KKR & Co. Inc. (Form: 8-K, Received: 05/06/2020 06:49:22)
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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): May 6, 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 May 6, 2020, KKR & Co. Inc. issued an earnings release announcing its financial results for the quarter ended March 31, 2020.

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
Exhibit No.
Description
Exhibit 99.1
Exhibit 104

Cover Page Interactive Data File, formatted in Inline XBRL







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:
May 6, 2020
By:  /s/ Robert H. Lewin        
Name: Robert H. Lewin
Title: Chief Financial Officer
 
 
 









LOGOA13.JPG
KKR & Co. Inc. Reports First Quarter 2020 Results
__________________________________________________________________________________________________________________________________________________________________________
NEW YORK, May 6, 2020 - KKR & Co. Inc. (NYSE: KKR) today reported its first quarter 2020 results.

GAAP Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders(1) was $(1,288.9) million for the quarter ended March 31, 2020. On a diluted basis, Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock was $(2.31) for the quarter ended March 31, 2020. KKR & Co. Inc. Stockholders' Equity - Common Stockholders(1) was $8.8 billion as of March 31, 2020, or $15.97 Per Outstanding Share of Class A common stock.

After-tax Distributable Earnings and After-tax Distributable Earnings Per Adjusted Share were $355.3 million and $0.42, respectively, for the quarter ended March 31, 2020.

As of and for the quarter ended March 31, 2020:
After-tax Distributable Earnings Per Adjusted Share are 11% higher compared to the first quarter of 2019.
Assets Under Management and Fee Paying Assets Under Management were $207 billion and $159 billion, up 4% and 8%, respectively, over the last twelve months. Uncalled commitments were $58 billion, of which $19 billion will contribute to Fee Paying Assets Under Management as that capital is either invested or enters its investment period.
Book value was $13.9 billion or $16.52 per adjusted share.
A dividend of $0.135 per share of Class A common stock has been declared for the first quarter of 2020.  This is consistent with KKR’s previously announced decision to increase its annualized dividend per Class A Common stock by 8% from $0.50 to $0.54 beginning with this quarter.
From December 31, 2019 through May 6, 2020, KKR used a total of $286 million under its share repurchase plan; open market repurchases were made at an average cost of $24.14.  KKR announces an increase in its total available share repurchase reauthorization to $500 million, effective immediately.   

___________________________


“As we reflect on the quarter, we can’t help but pause to first express our gratitude for the sacrifices, efforts and professionalism exhibited by all essential workers, including the many who work for our portfolio companies, standing on the front lines of the COVID-19 pandemic,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. “Since February, we have seen more uncertainty and volatility than at any time since the financial crisis. KKR navigated the quarter well and our results bear testament to the strength of our business model. We are enormously proud of the dedication of our employees and believe we are well positioned to help our clients and communities for what lies ahead.”



 
 
 
 
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 $(1,288.9) million for the quarter ended March 31, 2020, compared to $701.0 million for the quarter ended March 31, 2019.
Revenues for the quarter ended March 31, 2020 were $(1,001.5) million compared to $1,187.5 million for the quarter ended March 31, 2019. The decrease is primarily driven by mark-to-market net carried interest losses in the current period due to economic and market impacts of COVID-19, partially offset by a higher level of management fees.
Expenses for the quarter ended March 31, 2020 were $(96.7) million compared to $728.8 million for the quarter ended March 31, 2019. The decrease is primarily driven by the reversal of previously recognized accrued carried interest compensation resulting from net carried interest losses in the current period.
Total investment income (loss) for the quarter ended March 31, 2020 was $(3,683.8) million compared to $1,335.9 million for the comparable period of 2019. The decrease is primarily due to unrealized investment losses from our investment portfolio driven by the impact of COVID-19 on the economic outlook and overall market environment.
KKR & Co. Inc. Stockholders’ Equity - Common Stockholders per Outstanding Share of Class A common stock was $15.97 as of March 31, 2020, down from $18.44 as of December 31, 2019. The decrease was primarily attributable to net depreciation in the value of our investment portfolio that is attributable to KKR & Co. Inc. and to a lesser extent dividends to Class A common stockholders.

