Fees
Management and incentive fees:
Management fees	$	—	$	—	$	—	$	—	$	—
Incentive fees	—		—		—		—		—
Management and incentive fees	—		—		—		—		—

Monitoring and transaction fees:
Monitoring fees	—		—		—		—		—
Transaction fees	46,540		19,146		19,573		105,266		34,129
Fee credits	—		—		—		—		—
Net monitoring and transaction fees	46,540		19,146		19,573		105,266		34,129

Total fees	46,540		19,146		19,573		105,266		34,129

Expenses
Employee compensation and benefits	5,612		3,487		1,710		16,863		9,455
Occupancy and related charges	306		245		192		945		783
Other operating expenses	2,900		2,003		1,844		8,376		5,238
Total expenses	8,818		5,735		3,746		26,184		15,476

Fee Related Earnings	37,722		13,411		15,827		79,082		18,653

Investment income (loss)
Gross carried interest	—		—		—		—		—
Less: allocation to KKR carry pool	—		—		—		—		—
Less: management fee refunds	—		—		—		—		—
Net carried interest	—		—		—		—		—
Other investment income (loss)	398,312		117,334		352,923		1,219,053		1,267,976
Total investment income (loss)	398,312		117,334		352,923		1,219,053		1,267,976

Income (Loss) before noncontrolling interests in Income of consolidated entities	436,034		130,745		368,750		1,298,135		1,286,629
Income (Loss) attributable to noncontrolling interests	1,176		1,048		513		3,033		609

Economic Net Income (Loss)	$	434,858	$	129,697	$	368,237	$	1,295,102	$	1,286,020

KKR

STATEMENTS OF OPERATIONS

TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)

Quarter Ended December 31, 2010

(Amounts in thousands)

							Capital Markets		Total
	Private Markets			Public Markets			and Principal		Reportable
	Segment			Segment			Activities Segment		Segments

Fees
Management and incentive fees:
Management fees	$	102,684		$	16,359		$	—	$	119,043
Incentive fees	—			8,427			—		8,427
Management and incentive fees	102,684			24,786			—		127,470

Monitoring and transaction fees:
Monitoring fees	22,108			—			—		22,108
Transaction fees	30,942			9,292			46,540		86,774
Fee credits	(15,673		)	(5,998		)	—		(21,671		)
Net monitoring and transaction fees	37,377			3,294			46,540		87,211

Total fees	140,061			28,080			46,540		214,681

Expenses
Employee compensation and benefits	42,396			7,586			5,612		55,594
Occupancy and related charges	9,206			612			306		10,124
Other operating expenses	47,392			3,580			2,900		53,872
Total expenses	98,994			11,778			8,818		119,590

Fee Related Earnings	41,067			16,302			37,722		95,091

Investment income (loss)
Gross carried interest	414,025			2,417			—		416,442
Less: allocation to KKR carry pool	(168,338		)	(967		)	—		(169,305		)
Less: management fee refunds	(24,412		)	—			—		(24,412		)
Net carried interest	221,275			1,450			—		222,725
Other investment income (loss)	(111		)	188			398,312		398,389
Total investment income (loss)	221,164			1,638			398,312		621,114

Income (Loss) before noncontrolling interests in Income of consolidated entities	262,231			17,940			436,034		716,205
Income (Loss) attributable to noncontrolling interests	259			157			1,176		1,592

Economic Net Income (Loss)	$	261,972		$	17,783		$	434,858	$	714,613

KKR

STATEMENTS OF OPERATIONS

TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)

Quarter Ended September 30, 2010

(Amounts in thousands)

							Capital Markets		Total
	Private Markets			Public Markets			and Principal		Reportable
	Segment			Segment			Activities Segment		Segments

Fees
Management and incentive fees:
Management fees	$	98,337		$	14,208		$	—	$	112,545
Incentive fees	—			9,555			—		9,555
Management and incentive fees	98,337			23,763			—		122,100

Monitoring and transaction fees:
Monitoring fees	21,780			—			—		21,780
Transaction fees	19,816			1,672			19,146		40,634
Fee credits	(12,941		)	(742		)	—		(13,683		)
Net monitoring and transaction fees	28,655			930			19,146		48,731

