v2.4.0.6

SEGMENT REPORTING

6 Months Ended

Jun. 30, 2012

SEGMENT REPORTING

17. SEGMENT REPORTING

Blackstone transacts its primary business in the United States and substantially all of its revenues are generated domestically.

Blackstone conducts its alternative asset management and financial advisory businesses through five segments:

• Private Equity — Blackstone’s Private Equity segment comprises its management of private equity funds and certain multi-asset class investment funds.

• Real Estate — Blackstone’s Real Estate segment primarily comprises its management of general opportunistic real estate funds and internationally focused opportunistic real estate funds. In addition, the segment has debt investment funds targeting non-controlling real estate debt-related investment opportunities in the public and private markets, primarily in the United States and Europe.

• Hedge Fund Solutions — Blackstone’s Hedge Fund Solutions segment is comprised of Blackstone Alternative Asset Management (“BAAM”), an institutional solutions provider utilizing hedge funds across a variety of strategies.

• Credit Businesses — Blackstone’s Credit Businesses segment is comprised principally of GSO and manages credit-oriented funds, CLOs, credit-focused separately managed accounts and publicly registered debt-focused investment companies.

• Financial Advisory — Blackstone’s Financial Advisory segment comprises its financial advisory services, restructuring and reorganization advisory services and Park Hill Group, which provides fund placement services for alternative investment funds.

These business segments are differentiated by their various sources of income. The Private Equity, Real Estate, Hedge Fund Solutions and Credit Businesses segments primarily earn their income from management fees and investment returns on assets under management, while the Financial Advisory segment primarily earns its income from fees related to investment banking services and advice and fund placement services.

Blackstone uses Economic Income (“EI”) as a key measure of value creation, a benchmark of its performance and in making resource deployment and compensation decisions across its five segments. EI represents segment net income before taxes excluding transaction-related charges. Transaction-related charges arise from Blackstone’s IPO and long-term retention programs outside of annual deferred compensation and other corporate actions, including acquisitions. Transaction-related charges include equity-based compensation charges, the amortization of intangible assets and contingent consideration associated with acquisitions. EI presents revenues and expenses on a basis that deconsolidates the investment funds Blackstone manages. Prior to June 30, 2012, EI had been called Economic Net Income. The renaming of this measure did not change any of the previously reported amounts. Economic Net Income (“ENI”) now represents EI adjusted to include current period taxes. Taxes represent the current tax provision (benefit) calculated on Income (Loss) Before Provision for Taxes.

Management makes operating decisions and assesses the performance of each of Blackstone’s business segments based on financial and operating metrics and data that is presented without the consolidation of any of the Blackstone Funds that are consolidated into the Condensed Consolidated Financial Statements. Consequently, all segment data excludes the assets, liabilities and operating results related to the Blackstone Funds.

The following table presents the financial data for Blackstone’s five segments as of and for the three months ended June 30, 2012 and 2011:

		Three Months Ended June 30, 2012
		Private Equity				Real Estate				Hedge Fund Solutions				Credit Businesses				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	87,475			$	127,817			$	84,278			$	81,774			$	—			$	381,344
Advisory Fees			—				—				—				—				93,372				93,372
Transaction and Other Fees, Net			14,951				25,151				65				9,184				102				49,453
Management Fee Offsets			(672	)			(5,357	)			(375	)			(1,569	)			—				(7,973	)
Total Management and Advisory Fees, Net			101,754				147,611				83,968				89,389				93,474				516,196
Performance Fees
Realized
Carried Interest			28,781				13,539				—				13,609				—				55,929
Incentive Fees			—				7,766				1,175				2,751				—				11,692
Unrealized
Carried Interest			(87,893	)			144,510				—				27,673				—				84,290
Incentive Fees			—				(1,526	)			(10,981	)			(4,567	)			—				(17,074	)
Total Performance Fees			(59,112	)			164,289				(9,806	)			39,466				—				134,837
Investment Income (Loss)
Realized			(6,195	)			9,067				929				5,638				(79	)			9,360
Unrealized			(28,337	)			14,944				(3,636	)			(9,156	)			561				(25,624	)
Total Investment Income			(34,532	)			24,011				(2,707	)			(3,518	)			482				(16,264	)
Interest and Dividend Revenue			3,114				3,277				495				1,752				1,753				10,391
Other			562				(590	)			27				(787	)			(40	)			(828	)
Total Revenues			11,786				338,598				71,977				126,302				95,669				644,332
Expenses
Compensation and Benefits
Compensation			53,775				76,576				34,559				42,845				61,129				268,884
Performance Fee Compensation
Realized
Carried Interest			804				3,401				—				3,694				—				7,899
Incentive Fees			—				3,871				(345	)			2,049				—				5,575
Unrealized
Carried Interest			(8,259	)			31,677				—				13,397				—				36,815
Incentive Fees			—				(629	)			(2,820	)			(6,147	)			—				(9,596	)
Total Compensation and Benefits			46,320				114,896				31,394				55,838				61,129				309,577
Other Operating Expenses			30,521				26,560				14,506				15,749				25,702				113,038
Total Expenses			76,841				141,456				45,900				71,587				86,831				422,615
Economic Income (Loss)		$	(65,055	)		$	197,142			$	26,077			$	54,715			$	8,838			$	221,717

