KKR & Co (KKR)

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


Strong Investment Performance Drives Meaningful Economic Net Income

GAAP net income (loss) attributable to KKR & Co. L.P. was $204.7 million for the quarter ended September 30, 2013, up from $127.4 million in the comparable period of 2012. GAAP net income (loss) attributable to KKR & Co. L.P. was $413.3 million for the nine months ended September 30, 2013, down from $464.1 million in the comparable period of 2012.

Assets under management (“AUM”) totaled $90.2 billion as of September 30, 2013, up from $83.5 billion as of June 30, 2013.

Fee related earnings (“FRE”) were $106.0 million and $292.2 million for the quarter and nine months ended September 30, 2013, respectively, up from $90.7 million and $233.8 million in the comparable periods of 2012.

Total distributable earnings were $251.1 million for the quarter ended September 30, 2013, down from $332.9 million for the quarter ended September 30, 2012. Total distributable earnings were $945.5 million for the nine months ended September 30, 2013, up from $903.1 million in the comparable period of 2012.

Economic net income (“ENI”) was $613.7 million for the quarter ended September 30, 2013, up from $509.9 million in the comparable period of 2012. ENI was $1.4 billion for the nine months ended September 30, 2013, down from $1.8 billion in the comparable period of 2012.

After-tax ENI was $0.84 per adjusted unit for the quarter ended September 30, 2013, up from $0.69 per adjusted unit in the comparable period of 2012. After-tax ENI was $1.90 per adjusted unit for the nine months ended September 30, 2013, down from $2.42 per adjusted unit in the comparable period of 2012.

Book value was $7.2 billion on a total reportable segment basis as of September 30, 2013 or $10.07 per adjusted unit.

KKR & Co. L.P. declares a third quarter distribution of $0.23 per common unit.

KKR & Co. L.P. announced a transaction to acquire Avoca Capital.
Business WirePress Release: Kohlberg Kravis Roberts & Co. L.P. – 1 hour 48 minutes ago..

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NEW YORK--(BUSINESS WIRE)--

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

For the quarter and nine months ended September 30, 2013, the carrying value of our private equity investment portfolio appreciated 5.9% and 12.5%, respectively.

ENI was $613.7 million for the quarter ended September 30, 2013, up from $509.9 million for the quarter ended September 30, 2012. The increase was principally attributable to higher investment income earned from our principal investments and to a lesser extent a higher level of net carried interest earned from our private equity funds.

ENI was $1.4 billion for the nine months ended September 30, 2013, down from $1.8 billion for the nine months ended September 30, 2012. The decrease 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 and private equity portfolio increased during the nine months ended September 30, 2013, the level of appreciation was lower than in the comparable period of 2012.

AUM and fee paying assets under management (“FPAUM”) were $90.2 billion and $73.6 billion, respectively, as of September 30, 2013, both up from June 30, 2013. The increases in both AUM and FPAUM were primarily attributable to new capital raised across our various investment platforms, partially offset by distributions to fund limited partners. In September 2013, our Energy Income and Growth Fund had its first close with commitments totaling $1.4 billion (includes general partner commitment).

For the quarter and nine months ended September 30, 2013, FRE was $106.0 million and $292.2 million, respectively, up from $90.7 million and $233.8 million in the comparable periods of 2012. The increases in both comparable periods were primarily driven by (i) management fees attributable to new capital raised; (ii) higher transaction fees; and (iii) the acquisition of Prisma.

On October 18, 2013, KKR announced a transaction to acquire Avoca Capital (Unlimited) and its affiliates (“Avoca”), a European credit investment manager with approximately $8 billion in assets under management as of September 30, 2013. The transaction, which is subject to customary regulatory approvals, is expected to close in the first quarter of 2014.

“Our investment portfolio and balance sheet continue to perform, resulting in an unannualized 20% return on equity in the first nine months of this year,” said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive Officers of KKR.

___________________________________________________________________________________________________

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 nine months ended September 30, 2013 included net income attributable to KKR & Co. L.P. of $204.7 million and $413.3 million, respectively, and net income attributable to KKR & Co. L.P. per common unit of $0.66 and $1.40, respectively, on a diluted basis. For the quarter and nine months ended September 30, 2012, net income attributable to KKR & Co. L.P. was $127.4 million and $464.1 million, respectively, and net income attributable to KKR & Co. L.P. per common unit were $0.49 and $1.86, respectively, on a diluted basis. The increase quarter over quarter was primarily due to (i) an increase in management fees attributable to new capital raised and the acquisition of Prisma; (ii) higher transaction fees; and (iii) a higher level of total investment income. The year over year decrease was primarily due to a lower level of total investment income. The decrease in total investment income 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 nine months ended September 30, 2013 compared to the comparable period in 2012.

SEGMENT RESULTS

Private Markets

AUM was $59.7 billion as of September 30, 2013, an increase of $5.2 billion, or 9.5%, compared to AUM of $54.5 billion as of June 30, 2013. The increase was primarily attributable to new capital raised from fund investors and to a lesser extent appreciation in the fair value of our private equity portfolio. The increase was partially offset by distributions to the limited partners of our private equity funds arising from realizations.

FPAUM was $49.9 billion as of September 30, 2013, an increase of $4.0 billion, or 8.7%, compared to FPAUM of $45.9 billion as of June 30, 2013. The increase was primarily attributable to new capital raised from fund investors partially offset by distributions to the limited partners of our private equity funds arising from realizations.

FRE was $44.4 million for the quarter ended September 30, 2013, a decrease of $0.3 million compared to FRE of $44.7 million for the quarter ended September 30, 2012. The decrease was primarily driven by higher compensation expense due to additional headcount, partially offset by higher management fees resulting from new capital raised and higher transaction fees.

FRE was $127.8 million for the nine months ended September 30, 2013, an increase of $9.2 million, or 7.8%, compared to FRE of $118.6 million for the nine months ended September 30, 2012. The increase was primarily driven by higher management fees resulting from new capital raised and higher transaction fees. The increase was partially offset by higher compensation expense due to additional headcount.

ENI was $245.2 million for the quarter ended September 30, 2013, an increase of $31.3 million, or 14.6%, compared to ENI of $213.9 million for the quarter ended September 30, 2012. The increase was primarily attributable to higher net carried interest resulting from a higher level of appreciation in our private equity portfolio.