Total fees	126,992			24,693			19,146		170,831

Expenses
Employee compensation and benefits	37,861			7,708			3,487		49,056
Occupancy and related charges	9,513			615			245		10,373
Other operating expenses	36,733			3,160			2,003		41,896
Total expenses	84,107			11,483			5,735		101,325

Fee Related Earnings	42,885			13,210			13,411		69,506

Investment income (loss)
Gross carried interest	236,792			1,131			—		237,923
Less: allocation to KKR carry pool	(90,704		)	(452		)	—		(91,156		)
Less: management fee refunds	(17,387		)	—			—		(17,387		)
Net carried interest	128,701			679			—		129,380
Other investment income (loss)	2,524			148			117,334		120,006
Total investment income (loss)	131,225			827			117,334		249,386

Income (Loss) before noncontrolling interests in Income of consolidated entities	174,110			14,037			130,745		318,892
Income (Loss) attributable to noncontrolling interests	394			125			1,048		1,567

Economic Net Income (Loss)	$	173,716		$	13,912		$	129,697	$	317,325

KKR

STATEMENTS OF OPERATIONS

TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)

Quarter Ended December 31, 2009

(Amounts in thousands)

							Capital Markets		Total
	Private Markets			Public Markets			and Principal		Reportable
	Segment			Segment			Activities Segment		Segments

Fees
Management and incentive fees:
Management fees	$	99,221		$	14,394		$	—	$	113,615
Incentive fees	—			—			—		—
Management and incentive fees	99,221			14,394			—		113,615

Monitoring and transaction fees:
Monitoring fees	68,383			—			—		68,383
Transaction fees	20,269			—			19,573		39,842
Fee credits	(26,260		)	—			—		(26,260		)
Net monitoring and transaction fees	62,392			—			19,573		81,965

Total fees	161,613			14,394			19,573		195,580

Expenses
Employee compensation and benefits	39,399			6,909			1,710		48,018
Occupancy and related charges	9,080			624			192		9,896
Other operating expenses	43,911			4,444			1,844		50,199
Total expenses	92,390			11,977			3,746		108,113

Fee Related Earnings	69,223			2,417			15,827		87,467

Investment income (loss)
Gross carried interest	139,034			—			—		139,034
Less: allocation to KKR carry pool	(40,077		)	—			—		(40,077		)
Less: management fee refunds	(22,720		)	—			—		(22,720		)
Net carried interest	76,237			—			—		76,237
Other investment income (loss)	605			(952		)	352,923		352,576
Total investment income (loss)	76,842			(952		)	352,923		428,813

Income (Loss) before noncontrolling interests in Income of consolidated entities	146,065			1,465			368,750		516,280
Income (Loss) attributable to noncontrolling interests	497			15			513		1,025

Economic Net Income (Loss)	$	145,568		$	1,450		$	368,237	$	515,255

KKR

STATEMENTS OF OPERATIONS

TOTAL REPORTABLE SEGMENTS - ACTUAL (UNAUDITED)

Year Ended December 31, 2010

(Amounts in thousands)

							Capital Markets		Total
	Private Markets			Public Markets			and Principal		Reportable
	Segment			Segment			Activities Segment		Segments

Fees
Management and incentive fees:
Management fees	396,227			$	57,059		$	—	$	453,286
Incentive fees	—			38,832			—		38,832
Management and incentive fees	396,227			95,891			—		492,118

Monitoring and transaction fees:
Monitoring fees	86,932			—			—		86,932
Transaction fees	96,000			19,117			105,266		220,383
Fee credits	(52,563		)	(12,336		)	—		(64,899		)
Net monitoring and transaction fees	130,369			6,781			105,266		242,416

Total fees	526,596			102,672			105,266		734,534

Expenses
Employee compensation and benefits	159,561			29,910			16,863		206,334
Occupancy and related charges	36,395			2,375			945		39,715
Other operating expenses	148,357			13,430			8,376		170,163
Total expenses	344,313			45,715			26,184		416,212

