v2.4.1.9

SEGMENT REPORTING | 3 Months Ended
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Mar. 31, 2015
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 and public debt 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 five segments as of and for the three months ended March 31, 2015 and 2014:
|  | March 31, 2015 and the Three 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 |  | $ | 108,383 |  |  | $ | 152,348 |  |  | $ | 130,637 |  |  | $ | 125,029 |  |  | $ | — |  |  | $ | 516,397 |
Advisory Fees |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 84,238 |  |  |  | 84,238 |
Transaction and Other Fees, Net |  |  | 20,359 |  |  |  | 15,216 |  |  |  | 25 |  |  |  | 1,457 |  |  |  | 16 |  |  |  | 37,073 |
Management Fee Offsets |  |  | (4,949 | ) |  |  | (4,866 | ) |  |  | (280 | ) |  |  | (7,850 | ) |  |  | — |  |  |  | (17,945 | )
Total Management and Advisory Fees, Net |  |  | 123,793 |  |  |  | 162,698 |  |  |  | 130,382 |  |  |  | 118,636 |  |  |  | 84,254 |  |  |  | 619,763 |
Performance Fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 382,978 |  |  |  | 811,249 |  |  |  | — |  |  |  | 13,367 |  |  |  | — |  |  |  | 1,207,594 |
Incentive Fees |  |  | — |  |  |  | 723 |  |  |  | 10,516 |  |  |  | 18,431 |  |  |  | — |  |  |  | 29,670 |
Unrealized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 566,822 |  |  |  | (181,019 | ) |  |  | — |  |  |  | (11,951 | ) |  |  | — |  |  |  | 373,852 |
Incentive Fees |  |  | — |  |  |  | 6,069 |  |  |  | 47,427 |  |  |  | 9,124 |  |  |  | — |  |  |  | 62,620 |
Total Performance Fees |  |  | 949,800 |  |  |  | 637,022 |  |  |  | 57,943 |  |  |  | 28,971 |  |  |  | — |  |  |  | 1,673,736 |
Investment Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized |  |  | 44,816 |  |  |  | 71,344 |  |  |  | (10,375 | ) |  |  | 2,237 |  |  |  | (230 | ) |  |  | 107,792 |
Unrealized |  |  | 31,487 |  |  |  | 37,510 |  |  |  | 4,483 |  |  |  | 6,887 |  |  |  | 1,482 |  |  |  | 81,849 |
Total Investment Income (Loss) |  |  | 76,303 |  |  |  | 108,854 |  |  |  | (5,892 | ) |  |  | 9,124 |  |  |  | 1,252 |  |  |  | 189,641 |
Interest and Dividend Revenue |  |  | 7,617 |  |  |  | 9,997 |  |  |  | 3,949 |  |  |  | 5,651 |  |  |  | 3,237 |  |  |  | 30,451 |
Other |  |  | (1,825 | ) |  |  | (3,977 | ) |  |  | (1,607 | ) |  |  | 3,493 |  |  |  | (956 | ) |  |  | (4,872 | )
Total Revenues |  |  | 1,155,688 |  |  |  | 914,594 |  |  |  | 184,775 |  |  |  | 165,875 |  |  |  | 87,787 |  |  |  | 2,508,719 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and Benefits Compensation |  |  | 70,089 |  |  |  | 84,834 |  |  |  | 56,104 |  |  |  | 49,877 |  |  |  | 68,934 |  |  |  | 329,838 |
Performance Fee Compensation |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 39,482 |  |  |  | 246,496 |  |  |  | — |  |  |  | 6,270 |  |  |  | — |  |  |  | 292,248 |
Incentive Fees |  |  | — |  |  |  | 356 |  |  |  | 3,470 |  |  |  | 8,401 |  |  |  | — |  |  |  | 12,227 |
Unrealized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 178,120 |  |  |  | (98,084 | ) |  |  | — |  |  |  | (5,656 | ) |  |  | — |  |  |  | 74,380 |
Incentive Fees |  |  | — |  |  |  | 2,575 |  |  |  | 15,651 |  |  |  | 6,735 |  |  |  | — |  |  |  | 24,961 |
Total Compensation and Benefits |  |  | 287,691 |  |  |  | 236,177 |  |  |  | 75,225 |  |  |  | 65,627 |  |  |  | 68,934 |  |  |  | 733,654 |
Other Operating Expenses |  |  | 38,755 |  |  |  | 40,143 |  |  |  | 21,206 |  |  |  | 21,836 |  |  |  | 21,342 |  |  |  | 143,282 |
Total Expenses |  |  | 326,446 |  |  |  | 276,320 |  |  |  | 96,431 |  |  |  | 87,463 |  |  |  | 90,276 |  |  |  | 876,936 |
Economic Income (Loss) |  | $ | 829,242 |  |  | $ | 638,274 |  |  | $ | 88,344 |  |  | $ | 78,412 |  |  | $ | (2,489 | ) |  | $ | 1,631,783 |
Segment Assets |  | $ | 6,754,805 |  |  | $ | 7,916,836 |  |  | $ | 1,533,776 |  |  | $ | 2,563,449 |  |  | $ | 869,846 |  |  | $ | 19,638,712 |
|  | Three Months Ended March 31, 2014 |
|  | Private Equity |  |  | Real Estate |  |  | Hedge Fund Solutions |  |  | Credit |  |  | Financial Advisory |  |  | Total Segments |