		Three Months Ended June 30, 2011
		Private Equity				Real Estate				Hedge Fund Solutions				Credit Businesses				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	82,297			$	97,467			$	79,290			$	57,420			$	—			$	316,474
Advisory Fees			—				—				—				—				102,243				102,243
Transaction and Other Fees, Net			52,353				49,288				861				849				210				103,561
Management Fee Offsets			(7,629	)			(745	)			(196	)			(105	)			—				(8,675	)
Total Management and Advisory Fees, Net			127,021				146,010				79,955				58,164				102,453				513,603
Performance Fees
Realized
Carried Interest			1,362				11,798				—				29,592				—				42,752
Incentive Fees			—				9,034				667				7,762				—				17,463
Unrealized
Carried Interest			187,190				433,280				—				(9,313	)			—				611,157
Incentive Fees			—				(3,822	)			3,441				2,067				—				1,686
Total Performance Fees			188,552				450,290				4,108				30,108				—				673,058
Investment Income (Loss)
Realized			3,021				11,394				12,855				3,236				226				30,732
Unrealized			76,947				37,332				(12,864	)			5,437				(15	)			106,837
Total Investment Income (Loss)			79,968				48,726				(9	)			8,673				211				137,569
Interest and Dividend Revenue			3,197				2,989				472				902				1,723				9,283
Other			665				515				(38	)			(47	)			33				1,128
Total Revenues			399,403				648,530				84,488				97,800				104,420				1,334,641
Expenses
Compensation and Benefits
Compensation			64,633				70,651				31,674				33,071				72,363				272,392
Performance Fee Compensation
Realized
Carried Interest			49				5,095				—				13,531				—				18,675
Incentive Fees			—				4,287				253				4,496				—				9,036
Unrealized
Carried Interest			29,309				92,392				—				2,012				—				123,713
Incentive Fees			—				(1,371	)			2,955				(7,200	)			—				(5,616	)
Total Compensation and Benefits			93,991				171,054				34,882				45,910				72,363				418,200
Other Operating Expenses			30,124				22,971				16,075				10,226				19,967				99,363
Total Expenses			124,115				194,025				50,957				56,136				92,330				517,563
Economic Income		$	275,288			$	454,505			$	33,531			$	41,664			$	12,090			$	817,078

The following table reconciles the Total Segments to Blackstone’s Income (Loss) Before Provision for Taxes for the three months ended June 30, 2012 and 2011:

		Three Months Ended June 30, 2012												Three Months Ended June 30, 2011
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated				Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	644,332			$	(17,129	)(a)		$	627,203			$	1,334,641			$	(26,360	)(a)		$	1,308,281
Expenses		$	422,615			$	317,204	(b)		$	739,819			$	517,563			$	467,268	(b)		$	984,831
Other Income		$	—			$	248,230	(c)		$	248,230			$	—			$	(74,654	)(c)		$	(74,654	)
Economic Income		$	221,717			$	(86,103	)(d)		$	135,614			$	817,078			$	(568,282	)(d)		$	248,796

(a) The Revenues adjustment principally represents management and performance fees earned from Blackstone Funds which were eliminated in consolidation to arrive at Blackstone consolidated revenues.

(b) The Expenses adjustment represents the addition of expenses of the consolidated Blackstone Funds to the Blackstone unconsolidated expenses, amortization of intangibles and expenses related to transaction-related equity-based compensation to arrive at Blackstone consolidated expenses.

