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-- Economic Net Income After Taxes was $275 million for the third quarter of 2009, up from $181 million for the second quarter of 2009 and a loss of $(503) million for the third quarter of 2008.
-- Net Fee Related Earnings from Operations were $95 million for the third quarter of 2009, up from $87 million for the second quarter of 2009 and down from $152 million for the third quarter of 2008.
-- Adjusted Cash Flows From Operations were $132 million during the third quarter of 2009, up from $102 million for the second quarter of 2009 and up from a loss of $(9) million for the third quarter of 2008.
-- Fee-Earning Assets Under Management totaled $96.3 billion, up from $93.5 billion at June 30, 2009.
-- GAAP Net Loss Attributable to The Blackstone Group L.P. was $(176) million for the third quarter of 2009, including net IPO and acquisition-related charges of $201 million, compared to a GAAP Net Loss of $(340) million for the third quarter of 2008, which included net IPO and acquisition-related charges of $203 million.
-- Blackstone received an A+ rating with stable outlook from Fitch and remains A rated with stable outlook from Standard & Poor's. Blackstone executed its first bond issuance in the third quarter of 2009, issuing $600 million 10-year 6.625% notes.
-- Blackstone declares a quarterly priority distribution of $0.30 per common unit.
The Blackstone Group L.P. (NYSE: BX | Quote | Chart | News | PowerRating) today reported its third quarter 2009 results.
For the third quarter of 2009, Total Segment Revenues were $603.8 million, up $200.2 million from $403.6 million for the second quarter of 2009 and up $833.0 million from $(229.2) million for the third quarter of 2008. The year-over-year change was driven by net appreciation of the underlying portfolio investments in the Corporate Private Equity and Credit and Marketable Alternatives segments, as well as stabilization in the fair value of the Real Estate segment's underlying portfolio investments. These increases were partially offset by decreased advisory fees earned in the Financial Advisory segment. For the nine months ended September 30, 2009, Total Segment Revenues were $1.1 billion up significantly from $179.3 million for the same period in 2008.
Total Segment Expenses totaled $325.4 million, up from $230.8 million for the second quarter of 2009 and from $280.0 million for the third quarter of 2008. The largest component of segment expenses, Total Segment Compensation and Benefits was $249.9 million for the third quarter of 2009, up from $159.1 million for the second quarter of 2009 and from $197.9 million for the third quarter of 2008. The change from 2008 was driven by an increase in carried interest related compensation allocations and accruals in the Corporate Private Equity, Credit and Marketable Alternatives and Real Estate segments. Excluding the impact of carried interest allocations, Compensation and Benefits was $199.2 million for the third quarter of 2009, down from $226.1 million for the third quarter of 2008. Compensation and Benefits was $478.6 million for the nine months ended September 30, 2009, an increase from $461.1 million for the nine months ended September 30, 2008, reflecting an increase in carried interest accruals, partially offset by a decrease in personnel compensation of $30.9 million from 2008.
GAAP results for the third quarter of 2009 included Revenues of $597.0 million, up from $406.4 million for the second quarter of 2009 and $(160.3) million for the third quarter of 2008. Net Loss Attributable to The Blackstone Group L.P. was $(176.2) million, compared to $(164.3) million for the second quarter of 2009 and $(340.3) million for the third quarter of 2008. GAAP results for the nine months ended September 30, 2009 included Revenues of $1.0 billion, compared to $261.9 million for the nine months ended September 30, 2008, and Net Loss Attributable to The Blackstone Group L.P. of $(572.0) million, compared to $(747.9) million for the nine months ended September 30, 2008.
Most global equity and debt markets continued to move higher in the third quarter of 2009 as investors anticipated a bottoming of the global economy. Emerging markets experienced the greatest increase consistent with generally more favorable economic growth prospects as compared with the U.S. and Europe. Credit markets experienced similar improvement, as credit spreads tightened sharply. Credit delinquencies and charge-offs continue to be weak and unemployment, particularly in the U.S., remains high.
There has been some improvement in lending markets, with lower borrowing rates and an improved willingness on the part of banks to increase lending. Access to equity capital markets has improved and volumes of both IPOs and secondary equity markets have increased considerably throughout 2009. If these favorable trends are sustained, Blackstone's funds could participate in an increased number of acquisitions and dispositions.
Commercial real estate trends in the U.S. and Europe continued to worsen in the third quarter of 2009, with lower occupancy and pricing trends. Global hospitality trends also declined, including revenue per available room ("RevPAR"), an important hospitality industry metric. Commodities prices were relatively flat during the third quarter although materially higher than one year ago. The dollar continued to weaken against most global currencies, although it rose modestly against the Pound Sterling.
Stephen A. Schwarzman, Chairman and Chief Executive Officer, said, "It has been just over a year since the onset of the global financial crisis. Equity and debt markets have continued to heal, many companies have reduced expenses and inventory levels, the cost of borrowing has declined and the availability of credit is slowly increasing. We believe the worst is behind us though a recovery could be gradual and uneven. We see many opportunities to deploy our substantial available capital across each of our asset management businesses with attractive potential risk-return for our fund investors."
The table below details Blackstone's Economic Net Income, Net Fee Related Earnings from Operations, Adjusted Cash Flows from Operations and Fee-Earning Assets Under Management as of and for the three and nine months ended September 30, 2009 and 2008. Economic Net Income, Total Segments includes unrealized gains (losses) and the direct compensation impact related to those gains/losses, but excludes IPO and acquisition-related charges.
