KKR & Co. Inc. (Form: 8-K, Received: 01/31/2020 06:52:19)
false0001404912 0001404912 2020-01-31 2020-01-31 0001404912 us-gaap:CommonClassAMember 2020-01-31 2020-01-31 0001404912 us-gaap:SeriesAPreferredStockMember 2020-01-31 2020-01-31 0001404912 us-gaap:SeriesBPreferredStockMember 2020-01-31 2020-01-31



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): January 31, 2020

KKR & CO. INC.

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

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):
☐
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
☐
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
☐
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
☐
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
 
 
 
Title of each class
Trading symbol(s)
Name of each exchange on which registered
Class A Common Stock
KKR
New York Stock Exchange
6.75% Series A Preferred Stock
KKR PR A
New York Stock Exchange
6.50% Series B Preferred Stock
KKR PR B
New York Stock Exchange

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).
☐
 
Emerging growth company
☐
 
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 January 31, 2020, KKR & Co. Inc. issued an earnings release announcing its financial results for the quarter and year ended December 31, 2019.

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:
January 31, 2020
By:  /s/ Robert H. Lewin        
Name: Robert H. Lewin
Title: Chief Financial Officer
 
 
 









LOGOA12.JPG
KKR & Co. Inc. Reports Fourth Quarter and Full Year 2019 Results
__________________________________________________________________________________________________________________________________________________________________________
NEW YORK, January 31, 2020 - KKR & Co. Inc. (NYSE: KKR) today reported its fourth quarter and full year 2019 results.

GAAP Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders(1) was $515.1 million and $1,971.7 million, respectively, for the quarter and full year ended December 31, 2019. On a diluted basis, Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock was $0.91 and $3.54, respectively, for the quarter and full year ended December 31, 2019. KKR & Co. Inc. Stockholders' Equity - Common Stockholders(1) was $10.3 billion as of December 31, 2019, or $18.44 Per Outstanding Share of Class A common stock.

After-tax Distributable Earnings and After-tax Distributable Earnings Per Adjusted Share were $375.1 million and $0.44, respectively, for the quarter ended December 31, 2019. After-tax Distributable Earnings and After-tax Distributable Earnings Per Adjusted Share were $1,405.3 million and $1.67, respectively, for the full year ended December 31, 2019.



•
Monetization activity drove After-tax Distributable Earnings of $375.1 million and $0.44 per adjusted share for the fourth quarter.
•
As of December 31, 2019, Assets Under Management and Fee Paying Assets Under Management were $218 billion and $161 billion, respectively, up 12% and 14% compared to December 31, 2018. Uncalled commitments that will contribute to Fee Paying Assets Under Management as that capital is either invested or enters its investment period, was $19 billion.
•
Capital Invested in the fourth quarter exceeded $4.0 billion in both KKR's Private Markets and Public Markets business lines. In 2019, Capital Invested and Syndicated Capital totaled $28.1 billion.
•
As of December 31, 2019, book value was $16.4 billion or $19.24 per adjusted share.
•
KKR's regular dividend of $0.125 per share of Class A common stock was declared for the quarter ended December 31, 2019. Additionally, beginning with the dividend to be announced with the results for the quarter ending March 31, 2020, KKR intends to increase its regular annualized dividend per share of Class A common stock by 8% from $0.50 to $0.54.

___________________________




"Assets Under Management, Management Fees and Book Value per Share all grew at double-digit rates in 2019," said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. "Given our investment performance, integrated business model and growing fundraising pipeline, we feel well position to continue to deliver strong results for our shareholders."



 
 
 
 
Note: KKR discloses in this earnings release certain financial measures, including after-tax distributable earnings and book value that are not calculated and presented in accordance with accounting principles generally accepted in the United States of America (“non-GAAP”). Such non-GAAP measures should be considered in addition to, and not a substitute for or superior to, financial measures calculated in accordance with accounting principles generally accepted in the United States of America (“GAAP”). These non-GAAP measures, including operating assets, operating liabilities, operating revenues, operating expenses and distributable operating earnings, are presented in this earnings release as KKR’s operating results, which were previously referred to as segment results. Reconciliations of these non-GAAP financial measures to the most directly comparable GAAP financial measures are presented in Exhibit A.

(1)
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 non-GAAP financial results are 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.


Page 1


GAAP RESULTS
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders was $515.1 million for the quarter ended December 31, 2019, compared to $(393.0) million for the quarter ended December 31, 2018. Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders was $1,971.7 million for the year ended December 31, 2019, compared to $1,097.7 million for the year ended December 31, 2018.
Revenues for the quarter ended December 31, 2019 were $1,063.1 million compared to $(178.1) million for the quarter ended December 31, 2018. The increase is primarily due to mark-to-market net carried interest gains in the current period, partially offset by a lower level of transaction fees. Revenues for the year ended December 31, 2019 were $4,220.9 million compared to $2,395.8 million for the year ended December 31, 2018. The increase is primarily due to a higher level of mark-to-market carried interest gains and management fees, partially offset by a lower level of transaction fees.
Expenses for the quarter ended December 31, 2019 were $751.3 million compared to $237.7 million for the quarter ended December 31, 2018. The increase is primarily driven by accrued carried interest compensation resulting from net carried interest gains in the current period. Expenses for the year ended December 31, 2019 were $2,908.4 million compared to $2,089.5 million for the year ended December 31, 2018. The increase is primarily driven by higher accrued carried interest compensation resulting from a higher level of mark-to-market carried interest gains in the current period.
Total investment income (loss) for the quarter ended December 31, 2019 was $1,145.0 million compared to $(798.1) million for the comparable period of 2018. The increase is primarily due to net investment gains from our private equity portfolio and a higher level of dividend income in the current period. Total investment income (loss) for the year ended December 31, 2019 was $3,855.8 million, compared to $1,950.5 million for the comparable period of 2018. The increase is primarily due to a higher level of net investment gains from our private equity portfolio and dividend income in the current period.
KKR & Co. Inc. Stockholders’ Equity - Common Stockholders per Outstanding Share of Class A common stock was $18.44 as of December 31, 2019, up from $15.27 as of December 31, 2018. The increase was primarily attributable to net appreciation in the value of our investment portfolio that is attributable to KKR & Co. Inc. net of dividends to Class A common stockholders.
___________________________
OPERATING RESULTS
AFTER-TAX DISTRIBUTABLE EARNINGS
After-tax distributable earnings were $375.1 million for the quarter ended December 31, 2019, compared with $460.1 million in the comparable prior period. After-tax distributable earnings were $1,405.3 million for the year ended December 31, 2019, compared with $1,597.2 million in the comparable prior period.
The decreases in the quarterly and annual periods were primarily due to a decrease in realized carried interest reflecting a lower level of realizations within our Private Markets business line and a lower level of transaction fees at our Capital Markets business line. These decreases were partially offset by a decrease in compensation and benefits expense and an increase in management fees. Management fees were $317.1 million for the quarter ended December 31, 2019 and $1,227.2 million for the year ended December 31, 2019, compared with $279.4 million and $1,069.1 million in the comparable prior periods. The increase in management fees for both periods reflects an overall higher level of FPAUM in each of the Private Markets and Public Markets business lines.
BOOK VALUE PER ADJUSTED SHARE
Book value per adjusted share was $19.24 as of December 31, 2019, up 24%, compared with $15.57 as of December 31, 2018. 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. For the year ended December 31, 2019, KKR's private equity portfolio appreciated 27%.
___________________________
OPERATING METRICS
ASSETS UNDER MANAGEMENT
AUM was $218.4 billion as of December 31, 2019 compared to $208.4 billion as of September 30, 2019. The increase was primarily attributable to $7.7 billion of new capital raised across multiple strategies including infrastructure, real estate, leveraged credit, and strategic partnerships, and an increase in the value of our private equity portfolio. These increases were partially offset by realizations and distributions to limited partners in our private equity portfolio and distributions in various Public Markets strategies.
FEE PAYING ASSETS UNDER MANAGEMENT
FPAUM was $161.2 billion as of December 31, 2019 compared to $153.0 billion as of September 30, 2019. The increase was primarily driven by new capital raised across multiple strategies including growth equity and core equity, infrastructure, real estate, leveraged credit, private credit, and strategic partnerships. This increase was partially offset by realizations and distributions to limited partners in our private equity portfolio and distributions in various Public Markets strategies.