Segment Revenues |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Management and Advisory Fees, Net |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Base Management Fees |  | $ | 98,584 |  |  | $ | 159,336 |  |  | $ | 113,384 |  |  | $ | 105,574 |  |  | $ | — |  |  | $ | 476,878 |
Advisory Fees |  |  | — |  |  |  | — |  |  |  | — |  |  |  | — |  |  |  | 69,963 |  |  |  | 69,963 |
Transaction and Other Fees, Net |  |  | 42,847 |  |  |  | 13,564 |  |  |  | 93 |  |  |  | 3,344 |  |  |  | 62 |  |  |  | 59,910 |
Management Fee Offsets |  |  | (1,713 | ) |  |  | (9,224 | ) |  |  | (1,455 | ) |  |  | (4,252 | ) |  |  | — |  |  |  | (16,644 | )
Total Management and Advisory Fees, Net |  |  | 139,718 |  |  |  | 163,676 |  |  |  | 112,022 |  |  |  | 104,666 |  |  |  | 70,025 |  |  |  | 590,107 |
Performance Fees |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 119,805 |  |  |  | 194,658 |  |  |  | — |  |  |  | 19,160 |  |  |  | — |  |  |  | 333,623 |
Incentive Fees |  |  | — |  |  |  | (26 | ) |  |  | 39,845 |  |  |  | 14,018 |  |  |  | — |  |  |  | 53,837 |
Unrealized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 167,065 |  |  |  | 140,237 |  |  |  | — |  |  |  | 22,986 |  |  |  | — |  |  |  | 330,288 |
Incentive Fees |  |  | — |  |  |  | 2,737 |  |  |  | 18,085 |  |  |  | 40,444 |  |  |  | — |  |  |  | 61,266 |
Total Performance Fees |  |  | 286,870 |  |  |  | 337,606 |  |  |  | 57,930 |  |  |  | 96,608 |  |  |  | — |  |  |  | 779,014 |
Investment Income (Loss) |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Realized |  |  | 60,535 |  |  |  | 31,357 |  |  |  | 16,820 |  |  |  | 3,071 |  |  |  | 134 |  |  |  | 111,917 |
Unrealized |  |  | (9,033 | ) |  |  | 5,379 |  |  |  | 4,431 |  |  |  | 3,079 |  |  |  | 694 |  |  |  | 4,550 |
Total Investment Income |  |  | 51,502 |  |  |  | 36,736 |  |  |  | 21,251 |  |  |  | 6,150 |  |  |  | 828 |  |  |  | 116,467 |
Interest and Dividend Revenue |  |  | 5,228 |  |  |  | 6,110 |  |  |  | 2,661 |  |  |  | 5,861 |  |  |  | 2,502 |  |  |  | 22,362 |
Other |  |  | 864 |  |  |  | 317 |  |  |  | 122 |  |  |  | (259 | ) |  |  | (175 | ) |  |  | 869 |
Total Revenues |  |  | 484,182 |  |  |  | 544,445 |  |  |  | 193,986 |  |  |  | 213,026 |  |  |  | 73,180 |  |  |  | 1,508,819 |
Expenses |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Compensation and Benefits Compensation |  |  | 73,307 |  |  |  | 80,233 |  |  |  | 40,571 |  |  |  | 50,752 |  |  |  | 61,682 |  |  |  | 306,545 |
Performance Fee Compensation Realized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | 85,771 |  |  |  | 51,833 |  |  |  | — |  |  |  | 11,794 |  |  |  | — |  |  |  | 149,398 |
Incentive Fees |  |  | — |  |  |  | (16 | ) |  |  | 13,271 |  |  |  | 10,380 |  |  |  | — |  |  |  | 23,635 |
Unrealized |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |  |
Carried Interest |  |  | (27,148 | ) |  |  | 56,985 |  |  |  | — |  |  |  | 10,853 |  |  |  | — |  |  |  | 40,690 |
Incentive Fees |  |  | — |  |  |  | 1,382 |  |  |  | 6,761 |  |  |  | 15,388 |  |  |  | — |  |  |  | 23,531 |
Total Compensation and Benefits |  |  | 131,930 |  |  |  | 190,417 |  |  |  | 60,603 |  |  |  | 99,167 |  |  |  | 61,682 |  |  |  | 543,799 |
Other Operating Expenses |  |  | 33,006 |  |  |  | 33,107 |  |  |  | 19,480 |  |  |  | 32,839 |  |  |  | 21,342 |  |  |  | 139,774 |
Total Expenses |  |  | 164,936 |  |  |  | 223,524 |  |  |  | 80,083 |  |  |  | 132,006 |  |  |  | 83,024 |  |  |  | 683,573 |
Economic Income (Loss) |  | $ | 319,246 |  |  | $ | 320,921 |  |  | $ | 113,903 |  |  | $ | 81,020 |  |  | $ | (9,844 | ) |  | $ | 825,246 |
The following table reconciles the Total Segments to Blackstone’s Income Before Provision for Taxes and Total Assets as of and for the three months ended March 31, 2015 and 2014:
|  | Three Months Ended March 31, 2015 |  |  | Three Months Ended March 31, 2014 |
|  | Total Segments |  |  | Consolidation Adjustments and Reconciling Items |  |  | Blackstone Consolidated |  |  | Total Segments |  |  | Consolidation Adjustments and Reconciling Items |  |  | Blackstone Consolidated |