ENI was $583.9 million for the nine months ended September 30, 2013, a decrease of $70.0 million, or 10.7%, compared to ENI of $653.9 million for the nine months ended September 30, 2012. The decrease 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 $30.5 billion as of September 30, 2013, an increase of $1.5 billion, or 5.2%, compared to AUM of $29.0 billion as of June 30, 2013. FPAUM was $23.7 billion as of September 30, 2013, an increase of $1.7 billion, or 7.7%, compared to FPAUM of $22.0 billion as of June 30, 2013. For both AUM and FPAUM, the increases were primarily attributable to net new capital raised from fund investors.

FRE was $20.2 million for the quarter ended September 30, 2013, a decrease of $3.1 million, or 13.3%, compared to FRE of $23.3 million for the quarter ended September 30, 2012. The decrease was principally attributable to lower incentive fees earned and higher expenses related to one-time expenses in connection with the launch of a closed-end fund in the quarter ended September 30, 2013. The decrease was partially offset by higher management fees related to new capital raised from fund investors and the acquisition of Prisma.

FRE was $91.8 million for the nine months ended September 30, 2013, an increase of $40.7 million, or 79.6%, compared to FRE of $51.1 million for the nine months ended September 30, 2012. The increase was primarily attributable to higher management fees related to new capital raised from fund investors and the acquisition of Prisma.

ENI was $28.4 million for the quarter ended September 30, 2013, a decrease of $6.5 million, or 18.6%, compared to ENI of $34.9 million for the quarter ended September 30, 2012. The decrease was primarily driven by the decrease in FRE discussed above and lower net carried interest resulting from a lower level of appreciation of certain carry-earning credit investment vehicles.

ENI was $118.0 million for the nine months ended September 30, 2013, an increase of $52.4 million, or 79.9%, compared to ENI of $65.6 million for the nine months ended September 30, 2012. The increase was primarily driven by the increase in FRE discussed above and to a lesser extent higher net carried interest due to certain credit investment vehicles beginning to earn carry in 2013.

Capital Markets and Principal Activities

FRE was $41.4 million for the quarter ended September 30, 2013, an increase of $18.7 million, or 82.4%, compared to FRE of $22.7 million for the quarter ended September 30, 2012. FRE was $72.7 million for the nine months ended September 30, 2013, an increase of $8.5 million, or 13.2%, compared to FRE of $64.2 million for the nine months ended September 30, 2012. The increases in both comparable periods were primarily driven by a higher level of overall capital markets transaction activity.

ENI was $340.1 million for the quarter ended September 30, 2013, an increase of $79.0 million, or 30.3%, compared to ENI of $261.1 million for the quarter ended September 30, 2012. The increase was primarily attributable to a higher level of investment income from our principal investments and to a lesser extent the increase in FRE discussed above.

ENI was $704.0 million for the nine months ended September 30, 2013, a decrease of $359.7 million, or 33.8%, compared to ENI of $1,063.7 million for the nine months ended September 30, 2012. The decrease 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 nine months ended September 30, 2013, the level of appreciation was lower than in the comparable period of 2012.

CAPITAL AND LIQUIDITY

As of September 30, 2013, KKR had $1.9 billion of cash and short-term investments on a total reportable segment basis and $1.0 billion of outstanding debt obligations. KKR’s availability for borrowings was $750.0 million (which is reduced by 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 September 30, 2013.

As of September 30, 2013, KKR’s portion of total uncalled commitments to its investment funds was $1,164.5 million, consisting of the following (amounts in thousands):


Uncalled
Commitments


Private Markets

Energy Income and Growth Fund $ 252,500
North America Fund XI 191,300
Real Estate Fund 155,600
European Fund III 113,300
Asian Fund II 75,000
2006 Fund 62,900
Infrastructure 24,400
Natural Resources 10,900
E2 Investors (Annex Fund) 10,200
Asian Fund 9,300
China Growth Fund 6,500
Co-Investment Vehicles 45,600
Total Private Markets Commitments 957,500


Public Markets

Special Situations Vehicles 162,000
Mezzanine Fund 25,700
Direct Lending Vehicles 19,300
Total Public Markets Commitments 207,000

Total Uncalled Commitments $ 1,164,500


DISTRIBUTION

A distribution of $0.23 per common unit has been declared, comprised of (i) $0.10 per common unit from after-tax FRE, (ii) $0.07 per common unit from realized cash carry, and (iii) $0.06 per common unit from net realized principal investment income. The distribution will be paid on November 19, 2013 to unitholders of record as of the close of business on November 4, 2013. Please refer to the distribution policy presented later in this release.

CONFERENCE CALL

A conference call to discuss KKR’s financial results will be held on Thursday, October 24, 2013 at 11:00 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 KKR’s website at http://ir.kkr.com/kkr_ir/kkr_events.cfm. A replay of the live broadcast will be available on KKR’s website or by dialing [phone] (U.S. callers) or [phone] (non-U.S. callers), pass code 76308413 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 $90.2 billion in assets under management as of September 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 KKR’s 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 KKR’s 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, KKR’s 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 KKR’s business strategies including the ability to realize the anticipated synergies from acquisitions or strategic partnerships such as Prisma, Nephila or Avoca; 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 KKR’s 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, KKR’s 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 Nine Months Ended
September 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Revenues
Fees $ 220,028 $ 162,154 $ 537,644 $ 390,821

Expenses
Compensation and Benefits 329,182 366,350 860,905 1,019,400
Occupancy and Related Charges 17,637 14,344 46,036 43,636
General, Administrative and Other 108,676 65,825 279,906 177,480
Total Expenses 455,495 446,519 1,186,847 1,240,516

Investment Income (Loss)
Net Gains (Losses) from Investment Activities 2,230,401 2,308,613 4,598,755 6,997,166
Dividend Income 121,059 10,440 370,014 263,298
Interest Income 114,861 95,578 352,250 259,669
Interest Expense (25,056 ) (17,868 ) (72,693 ) (52,757 )
Total Investment Income (Loss) 2,441,265 2,396,763 5,248,326 7,467,376

Income (Loss) Before Taxes 2,205,798 2,112,398 4,599,123 6,617,681

Income Taxes 7,644 9,612 25,525 37,777

Net Income (Loss) 2,198,154 2,102,786 4,573,598 6,579,904

Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests 9,169 9,994 25,992 18,551
Net Income (Loss) Attributable to
Noncontrolling Interests 1,984,245 1,965,381 4,134,293 6,097,245