Page 2


DIVIDENDS AND OTHER
A dividend of $0.125 per share of Class A common stock has been declared for the fourth quarter of 2019, which will be paid on February 25, 2020 to holders of record of Class A common stock as of the close of business on February 10, 2020. Beginning with any dividend to be announced with the results for the first quarter of 2020, KKR expects to pay its Class A common stockholders an annualized dividend of $0.54 per share of Class A common stock, equal to a quarterly dividend of $0.135 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 16, 2020 to holders of record of Series A Preferred Stock as of the close of business on March 1, 2020. A dividend of $0.406250 per share of Series B Preferred Stock has been declared and set aside for payment on March 16, 2020 to holders of record of Series B Preferred Stock as of the close of business on March 1, 2020.
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.
___________________________
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 plans. In total, as can be seen in the table below, KKR has used approximately $1.1 billion to either repurchase shares or retire equity awards since the inception of KKR’s share repurchase plan on October 27, 2015 through January 24, 2020.
Share Repurchase Activity -- October 27, 2015 through January 24, 2020 (2)
(Amounts in millions, except per share amounts)
 
Inception to Date
Open Market Share Repurchases
 
43.3

Reduction of Shares for Retired Equity Awards (3)
 
16.3

Total Repurchased Shares and Retired Equity Awards
 
59.6

Total Capital Used
 
$
1,069

Average Price Paid Per Share (4)
 
$
17.94

Remaining Availability under Current Share Repurchase Plan
 
$
328


From December 31, 2018 through January 24, 2020, KKR used a total of approximately $200 million to repurchase 4.1 million shares in the open market and to retire equity awards representing 3.7 million shares that otherwise would have been issued to participants in the Equity Incentive Plans. During this period, open market purchases were made at an average cost of $26.61 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 the KKR & Co. Inc. 2019 Equity Incentive Plan (collectively the "Equity Incentive Plans").
(4)
Average price paid per share reflects total capital used to repurchase shares and to retire equity awards from inception to January 24, 2020 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, January 31, 2020 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 7684563, 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, 2019 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, adjusted 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 (the "Conversion") 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, 2018, filed with the SEC on February 15, 2019, 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


GAAP CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Revenues
 
 
 
 
 
 
 
 
Fees and Other
 
$
482,269

 
$
541,583

 
$
1,790,475

 
$
1,841,326

Capital Allocation-Based Income
 
580,802

 
(719,639
)
 
2,430,425

 
554,510

Total Revenues
 
1,063,071

 
(178,056
)
 
4,220,900

 
2,395,836

Expenses
 
 
 
 
 
 
 
 
Compensation and Benefits
 
535,834

 
43,293

 
2,116,890

 
1,374,363

Occupancy and Related Charges
 
15,951

 
14,919

 
62,728

 
59,706

General, Administrative and Other
 
199,535

 
179,524

 
728,813

 
655,408

Total Expenses
 
751,320

 
237,736

 
2,908,431

 
2,089,477

Investment Income (Loss)
 
 
 
 
 
 
 
 
Net Gains (Losses) from Investment Activities
 
924,611

 
(1,001,286
)
 
3,161,884

 
1,254,832

Dividend Income
 
131,228

 
37,501

 
318,972

 
175,154

Interest Income
 
350,138

 
407,178

 
1,418,516

 
1,396,532

Interest Expense
 
(260,950
)
 
(241,508
)
 
(1,043,551
)
 
(876,029
)
Total Investment Income (Loss)
 
1,145,027

 
(798,115
)
 
3,855,821

 
1,950,489

 
 
 
 
 
 
 
 
 
Income (Loss) Before Taxes
 
1,456,778

 
(1,213,907
)
 
5,168,290

 
2,256,848

 
 
 
 
 
 
 
 
 
Income Tax Expense (Benefit)
 
142,626

 
(143,294
)
 
528,750

 
(194,098
)
 
 
 
 
 
 
 
 
 
Net Income (Loss)
 
1,314,152

 
(1,070,613
)
 
4,639,540

 
2,450,946

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to Redeemable Noncontrolling Interests
 
—

 
(57,246
)
 
—

 
(37,352
)
Net Income (Loss) Attributable to Noncontrolling Interests
 
790,710

 
(628,726
)
 
2,634,491

 
1,357,235

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc.
 
523,442

 
(384,641
)
 
2,005,049

 
1,131,063

 
 
 
 
 
 
 
 
 
Preferred Stock Dividends
 
8,341

 
8,341

 
33,364

 
33,364

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
515,101

 
$
(392,982
)
 
$
1,971,685

 
$
1,097,699

 
 
 
 
 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock
 
 
 
 
 
 
 
 
Basic
 
$
0.93

 
$
(0.74
)
 
$
3.62

 
$
2.14

Diluted (1)
 
$
0.91

 
$
(0.74
)
 
$
3.54

 
$
2.06

Weighted Average Shares of Class A Common Stock Outstanding
 
 
 
 
 
 
 
 
Basic
 
555,379,973

 
532,266,521

 
545,096,999

 
514,102,571

Diluted (1)
 
566,277,984

 
532,266,521

 
557,687,512

 
533,707,039

 
GAAP CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
As of
 
 
December 31, 2019
 
December 31, 2018
 
 
 
 
 
Assets
 
 
 
 
Cash and Cash Equivalents
 
$
2,346,713

 
$
1,751,287

Investments
 
54,936,268

 
44,907,982

Other Assets
 
3,616,338

 
4,084,106

Total Assets
 
$
60,899,319

 
$
50,743,375

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Debt Obligations
 
$
27,013,284

 
$
22,341,192

Other Liabilities
 
3,383,661

 
3,019,574

Total Liabilities
 
30,396,945

 
25,360,766

 
 
 
 
 
Redeemable Noncontrolling Interests
 
—

 
1,122,641

 
 
 
 
 
Stockholders' Equity
 
 
 
 
Preferred Stock
 
482,554

 
482,554

KKR & Co. Inc. Stockholders' Equity - Common Stockholders
 
10,324,936

 
8,167,056

Noncontrolling Interests
 
19,694,884

 
15,610,358

Total Equity
 
30,502,374

 
24,259,968

Total Liabilities and Equity
 
$
60,899,319

 
$
50,743,375

 
 
 
 
 
KKR & Co. Inc. Stockholders' Equity Per Outstanding Share of Class A Common Stock
 
$
18.44

 
$
15.27


 
 
 
 