___________________________
OPERATING RESULTS
AFTER-TAX DISTRIBUTABLE EARNINGS
After-tax distributable earnings was $355.3 million for the quarter ended March 31, 2020, compared with $314.1 million in the comparable prior period.
The increase was primarily due to an increase in realized investment income and an increase in management fees. Management fees were $331.8 million for the quarter ended March 31, 2020 compared with $292.3 million in the comparable prior period. The increase in management fees reflects an overall higher level of FPAUM in each of the Private Markets and Public Markets business lines. These increases were partially offset by an increase in compensation and benefits expense and a decrease in transaction fees.
BOOK VALUE PER ADJUSTED SHARE
Book value per adjusted share was $16.52 as of March 31, 2020, down 14%, compared with $19.24 as of December 31, 2019. The decrease was primarily attributable to net depreciation in the value of our investment portfolio primarily due to the market and economic impacts of COVID-19 and to a lesser extent dividends to our shareholders, net of after-tax distributable earnings. Our private equity portfolio appreciated 4% over the last twelve months.
___________________________
OPERATING METRICS
ASSETS UNDER MANAGEMENT
AUM was $207.1 billion as of March 31, 2020 compared to $218.4 billion as of December 31, 2019. The decrease was primarily attributable to a decrease in the value of our Private and Public Markets portfolios and distributions to limited partners in our private equity portfolio and redemptions in funds managed by our strategic partners. The decline in values in the quarter was primarily driven by the market and economic impacts of COVID-19. These decreases were partially offset by new capital raised in our private equity and real estate funds and leveraged credit investment vehicles.
FEE PAYING ASSETS UNDER MANAGEMENT
FPAUM was $159.1 billion as of March 31, 2020 compared to $161.2 billion as of December 31, 2019. The decrease was primarily driven by a decrease in the value of our Public Markets portfolio and distributions to limited partners in our private equity and real asset portfolios and distributions across various Public Markets strategies. This decrease was partially offset by new capital raised across multiple strategies including private credit, leveraged credit, real estate, infrastructure, and in funds managed by our strategic partners.



Page 2



DIVIDENDS AND OTHER
A dividend of $0.135 per share of Class A common stock has been declared for the first quarter of 2020, which will be paid on June 2, 2020 to holders of record of Class A common stock as of the close of business on May 18, 2020.
A dividend of $0.421875 per share of Series A Preferred Stock has been declared and set aside for payment on June 15, 2020 to holders of record of Series A Preferred Stock as of the close of business on June 1, 2020. A dividend of $0.406250 per share of Series B Preferred Stock has been declared and set aside for payment on June 15, 2020 to holders of record of Series B Preferred Stock as of the close of business on June 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.
Since the beginning of the year, KKR issued $750 million aggregate principal amount of senior notes through its finance subsidiaries, consisting of $500 million of 3.625% Senior Notes due 2050 issued on February 25, 2020 and $250 million of $3.750% Senior Notes due 2029 issued on April 21, 2020. These notes are unsecured and unsubordinated obligations of KKR.


___________________________

SHARE REPURCHASE ACTIVITY (1)  
Effective May 6, 2020, KKR increased the total available amount under its repurchase program to $500 million, 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 $1.3 billion to either repurchase shares or retire equity awards since the inception of KKR’s share repurchase plan on October 27, 2015 through May 6, 2020.
Share Repurchase Activity -- October 27, 2015 through May 6, 2020 (2)
(Amounts in millions, except per share amounts)
 
Inception to Date
Open Market Share Repurchases
 
52.3

Reduction of Shares for Retired Equity Awards (3)
 
18.0

Total Repurchased Shares and Retired Equity Awards
 
70.3

Total Capital Used
 
$
1,318

Average Price Paid Per Share (4)
 
$
18.75

Remaining Availability under Current Share Repurchase Plan
 
$
500


From December 31, 2019 through May 6, 2020, KKR used a total of approximately $286 million to repurchase 10.2 million shares in the open market and to retire equity awards representing 1.7 million shares that otherwise would have been issued to participants under the Equity Incentive Plans. During this period, open market purchases were made at an average cost of $24.14 per share. The timing, manner, price and amount of any common stock repurchases will be determined by KKR in its discretion and will depend on a variety of factors, including legal requirements, price and economic and market conditions. The program does not require KKR to repurchase any specific number of shares of common stock, and the program may be suspended, extended, modified or discontinued at any time.
 
 
 
 
(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 May 6, 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 Wednesday, May 6, 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 1299767, beginning approximately two hours after the broadcast.
A slide presentation containing supplemental commentary about KKR's financial results for the fiscal quarter ended March 31, 2020 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: the severity and duration of the COVID-19 pandemic; the pandemic's impact on the U.S. and global economies; federal, state and local governmental responses to the pandemic; 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, 2019, filed with the SEC on February 18, 2020, 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
 
 
March 31, 2020
 
March 31, 2019
Revenues
 
 
 
 
Fees and Other
 
$
380,572

 
$
372,548

Capital Allocation-Based Income (Loss)
 
(1,382,077
)
 
814,932

Total Revenues(1)
 