Fee Related Earnings	182,283			56,957			79,082		318,322

Investment income (loss)
Gross carried interest	1,202,070			5,000			—		1,207,070
Less: allocation to KKR carry pool	(453,872		)	(2,000		)	—		(455,872		)
Less: management fee refunds	(143,446		)	—			—		(143,446		)
Net carried interest	604,752			3,000			—		607,752
Other investment income (loss)	(1,643		)	718			1,219,053		1,218,128
Total investment income (loss)	603,109			3,718			1,219,053		1,825,880

Income (Loss) before noncontrolling interests in Income of consolidated entities	785,392			60,675			1,298,135		2,144,202
Income (Loss) attributable to noncontrolling interests	839			537			3,033		4,409

Economic Net Income (Loss)	$	784,553		$	60,138		$	1,295,102	$	2,139,793

KKR

STATEMENTS OF OPERATIONS

TOTAL REPORTABLE SEGMENTS - PRO FORMA* (UNAUDITED)

Year Ended December 31, 2009

(Amounts in thousands)

							Capital Markets		Total
	Private Markets			Public Markets			and Principal		Reportable
	Segment			Segment			Activities Segment		Segments

Fees
Management and incentive fees:
Management fees	$	387,112		$	50,604		$	—	$	437,716
Incentive fees	—			4,472			—		4,472
Management and incentive fees	387,112			55,076			—		442,188

Monitoring and transaction fees:
Monitoring fees	158,243			—			—		158,243
Transaction fees	57,699			—			34,129		91,828
Fee credits	(73,901		)	—			—		(73,901		)
Net monitoring and transaction fees	142,041			—			34,129		176,170

Total fees	529,153			55,076			34,129		618,358

Expenses
Employee compensation and benefits	136,465			22,677			9,455		168,597
Occupancy and related charges	34,747			2,483			783		38,013
Other operating expenses	140,989			18,104			5,238		164,331
Total expenses	312,201			43,264			15,476		370,941

Fee Related Earnings	216,952			11,812			18,653		247,417

Investment income (loss)
Gross carried interest	602,427			—			—		602,427
Less: allocation to KKR carry pool	(153,827		)	—			—		(153,827		)
Less: management fee refunds	(22,720		)	—			—		(22,720		)
Net carried interest	425,880			—			—		425,880
Other investment income (loss)	20,621			(5,259		)	1,267,976		1,283,338
Total investment income (loss)	446,501			(5,259		)	1,267,976		1,709,218

Income (Loss) before noncontrolling interests in Income of consolidated entities	663,453			6,553			1,286,629		1,956,635
Income (Loss) attributable to noncontrolling interests	1,973			109			609		2,691

Economic Net Income (Loss)	$	661,480		$	6,444		$	1,286,020	$	1,953,944

KKR

BALANCE SHEETS

TOTAL REPORTABLE SEGMENTS (UNAUDITED)

(Amounts in thousands, except per unit amounts)

As of December 31, 2010

	Private Markets Segment			Public Markets Segment		Capital Markets and Principal Activities Segment			Total Reportable Segments

Cash and cash equivalents	$	229,729		$	10,007	$	516,544		$	756,280
Investments	—			—		4,831,798		(a)	4,831,798
Unrealized carry	523,002			3,001		—			526,003
Other assets	194,424			53,222		39,730			287,376
Total assets	$	947,155		$	66,230	$	5,388,072		$	6,401,457

Debt obligations	$	—		$	—	$	500,000		$	500,000
Other liabilities	104,248			10,193		45,837			160,278
Total liabilities	104,248			10,193		545,837			660,278

Noncontrolling interests	(1,750		)	766		16,537			15,553

Partners’ capital	$	844,657		$	55,271	$	4,825,698		$	5,725,626

Book value per adjusted unit (b)	$	1.24		$	0.08	$	7.06		$	8.38

As of December 31, 2009

	Private Markets Segment		Public Markets Segment		Capital Markets and Principal Activities Segment		Total Reportable Segments

Cash and cash equivalents	$	51,015	$	9,089	$	496,554	$	556,658
Investments	—		—		4,108,359		4,108,359
Unrealized carry	156,149		—		—		156,149
Other assets	154,964		53,319		55,219		263,502
Total assets	$	362,128	$	62,408	$	4,660,132	$	5,084,668