(1)
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


OPERATING REVENUES, OPERATING EXPENSES AND AFTER-TAX DISTRIBUTABLE EARNINGS (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
OPERATING REVENUES (UNAUDITED)
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Operating Revenues
 
 
 
 
 
 
 
 
 
 
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
317,131

 
$
314,793

 
$
279,444

 
$
1,227,236

 
$
1,069,074

Transaction Fees
 
255,511

 
164,892

 
367,685

 
910,932

 
977,485

Monitoring Fees
 
26,668

 
27,546

 
24,420

 
106,289

 
87,520

Fee Credits
 
(108,662
)
 
(61,308
)
 
(101,154
)
 
(382,940
)
 
(280,136
)
Total Fees and Other, Net
 
490,648


445,923

 
570,395

 
1,861,517

 
1,853,943

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 
232,180

 
296,344

 
259,394

 
1,070,788

 
1,218,647

Incentive Fees
 
12,771

 
11,184

 
86,271

 
65,256

 
138,330

Total Realized Performance Income (Loss)
 
244,951


307,528

 
345,665

 
1,136,044

 
1,356,977

 
 
 
 
 
 
 
 
 
 
 
Realized Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Net Realized Gains (Losses)
 
43,524

 
26,529

 
78,943

 
189,858

 
365,324

Interest Income and Dividends
 
182,946

 
183,705

 
80,946

 
495,915

 
286,468

Total Realized Investment Income (Loss)
 
226,470

 
210,234

 
159,889

 
685,773

 
651,792

 
 
 
 
 
 
 
 
 
 
 
Total Operating Revenues
 
$
962,069

 
$
963,685

 
$
1,075,949

 
$
3,683,334

 
$
3,862,712

 
OPERATING EXPENSES (UNAUDITED)
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Operating Expenses
 
 
 
 
 
 
 
 
 
 
Compensation and Benefits (1)
 
$
357,740

 
$
385,237

 
$
395,282

 
$
1,446,292

 
$
1,533,431

Occupancy and Related Charges
 
14,302

 
14,141

 
14,203

 
58,888

 
57,022

Other Operating Expenses (2)
 
108,133

 
77,532

 
98,753

 
343,418

 
293,621

Total Operating Expenses
 
$
480,175

 
$
476,910

 
$
508,238

 
$
1,848,598

 
$
1,884,074

 
AFTER-TAX DISTRIBUTABLE EARNINGS (UNAUDITED)
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
After-tax Distributable Earnings
 
 
 
 
 
 
 
 
 
 
(+) Total Operating Revenues
 
$
962,069

 
$
963,685

 
$
1,075,949

 
$
3,683,334

 
$
3,862,712

(-) Total Operating Expenses
 
480,175

 
476,910

 
508,238

 
1,848,598

 
1,884,074

(=) Total Distributable Operating Earnings
 
481,894

 
486,775

 
567,711

 
1,834,736

 
1,978,638

(-) Interest Expense
 
44,367

 
48,326

 
47,017

 
183,682

 
187,379

(-) Preferred Dividends
 
8,341

 
8,341

 
8,341

 
33,364

 
33,364

(-) Income (Loss) Attributable to Noncontrolling Interests
 
1,803

 
881

 
4,250

 
4,907

 
8,807

(-) Income Taxes Paid
 
52,242

 
40,429

 
47,980

 
207,479

 
151,848

After-tax Distributable Earnings
 
$
375,141

 
$
388,798

 
$
460,123

 
$
1,405,304

 
$
1,597,240

 
 
 
 
 
 
 
 
 
 
 
After-tax Distributable Earnings Per Adjusted Share
 
$
0.44

 
$
0.46

 
$
0.55

 
$
1.67

 
$
1.93

Weighted Average Adjusted Shares
 
848,327,093

 
842,585,116

 
833,010,571

 
841,542,195

 
829,443,128

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
218,355,100

 
$
208,427,000

 
$
194,720,400

 
$
218,355,100

 
$
194,720,400

Fee Paying Assets Under Management
 
$
161,209,800

 
$
152,997,400

 
$
141,007,700

 
$
161,209,800

 
$
141,007,700

Capital Invested and Syndicated Capital
 
$
9,833,000

 
$
5,043,800

 
$
10,304,800

 
$
28,055,900

 
$
26,493,900

Uncalled Commitments
 
$
56,920,600

 
$
56,605,200

 
$
57,959,000

 
$
56,920,600

 
$
57,959,000

 
 
 
 
 
 
 
 
 
 
 
Fee Related Earnings
 
$
271,210

 
$
250,414

 
$
331,188

 
$
1,031,084

 
$
1,064,884

 
 
 
 

(1)
Includes equity-based compensation of $49.9 million, $54.4 million, and $57.0 million for the quarters ended December 31, 2019, September 30, 2019, and December 31, 2018, respectively, and $207.8 million and $242.8 million for the years ended December 31, 2019 and 2018, respectively.
(2)
For the quarter and year ended December 31, 2019, other operating expenses include approximately $20 million of issuance costs incurred in connection with the launch of a closed-end fund that closed in the fourth quarter of 2019.


Page 6


SCHEDULE OF SELECTED SUPPLEMENTAL FINANCIAL INFORMATION (UNAUDITED)
(Amounts in thousands)
 
PRIVATE MARKETS BUSINESS LINE REVENUES & OPERATING METRICS
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
201,760

 
$
202,632

 
$
174,470

 
$
780,254

 
$
665,026

Transaction Fees
 
122,601

 
63,580

 
114,780

 
421,494

 
303,902

Monitoring Fees
 
26,668

 
27,546

 
24,420

 
106,289

 
87,520

Fee Credits
 
(83,170
)
 
(44,625
)
 
(81,278
)
 
(307,716
)
 
(239,441
)
Total Fees and Other, Net
 
267,859

 
249,133

 
232,392

 
1,000,321

 
817,007

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 
232,180

 
281,494

 
259,394

 
1,046,038

 
1,208,747

Incentive Fees
 
831

 
—

 
1,041

 
2,316

 
1,041

Total Realized Performance Income (Loss)
 
$
233,011

 
$
281,494

 
$
260,435

 
$
1,048,354

 
$
1,209,788

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
119,274,700

 
$
114,368,500

 
$
103,396,500

 
$
119,274,700

 
$
103,396,500

Fee Paying Assets Under Management
 
$
76,918,100

 
$
73,824,100

 
$
66,830,000

 
$
76,918,100

 
$
66,830,000

Capital Invested 
 
$
4,491,600

 
$
2,372,100

 
$
4,337,600

 
$
14,116,000

 
$
13,224,100

Uncalled Commitments
 
$
46,811,300

 
$
46,579,800

 
$
48,160,900

 
$
46,811,300

 
$
48,160,900

PUBLIC MARKETS BUSINESS LINE REVENUES & OPERATING METRICS
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Fees and Other, Net
 
 
 
 
 
 
 
 
 
 
Management Fees
 
$
115,371

 
$
112,161

 
$
104,974

 
$
446,982

 
$
404,048

Transaction Fees
 
26,142

 
17,313

 
20,634

 
79,383

 
42,531

Fee Credits
 
(25,492
)
 
(16,683
)
 
(19,876
)
 
(75,224
)
 
(40,695
)
Total Fees and Other, Net
 
116,021

 
112,791

 
105,732

 
451,141

 
405,884

 
 
 
 
 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
 
 
 
 
Carried Interest
 
—

 
14,850

 
—

 
24,750

 
9,900

Incentive Fees
 
11,940

 
11,184

 
85,230

 
62,940

 
137,289

Total Realized Performance Income (Loss)
 