Net Income (Loss) Attributable to KKR & Co. L.P. $ 204,740 $ 127,411 $ 413,313 $ 464,108

Distributions Declared per KKR & Co. L.P. Common Unit $ 0.23 $ 0.24 $ 0.92 $ 0.52

Net Income (Loss) Attributable to KKR & Co. L.P. Per Common Unit
Basic $ 0.73 $ 0.53 $ 1.53 $ 1.98
Diluted (a) $ 0.66 $ 0.49 $ 1.40 $ 1.86
Weighted Average Common Units Outstanding
Basic 282,148,802 239,696,358 270,484,224 234,876,879
Diluted (a) 308,135,191 257,646,622 296,181,070 249,359,200




(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 KKR’s 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 Nine Months Ended
September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Fees
Management and incentive fees:
Management fees $ 173,245 $ 164,176 $ 126,483 $ 490,384 $ 384,752
Incentive fees 1,225 15,590 17,768 35,664 31,495
Management and incentive fees 174,470 179,766 144,251 526,048 416,247

Monitoring and transaction fees:
Monitoring fees 33,010 28,907 29,969 93,985 83,577
Transaction fees 129,127 62,785 75,264 232,211 163,268
Fee credits (61,782 ) (34,751 ) (31,707 ) (119,598 ) (67,739 )
Net monitoring and transaction fees 100,355 56,941 73,526 206,598 179,106

Total fees 274,825 236,707 217,777 732,646 595,353

Expenses
Compensation and benefits 92,229 80,436 71,340 247,827 196,810
Occupancy and related charges 15,674 13,067 13,605 42,063 41,305
Other operating expenses (a) 60,884 45,027 42,128 150,541 123,406
Total expenses 168,787 138,530 127,073 440,431 361,521

Fee Related Earnings (a) 106,038 98,177 90,704 292,215 233,832

Investment income (loss)
Realized carried interest 81,532 269,828 166,908 439,527 307,387
Unrealized carried interest 278,004 (202,018 ) 243,828 407,184 855,587
Gross carried interest 359,536 67,810 410,736 846,711 1,162,974
Less: allocation to KKR carry pool (145,512 ) (26,536 ) (169,633 ) (341,552 ) (473,692 )
Less: management fee refunds (b) (7,767 ) (4,735 ) (61,499 ) (21,718 ) (135,011 )
Net carried interest 206,257 36,539 179,604 483,441 554,271
Other investment income (loss) 303,472 11,050 240,876 634,720 1,000,886
Total investment income (loss) 509,729 47,589 420,480 1,118,161 1,555,157

Income (Loss) before noncontrolling interests
in Income of consolidated entities 615,767 145,766 511,184 1,410,376 1,788,989
Income (Loss) attributable to
noncontrolling interests 2,020 1,323 1,310 4,444 5,798

Economic Net Income (Loss) $ 613,747 $ 144,443 $ 509,874 $ 1,405,932 $ 1,783,191

Provision for Income Taxes 11,950 13,486 22,548 45,553 91,788

Economic Net Income (Loss), After Taxes (c) $ 601,797 $ 130,957 $ 487,326 $ 1,360,379 $ 1,691,403

Economic Net Income (Loss), After Taxes per Adjusted Unit (c) $ 0.84 $ 0.18 $ 0.69 $ 1.90 $ 2.42

Assets Under Management $ 90,169,200 $ 83,500,900 $ 66,278,700 $ 90,169,200 $ 66,278,700
Fee Paying Assets Under Management $ 73,611,900 $ 67,956,400 $ 50,266,000 $ 73,611,900 $ 50,266,000
Committed Dollars Invested and Syndicated Capital $ 2,848,700 $ 1,889,400 $ 926,000 $ 5,562,500 $ 2,639,200
Uncalled Commitments $ 22,718,400 $ 21,364,400 $ 15,845,900 $ 22,718,400 $ 15,845,900


Other Information

Fee Related Earnings $ 106,038 $ 98,177 $ 90,704 $ 292,215 $ 233,832
Plus: depreciation and amortization 3,601 3,708 3,273 10,990 8,919
Fee Related EBITDA $ 109,639 $ 101,885 $ 93,977 $ 303,205 $ 242,751

Distributed Earnings $ 189,477 $ 313,559 $ 187,174 $ 701,756 $ 403,208
Plus: Undistributed net realized principal investment income 61,660 90,217 145,700 243,771 499,898
Total Distributable Earnings (c) $ 251,137 $ 403,776 $ 332,874 $ 945,527 $ 903,106

GAAP interest expense $ 25,056 $ 24,614 $ 17,868 $ 72,693 $ 52,757
Less: interest expense related to debt obligations
from investment financing arrangements 8,841 8,404 8,502 24,035 24,036
Core Interest Expense (c) $ 16,215 $ 16,210 $ 9,366 $ 48,658 $ 28,721

Economic Net Income (Loss), After Taxes and Equity-based Charges (c) $ 570,570 $ 105,021 $ 469,961 $ 1,275,798 $ 1,643,724




(a) For the quarter ended September 30, 2013, other operating expenses include $9.7 million of one-time expenses incurred in connection with the launch of a closed-end fund.

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

(c) 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 Nine Months Ended
September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Fees
Management and incentive fees:
Management fees $ 119,410 $ 114,700 $ 105,035 $ 340,715 $ 319,117
Incentive fees - - - - -
Management and incentive fees 119,410 114,700 105,035 340,715 319,117

Monitoring and transaction fees:
Monitoring fees 33,010 28,907 29,969 93,985 83,577
Transaction fees 54,968 25,231 32,788 96,611 55,223
Fee credits (46,597 ) (29,547 ) (26,293 ) (97,153 ) (59,641 )
Net monitoring and transaction fees 41,381 24,591 36,464 93,443 79,159

Total fees 160,791 139,291 141,499 434,158 398,276

Expenses
Compensation and benefits 65,400 51,516 48,905 164,917 139,382
Occupancy and related charges 13,367 11,143 12,049 35,935 36,487
Other operating expenses 37,586 33,988 35,885 105,516 103,790
Total expenses 116,353 96,647 96,839 306,368 279,659

