v2.4.0.8

SEGMENT REPORTING

9 Months Ended

Sep. 30, 2014

SEGMENT REPORTING

18. 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, certain multi-asset class investment funds and secondary private funds of 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 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 segments for the three months ended September 30, 2014 and 2013:

		Three Months Ended September 30, 2014
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	108,236			$	155,089			$	121,484			$	120,684			$	—			$	505,493
Advisory Fees			—				—				—				—				84,131				84,131
Transaction and Other Fees, Net			48,996				38,312				161				3,025				391				90,885
Management Fee Offsets			(5,837	)			(8,977	)			(1,099	)			(6,850	)			—				(22,763	)
Total Management and Advisory Fees, Net			151,395				184,424				120,546				116,859				84,522				657,746
Performance Fees
Realized
Carried Interest			124,913				349,237				—				164,602				—				638,752
Incentive Fees			—				1,159				6,683				28,998				—				36,840
Unrealized
Carried Interest			96,455				187,175				—				(61,604	)			—				222,026
Incentive Fees			—				(374	)			25,473				(31,630	)			—				(6,531	)
Total Performance Fees			221,368				537,197				32,156				100,366				—				891,087
Investment Income (Loss)
Realized			20,421				49,173				2,693				3,040				505				75,832
Unrealized			(12,754	)			14,492				(1,168	)			4,892				(528	)			4,934
Total Investment Income (Loss)			7,667				63,665				1,525				7,932				(23	)			80,766
Interest and Dividend Revenue			5,346				7,135				2,724				5,968				2,412				23,585
Other			2,150				976				740				(3,619	)			472				719
Total Revenues			387,926				793,397				157,691				227,506				87,383				1,653,903
Expenses
Compensation and Benefits
Compensation			79,007				90,586				41,940				54,877				58,016				324,426
Performance Fee Compensation
Realized
Carried Interest			30,944				64,187				—				90,872				—				186,003
Incentive Fees			—				592				2,312				16,125				—				19,029
Unrealized
Carried Interest			93,434				108,789				—				(38,091	)			—				164,132
Incentive Fees			—				(123	)			8,778				(17,657	)			—				(9,002	)
Total Compensation and Benefits			203,385				264,031				53,030				106,126				58,016				684,588
Other Operating Expenses			34,109				36,138				20,480				20,860				19,853				131,440
Total Expenses			237,494				300,169				73,510				126,986				77,869				816,028
Economic Income		$	150,432			$	493,228			$	84,181			$	100,520			$	9,514			$	837,875

		Three Months Ended September 30, 2013
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	95,281			$	136,721			$	103,392			$	101,900			$	—			$	437,294
Advisory Fees			—				—				—				—				83,602				83,602
Transaction and Other Fees, Net			16,052				19,205				295				7,058				196				42,806
Management Fee Offsets			(2,080	)			(2,385	)			(1,200	)			(2,606	)			—				(8,271	)
Total Management and Advisory Fees, Net			109,253				153,541				102,487				106,352				83,798				555,431
Performance Fees
Realized
Carried Interest			85,121				93,878				—				3,655				—				182,654
Incentive Fees			—				3,737				5,320				22,181				—				31,238
Unrealized
Carried Interest			(86,300	)			340,406				—				35,946				—				290,052
Incentive Fees			—				2,481				29,208				9,303				—				40,992
Total Performance Fees			(1,179	)			440,502				34,528				71,085				—				544,936
Investment Income (Loss)
Realized			11,495				928				(598	)			496				(829	)			11,492
Unrealized			23,621				57,656				6,439				(1,042	)			1,006				87,680
Total Investment Income (Loss)			35,116				58,584				5,841				(546	)			177				99,172
Interest and Dividend Revenue			5,231				6,060				2,523				5,288				2,437				21,539
Other			1,521				2,113				595				(357	)			836				4,708
Total Revenues			149,942				660,800				145,974				181,822				87,248				1,225,786
Expenses
Compensation and Benefits
Compensation			55,800				75,346				37,611				53,250				57,491				279,498
Performance Fee Compensation
Realized
Carried Interest			19,824				38,942				—				1,603				—				60,369
Incentive Fees			—				1,919				1,954				10,726				—				14,599
Unrealized
Carried Interest			(36,198	)			99,323				—				19,216				—				82,341
Incentive Fees			—				615				10,177				292				—				11,084
Total Compensation and Benefits			39,426				216,145				49,742				85,087				57,491				447,891
Other Operating Expenses			30,024				30,614				19,575				23,451				19,208				122,872
Total Expenses			69,450				246,759				69,317				108,538				76,699				570,763
Economic Income		$	80,492			$	414,041			$	76,657			$	73,284			$	10,549			$	655,023