Debt obligations	$	—	$	—	$	733,697	$	733,697
Other liabilities	84,936		12,300		85,802		183,038
Total liabilities	84,936		12,300		819,499		916,735

Noncontrolling interests	130		527		14,392		15,049

Partners’ capital	$	277,062	$	49,581	$	3,826,241	$	4,152,884

Book value per adjusted unit (b)	$	0.41	$	0.07	$	5.60	$	6.08

(a) See capital markets and principal activities segment schedule of investments that follows in this press release.

(b) Adjusted units represents the fully diluted unit count using the if-converted method. See Exhibit B for a reconciliation of this item to the comparable GAAP measure.

KKR

CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS

(Amounts in thousands, except percentage amounts)

	As of December 31, 2010
Investment	Cost		Fair Value		Fair Value as a Percentage of Investments

Private Equity Investments:
Co-investments in portfolio companies of private equity funds:
Dollar General Corporation	$	164,291	$	575,862	11.9	%
HCA Inc.	201,444		436,473		9.0
Alliance Boots GmbH.	301,352		304,192		6.3
The Nielsen Company B.V.	156,839		235,258		4.9
NXP B.V.	250,000		198,253		4.1
Biomet, Inc.	151,443		151,443		3.1
U.S. Foodservice, Inc.	100,000		120,000		2.5
ProSiebenSat.1 Media AG	226,913		106,731		2.2
First Data Corporation	135,258		81,155		1.7
KION Group GmbH.	128,058		55,199		1.1
Energy Future Holdings Corp.	200,000		40,000		0.9
PagesJaunes Groupe S.A.	235,201		—		—
Capmark Financial Group Inc.	137,321		—		—
	2,388,120		2,304,566		47.7	%
Private equity funds:
KKR 2006 Fund L.P.	1,080,930		1,148,646		23.8	%
KKR Asian Fund L.P.	177,996		237,606		4.9
KKR European Fund III, Limited Partnership	183,368		193,090		4.0
KKR European Fund, Limited Partnership	144,133		189,240		3.9
KKR Millennium Fund L.P.	195,164		181,989		3.8
KKR European Fund II, Limited Partnership	95,974		83,923		1.7
KKR E2 Investors, L.P.	9,432		13,334		0.3
KKR China Growth Fund	1,479		1,479		—
	1,888,476		2,049,307		42.4	%

Other Investments	505,820		477,925		9.9	%

Total Investments	$	4,782,416	$	4,831,798	100.0	%

KKR

CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED

(Amounts in thousands, except percentage amounts)

	As of December 31, 2010
Investment	Cost		Fair Value		Fair Value as a Percentage of Investments

Significant Aggregate Investments: (a)

Dollar General Corporation	$	227,972	$	767,168	15.9	%
HCA Inc.	255,307		540,618		11.2
Alliance Boots GmbH	426,523		437,905		9.1
The Nielsen Company B.V.	172,841		257,662		5.3
Biomet, Inc.	242,866		242,866		5.0
	1,325,509		2,246,219		46.5
Other portfolio companies (b)	2,951,087		2,107,654		43.6
Other investments	505,820		477,925		9.9
	$	4,782,416	$	4,831,798	100.0	%

Investments by Geography:
North America	$	2,613,189	$	3,071,011	63.6	%
Europe	1,738,313		1,250,258		25.9
Asia Pacific	430,914		510,529		10.5
	$	4,782,416	$	4,831,798	100.0	%

Investments by Industry:
Healthcare	$	992,269	$	1,286,435	26.6	%
Retail	544,719		1,093,883		22.6
Financial Services	999,425		693,866		14.4
Media/Telecom	811,348		541,846		11.2
Technology	532,138		538,496		11.1
Industrial	326,163		305,948		6.3
Energy	454,412		213,564		4.4
Consumer Products	100,850		124,543		2.6
Other	21,092		33,217		0.8
	$	4,782,416	$	4,831,798	100.0	%

(a) The significant aggregate investments include investments in portfolio companies with individual fair values of 5% or more of the capital markets and principal activities segment investments balance as of December 31, 2010. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.