Fee Related Earnings 44,438 42,644 44,660 127,790 118,617

Investment income (loss)
Realized carried interest 81,532 269,828 166,908 439,527 307,387
Unrealized carried interest 263,982 (212,809 ) 224,260 361,972 830,072
Gross carried interest 345,514 57,019 391,168 801,499 1,137,459
Less: allocation to KKR carry pool (139,903 ) (22,220 ) (161,805 ) (323,467 ) (463,485 )
Less: management fee refunds (7,767 ) (4,735 ) (61,499 ) (21,718 ) (135,011 )
Net carried interest 197,844 30,064 167,864 456,314 538,963
Other investment income (loss) 3,357 (249 ) 1,779 1,073 (559 )
Total investment income (loss) 201,201 29,815 169,643 457,387 538,404

Income (Loss) before noncontrolling interests
in Income of consolidated entities 245,639 72,459 214,303 585,177 657,021
Income (Loss) attributable to
noncontrolling interests 433 411 444 1,242 3,098

Economic Net Income (Loss) $ 245,206 $ 72,048 $ 213,859 $ 583,935 $ 653,923

Assets Under Management $ 59,678,300 $ 54,452,400 $ 49,771,000 $ 59,678,300 $ 49,771,000
Fee Paying Assets Under Management $ 49,889,500 $ 45,907,500 $ 40,354,200 $ 49,889,500 $ 40,354,200
Committed Dollars Invested $ 1,805,800 $ 1,314,000 $ 623,000 $ 3,718,300 $ 1,805,500
Uncalled Commitments $ 21,103,800 $ 19,972,800 $ 14,594,700 $ 21,103,800 $ 14,594,700

...

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

Quarter Ended Nine Months Ended
September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Fees
Management and incentive fees:
Management fees $ 53,835 $ 49,476 $ 21,448 $ 149,669 $ 65,635
Incentive fees 1,225 15,590 17,768 35,664 31,495
Management and incentive fees 55,060 65,066 39,216 185,333 97,130

Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 20,534 7,243 8,780 30,883 12,521
Fee credits (15,185 ) (5,204 ) (5,414 ) (22,445 ) (8,098 )
Net monitoring and transaction fees 5,349 2,039 3,366 8,438 4,423

Total fees 60,409 67,105 42,582 193,771 101,553

Expenses
Compensation and benefits 18,606 21,990 13,997 60,296 34,608
Occupancy and related charges 1,906 1,615 1,343 5,063 4,127
Other operating expenses (a) 19,670 9,147 3,897 36,643 11,754
Total expenses 40,182 32,752 19,237 102,002 50,489

Fee Related Earnings (a) 20,227 34,353 23,345 91,769 51,064

Investment income (loss)
Realized carried interest - - - - -
Unrealized carried interest 14,022 10,791 19,568 45,212 25,515
Gross carried interest 14,022 10,791 19,568 45,212 25,515
Less: allocation to KKR carry pool (5,609 ) (4,316 ) (7,828 ) (18,085 ) (10,207 )
Less: management fee refunds - - - - -
Net carried interest 8,413 6,475 11,740 27,127 15,308
Other investment income (loss) (4 ) 22 25 80 (10 )
Total investment income (loss) 8,409 6,497 11,765 27,207 15,298

Income (Loss) before noncontrolling interests
in Income of consolidated entities 28,636 40,850 35,110 118,976 66,362
Income (Loss) attributable to
noncontrolling interests 202 378 233 935 787

Economic Net Income (Loss) $ 28,434 $ 40,472 $ 34,877 $ 118,041 $ 65,575

Assets Under Management $ 30,490,900 $ 29,048,500 $ 16,507,700 $ 30,490,900 $ 16,507,700
Fee Paying Assets Under Management $ 23,722,400 $ 22,048,900 $ 9,911,800 $ 23,722,400 $ 9,911,800
Committed Dollars Invested $ 326,400 $ 370,800 $ 278,300 $ 862,100 $ 558,400
Uncalled Commitments $ 1,614,600 $ 1,391,600 $ 1,251,200 $ 1,614,600 $ 1,251,200




(a) For the quarter ended September 30, 2013, other operating expenses include $9.7 million of one-time expenses incurred in connection with the launch of a closed-end fund.



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

Quarter Ended Nine Months Ended
September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012
Fees
Management and incentive fees:
Management fees $ - $ - $ - $ - $ -
Incentive fees - - - - -
Management and incentive fees - - - - -

Monitoring and transaction fees:
Monitoring fees - - - - -
Transaction fees 53,625 30,311 33,696 104,717 95,524
Fee credits - - - - -
Net monitoring and transaction fees 53,625 30,311 33,696 104,717 95,524

Total fees 53,625 30,311 33,696 104,717 95,524

Expenses
Compensation and benefits 8,223 6,930 8,438 22,614 22,820
Occupancy and related charges 401 309 213 1,065 691
Other operating expenses 3,628 1,892 2,346 8,382 7,862
Total expenses 12,252 9,131 10,997 32,061 31,373

Fee Related Earnings 41,373 21,180 22,699 72,656 64,151

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) 300,119 11,277 239,072 633,567 1,001,455
Total investment income (loss) 300,119 11,277 239,072 633,567 1,001,455

Income (Loss) before noncontrolling interests
in Income of consolidated entities 341,492 32,457 261,771 706,223 1,065,606
Income (Loss) attributable to
noncontrolling interests 1,385 534 633 2,267 1,913

Economic Net Income (Loss) $ 340,107 $ 31,923 $ 261,138 $ 703,956 $ 1,063,693

Syndicated Capital $ 716,500 $ 204,600 $ 24,700 $ 982,100 $ 275,300




(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 September 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 $ 119,410 $ 53,835 $ - $ 173,245
Incentive fees - 1,225 - 1,225
Management and incentive fees 119,410 55,060 - 174,470

Monitoring and transaction fees:
Monitoring fees 33,010 - - 33,010
Transaction fees 54,968 20,534 53,625 129,127
Fee credits (46,597 ) (15,185 ) - (61,782 )
Net monitoring and transaction fees 41,381 5,349 53,625 100,355

Total fees 160,791 60,409 53,625 274,825

Expenses
Compensation and benefits 65,400 18,606 8,223 92,229
Occupancy and related charges 13,367 1,906 401 15,674
Other operating expenses 37,586 19,670 3,628 60,884
Total expenses 116,353 40,182 12,252 168,787