(1,001,505
)
 
1,187,480

Expenses
 
 
 
 
Compensation and Benefits
 
(262,137
)
 
544,562

Occupancy and Related Charges
 
16,322

 
14,690

General, Administrative and Other
 
149,123

 
169,515

Total Expenses(1)
 
(96,692
)
 
728,767

Investment Income (Loss)
 
 
 
 
Net Gains (Losses) from Investment Activities
 
(3,944,504
)
 
1,203,878

Dividend Income
 
168,699

 
22,625

Interest Income
 
353,455

 
358,511

Interest Expense
 
(261,469
)
 
(249,088
)
Total Investment Income (Loss)
 
(3,683,819
)
 
1,335,926

 
 
 
 
 
Income (Loss) Before Taxes
 
(4,588,632
)
 
1,794,639

 
 
 
 
 
Income Tax Expense (Benefit)
 
(360,679
)
 
167,593

 
 
 
 
 
Net Income (Loss)
 
(4,227,953
)
 
1,627,046

 
 
 
 
 
Net Income (Loss) Attributable to Noncontrolling Interests
 
(2,947,429
)
 
917,727

 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc.
 
(1,280,524
)
 
709,319

 
 
 
 
 
Preferred Stock Dividends
 
8,341

 
8,341

 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Class A Common Stockholders
 
$
(1,288,865
)
 
$
700,978

 
 
 
 
 
Net Income (Loss) Attributable to KKR & Co. Inc. Per Share of Class A Common Stock
 
 
 
 
Basic
 
$
(2.31
)
 
$
1.31

Diluted (2)
 
$
(2.31
)
 
$
1.27

Weighted Average Shares of Class A Common Stock Outstanding
 
 
 
 
Basic
 
559,149,821

 
533,892,474

Diluted (2)
 
559,149,821

 
550,046,440

 
GAAP CONDENSED CONSOLIDATED STATEMENTS OF FINANCIAL CONDITION (UNAUDITED)
(Amounts in thousands, except per share amounts)
 
 
 
 
 
 
 
 
 
 
As of
 
 
March 31, 2020
 
December 31, 2019
 
 
 
 
 
Assets
 
 
 
 
Cash and Cash Equivalents
 
$
1,982,292

 
$
2,346,713

Investments
 
48,601,127

 
54,936,268

Other Assets
 
5,017,656

 
3,616,338

Total Assets
 
$
55,601,075

 
$
60,899,319

 
 
 
 
 
Liabilities and Equity
 
 
 
 
Debt Obligations
 
$
26,265,381

 
$
27,013,284

Other Liabilities
 
2,745,664

 
3,383,661

Total Liabilities
 
29,011,045

 
30,396,945

 
 
 
 
 
Stockholders' Equity
 
 
 
 
KKR & Co. Inc. Stockholders' Equity - Preferred Stock
 
482,554

 
482,554

KKR & Co. Inc. Stockholders' Equity - Common Stock
 
8,843,408

 
10,324,936

Noncontrolling Interests
 
17,264,068

 
19,694,884

Total Equity
 
26,590,030

 
30,502,374

Total Liabilities and Equity
 
$
55,601,075

 
$
60,899,319

 
 
 
 
 
KKR & Co. Inc. Stockholders' Equity Per Outstanding Share of Class A Common Stock
 
$
15.97

 
$
18.44

 
 
 
 
(1)
Capital allocation-based income (loss) is earned from those arrangements whereby KKR serves as general partner and includes income from KKR's capital interest as well as "carried interest" which entitles KKR to a disproportionate allocation of investment income from investment funds' limited partners. During the first quarter of 2020, previously recognized carried interest and the associated carried interest compensation recorded in compensation and benefits were reversed resulting from the decline in investment returns in the period.
(2)
Consistent with prior quarters, 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 Partnership L.P. As required under GAAP, for the quarter ended March 31, 2020, 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
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Operating Revenues
 
 
 
 
 
 
Fees and Other, Net
 
 
 
 
 
 
Management Fees
 
$
331,758

 
$
317,131

 
$
292,296

Transaction Fees
 
98,420

 
255,511

 
186,727

Monitoring Fees
 
31,149

 
26,668

 
25,651

Fee Credits
 
(35,614
)
 
(108,662
)
 
(107,416
)
Total Fees and Other, Net
 
425,713


490,648

 
397,258

 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
Carried Interest
 
361,331

 
232,180

 
330,345

Incentive Fees
 
10,957

 
12,771

 
19,537

Total Realized Performance Income (Loss)
 
372,288


244,951

 
349,882

 
 
 
 
 
 
 
Realized Investment Income (Loss)
 
 
 
 
 