Three Months Ended Variance Nine Months Ended Variance
September 30, September 30,
2009 2008 $ % 2009 2008 $ %
(Dollars in Thousands, Except per Unit Amounts)
Economic Net Income, $ 278,357 $ (509,266 ) $ 787,623 155 % $ 357,918 $ (502,908 ) $ 860,826 171 %
Total Segments
Provision (Benefit) for 3,009 (6,720 ) 9,729 145 % (15,836 ) (99,491 ) 83,655 84 %
Income Taxes (a)
Economic Net Income, $ 275,348 $ (502,546 ) $ 777,894 155 % $ 373,754 $ (403,417 ) $ 777,171 193 %
After Taxes
Economic Net Income, After $ 0.25 $ (0.45 ) $ 0.69 NM $ 0.33 $ (0.36 ) $ 0.69 NM
Taxes per Adjusted Unit (b)
Net Fee Related Earnings from $ 94,939 $ 151,810 $ (56,871 ) -37 % $ 271,247 $ 309,814 $ (38,567 ) -12 %
Operations
Adjusted Cash Flows from $ 131,934 $ (9,001 ) $ 140,935 NM $ 309,014 $ 148,122 $ 160,892 109 %
Operations
Fee-Earning Assets Under Management:
Corporate Private Equity $ 25,184,161 $ 25,349,192 $ (165,031 ) -1 %
Real Estate 23,692,257 22,576,659 1,115,598 5 %
Credit and Marketable Alternatives (c) 47,448,212 51,799,414 (4,351,202 ) -8 %
Total Fee-Earning Assets Under $ 96,324,630 $ 99,725,265 $ (3,400,635 ) -3 %
Management
____________________
(a) Represents the implied provision (benefit) for income taxes calculated using the same methodology applied in calculating the tax provision for The Blackstone Group L.P.
(b) Adjusted Units represents the weighted-average fully diluted unit count for Economic Net Income purposes. A reconciliation of this item to the equivalent GAAP measure is presented in Exhibit 5 to this release.
(c) The variance of $4.4 billion is partially attributed to a $2.8 billion decrease in Fee-Earning Assets Under Management related to Blackstone's decision to restructure its Credit and Marketable Alternatives segment and liquidate its single manager proprietary hedge funds.
SEGMENT REVIEW
Corporate Private Equity
Corporate Private Equity had revenues of $226.9 million for the third quarter of 2009, compared with revenues of $198.6 million for the second quarter of 2009 and $(68.3) million for the third quarter of 2008. The change from 2008 was driven principally by an increase in performance fees which was attributable to the net appreciation in the fair value of the segment's underlying portfolio investments, particularly in publicly traded investments and consumer and energy sector investments. The fair value of the Corporate Private Equity portfolio appreciated by 5% in the third quarter of 2009, versus net depreciation of 8% in the third quarter of 2008.
Net Fee Related Earnings from Operations were $21.2 million for the third quarter of 2009, down from $23.9 million for the second quarter of 2009 and up from $16.2 million for the third quarter of 2008. The change from 2008 primarily reflected an increase in fee related revenues. Economic Net Income was $135.7 million for the third quarter of 2009, up from $123.8 million for the second quarter of 2009 and up from negative $(126.5) million for the third quarter of 2008.
Compensation and Benefits expense increased to $69.9 million from $54.3 million for the second quarter of 2009 and $34.2 million for the third quarter of 2008. The change from 2008 was primarily due to an increase in compensation related to carried interest allocations. Other Operating Expenses of $21.3 million remained consistent with the second quarter of 2009 and down from $24.0 million for the third quarter of 2008 reflecting Blackstone's ongoing focus on non-compensation expenses.
Fee-Earning Assets Under Management were relatively unchanged at $25.2 billion compared with the second quarter of 2009 and the third quarter of 2008.
Transaction activity has increased recently in terms of both new commitments as well as realizations. At September 30, 2009, $1.3 billion of Limited Partner Capital had been committed to deals by the segment's funds and not yet deployed. Subsequent to the end of the third quarter of 2009, over $600 million of Limited Partner Capital was committed to new transactions. The segment's funds also closed or announced four realizations in the third quarter of 2009 and subsequently. In addition, the funds are examining several opportunities for initial public offerings.
Limited Partner Capital Deployed totaled $109.1 million for the third quarter of 2009, including new and follow-on investments, a decrease from $338.3 million for the second quarter of 2009 and $1.5 billion deployed for the third quarter of 2008.
Corporate Private Equity had nine-month revenues of $493.6 million, compared with negative revenues of $(92.6) million in the same period of 2008. The principal driver of the year-over-year change was an increase in performance fees and investment income as a result of net appreciation in the fair value of the portfolio investments, principally publicly-traded portfolio investments and certain portfolio investments in the energy, healthcare and consumer sectors, as well as gains related to foreign currency fluctuations.
Real Estate
Real Estate had revenues of $100.2 million for the third quarter of 2009, compared with revenues of negative $(18.9) million for the second quarter of 2009 and $(273.7) million for the third quarter of 2008. The change from 2008 was due to positive performance fees accrued, driven by the performance of certain debt strategy portfolio investments as well as stabilization in the fair value of the segment's underlying portfolio investments. The fair value of the Real Estate portfolio depreciated by 0.4% in the third quarter of 2009, versus 10% in the third quarter of 2008.
Net Fee Related Earnings from Operations were $33.4 million in the third quarter of 2009, up from $32.9 million for the second quarter of 2009 and $32.7 million for the third quarter of 2008. Economic Net Income was $44.2 million for the third quarter of 2009, an improvement from $(25.1) million for the second quarter of 2009 and $(309.6) million for the third quarter of 2008.