Fee Related Earnings 44,438 20,227 41,373 106,038

Investment income (loss)
Realized carried interest 81,532 - - 81,532
Unrealized carried interest 263,982 14,022 - 278,004
Gross carried interest 345,514 14,022 - 359,536
Less: allocation to KKR carry pool (139,903 ) (5,609 ) - (145,512 )
Less: management fee refunds (7,767 ) - - (7,767 )
Net carried interest 197,844 8,413 - 206,257
Other investment income (loss) 3,357 (4 ) 300,119 303,472
Total investment income (loss) 201,201 8,409 300,119 509,729

Income (Loss) before noncontrolling interests
in Income of consolidated entities 245,639 28,636 341,492 615,767
Income (Loss) attributable to
noncontrolling interests 433 202 1,385 2,020

Economic Net Income (Loss) $ 245,206 $ 28,434 $ 340,107 $ 613,747



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 September 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 $ 105,035 $ 21,448 $ - $ 126,483
Incentive fees - 17,768 - 17,768
Management and incentive fees 105,035 39,216 - 144,251

Monitoring and transaction fees:
Monitoring fees 29,969 - - 29,969
Transaction fees 32,788 8,780 33,696 75,264
Fee credits (26,293 ) (5,414 ) - (31,707 )
Net monitoring and transaction fees 36,464 3,366 33,696 73,526

Total fees 141,499 42,582 33,696 217,777

Expenses
Compensation and benefits 48,905 13,997 8,438 71,340
Occupancy and related charges 12,049 1,343 213 13,605
Other operating expenses 35,885 3,897 2,346 42,128
Total expenses 96,839 19,237 10,997 127,073

Fee Related Earnings 44,660 23,345 22,699 90,704

Investment income (loss)
Realized carried interest 166,908 - - 166,908
Unrealized carried interest 224,260 19,568 - 243,828
Gross carried interest 391,168 19,568 - 410,736
Less: allocation to KKR carry pool (161,805 ) (7,828 ) - (169,633 )
Less: management fee refunds (61,499 ) - - (61,499 )
Net carried interest 167,864 11,740 - 179,604
Other investment income (loss) 1,779 25 239,072 240,876
Total investment income (loss) 169,643 11,765 239,072 420,480

Income (Loss) before noncontrolling interests
in Income of consolidated entities 214,303 35,110 261,771 511,184
Income (Loss) attributable to
noncontrolling interests 444 233 633 1,310

Economic Net Income (Loss) $ 213,859 $ 34,877 $ 261,138 $ 509,874



KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Nine Months Ended September 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 $ 340,715 $ 149,669 $ - $ 490,384
Incentive fees - 35,664 - 35,664
Management and incentive fees 340,715 185,333 - 526,048

Monitoring and transaction fees:
Monitoring fees 93,985 - - 93,985
Transaction fees 96,611 30,883 104,717 232,211
Fee credits (97,153 ) (22,445 ) - (119,598 )
Net monitoring and transaction fees 93,443 8,438 104,717 206,598

Total fees 434,158 193,771 104,717 732,646

Expenses
Compensation and benefits 164,917 60,296 22,614 247,827
Occupancy and related charges 35,935 5,063 1,065 42,063
Other operating expenses 105,516 36,643 8,382 150,541
Total expenses 306,368 102,002 32,061 440,431

Fee Related Earnings 127,790 91,769 72,656 292,215

Investment income (loss)
Realized carried interest 439,527 - - 439,527
Unrealized carried interest 361,972 45,212 - 407,184
Gross carried interest 801,499 45,212 - 846,711
Less: allocation to KKR carry pool (323,467 ) (18,085 ) - (341,552 )
Less: management fee refunds (21,718 ) - - (21,718 )
Net carried interest 456,314 27,127 - 483,441
Other investment income (loss) 1,073 80 633,567 634,720
Total investment income (loss) 457,387 27,207 633,567 1,118,161

Income (Loss) before noncontrolling interests
in Income of consolidated entities 585,177 118,976 706,223 1,410,376
Income (Loss) attributable to
noncontrolling interests 1,242 935 2,267 4,444

Economic Net Income (Loss) $ 583,935 $ 118,041 $ 703,956 $ 1,405,932



KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Nine Months Ended September 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 $ 319,117 $ 65,635 $ - $ 384,752
Incentive fees - 31,495 - 31,495
Management and incentive fees 319,117 97,130 - 416,247

Monitoring and transaction fees:
Monitoring fees 83,577 - - 83,577
Transaction fees 55,223 12,521 95,524 163,268
Fee credits (59,641 ) (8,098 ) - (67,739 )
Net monitoring and transaction fees 79,159 4,423 95,524 179,106

Total fees 398,276 101,553 95,524 595,353

Expenses
Compensation and benefits 139,382 34,608 22,820 196,810
Occupancy and related charges 36,487 4,127 691 41,305
Other operating expenses 103,790 11,754 7,862 123,406
Total expenses 279,659 50,489 31,373 361,521

Fee Related Earnings 118,617 51,064 64,151 233,832

Investment income (loss)
Realized carried interest 307,387 - - 307,387
Unrealized carried interest 830,072 25,515 - 855,587
Gross carried interest 1,137,459 25,515 - 1,162,974
Less: allocation to KKR carry pool (463,485 ) (10,207 ) - (473,692 )
Less: management fee refunds (135,011 ) - - (135,011 )
Net carried interest 538,963 15,308 - 554,271
Other investment income (loss) (559 ) (10 ) 1,001,455 1,000,886
Total investment income (loss) 538,404 15,298 1,001,455 1,555,157

Income (Loss) before noncontrolling interests
in Income of consolidated entities 657,021 66,362 1,065,606 1,788,989
Income (Loss) attributable to
noncontrolling interests 3,098 787 1,913 5,798

Economic Net Income (Loss) $ 653,923 $ 65,575 $ 1,063,693 $ 1,783,191



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

As of September 30, 2013
Capital
Markets and
Private Public Principal Total
Markets Markets Activities Reportable
Segment Segment Segment Segments

Cash and short-term investments $ 173,453 $ 47,074 $ 1,680,428 $ 1,900,955
Investments - - 4,937,849


(a)
4,937,849
Unrealized carry 918,574 52,066 - 970,640
Other assets 363,981 283,283 58,336 705,600
Total assets $ 1,456,008 $ 382,423 $ 6,676,613 $ 8,515,044

Debt obligations $ - $ - $ 1,000,000 $ 1,000,000
Other liabilities 143,016 51,701 40,964 235,681
Total liabilities 143,016 51,701 1,040,964 1,235,681