 
Net Realized Gains (Losses)
 
6,670

 
43,524

 
44,712

Interest Income and Dividends
 
138,494

 
182,946

 
58,207

Total Realized Investment Income (Loss)
 
145,164

 
226,470

 
102,919

 
 
 
 
 
 
 
Total Operating Revenues
 
$
943,165

 
$
962,069

 
$
850,059

 
OPERATING EXPENSES
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Operating Expenses
 
 
 
 
 
 
Compensation and Benefits (1)
 
$
377,230

 
$
357,740

 
$
340,286

Occupancy and Related Charges
 
14,114

 
14,302

 
13,957

Other Operating Expenses (2)
 
79,628

 
108,133

 
74,910

Total Operating Expenses
 
$
470,972

 
$
480,175

 
$
429,153

 
AFTER-TAX DISTRIBUTABLE EARNINGS
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
After-tax Distributable Earnings
 
 
 
 
 
 
(+) Total Operating Revenues
 
$
943,165

 
$
962,069

 
$
850,059

(-) Total Operating Expenses
 
470,972

 
480,175

 
429,153

(=) Total Distributable Operating Earnings
 
472,193

 
481,894

 
420,906

(-) Interest Expense
 
47,434

 
44,367

 
44,130

(-) Preferred Dividends
 
8,341

 
8,341

 
8,341

(-) Income (Loss) Attributable to Noncontrolling Interests
 
1,089

 
1,803

 
359

(-) Income Taxes Paid
 
60,035

 
52,242

 
53,993

After-tax Distributable Earnings
 
$
355,294

 
$
375,141

 
$
314,083

 
 
 
 
 
 
 
After-tax Distributable Earnings Per Adjusted Share
 
$
0.42

 
$
0.44

 
$
0.38

Weighted Average Adjusted Shares
 
847,471,874

 
848,327,093

 
832,750,892

 
 
 
 
 
 
 
Assets Under Management
 
$
207,076,900

 
$
218,355,100

 
$
199,503,300

Fee Paying Assets Under Management
 
$
159,056,200

 
$
161,209,800

 
$
147,685,300

Capital Invested and Syndicated Capital
 
$
5,162,100

 
$
9,833,000

 
$
5,825,000

Uncalled Commitments
 
$
58,194,100

 
$
56,920,600

 
$
58,102,600

 
 
 
 
 
 
 
Fee Related Earnings
 
$
236,153

 
$
271,210

 
$
222,351

 
 
 
 

(1)
Includes equity-based compensation of $51.0 million, $49.9 million, and $54.9 million for the quarters ended March 31, 2020, December 31, 2019, and March 31, 2019, respectively.
(2)
For the quarter 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
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Fees and Other, Net
 
 
 
 
 
 
Management Fees
 
$
217,260

 
$
201,760

 
$
183,221

Transaction Fees
 
16,868

 
122,601

 
99,017

Monitoring Fees
 
31,149

 
26,668

 
25,651

Fee Credits
 
(15,479
)
 
(83,170
)
 
(82,342
)
Total Fees and Other, Net
 
$
249,798

 
$
267,859

 
$
225,547

 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
Carried Interest
 
$
325,691

 
$
232,180

 
$
330,345

Incentive Fees
 
1,137

 
831

 
675

Total Realized Performance Income (Loss)
 
$
326,828

 
$
233,011

 
$
331,020

 
 
 
 
 
 
 
Assets Under Management
 
$
114,112,000

 
$
119,274,700

 
$
108,119,500

Fee Paying Assets Under Management
 
$
77,566,400

 
$
76,918,100

 
$
71,570,300

Capital Invested 
 
$
1,434,000

 
$
4,491,600

 
$
3,259,200

Uncalled Commitments
 
$
48,918,100

 
$
46,811,300

 
$
48,428,400

PUBLIC MARKETS BUSINESS LINE REVENUES & OPERATING METRICS
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Fees and Other, Net
 
 
 
 
 
 
Management Fees
 
$
114,498

 
$
115,371

 
$
109,075

Transaction Fees
 
21,369

 
26,142

 
27,456

Fee Credits
 
(20,135
)
 
(25,492
)
 
(25,074
)
Total Fees and Other, Net
 
$
115,732

 
$
116,021

 
$
111,457

 
 
 
 
 
 
 
Realized Performance Income (Loss)
 
 
 
 
 
 
Carried Interest
 
$
35,640

 
$

 
$

Incentive Fees
 
9,820

 
11,940

 
18,862

Total Realized Performance Income (Loss)
 
$
45,460

 
$
11,940

 
$
18,862

 
 
 
 
 
 