Revenues |  | $ | 2,508,719 |  |  | $ | (15,139)(a) |  |  | $ | 2,493,580 |  |  | $ | 1,508,819 |  |  | $ | 17,849(a) |  |  | $ | 1,526,668 |
Expenses |  | $ | 876,936 |  |  | $ | 272,014(b) |  |  | $ | 1,148,950 |  |  | $ | 683,573 |  |  | $ | 204,278(b) |  |  | $ | 887,851 |
Other Income |  | $ | — |  |  | $ | 238,972(c) |  |  | $ | 238,972 |  |  | $ | — |  |  | $ | 70,155(c) |  |  | $ | 70,155 |
Economic Income |  | $ | 1,631,783 |  |  | $ | (48,181)(d) |  |  | $ | 1,583,602 |  |  | $ | 825,246 |  |  | $ | (116,274)(d) |  |  | $ | 708,972 |
Total Assets |  | $ | 19,638,712 |  |  | $ | 12,767,889(e) |  |  | $ | 32,406,601 |  |  | $ | 16,458,341 |  |  | $ | 13,570,204(e) |  |  | $ | 30,028,545 |
(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:
|  | Three Months Ended March 31, |
|  | 2015 |  |  | 2014 |
Fund Management Fees and Performance Fees Eliminated in Consolidation and Transactional Investment Loss |  | $ | 15,067 |  |  | $ | (17,878 | )
Fund Expenses Added in Consolidation |  |  | 15,748 |  |  |  | (746 | )
Non-Controlling Interests in Income of Consolidated Entities |  |  | 209,580 |  |  |  | 89,753 |
Transaction-Related Other Loss |  |  | (1,423 | ) |  |  | (974 | )
Total Consolidation Adjustments and Reconciling Items |  | $ | 238,972 |  |  | $ | 70,155 |
(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 March 31, |
|  | 2015 |  |  | 2014 |
Economic Income |  | $ | 1,631,783 |  |  | $ | 825,246 |
Adjustments |  |  |  |  |  |  |  |
Amortization of Intangibles |  |  | (25,899 | ) |  |  | (29,003 | )
IPO and Acquisition-Related Charges |  |  | (231,862 | ) |  |  | (177,024 | )
Non-Controlling Interests in Income of Consolidated Entities |  |  | 209,580 |  |  |  | 89,753 |
Total Consolidation Adjustments and Reconciling Items |  |  | (48,181 | ) |  |  | (116,274 | )
Income Before Provision for Taxes |  | $ | 1,583,602 |  |  | $ | 708,972 |
(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.

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- 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 Reference 1: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 29 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8864-108599 Reference 2: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 32 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8933-108599 Reference 3: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 26 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8844-108599 Reference 4: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 10 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8538-108599 Reference 5: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 1 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8380-108599 Reference 6: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 34 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8981-108599 Reference 7: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 35 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8984-108599 Reference 8: 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 Reference 9: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 30 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8906-108599 Reference 10: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 42 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9054-108599 Reference 11: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 31 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8924-108599 Reference 12: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 40 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e9031-108599 Reference 13: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 33 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8971-108599 Reference 14: http://www.xbrl.org/2003/role/presentationRef -Publisher FASB -Name Accounting Standards Codification -Topic 280 -SubTopic 10 -Section 50 -Paragraph 12 -URI http://asc.fasb.org/extlink&oid=6534315&loc=d3e8595-108599 + Details
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