Compensation and Benefits were $42.5 million compared to $(6.8) million for the second quarter of 2009 and $21.1 million for the third quarter of 2008. The change from 2008 was due to a decrease in reversals of prior period carried interest allocations to certain personnel in the third quarter of 2009. Other Operating Expenses of $13.4 million remained consistent with the second quarter of 2009 and down from $14.8 million for the third quarter of 2008 reflecting Blackstone's ongoing focus on non-compensation expenses.
Fee-Earning Assets Under Management increased $167.1 million from the second quarter of 2009 and $1.1 billion from the third quarter of 2008 to $23.7 billion.
The Real Estate funds have seen an increase in potential investment opportunities in recent months. At September 30, 2009, $179.7 million of Limited Partner Capital had been committed to deals by the segment's funds and not yet deployed. Subsequent to the end of the third quarter of 2009, over $165 million of the Limited Partner Capital committed has been deployed and over $375 million of Limited Partner Capital was committed to or is under letter of intent by the funds with regard to new transactions.
Limited Partner Capital Deployed totaled $35.0 million for the third quarter of 2009, a decrease from $252.7 million and $131.1 million deployed during the second quarter of 2009 and third quarter of 2008, respectively.
Real Estate had negative nine-month revenues of $(131.3) million, compared with negative revenues of $(240.2) million for the nine months ended September 30, 2008. The principal drivers of the year-over-year change was a reduction in the reversal of Blackstone's prior period carried interest allocations and an increase in Base Management Fees, a function of an increase in Fee-Earning Assets Under Management.
Credit and Marketable Alternatives (CAMA)
CAMA had revenues of $179.4 million, compared with $140.4 million for the second quarter of 2009 and negative revenues of $(48.0) million for the third quarter of 2008. The change from 2008 was due primarily to improved returns on the segment's fund of hedge funds and credit-oriented funds, resulting in positive performance fees and allocations and investment income for the third quarter of 2009.
The fund of hedge funds posted a composite net return of 5.5% for the third quarter of 2009 and 12.9% for the nine months ended September 30, 2009. The credit-oriented hedge funds posted a composite net return of 13.0% for the third quarter of 2009 and 22.5% for the nine months ended September 30, 2009. The segment's mezzanine funds posted a composite net return of 5.7% for the third quarter of 2009 and 11.7% for the nine months ended September 30, 2009.
Net Fee Related Earnings from Operations were $24.0 million for the third quarter of 2009, a decrease from $25.2 million for the second quarter of 2009 and from $42.4 million for the third quarter of 2008. The main driver of the decline from 2008 was a decrease in Base Management Fees, partially attributable to Blackstone's restructuring of its proprietary single manager hedge funds, partially offset by a reduction in Compensation and Benefits and Other Operating Expenses. Economic Net Income was $81.5 million for the third quarter of 2009 compared to $66.5 million for the second quarter of 2009 and a loss of $(134.3) million for the third quarter of 2008.
Compensation and Benefits were $79.8 million, up from $57.4 million in the second quarter of 2009 and $60.3 million in the third quarter of 2008. The increase from the third quarter of 2008 was principally driven by carried interest allocations to certain personnel due to positive returns on certain of Blackstone's credit-related funds, partially offset by a decline in personnel compensation. Other Operating Expenses of $18.1 million were down from $26.1 million for the third quarter of 2008 reflecting Blackstone's ongoing focus on non-compensation expenses.
Fee-Earning Assets Under Management in the third quarter of 2009 totaled $47.4 billion compared with $44.7 billion for the second quarter of 2009 and $51.8 billion for the third quarter of 2008. The decrease from 2008 was principally due to redemptions and the liquidation of certain of Blackstone's proprietary single manager hedge funds.
Limited Partner Capital Deployed in certain carry credit-oriented funds totaled $87.3 million for the third quarter of 2009, down from $112.1 million for the second quarter of 2009 and $657.6 million for the third quarter of 2008. The decrease was related to a reduction in new investment activity in certain of Blackstone's credit-oriented funds as a result of a reduction in completed leveraged finance transactions.
CAMA had revenues of $419.0 million for the nine months ended September 30, 2009 compared with revenues of $207.3 million for the same period of 2008. The increase was primarily driven by improved returns on Blackstone's investment in its funds of hedge funds and its credit-oriented and proprietary hedge funds during the nine months ended September 30, 2009 compared to the nine months ended September 30, 2008.
Financial Advisory
Revenues were $97.3 million for the third quarter of 2009, an increase from $83.5 million for the second quarter of 2009 and a decrease from $160.7 million for the third quarter of 2008. The change from 2008 was primarily driven by a decrease in fees generated by Blackstone's fund placement business. Fees earned in the fund placement business decreased $41.7 million the market for new capital raising remained challenged with capital raised at cyclical lows. Fees generated by the corporate and mergers and acquisitions advisory services and the restructuring and reorganization advisory services businesses decreased $20.8 million from the third quarter of 2008 due principally to large transactions fees earned in the third quarter of 2008. The fees generated by these businesses increased $7.7 million from the second quarter of 2009 due to continued strong demand for Blackstone's advisory services.
Net Fee Related Earnings from Operations were $16.4 million for the third quarter of 2009, an increase from $4.9 million for the second quarter of 2009 and a decrease from $60.5 million for the third quarter of 2008. The primary catalyst for the decrease from 2008 was lower advisory fees, partially offset by a decrease in Compensation and Benefits as a portion of compensation is directly related to the profitability of each of the advisory services businesses. Economic Net Income was $17.0 million for the third quarter of 2009 compared to $7.5 million for the second quarter of 2009 and $61.1 million for the third quarter of 2008.
Compensation and Benefits were $57.7 million, up from $54.2 million for the second quarter of 2009 and down from $82.3 million for the third quarter of 2008.