 
Assets Under Management
 
$
92,964,900

 
$
99,080,400

 
$
91,383,800

Fee Paying Assets Under Management
 
$
81,489,800

 
$
84,291,700

 
$
76,115,000

Capital Invested
 
$
3,642,100

 
$
4,034,000

 
$
2,227,100

Uncalled Commitments
 
$
9,276,000

 
$
10,109,300

 
$
9,674,200

CAPITAL MARKETS BUSINESS LINE REVENUES & OPERATING METRICS
 
 
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
 
 
 
 
 
 
Transaction Fees
 
$
60,183

 
$
106,768

 
$
60,254

 
 
 
 
 
 
 
Syndicated Capital
 
$
86,000


$
1,307,400


$
338,700

PRINCIPAL ACTIVITIES BUSINESS LINE REVENUES
 
 
 
 
 
Quarter Ended
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
Realized Investment Income (Loss)
 
 
 
 
 
 
Net Realized Gains (Losses)
 
$
6,670

 
$
43,524

 
$
44,712

Interest Income and Dividends
 
138,494

 
182,946

 
58,207

Total Realized Investment Income (Loss)
 
$
145,164

 
$
226,470

 
$
102,919



Page 7



OPERATING ASSETS, OPERATING LIABILITIES AND BOOK VALUE (UNAUDITED)
(Amounts in thousands, except share and per share amounts)
 
 
 
 
 
 
OPERATING ASSETS
 
 
 
 
 
 
As of
 
 
 
March 31, 2020
 
December 31, 2019
 
Operating Assets
 
 
 
 
 
Cash and Short-term Investments
 
$
2,502,331

 
$
2,783,905

 
Investments
 
11,492,564

(1) 
13,026,387

 
Net Unrealized Carried Interest
 
1,026,256

(2) 
1,982,251

(2) 
Tax Assets
 
507,508

 
111,719

 
Other Assets
 
4,192,643

 
3,716,189

 
Total Operating Assets
 
$
19,721,302

 
$
21,620,451

 
 
 
 
 
 
 
OPERATING LIABILITIES
 
 
 
 
 
 
 
 
As of
 
 
 
March 31, 2020
 
December 31, 2019
 
Operating Liabilities
 
 
 
 
 
Debt Obligations - KKR (ex-KFN)
 
$
3,592,286

 
$
3,097,460

 
Debt Obligations - KFN
 
948,517

 
948,517

 
Tax Liabilities
 
189,632

 
169,997

 
Other Liabilities
 
581,741

 
514,236

 
Total Operating Liabilities
 
$
5,312,176

 
$
4,730,210

 
 
 
 
 
 
 
BOOK VALUE
 
 
 
 
 
 
 
 
As of
 
 
 
March 31, 2020
 
December 31, 2019
 
Book Value
 
 
 
 
 
(+) Total Operating Assets
 
$
19,721,302

 
$
21,620,451

 
(-) Total Operating Liabilities
 
5,312,176

 
4,730,210

 
(-) Noncontrolling Interests
 
27,198

 
26,291

 
(-) Preferred Stock
 
500,000

 
500,000

 
Book Value
 
$
13,881,928

 
$
16,363,950

 
 
 
 
 
 
 
Book Value Per Adjusted Share
 
$
16.52

 
$
19.24

 
Adjusted Shares
 
840,179,251

 
850,388,924

 

 
 
 
 
Note: As of March 31, 2020, KKR had a (i) $1.0 billion revolving credit facility, which was undrawn, and (ii) $1.3 billion in revolving credit facilities for use in its capital markets business, which were also undrawn.

(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
 
 
 
March 31, 2020
 
December 31, 2019
 
Private Markets Business Line
 
$
1,022,228

 
$
1,832,581

 
Public Markets Business Line
 
4,028

 
149,670

 
Total
 
$
1,026,256

 
$
1,982,251

 
 
 
 
 
 
 
 
 
 
 
 
 





Page 8



SCHEDULE OF INVESTMENTS (UNAUDITED) (1)
(Amounts in thousands, except percentage amounts)
 
 
As of March 31, 2020
 
 
 
Investments
 
Fair Value
 
 
 
Private Equity Funds / SMAs
 
$
4,540,091

Private Equity Co-Investments and Other Equity
 
2,938,592

Private Equity Total
 
7,478,683

 
 
 
Energy
 
517,594

Real Estate
 
1,065,783

Infrastructure
 
601,339

Real Assets Total
 
2,184,716

 
 
 
Special Situations
 
345,852

Private Credit
 
121,809

Alternative Credit Total
 
467,661

CLOs
 
454,980

Other Credit
 
139,127

Credit Total
 
1,061,768

 
 
 
Other
 
767,397

 
 
 
Total Investments
 
$
11,492,564

 
 
 
CHART-BB4DEDAAC95458EB9CD.JPG


 
 
As of March 31, 2020
 
 
 
 
 
Significant Investments: (3)
 
Fair Value
 
Fair Value
as a % of Total Investments
Fiserv, Inc.
 