(b) Other portfolio companies includes investments in private equity portfolio companies with individual fair values less than 5% of the capital markets and principal activities segment investments balance as of December 31, 2010.

KKR

ASSETS UNDER MANAGEMENT AND FEE PAYING ASSETS UNDER MANAGEMENT

(Amounts in thousands)

Assets Under Management

	Private Markets Segment			Public Markets Segment			Total Reportable Segments
Quarter Ended December 31, 2010

AUM as of September 30, 2010	$	41,878,700		$	13,619,800		$	55,498,500
New Capital Raised	2,483,100			993,200			3,476,300
Distributions	(1,400,500		)	(59,100		)	(1,459,600		)
Foreign Exchange	(45,900		)	—			(45,900		)
Change in Value	3,308,500			219,700			3,528,200
AUM as of December 31, 2010	$	46,223,900		$	14,773,600		$	60,997,500

Year Ended December 31, 2010

AUM as of December 31, 2009	$	38,842,900		$	13,361,300		$	52,204,200
New Capital Raised	3,025,500			1,970,100			4,995,600
Distributions	(4,085,200		)	(1,281,700		)	(5,366,900		)
Foreign Exchange	(274,800		)	—			(274,800		)
Change in Value	8,715,500			723,900			9,439,400
AUM as of December 31, 2010	$	46,223,900		$	14,773,600		$	60,997,500

Fee Paying Assets Under Management

	Private Markets Segment			Public Markets Segment			Total Reportable Segments
Quarter Ended December 31, 2010

FPAUM as of September 30, 2010	$	36,032,300		$	6,672,900		$	42,705,200
New Capital Raised	2,437,100			991,700			3,428,800
Distributions	(152,000		)	(59,100		)	(211,100		)
Foreign Exchange	(137,900		)	—			(137,900		)
Change in Value	7,200			218,900			226,100
FPAUM as of December 31, 2010	$	38,186,700		$	7,824,400		$	46,011,100

Year Ended December 31, 2010

FPAUM as of December 31, 2009	$	36,484,400		$	6,295,400		$	42,779,800
New Capital Raised	2,971,600			1,893,000			4,864,600
Distributions	(650,300		)	(1,281,700		)	(1,932,000		)
Foreign Exchange	(658,800		)	—			(658,800		)
Change in Value	39,800			917,700			957,500
FPAUM as of December 31, 2010	$	38,186,700		$	7,824,400		$	46,011,100

KKR

INVESTMENT VEHICLE SUMMARY (UNAUDITED)

As of December 31, 2010

(Amounts in millions, except percentages)

	Investment Period		Amount
Private Markets	Commencement Date	End Date	Commitment		Uncalled Commitments		Percentage Committed by General Partner	Invested		Realized		Remaining Cost		Fair Value

Private Equity Funds
China Growth Fund	11/2010	11/2016	$	943.8	$	837.5	1.1%	$	106.3	$	—	$	106.3	$	106.3
E2 Investors (Annex Fund)	8/2009	11/2011	539.4		424.6		4.2%	114.8		—		114.8		165.9
European Fund III	3/2008	3/2014	5,956.2		3,709.6		4.5%	2,246.6		—		2,246.6		2,342.8
Asian Fund	7/2007	7/2013	3,983.2		1,567.6		2.5%	2,415.6		—		2,415.6		3,442.2
2006 Fund	9/2006	9/2012	17,642.2		4,726.5		2.1%	12,915.7		2,405.1		11,836.5		13,410.2
European Fund II	11/2005	10/2008	5,750.8		—		2.1%	5,750.8		761.6		5,335.9		4,594.0
Millennium Fund	12/2002	12/2008	6,000.0		—		2.5%	6,000.0		6,056.3		3,965.3		5,742.5
European Fund	12/1999	12/2005	3,085.4		—		3.2%	3,085.4		6,525.0		492.3		2,249.4

Total Private Equity Funds			43,901.0		11,265.8			32,635.2		15,748.0		26,513.3		32,053.3