$
11,940

 
$
26,034

 
$
85,230

 
$
87,690

 
$
147,189

 
 
 
 
 
 
 
 
 
 
 
Assets Under Management
 
$
99,080,400

 
$
94,058,500

 
$
91,323,900

 
$
99,080,400

 
$
91,323,900

Fee Paying Assets Under Management
 
$
84,291,700

 
$
79,173,300

 
$
74,177,700

 
$
84,291,700

 
$
74,177,700

Capital Invested
 
$
4,034,000

 
$
2,021,200

 
$
1,978,200

 
$
10,075,400

 
$
6,932,400

Uncalled Commitments
 
$
10,109,300

 
$
10,025,400

 
$
9,798,100

 
$
10,109,300

 
$
9,798,100

CAPITAL MARKETS BUSINESS LINE REVENUES & OPERATING METRICS
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
 
 
 
 
 
 
 
 
 
 
 
Transaction Fees
 
$
106,768

 
$
83,999

 
$
232,271

 
$
410,055

 
$
631,052

 
 
 
 
 
 
 
 
 
 
 
Syndicated Capital
 
$
1,307,400


$
650,500


$
3,989,000

 
$
3,864,500

 
$
6,337,400

PRINCIPAL ACTIVITIES BUSINESS LINE REVENUES
 
 
 
 
 
 
 
 
 
Quarter Ended
 
Year Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
December 31, 2019
 
December 31, 2018
Realized Investment Income (Loss)
 
 
 
 
 
 
 
 
 
 
Net Realized Gains (Losses)
 
$
43,524

 
$
26,529

 
$
78,943

 
189,858

 
365,324

Interest Income and Dividends
 
182,946

 
183,705

 
80,946

 
495,915

 
286,468

Total Realized Investment Income (Loss)
 
$
226,470

 
$
210,234

 
$
159,889

 
$
685,773

 
$
651,792



Page 7


OPERATING ASSETS, OPERATING LIABILITIES AND BOOK VALUE (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
OPERATING ASSETS (UNAUDITED)
 
 
 
 
 
 
As of
 
 
 
December 31, 2019
 
December 31, 2018
 
Operating Assets
 
 
 
 
 
Cash and Short-term Investments
 
$
2,783,905

 
$
2,502,239

 
Investments
 
13,026,387

(1) 
9,847,464

 
Net Unrealized Carried Interest
 
1,982,251

(2) 
1,223,084

(2) 
Tax Assets
 
111,719

 
561,114

 
Other Assets
 
3,716,189

 
3,453,735

 
Total Operating Assets
 
$
21,620,451

 
$
17,587,636

 
 
 
 
 
 
 
OPERATING LIABILITIES (UNAUDITED)
 
 
 
 
 
 
 
 
As of
 
 
 
December 31, 2019
 
December 31, 2018
 
Operating Liabilities
 
 
 
 
 
Debt Obligations - KKR (ex-KFN)
 
$
3,097,460

 
$
2,367,801

 
Debt Obligations - KFN
 
948,517

 
948,517

 
Tax Liabilities
 
169,997

 
174,395

 
Other Liabilities
 
514,236

 
590,981

 
Total Operating Liabilities
 
$
4,730,210

 
$
4,081,694

 
 
 
 
 
 
 
BOOK VALUE (UNAUDITED)
 
 
 
 
 
 
 
 
As of
 
 
 
December 31, 2019
 
December 31, 2018
 
Book Value
 
 
 
 
 
(+) Total Operating Assets
 
$
21,620,451

 
$
17,587,636

 
(-) Total Operating Liabilities
 
4,730,210

 
4,081,694

 
(-) Noncontrolling Interests
 
26,291

 
25,382

 
(-) Preferred Stock
 
500,000

 
500,000

 
Book Value
 
$
16,363,950

 
$
12,980,560

 
 
 
 
 
 
 
Book Value Per Adjusted Share
 
$
19.24

 
$
15.57

 
Adjusted Shares
 
850,388,924

 
833,938,476

 

 
 
 
 
Note: As of December 31, 2019, 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, 2019.

(1)
See schedule of investments that follows on the next page.
(2)
The following table provides net unrealized carried interest by business line:
 
 
As of
 
 
 
December 31, 2019
 
December 31, 2018
 
Private Markets Business Line
 
$
1,832,581

 
$
1,083,163

 
Public Markets Business Line
 
149,670

 
139,921

 
Total
 
$
1,982,251

 
$
1,223,084

 
 
 
 
 
 
 
 
 
 
 
 
 





Page 8


SCHEDULE OF INVESTMENTS (UNAUDITED) (1)
(Amounts in thousands, except percentage amounts)
 
 
As of December 31, 2019
 
 
 
Investments
 
Fair Value
 
 
 
Private Equity Funds / SMAs
 
$
4,914,559

Private Equity Co-Investments and Other Equity
 
3,641,702

Private Equity Total
 
8,556,261

 
 
 
Energy
 
714,635

Real Estate
 
1,076,838

Infrastructure
 
614,093

Real Assets Total
 
2,405,566

 
 
 
Special Situations
 
464,519

Private Credit
 
179,028

Alternative Credit Total
 
643,547

CLOs
 
646,597

Other Credit
 
60,135

Credit Total
 
1,350,279

 
 
 
Other
 
714,281

 
 
 
Total Investments
 
$
13,026,387

 
 
 
CHART-00185EBE7A585044A06.JPG


 
 
As of December 31, 2019
 
 
 
 
 
Significant Investments: (3)
 
Fair Value
 
Fair Value
as a % of Total Investments
Fiserv, Inc.
 
$
1,837,682

 
14.1
%
USI, Inc.
 
800,168

 
6.1
%
BridgeBio Pharma, LLC
 
513,989

 
3.9
%
Heartland Dental, LLC
 
423,157

 
3.2
%
PetVet Care Centers, LLC
 
413,420

 
3.2
%
Total Significant Investments
 
3,988,416

 
30.5
%
 
 
 
 
 
Other Investments
 
9,037,971

 
69.5
%
Total Investments
 
$
13,026,387

 
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 other 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 funds, core private equity funds and other opportunistic investments. Equity investments in other asset classes, such as energy, real estate, and alternative credit 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 a new fundraising) based on their fair values as of December 31, 2019. 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


ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Markets
Business Line
 
Public Markets
Business Line
 
Total
Quarter Ended December 31, 2019
 
 
 
 
 
 
September 30, 2019
 
$
114,368,500

 
$
94,058,500

 
$
208,427,000

New Capital Raised
 
3,876,600

 
3,801,900

 
7,678,500

Impact of Other Transactions
 
—

 
2,172,900

(1) 
2,172,900

Distributions and Other
 
(2,842,200
)
 
(1,726,600
)
(2) 
(4,568,800
)
Change in Value
 
3,871,800

 
773,700

 
4,645,500

December 31, 2019
 
$
119,274,700

 
$
99,080,400

 
$
218,355,100

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2019
 
 
 
 
 
 
December 31, 2018
 
$
103,396,500

 
$
91,323,900

 
$
194,720,400

New Capital Raised
 
12,097,800

 
13,419,600

 
25,517,400

Impact of Other Transactions
 
—

 
2,172,900

(1) 
2,172,900

Distributions and Other
 
(9,978,500
)
 
