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


Attachment:

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

       Initiates quarterly distribution of 40% of balance sheet income

     Strong investment appreciation drives meaningful economic net income

GAAP net income (loss) attributable to KKR & Co. L.P. was $193.4 million for
the quarter ended March 31, 2013, up from $190.4 million for the quarter ended
March 31, 2012.

Assets under management (“AUM”) totaled $78.3 billion as of March 31, 2013, up
from $75.5 billion as of December 31, 2012.

Fee related earnings (“FRE”) were $88.0 million for the quarter ended March
31, 2013, up from $73.4 million for the quarter ended March 31, 2012.

Total distributable earnings were $290.6 million for the quarter ended March
31, 2013, up from $164.1 million for the quarter ended March 31, 2012.

Economic net income (loss) (“ENI”) was $647.7 million for the quarter ended
March 31, 2013, down from $727.2 million for the quarter ended March 31, 2012.

After-tax ENI was $0.88 per adjusted unit for the quarter ended March 31,
2013, down from $0.99 per adjusted unit for the quarter ended March 31, 2012.

Book value was $7.1 billion on a segment basis as of March 31, 2013,
representing $9.89 per adjusted unit.

KKR & Co. L.P. declares a first quarter distribution of $0.27 per common unit,
which includes $0.09 per common unit of net realized principal investment
income.

Business Wire

NEW YORK -- April 25, 2013

KKR & Co. L.P. (NYSE: KKR) today reported its first quarter 2013 results.

For the quarter ended March 31, 2013, the carrying value of KKR’s private
equity investment portfolio appreciated 5.9% driving ENI of $647.7 million for
the quarter ended March 31, 2013. This represented a decrease of $79.5 million
or 10.9%, as compared to ENI of $727.2 million for the quarter ended March 31,
2012, primarily due to a lower level of investment income from our principal
investments, partially offset by higher management and incentive fees. While
the fair value of our principal investments increased during the first quarter
of 2013, the level of appreciation was lower than in the comparable period of
2012.

AUM and fee paying assets under management (“FPAUM”) were $78.3 billion and
$62.5 billion, respectively as of March 31, 2013, increasing 3.7% and 2.8%
from December 31, 2012, respectively. The increase in AUM was primarily
attributable to investment appreciation and new capital raised during the
period, partially offset by distributions to limited partners of our
investment funds. FPAUM was higher primarily due to new capital raised. During
the first quarter of 2013, our North America Fund XI had new capital raised of
approximately $900 million, which is included in both AUM and FPAUM.

KKR also announced a change to its distribution policy. Beginning with this
quarter, KKR will distribute 40% of realized balance sheet income in addition
to its traditional distribution of after-tax FRE and realized cash carry
earned in each quarter. The quarterly distribution of 40% of realized balance
sheet income will replace the annual, additional distribution that
historically was announced with respect to fourth quarter earnings.

“We had a good start to the year with strong returns, cash flow generation,
and balance sheet income,” said Henry R. Kravis and George R. Roberts,
Co-Chairmen and Co-Chief Executive Officers of KKR. “We continue to scale both
our private equity and non-private equity businesses, growing our assets under
management.”

 
Note: Certain financial measures, including FRE, ENI, after-tax ENI, after-tax
ENI per adjusted unit, fee related EBITDA, total distributable earnings, 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. See
calculation and reconciliation of total distributable earnings under
“Distribution Calculation.”

GAAP RESULTS

GAAP results for the quarter ended March 31, 2013 included net income
attributable to KKR & Co. L.P. of $193.4 million and net income attributable
to KKR & Co. L.P. per common unit of $0.69 on a diluted basis. For the quarter
ended March 31, 2012, net income attributable to KKR & Co. L.P. was $190.4
million and net income attributable to KKR & Co. L.P. per common unit was
$0.80 on a diluted basis. The increase was primarily due to higher fees and a
decrease in compensation and benefits expense, partially offset by a lower
level of investment appreciation, which is recorded in net gains (losses) from
investment activities for the quarter ended March 31, 2013 compared to the
quarter ended March 31, 2012.

SEGMENT RESULTS

Private Markets

AUM was $50.3 billion as of March 31, 2013, an increase of $1.2 billion, or
2.4%, compared to AUM of $49.1 billion as of December 31, 2012. The increase
was primarily due to investment appreciation and to a lesser extent new
capital raised, partially offset by distributions to limited partners of our
private equity funds arising from realizations.