Co-Investment Vehicles	Various	Various	3,194.4		659.3		Various	2,535.1		316.4		2,447.8		3,057.5
Natural Resources I	3/2010	10/2013	257.5		185.8		2.9%	71.7		—		71.7		71.7
Infrastructure Fund	9/2010	9/2016	515.0		515.0		9.7%	—		—		—		—

Private Markets Total			47,867.9		12,625.9			35,242.0		16,064.4		29,032.8		35,182.5

Public Markets
Capital Solutions Vehicles	Various	Various	1,757.0		1,018.2		Various	738.8		—		738.8		787.7
Mezzanine Fund	3/2010	3/2015	558.6		430.6		8.1%	128.0		—		128.0		125.2

Public Markets Total			2,315.6		1,448.8			866.8		—		866.8		912.9

Total			$	50,183.5	$	14,074.7		$	36,108.8	$	16,064.4	$	29,899.6	$	36,095.4

KKR

DISTRIBUTION CALCULATION

(Amounts in thousands, except unit and per unit amounts)

	Quarter Ended
	December 31, 2010

FRE	$	95,091
Realized cash carry	68,958
Less: local income taxes	(5,111		)
Less: noncontrolling interests	(1,592		)
Gross distributable earnings	157,346

Distributable earnings to KKR & Co. L.P.	49,014

Less: estimated current corporate income taxes	(13,880		)
Net cash available for distribution	$	35,134

Additional distribution (a)	$	27,000

Total distribution	$	62,134

Distribution per KKR & Co. L.P. common unit	$	0.29

Outstanding KKR & Co. L.P. common units	212,770,091

(a) Additional distribution is provided primarily from certain realizations on investments within KKR’s capital markets and principal activities segment and was calculated in accordance with our distribution policy to cover certain tax liabilities. The amount of any additional distribution in the future should not be expected to be consistent or regularly declared.

DISTRIBUTION POLICY

KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its investment management business each year in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other agreements. KKR does not intend to distribute gains on principal investments, other than certain additional distributions, that KKR may determine to make. These additional distributions, if any, are intended to cover certain tax liabilities, as calculated by KKR. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships. For the purposes of KKR’s distribution policy, its distributions are expected to consist of an amount consisting of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool, and (iii) certain tax distributions, if any. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) noncontrolling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.

The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P. and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that such distributions will be sufficient to pay any particular KKR unit holder’s actual U.S. or non-U.S. tax liability.

KKR

Notes to Reportable Segments (Unaudited)

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 L.P. and as such represent the business in total .

Business Combination

FRE and ENI previously reported for periods prior to October 1, 2009 did not reflect certain adjustments that are applicable for periods after October 1, 2009 as a result of the Business Combination, which include items such as:

· the exclusion of approximately 40% of the carry allocated to KKR principals pursuant to its carry pool;

· the exclusion of carry allocated to former KKR principals;

· the exclusion of the capital invested by or on behalf of the general partners of KKR’s private equity funds before the completion of the Business Combination and any returns thereon;

· the exclusion of the economic interests associated with the KKR 1996 Fund;

· the elimination of management fees paid by KKR & Co. (Guernsey) L.P. formerly known as KKR Private Equity Investors, L.P. (“KPE”), prior to the Business Combination, to KKR’s management companies;

· the inclusion of the financial results of KPE; and

· certain compensation adjustments including: (i) the exclusion of bonuses earned by certain of KKR’s principals which will not be borne by public investors and (ii) the inclusion of salaries for KKR’s senior principals.

Given the significance of these adjustments, the comparisons to all periods prior to October 1, 2009 in this press release are on a pro forma basis giving effect to the adjustments above. For a further discussion of adjustments related to the Business Combination please refer to KKR & Co. L.P.’s prospectus filed on October 5, 2010, which is available at the SEC’s website at www.sec.gov.

Definitions

Fee related earnings (“FRE”) is comprised of segment operating revenues, less segment operating expenses. The components of FRE on a segment basis differ from the equivalent U.S. GAAP amounts on a combined basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of expenses of consolidated funds; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges borne by KKR Holdings; (vi) the exclusion of certain reimbursable expenses and (vii) the exclusion of certain non-recurring items .