$
1,415,083

 
12.3
%
USI, Inc.
 
800,168

 
7.0
%
BridgeBio Pharma Inc.
 
425,355

 
3.7
%
Heartland Dental, LLC
 
392,931

 
3.4
%
PetVet Care Centers, LLC
 
389,101

 
3.4
%
Total Significant Investments
 
3,422,638

 
29.8
%
 
 
 
 
 
Other Investments
 
8,069,926

 
70.2
%
Total Investments
 
$
11,492,564

 
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 March 31, 2020. 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 March 31, 2020
 
 
 
 
 
 
December 31, 2019
 
$
119,274,700

 
$
99,080,400

 
$
218,355,100

New Capital Raised
 
4,182,000

 
2,909,200

 
7,091,200

Distributions and Other
 
(2,895,700
)
 
(1,964,900
)
(1) 
(4,860,600
)
Change in Value
 
(6,449,000
)
 
(7,059,800
)
 
(13,508,800
)
March 31, 2020
 
$
114,112,000

 
$
92,964,900

 
$
207,076,900

 
 
 
 
 
 
 
Trailing Twelve Months Ended March 31, 2020
 
 
 
 
 
 
March 31, 2019
 
$
108,119,500

 
$
91,383,800

 
$
199,503,300

New Capital Raised
 
13,583,900

 
12,733,700

 
26,317,600

Impact of Other Transactions
 

 
2,172,900

(2) 
2,172,900

Distributions and Other
 
(9,922,300
)
 
(7,959,600
)
(3) 
(17,881,900
)
Change in Value
 
2,330,900

 
(5,365,900
)
 
(3,035,000
)
March 31, 2020
 
$
114,112,000

 
$
92,964,900

 
$
207,076,900

 
 
 
 
 
 
 


FEE PAYING ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Private Markets
Business Line
 
Public Markets
Business Line
 
Total
Quarter Ended March 31, 2020
 
 
 
 
 
 
December 31, 2019
 
$
76,918,100

 
$
84,291,700

 
$
161,209,800

New Capital Raised
 
1,300,200

 
3,971,400

 
5,271,600

Distributions and Other
 
(1,083,500
)
 
(1,868,000
)
(4) 
(2,951,500
)
Change in Value
 
431,600

 
(4,905,300
)
 
(4,473,700
)
March 31, 2020
 
$
77,566,400

 
$
81,489,800

 
$
159,056,200

 
 
 
 
 
 
 
Trailing Twelve Months Ended March 31, 2020
 
 
 
 
 
 
March 31, 2019
 
$
71,570,300

 
$
76,115,000

 
$
147,685,300

New Capital Raised
 
9,218,600

 
13,707,100

 
22,925,700

Impact of Other Transactions
 

 
2,172,900

(2) 
2,172,900

Distributions and Other
 
(3,629,300
)
 
(6,868,200
)
(5) 
(10,497,500
)
Net Changes in Fee Base of Certain Funds (6)
 
(240,500
)
 

 
(240,500
)
Change in Value
 
647,300

 
(3,637,000
)
 
(2,989,700
)
March 31, 2020
 
$
77,566,400

 
$
81,489,800

 
$
159,056,200

 
 
 
 
 
 
 

 
 
 
 

(1)
Includes $1,494.3 million of redemptions by fund investors.
(2)
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.
(3)
Includes $5,767.5 million of redemptions by fund investors.
(4)
Includes $1,378.3 million of redemptions by fund investors.
(5)
Includes $4,948.8 million of redemptions by fund investors.
(6)
Represents the impact of certain funds entering their post-investment period.