(c) The Other Income adjustment results from the following:

		Three Months Ended June 30,
		2012				2011
Fund Management Fees and Performance Fees Eliminated in Consolidation		$	15,892			$	24,416
Fund Expenses Added in Consolidation			17,170				403
Non-Controlling Interests in Income (Loss) of Consolidated Entities			222,268				(92,548	)
Transaction-Related Other Income			(7,100	)			(6,925	)
Total Consolidation Adjustments and Reconciling Items		$	248,230			$	(74,654	)

(d) The reconciliation of Economic Income to Income (Loss) Before Provision (Benefit) for Taxes as reported in the Condensed Consolidated Statements of Operations consists of the following:

		Three Months Ended June 30,
		2012				2011
Economic Income		$	221,717			$	817,078
Adjustments
Amortization of Intangibles			(39,435	)			(44,905	)
IPO and Acquisition-Related Charges			(268,936	)			(430,829	)
Non-Controlling Interests in Income (Loss) of Consolidated Entities			222,268				(92,548	)
Total Consolidation Adjustments and Reconciling Items			(86,103	)			(568,282	)
Income Before Provision (Benefit) for Taxes		$	135,614			$	248,796

The following table presents financial data for Blackstone’s five segments for the six months ended June 30, 2012 and 2011:

		June 30, 2012 and the Six Months Then Ended
		Private Equity				Real Estate				Hedge Fund Solutions				Credit Businesses				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	173,264			$	275,619			$	166,099			$	161,868			$	—			$	776,850
Advisory Fees			—				—				—				—				169,218				169,218
Transaction and Other Fees, Net			33,048				39,563				157				14,909				247				87,924
Management Fee Offsets			(4,454	)			(13,984	)			(710	)			(1,875	)			—				(21,023	)
Total Management and Advisory Fees			201,858				301,198				165,546				174,902				169,465				1,012,969
Performance Fees
Realized
Carried Interest			32,714				22,156				—				14,619				—				69,489
Incentive Fees			—				7,765				4,473				4,733				—				16,971
Unrealized
Carried Interest			(53,842	)			366,010				—				70,918				—				383,086
Incentive Fees			—				6,388				12,206				32,453				—				51,047
Total Performance Fees			(21,128	)			402,319				16,679				122,723				—				520,593
Investment Income (Loss)
Realized			7,716				16,879				1,432				6,321				504				32,852
Unrealized			(11,868	)			40,856				4,735				55				512				34,290
Total Investment Income (Loss)			(4,152	)			57,735				6,167				6,376				1,016				67,142
Interest and Dividend Revenue			5,534				5,829				881				4,177				3,315				19,736
Other			347				(1,299	)			(100	)			(1,025	)			42				(2,035	)
Total Revenues			182,459				765,782				189,173				307,153				173,838				1,618,405
Expenses
Compensation and Benefits
Compensation			106,322				145,465				62,792				79,988				129,089				523,656
Performance Fee Compensation
Realized
Carried Interest			1,124				7,478				—				7,235				—				15,837
Incentive Fees			—				3,873				1,033				4,921				—				9,827
Unrealized
Carried Interest			(9,311	)			85,952				—				44,717				—				121,358
Incentive Fees			—				3,139				4,474				(4,430	)			—				3,183
Total Compensation and Benefits			98,135				245,907				68,299				132,431				129,089				673,861
Other Operating Expenses			59,402				55,484				28,440				32,845				46,388				222,559
Total Expenses			157,537				301,391				96,739				165,276				175,477				896,420
Economic Income		$	24,922			$	464,391			$	92,434			$	141,877			$	(1,639	)		$	721,985
Segment Assets as of June 30, 2012		$	3,736,660			$	4,495,602			$	794,310			$	1,881,416			$	575,373			$	11,483,361

		Six Months Ended June 30, 2011
		Private Equity				Real Estate				Hedge Fund Solutions				Credit Businesses				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	162,232			$	192,906			$	154,902			$	112,021			$	—			$	622,061
Advisory Fees			—				—				—				—				172,495				172,495
Transaction and Other Fees, Net			87,695				70,831				1,588				1,594				216				161,924
Management Fee Offsets			(15,518	)			(1,250	)			(320	)			(123	)			—				(17,211	)
Total Management and Advisory Fees			234,409				262,487				156,170				113,492				172,711				939,269
Performance Fees
Realized
Carried Interest			83,751				14,169				—				38,233				—				136,153
Incentive Fees			—				9,256				1,560				8,846				—				19,662
Unrealized
Carried Interest			219,727				794,726				—				28,852				—				1,043,305
Incentive Fees			—				2,836				22,694				49,205				—				74,735
Total Performance Fees			303,478				820,987				24,254				125,136				—				1,273,855
Investment Income
Realized			20,928				14,313				14,196				4,471				323				54,231
Unrealized			106,073				98,738				(5,744	)			9,969				378				209,414
Total Investment Income			127,001				113,051				8,452				14,440				701				263,645
Interest and Dividend Revenue			6,702				6,277				988				1,355				3,409				18,731
Other			1,476				1,375				66				51				419				3,387
Total Revenues			673,066				1,204,177				189,930				254,474				177,240				2,498,887
Expenses
Compensation and Benefits
Compensation			119,557				128,278				59,767				62,620				126,702				496,924
Performance Fee Compensation
Realized
Carried Interest			7,767				6,221				—				18,256				—				32,244
Incentive Fees			—				4,391				553				5,066				—				10,010
Unrealized
Carried Interest			34,773				193,350				—				21,545				—				249,668
Incentive Fees			—				4,172				8,313				18,469				—				30,954
Total Compensation and Benefits			162,097				336,412				68,633				125,956				126,702				819,800
Other Operating Expenses			58,837				51,337				29,083				25,583				37,498				202,338
Total Expenses			220,934				387,749				97,716				151,539				164,200				1,022,138
Economic Income		$	452,132			$	816,428			$	92,214			$	102,935			$	13,040			$	1,476,749