Revenues were $271.9 million for the nine months ended September 30, 2009, a decrease from $304.8 million in the same period of 2008. The change was driven by decreased fees generated by the fund placement business of $84.8 million, partially offset by an increase in fees earned by the restructuring and reorganization advisory services business of $45.0 million and the corporate and mergers and acquisitions advisory services business of $11.2 million.
CAPITAL AND LIQUIDITY
For Economic Net Income purposes, the weighted-average fully diluted unit count (the "Adjusted Units") for the three and nine month periods ended September 30, 2009 was 1,119.8 million units and 1,125.2 million units, respectively. The weighted-average fully diluted unit count for the three and nine month periods ended September 30, 2008 was 1,129.0 million units and 1,129.0 million units, respectively.
The total number of units used in calculating cash distributions was 1,091.9 million units for the nine month period ended September 30, 2009 and 1,085.8 million units for the nine month period ended September 30, 2008.
On August 13, 2009, Blackstone issued a ten-year debt obligation of $600 million at 6.625% and continues to maintain its $850 million revolving credit-facility, against which it has no outstanding borrowings. As of September 30, 2009, Blackstone had $486.5 million in cash, $1 billion invested in high grade liquid debt strategies and $492.5 million invested in liquid Blackstone Funds, against $673.4 million in outstanding borrowings.
DISTRIBUTION
The Blackstone Group L.P. has declared a quarterly distribution of $0.30 per common unit to record holders of common units at the close of business on November 30, 2009. This distribution will be paid on December 11, 2009.
Public common unitholders will continue to receive a priority distribution ahead of Blackstone personnel and others through 2009, but the amount of those distributions in respect of 2009 will be based on the amount of Adjusted Cash Flows from Operations generated in 2009 available for distributions and could fall below $1.20.
No distributions will be paid in respect of the third quarter of 2009 to Blackstone personnel and others with respect to their Blackstone Holdings partnership units.
# # #
Blackstone will host a conference call on November 6, 2009 at 11:00 a.m. ET to discuss third quarter 2009 results. The conference call can be accessed by dialing (888) 713-4215 (U.S. domestic) or +1 (617) 213-4867 (international) pass code 80408635. Additionally, the conference call will be broadcast live over the internet and can be accessed by all interested parties through the Investor Relations section of The Blackstone Group's website http://ir.blackstone.com. For those unable to listen to the live broadcast, a replay will be available on Blackstone's website or by dialing (888) 286-8010 (U.S. domestic) or +1 (617) 801-6888 (international) conference ID number 88974763, beginning approximately two hours after the event.
About The Blackstone Group
Blackstone is one of the world's leading investment and advisory firms. We seek to create positive economic impact and long-term value for our investors, the companies we invest in, the companies we advise and the broader global economy. We do this through the commitment of our extraordinary people and flexible capital. Our alternative asset management businesses include the management of private equity funds, real estate funds, funds of hedge funds, credit-oriented funds, collateralized loan obligation vehicles (CLOs) and closed-end mutual funds. The Blackstone Group also provides various financial advisory services, including mergers and acquisitions advisory, restructuring and reorganization advisory and fund placement services. Further information is available at www.blackstone.com.
Forward-Looking Statements
This release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 which reflect Blackstone's current views with respect to, among other things, Blackstone's operations and financial performance. You can identify these forward-looking statements by the use of words such as "outlook," "believes," "expects," "potential," "continues," "may," "will," "should," "seeks," "approximately," "predicts," "intends," "plans," "estimates," "anticipates" or the negative version of these words or other comparable words. Such forward-looking statements are subject to various risks and uncertainties. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Blackstone believes these factors include but are not limited to those described under the section entitled "Risk Factors" in its Annual Report on Form 10-K for the fiscal year ended December 31, 2008, as such factors may be updated from time to time in its periodic filings with the SEC, which are accessible on the SEC's website at www.sec.gov. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release and in the prospectus. Blackstone undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
This release does not constitute an offer of any Blackstone Fund.
THE BLACKSTONE GROUP L.P.
Exhibit 1a.Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Unit Data)
Three Months Ended September 30,
2009 2008
Revenues
Management and Advisory Fees $ 367,605 $ 447,373
Performance Fees and Allocations 154,013 (416,076 )
Investment Income (Loss) (a) 64,809 (199,485 )
Interest Income and Other 10,596 7,934
Total Revenues 597,023 (160,254 )
Expenses
Compensation and Benefits (b) 980,628 991,521
Interest (c) 5,258 5,893
General, Administrative and Other (d) 110,641 121,842
Fund Expenses 1,267 13,442
Total Expenses 1,097,794 1,132,698
Other Income
Net Gains (Losses) from Fund Investment 73,812 (550,755 )
Activities
Income (Loss) Before Provision (Benefit) for Taxes (e) (426,959 ) (1,843,707 )
Provision (Benefit) for Taxes 52,551 (21,362 )
Net Income (Loss) (479,510 ) (1,822,345 )
Net Income (Loss) Attributable to Redeemable Non-Controlling 50,281 (441,381 )
Interests in Consolidated Entities
Net Income (Loss) Attributable to Non-Controlling Interests in 3,622 (37,208 )
Consolidated Entities
Net Income (Loss) Attributable to Non-Controlling Interests in (357,230 ) (1,003,425 )
Blackstone Holdings
Net Income (Loss) Attributable to The Blackstone Group L.P. (f) $ (176,183 ) $ (340,331 )
Net Loss per Common Unit, Basic and Diluted
Common Units Entitled to Priority Distributions $ (0.61 ) $ (1.26 )
Common Units Not Entitled to Priority Distributions $ (0.91 ) $ (1.56 )
____________________
Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss) $ 11,935 $ (9,539 )
(b) Total Compensation and Benefits $ 980,628 $ 991,521
Less: Compensation and Benefits - IPO and acquisition-related $ 730,726 $ 793,665
Compensation - non-IPO and acquisition-related (*) $ 249,902 $ 197,856
(c) Interest $ 902 $ 851
(d) General, Administrative and Other $ 39,527 $ 51,799
(e) Total IPO and acquisition-related charges $ 759,220 $ 855,854
(f) Total IPO and acquisition-related charges attributable to The $ 201,141 $ 202,826
Blackstone
Group L.P., net of tax
____________________
(*) Principally comprised of base pay, bonus, net carried interest
allocations,
benefits and non-IPO and acquisition-related equity-based
compensation.