Economic net income (“ENI”) is a measure of profitability for KKR’s reportable segments and is comprised of: (i) FRE; plus (ii) segment investment income, which is reduced for carry pool allocations and management fee refunds; less (iii) certain economic interests in KKR’s segments held by third parties. ENI differs from net income on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income relating to noncontrolling interests; and (iii) the exclusion of income taxes.

After-tax ENI is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.

Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner 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 plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR’s fixed income products; and (iv) the value of outstanding structured finance vehicles. You should note that KKR’s calculation of AUM may differ from the calculations of other asset managers and, as a result, its measurements of AUM may not be comparable to similar measures presented by other asset managers. KKR’s definition of AUM is not based on any definition of AUM that is set forth in the agreements governing the investment funds, vehicles or accounts that it manages.

KKR

Notes to Reportable Segments (Unaudited) (Continued)

Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest); 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.

Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR’s investment funds and carry-yielding co-investment vehicles during a given period. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a carried interest and (ii) capital invested by KKR.

Uncalled commitments represent 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.

Fee Credits require KKR to share a portion of any monitoring and transaction fees received from portfolio companies with limited partners in certain of its investment funds. Fee credits exclude fees that are not attributable to a fund’s investment in a portfolio company and generally amount to 80% of monitoring and transaction fees after fund related expenses are recovered.

KKR Carry Pool represents a portion of the carried interest earned in relation to certain of KKR’s active and future investment funds and co-investment vehicles that will be allocated to its principals, other professionals and selected other individuals.

Management Fee Refunds represent 20% of any cash management fees earned from limited partners in the event that certain of KKR’s investment funds recognize a carried interest. At such time as the fund recognizes a carried interest in an amount sufficient to cover 20% of the management fees earned or a portion thereof, carried interest is reduced, not to exceed 20% of management fees earned. As of December 31, 2010, the amount subject to management fee refunds, which may reduce carried interest in future periods, totaled $58.7 million.

Noncontrolling interests represent economic interests that will (i) allocate to a former principal an aggregate of 1% of profits and losses of its management companies until a future date and (ii) allocate to a third party investor an aggregate of 2% of the equity in its capital markets business.

KKR

EXHIBIT A

RECONCILIATION OF TOTAL REPORTABLE SEGMENTS FEE RELATED EARNINGS AND ECONOMIC NET INCOME

TO NET INCOME ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS - UNAUDITED)

(Amounts in thousands)

	Quarter Ended			Quarter Ended			Year Ended
	December 31, 2010			December 31, 2009			December 31, 2010
Total reportable segments fee related earnings	$	95,091		$	87,467		$	318,322
Investment income	621,114			428,813			1,825,880
Less: Income attributable to noncontrolling interests	(1,592		)	(1,025		)	(4,409		)
Economic net income (loss)	714,613			515,255			2,139,793
Income taxes	(14,362		)	(31,193		)	(75,360		)
Amortization of intangibles and other, net	(1,219		)	(1,066		)	(7,785		)
Non-cash equity based charges	(107,040		)	(562,373		)	(824,193		)
Allocations to carry pool recorded in connection with the Transactions	—			(115,540		)	—
Allocation to noncontrolling interests held by KKR Holdings L.P.	(411,413		)	116,696			(899,277		)
Net (income) loss attributable to KKR & Co. L.P.	$	180,579		$	(78,221	)	$	333,178

	Year Ended
	December 31, 2009 (a)
Total pro forma reportable segments fee related earnings	$	247,417
Investment income	1,709,218
Less: Income attributable to noncontrolling interests	(2,691		)
Pro forma economic net income (loss)	1,953,944
Allocation to carry pool	95,857
Carry allocated to former KKR principals	172,637
Income on capital invested by or on behalf of KKR principals prior to completion of the Business Combination	86,452
Economic interests associated with the KKR 1996 Fund	67,163
Elimination of management fees paid by KPE prior to completion of Business Combination	28,244
Financial results of KPE	(906,492		)
Certain compensation adjustments	(12,753		)
Income attributable to noncontrolling interests	1,601
Total actual economic net income (loss)	$	1,486,653
Costs relating to the Business Combination and related transactions	(34,846		)
Income taxes	(36,998		)
Amortization of intangibles and other, net	(3,907		)
Non-cash equity based charges	(562,373		)
Allocations to carry pool recorded in connection with the Transactions	(115,540		)
Allocation to noncontrolling interests held by KKR Holdings L.P.	116,696
Net income attributable to KKR & Co. L.P.	$	849,685

