KKR & Co (KKR)

[Drmicrocap]

KKR & Co. L.P. Announces Second Quarter 2013 Results


Realization activity drives record cash carry and $0.42 distribution per common unit

GAAP net income (loss) attributable to KKR & Co. L.P. was $15.1 million and $208.6 million for the quarter and six months ended June 30, 2013, respectively, down from $146.3 million and $336.7 million in the comparable periods of 2012.

Assets under management (“AUM”) totaled $83.5 billion as of June 30, 2013, up from $78.3 billion as of March 31, 2013.

Fee related earnings (“FRE”) were $98.2 million and $186.2 million for the quarter and six months ended June 30, 2013, respectively, up from $69.8 million and $143.1 million in the comparable periods of 2012.

Total distributable earnings were $403.8 million for the quarter ended June 30, 2013, down from $406.1 million for the quarter ended June 30, 2012. Total distributable earnings were $694.4 million for the six months ended June 30, 2013, up from $570.2 million in the comparable period of 2012.

Economic net income (“ENI”) was $144.4 million and $792.2 million for the quarter and six months ended June 30, 2013, respectively, down from $546.1 million and $1,273.3 million in the comparable periods of 2012.

After-tax ENI was $0.18 and $1.06 per adjusted unit for the quarter and six months ended June 30, 2013, respectively, down from $0.74 and $1.73 per adjusted unit in the comparable periods of 2012.

Book value was $6.9 billion on a total reportable segment basis as of June 30, 2013 or $9.65 per adjusted unit.

KKR & Co. L.P. declares a second quarter distribution of $0.42 per common unit, which includes $0.23 per common unit of cash carry and $0.09 per common unit of net realized principal investment income.


Business WirePress Release: KKR & Co. L.P. – Fri, Jul 26, 2013 8:00 AM EDT..

KKR & Co. L.P. ( KKR ) today reported its second quarter 2013 results.

AUM and fee paying assets under management (FPAUM) were $83.5 billion and $68.0 billion, respectively as of June 30, 2013, both up from March 31, 2013. The increases in both AUM and FPAUM were primarily attributable to new capital raised relating to the Asian Fund II. The increases were partially offset by distributions to fund limited partners and to a lesser extent the impact of the Asian Fund entering its post-investment period.

For the quarter and six months ended June 30, 2013, FRE was $98.2 million and $186.2 million, respectively, up from $69.8 million and $143.1 million in the comparable periods of 2012. The increase in both comparable periods was primarily driven by new capital raised over the past twelve months and the acquisition of Prisma.

For the quarter and six months ended June 30, 2013, the carrying value of our private equity investment portfolio appreciated 0.9% and 6.6%, respectively. ENI was $144.4 million and $792.2 million for the quarter and six months ended June 30, 2013, respectively, down from $546.1 million and $1,273.3 million in the comparable periods of 2012. The decrease in both comparable periods was primarily due to lower investment income earned from our principal investments as well as a lower level of net carried interest earned from our private equity funds. While the fair value of our principal investments increased during the quarter and six months ended June 30, 2013, the level of appreciation was lower than in the comparable periods of 2012.

Over the past year, organic fee-paying AUM inflows have exceeded $19 billion, supporting the continued growth of our Private Markets business as well as the scaling of our newer strategies in Public Markets, said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR. In addition, our realization activity in the second quarter drove the highest cash carry weve reported since going public, contributing to a quarterly distribution of $0.42 per unit.


Note: Certain financial measures, including FRE, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee related EBITDA, book value, cash and short-term investments and adjusted units, are not presented in accordance with accounting principles generally accepted in the United States of America (GAAP). See Exhibits A and B for a reconciliation of such measures to financial results prepared in accordance with GAAP.

GAAP RESULTS

GAAP results for the quarter and six months ended June 30, 2013 included net income attributable to KKR & Co. L.P. of $15.1 million and $208.6 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.05 and $0.72, respectively, on a diluted basis. For the quarter and six months ended June 30, 2012, net income attributable to KKR & Co. L.P. was $146.3 million and $336.7 million, respectively, and net income attributable to KKR & Co. L.P. per common unit was $0.58 and $1.37, respectively, on a diluted basis. The decrease in both comparable periods was primarily due to a lower level of investment appreciation recorded in net gains (losses) from investment activities. The decrease in net gains (losses) from investment activities was partially offset by increases in fees primarily attributable to the acquisition of Prisma and higher transaction fees. The decrease in compensation and benefits expense was primarily attributable to lower carry pool allocations as a result of the recognition of lower carried interest during the quarter and six months ended June 30, 2013 compared to the comparable periods in 2012.

SEGMENT RESULTS

Private Markets

AUM was $54.5 billion as of June 30, 2013, an increase of $4.2 billion, or 8.3%, compared to AUM of $50.3 billion as of March 31, 2013. The increase was primarily attributable to new capital raised from the Asian Fund II and to a lesser extent appreciation in the fair value of our private equity portfolio. These increases were partially offset by distributions to the limited partners of our private equity funds arising from realizations and a reduction in AUM as a result of the Asian Fund entering its post-investment period.

FPAUM was $45.9 billion as of June 30, 2013, an increase of $4.7 billion, or 11.4%, compared to FPAUM of $41.2 billion as of March 31, 2013. The increase was primarily attributable to new capital raised from the Asian Fund II partially offset by distributions to the limited partners of our private equity funds arising from realizations and the reduction in the fee base of the Asian Fund as a result of the fund entering the post-investment period.

FRE was $42.6 million for the quarter ended June 30, 2013, an increase of $6.4 million, or 17.6%, compared to FRE of $36.2 million for the quarter ended June 30, 2012. FRE was $83.4 million for the six months ended June 30, 2013, an increase of $9.4 million, or 12.7%, compared to FRE of $74.0 million for the six months ended June 30, 2012. The increase in both comparable periods was primarily driven by higher management fees resulting from new capital raised and higher transaction fees. These increases were partially offset by higher compensation expense due to additional headcount.

ENI was $72.0 million for the quarter ended June 30, 2013, a decrease of $102.7 million, or 58.7%, compared to ENI of $174.7 million for the quarter ended June 30, 2012. ENI was $338.7 million for the six months ended June 30, 2013, a decrease of $101.4 million, or 23.0%, compared to ENI of $440.1 million for the six months ended June 30, 2012. The decrease in both comparable periods was primarily attributable to lower net carried interest resulting from a lower level of appreciation in our private equity portfolio, partially offset by the increase in FRE discussed above.

Public Markets

AUM was $29.0 billion as of June 30, 2013, an increase of $1.1 billion, or 3.9%, compared to AUM of $27.9 billion as of March 31, 2013. FPAUM was $22.0 billion as of June 30, 2013, an increase of $0.8 billion, or 3.7%, compared to FPAUM of $21.2 billion as of March 31, 2013. For both AUM and FPAUM, the increases were primarily attributable to net new capital raised and to a lesser extent appreciation in the net asset values of certain credit investment vehicles.

FRE was $34.4 million for the quarter ended June 30, 2013, an increase of $22.1 million compared to FRE of $12.3 million for the quarter ended June 30, 2012. FRE was $71.5 million for the six months ended June 30, 2013, an increase of $43.8 million compared to FRE of $27.7 million for the six months ended June 30, 2012. The increase in both comparable periods was principally attributable to (i) higher management fees related to new capital raised, (ii) the acquisition of Prisma and (iii) higher incentive fees earned.

ENI was $40.5 million for the three months ended June 30, 2013, an increase of $33.7 million compared to ENI of $6.8 million for the three months ended June 30, 2012. ENI was $89.6 million for the six months ended June 30, 2013, an increase of $58.9 million compared to ENI of $30.7 million for the six months ended June 30, 2012. The increase in both comparable periods was primarily driven by the increase in FRE discussed above and to a lesser extent higher net carried interest due to investment appreciation of certain carry-earning investment vehicles.

Capital Markets and Principal Activities

FRE was $21.2 million for the quarter ended June 30, 2013, which was the same as in the quarter ended June 30, 2012.

FRE was $31.3 million for the six months ended June 30, 2013, a decrease of $10.2 million, or 24.5%, compared to FRE of $41.5 million for the six months ended June 30, 2012. The decrease was primarily driven by a lower level of overall capital markets transaction activity.

ENI was $31.9 million for the quarter ended June 30, 2013, a decrease of $332.6 million compared to ENI of $364.5 million for the quarter ended June 30, 2012. ENI was $363.8 million for the six months ended June 30, 2013, a decrease of $438.8 million compared to ENI of $802.6 million for the six months ended June 30, 2012. The decrease in both comparative periods was primarily due to a lower level of investment income from our principal investments. While the fair value of our principal investments increased during the quarter and six months ended June 30, 2013, the level of appreciation was lower than in the comparable periods of 2012.