THE BLACKSTONE GROUP L.P.
Exhibit 1b.Condensed Consolidated Statements of Operations
(Dollars in Thousands, Except Per Unit Data)
Nine Months Ended September 30,
2009 2008
Revenues
Management and Advisory Fees $ 1,049,606 $ 1,094,941
Performance Fees and Allocations 10,936 (618,485 )
Investment Income (Loss) (a) (28,593 ) (238,077 )
Interest Income and Other 16,404 23,542
Total Revenues 1,048,353 261,921
Expenses
Compensation and Benefits (b) 2,730,726 2,997,476
Interest (c) 6,744 14,326
General, Administrative and Other (d) 328,517 324,580
Fund Expenses 5,871 58,187
Total Expenses 3,071,858 3,394,569
Other Income (Loss)
Net Gains (Losses) from Fund Investment 97,353 (576,713 )
Activities
Income (Loss) Before Provision (Benefit) for Taxes (e) (1,926,152 ) (3,709,361 )
Provision (Benefit) for Taxes 81,167 (38,232 )
Net Income (Loss) (2,007,319 ) (3,671,129 )
Net Income (Loss) Attributable to Redeemable Non-Controlling 90,515 (494,207 )
Interests in Consolidated Entities
Net Income (Loss) Attributable to Non-Controlling Interests in (33,450 ) (45,182 )
Consolidated Entities
Net Income (Loss) Attributable to Non-Controlling Interests in (1,492,343 ) (2,383,885 )
Blackstone Holdings
Net Income (Loss) Attributable to The Blackstone Group L.P. (f) $ (572,041 ) $ (747,855 )
Net Loss per Common Unit, Basic and Diluted
Common Units Entitled to Priority Distributions $ (2.05 ) $ (2.81 )
Common Units Not Entitled to Priority Distributions $ (2.95 ) $ (1.56 )
____________________
Net IPO and acquisition-related charges included above were:
(a) Investment Income (Loss) $ 32,729 $ (1,509 )
(b) Total Compensation and Benefits $ 2,730,726 $ 2,997,476
Less: Compensation and Benefits - IPO and acquisition-related $ 2,252,096 $ 2,536,341
Compensation - non-IPO and acquisition-related (*) $ 478,630 $ 461,135
(c) Interest $ 2,638 $ 3,202
(d) General, Administrative and Other $ 119,130 $ 126,012
(e) Total IPO and acquisition-related charges $ 2,341,135 $ 2,667,064
(f) Total IPO and acquisition-related charges attributable to The $ 589,852 $ 635,921
Blackstone
Group L.P., net of tax
____________________
(*) Principally comprised of base pay, bonus, net carried interest
allocations,
benefits and non-IPO and acquisition-related equity-based
compensation.
THE BLACKSTONE GROUP L.P.
Exhibit 2a.Condensed Consolidated Statements of Financial
Condition
(Dollars in Thousands)
September 30, December 31,
2009 2008
Assets
Cash and Cash Equivalents $ 486,470 $ 503,737
Cash Held by Blackstone Funds and Other 73,724 907,324
Investments 3,812,208 2,830,942
Accounts Receivable 243,111 312,067
Due from Brokers 805 48,506
Investment Subscriptions Paid in Advance 238 1,916
Due from Affiliates 353,480 861,434
Intangible Assets, Net 958,989 1,077,526
Goodwill 1,703,602 1,703,602
Other Assets 160,306 169,555
Deferred Tax Assets 937,048 845,578
Total Assets $ 8,729,981 $ 9,262,187
Liabilities and Partners' Capital
Loans Payable $ 673,386 $ 387,000
Amounts Due to Non-Controlling Interest Holders 163,009 1,103,423
Securities Sold, Not Yet Purchased 418 894
Due to Affiliates 1,405,464 1,285,577
Accrued Compensation and Benefits 463,744 413,459
Accounts Payable, Accrued Expenses and Other Liabilities 139,743 180,259
Total Liabilities 2,845,764 3,370,612
Commitments and Contingencies
Redeemable Non-Controlling Interests in Consolidated Entities 466,056 362,462
Partners' Capital
Partners' Capital 3,340,428 3,509,448
Accumulated Other Comprehensive Income (Loss) (177 ) (291 )
Non-Controlling Interests in Consolidated Entities 182,507 198,197
Non-Controlling Interests in Blackstone Holdings 1,895,403 1,821,759
Total Partners' Capital 5,418,161 5,529,113
Total Liabilities and Partners' Capital $ 8,729,981 $ 9,262,187
THE BLACKSTONE GROUP L.P.