Page 10



INVESTMENT VEHICLE SUMMARY (UNAUDITED)
As of March 31, 2020
(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

$
6,373.6

$
7,066.4

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

576.3

2.9%
9,579.6

11,299.6

5,303.6

7,470.0

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

247.4

2.1%
17,304.5

31,003.8

3,285.8

4,643.9

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
 
6,030.3

5,584.6

1.9%
717.9


717.9

465.4

European Fund IV
12/2014
3/2019
 
3,508.6

241.3

5.7%
3,372.9

1,968.6

2,472.7

3,658.4

European Fund III (1)
3/2008
3/2014
 
5,508.0

148.2

5.2%
5,359.8

10,463.6

396.9

235.3

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

4,928.2

5.6%
4,292.3

985.4

3,996.8

5,051.8

Asian Fund II
4/2013
4/2017
 
5,825.0

315.8

1.3%
6,522.4

4,051.2

4,345.1

5,466.4

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


2.5%
3,945.9

8,535.4

173.5

190.4

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


1.0%
1,010.0

805.5

549.1

450.8

Next Generation Technology Growth Fund II
12/2019
12/2025
 
2,088.3

2,088.3

7.2%




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

10.5

22.5%
653.9

45.9

603.3

979.7

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

906.2

11.3%
503.9

82.4

415.3

692.6

Global Impact Fund
2/2019
2/2025
 
1,242.2

1,156.5

8.1%
85.7


85.7

62.5

Total Private Equity and Growth Funds
 
 
 
91,797.0

23,265.2

 
71,561.4

91,960.9

28,719.3

36,474.0

 
 
 
 
 
 
 
 
 
 
 
Co-Investment Vehicles and Other
Various
Various
 
11,760.1

5,134.1

Various
6,802.5

4,852.1

4,455.6

5,414.8

 
 
 
 
 
 
 
 
 
 
 
Total Private Equity
 
 
 
103,557.1

28,399.3

 
78,363.9

96,813.0

33,174.9

41,888.8

 
 
 
 
 
 
 
 
 
 
 
Core Investment Vehicles
Various
Various
 
9,745.0

5,045.1

35.9%
4,699.9


4,699.9

6,271.2

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

587.6

20.1%
416.3

9.6

407.1

356.1

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

59.3

12.9%
1,963.4

781.9

1,287.7

726.1

Natural Resources Fund (1)
Various
Various
 
887.4

0.9

Various
886.5

123.2

194.2

41.1

Global Energy Opportunities
Various
Various
 
914.1

188.4

Various
501.3

128.2

338.0

193.8

Global Infrastructure Investors III
6/2018
6/2024
 
7,148.7

4,576.9

3.8%
2,623.4

51.5

2,584.8

2,501.7

Global Infrastructure Investors II
10/2014
6/2018
 
3,039.8

158.2

4.1%
3,117.7

847.1

2,554.9

3,979.6

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

25.4

4.8%
1,047.6

1,364.9

319.9

824.2

Asia Pacific Infrastructure Investors
1/2020
1/2026
 
1,759.5

1,759.5

14.2%




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

915.5

7.8%
1,164.7

342.5

993.7

1,116.7

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

148.2

16.3%
1,010.7

1,351.4

222.1

127.6

Real Estate Partners Europe
9/2015
12/2019
 
707.9

231.8

9.3%
548.0

146.1

475.3

543.2

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

122.2

4.4%
1,007.8

161.9

1,007.8

964.3

Property Partners Americas
12/2019
(2)
 
1,512.5

1,317.2

33.1%
195.3


195.3

196.8

Co-Investment Vehicles and Other
Various
Various
 
4,893.7

3,268.8

Various
1,624.9

831.3

1,621.2

1,838.8

Total Real Assets
 
 
 
29,152.5

13,359.9

 
16,107.6

6,139.6

12,202.0

13,410.0

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (3)
 
 
 
1,985.8

1,985.8

Various




 
 
 
 
 
 
 
 
 
 
 
Private Markets Total
 
 
 
144,440.4

48,790.1

 
99,171.4

102,952.6

50,076.8

61,570.0

 
 
 
 
 
 
 
 
 
 
 
Public Markets Business Line (4)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Alternative Credit
 
 
 
 
 
 
 
 
 
 
Special Situations Fund II
12/2014
3/2019
 
3,524.7

778.4

9.0%
2,746.3

588.8

2,460.5

1,872.8

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

1.3

11.6%
2,273.0

1,552.4

1,431.8

619.8

Mezzanine Partners
3/2010
3/2015
 
1,022.8

102.7

4.4%
920.1

1,081.8

261.5

194.4

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

654.3

2.2%
1,590.8

118.5

1,590.8

1,540.9

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

840.8

1.7%
657.0

108.9

657.0

641.8

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

156.8

3.7%
1,179.1

1,100.7

529.9

258.1

Lending Partners
12/2011
12/2014
 
460.2

54.9

15.2%
405.3

450.7

116.6

24.2

Lending Partners Europe
3/2015
3/2019
 
847.6

242.7

5.0%
604.9

178.6

548.7

387.5

Total Alternative Credit
 
 
 
13,208.4

2,831.9

 
10,376.5

5,180.4

7,596.8

5,539.5

 
 
 
 
 
 
 
 
 
 