CAPITAL AND LIQUIDITY

As of June 30, 2013, KKR had $2.0 billion of cash and short-term investments on a total reportable segment basis and $1.0 billion of outstanding debt obligations. KKRs availability for borrowings was $750.0 million (reduced for an outstanding letter of credit), which does not include a $500.0 million revolving credit facility for use in its capital markets business that was undrawn as of June 30, 2013.

As of June 30, 2013, KKRs portion of total uncalled commitments to its investment funds was $786.6 million, consisting of the following (amounts in thousands):


Uncalled
Commitments


Private Markets

North America Fund XI $ 229,600
Real Estate Fund 135,100
European Fund III 125,100
Asian Fund II 75,000
2006 Fund 63,800
Infrastructure 28,900
E2 Investors (Annex Fund) 14,000
Asian Fund 10,900
Natural Resources 10,300
China Growth Fund 6,500
Other 11,300
Total Private Markets Commitments 710,500


Public Markets

Direct Lending Vehicles 30,100
Mezzanine Fund 29,600
Special Situations Vehicles 16,400
Total Public Markets Commitments 76,100

Total Uncalled Commitments $ 786,600


DISTRIBUTION

A distribution of $0.42 per common unit has been declared, comprised of (i) $0.10 per common unit from after-tax FRE, (ii) $0.23 per common unit from realized cash carry, and (iii) $0.09 per common unit from net realized principal investment income. The distribution will be paid on August 20, 2013 to unitholders of record as of the close of business on August 5, 2013. Please refer to the distribution policy presented later in this release.

CONFERENCE CALL

A conference call to discuss KKRs financial results will be held on Friday, July 26, 2013 at 10:00 a.m. EDT. The conference call may be accessed by dialing [phone] (U.S. callers) or [phone] (non-U.S. callers); a pass code is not required. Additionally, the conference call will be broadcast live over the Internet and may be accessed through the Public Investors section of KKRs website at http://ir.kkr.com/kkr_ir/kkr_events.cfm . A replay of the live broadcast will be available on KKRs website or by dialing [phone] (U.S. callers) or [phone] (non-U.S. callers), pass code 14885175, beginning approximately two hours after the broadcast.

From time to time, KKR may use its website as a channel of distribution of material company information. Financial and other important information regarding KKR is routinely posted and accessible on the Investor Center for KKR & Co. L.P. at http://ir.kkr.com/kkr_ir/kkr_events.cfm . In addition, you may automatically receive email alerts and other information about KKR by enrolling your email address at the Email Alerts area of the Investor Center on the website.

ABOUT KKR

Founded in 1976 and led by Henry Kravis and George Roberts , KKR is a leading global investment firm with $83.5 billion in assets under management as of June 30, 2013. With offices around the world, KKR manages assets through a variety of investment funds and accounts covering multiple asset classes. KKR seeks to create value by bringing operational expertise to its portfolio companies and through active oversight and monitoring of its investments. KKR complements its investment expertise and strengthens interactions with fund investors through its client relationships and capital markets platform. KKR & Co. L.P. is publicly traded on the New York Stock Exchange ( KKR ) and KKR, as used in this release, includes its subsidiaries, their managed investment funds and accounts, and/or their affiliated investment vehicles, as appropriate. For additional information, please visit KKRs website at www.kkr.com .

FORWARD-LOOKING STATEMENTS

This release contains certain forward-looking statements. Forward-looking statements relate to expectations, beliefs, projections, future plans and strategies, anticipated events or trends and similar expressions concerning matters that are not historical facts. The forward-looking statements are based on KKRs beliefs, assumptions and expectations of its future performance, taking into account all information currently available to it. These beliefs, assumptions and expectations can change as a result of many possible events or factors, not all of which are known to KKR or are within its control. If a change occurs, KKRs business, financial condition, liquidity and results of operations, including but not limited to AUM, FPAUM, FRE, total distributable earnings, ENI, after-tax ENI, ENI after taxes and equity-based charges, fee related EBITDA, committed dollars invested and syndicated capital, uncalled commitments, core interest expense, cash and short-term investments, net realized principal investment income and book value, may vary materially from those expressed in the forward-looking statements. The following factors, among others, could cause actual results to vary from the forward-looking statements: the general volatility of the capital markets; failure to realize the benefits of or changes in KKRs business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships such as Prisma or Nephila; availability, terms and deployment of capital; availability of qualified personnel and expense of recruiting and retaining such personnel; changes in the asset management industry, interest rates or the general economy; underperformance of KKR's investments and decreased ability to raise funds; and the degree and nature of KKRs competition. KKR does not undertake any obligation to update any forward-looking statements to reflect circumstances or events that occur after the date on which such statements were made except as required by law. In addition, KKRs business strategy is focused on the long term and financial results are subject to significant volatility. Additional information about factors affecting KKR is available in KKR & Co. L.P.s Annual Report on Form 10-K for the fiscal year ended December 31, 2012, filed with the SEC on February 22, 2013, and other filings with the SEC, which are available at www.sec.gov .


KKR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)


Quarter Ended Six Months Ended
June 30, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Revenues
Fees $ 166,376 $ 112,360 $ 317,616 $ 228,667

Expenses
Compensation and Benefits 200,602 280,640 531,723 653,050
Occupancy and Related Charges 13,878 14,095 28,399 29,292
General, Administrative and Other 77,542 54,004 171,230 111,655
Total Expenses 292,022 348,739 731,352 793,997

Investment Income (Loss)
Net Gains (Losses) from Investment Activities 98,537 1,601,688 2,368,354 4,688,553
Dividend Income

209,486 79,919 248,955 252,858
Interest Income 128,020 87,892 237,389 164,091
Interest Expense (24,614 ) (16,884 ) (47,637 ) (34,889 )
Total Investment Income (Loss) 411,429 1,752,615 2,807,061 5,070,613

Income (Loss) Before Taxes 285,783 1,516,236 2,393,325 4,505,283

Income Taxes 8,525 11,093 17,881 28,165

Net Income (Loss) 277,258 1,505,143 2,375,444 4,477,118

Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests (7,800 ) 3,285 16,823 8,557
Net Income (Loss) Attributable to
Noncontrolling Interests 269,924 1,355,597 2,150,048 4,131,864

Net Income (Loss) Attributable to KKR & Co. L.P. $ 15,134 $ 146,261 $ 208,573 $ 336,697

Distributions Declared per KKR & Co. L.P. Common Unit $ 0.42 $ 0.13 $ 0.69 $ 0.28

Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ 0.06 $ 0.62 $ 0.79 $ 1.45
Diluted (a) $ 0.05 $ 0.58 $ 0.72 $ 1.37
Weighted Average Common Units Outstanding
Basic 271,983,811 235,781,983 264,555,267 232,440,659
Diluted (a) 298,078,764 252,507,802 290,104,942 245,169,954



(a) KKR Holdings L.P. units have been excluded from the calculation of diluted earnings per common unit given that the exchange of these units would proportionally increase KKR & Co. L.P.s interests in KKRs business and would have an anti-dilutive effect on earnings per common unit as a result of certain tax benefits KKR & Co. L.P. is assumed to receive upon the exchange.



KKR

STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)

Quarter Ended Six Months Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Fees
Management and incentive fees:
Management fees $ 164,176 $ 152,963 $ 129,626 $ 317,139 $ 258,269
Incentive fees 15,590 18,849 4,057 34,439 13,727
Management and incentive fees 179,766 171,812 133,683 351,578 271,996

Monitoring and transaction fees:
Monitoring fees 28,907 32,068 27,786 60,975 53,608
Transaction fees 62,785 40,299 43,706 103,084 88,004
Fee credits (34,751 ) (23,065 ) (16,689 ) (57,816 ) (36,032 )
Net monitoring and transaction fees 56,941 49,302 54,803 106,243 105,580

Total fees 236,707 221,114 188,486 457,821 377,576

Expenses
Compensation and benefits 80,436 75,162 62,746 155,598 125,470
Occupancy and related charges 13,067 13,322 13,239 26,389 27,700
Other operating expenses 45,027 44,630 42,729 89,657 81,278
Total expenses 138,530 133,114 118,714 271,644 234,448

Fee Related Earnings 98,177 88,000 69,772 186,177 143,128

Investment income (loss)
Realized carried interest 269,828 88,167 65,600 357,995 140,478
Unrealized carried interest (202,018 ) 331,198 217,274 129,180 611,760
Gross carried interest 67,810 419,365 282,874 487,175 752,238
Less: allocation to KKR carry pool (26,536 ) (169,504 ) (112,553 ) (196,040 ) (304,059 )
Less: management fee refunds (a) (4,735 ) (9,216 ) (32,804 ) (13,951 ) (73,512 )
Net carried interest 36,539 240,645 137,517 277,184 374,667
Other investment income (loss) 11,050 320,198 340,103 331,248 760,010
Total investment income (loss) 47,589 560,843 477,620 608,432 1,134,677

Income (Loss) before noncontrolling interests
in Income of consolidated entities 145,766 648,843 547,392 794,609 1,277,805
Income (Loss) attributable to
noncontrolling interests 1,323 1,101 1,277 2,424 4,488