Noncontrolling interests 1,479 649 69,487 71,615

Book value $ 1,311,513 $ 330,073 $ 5,566,162 $ 7,207,748

Book value per adjusted unit $ 1.83 $ 0.46 $ 7.78 $ 10.07


As of December 31, 2012
Capital
Markets and
Private Public Principal Total
Markets Markets Activities Reportable
Segment Segment Segment 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 September 30, 2013




Fair Value as
Fair a Percentage of

Investment

Cost
Value Total Investments

Co-Investments in Portfolio Companies of
Private Equity Investment Vehicles:
Alliance Boots GmbH 195,640 491,801 10.0 %
HCA Inc. 96,289 363,611 7.4 %
ProSiebenSat.1 Media AG 226,913 279,201 5.7 %
The Nielsen Company B.V. 87,657 214,492 4.3 %
Samson Resources Corporation 237,514 190,012 3.8 %
KION Group 128,058 189,391 3.8 %
NXP B.V. 122,059 172,084 3.5 %
US Foods, Inc. 100,000 130,000 2.6 %
Biomet, Inc. 151,444 121,155 2.5 %
First Data Corporation 135,258 94,681 1.9 %
Dollar General Corporation 2,893 18,171 0.4 %
Energy Future Holdings Corp. 200,000 10,000 0.2 %
1,683,725 2,274,599 46.1 %

Private Equity Investment Vehicles
KKR 2006 Fund L.P. 340,655 389,950 7.9 %
KKR European Fund III L.P. 243,973 286,953 5.8 %
KKR Asian Fund L.P. 84,152 95,665 1.9 %
KKR North America Fund XI L.P. 61,565 64,106 1.3 %
KKR European Fund II L.P. 46,966 49,205 1.0 %
KKR Millennium Fund L.P. 50,470 42,693 0.9 %
KKR E2 Investors, L.P. 14,210 26,037 0.5 %
Co-Investments 7,598 7,730 0.2 %
KKR European Fund L.P. 47,664 4,290 0.1 %
KKR China Growth Fund L.P. 3,286 4,207 0.1 %
900,539 970,836 19.7 %

Private Equity Total 2,584,264 3,245,435 65.8 %

Real Assets
Royalties and Drilling 281,968 294,670 6.0 %
Real Estate Fund 45,135 57,065 1.2 %
Infrastructure Fund 30,324 32,668 0.7 %
Co-Investments 10,835 12,888 0.3 %
Natural Resources 12,917 8,159 0.2 %
Real Assets Total 381,179 405,450 8.4 %

Private Markets Total 2,965,443 3,650,885 74.2 %

Public Markets Investment Strategies
Liquid Credit 187,263 196,972 4.0 %
Long/Short Equities 100,000 110,899 2.2 %
Credit Relative Value 82,000 91,550 1.9 %
Direct Lending 49,796 55,323 1.1 %
Special Situations 30,205 34,600 0.7 %
Mezzanine Fund 15,865 19,331 0.4 %
Public Markets Total 465,129 508,675 10.3 %

Other 762,234 778,289 15.5 %

Total Investments $ 4,192,806 $ 4,937,849 100.0 %



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


As of September 30, 2013




Fair Value as
a Percentage

Investment

Cost
Fair
Value
of Total
Investments


Significant Aggregate Investments: (a)
Alliance Boots GmbH $ 228,769 $ 565,811 11.5 %
HCA Inc. 117,624 432,333 8.7 %
ProSieben.Sat 1 Media AG 242,643 297,299 6.0 %
589,036 1,295,443 26.2 %

Other investments 3,603,770 3,642,406 73.8 %
Total Investments $ 4,192,806 $ 4,937,849 100.0 %




(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 September 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 Public Total
Markets Markets Reportable
Segment Segment Segments

Quarter Ended September 30, 2013


June 30, 2013 $ 54,452,400 $ 29,048,500 $ 83,500,900
New Capital Raised 4,670,800 1,821,700 6,492,500
Distributions (1,591,600 ) (552,300 )


(c)
(2,143,900 )
Foreign Exchange 33,100 - 33,100
Change in Value 2,113,600 173,000 2,286,600
September 30, 2013 $ 59,678,300 $ 30,490,900 $ 90,169,200



Nine Months Ended September 30, 2013


December 31, 2012 $ 49,127,600 $ 26,399,900 $ 75,527,500
New Capital Raised 12,319,000 5,056,500 17,375,500
Distributions (6,109,000 ) (1,952,500 )


(d)
(8,061,500 )
Net Changes in Fee Base of Certain Funds (a) (272,300 ) - (272,300 )
Foreign Exchange 22,100 - 22,100
Change in Value 4,590,900 987,000 5,577,900
September 30, 2013 $ 59,678,300 $ 30,490,900 $ 90,169,200



Trailing Twelve Months Ended September 30, 2013


September 30, 2012 $ 49,771,000 $ 16,507,700 $ 66,278,700
New Capital Raised 13,253,100 6,850,500 20,103,600
Acquisitions (b) - 8,086,900 8,086,900
Distributions (9,206,100 ) (2,438,100 )


(e)
(11,644,200 )
Net Changes in Fee Base of Certain Funds (a) (272,300 ) - (272,300 )
Foreign Exchange 39,500 - 39,500
Change in Value 6,093,100 1,483,900 7,577,000
September 30, 2013 $ 59,678,300 $ 30,490,900 $ 90,169,200




* 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 from fund investors and distributions since the acquisition.
(c) Includes $155.3 million of redemptions by fund investors.
(d) Includes $694.5 million of redemptions by fund investors.
(e) Includes $864.4 million of redemptions by fund investors.