The following table reconciles the Total Segments to Blackstone’s Income Before Provision for Taxes for the three months ended September 30, 2014 and 2013:

		Three Months Ended September 30, 2014												Three Months Ended September 30, 2013
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated				Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	1,653,903			$	25,523	(a)		$	1,679,426			$	1,225,786			$	(8,941	)(a)		$	1,216,845
Expenses		$	816,028			$	239,110	(b)		$	1,055,138			$	570,763			$	215,642	(b)		$	786,405
Other Income		$	—			$	8,682	(c)		$	8,682			$	—			$	87,952	(c)		$	87,952
Economic Income		$	837,875			$	(204,905	)(d)		$	632,970			$	655,023			$	(136,631	)(d)		$	518,392

(a) The Revenues adjustment represents management and performance fees earned from Blackstone Funds that 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:

		Three Months Ended September 30,
		2014				2013
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss		$	(25,613	)		$	6,321
Fund Expenses Added in Consolidation			7,649				7,679
Non-Controlling Interests in Income of Consolidated Entities			32,163				81,419
Transaction-Related Other Income			(5,517	)			(7,467	)
Total Consolidation Adjustments and Reconciling Items		$	8,682			$	87,952

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

		Three Months Ended September 30,
		2014				2013
Economic Income		$	837,875			$	655,023
Adjustments
Amortization of Intangibles			(27,828	)			(27,525	)
IPO and Acquisition-Related Charges			(209,240	)			(190,525	)
Non-Controlling Interests in Income of Consolidated Entities			32,163				81,419
Total Consolidation Adjustments and Reconciling Items			(204,905	)			(136,631	)
Income Before Provision for Taxes		$	632,970			$	518,392

The following table presents the financial data for Blackstone’s segments as of and for the nine months ended September 30, 2014 and 2013:

		September 30, 2014 and the Nine Months Then Ended
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	310,024			$	472,294			$	357,876			$	338,747			$	—			$	1,478,941
Advisory Fees			—				—				—				—				269,008				269,008
Transaction and Other Fees, Net			119,459				65,390				380				13,433				1,329				199,991
Management Fee Offsets			(11,796	)			(25,903	)			(4,085	)			(17,841	)			—				(59,625	)
Total Management and Advisory Fees, Net			417,687				511,781				354,171				334,339				270,337				1,888,315
Performance Fees
Realized
Carried Interest			457,112				961,721				—				195,201				—				1,614,034
Incentive Fees			—				7,203				54,501				68,264				—				129,968
Unrealized
Carried Interest			765,730				446,873				—				423				—				1,213,026
Incentive Fees			—				(1,120	)			74,114				38,517				—				111,511
Total Performance Fees			1,222,842				1,414,677				128,615				302,405				—				3,068,539
Investment Income (Loss)
Realized			155,768				203,194				21,907				8,334				745				389,948
Unrealized			(4,125	)			(30,566	)			4,320				12,492				1,135				(16,744	)
Total Investment Income			151,643				172,628				26,227				20,826				1,880				373,204
Interest and Dividend Revenue			15,240				21,254				7,725				16,721				7,101				68,041
Other			3,578				1,075				659				(3,867	)			137				1,582
Total Revenues			1,810,990				2,121,415				517,397				670,424				279,455				5,399,681
Expenses
Compensation and Benefits
Compensation			225,352				256,401				125,852				156,939				189,442				953,986
Performance Fee Compensation
Realized
Carried Interest			229,435				259,462				—				106,805				—				595,702
Incentive Fees			—				3,657				18,501				39,015				—				61,173
Unrealized
Carried Interest			132,480				193,113				—				(6,435	)			—				319,158
Incentive Fees			—				(524	)			26,791				12,954				—				39,221
Total Compensation and Benefits			587,267				712,109				171,144				309,278				189,442				1,969,240
Other Operating Expenses			106,308				105,787				65,061				75,858				63,311				416,325
Total Expenses			693,575				817,896				236,205				385,136				252,753				2,385,565
Economic Income		$	1,117,415			$	1,303,519			$	281,192			$	285,288			$	26,702			$	3,014,116
Segment Assets as of September 30, 2014		$	5,656,155			$	8,131,003			$	1,338,519			$	2,736,882			$	817,339			$	18,679,898

