Segment Reporting (Tables)

9 Months Ended

Sep. 30, 2017

The following table presents the financial data for the Partnership’s four reportable segments for the three and nine months ended September 30, 2017:



	Three Months Ended September 30, 2017
	Corporate Private Equity			Real Assets			Global Market Strategies			Investment Solutions			Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	118.3		$	71.4		$	47.6		$	41.1		$	278.4
Portfolio advisory fees, net	3.6			0.4			0.1			—			4.1
Transaction fees, net	5.3			0.8			—			—			6.1
Total fund level fee revenues	127.2			72.6			47.7			41.1			288.6
Performance fees
Realized	345.4			20.4			15.0			30.2			411.0
Unrealized	(193.2		)	60.8			2.6			4.2			(125.6		)
Total performance fees	152.2			81.2			17.6			34.4			285.4
Investment income (loss)
Realized	6.5			(64.6		)	4.7			—			(53.4		)
Unrealized	4.1			12.4			—			1.6			18.1
Total investment income (loss)	10.6			(52.2		)	4.7			1.6			(35.3		)
Interest income	1.8			1.0			2.0			0.6			5.4
Other income	1.6			0.6			1.1			0.1			3.4
Total revenues	293.4			103.2			73.1			77.8			547.5
Segment Expenses
Compensation and benefits
Direct base compensation	65.3			24.5			23.0			19.7			132.5
Indirect base compensation	18.3			14.8			6.7			5.0			44.8
Equity-based compensation	14.5			8.7			5.1			2.1			30.4
Performance fee related
Realized	147.7			9.2			7.3			29.9			194.1
Unrealized	(76.1		)	21.6			0.8			(2.0		)	(55.7		)
Total compensation and benefits	169.7			78.8			42.9			54.7			346.1
General, administrative, and other indirect expenses	20.5			10.5			(63.6		)	6.1			(26.5		)
Depreciation and amortization expense	4.1			1.9			1.3			0.9			8.2
Interest expense	7.0			4.2			4.2			1.6			17.0
Total expenses	201.3			95.4			(15.2		)	63.3			344.8
Economic Net Income	$	92.1		$	7.8		$	88.3		$	14.5		$	202.7
(-) Net Performance Fees	80.6			50.4			9.5			6.5			147.0
(-) Investment Income (Loss)	10.6			(52.2		)	4.7			1.6			(35.3		)
(+) Equity-based Compensation	14.5			8.7			5.1			2.1			30.4
(+) Reserve for Litigation and Contingencies	(12.5		)	(5.8		)	(4.1		)	(2.6		)	(25.0		)
(=) Fee Related Earnings	$	2.9		$	12.5		$	75.1		$	5.9		$	96.4
(+) Realized Net Performance Fees	197.7			11.2			7.7			0.3			216.9
(+) Realized Investment Income (Loss)	6.5			(64.6		)	4.7			—			(53.4		)
(=) Distributable Earnings	$	207.1		$	(40.9	)	$	87.5		$	6.2		$	259.9



	September 30, 2017 and the Nine Months Then Ended
	Corporate Private Equity			Real Assets			Global Market Strategies			Investment Solutions			Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	351.7		$	185.6		$	140.8		$	113.1		$	791.2
Portfolio advisory fees, net	11.9			0.6			0.5			—			13.0
Transaction fees, net	14.2			0.8			—			—			15.0
Total fund level fee revenues	377.8			187.0			141.3			113.1			819.2
Performance fees
Realized	668.8			73.6			37.8			66.5			846.7
Unrealized	465.0			200.1			15.5			32.1			712.7
Total performance fees	1,133.8			273.7			53.3			98.6			1,559.4
Investment income (loss)
Realized	15.6			(72.4		)	8.6			—			(48.2		)
Unrealized	22.9			24.4			4.3			3.1			54.7
Total investment income (loss)	38.5			(48.0		)	12.9			3.1			6.5
Interest income	3.7			2.0			4.6			0.9			11.2
Other income	4.2			1.3			5.6			0.3			11.4
Total revenues	1,558.0			416.0			217.7			216.0			2,407.7
Segment Expenses
Compensation and benefits
Direct base compensation	175.4			61.6			55.3			51.9			344.2
Indirect base compensation	55.0			45.6			20.9			11.9			133.4
Equity-based compensation	47.3			26.8			16.9			6.2			97.2
Performance fee related
Realized	295.4			33.4			18.2			65.4			412.4
Unrealized	221.1			60.1			6.9			18.4			306.5
Total compensation and benefits	794.2			227.5			118.2			153.8			1,293.7
General, administrative, and other indirect expenses	83.9			52.6			(18.6		)	21.6			139.5
Depreciation and amortization expense	11.5			5.3			3.8			2.6			23.2
Interest expense	21.1			12.7			10.0			4.6			48.4
Total expenses	910.7			298.1			113.4			182.6			1,504.8
Economic Net Income	$	647.3		$	117.9		$	104.3		$	33.4		$	902.9
(-) Net Performance Fees	617.3			180.2			28.2			14.8			840.5
(-) Investment Income (Loss)	38.5			(48.0		)	12.9			3.1			6.5
(+) Equity-based Compensation	47.3			26.8			16.9			6.2			97.2
(+) Reserve for Litigation and Contingencies	(12.5		)	(5.8		)	(4.1		)	(2.6		)	(25.0		)
(=) Fee Related Earnings	$	26.3		$	6.7		$	76.0		$	19.1		$	128.1
(+) Realized Net Performance Fees	373.4			40.2			19.6			1.1			434.3
(+) Realized Investment Income (Loss)	15.6			(72.4		)	8.6			—			(48.2		)
(=) Distributable Earnings	$	415.3		$	(25.5	)	$	104.2		$	20.2		$	514.2
Segment assets as of September 30, 2017	$	3,472.9		$	1,861.8		$	996.5		$	1,063.4		$	7,394.6