(9,608,600
)
(3) 
(19,587,100
)
Change in Value
 
13,758,900

 
1,772,600

 
15,531,500

December 31, 2019
 
$
119,274,700

 
$
99,080,400

 
$
218,355,100

 
 
 
 
 
 
 


FEE PAYING ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Markets
Business Line
 
Public Markets
Business Line
 
Total
Quarter Ended December 31, 2019
 
 
 
 
 
 
September 30, 2019
 
$
73,824,100

 
$
79,173,300

 
$
152,997,400

New Capital Raised
 
4,033,900

 
3,832,200

 
7,866,100

Impact of Other Transactions
 
—

 
2,172,900

(1) 
2,172,900

Distributions and Other
 
(837,300
)
 
(1,547,700
)
(4) 
(2,385,000
)
Net Changes in Fee Base of Certain Funds (5)
 
(240,500
)
 
—

 
(240,500
)
Change in Value
 
137,900

 
661,000

 
798,900

December 31, 2019
 
$
76,918,100

 
$
84,291,700

 
$
161,209,800

 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended December 31, 2019
 
 
 
 
 
 
December 31, 2018
 
$
66,830,000

 
$
74,177,700

 
$
141,007,700

New Capital Raised
 
14,076,800

 
13,878,500

 
27,955,300

Impact of Other Transactions
 
—

 
2,172,900

(1) 
2,172,900

Distributions and Other
 
(3,641,900
)
 
(7,248,200
)
(6) 
(10,890,100
)
Net Changes in Fee Base of Certain Funds (5)
 
(561,300
)
 
—

 
(561,300
)
Change in Value
 
214,500

 
1,310,800

 
1,525,300

December 31, 2019
 
$
76,918,100

 
$
84,291,700

 
$
161,209,800

 
 
 
 
 
 
 

 
 
 
 
(1)
Includes KKR's incremental pro rata portion of AUM and FPAUM of $2,172.9 million managed by Marshall Wace LLP due to an additional 5% interest acquired by KKR on November 22, 2019.
(2)
Includes $1,437.9 million of redemptions by fund investors.
(3)
Includes $7,657.3 million of redemptions by fund investors.
(4)
Includes $1,357.7 million of redemptions by fund investors.
(5)
Represents the impact of certain funds entering their post-investment period.
(6)
Includes $5,159.1 million of redemptions by fund investors.

Page 10


INVESTMENT VEHICLE SUMMARY (UNAUDITED)
As of December 31, 2019
(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
 
 
 
 
 
 
 
 
 
 
Americas Fund XII
1/2017
1/2023
 
$
13,500.0

$
7,061.9

5.8%
$
6,461.8

$
89.0

$
6,458.0

$
7,476.4

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

573.1

2.9%
9,579.6

10,334.2

5,632.8

9,782.4

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

247.4

2.1%
17,304.5

30,478.7

3,528.7

6,491.9

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

—

2.5%
6,000.0

14,123.1

—

6.1

European Fund V
3/2019
7/2025
 
6,277.7

6,277.7

1.8%
—

—

—

—

European Fund IV
12/2014
3/2019
 
3,507.2

239.9

5.7%
3,372.9

1,968.6

2,522.5

4,175.9

European Fund III (1)
3/2008
3/2014
 
5,507.1

147.3

5.2%
5,359.8

10,447.8

419.5

416.8

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

—

2.1%
5,750.8

8,507.4

—

34.3

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

5,011.8

5.6%
4,208.8

486.4

4,166.3

5,677.7

Asian Fund II
4/2013
4/2017
 
5,825.0

342.9

1.3%
6,495.2

3,907.4

4,413.1

6,499.1

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

—

2.5%
3,945.9

8,535.4

173.5

52.6

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

—

1.0%
1,010.0

805.5

524.7

461.8

Next Generation Technology Growth Fund II
12/2019
12/2025
 
2,033.3

2,033.3

7.4%
—

—

—

—

Next Generation Technology Growth Fund
3/2016
12/2019
 
658.9

33.8

22.5%
630.6

45.9

613.5

1,060.1

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

1,047.9

11.3%
360.4

82.4

289.3

560.7

Global Impact Fund
2/2019
2/2025
 
1,129.3

1,129.3

8.9%
—

—

—

—

Total Private Equity and Growth Funds
 
 
 
91,874.2

24,146.3

 
70,480.3

89,811.8

28,741.9

42,695.8

 
 
 
 
 
 
 
 
 
 
 
Co-Investment Vehicles and Other
Various
Various
 
9,157.3

2,853.6

Various
6,556.8

4,802.5

4,434.8

6,062.0

 
 
 
 
 
 
 
 
 
 
 
Total Private Equity
 
 
 
101,031.5

26,999.9

 
77,037.1

94,614.3

33,176.7

48,757.8

 
 
 
 
 
 
 
 
 
 
 
Core Investment Vehicles
Various
Various
 
9,500.0

5,010.3

36.8%
4,489.7

—

4,489.7

6,196.8

 
 
 
 
 
 
 
 
 
 
 
Real Assets
 
 
 
 
 
 
 
 
 
 
Energy Income and Growth Fund II
6/2018
6/2021
 
994.2

581.4

20.1%
416.3

3.4

413.1

427.7

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

59.3

12.9%
1,963.4

769.1

1,300.5

1,205.2

Natural Resources Fund (1)
Various
Various
 
887.4

0.9

Various
886.5

123.2

194.2

95.3

Global Energy Opportunities
Various
Various
 
914.1

242.6

Various
501.1

122.9

343.2

279.8

Global Infrastructure Investors III
6/2018
6/2024
 
7,140.6

5,088.7

3.8%
2,081.4

29.5

2,049.1

2,081.9

Global Infrastructure Investors II
10/2014
6/2018
 
3,039.6

177.2

4.1%
3,093.7

593.4

2,744.5

3,562.5

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

25.4

4.8%
1,047.6

1,316.2

377.9

867.5

Asia Pacific Infrastructure Investors
(2)
(3)
 
1,439.6

1,439.6

13.9%
—

—

—

—

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

964.5

7.8%
1,068.6

181.3

945.2

1,202.9

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

148.2

16.3%
1,010.7

1,268.6

266.3

249.0

Real Estate Partners Europe
9/2015
12/2019
 
706.7

274.6

9.3%
504.0

124.8

431.7

544.6

Real Estate Credit Opportunity Partners
2/2017
4/2019
 
1,130.0

122.2

4.4%
1,007.8

136.8

1,007.8

1,050.4

Co-Investment Vehicles and Other
Various
Various
 
5,023.8

3,209.6

Various
1,814.2

801.3

1,810.5

2,088.3

Total Real Assets
 
 
 
27,440.7

12,334.2

 
15,395.3

5,470.5

11,884.0

13,655.1

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (4)
 
 
 
2,333.9

2,333.9

Various
—

—

—

—

 
 
 
 
 
 
 
 
 
 
 
Private Markets Total
 
 
 
140,306.1

46,678.3

 
96,922.1

100,084.8

49,550.4

68,609.7

 
 
 
 
 
 
 
 
 
 
 
Public Markets Business Line (5)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alternative Credit
 
 
 
 
 
 
 
 
 