The following table reconciles the Total Segments to Blackstone’s Income (Loss) Before Provision for Taxes and Total Assets as of and for the six months ended June 30, 2012 and 2011:

		June 30, 2012 and the Six Months Then Ended												Six Months Ended June 30, 2011
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated				Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	1,618,405			$	(39,166	)(a)		$	1,579,239			$	2,498,887			$	(37,337	)(a)		$	2,461,550
Expenses		$	896,420			$	627,192	(b)		$	1,523,612			$	1,022,138			$	953,557	(b)		$	1,975,695
Other Income		$	—			$	536,372	(c)		$	536,372			$	—			$	(119,845	)(c)		$	(119,845	)
Economic Income		$	721,985			$	(129,986	)(d)		$	591,999			$	1,476,749			$	(1,110,739	)(d)		$	366,010
Total Assets		$	11,483,361			$	14,659,209	(e)		$	26,142,570

(a) The Revenues adjustment principally represents management and performance fees earned from Blackstone Funds which were eliminated in consolidation to arrive at Blackstone consolidated revenues.

(b) The Expenses adjustment represents the addition of expenses of the consolidated Blackstone Funds to the Blackstone unconsolidated expenses, amortization of intangibles and expenses related to transaction-related equity-based compensation to arrive at Blackstone consolidated expenses.

(c) The Other Income adjustment results from the following:

		Six Months Ended June 30,
		2012				2011
Fund Management Fees and Performance Fees Eliminated in Consolidation		$	36,490			$	33,519
Fund Expenses Added in Consolidation			39,877				12,616
Non-Controlling Interests in Income (Loss) of Consolidated Entities			474,170				(163,604	)
Transactional Other Income			(14,165	)			(2,376	)
Total Consolidation Adjustments and Reconciling Items		$	536,372			$	(119,845	)

(d) The reconciliation of Economic Income to Income (Loss) Before Provision (Benefit) for Taxes as reported in the Condensed Consolidated Statements of Operations consists of the following:

		Six Months Ended June 30,
		2012				2011
Economic Income		$	721,985			$	1,476,749
Adjustments
Amortization of Intangibles			(90,323	)			(89,079	)
IPO and Acquisition-Related Charges			(513,833	)			(858,056	)
Non-Controlling Interests in Income (Loss) of Consolidated Entities			474,170				(163,604	)
Total Consolidation Adjustments and Reconciling Items			(129,986	)			(1,110,739	)
Income (Loss) Before Provision for Taxes		$	591,999			$	366,010

(e) The Total Assets adjustment represents the addition of assets of the consolidated Blackstone Funds to the Blackstone unconsolidated assets to arrive at Blackstone consolidated assets.

X

- Definition

The entire disclosure for reporting segments including data and tables. Reportable segments include those that meet any of the following quantitative thresholds a) it's reported revenue, including sales to external customers and intersegment sales or transfers is 10 percent or more of the combined revenue, internal and external, of all operating segments b) the absolute amount of its reported profit or loss is 10 percent or more of the greater, in absolute amount of 1) the combined reported profit of all operating segments that did not report a loss or 2) the combined reported loss of all operating segments that did report a loss c) its assets are 10 percent or more of the combined assets of all operating segments.

+ References

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-Name Statement of Financial Accounting Standard (FAS)

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-LegacyDoc This reference is SUPERSEDED by the Accounting Standards Codification effective for interim and annual periods ending after September 15, 2009. This reference is included to help users transition from the previous accounting hierarchy and will be removed from future versions of this taxonomy.



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-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599



Reference 15: http://www.xbrl.org/2003/role/presentationRef

-Publisher FASB

-Name Accounting Standards Codification

-Topic 280

-SubTopic 10

-Section 50

-Paragraph 41

-URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9038-108599

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