		Nine Months Ended September 30, 2013
		Private Equity				Real Estate				Hedge Fund Solutions				Credit				Financial Advisory				Total Segments
Segment Revenues
Management and Advisory Fees, Net
Base Management Fees		$	268,148			$	412,067			$	296,296			$	295,204			$	—			$	1,271,715
Advisory Fees			—				—				—				—				271,356				271,356
Transaction and Other Fees, Net			78,853				47,358				360				20,434				239				147,244
Management Fee Offsets			(4,510	)			(15,983	)			(2,238	)			(5,737	)			—				(28,468	)
Total Management and Advisory Fees, Net			342,491				443,442				294,418				309,901				271,595				1,661,847
Performance Fees
Realized
Carried Interest			228,912				306,132				—				125,068				—				660,112
Incentive Fees			—				37,931				32,874				60,027				—				130,832
Unrealized
Carried Interest			12,672				880,454				—				30,979				—				924,105
Incentive Fees			—				(27,398	)			105,698				74,805				—				153,105
Total Performance Fees			241,584				1,197,119				138,572				290,879				—				1,868,154
Investment Income (Loss)
Realized			57,243				29,039				13,922				4,725				(741	)			104,188
Unrealized			76,420				148,595				(1,702	)			4,432				(871	)			226,874
Total Investment Income (Loss)			133,663				177,634				12,220				9,157				(1,612	)			331,062
Interest and Dividend Revenue			11,466				14,754				5,617				13,906				5,799				51,542
Other			2,311				1,706				426				408				836				5,687
Total Revenues			731,515				1,834,655				451,253				624,251				276,618				3,918,292
Expenses
Compensation and Benefits
Compensation			179,750				218,597				108,323				154,712				191,570				852,952
Performance Fee Compensation
Realized
Carried Interest			36,947				119,810				—				68,959				—				225,716
Incentive Fees			—				19,376				12,092				28,653				—				60,121
Unrealized
Carried Interest			68,532				266,984				—				15,121				—				350,637
Incentive Fees			—				(14,680	)			37,679				35,647				—				58,646
Total Compensation and Benefits			285,229				610,087				158,094				303,092				191,570				1,548,072
Other Operating Expenses			91,370				86,693				51,269				67,374				60,762				357,468
Total Expenses			376,599				696,780				209,363				370,466				252,332				1,905,540
Economic Income		$	354,916			$	1,137,875			$	241,890			$	253,785			$	24,286			$	2,012,752

The following table reconciles the Total Segments to Blackstone’s Income Before Provision for Taxes and Total Assets as of and for the nine months ended September 30, 2014 and 2013:

		September 30, 2014 and the Nine Months Then Ended												Nine Months Ended September 30, 2013
		Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated				Total Segments				Consolidation Adjustments and Reconciling Items				Blackstone Consolidated
Revenues		$	5,399,681			$	64,273 (a)			$	5,463,954			$	3,918,292			$	(14,504)(a)			$	3,903,788
Expenses		$	2,385,565			$	647,205 (b)			$	3,032,770			$	1,905,540			$	630,728 (b)			$	2,536,268
Other Income		$	—			$	217,422 (c)			$	217,422			$	—			$	196,128 (c)			$	196,128
Economic Income		$	3,014,116			$	(365,510)(d)			$	2,648,606			$	2,012,752			$	(449,104)(d)			$	1,563,648
Total Assets		$	18,679,898			$	11,833,958(e)			$	30,513,856

(a) The Revenues adjustment represents management and performance fees earned from Blackstone Funds that 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:

		Nine Months Ended September 30,
		2014				2013
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss		$	(64,531	)		$	11,455
Fund Expenses Added in Consolidation			7,668				21,703
Non-Controlling Interests in Income of Consolidated Entities			284,463				184,593
Transaction-Related Other Income			(10,178	)			(21,623	)
Total Consolidation Adjustments and Reconciling Items		$	217,422			$	196,128

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

		Nine Months Ended September 30,
		2014				2013
Economic Income		$	3,014,116			$	2,012,752
Adjustments
Amortization of Intangibles			(85,141	)			(77,504	)
IPO and Acquisition-Related Charges			(564,832	)			(556,193	)
Non-Controlling Interests in Income of Consolidated Entities			284,463				184,593
Total Consolidation Adjustments and Reconciling Items			(365,510	)			(449,104	)
Income Before Provision for Taxes		$	2,648,606			$	1,563,648

(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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-Name Accounting Standards Codification

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-Name Accounting Standards Codification

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-Name Accounting Standards Codification

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+ Details

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