 
Special Situations Fund II
12/2014
3/2019
 
3,524.7

869.4

9.0%
2,655.3

497.8

2,435.0

2,448.6

Special Situations Fund
12/2012
1/2016
 
2,274.3

1.3

11.6%
2,273.0

1,527.3

1,431.8

1,049.5

Mezzanine Partners
3/2010
3/2015
 
1,022.8

102.7

4.4%
920.1

1,070.9

262.3

305.8

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

825.8

2.2%
1,419.3

76.6

1,419.3

1,532.9

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

840.8

1.7%
657.0

81.9

657.0

703.8

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

156.8

3.7%
1,179.1

1,090.1

529.9

435.7

Lending Partners
12/2011
12/2014
 
460.2

54.9

15.2%
405.3

445.7

121.6

46.2

Lending Partners Europe
3/2015
3/2019
 
847.6

242.7

5.0%
604.9

178.6

549.1

499.4

Total Alternative Credit
 
 
 
13,208.4

3,094.4

 
10,114.0

4,968.9

7,406.0

7,021.9

 
 
 
 
 
 
 
 
 
 
 
Other Alternative Credit Vehicles
Various
Various
 
10,738.3

5,924.6

Various
4,813.7

3,180.6

3,266.5

3,391.3

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (4)
 
 
 
285.6

285.6

Various
—

—

—

—

 
 
 
 
 
 
 
 
 
 
 
Public Markets Total
 
 
 
24,232.3

9,304.6

 
14,927.7

8,149.5

10,672.5

10,413.2

 
 
 
 
 
 
 
 
 
 
 
Total Eligible To Receive Carried Interest
 
 
 
$
164,538.4

$
55,982.9

 
$
111,849.8

$
108,234.3

$
60,222.9

$
79,022.9

 
 
 
 

(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)
Upon first investment of the fund.
(3)
Six years from first investment date.
(4)
Represents unallocated commitments from our strategic investor partnerships.
(5)
The "Commitment" and "Uncalled Commitments" columns include income that is eligible to be reinvested if permitted under the terms of the investment vehicle agreements.

Page 11


INVESTMENT VEHICLE SUMMARY (UNAUDITED) (CONTINUED)
As of December 31, 2019
(Amounts in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncalled
Commitments
 
Remaining
Fair Value
 
Total
 
 
 
 
 
 
 
Carried Interest Eligible
 
$
55,982.9

 
$
79,022.9

 
$
135,005.8

Incentive Fee Eligible
 
 
 
 
 
 
Hedge Fund Partnerships (1)
 
—

 
18,533.9

 
18,533.9

Business Development Companies (BDCs)
 
—

 
16,460.0

 
16,460.0

KKR Real Estate Finance Trust Inc.
 
—

 
1,171.9

 
1,171.9

Other
 
133.0

 
4,601.3

 
4,734.3

Total Carried Interest and Incentive Fee Eligible
 
56,115.9

 
119,790.0

 
175,905.9

Collateralized Loan Obligations (CLOs)
 
—

 
15,310.4

 
15,310.4

Leveraged Credit / Hedge Fund Partnerships (1) / Other
 
804.7

 
26,334.1

 
27,138.8

Total Assets Under Management
 
$
56,920.6

 
$
161,434.5

 
$
218,355.1

 
 
 
 
(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 $26,082.3 million, of which $18,533.9 million is incentive fee eligible.













KKR’S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
As of
 
 
December 31, 2019
 
 
 
December 31, 2018
Private Markets Business Line
 
$
4,551,500

 
 
 
$
4,966,600

Public Markets Business Line
 
689,700

 
 
 
307,400

Total
 
$
5,241,200

 
 
 
$
5,274,000

 
 
 
 
 
 
 
 
 
 
 
 
 
 


















Page 12


INFORMATION ON NON-GAAP AND OTHER MEASURES & DEFINTIONS (UNAUDITED)

KKR operates through one operating and reportable segment. Management makes operating decisions and assesses performance of our business prior to giving effect to the (i) allocation of income (loss) between KKR & Co. Inc. and KKR Holdings L.P.; (ii) consolidation of the investment funds and collateralized financing entities that KKR manages; and (iii) other consolidated entities that are not subsidiaries of KKR & Co. Inc.
KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP: after-tax distributable earnings, after-tax distributable earnings per adjusted share, book value, book value per adjusted share, operating assets, operating liabilities, operating revenues, operating expenses and fee related earnings. 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 businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP, if available. In addition, 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 similarly titled measures presented by other investment managers. These non-GAAP measures are presented in this earnings release as KKR’s operating results, which were previously referred to as segment results. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP, where applicable, are included in Exhibit A.
Adjusted shares represents shares of Class A common stock of KKR & Co. Inc. outstanding under GAAP adjusted to include shares issuable upon exchange of all units of KKR Holdings L.P. and any other securities exchangeable into Class A common stock of KKR & Co. Inc. that are eligible to receive a dividend (which excludes equity awards issued under the Equity Incentive Plans). We believe providing adjusted shares 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 is used in the calculation of after-tax distributable earnings per adjusted share and adjusted shares is used in the calculation of book value per adjusted share. Adjusted shares was previously referred to as "adjusted shares eligible for distribution."

After-tax distributable earnings is a non-GAAP measure of KKR’s earnings excluding mark-to-market gains (losses) after interest expense, preferred dividends, noncontrolling interests and income taxes paid. It is defined as the amount of net realized earnings of KKR for a given reporting period, after deducting equity-based compensation and the impact of non-recurring items. 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. 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. Income taxes paid represents 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. Income taxes paid also includes amounts paid pursuant to the tax receivable agreement.
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 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 non-GAAP measure of the net assets of KKR and is used by management primarily in assessing the unrealized value of KKR’s operating assets after deducting for operating liabilities, noncontrolling interests and preferred stock. We believe this measure is useful to stockholders as it provides additional insight into the net assets of KKR excluding those net assets that are allocated to noncontrolling interest holders and to the holders of the Series A and Series B Preferred Stock. Following the Conversion, KKR's book value includes the net impact of KKR's tax assets and liabilities as prepared under GAAP.
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.



Page 13


Distributable operating earnings is a non-GAAP measure that represents after-tax distributable earnings before interest expense, preferred dividends, income (loss) attributable to noncontrolling interests and income taxes paid. We believe distributable 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 KKR's operations.

Operating assets is a non-GAAP measure that represents cash and short-term investments, investments, unrealized carried interest, tax assets, and other assets of KKR presented on a basis that deconsolidates (i) KKR's investment funds and collateralized financing entities that KKR manages and (ii) other consolidated entities that are not subsidiaries of KKR & Co. Inc. We believe this measure is useful to stockholders as it provides additional insight into the assets of KKR that are used to operate its business lines. As used in this definition, 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.
Operating expenses is a non-GAAP measure that represents the expenses of KKR and is the sum of (i) compensation and benefits (excluding unrealized performance income compensation), (ii) occupancy and related charges and (iii) other operating expenses. KKR believes that operating expenses is useful to stockholders as it provides insight into the costs expended in connection with generating KKR's operating revenues.
Operating revenues is a non-GAAP measure that represents the realized revenues (which excludes unrealized carried interest and unrealized net gains (losses)) generated by KKR and is the sum of (i) fees and other, net, (ii) realized performance income (loss) and (iii) realized investment income (loss). KKR believes that operating revenues is useful to stockholders as it provides insight into the realized revenue generated by KKR's business lines.
Operating liabilities is a non-GAAP measure that represents the debt obligations of KKR (including KFN), tax liabilities, and other liabilities of KKR presented on a basis that deconsolidates (i) KKR's investment funds and collateralized financing entities that KKR manages and (ii) other consolidated entities that are not subsidiaries of KKR & Co. Inc. We believe this measure is useful to stockholders as it provides additional insight into the liabilities of KKR excluding the liabilities that are allocated to noncontrolling interest holders and to the holders of the Series A and Series B Preferred Stock.
Fee paying AUM ("FPAUM") represents only the AUM from which KKR is entitled to receive 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 is not entitled to receive a management fee are excluded (e.g., assets and commitments with respect to which it is entitled to receive only carried interest or is otherwise not currently entitled to receive 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 non-GAAP measure of earnings of KKR before performance income and investment income. KKR believes this measure may be useful to stockholders as it may provide additional insight into the profitability of KKR’s fee generating management companies and capital markets businesses. Fee related earnings is calculated as KKR’s total Fees and Other, Net, multiplied by KKR’s distributable operating margin. For purposes of the fee related earnings calculation, distributable operating margin is calculated as distributable operating earnings, before equity-based compensation, divided by total operating revenues.
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 14