 
Other Alternative Credit Vehicles
Various
Various
 
10,571.2

5,382.2

Various
5,189.0

3,282.5

3,522.2

3,011.5

 
 
 
 
 
 
 
 
 
 
 
Unallocated Commitments (3)
 
 
 
285.6

285.6

Various




 
 
 
 
 
 
 
 
 
 
 
Public Markets Total
 
 
 
24,065.2

8,499.7

 
15,565.5

8,462.9

11,119.0

8,551.0

 
 
 
 
 
 
 
 
 
 
 
Total Eligible To Receive Carried Interest
 
 
 
$
168,505.6

$
57,289.8

 
$
114,736.9

$
111,415.5

$
61,195.8

$
70,121.0

 
 
 
 

(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)
Open ended fund.
(3)
Represents unallocated commitments from our strategic investor partnerships.
(4)
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 March 31, 2020
(Amounts in millions)
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Uncalled
Commitments
 
Remaining
Fair Value
 
Total
 
 
 
 
 
 
 
Carried Interest Eligible
 
$
57,289.8

 
$
70,121.0

 
$
127,410.8

Incentive Fee Eligible
 
 
 
 
 
 
Hedge Fund Partnerships (1)
 

 
18,319.1

 
18,319.1

Business Development Companies (BDCs)
 

 
15,286.0

 
15,286.0

KKR Real Estate Finance Trust Inc.
 

 
1,171.9

 
1,171.9

Other
 
128.0

 
4,233.8

 
4,361.8

Total Carried Interest and Incentive Fee Eligible
 
57,417.8

 
109,131.8

 
166,549.6

Collateralized Loan Obligations (CLOs)
 

 
15,618.4

 
15,618.4

Leveraged Credit / Hedge Fund Partnerships (1) / Other
 
776.3

 
24,132.6

 
24,908.9

Total Assets Under Management
 
$
58,194.1

 
$
148,882.8

 
$
207,076.9

 
 
 
 
(1)
Represents KKR's pro rata portion of AUM of hedge fund managers in which KKR holds a minority ownership interest. Total AUM for Hedge Fund Partnerships is $25,347.3 million, of which $18,319.1 million is incentive fee eligible.













KKR’S PORTION OF TOTAL UNCALLED COMMITMENTS TO ITS INVESTMENT FUNDS
(Amounts in thousands)
 
 
 
 
 
 
 
 
 
As of
 
 
March 31, 2020
 
 
 
December 31, 2019
Private Markets Business Line
 
$
5,559,400

 
 
 
$
4,551,500

Public Markets Business Line
 
676,100

 
 
 
689,700

Total
 
$
6,235,500

 
 
 
$
5,241,200

 
 
 
 
 
 
 
 
 
 
 
 
 
 


















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. 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 adjusted 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.

After-tax distributable earnings is a non-GAAP performance measure of KKR’s earnings excluding mark-to-market gains (losses) after interest expense, preferred dividends, noncontrolling interests and income taxes paid. It is used by management to assess the net realized earnings of KKR for a given reporting period, after deducting equity-based compensation under the Equity Incentive Plans and adjusting to exclude the impact of non-recurring items, if any. 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 our strategic BDC partnership and the hedge fund and other managers in which KKR holds an 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 and other 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 and other managers in which KKR holds an 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 and other 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 performance 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. 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.
Distributable operating earnings is a non-GAAP performance 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.

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Operating assets is a non-GAAP performance measure that represents cash and short-term investments, investments, net 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 performance 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 performance 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 performance 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 supplemental performance 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 is the aggregate amount 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.




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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
 
 
 
March 31, 2020
 
December 31, 2019
 
March 31, 2019
 
Weighted Average GAAP Shares of Class A Common Stock Outstanding - Basic
 
559,149,821

 
555,379,973

 
533,892,474

 
Adjustments:
 
 
 
 
 
 
 
Weighted Average KKR Holdings Units (1)
 
288,322,053

 
292,947,120

 
298,858,418

 
Weighted Average Adjusted Shares (2)
 
847,471,874

 
848,327,093

 
832,750,892

 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
The following table provides a reconciliation of KKR's GAAP Shares of Class A Common Stock Outstanding to Adjusted Shares:
 
 
 
 
 
 
 
 
 
 
 
As of
 
 
 
 
 
March 31, 2020
 
December 31, 2019
 
 
 
GAAP Shares of Class A Common Stock Outstanding
 
553,701,980

 
560,007,579

 
 
 
Adjustments:
 
 
 
 
 
 
 
KKR Holdings Units (1)
 
286,477,271

 
290,381,345

 
 
 
Adjusted Shares (2)
 
840,179,251

 
850,388,924