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


Private Public Total
Markets Markets Reportable
Segment Segment Segments

Quarter Ended September 30, 2013


June 30, 2013 $ 45,907,500 $ 22,048,900 $ 67,956,400
New Capital Raised 4,366,900 1,719,500 6,086,400
Distributions (582,800 ) (311,100 )


(c)
(893,900 )
Foreign Exchange 162,800 - 162,800
Change in Value 35,100 265,100 300,200
September 30, 2013 $ 49,889,500 $ 23,722,400 $ 73,611,900



Nine Months Ended September 30, 2013


December 31, 2012 $ 41,173,000 $ 19,673,000 $ 60,846,000
New Capital Raised 11,730,800 4,453,800 16,184,600
Distributions (2,533,800 ) (1,284,800 )


(d)
(3,818,600 )
Net Changes in Fee Base of Certain Funds (a) (654,700 ) - (654,700 )
Foreign Exchange 107,400 - 107,400
Change in Value 66,800 880,400 947,200
September 30, 2013 $ 49,889,500 $ 23,722,400 $ 73,611,900



Trailing Twelve Months Ended September 30, 2013


September 30, 2012 $ 40,354,200 $ 9,911,800 $ 50,266,000
New Capital Raised 13,002,800 6,012,900 19,015,700
Acquisitions (b) - 8,078,400 8,078,400
Distributions (3,084,900 ) (1,542,000 )


(e)
(4,626,900 )
Net Changes in Fee Base of Certain Funds (a) (654,700 ) - (654,700 )
Foreign Exchange 191,000 - 191,000
Change in Value 81,100 1,261,300 1,342,400
September 30, 2013 $ 49,889,500 $ 23,722,400 $ 73,611,900




* 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 from fund investors and distributions since the acquisition.
(c) Includes $155.3 million of redemptions by fund investors.
(d) Includes $694.5 million of redemptions by fund investors.
(e) Includes $864.4 million of redemptions by fund investors.



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

Investment Period Amount
Percentage

Committed by

Commencement Uncalled
General
Remaining
Remaining Fair

Date End Date Commitment Commitments Partner Invested Realized Cost
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 8,030.4 6,316.2 3.1 % 1,714.2 3.9 1,714.2 1,774.5
China Growth Fund 11/2010 11/2016 1,010.0 692.4 1.0 % 317.6 32.6 300.1 388.8
E2 Investors (Annex Fund) 8/2009 11/2013 347.9 152.1 4.3 % 195.8 - 195.8 395.1
European Fund III 3/2008 3/2014 6,108.1 1,599.4 4.6 % 4,508.7 653.5 4,151.3 5,154.1
Asian Fund 7/2007 4/2013 3,983.2 243.3 2.5 % 3,739.9 1,663.1 2,869.9 4,763.2
2006 Fund 9/2006 9/2012 17,642.2 1,255.5 2.1 % 16,386.7 10,874.8 9,914.7 14,627.2
European Fund II 11/2005 10/2008 5,750.8 - 2.1 % 5,750.8 3,245.1 3,120.4 4,636.4
Millennium Fund 12/2002 12/2008 6,000.0 - 2.5 % 6,000.0 9,502.7 2,084.1 3,500.4
European Fund 12/1999 12/2005 3,085.4 - 3.2 % 3,085.4 8,720.0 - 51.8
Total Private Equity Funds 57,783.0 16,083.9 41,699.1 34,695.7 24,350.5 35,291.5

Co-Investment Vehicles Various Various 3,137.9 1,083.1 Various 2,054.8 2,436.9 1,413.3 1,837.7
Total Private Equity 60,920.9 17,167.0 43,753.9 37,132.6 25,763.8 37,129.2

Real Assets
Energy Income and Growth Fund 9/2013 9/2018 1,413.5 1,413.5 17.9 % - - - -
Natural Resources Fund Various Various 1,072.3 499.4 Various 572.9 67.3 525.5 329.6
Global Energy Opportunities Various Various 861.0 734.4 Various 126.6 - 126.6 121.9
Infrastructure Fund Various Various 1,042.0 498.0 4.8 % 544.0 9.0

544.0 583.2
Infrastructure Co-Investments Various Various 1,356.2 251.7 Various 1,104.5 208.7

1,104.5 1,337.6
Real Estate Partners Americas 5/2013 (b) 694.0 539.8 29 % 154.2 - 154.2 196.0
Real Assets 6,439.0 3,936.8 2,502.2 285.0 2,454.8 2,568.3

Private Markets Total 67,359.9 21,103.8 46,256.1 37,417.6 28,218.6 39,697.5


Public Markets


Special Situations Vehicles Various Various 2,635.5 822.4 Various 1,813.1 530.4 1,567.3 1,934.1
Mezzanine Fund 3/2010 8/2015 987.0 564.1 4.6 % 422.9 129.3 364.9 426.9
Direct Lending Vehicles Various Various 681.0 228.1 Various 452.9 19.5 452.9 484.7

Public Markets Total 4,303.5 1,614.6 2,688.9 679.2 2,385.1 2,845.7

Grand Total $ 71,663.4 $ 22,718.4 $ 48,945.0 $ 38,096.8 $ 30,603.7 $ 42,543.2


(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 Nine Months Ended
September 30, 2013 June 30, 2013 September 30, 2012 September 30, 2013 September 30, 2012

FRE (a) $ 106,038 $ 98,177 $ 90,704 $ 292,215 $ 233,832
Realized cash carry 48,919 161,897 100,145 263,716 184,432
Net realized principal investment income 102,766 150,361 145,700 406,283 499,898
Less: local income taxes (4,566 ) (5,336 ) (2,365 ) (12,243 ) (9,258 )
Less: noncontrolling interests (2,020 ) (1,323 ) (1,310 ) (4,444 ) (5,798 )
Total Distributable Earnings 251,137 403,776 332,874 945,527 903,106

Less: Undistributed net realized principal investment income (61,660 ) (90,217 ) (145,700 ) (243,771 ) (499,898 )

Distributed Earnings 189,477 313,559 187,174 701,756 403,208

Distributed Earnings to KKR & Co. L.P. (b) 78,300 126,295 66,015 280,344 140,216

Less: estimated current corporate income taxes (12,455 ) (10,125 ) (6,890 ) (28,956 ) (15,180 )

Distributed Earnings to KKR & Co. L.P., After Taxes 65,845 116,170 59,125 251,388 125,036


Distribution per KKR & Co. L.P. common unit $ 0.23 $ 0.42 $ 0.24 $ 0.92 $ 0.52

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

After-tax FRE $ 0.10 $ 0.10 $ 0.09 $ 0.30 $ 0.24
Realized Cash Carry $ 0.07 $ 0.23 $ 0.15 $ 0.38 $ 0.28
Distributed Net Realized Principal Investment Income $ 0.06 $ 0.09 $ - $ 0.24 $ -

Outstanding KKR & Co. L.P. common units 285,051,256 277,834,343 241,407,805




(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
September 30, 2013 June 30, 2013 September 30, 2012

Net income (loss) attributable to KKR & Co. L.P. per common unit $ 0.73 $ 0.06 $ 0.53
Weighted Average Common Units Outstanding 282,148,802 271,983,811 239,696,358
Net income (loss) attributable to KKR & Co. L.P. 204,740 15,134 127,411

Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.
300,169 28,106 249,460
Plus: Non-cash equity based charges 85,215 80,318 122,157
Plus: Amortization of intangibles and other, net 15,979 12,360 1,234
Plus: Income taxes 7,644 8,525 9,612
Economic net income (loss) 613,747 144,443 509,874
Less: Provision for income taxes 11,950 13,486 22,548
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 31,227 25,936 17,365
Economic net income (loss) after taxes and equity-based charges 570,570 105,021 469,961
Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 31,227 25,936 17,365
Economic net income (loss) after taxes 601,797 130,957 487,326
Weighted Average Adjusted Units 715,781,663 715,453,358 702,252,548
Economic net income (loss) after taxes per adjusted unit $ 0.84 $ 0.18 $ 0.69


Nine Months Ended
September 30, 2013 September 30, 2012

Net income (loss) attributable to KKR & Co. L.P. per common unit $ 1.53 $ 1.98
Weighted Average Common Units Outstanding 270,484,224 234,876,879
Net income (loss) attributable to KKR & Co. L.P. 413,313 464,108

Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.
662,387 946,484
Plus: Non-cash equity based charges 247,183 330,037
Plus: Amortization of intangibles and other, net 57,524 4,785
Plus: Income taxes 25,525 37,777
Economic net income (loss) 1,405,932 1,783,191
Less: Provision for income taxes 45,553 91,788
Less: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 84,581 47,678
Economic net income (loss) after taxes and equity-based charges 1,275,798 1,643,725
Plus: Equity-based charges associated with the KKR & Co. L.P. 2010 equity incentive plan 84,581 47,678
Economic net income (loss) after taxes 1,360,379 1,691,403
Weighted Average Adjusted Units 714,171,641 698,371,025
Economic net income (loss) after taxes per adjusted unit $ 1.90 $ 2.42



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
September 30, 2013 June 30, 2013 September 30, 2012

Net income (loss) attributable to KKR & Co. L.P. $ 204,740 $ 15,134 $ 127,411

Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.
300,169 28,106 249,460
Plus: Non-cash equity based charges 85,215 80,318 122,157
Plus: Amortization of intangibles and other, net 15,979 12,360 1,234
Plus: Income taxes 7,644 8,525 9,612
Economic net income (loss) 613,747 144,443 509,874
Plus: Income attributable to segment noncontrolling interests 2,020 1,323 1,310
Less: Investment income (loss) 509,729 47,589 420,480
Fee related earnings 106,038 98,177 90,704
Plus: Depreciation and amortization 3,601 3,708 3,273
Fee related EBITDA $ 109,639 $ 101,885 $ 93,977
Less: Depreciation and amortization 3,601 3,708 3,273
Plus: Realized cash carry 48,919 161,897 100,145
Plus: Net realized principal investment income 102,766 150,361 145,700
Less: Local income taxes and noncontrolling interests 6,586 6,659 3,675
Total distributable earnings $ 251,137 $ 403,776 $ 332,874



Nine Months Ended
September 30, 2013 September 30, 2012

Net income (loss) attributable to KKR & Co. L.P. $ 413,313 $ 464,108

Plus: Net income (loss) attributable to noncontrolling

interests held by KKR Holdings L.P.
662,387 946,484
Plus: Non-cash equity based charges 247,183 330,037
Plus: Amortization of intangibles and other, net 57,524 4,785
Plus: Income taxes 25,525 37,777
Economic net income (loss) 1,405,932 1,783,191
Plus: Income attributable to segment noncontrolling interests 4,444 5,798
Less: Investment income (loss) 1,118,161 1,555,157
Fee related earnings 292,215 233,832
Plus: Depreciation and amortization 10,990 8,919
Fee related EBITDA $ 303,205 $ 242,751
Less: Depreciation and amortization 10,990 8,919
Plus: Realized cash carry 263,716 184,432
Plus: Net realized principal investment income 406,283 499,898
Less: Local income taxes and noncontrolling interests 16,687 15,056
Total distributable earnings $ 945,527 $ 903,106



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
September 30, 2013 December 31, 2012

KKR & Co. L.P. partners’ capital $ 2,495,093 $ 2,004,359

Noncontrolling interests held by KKR Holdings L.P. 4,796,218 4,981,864

Equity impact of KKR Management Holdings Corp. and other (83,563 ) (29,039 )

Book value 7,207,748 6,957,184

Adjusted units 715,755,721 704,780,484

Book value per adjusted unit $ 10.07 $ 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
September 30, 2013 December 31, 2012

Cash and cash equivalents $ 1,112,316 $ 1,230,464

Liquid short-term investments 788,639 303,823

Cash and short-term investments $ 1,900,955 $ 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
September 30, 2013 June 30, 2013 September 30, 2012
Weighted Average GAAP Common Units Outstanding - Basic 282,148,802 271,983,811 239,696,358
Weighted Average Unvested Common Units(a) 25,986,389 26,094,953 17,950,264
Weighted Average GAAP Common Units Outstanding - Diluted 308,135,191 298,078,764 257,646,622
Adjustments:
Weighted Average KKR Holdings Units(b) 407,646,472 417,374,594 444,605,926
Weighted Average Adjusted Units 715,781,663 715,453,358 702,252,548


Nine Months Ended
September 30, 2013 September 30, 2012
Weighted Average GAAP Common Units Outstanding - Basic 270,484,224 234,876,879
Weighted Average Unvested Common Units(a) 25,696,846 14,482,321
Weighted Average GAAP Common Units Outstanding - Diluted 296,181,070 249,359,200
Adjustments:
Weighted Average KKR Holdings Units(b) 417,990,571 449,011,825
Weighted Average Adjusted Units 714,171,641 698,371,025




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
September 30, 2013 December 31, 2012
GAAP Common Units Outstanding - Basic 285,051,256 253,363,691
Unvested Common Units(a) 25,960,447 18,863,517
GAAP Common Units Outstanding - Diluted 311,011,703 272,227,208
Adjustments:
KKR Holdings Units(b) 404,744,018 432,553,276
Adjusted Units 715,755,721 704,780,484




(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.



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Contact:.
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Investor Relations:
Kohlberg Kravis Roberts & Co. L.P.
Craig Larson
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Media:
Kohlberg Kravis Roberts & Co. L.P.
Kristi Huller
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