The following table presents the financial data for the Partnership’s four reportable segments for the three and nine months ended September 30, 2016:



	Three Months Ended September 30, 2016
	Corporate Private Equity			Real Assets			Global Market Strategies			Investment Solutions			Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	122.9		$	60.3		$	44.1		$	33.1		$	260.4
Portfolio advisory fees, net	2.9			—			0.1			0.8			3.8
Transaction fees, net	1.4			—			—			—			1.4
Total fund level fee revenues	127.2			60.3			44.2			33.9			265.6
Performance fees
Realized	311.1			19.2			14.3			36.3			380.9
Unrealized	(124.2		)	2.0			3.1			(6.8		)	(125.9		)
Total performance fees	186.9			21.2			17.4			29.5			255.0
Investment income (loss)
Realized	24.1			(14.1		)	1.1			—			11.1
Unrealized	(9.6		)	4.5			7.1			0.2			2.2
Total investment income (loss)	14.5			(9.6		)	8.2			0.2			13.3
Interest income	0.9			0.4			1.1			0.1			2.5
Other income	1.3			0.4			1.2			0.2			3.1
Total revenues	330.8			72.7			72.1			63.9			539.5
Segment Expenses
Compensation and benefits
Direct base compensation	52.7			17.2			20.9			16.3			107.1
Indirect base compensation	17.8			8.9			7.5			2.7			36.9
Equity-based compensation	19.8			7.1			4.4			1.6			32.9
Performance fee related
Realized	143.5			8.7			6.6			35.8			194.6
Unrealized	(57.8		)	(15.7		)	1.3			(9.7		)	(81.9		)
Total compensation and benefits	176.0			26.2			40.7			46.7			289.6
General, administrative, and other indirect expenses	81.4			37.2			37.7			17.3			173.6
Depreciation and amortization expense	3.4			1.4			1.5			0.9			7.2
Interest expense	7.0			4.1			3.0			1.5			15.6
Total expenses	267.8			68.9			82.9			66.4			486.0
Economic Net Income (Loss)	$	63.0		$	3.8		$	(10.8	)	$	(2.5	)	$	53.5
(-) Net Performance Fees	101.2			28.2			9.5			3.4			142.3
(-) Investment Income (Loss)	14.5			(9.6		)	8.2			0.2			13.3
(+) Equity-based Compensation	19.8			7.1			4.4			1.6			32.9
(+) Reserve for Litigation and Contingencies	49.8			21.6			19.0			9.6			100.0
(=) Fee Related Earnings	$	16.9		$	13.9		$	(5.1	)	$	5.1		$	30.8
(+) Realized Net Performance Fees	167.6			10.5			7.7			0.5			186.3
(+) Realized Investment Income (Loss)	24.1			(14.1		)	1.1			—			11.1
(=) Distributable Earnings	$	208.6		$	10.3		$	3.7		$	5.6		$	228.2