Economic Net Income (Loss) $ 144,443 $ 647,742 $ 546,115 $ 792,185 $ 1,273,317

Provision for Income Taxes 13,486 20,117 25,857 33,603 69,240

Economic Net Income (Loss), After Taxes (b) $ 130,957 $ 627,625 $ 520,258 $ 758,582 $ 1,204,077

Economic Net Income (Loss), After Taxes per Adjusted Unit (b) $ 0.18 $ 0.88 $ 0.74 $ 1.06 $ 1.73

Assets Under Management $ 83,500,900 $ 78,253,400 $ 61,488,900 $ 83,500,900 $ 61,488,900
Fee Paying Assets Under Management $ 67,956,400 $ 62,454,100 $ 47,200,500 $ 67,956,400 $ 47,200,500
Committed Dollars Invested and Syndicated Capital $ 1,889,400 $ 824,400 $ 680,200 $ 2,713,800 $ 1,713,200
Uncalled Commitments $ 21,364,400 $ 16,207,300 $ 10,610,300 $ 21,364,400 $ 10,610,300


Other Information

Fee Related Earnings $ 98,177 $ 88,000 $ 69,772 $ 186,177 $ 143,128
Plus: depreciation and amortization 3,708 3,681 3,093 7,389 5,646
Fee Related EBITDA $ 101,885 $ 91,681 $ 72,865 $ 193,566 $ 148,774

Distributed Earnings $ 313,559 $ 198,720 $ 104,548 $ 512,279 $ 216,034
Plus: Undistributed net realized principal investment income 90,217 91,894 301,580 182,111 354,198
Total Distributable Earnings (b) $ 403,776 $ 290,614 $ 406,128 $ 694,390 $ 570,232

GAAP interest expense $ 24,614 $ 23,023 $ 16,884 $ 47,637 $ 34,889
Less: interest expense related to debt obligations
from investment financing arrangements 8,404 6,790 7,461 15,194 15,534
Core Interest Expense (b) $ 16,210 $ 16,233 $ 9,423 $ 32,443 $ 19,355

Economic Net Income (Loss), After Taxes and Equity-based Charges (b) $ 105,021 $ 600,207 $ 506,208 $ 705,228 $ 1,173,763



(a) As of June 30, 2013, there is no carried interest subject to management fee refunds, which may reduce carried interest in future periods.

(b) See definitions for economic net income (loss), after taxes, adjusted units, total distributable earnings, core interest expense and economic net income (loss), after taxes and equity-based charges under Notes to Reportable Segments.


KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENTS (UNAUDITED)
(Amounts in thousands)

Quarter Ended Six Months Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Fees
Management and incentive fees:
Management fees $ 114,700 $ 106,605 $ 107,170 $ 221,305 $ 214,082
Incentive fees - - - - -
Management and incentive fees 114,700 106,605 107,170 221,305 214,082

Monitoring and transaction fees:
Monitoring fees 28,907 32,068 27,786 60,975 53,608
Transaction fees 25,231 16,412 10,768 41,643 22,435
Fee credits (29,547 ) (21,009 ) (15,642 ) (50,556 ) (33,348 )
Net monitoring and transaction fees 24,591 27,471 22,912 52,062 42,695

Total fees 139,291 134,076 130,082 273,367 256,777

Expenses
Compensation and benefits 51,516 48,001 45,991 99,517 90,477
Occupancy and related charges 11,143 11,425 11,633 22,568 24,438
Other operating expenses 33,988 33,942 36,230 67,930 67,905
Total expenses 96,647 93,368 93,854 190,015 182,820

Fee Related Earnings 42,644 40,708 36,228 83,352 73,957

Investment income (loss)
Realized carried interest 269,828 88,167 65,600 357,995 140,478
Unrealized carried interest (212,809 ) 310,799 226,186 97,990 605,813
Gross carried interest 57,019 398,966 291,786 455,985 746,291
Less: allocation to KKR carry pool (22,220 ) (161,344 ) (116,118 ) (183,564 ) (301,680 )
Less: management fee refunds (4,735 ) (9,216 ) (32,804 ) (13,951 ) (73,512 )
Net carried interest 30,064 228,406 142,864 258,470 371,099
Other investment income (loss) (249 ) (2,035 ) (3,990 ) (2,284 ) (2,338 )
Total investment income (loss) 29,815 226,371 138,874 256,186 368,761

Income (Loss) before noncontrolling interests
in Income of consolidated entities 72,459 267,079 175,102 339,538 442,718
Income (Loss) attributable to
noncontrolling interests 411 398 358 809 2,654

Economic Net Income (Loss) $ 72,048 $ 266,681 $ 174,744 $ 338,729 $ 440,064

Assets Under Management $ 54,452,400 $ 50,340,400 $ 45,528,100 $ 54,452,400 $ 45,528,100
Fee Paying Assets Under Management $ 45,907,500 $ 41,218,000 $ 37,858,300 $ 45,907,500 $ 37,858,300
Committed Dollars Invested $ 1,314,000 $ 598,500 $ 606,300 $ 1,912,500 $ 1,182,500
Uncalled Commitments $ 19,972,800 $ 14,560,900 $ 9,304,500 $ 19,972,800 $ 9,304,500



KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENTS (UNAUDITED)
(Amounts in thousands)

Quarter Ended Six Months Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Fees
Management and incentive fees:
Management fees $ 49,476 $ 46,358 $ 22,456 $ 95,834 $ 44,187
Incentive fees 15,590 18,849 4,057

34,439 13,727
Management and incentive fees 65,066 65,207 26,513 130,273 57,914

Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 7,243 3,106 1,319 10,349 3,741
Fee credits (5,204 ) (2,056 ) (1,047 ) (7,260 ) (2,684 )
Net monitoring and transaction fees 2,039 1,050 272 3,089 1,057

Total fees 67,105 66,257 26,785 133,362 58,971

Expenses
Compensation and benefits 21,990 19,700 9,229 41,690 20,611
Occupancy and related charges 1,615 1,542 1,366 3,157 2,784
Other operating expenses 9,147 7,826 3,880 16,973 7,857
Total expenses 32,752 29,068 14,475 61,820 31,252

Fee Related Earnings 34,353 37,189 12,310 71,542 27,719

Investment income (loss)
Realized carried interest - - - - -
Unrealized carried interest 10,791 20,399 (8,912 ) 31,190 5,947
Gross carried interest 10,791 20,399 (8,912 ) 31,190 5,947
Less: allocation to KKR carry pool (4,316 ) (8,160 ) 3,565 (12,476 ) (2,379 )
Less: management fee refunds - - - - -
Net carried interest 6,475 12,239 (5,347 ) 18,714 3,568
Other investment income (loss) 22 62 (12 ) 84 (35 )
Total investment income (loss) 6,497 12,301 (5,359 ) 18,798 3,533

Income (Loss) before noncontrolling interests
in Income of consolidated entities 40,850 49,490 6,951 90,340 31,252
Income (Loss) attributable to
noncontrolling interests 378 355 123 733 554

Economic Net Income (Loss) $ 40,472 $ 49,135 $ 6,828 $ 89,607 $ 30,698

Assets Under Management $ 29,048,500 $ 27,913,000 $ 15,960,800 $ 29,048,500 $ 15,960,800
Fee Paying Assets Under Management $ 22,048,900 $ 21,236,100 $ 9,342,200 $ 22,048,900 $ 9,342,200
Committed Dollars Invested $ 370,800 $ 164,900 $ 73,900 $ 535,700 $ 280,100
Uncalled Commitments $ 1,391,600 $ 1,646,400 $ 1,305,800 $ 1,391,600 $ 1,305,800



KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENTS (UNAUDITED)
(Amounts in thousands)

Quarter Ended Six Months Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012
Fees
Management and incentive fees:
Management fees $ - $ - $ - $ - $ -
Incentive fees - - - - -
Management and incentive fees - - - - -

Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 30,311 20,781 31,619 51,092 61,828
Fee credits - - - - -
Net monitoring and transaction fees 30,311 20,781 31,619 51,092 61,828

Total fees 30,311 20,781 31,619 51,092 61,828

Expenses
Compensation and benefits 6,930 7,461 7,526 14,391 14,382
Occupancy and related charges 309 355 240 664 478
Other operating expenses 1,892 2,862 2,619 4,754 5,516
Total expenses 9,131 10,678 10,385 19,809 20,376

Fee Related Earnings 21,180 10,103 21,234 31,283 41,452

Investment income (loss)
Realized carried interest - - - - -
Unrealized carried interest - - - - -
Gross carried interest - - - - -
Less: allocation to KKR carry pool - - - - -
Less: management fee refunds - - - - -
Net carried interest - - - - -
Other investment income (loss) (a) 11,277 322,171 344,105 333,448 762,383
Total investment income (loss) 11,277 322,171 344,105 333,448 762,383

Income (Loss) before noncontrolling interests
in Income of consolidated entities 32,457 332,274 365,339 364,731 803,835
Income (Loss) attributable to
noncontrolling interests 534 348 796 882 1,280

Economic Net Income (Loss) $ 31,923 $ 331,926 $ 364,543 $ 363,849 $ 802,555

Syndicated Capital $ 204,600 $ 61,000 $ - $ 265,600 $ 250,600







(a) Amount is net of (i) interest expense and (ii) certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income that is not included in Compensation and benefits and Other operating expenses above and on page 6.


KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended June 30, 2013
(Amounts in thousands)

Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments

Fees
Management and incentive fees:
Management fees $ 114,700 $ 49,476 $ - $ 164,176
Incentive fees - 15,590 - 15,590
Management and incentive fees 114,700 65,066 - 179,766

Monitoring and transaction fees:
Monitoring fees 28,907 - - 28,907
Transaction fees 25,231 7,243 30,311 62,785
Fee credits (29,547 ) (5,204 ) - (34,751 )
Net monitoring and transaction fees 24,591 2,039 30,311 56,941

Total fees 139,291 67,105 30,311 236,707

Expenses
Compensation and benefits 51,516 21,990 6,930 80,436
Occupancy and related charges 11,143 1,615 309 13,067
Other operating expenses 33,988 9,147 1,892 45,027
Total expenses 96,647 32,752 9,131 138,530

Fee Related Earnings 42,644 34,353 21,180 98,177

Investment income (loss)
Realized carried interest 269,828 - - 269,828
Unrealized carried interest (212,809 ) 10,791 - (202,018 )
Gross carried interest 57,019 10,791 - 67,810
Less: allocation to KKR carry pool (22,220 ) (4,316 ) - (26,536 )
Less: management fee refunds (4,735 ) - - (4,735 )
Net carried interest 30,064 6,475 - 36,539
Other investment income (loss) (249 ) 22 11,277 11,050
Total investment income (loss) 29,815 6,497 11,277 47,589

Income (Loss) before noncontrolling interests
in Income of consolidated entities 72,459 40,850 32,457 145,766
Income (Loss) attributable to
noncontrolling interests 411 378 534 1,323

Economic Net Income (Loss) $ 72,048 $ 40,472 $ 31,923 $ 144,443



KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended March 31, 2013
(Amounts in thousands)


Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments

Fees
Management and incentive fees:
Management fees $ 106,605 $ 46,358 $ - $ 152,963
Incentive fees - 18,849 - 18,849
Management and incentive fees 106,605 65,207 - 171,812

Monitoring and transaction fees:
Monitoring fees 32,068 - - 32,068
Transaction fees 16,412 3,106 20,781 40,299
Fee credits (21,009 ) (2,056 ) - (23,065 )
Net monitoring and transaction fees 27,471 1,050 20,781 49,302

Total fees 134,076 66,257 20,781 221,114

Expenses
Compensation and benefits 48,001 19,700 7,461 75,162
Occupancy and related charges 11,425 1,542 355 13,322
Other operating expenses 33,942 7,826 2,862 44,630
Total expenses 93,368 29,068 10,678 133,114

Fee Related Earnings 40,708 37,189 10,103 88,000

Investment income (loss)
Realized carried interest 88,167 - - 88,167
Unrealized carried interest 310,799 20,399 - 331,198
Gross carried interest 398,966 20,399 - 419,365
Less: allocation to KKR carry pool (161,344 ) (8,160 ) - (169,504 )
Less: management fee refunds (9,216 ) - - (9,216 )
Net carried interest 228,406 12,239 - 240,645
Other investment income (loss) (2,035 ) 62 322,171 320,198
Total investment income (loss) 226,371 12,301 322,171 560,843

Income (Loss) before noncontrolling interests
in Income of consolidated entities 267,079 49,490 332,274 648,843
Income (Loss) attributable to
noncontrolling interests 398 355 348 1,101

Economic Net Income (Loss) $ 266,681 $ 49,135 $ 331,926 $ 647,742



KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended June 30, 2012
(Amounts in thousands)

Capital Markets Total
Private Markets Public Markets
and Principal
Reportable
Segment Segment Activities Segment Segments

Fees
Management and incentive fees:
Management fees $ 107,170 $ 22,456 $ - $ 129,626
Incentive fees - 4,057 - 4,057
Management and incentive fees 107,170 26,513 - 133,683

Monitoring and transaction fees:
Monitoring fees 27,786 - - 27,786
Transaction fees 10,768 1,319 31,619 43,706
Fee credits (15,642 ) (1,047 ) - (16,689 )
Net monitoring and transaction fees 22,912 272 31,619 54,803

Total fees 130,082 26,785 31,619 188,486

Expenses
Compensation and benefits 45,991 9,229 7,526 62,746
Occupancy and related charges 11,633 1,366 240 13,239
Other operating expenses 36,230 3,880 2,619 42,729
Total expenses 93,854 14,475 10,385 118,714

Fee Related Earnings 36,228 12,310 21,234 69,772

Investment income (loss)
Realized carried interest 65,600 - - 65,600
Unrealized carried interest 226,186 (8,912 ) - 217,274
Gross carried interest 291,786 (8,912 ) - 282,874
Less: allocation to KKR carry pool (116,118 ) 3,565 - (112,553 )
Less: management fee refunds (32,804 ) - - (32,804 )
Net carried interest 142,864 (5,347 ) - 137,517
Other investment income (loss) (3,990 ) (12 ) 344,105 340,103
Total investment income (loss) 138,874 (5,359 ) 344,105 477,620

Income (Loss) before noncontrolling interests
in Income of consolidated entities 175,102 6,951 365,339 547,392
Income (Loss) attributable to
noncontrolling interests 358 123 796 1,277

Economic Net Income (Loss) $ 174,744 $ 6,828 $ 364,543 $ 546,115

...

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Six Months Ended June 30, 2013
(Amounts in thousands)

Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments

Fees
Management and incentive fees:
Management fees $ 221,305 $ 95,834 $ - $ 317,139
Incentive fees - 34,439 - 34,439
Management and incentive fees 221,305 130,273 - 351,578

Monitoring and transaction fees:
Monitoring fees 60,975 - - 60,975
Transaction fees 41,643 10,349 51,092 103,084
Fee credits (50,556 )
(7,260 ) - (57,816 ) Net monitoring and transaction fees 52,062 3,089 51,092 106,243 Total fees 273,367 133,362 51,092 457,821 Expenses Compensation and benefits 99,517 41,690 14,391 155,598 Occupancy and related charges 22,568 3,157 664 26,389 Other operating expenses 67,930 16,973 4,754 89,657 Total expenses 190,015 61,820 19,809 271,644 Fee Related Earnings 83,352 71,542 31,283 186,177 Investment income (loss) Realized carried interest 357,995 - - 357,995 Unrealized carried interest 97,990 31,190 - 129,180 Gross carried interest 455,985 31,190 - 487,175 Less: allocation to KKR carry pool (183,564 ) (12,476 ) - (196,040 ) Less: management fee refunds (13,951 ) - - (13,951 ) Net carried interest 258,470 18,714 - 277,184 Other investment income (loss) (2,284 ) 84 333,448 331,248 Total investment income (loss) 256,186 18,798 333,448 608,432 Income (Loss) before noncontrolling interests in Income of consolidated entities 339,538 90,340 364,731 794,609 Income (Loss) attributable to noncontrolling interests 809 733 882 2,424 Economic Net Income (Loss) $ 338,729 $ 89,607 $ 363,849 $ 792,185

KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Six Months Ended June 30, 2012
(Amounts in thousands)

Capital Markets Total
Private Markets Public Markets and Principal Reportable
Segment Segment Activities Segment Segments

Fees
Management and incentive fees:
Management fees $ 214,082 $ 44,187 $ - $ 258,269
Incentive fees - 13,727 - 13,727
Management and incentive fees 214,082 57,914 - 271,996

Monitoring and transaction fees:
Monitoring fees 53,608 - - 53,608
Transaction fees 22,435 3,741 61,828 88,004
Fee credits (33,348 ) (2,684 ) - (36,032 )
Net monitoring and transaction fees 42,695 1,057 61,828 105,580

Total fees 256,777 58,971 61,828 377,576

Expenses
Compensation and benefits 90,477 20,611 14,382 125,470
Occupancy and related charges 24,438 2,784 478 27,700
Other operating expenses 67,905 7,857 5,516 81,278
Total expenses 182,820 31,252 20,376 234,448

Fee Related Earnings 73,957 27,719 41,452 143,128

Investment income (loss)
Realized carried interest 140,478 - - 140,478
Unrealized carried interest 605,813 5,947 - 611,760
Gross carried interest 746,291 5,947 - 752,238
Less: allocation to KKR carry pool (301,680 ) (2,379 ) - (304,059 )
Less: management fee refunds (73,512 ) - - (73,512 )
Net carried interest 371,099 3,568 - 374,667
Other investment income (loss) (2,338 ) (35 ) 762,383 760,010
Total investment income (loss) 368,761 3,533 762,383 1,134,677