EXHIBIT A
 
 
 
 
 
GAAP CLASS A COMMON STOCK OUTSTANDING AND ADJUSTED SHARES
 
 
 
 
 
The following table provides a reconciliation of KKR's Weighted Average GAAP Shares of Class A Common Stock Outstanding to Weighted Average Adjusted Shares:
 
 
 
 
 
 
 
Quarter Ended
 
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
 
Weighted Average GAAP Shares of Class A Common Stock Outstanding - Basic
 
555,379,973

(1) 
546,336,936

 
532,266,521

 
Adjustments:
 
 
 
 
 
 
 
Weighted Average KKR Holdings Units (2)
 
292,947,120

 
296,248,180

 
300,744,050

 
Weighted Average Adjusted Shares (3)
 
848,327,093

 
842,585,116

 
833,010,571

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
 
December 31, 2019
 
December 31, 2018
 
 
 
Weighted Average GAAP Shares of Class A Common Stock Outstanding - Basic
 
545,096,999

(1) 
514,102,571

 
 
 
Adjustments:
 
 
 
 
 
 
 
Weighted Average Other Securities (4)
 
—

 
881,800

 
 
 
Weighted Average KKR Holdings Units (2)
 
296,445,196

 
314,458,757

 
 
 
Weighted Average Adjusted Shares (3)
 
841,542,195

 
829,443,128

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table provides a reconciliation of KKR's GAAP Shares of Class A Common Stock Outstanding to Adjusted Shares:
 
 
 
 
 
 
 
 
 
 
 
As of
 
 
 
 
 
December 31, 2019
 
December 31, 2018
 
 
 
GAAP Shares of Class A Common Stock Outstanding
 
560,007,579

(1) 
534,857,237

 
 
 
Adjustments:
 
 
 
 
 
 
 
KKR Holdings Units (2)
 
290,381,345

 
299,081,239

 
 
 
Adjusted Shares (3)
 
850,388,924

 
833,938,476

 
 
 
 
 
 
 
 
 
 
 
Unvested Shares of Class A Common Stock
 
22,712,604

 
33,408,491

 
 
 















 
 
 
 

(1)
Includes 5.7 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 22, 2019.
(2)
Shares that may be issued by KKR & Co. Inc. upon exchange of units in KKR Holdings L.P. for KKR Class A common stock.
(3)
Amounts exclude unvested shares granted under the Equity Incentive Plans.
(4)
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.

Page 15


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 AND ADJUSTED EBITDA (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
Quarter Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock - Basic
 
$
0.93

 
$
0.44

 
$
(0.74
)
Weighted Average Shares of Class A Common Stock Outstanding - Basic
 
555,379,973

 
546,336,936

 
532,266,521

Net Income (Loss) Available to KKR & Co. Inc. Class A Common Stockholders
 
$
515,101

 
$
241,213

 
$
(392,982
)
(-) Excess of carrying value over consideration transferred on redemption of KFN 7.375% Series A LLC Preferred Shares
 
—

 
—

 
—

Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
515,101

 
$
241,213

 
$
(392,982
)
 
 
 
 
 
 
 
(+) Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P.
 
351,844

 
175,231

 
(303,468
)
(+) Equity-based and Other Compensation - KKR Holdings L.P.
 
22,836

 
22,539

 
13,153

(+) Amortization of Intangibles and Other, net
 
95,230

 
49,659

 
(31,898
)
(+) Non-recurring Costs (1)
 
—

 
22,839

 
—

(-) Unrealized Carried Interest
 
338,420

 
13,695

 
(938,597
)
(-) Net Unrealized Gains (Losses)
 
502,686

 
130,972

 
(805,165
)
(+) Unrealized Performance Income Compensation
 
140,852

 
9,281

 
(377,170
)
(+) Income Tax Expense (Benefit)
 
142,626

 
53,132

 
(143,294
)
(-) Income Taxes Paid
 
52,242

 
40,429

 
47,980

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
375,141

 
$
388,798

 
$
460,123

Weighted Average Adjusted Shares
 
848,327,093

 
842,585,116

 
833,010,571

After-tax Distributable Earnings Per Adjusted Share
 
$
0.44

 
$
0.46

 
$
0.55

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
375,141

 
$
388,798

 
$
460,123

 
 
 
 
 
 
 
(+) Equity-based Compensation (Equity Incentive Plans)
 
49,898

 
54,395

 
57,016

(+) Income (Loss) Attributable to Noncontrolling Interests
 
1,803

 
881

 
4,250

(+) Income Taxes Paid
 
52,242

 
40,429

 
47,980

(+) Preferred Dividends
 
8,341

 
8,341

 
8,341

(+) Core Interest Expense (2)
 
30,663

 
34,491

 
33,143

(+) Depreciation and Amortization
 
4,699

 
4,250

 
3,860

 
 
 
 
 
 
 
Adjusted EBITDA (3)
 
$
522,787

 
$
531,585

 
$
614,713

 
 
 
 
 
 
 


 
 
 
 

(1) 
Represents a non-recurring $22.8 million make-whole premium associated with KKR’s refinancing of its 2020 Senior Notes for the three months ended September 30, 2019.
(2) 
Core interest expense may be used by certain debt investors as an alternative measurement of interest expense incurred by KKR 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) 
Adjusted EBITDA may be useful to stockholders 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 noncontrolling interests.

Page 16


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 AND ADJUSTED EBITDA (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2019
 
December 31, 2018
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock - Basic
 
$
3.62

 
$
2.14

 
 
Weighted Average Shares of Class A Common Stock Outstanding - Basic
 
545,096,999

 
514,102,571

 
 
Net Income (Loss) Available to KKR & Co. Inc. Class A Common Stockholders
 
$
1,971,685

 
$
1,100,801

 
 
(-) 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
 
$
1,971,685

 
$
1,097,699

 

 
 
 
 
 
 
 
(+) Net Income (Loss) Attributable to Noncontrolling Interests held by KKR Holdings L.P.
 
1,369,671

 
561,052

 
 
(+) Equity-based and Other Compensation - KKR Holdings L.P.
 