	Nine Months Ended September 30, 2016
	Corporate Private Equity			Real Assets			Global Market Strategies			Investment Solutions			Total
	(Dollars in millions)
Segment Revenues
Fund level fee revenues
Fund management fees	$	376.9		$	192.0		$	147.4		$	103.7		$	820.0
Portfolio advisory fees, net	11.2			0.1			0.7			0.8			12.8
Transaction fees, net	24.3			—			—			—			24.3
Total fund level fee revenues	412.4			192.1			148.1			104.5			857.1
Performance fees
Realized	775.2			79.8			21.5			42.7			919.2
Unrealized	(496.2		)	165.8			4.6			19.9			(305.9		)
Total performance fees	279.0			245.6			26.1			62.6			613.3
Investment income (loss)
Realized	46.6			(21.4		)	2.7			—			27.9
Unrealized	(12.7		)	6.5			14.9			(0.8		)	7.9
Total investment income (loss)	33.9			(14.9		)	17.6			(0.8		)	35.8
Interest income	2.7			1.3			3.7			0.3			8.0
Other income	4.0			1.0			3.5			0.4			8.9
Total revenues	732.0			425.1			199.0			167.0			1,523.1
Segment Expenses
Compensation and benefits
Direct base compensation	165.8			55.4			66.3			49.9			337.4
Indirect base compensation	55.6			28.2			22.7			8.6			115.1
Equity-based compensation	56.0			20.3			13.8			5.1			95.2
Performance fee related
Realized	345.4			34.8			8.1			41.2			429.5
Unrealized	(219.9		)	55.2			2.2			13.3			(149.2		)
Total compensation and benefits	402.9			193.9			113.1			118.1			828.0
General, administrative, and other indirect expenses	144.3			70.7			77.1			34.6			326.7
Depreciation and amortization expense	10.2			4.4			4.6			2.6			21.8
Interest expense	21.2			12.1			8.5			4.5			46.3
Total expenses	578.6			281.1			203.3			159.8			1,222.8
Economic Net Income (Loss)	$	153.4		$	144.0		$	(4.3	)	$	7.2		$	300.3
(-) Net Performance Fees	153.5			155.6			15.8			8.1			333.0
(-) Investment Income (Loss)	33.9			(14.9		)	17.6			(0.8		)	35.8
(+) Equity-based Compensation	56.0			20.3			13.8			5.1			95.2
(+) Reserve for Litigation and Contingencies	49.8			21.6			19.0			9.6			100.0
(=) Fee Related Earnings	$	71.8		$	45.2		$	(4.9	)	$	14.6		$	126.7
(+) Realized Net Performance Fees	429.8			45.0			13.4			1.5			489.7
(+) Realized Investment Income (Loss)	46.6			(21.4		)	2.7			—			27.9
(=) Distributable Earnings	$	548.2		$	68.8		$	11.2		$	16.1		$	644.3

Total segments to partnership income before provision for taxes reconciliation

The following table reconciles the Total Segments to the Partnership’s Income Before Provision for Taxes for the three months ended September 30, 2017 and 2016.



	Three Months Ended September 30, 2017
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	(Dollars in millions)
Revenues	$	547.5	$	44.7	$	47.7		(a)	$	639.9
Expenses	$	344.8	$	52.3	$	95.5		(b)	$	492.6
Other income	$	—	$	18.6	$	—		(c)	$	18.6
Economic net income	$	202.7	$	11.0	$	(47.8	)	(d)	$	165.9



	Three Months Ended September 30, 2016
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	(Dollars in millions)
Revenues	$	539.5	$	43.0	$	24.8		(a)	$	607.3
Expenses	$	486.0	$	41.2	$	134.6		(b)	$	661.8
Other income	$	—	$	4.8	$	—		(c)	$	4.8
Economic net income (loss)	$	53.5	$	6.6	$	(109.8	)	(d)	$	(49.7	)

The following table reconciles the Total Segments to the Partnership’s Income Before Provision for Taxes for the nine months ended September 30, 2017 and 2016, and Total Assets as of September 30, 2017.