Exhibit 2b.Condensed Consolidating Statements of Financial
Condition
(Dollars in Thousands)
September 30, 2009
Consolidated Consolidated Reclasses and Consolidated
Operating Blackstone Funds Eliminations
Partnerships
Assets
Cash and Cash Equivalents $ 486,470 $ - $ - $ 486,470
Cash Held by Blackstone Funds 59,518 14,206 - 73,724
and Other
Investments 2,916,909 1,111,956 (216,657 ) 3,812,208
Accounts Receivable 238,203 4,908 - 243,111
Due from Brokers - 805 - 805
Investment Subscriptions Paid in 238 - - 238
Advance
Due from Affiliates 349,559 15,819 (11,898 ) 353,480
Intangible Assets, Net 958,989 - - 958,989
Goodwill 1,703,602 - - 1,703,602
Other Assets 160,053 253 - 160,306
Deferred Tax Assets 937,048 - - 937,048
Total Assets $ 7,810,589 $ 1,147,947 $ (228,555 ) $ 8,729,981
Liabilities and Partners'
Capital
Loans Payable $ 673,386 $ - $ - $ 673,386
Amounts Due to Non-Controlling 61,582 101,427 - 163,009
Interest Holders
Securities Sold, Not Yet - 418 - 418
Purchased
Due to Affiliates 1,397,305 20,057 (11,898 ) 1,405,464
Accrued Compensation and 461,590 2,154 - 463,744
Benefits
Accounts Payable, Accrued 135,943 3,800 - 139,743
Expenses and Other Liabilities
Total Liabilities 2,729,806 127,856 (11,898 ) 2,845,764
Redeemable Non-Controlling - - 466,056 466,056
Interests in Consolidated Entities
Partners' Capital
Partners' Capital 3,340,428 682,713 (682,713 ) 3,340,428
Accumulated Other (177 ) - - (177 )
Comprehensive Income (Loss)
Non-Controlling Interests (154,871 ) 337,378 - 182,507
in Consolidated Entities
Non-Controlling Interests in 1,895,403 - - 1,895,403
Blackstone Holdings
Total Partners' Capital 5,080,783 1,020,091 (682,713 ) 5,418,161
Total Liabilities and $ 7,810,589 $ 1,147,947 $ (228,555 ) $ 8,729,981
Partners' Capital
THE BLACKSTONE GROUP L.P.
Exhibit 2b.Condensed Consolidating Statements of Financial
Condition - Continued
(Dollars in Thousands)
December 31, 2008
Consolidated Consolidated Reclasses and Consolidated
Operating Blackstone Funds Eliminations
Partnerships
Assets
Cash and Cash Equivalents $ 503,737 $ - $ - $ 503,737
Cash Held by Blackstone Funds 57,536 849,788 - 907,324
and Other
Investments 1,650,071 1,385,132 (204,261 ) 2,830,942
Accounts Receivable 309,201 2,866 - 312,067
Due from Brokers - 48,506 - 48,506
Investment Subscriptions Paid in 6,697 - (4,781 ) 1,916
Advance
Due from Affiliates 1,057,362 216 (196,144 ) 861,434
Intangible Assets, Net 1,077,526 - - 1,077,526
Goodwill 1,703,602 - - 1,703,602
Other Assets 169,333 222 - 169,555
Deferred Tax Assets 845,578 - - 845,578
Total Assets $ 7,380,643 $ 2,286,730 $ (405,186 ) $ 9,262,187
Liabilities and Partners'
Capital
Loans Payable $ 387,000 $ - $ - $ 387,000
Amounts Due to Non-Controlling 105,942 1,009,780 (12,299 ) 1,103,423
Interest Holders
Securities Sold, Not Yet - 894 - 894
Purchased
Due to Affiliates 1,064,980 362,526 (141,929 ) 1,285,577
Accrued Compensation and 410,593 2,866 - 413,459
Benefits
Accounts Payable, Accrued 176,418 112,699 (108,858 ) 180,259
Expenses and Other Liabilities
Total Liabilities 2,144,933 1,488,765 (263,086 ) 3,370,612
Redeemable Non-Controlling - - 362,462 362,462
Interests in Consolidated Entities
Partners' Capital
Partners' Capital 3,509,448 504,562 (504,562 ) 3,509,448
Accumulated Other (291 ) - - (291 )
Comprehensive Income (Loss)
Non-Controlling Interests (95,206 ) 293,403 - 198,197
in Consolidated Entities
Non-Controlling Interests in 1,821,759 - - 1,821,759
Blackstone Holdings
Total Partners' Capital 5,235,710 797,965 (504,562 ) 5,529,113
Total Liabilities and $ 7,380,643 $ 2,286,730 $ (405,186 ) $ 9,262,187
Partners' Capital
THE BLACKSTONE GROUP L.P.