91,296

 
100,632

 
 
(+) Amortization of Intangibles and Other, net
 
226,422

 
26,116

 
 
(+) Non-recurring Costs (1) 
 
22,839

 
11,501

 
 
(+) Realized Losses on Certain Investments (2)
 
—

 
729,425

 
 
(-) Unrealized Carried Interest
 
1,263,046

 
(756,467
)
 
 
(-) Net Unrealized Gains (Losses)
 
1,854,867

 
1,043,912

 
 
(+) Unrealized Performance Income Compensation
 
520,033

 
(295,794
)
 
 
(+) Income Tax Expense (Benefit)
 
528,750

 
(194,098
)
 
 
(-) Income Taxes Paid
 
207,479

 
151,848

 
 
 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
1,405,304

 
$
1,597,240

 

Weighted Average Adjusted Shares
 
841,542,195

 
829,443,128

 
 
After-tax Distributable Earnings Per Adjusted Share
 
$
1.67

 
$
1.93

 

 
 
 
 
 
 
 
After-tax Distributable Earnings
 
$
1,405,304

 
$
1,597,240

 

 
 
 
 
 
 
 
(+) Equity-based Compensation (Equity Incentive Plans)
 
207,789

 
242,811

 
 
(+) Income (Loss) Attributable to Noncontrolling Interests
 
4,907

 
8,807

 
 
(+) Income Taxes Paid
 
207,479

 
151,848

 
 
(+) Preferred Dividends
 
33,364

 
33,364

 
 
(+) Core Interest Expense (3)
 
128,387

 
127,763

 
 
(+) Depreciation and Amortization
 
17,653

 
14,993

 
 
 
 
 
 
 
 
 
Adjusted EBITDA (4)
 
$
2,004,883

 
$
2,176,826

 

 
 
 
 
 
 
 

 
 
 
 

(1)
For the year ended December 31, 2019, represents a non-recurring $22.8 million make-whole premium associated with KKR’s refinancing of its 2020 Senior Notes. For the year ended December 31, 2018, represents non-recurring costs in connection with the Conversion.
(2)
Represents losses on certain investments which were realized in the second quarter of 2018 in advance of the Conversion.
(3)
Core interest expense may be used by certain debt investors as an alternative measurement of interest expense incurred by KKR 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.
(4)
Adjusted EBITDA may be useful to stockholders 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 noncontrolling interests.

Page 17


EXHIBIT A (CONTINUED)
 
 
RECONCILIATION OF TOTAL GAAP REVENUES TO TOTAL OPERATING REVENUES (UNAUDITED)
(Amounts in thousands)
 
 
Quarter Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Total GAAP Revenues
 
$
1,063,071

 
$
790,485

 
$
(178,056
)
(+) Management Fees - Consolidated Funds and Other
 
115,723

 
108,922

 
186,931

(-) Fee Credits - Consolidated Funds
 
20,572

 
3,838

 
7,015

(-) Capital Allocation-Based Income (GAAP)
 
580,802

 
374,268

 
(719,639
)
(+) Realized Carried Interest
 
232,180

 
296,344

 
259,394

(+) Realized Investment Income (Loss)
 
226,470

 
210,234

 
159,889

(-) Revenue Earned by Other Consolidated Entities
 
25,742

 
29,838

 
26,843

(-) Expense Reimbursements
 
48,259

 
34,356

 
37,990

Total Operating Revenues
 
$
962,069

 
$
963,685

 
$
1,075,949

 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2019
 
December 31, 2018
 
 
Total GAAP Revenues
 
$
4,220,900

 
$
2,395,836

 
 
(+) Management Fees - Consolidated Funds and Other
 
464,190

 
457,314

 
 
(-) Fee Credits - Consolidated Funds
 
42,041

 
48,193

 
 
(-) Capital Allocation-Based Income (GAAP)
 
2,430,425

 
554,510

 
 
(+) Realized Carried Interest
 
1,070,788

 
1,218,647

 
 
(+) Realized Investment Income (Loss)
 
685,773

 
651,792

 
 
(-) Revenue Earned by Other Consolidated Entities
 
116,435

 
111,185

 
 
(-) Expense Reimbursements
 
169,416

 
146,989

 
 
Total Operating Revenues
 
$
3,683,334

 
$
3,862,712

 
 
RECONCILIATION OF TOTAL GAAP EXPENSES TO TOTAL OPERATING EXPENSES (UNAUDITED)
(Amounts in thousands)
 
 
Quarter Ended
 
 
December 31, 2019
 
September 30, 2019
 
December 31, 2018
Total GAAP Expenses
 
$
751,320

 
$
619,533

 
$
237,736

(-) Equity-based and Other Compensation - KKR Holdings L.P.
 
22,836

 
22,539

 
12,913

(-) Unrealized Performance Income Compensation
 
140,852

 
9,281

 
(377,170
)
(-) Amortization of Intangibles
 
373

 
383

 
672

(-) Reimbursable Expenses
 
56,453

 
38,515

 
50,339

(-) Operating Expenses relating to Other Consolidated Entities
 
47,808

 
38,233

 
44,550

(+) Other
 
(2,823
)
 
(33,672
)
 
1,806

Total Operating Expenses
 
$
480,175

 
$
476,910

 
$
508,238

 
 
 
 
 
 
 
 
 
Year Ended
 
 
 
 
December 31, 2019
 
December 31, 2018
 
 
Total GAAP Expenses
 
$
2,908,431

 
$
2,089,477

 
 
(-) Equity-based and Other Compensation - KKR Holdings L.P.
 
91,921

 
100,182

 
 
(-) Unrealized Performance Income Compensation
 
520,033

 
(295,794
)
 
 
(-) Amortization of Intangibles
 
1,674

 
7,700

 
 
(-) Reimbursable Expenses
 
196,694

 
176,126

 
 
(-) Operating Expenses relating to Other Consolidated Entities
 
187,056

 
179,818

 
 
(-) Non-recurring Costs (1)
 
—

 
11,501

 
 
(+) Other
 
(62,455
)
 
(25,870
)
 
 
Total Operating Expenses
 
$
1,848,598

 
$
1,884,074

 
 
(1) For the year ended December 31, 2018, represents non-recurring costs in connection with the Conversion.
 


Page 18


EXHIBIT A (CONTINUED)
 
 
 
 
 
 
 
 
 
 
RECONCILIATION OF CERTAIN GAAP TO NON-GAAP BALANCE SHEET MEASURES
(Amounts in thousands)
 
 
As of
 
 
December 31, 2019
 
December 31, 2018
Total GAAP Assets
 
$
60,899,319

 
$
50,743,375

(-) Impact of Consolidation of Funds and Other Entities
 
37,453,629

 
31,888,471

(-) Carry Pool Reclassification
 
1,448,879

 
922,977

(-) Other Reclassifications
 
376,360

 
344,291

Total Operating Assets
 
$
21,620,451

 
$
17,587,636

 
 
 
 
 
 
 
As of
 
 
December 31, 2019
 
December 31, 2018
Total GAAP Liabilities
 
$
30,396,945

 
$
25,360,766

(-) Impact of Consolidation of Funds and Other Entities
 
23,841,496

 
20,011,804

(-) Carry Pool Reclassification
 
1,448,879

 
922,977

(-) Other Reclassifications
 
376,360

 
344,291

Total Operating Liabilities
 
$
4,730,210

 
$
4,081,694

 
 
 
 
 
 
 
As of
 
 
December 31, 2019
 
December 31, 2018
KKR & Co. Inc. Stockholders' Equity - Common Stockholders
 
$
10,324,936

 
$
8,167,056

(+) Impact of Consolidation of Funds and Other Entities
 
327,826

 
205,502

(-) Other Reclassifications
 
17,446

 
17,446

(+) Noncontrolling Interests Held by KKR Holdings L.P.
 
5,728,634

 
4,625,448

Book Value
 
$
16,363,950

 
$
12,980,560



Page 19
No data