	September 30, 2017 and the Nine Months Then Ended
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	(Dollars in millions)
Revenues	$	2,407.7	$	132.6	$	128.1		(a)	$	2,668.4
Expenses	$	1,504.8	$	197.2	$	305.5		(b)	$	2,007.5
Other income	$	—	$	76.4	$	—		(c)	$	76.4
Economic net income	$	902.9	$	11.8	$	(177.4	)	(d)	$	737.3
Total assets	$	7,394.6	$	4,495.5	$	(203.5	)	(e)	$	11,686.6



	Nine Months Ended September 30, 2016
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	Total Reportable Segments		Consolidated Funds		Reconciling Items				Carlyle Consolidated
	(Dollars in millions)
Revenues	$	1,523.1	$	107.8	$	67.5		(a)	$	1,698.4
Expenses	$	1,222.8	$	105.9	$	339.4		(b)	$	1,668.1
Other loss	$	—	$	3.1	$	—		(c)	$	3.1
Economic net income (loss)	$	300.3	$	5.0	$	(271.9	)	(d)	$	33.4

(a)

The Revenues adjustment principally represents fund management and performance fees earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Partnership’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management and its affiliates that are included in operating captions or are excluded from the segment results, adjustments to reflect the Partnership’s share of Urbplan’s net losses as a component of investment income until Urbplan was deconsolidated during the three months ended September 30, 2017, the inclusion of tax expenses associated with certain performance fees, and adjustments to reflect the Partnership’s ownership interests in Claren Road (through January 2017) and ESG (through June 2016) that were included in Revenues in the Partnership’s segment reporting.

(b)

The Expenses adjustment represents the elimination of intercompany expenses of the Consolidated Funds payable to the Partnership, the inclusion of certain tax expenses associated with performance fee compensation, adjustments related to expenses associated with the investment in NGP Management that are included in operating captions, adjustments to reflect the Partnership’s share of Urbplan’s net losses as a component of investment income until Urbplan was deconsolidated during the three months ended September 30, 2017, changes in the tax receivable agreement liability, charges and credits associated with Carlyle corporate actions and non-recurring items and adjustments to reflect the Partnership’s economic interests in Claren Road (through January 2017) and ESG (through June 2016), as detailed below (Dollars in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Equity-based compensation issued in conjunction with the initial public offering, acquisitions and strategic investments	$	58.3		$	50.6		$	183.8		$	175.3
Acquisition related charges, including amortization of intangibles and impairment	7.2			27.7			25.2			67.0
Other non-operating expense (income)	—			(3.7		)	0.1			0.8
Tax expense associated with performance fees	(1.7		)	(2.0		)	(7.0		)	(16.1		)
Non-Carlyle economic interests in acquired businesses and the real estate VIE	46.2			69.4			128.8			120.7
Severance and other adjustments	0.6			1.5			10.9			10.3
Elimination of expenses of Consolidated Funds	(15.1		)	(8.9		)	(36.3		)	(18.6		)
	$	95.5		$	134.6		$	305.5		$	339.4


(c)	The Other Income (Loss) adjustment results from the Consolidated Funds which were eliminated in consolidation to arrive at the Partnership’s total Other Income (Loss).


(d)	The following table is a reconciliation of Income Before Provision for Income Taxes to Economic Net Income, to Fee Related Earnings, and to Distributable Earnings (Dollars in millions):



	Three Months Ended September 30,						Nine Months Ended September 30,
	2017			2016			2017			2016
Income (loss) before provision for income taxes	$	165.9		$	(49.7	)	$	737.3		$	33.4
Adjustments:
Equity-based compensation issued in conjunction with the initial public offering, acquisitions and strategic investments	58.3			50.6			183.8			175.3
Acquisition related charges, including amortization of intangibles and impairment	7.2			27.7			25.2			67.0
Other non-operating expense (income)	—			(3.7		)	0.1			0.8
Tax provision associated with performance fees	(1.7		)	(2.0		)	(7.0		)	(16.1		)
Net (income) loss attributable to non-controlling interests in consolidated entities	(27.6		)	29.1			(47.4		)	29.8
Severance and other adjustments	0.6			1.5			10.9			10.1
Economic Net Income	$	202.7		$	53.5		$	902.9		$	300.3
Net performance fees⁽¹⁾	147.0			142.3			840.5			333.0
Investment income (loss) ⁽¹⁾	(35.3		)	13.3			6.5			35.8
Equity-based compensation	30.4			32.9			97.2			95.2
Reserve for litigation and contingencies	(25.0		)	100.0			(25.0		)	100.0
Fee Related Earnings	$	96.4		$	30.8		$	128.1		$	126.7
Realized performance fees, net of related compensation	216.9			186.3			434.3			489.7
Realized investment income (loss)⁽¹⁾	(53.4		)	11.1			(48.2		)	27.9
Distributable Earnings	$	259.9		$	228.2		$	514.2		$	644.3

(1) See reconciliation to most directly comparable U.S. GAAP measure below:



	Three Months Ended September 30, 2017
	Carlyle Consolidated			Adjustments ⁽²⁾			Total Reportable Segments
	(Dollars in millions)
Performance fees
Realized	$	411.8		$	(0.8	)	$	411.0
Unrealized	(126.2		)	0.6			(125.6		)
Total performance fees	285.6			(0.2		)	285.4
Performance fee related compensation expense
Realized	189.4			4.7			194.1
Unrealized	(51.8		)	(3.9		)	(55.7		)
Total performance fee related compensation expense	137.6			0.8			138.4
Net performance fees
Realized	222.4			(5.5		)	216.9
Unrealized	(74.4		)	4.5			(69.9		)
Total net performance fees	$	148.0		$	(1.0	)	$	147.0
Investment income (loss)
Realized	$	15.5		$	(68.9	)	$	(53.4	)
Unrealized	21.7			(3.6		)	18.1
Investment income (loss)	$	37.2		$	(72.5	)	$	(35.3	)



	Three Months Ended September 30, 2016
	Carlyle Consolidated			Adjustments⁽²⁾			Total Reportable Segments
	(Dollars in millions)
Performance fees
Realized	$	383.4		$	(2.5	)	$	380.9
Unrealized	(168.7		)	42.8			(125.9		)
Total performance fees	214.7			40.3			255.0
Performance fee related compensation expense
Realized	189.0			5.6			194.6
Unrealized	(78.1		)	(3.8		)	(81.9		)
Total performance fee related compensation expense	110.9			1.8			112.7
Net performance fees
Realized	194.4			(8.1		)	186.3
Unrealized	(90.6		)	46.6			(44.0		)
Total net performance fees	$	103.8		$	38.5		$	142.3
Investment income (loss)
Realized	$	40.7		$	(29.6	)	$	11.1
Unrealized	29.8			(27.6		)	2.2
Total investment income (loss)	$	70.5		$	(57.2	)	$	13.3



	Nine Months Ended September 30, 2017
	Carlyle Consolidated		Adjustments ⁽²⁾			Total Reportable Segments
	(Dollars in millions)
Performance fees
Realized	$	852.7	$	(6.0	)	$	846.7
Unrealized	658.1		54.6			712.7
Total performance fees	1,510.8		48.6			1,559.4
Performance fee related compensation expense
Realized	401.9		10.5			412.4
Unrealized	309.9		(3.4		)	306.5
Total performance fee related compensation expense	711.8		7.1			718.9
Net performance fees
Realized	450.8		(16.5		)	434.3
Unrealized	348.2		58.0			406.2
Total net performance fees	$	799.0	$	41.5		$	840.5
Investment income (loss)
Realized	$	42.0	$	(90.2	)	$	(48.2	)
Unrealized	100.5		(45.8		)	54.7
Investment income (loss)	$	142.5	$	(136.0	)	$	6.5



	Nine Months Ended September 30, 2016
	Carlyle Consolidated			Adjustments ⁽²⁾			Total Reportable Segments
	(Dollars in millions)
Performance fees
Realized	$	905.1		$	14.1		$	919.2
Unrealized	(334.3		)	28.4			(305.9		)
Total performance fees	570.8			42.5			613.3
Performance fee related compensation expense
Realized	423.0			6.5			429.5
Unrealized	(146.1		)	(3.1		)	(149.2		)
Total performance fee related compensation expense	276.9			3.4			280.3
Net performance fees
Realized	482.1			7.6			489.7
Unrealized	(188.2		)	31.5			(156.7		)
Total net performance fees	$	293.9		$	39.1		$	333.0
Investment income (loss)
Realized	$	92.2		$	(64.3	)	$	27.9
Unrealized	34.0			(26.1		)	7.9
Total investment income (loss)	$	126.2		$	(90.4	)	$	35.8

(2) Adjustments to performance fees and investment income (loss) relate to (i) amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the segment results, (ii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results, (iii) the reclassification of NGP performance fees, which are included in investment income in U.S. GAAP financial statements, and (iv) the reclassification of certain tax expenses associated with performance fees. Adjustments to investment income (loss) also include the reclassification of earnings for the investments in NGP Management and its affiliates to the appropriate operating captions for the segment results, the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the segment results, and adjustments to reflect the Partnership’s share of Urbplan’s net losses as investment losses for the segment results until Urbplan was deconsolidated during the three months ended September 30, 2017. Adjustments are also included in these financial statement captions to reflect the Partnership’s economic interests in Claren Road (through January 2017) and ESG (through June 2016).

(e) The Total Assets adjustment represents the addition of the assets of the Consolidated Funds that were eliminated in consolidation to arrive at the Partnership’s total assets.