Exhibit 3.Condensed Consolidated Statements of Cash Flows
(Dollars in Thousands)
Three Months Ended Three Months Ended Nine Months Ended
March 31, 2008 June 30, September 30, December 31, Full Year 2008 March 31, 2009 June 30, September 30, September 30, September 30,
2008 2008 2008 2009 2009 2009 2008
Operating Activities
Net Income (Loss) $ (1,254,157 ) $ (594,627 ) $ (1,822,345 ) $ (1,923,025 ) $ (5,594,154 ) $ (929,938 ) $ (597,871 ) $ (479,510 ) $ (2,007,319 ) $ (3,671,129 )
Adjustments to Reconcile Net Income
(Loss) to Net Cash Provided by
Operating Activities:
Blackstone Funds Related:
Non-Controlling Interests in 209,980 (121,292 ) 389,856 202,011 680,555 13,235 (98,161 ) (134,344 ) (219,270 ) 478,544
Income (Loss) of Consolidated
Entities
Net Realized (Gains) Losses on 256 (118,555 ) 204,373 78,652 164,726 53,190 38,369 48,818 140,377 86,074
Investments
Changes in Unrealized (Gains) 62,823 (7,770 ) 182,138 386,870 624,061 78,218 14,758 (51,983 ) 40,993 237,191
Losses on Investments Allocable
to Blackstone Group
Unrealized Depreciation - - - - - - - 8,799 8,799 -
on Hedge Activities
Non-Cash Performance Fees and 76,279 37,343 393,282 579,154 1,086,058 101,770 (89,499 ) (134,248 ) (121,977 ) 506,904
Allocations
Equity-Based Compensation Expense 914,671 805,597 774,431 807,918 3,302,617 738,045 762,521 738,404 2,238,970 2,494,699
Intangible Amortization 33,528 40,685 39,512 39,512 153,237 39,513 39,511 39,513 118,537 113,725
Other Non-Cash Amounts Included in 3,845 5,102 4,470 6,271 19,688 6,006 6,026 5,945 17,977 13,417
Net Income
Cash Flows Due to Changes in 316,363 112,039 (96,073 ) 651,625 983,954 182,718 21,332 64,241 268,291 332,329
Operating Assets and Liabilities
Investments Purchased - - - - - - - (1,030,000 ) (1,030,000 ) -
Blackstone Funds Related Investment (248,434 ) (2,697 ) 351,860 368,964 469,693 273,125 39,718 137,307 450,150 100,729
Activity
Net Cash Provided by (Used in) 115,154 155,825 421,504 1,197,952 1,890,435 555,882 136,704 (787,058 ) (94,472 ) 692,483
Operating Activities
Investing Activities
Net Cash Provided by (Used in) (388,918 ) 20,210 (9,731 ) (3,241 ) (381,680 ) (2,044 ) (9,450 ) (5,590 ) (17,084 ) (378,439 )
Investing Activities
Financing Activities
Net Cash Provided by (Used in) 77,714 (630,954 ) 505,521 (1,825,928 ) (1,873,647 ) (281,272 ) (118,978 ) 494,539 94,289 (47,719 )
Financing Activities
Effect of Exchange Rate Changes on Cash 90 (90 ) - - - - - - - -
and Cash Equivalents
Net Increase (Decrease) in Cash (195,960 ) (455,009 ) 917,294 (631,217 ) (364,892 ) 272,566 8,276 (298,109 ) (17,267 ) 266,325
and Cash Equivalents
Cash and Cash Equivalents, Beginning of 868,629 672,669 217,660 1,134,954 868,629 503,737 776,303 784,579 503,737 868,629
Period
Cash and Cash Equivalents, End of Period $ 672,669 $ 217,660 $ 1,134,954 $ 503,737 $ 503,737 $ 776,303 $ 784,579 $ 486,470 $ 486,470 $ 1,134,954
THE BLACKSTONE GROUP L.P.
Exhibit 4a.Economic Net Income and Net Fee Related Earnings
from Operations
(Dollars in Thousands)
The tables below detail Blackstone's Economic Net Income and Net
Fee Related Earnings from Operations. Net Fee Related Earnings
from Operations is a supplemental measure of after tax performance
used to highlight earnings from operations excluding the income
from and related profit sharing expenses of Blackstone's
performance fees and allocations and investment income except for
interest income. The reconciliation of Economic Net Income to Net
Fee Related Earnings from Operations is presented in Exhibit 4b to
this release.
Three Months Ended Nine Months Ended
March 31, June 30, September 30, December 31, March 31, June 30, September 30, September 30, September 30,
2008 2008 2008 2008 2009 2009 2009 2009 2008
Corporate Private Equity
Revenues
Management Fees
Base Management Fees $ 67,336 $ 66,967 $ 67,009 $ 67,649 $ 68,431 $ 67,740 $ 67,009 $ 203,180 $ 201,312
Transaction and Other Fees * 10,837 19,161 26,090 24,862 13,982 15,711 19,303 48,996 56,088
Management Fee Offsets ** (8,410 ) (15,232 ) (9,330 ) (1,044 ) (3,654 ) (566 ) (935 ) (5,155 ) (32,972 )
Total Management Fees 69,763 70,896 83,769 91,467 78,759 82,885 85,377 247,021 224,428
Performance Fees and Allocations (163,430 ) 21,960 (104,653 ) (184,362 ) 4,818 97,185 110,867 212,870 (246,123 )
Investment Income (Loss) and Other (23,050 ) (408 ) (47,454 ) (100,668 ) (15,481 ) 18,516 30,664 33,699 (70,912 )
Total Revenues (116,717 ) 92,448 (68,338 ) (193,563 ) 68,096 198,586 226,908 493,590 (92,607 )
Expenses
Compensation and Benefits (80,752 ) 40,283 34,192 22,483 (5,124 ) 54,263 69,901 119,040 (6,277 )