Income (Loss) before noncontrolling interests
in Income of consolidated entities 442,718 31,252 803,835 1,277,805
Income (Loss) attributable to
noncontrolling interests 2,654 554 1,280 4,488

Economic Net Income (Loss) $ 440,064 $ 30,698 $ 802,555 $ 1,273,317



KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)


As of June 30, 2013

Private
Markets
Segment

Public
Markets
Segment

Capital
Markets and
Principal
Activities
Segment

Total
Reportable
Segments


Cash and short-term investments $ 322,639 $ 35,229 $ 1,636,977 $ 1,994,845
Investments - - 4,607,196 (a) 4,607,196
Unrealized carry 770,245 43,653 - 813,898
Other assets 316,317 308,837 68,028 693,182
Total assets $ 1,409,201 $ 387,719 $ 6,312,201 $ 8,109,121

Debt obligations $ - $ - $ 1,000,000 $ 1,000,000
Other liabilities 111,550 38,181 39,356 189,087
Total liabilities 111,550 38,181 1,039,356 1,189,087

Noncontrolling interests 1,457 825 18,695 20,977

Book value $ 1,296,194 $ 348,713 $ 5,254,150 $ 6,899,057

Book value per adjusted unit $ 1.81 $ 0.49 $ 7.35 $ 9.65


As of December 31, 2012

Private
Markets
Segment

Public

Markets
Segment

Capital
Markets and
Principal
Activities
Segment

Total
Reportable
Segments


Cash and short-term investments $ 358,237 $ 28,690 $ 1,147,360 $ 1,534,287
Investments - - 4,758,157 4,758,157
Unrealized carry 730,292 24,939 - 755,231
Other assets 207,047 280,472 62,119 549,638
Total assets $ 1,295,576 $ 334,101 $ 5,967,636 $ 7,597,313

Debt obligations $ - $ - $ 500,000 $ 500,000
Other liabilities 78,724 16,433 24,275 119,432
Total liabilities 78,724 16,433 524,275 619,432

Noncontrolling interests 1,339 739 18,619 20,697

Book value $ 1,215,513 $ 316,929 $ 5,424,742 $ 6,957,184

Book value per adjusted unit $ 1.72 $ 0.45 $ 7.70 $ 9.87



(a) See Capital Markets and Principal Activities segment schedule of investments that follows.


KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS (UNAUDITED)
(Amounts in thousands, except percentage amounts)


As of June 30, 2013
Investment

Fair Value as
Fair a Percentage of

Cost
Value

Total Investments

Co-Investments in Portfolio Companies of
Private Equity Investment Vehicles:
Alliance Boots GmbH 195,640 473,795 10.3 %
HCA Inc. 96,289 306,709 6.6 %
The Nielsen Company B.V. 87,657 196,662 4.3 %
NXP B.V. 167,276 196,601 4.3 %
Samson Resources Corporation 237,514 190,012 4.1 %
ProSiebenSat.1 Media AG 226,913 183,483 4.0 %
KION Group GmbH 128,058 162,598 3.5 %
US Foods, Inc. 100,000 130,000 2.8 %
Biomet, Inc. 151,444 121,155 2.6 %
First Data Corporation 135,258 94,681 2.1 %
Dollar General Corporation 14,043 78,796 1.7 %
Energy Future Holdings Corp. 200,000 10,000 0.2 %
1,740,092 2,144,492 46.5 %

Private Equity Investment Vehicles
KKR 2006 Fund L.P. 346,036 394,058 8.5 %
KKR European Fund III L.P. 233,706 261,169 5.7 %
KKR Asian Fund L.P. 82,542 92,554 2.0 %
KKR European Fund II L.P. 54,546 57,806 1.2 %
KKR Millennium Fund L.P. 53,844 44,969 1.0 %
KKR North America Fund XI L.P. 20,177 21,510 0.5 %
KKR E2 Investors, L.P. 10,418 20,568 0.4 %
KKR European Fund L.P. 47,664 4,318 0.1 %
KKR China Growth Fund L.P. 3,286 3,314 0.1 %
Co-Investment Vehicles 546 653 0.0 %
852,765 900,919 19.5 %

Private Equity Total 2,592,857 3,045,411 66.0 %

Real Assets
Royalties and Drilling 142,272 157,062 3.4 %
Real Estate Fund 83,920 100,355 2.2 %
Infrastructure Fund 25,825 26,570 0.6 %
Co-Investments 10,835 12,988 0.3 %
Natural Resources 13,172 8,836 0.2 %
Real Assets Total 276,024 305,811 6.7 %

Private Markets Total 2,868,881 3,351,222 72.7 %

Public Markets Investment Strategies
Liquid Credit 187,263 195,094 4.2 %
Long/Short Equities 100,000 109,906 2.4 %
Credit Relative Value 82,000 88,775 1.9 %
Direct Lending 39,069 44,006 1.0 %
Special Situations 27,297 30,661 0.7 %
Mezzanine Fund 14,564 17,937 0.4 %
Public Markets Total 450,193 486,379 10.6 %

Other 760,606 769,595 16.7 %

Total Investments $ 4,079,680 $ 4,607,196 100.0 %



KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS, CONTINUED (UNAUDITED)
(Amounts in thousands, except percentage amounts)


As of June 30, 2013




Fair Value as
a Percentage

Investment

Cost
Fair
Value
of Total
Investments


Significant Aggregate Investments: (a)
Alliance Boots GmbH $ 228,769 $ 545,895 11.9 %
HCA Inc. 117,624 365,344 7.9 %
346,393 911,239 19.8 %

Other investments 3,733,287 3,695,957 80.2 %
Total Investments $ 4,079,680 $ 4,607,196 100.0 %




(a)

The significant aggregate investments include investments in portfolio companies with individual fair values of 5% or more of the Capital Markets and Principal Activities segment investments balance as of June 30, 2013. The fair value figures include the co-investment and the limited partner and/or general partner interests in the underlying portfolio company.



KKR
ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)



Private
Markets
Segment
Public
Markets

Segment

Total
Reportable
Segments


Quarter Ended June 30, 2013


March 31, 2013 $ 50,340,400 $ 27,913,000 $ 78,253,400
New Capital Raised 6,681,000 1,703,300 8,384,300
Distributions (2,685,400 ) (720,500 ) (c) (3,405,900 )
Net Changes in Fee Base of Certain Funds (a) (272,300 ) - (272,300 )
Foreign Exchange 12,600 - 12,600
Change in Value 376,100 152,700 528,800
June 30, 2013 $ 54,452,400 $ 29,048,500 $ 83,500,900



Six Months Ended June 30, 2013


December 31, 2012 $ 49,127,600 $ 26,399,900 $ 75,527,500
New Capital Raised 7,648,200 3,234,800 10,883,000
Distributions (4,517,400 ) (1,400,200 ) (d) (5,917,600 )
Net Changes in Fee Base of Certain Funds (a) (272,300 ) - (272,300 )
Foreign Exchange (11,000 ) - (11,000 )
Change in Value 2,477,300 814,000 3,291,300
June 30, 2013 $ 54,452,400 $ 29,048,500 $ 83,500,900



Trailing Twelve Months Ended June 30, 2013


June 30, 2012 $ 45,528,100 $ 15,960,800 $ 61,488,900
New Capital Raised 14,551,400 5,464,000 20,015,400
Acquisitions (b) - 8,086,900 8,086,900
Distributions (10,254,300 ) (2,091,500 ) (e) (12,345,800 )
Net Changes in Fee Base of Certain Funds (a) (1,600,200 ) - (1,600,200 )
Foreign Exchange 68,200 - 68,200
Change in Value 6,159,200 1,628,300 7,787,500
June 30, 2013 $ 54,452,400 $ 29,048,500 $ 83,500,900



* Assets Under Management exclude those assets managed by entities where KKR holds less than a 50% ownership interest.

(a) Represents the impact of including certain funds entering the post-investment period.
(b) Represents AUM of Prisma as of October 1, 2012, the date of acquisition. This figure excludes new capital raised and distributions since the acquisition.
(c) Includes $193.5 million of redemptions by fund investors.
(d) Includes $539.2 million of redemptions by fund investors.
(e) Includes $709.1 million of redemptions by fund investors.