(a) The segment financial information for the year ended December 31, 2009 is presented on a pro forma basis to give effect to the Business Combination and related transactions as if they were completed on January 1, 2009 whereas the 2009 GAAP financial information is presented on an actual basis. Accordingly, the reconciliation of segment financial information to GAAP financial information for the year ended December 31, 2009 is presented in two parts: (i) a reconciliation of 2009 pro forma segment financial information to 2009 actual segment financial information and (ii) a reconciliation of 2009 actual segment financial information to 2009 actual GAAP information.

KKR

EXHIBIT B

RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS

The following table provides a reconciliation of KKR’s Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.

	Quarter Ended			Year Ended
	December 31, 2010	September 30, 2010	December 31, 2009	December 31, 2010
Weighted Average GAAP Common Units Outstanding - Basic	209,383,219	204,902,226	204,902,226	206,031,682
Weighted Average Unvested Common Units(a)	30,000	—	—	7,562
Weighted Average GAAP Common Units Outstanding - Diluted	209,413,219	204,902,226	204,902,226	206,039,244
Adjustments:
Weighted Average KKR Holdings Units (b)	473,624,201	478,105,194	478,105,194	476,975,738
Weighted Average Adjusted Units	683,037,420	683,007,420	683,007,420	683,014,982

RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS

The following table provides a reconciliation of KKR’s GAAP Common Units Outstanding to Adjusted Units.

	As of	As of
	December 31, 2010	December 31, 2009
GAAP Common Units Outstanding - Basic	212,770,091	204,902,226
Unvested Common Units(a)	30,000	—
GAAP Common Units Outstanding - Diluted	212,800,091	204,902,226
Adjustments:
KKR Holdings Units (b)	470,237,329	478,105,194
Adjusted Units	683,037,420	683,007,420

(a) Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.

(b) Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.

Exhibit 99.2

KKR Appoints New Independent Director to Board

NEW YORK, February 23, 2011—KKR & Co. L.P. (NYSE: KKR) today announced that Thomas M. Schoewe is being appointed to the Board of Directors of KKR Management LLC, the managing partner of KKR, and its Audit Committee and Conflicts Committee, effective on March 14, 2011.

Mr. Schoewe, 59, is the former executive vice president and chief financial officer of Wal-Mart Stores, Inc. In this position, he was responsible for accounting and control, business planning and analysis, internal auditing, treasury and tax. Before Wal-Mart, he served as senior vice president and chief financial officer of Black and Decker Corp., a position he held from 1993 to 1999. Prior to his work at Black and Decker, he served as chief financial officer of Beatrice Consumer Durables, a division of Beatrice Companies.

Mr. Schoewe is currently a member of the Board of Directors of PulteGroup (NYSE: PHM) and a trustee for The First Tee Foundation, a charitable youth organization. A member of Financial Executives International, Mr. Schoewe holds a Bachelor of Business Administration degree in Finance from Loyola University of Chicago.

KKR’s other independent directors include Joseph A. Grundfest, Stanford Law Professor and former Commissioner of the Securities and Exchange Commission, Dieter Rampl, Chairman of Unicredit Group, and Robert W. Scully, former member of the Office of the Chairman of Morgan Stanley, who were appointed on July 15, 2010.

ABOUT KKR

CONTACT INFORMATION

Investor Relations:		Media Contact:
Jonathan Levin Kohlberg Kravis Roberts & Co. L.P. Tel: +1 (877) 610-4910 (U.S.) / +1 (212) 230-9410 investor-relations@kkr.com		Peter McKillop or Kristi Huller Kohlberg Kravis Roberts & Co. L.P. Tel:+ 1 (212) 750-8300 media@kkr.com

No data