Other Operating Expenses 22,200 20,880 23,957 23,093 20,108 20,553 21,318 61,979 67,037
Total Segment Expenses (58,552 ) 61,163 58,149 45,576 14,984 74,816 91,219 181,019 60,760
Economic Net Income (Loss) $ (58,165 ) $ 31,285 $ (126,487 ) $ (239,139 ) $ 53,112 $ 123,770 $ 135,689 $ 312,571 $ (153,367 )
Net Fee Related Earnings from $ 18,297 $ 15,871 $ 16,194 $ 31,566 $ 19,883 $ 23,885 $ 21,153 $ 64,921 $ 50,362
Operations
Real Estate
Revenues
Management Fees
Base Management Fees $ 66,751 $ 67,977 $ 80,361 $ 80,832 $ 80,198 $ 81,517 $ 83,409 $ 245,124 $ 215,089
Transaction and Other Fees * 11,795 6,854 7,050 10,347 3,140 2,879 3,347 9,366 25,699
Management Fee Offsets ** (404 ) (326 ) (1,435 ) (2,804 ) (1,193 ) (486 ) (415 ) (2,094 ) (2,165 )
Total Management Fees 78,142 74,505 85,976 88,375 82,145 83,910 86,341 252,396 238,623
Performance Fees and Allocations (30,062 ) (77,133 ) (302,448 ) (409,380 ) (228,573 ) (47,370 ) 12,167 (263,776 ) (409,643 )
Investment Income (Loss) and Other (176 ) (11,788 ) (57,180 ) (156,840 ) (66,127 ) (55,461 ) 1,649 (119,939 ) (69,144 )
Total Revenues 47,904 (14,416 ) (273,652 ) (477,845 ) (212,555 ) (18,921 ) 100,157 (131,319 ) (240,164 )
Expenses
Compensation and Benefits 35,688 32,083 21,102 (12,080 ) (37,319 ) (6,824 ) 42,515 (1,628 ) 88,873
Other Operating Expenses 16,160 12,581 14,807 12,234 12,615 12,978 13,437 39,030 43,548
Total Segment Expenses 51,848 44,664 35,909 154 (24,704 ) 6,154 55,952 37,402 132,421
Economic Net Income (Loss) $ (3,944 ) $ (59,080 ) $ (309,561 ) $ (477,999 ) $ (187,851 ) $ (25,075 ) $ 44,205 $ (168,721 ) $ (372,585 )
Net Fee Related Earnings from $ 20,317 $ 22,787 $ 32,739 $ 43,778 $ 30,513 $ 32,867 $ 33,376 $ 96,756 $ 75,843
Operations
Credit and Marketable Alternatives
Revenues
Management Fees
Base Management Fees $ 103,187 $ 127,465 $ 131,908 $ 114,276 $ 96,503 $ 96,293 $ 105,430 $ 298,226 $ 362,560
Transaction and Other Fees * 1,128 2,884 3,806 698 443 687 778 1,908 7,818
Management Fee Offsets ** - (16 ) (165 ) (6,425 ) (4,213 ) (4,365 ) (4,121 ) (12,699 ) (181 )
Total Management Fees 104,315 130,333 135,549 108,549 92,733 92,615 102,087 287,435 370,197
Performance Fees and Allocations 5,058 45,027 (12,488 ) (35,338 ) 9,922 22,419 43,736 76,077 37,597
Investment Income (Loss) and Other (79,383 ) 49,885 (171,033 ) (128,954 ) (3,452 ) 25,375 33,573 55,496 (200,531 )
Total Revenues 29,990 225,245 (47,972 ) (55,743 ) 99,203 140,409 179,396 419,008 207,263
Expenses
Compensation and Benefits 56,273 84,162 60,268 40,252 61,134 57,406 79,801 198,341 200,703
Other Operating Expenses 18,307 25,158 26,073 36,489 23,645 16,461 18,123 58,229 69,538
Total Segment Expenses 74,580 109,320 86,341 76,741 84,779 73,867 97,924 256,570 270,241
Economic Net Income (Loss) $ (44,590 ) $ 115,925 $ (134,313 ) $ (132,484 ) $ 14,424 $ 66,542 $ 81,472 $ 162,438 $ (62,978 )
Net Fee Related Earnings from $ 26,322 $ 40,490 $ 42,417 $ 21,712 $ 14,428 $ 25,164 $ 24,005 $ 63,597 $ 109,229
Operations
Financial Advisory
Revenues
Advisory Fees $ 68,563 $ 71,080 $ 157,026 $ 100,850 $ 90,940 $ 82,503 $ 94,566 $ 268,009 $ 296,669
Investment Income and Other 2,597 1,826 3,716 4,908 101 996 2,777 3,874 8,139
Total Revenues 71,160 72,906 160,742 105,758 91,041 83,499 97,343 271,883 304,808
Expenses
Compensation and Benefits 46,967 48,574 82,295 56,919 50,952 54,239 57,686 162,877 177,836
Other Operating Expenses 11,061 12,537 17,352 26,327 12,976 21,734 22,666 57,376 40,950
Total Segment Expenses 58,028 61,111 99,647 83,246 63,928 75,973 80,352 220,253 218,786
Economic Net Income $ 13,132 $ 11,795 $ 61,095 $ 22,512 $ 27,113 $ 7,526 $ 16,991 $ 51,630 $ 86,022
Net Fee Related Earnings from $ 2,625 $ 11,295 $ 60,460 $ 20,798 $ 24,694 $ 4,874 $ 16,405 $ 45,973 $ 74,380
Operations
Economic Net Income Recap,
Total Segments
Revenues
Management Fees
Base Management Fees $ 237,274 $ 262,409 $ 279,278 $ 262,757 $ 245,132 $ 245,550 $ 255,848 $ 746,530 $ 778,961
Advisory Fees 68,563 71,080 157,026 100,850 90,940 82,503 94,566 268,009 296,669
Transaction and Other Fees * 23,760 28,899 36,946 35,907 17,565 19,277 23,428 60,270 89,605
Management Fee Offsets ** (8,814 ) (15,574 ) (10,930 ) (10,273 ) (9,060 ) (5,417 ) (5,471 ) (19,948 ) (35,318 )
Total Management and For full details on The Blackstone Group L.P (BX) click here. The Blackstone Group L.P (BX) has Short Term PowerRatings of 4. Details on The Blackstone Group L.P (BX) Short Term PowerRatings is available at This Link.
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