KKR
FEE PAYING ASSETS UNDER MANAGEMENT* (UNAUDITED)
(Amounts in thousands)



Private
Markets
Segment

Public
Markets
Segment

Total
Reportable
Segments


Quarter Ended June 30, 2013


March 31, 2013 $ 41,218,000 $ 21,236,100 $ 62,454,100
New Capital Raised 6,402,100 1,203,000 7,605,100
Distributions (1,109,900 ) (437,200 ) (c) (1,547,100 )
Net Changes in Fee Base of Certain Funds (a) (654,700 ) - (654,700 )
Foreign Exchange 48,300 - 48,300
Change in Value 3,700 47,000 50,700
June 30, 2013 $ 45,907,500 $ 22,048,900 $ 67,956,400



Six Months Ended June 30, 2013


December 31, 2012 $ 41,173,000 $ 19,673,000 $ 60,846,000
New Capital Raised 7,363,900 2,734,300 10,098,200
Distributions (1,951,000 ) (973,700 ) (d) (2,924,700 )
Net Changes in Fee Base of Certain Funds (a) (654,700 ) - (654,700 )
Foreign Exchange (55,400 ) - (55,400 )
Change in Value 31,700 615,300 647,000
June 30, 2013 $ 45,907,500 $ 22,048,900 $ 67,956,400



Trailing Twelve Months Ended June 30, 2013


June 30, 2012 $ 37,858,300 $ 9,342,200 $ 47,200,500
New Capital Raised 14,361,000 4,727,500 19,088,500
Acquisitions (b) - 8,078,400 8,078,400
Distributions (2,757,200 ) (1,322,300 ) (e) (4,079,500 )
Net Changes in Fee Base of Certain Funds (a) (3,860,100 ) - (3,860,100 )
Foreign Exchange 238,300 - 238,300
Change in Value 67,200 1,223,100 1,290,300
June 30, 2013 $ 45,907,500 $ 22,048,900 $ 67,956,400



* Fee Paying Assets Under Management exclude those assets managed by entities where KKR holds less than a 50% ownership interest.

(a) Represents the impact of including certain funds entering the post-investment period.
(b) Represents FPAUM of Prisma as of October 1, 2012, the date of acquisition. This figure excludes new capital raised and distributions since the acquisition.
(c) Includes $193.5 million of redemptions by fund investors.
(d) Includes $539.2 million of redemptions by fund investors.
(e) Includes $709.1 million of redemptions by fund investors.


KKR
INVESTMENT VEHICLE SUMMARY (a) (UNAUDITED)
As of June 30, 2013
(Amounts in millions, except percentages)

Investment Period Amount

Commencement
Date
End Date Commitment
Uncalled
Commitments

Percentage
Committed
by General
Partner
Invested Realized
Remaining
Cost

Remaining
Fair Value


Private Markets


Private Equity Funds
Asian Fund II 4/2013 4/2019 $ 5,825.0 $ 5,825.0 1.3% $ - $ - $ - $ -
North America Fund XI 9/2012 9/2018 7,230.7 6,740.2 3.5% 490.5 3.9 490.5 524.5
China Growth Fund 11/2010 11/2016 1,010.0 692.4 1.0% 317.6 28.5 300.1 305.4
E2 Investors (Annex Fund) 8/2009 11/2013 345.9 191.6 4.3% 154.3 - 154.2 325.2
European Fund III 3/2008 3/2014 6,077.2 1,729.2 4.6% 4,348.0 549.5 3,990.6 4,697.2
Asian Fund 7/2007 4/2013 3,983.2 273.9 2.5% 3,709.3 1,623.7 2,864.8 4,737.9
2006 Fund 9/2006 9/2012 17,642.2 1,269.1 2.1% 16,373.1 10,509.6 10,021.7 14,378.1
European Fund II 11/2005 10/2008 5,750.8 - 2.1% 5,750.8 2,442.6 3,922.9 4,926.6
Millennium Fund 12/2002 12/2008 6,000.0 - 2.5% 6,000.0 9,320.5 2,218.9 3,335.2
European Fund 12/1999 12/2005 3,085.4 - 3.2% 3,085.4 8,720.0 - 51.7
Total Private Equity Funds 56,950.4 16,721.4 40,229.0 33,198.3 23,963.7 33,281.8

Co-Investment Vehicles Various Various 2,434.1 504.1 Various 1,930.0 2,318.9 1,309.7 1,752.0
Total Private Equity 59,384.5 17,225.5 42,159.0 35,517.2 25,273.4 35,033.8



Real Assets
Natural Resources Fund Various Various 1,232.0 658.9 Various 573.1 46.9 547.0 370.1
Global Energy Opportunities Various Various 1,011.0 884.4 Various 126.6 - 126.6 113.4
Infrastructure Fund Various Various 1,041.5 614.2 4.8% 427.3 9.0 427.3 437.9
Infrastructure Co-Investments Various Various 1,356.7 252.2 Various 1,104.5 190.5 1,104.5 1,355.8
Real Estate Fund 5/2013 (b) 500.0 337.6 40% 162.4 - 162.4 203.8
Real Assets 5,141.2 2,747.3 2,393.9 246.4 2,367.8 2,481.0

Private Markets Total 64,525.7 19,972.8 44,552.9 35,763.6 27,641.2 37,514.8


Public Markets


Special Situations Vehicles Various Various 2,131.9 407.5 Various 1,724.4 417.9 1,562.4 1,904.3
Mezzanine Fund 3/2010 8/2015 987.0 650.7 4.6% 336.3 52.3 336.3 394.6
Direct Lending Vehicles Various Various 668.5 333.4 Various 335.1 9.4 335.1 359.4

Public Markets Total 3,787.4 1,391.6 2,395.8 479.6 2,233.8 2,658.3

Grand Total $ 68,313.1 $ 21,364.4 $ 46,948.7 $ 36,243.2 $ 29,875.0 $ 40,173.1



(a) Reflects investment vehicles for which KKR has the ability to earn carried interest.
(b) Third anniversary of final close.


KKR
DISTRIBUTION CALCULATION (UNAUDITED)
(Amounts in thousands, except unit and per unit amounts)


Quarter Ended Six Months Ended
June 30, 2013 March 31, 2013 June 30, 2012 June 30, 2013 June 30, 2012

FRE (a) $ 98,177 $ 88,000 $ 69,772 $ 186,177 $ 143,128
Realized cash carry 161,897 52,900 39,360 214,797 84,287
Net realized principal investment income 150,361 153,156 301,580 303,517 354,198
Less: local income taxes (5,336 ) (2,341 ) (3,307 ) (7,677 ) (6,893 )
Less: noncontrolling interests (1,323 ) (1,101 ) (1,277 ) (2,424 ) (4,488 )
Total Distributable Earnings 403,776 290,614 406,128 694,390 570,232

Less: Undistributed net realized principal investment income (90,217 ) (91,894 ) (301,580 ) (182,111 ) (354,198 )

Distributed Earnings 313,559 198,720 104,548 512,279 216,034

Distributed Earnings to KKR & Co. L.P. (b) 126,295 75,749 36,401 202,044 74,201

Less: estimated current corporate income taxes (10,125 ) (6,376 ) (4,268 ) (16,501 ) (8,290 )

Distributed Earnings to KKR & Co. L.P., After Taxes 116,170 69,373 32,133 185,543 65,911


Distribution per KKR & Co. L.P. common unit $ 0.42 $ 0.27 $ 0.13 $ 0.69 $ 0.28


Components of Distribution per KKR & Co. L.P. common unit


After-tax FRE $ 0.10 $ 0.10 $ 0.07 $ 0.20 $ 0.15
Realized Cash Carry $ 0.23 $ 0.08 $ 0.06 $ 0.31 $ 0.13
Distributed Net Realized Principal Investment Income $ 0.09 $ 0.09 $ - $ 0.18 $ -

Outstanding KKR & Co. L.P. common units 277,834,343 261,781,303 238,155,157



(a) See Exhibit A for a reconciliation of such measure to financial results prepared in accordance with GAAP.

(b) Represents the amount of distributed earnings allocable to KKR & Co. L.P. based on its ownership in the KKR business.


DISTRIBUTION POLICY

KKR intends to make quarterly cash distributions in amounts that in the aggregate are expected to constitute substantially all of the cash earnings of its investment management business and 40% of the net cash income from realized principal investments, in each case in excess of amounts determined by KKR to be necessary or appropriate to provide for the conduct of its business, to make appropriate investments in its business and its investment funds and to comply with applicable law and any of its debt instruments or other obligations. For purposes of KKR’s distribution policy, its distributions are expected to consist of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool and (iii) a percentage of net realized principal investment income. This amount is expected to be reduced by (i) corporate and applicable local taxes, if any, (ii) non-controlling interests, and (iii) amounts determined by KKR to be necessary or appropriate for the conduct of its business and other matters as discussed above.

The declaration and payment of any distributions are subject to the discretion of the board of directors of the general partner of KKR & Co. L.P., which may change the distribution policy at any time, and the terms of its limited partnership agreement. There can be no assurance that distributions will be made as intended or at all or that unitholders will receive sufficient distributions to satisfy payment of their tax liabilities as limited partners of KKR & Co. L.P. When KKR & Co. L.P. receives distributions from the KKR Group Partnerships (the holding companies of the KKR business), KKR Holdings receives its pro rata share of such distributions from the KKR Group Partnerships.

KKR
Notes to Reportable Segments (Unaudited)

The segment key performance measures that follow are used by management in making operating and resource deployment decisions as well as assessing the overall performance of each of KKR’s reportable business segments. The reportable segments for KKR’s business are presented prior to giving effect to the allocation of income (loss) between KKR & Co. L.P. and KKR Holdings L.P. and as such represent the business in total. In addition, KKR’s reportable segments are presented without giving effect to the consolidation of the funds that KKR manages.

