v2.4.0.8

SEGMENT REPORTING

12 Months Ended

Dec. 31, 2013

SEGMENT REPORTING

21.    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 global, European focused and Asian focused opportunistic real estate funds. In addition, the segment has debt investment funds and a publicly traded REIT 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 principally of Blackstone Alternative Asset Management (“BAAM”), an institutional solutions provider utilizing hedge funds across a variety of strategies.

• Credit—Blackstone’s Credit segment, which principally includes GSO Capital Partners LP (“GSO”), manages credit-focused products within private debt and public market strategies. GSO’s products include senior credit-focused funds, distressed debt funds, mezzanine funds, general credit-focused funds, registered investment companies, separately managed accounts and CLO vehicles.

• Financial Advisory—Blackstone’s Financial Advisory segment comprises its financial and strategic advisory services, restructuring and reorganization advisory services, capital markets 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 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. Economic Net Income (“ENI”) 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 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 years ended December 31, 2013, 2012 and 2011:

		December 31, 2013 and the Year Then Ended
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	368,146			$	565,182			$	409,321			$	398,158			$	—			$	1,740,807
Advisory Fees			—				—				—				—				410,514				410,514
Transaction and Other Fees, Net			96,988				79,675				623				28,586				1,105				206,977
Management Fee Offsets			(5,683	)			(22,821	)			(3,387	)			(40,329	)			—				(72,220	)
Total Management and Advisory Fees, Net			459,451				622,036				406,557				386,415				411,619				2,286,078
Performance Fees
Realized
Carried Interest			329,993				486,773				—				127,192				—				943,958
Incentive Fees			—				45,862				207,735				220,736				—				474,333
Unrealized
Carried Interest			398,232				1,651,700				—				108,078				—				2,158,010
Incentive Fees			—				(28,753	)			7,718				1,107				—				(19,928	)
Total Performance Fees			728,225				2,155,582				215,453				457,113				—				3,556,373
Investment Income (Loss)
Realized			88,026				52,359				27,613				4,098				(1,625	)			170,471
Unrealized			161,749				350,201				(9,306	)			13,951				739				517,334
Total Investment Income (Loss)			249,775				402,560				18,307				18,049				(886	)			687,805
Interest and Dividend Revenue			15,602				21,563				7,605				18,146				8,020				70,936
Other			4,259				3,384				688				527				1,450				10,308
Total Revenues			1,457,312				3,205,125				648,610				880,250				420,203				6,611,500
Expenses
Compensation and Benefits
Compensation			236,120				294,222				136,470				186,514				262,314				1,115,640
Performance Fee Compensation
Realized
Carried Interest			38,953				148,837				—				69,411				—				257,201
Incentive Fees			—				23,878				65,793				111,244				—				200,915
Unrealized
Carried Interest			342,733				566,837				—				57,147				—				966,717
Incentive Fees			—				(15,015	)			2,856				508				—				(11,651	)
Total Compensation and Benefits			617,806				1,018,759				205,119				424,824				262,314				2,528,822
Other Operating Expenses			124,137				116,391				66,966				96,940				82,205				486,639
Total Expenses			741,943				1,135,150				272,085				521,764				344,519				3,015,461
Economic Income		$	715,369			$	2,069,975			$	376,525			$	358,486			$	75,684			$	3,596,039
Segment Assets		$	4,444,227			$	7,496,591			$	1,325,631			$	2,381,603			$	781,469			$	16,429,521

		December 31, 2012 and the Year Then Ended
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	348,594			$	551,322			$	346,210			$	345,277			$	—			$	1,591,403
Advisory Fees			—				—				—				—				357,417				357,417
Transaction and Other Fees, Net			100,080				85,681				188				40,875				295				227,119
Management Fee Offsets			(5,926	)			(28,609	)			(1,414	)			(5,004	)			—				(40,953	)
Total Management and Advisory Fees, Net			442,748				608,394				344,984				381,148				357,712				2,134,986
Performance Fees
Realized
Carried Interest			109,797				165,114				—				52,511				—				327,422
Incentive Fees			—				25,656				83,433				192,375				—				301,464
Unrealized
Carried Interest			148,381				683,764				—				162,045				—				994,190
Incentive Fees			—				(119	)			9,042				(38,234	)			—				(29,311	)
Total Performance Fees			258,178				874,415				92,475				368,697				—				1,593,765
Investment Income
Realized			25,823				45,302				7,270				15,611				1,392				95,398
Unrealized			85,337				90,875				8,517				4,769				1,348				190,846
Total Investment Income			111,160				136,177				15,787				20,380				2,740				286,244
Interest and Dividend Revenue			13,556				14,448				2,139				9,330				7,157				46,630
Other			2,417				894				3,816				(1,174	)			(804	)			5,149
Total Revenues			828,059				1,634,328				459,201				778,381				366,805				4,066,774
Expenses
Compensation and Benefits
Compensation			222,709				271,122				119,731				182,077				235,137				1,030,776
Performance Fee Compensation
Realized
Carried Interest			3,679				62,418				—				30,336				—				96,433
Incentive Fees			—				13,060				23,080				103,902				—				140,042
Unrealized
Carried Interest			58,555				165,482				—				97,562				—				321,599
Incentive Fees			—				(583	)			1,317				(45,262	)			—				(44,528	)
Total Compensation and Benefits			284,943				511,499				144,128				368,615				235,137				1,544,322
Other Operating Expenses			130,845				123,714				57,809				84,488				84,589				481,445
Total Expenses			415,788				635,213				201,937				453,103				319,726				2,025,767
Economic Income		$	412,271			$	999,115			$	257,264			$	325,278			$	47,079			$	2,041,007
Segment Assets		$	4,625,310			$	5,599,759			$	876,881			$	2,004,529			$	749,000			$	13,855,479