KKR discloses the following financial measures in this earnings release that are calculated and presented using methodologies other than in accordance with GAAP. We believe that providing these performance measures on a supplemental basis to our GAAP results is helpful to unitholders in assessing the overall performance of KKR’s businesses. These financial measures should not be considered as a substitute for similar financial measures calculated in accordance with GAAP. We caution readers that these non-GAAP financial measures may differ from the calculations of other investment managers, and as a result, may not be comparable to similar measures presented by other investment managers. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included elsewhere within this earnings release.

Fee related earnings (“FRE”) is comprised of segment operating revenues less segment operating expenses, excluding certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income. This measure is used by management as an alternative measurement of the operating earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the operating profitability of our fee generating management companies and capital markets businesses. The components of FRE on a segment basis differ from the equivalent GAAP amounts on a consolidated basis as a result of: (i) the inclusion of management fees earned from consolidated funds that were eliminated in consolidation; (ii) the exclusion of fees and expenses of certain consolidated entities; (iii) the exclusion of charges relating to the amortization of intangible assets; (iv) the exclusion of charges relating to carry pool allocations; (v) the exclusion of non-cash equity charges and other non-cash compensation charges borne by KKR Holdings or incurred under the KKR & Co. L.P. 2010 Equity Incentive Plan; (vi) the exclusion of certain reimbursable expenses; and (vii) the exclusion of certain non-recurring items.

Economic net income (loss) (“ENI”) is a measure of profitability for KKR’s reportable segments and is used by management as an alternative measurement of the operating and investment earnings of KKR and its business segments. We believe this measure is useful to unitholders as it provides additional insight into the overall profitability of KKR’s businesses inclusive of investment income and carried interest. ENI is comprised of: (i) FRE plus (ii) segment investment income (loss), which is reduced for carry pool allocations, management fee refunds, interest expense and certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income; less (iii) certain economic interests in KKR’s segments held by third parties. ENI differs from net income (loss) on a GAAP basis as a result of: (i) the exclusion of the items referred to in FRE above; (ii) the exclusion of investment income (loss) relating to noncontrolling interests; and (iii) the exclusion of income taxes.

Economic net income (loss), after taxes is used to measure KKR’s implied ENI on a fully diluted basis. We believe this measure is useful to unitholders as it provides an indication of KKR’s ENI as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P. Economic Net Income (Loss), After Taxes is calculated by deducting from ENI the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.

Economic net income (loss), after taxes and equity-based charges is used to measure KKR’s implied ENI on a fully diluted basis. We believe this measure is useful to unitholders as it provides an indication of KKR’s ENI as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P. Economic Net Income (Loss), After Taxes and Equity-based Charges is calculated by deducting from ENI: (i) equity-based charges associated with equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan; and (ii) the implied income tax provision that has been calculated assuming that all income is allocated to KKR & Co. L.P., which would occur following an exchange of all KKR Holdings units for common units of KKR & Co. L.P. The assumptions and methodology used to calculate the implied income tax provision are consistent with those used in calculating the tax provision for KKR & Co. L.P. under GAAP. The implied income tax provision does not give effect to any tax savings or deductions that may result from the exchange of KKR Holdings units.

Net realized principal investment income refers to net cash income from (i) realized investment gains and losses excluding certain realized investment losses from principal investments during the second quarter of 2013 to the extent unrealized losses on these investments were recognized prior to the combination with KPE on October 1, 2009, (ii) dividend income and (iii) interest income net of interest expense less certain compensation and general and administrative expenses incurred in the generation of net realized principal investment income in each case generated by KKR’s principal investments held on or through KKR’s balance sheet in our Capital Markets and Principal Activities segment. This is a term to describe a portion of KKR’s quarterly distribution.

Total distributable earnings is the sum of (i) FRE, (ii) carry distributions received from KKR’s investment funds which have not been allocated as part of its carry pool and (iii) net realized principal investment income; less (i) applicable local income taxes, if any, and (ii) noncontrolling interests. We believe this measure is useful to unitholders as it provides a supplemental measure to assess performance, excluding the impact of mark-to-market gains (losses), and also assess amounts available for distribution to KKR unitholders. However, total distributable earnings is not a measure that calculates actual distributions under KKR’s current distribution policy.

Assets under management (“AUM”) represent the assets from which KKR is entitled to receive fees or a carried interest and general partner capital. We believe this measure is useful to unitholders as it provides additional insight into KKR’s capital raising activities and the overall activity in its investment funds and vehicles. KKR calculates the amount of AUM as of any date as the sum of: (i) the fair value of the investments of KKR’s investment funds plus uncalled capital commitments from these funds; (ii) the fair value of investments in KKR’s co-investment vehicles; (iii) the net asset value of certain of KKR's fixed income products; (iv) the value of outstanding structured finance vehicles; and (v) the fair value of other assets managed by KKR. KKR’s definition of AUM is not based on any definition of AUM that may be set forth in the agreements governing the investment funds, vehicles or accounts that it manages or calculated pursuant to any regulatory definitions.

Fee paying AUM (“FPAUM”) represents only those assets under management from which KKR receives fees. We believe this measure is useful to unitholders as it provides additional insight into the capital base upon which KKR earns management fees. This relates to KKR’s capital raising activities and the overall activity in its investment funds and vehicles, for only those funds and vehicles where KKR receives fees (i.e., excluding vehicles that receive only carried interest or general partner capital). FPAUM is the sum of all of the individual fee bases that are used to calculate KKR’s fees and differs from AUM in the following respects: (i) assets from which KKR does not receive a fee are excluded (i.e., assets with respect to which it receives only carried interest) and (ii) certain assets, primarily in its private equity funds, are reflected based on capital commitments and invested capital as opposed to fair value because fees are not impacted by changes in the fair value of underlying investments.

Committed dollars invested is the aggregate amount of capital commitments that have been invested by KKR’s investment funds and carry-yielding co-investment vehicles and is used as a measure of investment activity for KKR and its business segments during a given period. We believe this measure is useful to unitholders as it provides additional insight into KKR’s investment of committed capital. Such amounts include: (i) capital invested by fund investors and co-investors with respect to which KKR is entitled to a fee or carried interest and (ii) capital invested by KKR’s investment funds and vehicles.

Syndicated capital is the aggregate amount of debt or equity capital in transactions originated by KKR investment funds and vehicles, which has been distributed to third parties in exchange for a fee. It does not include (i) capital committed to such transactions by carry-yielding co-investment vehicles, which is instead reported in committed dollars invested and (ii) debt capital that is arranged as part of the acquisition financing of transactions originated by KKR investment funds and vehicles. Syndicated capital is used as a measure of investment activity for KKR and its business segments during a given period, and we believe that this measure is useful to unitholders as it provides additional insight into levels of syndication activity in KKR’s Capital Markets and Principal Activities segment and across its investment platform.

Uncalled commitments are used as a measure of unfunded capital commitments that KKR’s investment funds and carry-paying co-investment vehicles have received from partners to contribute capital to fund future investments. We believe this measure is useful to unitholders as it provides additional insight into the amount of capital that is available to KKR’s investment funds and vehicles to make future investments.

Adjusted units are used as a measure of the total equity ownership of KKR that is held by KKR & Co. L.P. and KKR Holdings and represent the fully diluted unit count using the if-converted method. We believe this measure is useful to unitholders as it provides an indication of the total equity ownership of KKR as if all outstanding KKR Holdings units had been exchanged for common units of KKR & Co. L.P.

Core interest expense is used by management as an alternative measurement of interest expense incurred by KKR on a segment basis and excludes interest expense related to debt obligations from investment financing arrangements related to certain of KKR’s private equity funds, investment vehicles and principal investments. These financing arrangements are not direct obligations of the general partners of KKR’s private equity funds or its management companies. On a segment basis, interest expense is included in other investment income. We believe this measure is useful to unitholders as it provides an indication of the amount of interest expense borne by KKR excluding interest expense that is allocated to KKR’s investment funds and vehicles and other noncontrolling interest holders. Additionally, we believe this measure is useful for analyzing KKR’s ability to service its debt obligations.

Book value is a measure of the net assets of KKR’s reportable segments and is used by management primarily in assessing the unrealized value of our investment portfolio, including carried interest, as well as our overall liquidity position. We believe this measure is useful to unitholders as it provides additional insight into the assets and liabilities of KKR excluding the assets and liabilities that are allocated to noncontrolling interest holders. Book value differs from the equivalent GAAP amounts on a consolidated basis primarily as a result of the exclusion of ownership interests attributable to KKR Holdings L.P.

Fee related EBITDA is comprised of FRE before the impact of depreciation of fixed assets and amortization of intangible assets and is used by management as a measure of the cash earnings of KKR and its business segments before investment income. We believe this measure is useful to unitholders as it provides additional insight into the amount of cash earnings generated by KKR’s management companies and capital markets businesses.

Cash and short-term investments represent cash and liquid short-term investments in high-grade, short-duration cash management strategies used by KKR to generate additional yield on our excess liquidity and is used by management in evaluating KKR’s liquidity position. We believe this measure is useful to unitholders as it provides additional insight into KKR’s available liquidity. Cash and short-term investments differ from cash and cash equivalents on a GAAP basis as a result of the inclusion of liquid short-term investments in cash and short-term investments.


KKR

EXHIBIT A

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON UNIT (GAAP BASIS)
TO ENI AFTER TAXES PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)


Quarter Ended
June 30, 2013 March 31, 2013 June 30, 2012

Net income (loss) attributable to KKR & Co. L.P. per common unit $ 0.06 $ 0.75 $ 0.62
Weighted Average Common Units Outstanding 271,983,811 257,044,184 235,781,983
Net income (loss) attributable to KKR & Co. L.P. 15,134 193,439 146,261
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
28,106 334,112 292,833
Plus: Non-cash equity based charges 80,318 81,650 93,540
Plus: Amortization of intangibles and other, net 12,360 29,185 2,388
Plus: Income taxes 8,525 9,356 11,093
Economic net income (loss) 144,443 647,742 546,115
Less: Provision for income taxes 13,486 20,117 25,857
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 25,936 27,418 14,050
Economic net income (loss) after taxes and equity-based charges 105,021 600,207 506,208
Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 25,936 27,418 14,050
Economic net income (loss) after taxes 130,957 627,625 520,258
Weighted Average Adjusted Units 715,453,358 711,229,881 700,720,686
Economic net income (loss) after taxes per adjusted unit $ 0.18 $ 0.88 $ 0.74


Six Months Ended
June 30, 2013 June 30, 2012

Net income (loss) attributable to KKR & Co. L.P. per common unit $ 0.79 $ 1.45
Weighted Average Common Units Outstanding 264,555,267 232,440,659
Net income (loss) attributable to KKR & Co. L.P. 208,573 336,697
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
362,218 697,024
Plus: Non-cash equity based charges 161,968 207,881
Plus: Amortization of intangibles and other, net 41,545 3,550
Plus: Income taxes 17,881 28,165
Economic net income (loss) 792,185 1,273,317
Less: Provision for income taxes 33,603 69,240
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 53,354 30,314
Economic net income (loss) after taxes and equity-based charges 705,228 1,173,763
Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 53,354 30,314
Economic net income (loss) after taxes 758,582 1,204,077
Weighted Average Adjusted Units 713,353,287 696,408,937
Economic net income (loss) after taxes per adjusted unit $ 1.06 $ 1.73



KKR

EXHIBIT A (CONTINUED)

RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. (GAAP BASIS)
TO ECONOMIC NET INCOME (LOSS), FEE RELATED EARNINGS, FEE RELATED EBITDA, AND TOTAL DISTRIBUTABLE EARNINGS (UNAUDITED)
(Amounts in thousands)

Quarter Ended
June 30, 2013 March 31, 2013 June 30, 2012

Net income (loss) attributable to KKR & Co. L.P. $ 15,134 $ 193,439 $ 146,261
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
28,106 334,112 292,833
Plus: Non-cash equity based charges 80,318 81,650 93,540
Plus: Amortization of intangibles and other, net 12,360 29,185 2,388
Plus: Income taxes 8,525 9,356 11,093
Economic net income (loss) 144,443 647,742 546,115
Plus: Income attributable to segment noncontrolling interests 1,323 1,101 1,277
Less: Investment income (loss) 47,589 560,843 477,620
Fee related earnings 98,177 88,000 69,772
Plus: Depreciation and amortization 3,708 3,681 3,093
Fee related EBITDA $ 101,885 $ 91,681 $ 72,865
Less: Depreciation and amortization 3,708 3,681 3,093
Plus: Realized cash carry 161,897 52,900 39,360
Plus: Net realized principal investment income 150,361 153,156 301,580
Less: Local income taxes and noncontrolling interests 6,659 3,442 4,584
Total distributable earnings $ 403,776 $ 290,614 $ 406,128



Six Months Ended
June 30, 2013 June 30, 2012

Net income (loss) attributable to KKR & Co. L.P. $ 208,573 $ 336,697
Plus: Net income (loss) attributable to noncontrolling
interests held by KKR Holdings L.P.
362,218 697,024
Plus: Non-cash equity based charges 161,968 207,881
Plus: Amortization of intangibles and other, net 41,545 3,550
Plus: Income taxes 17,881 28,165
Economic net income (loss) 792,185 1,273,317
Plus: Income attributable to segment noncontrolling interests 2,424 4,488
Less: Investment income (loss) 608,432 1,134,677
Fee related earnings 186,177 143,128
Plus: Depreciation and amortization 7,389 5,646
Fee related EBITDA $ 193,566 $ 148,774
Less: Depreciation and amortization 7,389 5,646
Plus: Realized cash carry 214,797 84,287
Plus: Net realized principal investment income 303,517 354,198
Less: Local income taxes and noncontrolling interests 10,101 11,381
Total distributable earnings $ 694,390 $ 570,232



KKR

EXHIBIT A (CONTINUED)

RECONCILIATION OF KKR & CO. L.P. PARTNERS' CAPITAL (GAAP BASIS)
TO BOOK VALUE AND BOOK VALUE PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)


As of As of
June 30, 2013 December 31, 2012

KKR & Co. L.P. partners’ capital $ 2,287,389 $ 2,004,359

Noncontrolling interests held by KKR Holdings L.P. 4,699,114 4,981,864

Equity impact of KKR Management Holdings Corp. and other (87,446 ) (29,039 )

Book value 6,899,057 6,957,184

Adjusted units 715,296,775 704,780,484

Book value per adjusted unit $ 9.65 $ 9.87







RECONCILIATION OF CASH AND CASH EQUIVALENTS (GAAP BASIS)
TO CASH AND SHORT-TERM INVESTMENTS (SEGMENT BASIS) (UNAUDITED)
(Amounts in thousands)


As of
As of
June 30, 2013 December 31, 2012

Cash and cash equivalents $ 1,167,413 $ 1,230,464

Liquid short-term investments 827,432 303,823

Cash and short-term investments $ 1,994,845 $ 1,534,287



KKR

EXHIBIT B


RECONCILIATION OF WEIGHTED AVERAGE GAAP COMMON UNITS OUTSTANDING TO WEIGHTED AVERAGE ADJUSTED UNITS (UNAUDITED)

The following table provides a reconciliation of KKR's Weighted Average GAAP Common Units Outstanding to Weighted Average Adjusted Units.

Quarter Ended
June 30, 2013 March 31, 2013 June 30, 2012
Weighted Average GAAP Common Units Outstanding - Basic 271,983,811 257,044,184 235,781,983
Weighted Average Unvested Common Units(a) 26,094,953 24,998,337 16,725,819
Weighted Average GAAP Common Units Outstanding - Diluted 298,078,764 282,042,521 252,507,802
Adjustments:
Weighted Average KKR Holdings Units(b) 417,374,594 429,187,360 448,212,884
Weighted Average Adjusted Units 715,453,358 711,229,881 700,720,686


Six Months Ended
June 30, 2013 June 30, 2012
Weighted Average GAAP Common Units Outstanding - Basic 264,555,267 232,440,659
Weighted Average Unvested Common Units(a) 25,549,675 12,729,295
Weighted Average GAAP Common Units Outstanding - Diluted 290,104,942 245,169,954
Adjustments:
Weighted Average KKR Holdings Units(b) 423,248,345 451,238,983
Weighted Average Adjusted Units 713,353,287 696,408,937




RECONCILIATION OF GAAP COMMON UNITS OUTSTANDING TO ADJUSTED UNITS (UNAUDITED)


The following table provides a reconciliation of KKR's GAAP Common Units Outstanding to Adjusted Units.

As of As of
June 30, 2013 December 31, 2012
GAAP Common Units Outstanding - Basic 277,834,343 253,363,691
Unvested Common Units(a) 25,501,501 18,863,517
GAAP Common Units Outstanding - Diluted 303,335,844 272,227,208
Adjustments:
KKR Holdings Units(b) 411,960,931 432,553,276
Adjusted Units 715,296,775 704,780,484




(a)

Represents equity awards granted under the KKR & Co. L.P. 2010 Equity Incentive Plan. The issuance of common units of KKR & Co. L.P. pursuant to awards under its equity incentive plan dilutes KKR common unitholders and KKR Holdings pro rata in accordance with their respective percentage interests in the KKR business.



(b)

Common units that may be issued by KKR & Co. L.P. upon exchange of units in KKR Holdings L.P. for KKR common units.



.
.
Contact:.
.
Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
Craig Larson, [phone] (U.S.) / [phone]
[e-mail]
or
Media:
Kohlberg Kravis Roberts & Co. L.P.
Kristi Huller, [phone]
[e-mail]