		December 31, 2011 and the Year Then Ended
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	331,997			$	394,778			$	315,863			$	238,547			$	—			$	1,281,185
Advisory Fees			—				—				—				—				382,240				382,240
Transaction and Other Fees, Net			133,004				109,510				2,798				1,880				321				247,513
Management Fee Offsets			(27,073	)			(4,950	)			(980	)			(390	)			—				(33,393	)
Total Management and Advisory Fees, Net			437,928				499,338				317,681				240,037				382,561				1,877,545
Performance Fees
Realized
Carried Interest			37,393				22,844				—				78,670				—				138,907
Incentive Fees			—				9,629				11,472				67,928				—				89,029
Unrealized
Carried Interest			33,490				913,418				—				24,610				—				971,518
Incentive Fees			—				3,658				774				(29,360	)			—				(24,928	)
Total Performance Fees			70,883				949,549				12,246				141,848				—				1,174,526
Investment Income (Loss)
Realized			44,988				27,972				17,722				11,299				594				102,575
Unrealized			9,476				92,648				(19,031	)			(708	)			304				82,689
Total Investment Income (Loss)			54,464				120,620				(1,309	)			10,591				898				185,264
Interest and Dividend Revenue			13,749				12,902				2,025				3,369				6,799				38,844
Other			1,810				(1,061	)			7,902				(853	)			(383	)			7,415
Total Revenues			578,834				1,581,348				338,545				394,992				389,875				3,283,594
Expenses
Compensation and Benefits
Compensation			217,556				236,771				128,959				128,588				248,695				960,569
Performance Fee Compensation
Realized
Carried Interest			1,465				10,103				—				32,047				—				43,615
Incentive Fees			—				4,564				3,498				47,850				—				55,912
Unrealized
Carried Interest			(2,229	)			221,140				—				19,033				—				237,944
Incentive Fees			—				3,106				234				(24,099	)			—				(20,759	)
Total Compensation and Benefits			216,792				475,684				132,691				203,419				248,695				1,277,281
Other Operating Expenses			120,918				103,859				65,072				49,955				81,538				421,342
Total Expenses			337,710				579,543				197,763				253,374				330,233				1,698,623
Economic Income		$	241,124			$	1,001,805			$	140,782			$	141,618			$	59,642			$	1,584,971

The following table reconciles the Total Segments to Blackstone’s Income Before Provision for Taxes and Total Assets as of and for the years ended December 31, 2013, 2012 and 2011:

		December 31, 2013 and the Year Then Ended
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	6,611,500			$	1,668	(a)		$	6,613,168
Expenses		$	3,015,461			$	851,279	(b)		$	3,866,740
Other Income		$	—			$	402,133	(c)		$	402,133
Economic Income		$	3,596,039			$	(447,478	)(d)		$	3,148,561
Total Assets		$	16,429,521			$	13,249,085	(e)		$	29,678,606

		December 31, 2012 and the Year Then Ended
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	4,066,774			$	(47,333	)(a)		$	4,019,441
Expenses		$	2,025,767			$	1,234,914	(b)		$	3,260,681
Other Income		$	—			$	256,145	(c)		$	256,145
Economic Income		$	2,041,007			$	(1,026,102	)(d)		$	1,014,905
Total Assets		$	13,855,479			$	15,076,073	(e)		$	28,931,552

		Year Ended December 31, 2011
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	3,283,594			$	(31,018	)(a)		$	3,252,576
Expenses		$	1,698,623			$	1,689,446	(b)		$	3,388,069
Other Income		$	—			$	212,751	(c)		$	212,751
Economic Income		$	1,584,971			$	(1,507,713	)(d)		$	77,258

(a) The Revenues adjustment represents management and performance fees earned from Blackstone Funds which were eliminated in consolidation to arrive at Blackstone consolidated revenues and non-segment related Investment Income, which is included in 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:

		Year Ended December 31,
		2013				2012				2011
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss		$	(5,575	)		$	43,393			$	21,000
Fund Expenses Added in Consolidation			30,727				37,548				30,129
Non-Controlling Interests in Income (Loss) of Consolidated Entities			381,872				203,557				(16,916	)
Transaction-Related Other Income (Loss)			(4,891	)			(28,353	)			178,538
Total Consolidation Adjustments and Reconciling Items		$	402,133			$	256,145			$	212,751

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

		Year Ended December 31,
		2013				2012				2011
Economic Income		$	3,596,039			$	2,041,007			$	1,584,971
Adjustments
Amortization of Intangibles			(106,643	)			(150,148	)			(220,865	)
IPO and Acquisition-Related Charges			(722,707	)			(1,079,511	)			(1,269,932	)
Non-Controlling Interests in Income (Loss) of Consolidated Entities			381,872				203,557				(16,916	)
Total Consolidation Adjustments and Reconciling Items			(447,478	)			(1,026,102	)			(1,507,713	)
Income Before Provision for Taxes		$	3,148,561			$	1,014,905			$	77,258

(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.

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