FPAUM was $41.2 billion as of March 31, 2013 unchanged from December 31, 2012.
New capital raised was offset by distributions to the limited partners of our
private equity funds arising from realizations and unfavorable changes in
foreign exchange related to euro-denominated commitments and invested capital.

FRE was $40.7 million for the quarter ended March 31, 2013, an increase of
$3.0 million, or 8.0%, compared to FRE of $37.7 million for the quarter ended
March 31, 2012. The increase was primarily driven by higher monitoring fees
and higher transaction fees resulting from closing more transaction
fee-generating investments. These increases were partially offset by higher
compensation expense due to additional headcount.

ENI was $266.7 million for the quarter ended March 31, 2013, an increase of
$1.4 million compared to ENI of $265.3 million for the quarter ended March 31,
2012. The increase was primarily attributable to the increase in FRE discussed
above.

Public Markets

AUM was $27.9 billion as of March 31, 2013, an increase of $1.5 billion, or
5.7%, compared to AUM of $26.4 billion as of December 31, 2012. FPAUM was
$21.2 billion as of March 31, 2013, an increase $1.5 billion, or 7.6%,
compared to FPAUM of $19.7 billion as of December 31, 2012. For both AUM and
FPAUM, the increases were primarily attributable to net new capital raised as
well as appreciation in the net asset value of certain investment vehicles.

FRE was $37.2 million for the quarter ended March 31, 2013, an increase of
$21.8 million, or 141.6%, compared to FRE of $15.4 million for the quarter
ended March 31, 2012. The increase was primarily due to (i) higher incentive
fees earned, (ii) higher management fees related to new capital raised over
the past twelve months and (iii) the acquisition of Prisma.

ENI was $49.1 million for the quarter ended March 31, 2013, an increase of
$25.2 million, or 105.4%, compared to ENI of $23.9 million for the quarter
ended March 31, 2012. The increase was primarily attributable to 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 $10.1 million for the quarter ended March 31, 2013, a decrease of
$10.1 million, or 50.0%, compared to FRE of $20.2 million for the quarter
ended March 31, 2012. The decrease was primarily driven by a lower level of
overall capital markets transaction activity.

ENI was $331.9 million for the quarter ended March 31, 2013, a decrease of
$106.1 million, or 24.2%, compared to ENI of $438.0 million for the quarter
ended March 31, 2012. The decrease was primarily attributable to a lower level
of investment income. While the fair value of our principal investments
increased during the first quarter of 2013, the level of appreciation was
lower than in the comparable period of 2012.

CAPITAL AND LIQUIDITY

As of March 31, 2013, KKR had $2.0 billion of cash and short-term investments
on a segment basis and $1.0 billion of outstanding debt obligations. KKR’s
availability for borrowings was $750.0 million (reduced for an outstanding
letter of credit), which does not include $500.0 million revolving credit
facility for use in its capital markets business that was undrawn as of March
31, 2013.

As of March 31, 2013, KKR’s portion of total uncalled commitments to its
investment funds was $653.3 million, consisting of the following (amounts in
thousands):

                                       
                                        Uncalled

                                        Commitments
Private Markets
North America Fund XI                   $  231,500
European Fund III                          172,800
2006 Fund                                  64,300
Infrastructure                             30,300
Asian Fund                                 21,200
E2 Investors (Annex Fund)                  14,000
Natural Resources                          10,000
China Growth Fund                          6,500
Other                                      10,800
Total Private Markets Commitments          561,400
                                         
Public Markets
Direct Lending Vehicles                    38,800
Mezzanine Fund                             31,600
Special Situations Vehicles                21,500
Total Public Markets Commitments           91,900
                                         
Total Uncalled Commitments              $  653,300
                                            

DISTRIBUTION

A distribution of $0.27 per common unit has been declared, comprised of (i)
$0.10 per common unit from after-tax FRE, (ii) $0.08 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 May 21, 2013 to
unitholders of record as of the close of business on May 6, 2013. Please refer
to the changed distribution policy presented later in this release.

CONFERENCE CALL

A conference call to discuss KKR’s financial results will be held on Thursday,
April 25, 2013 at 10:00 a.m. EDT. The conference call may be accessed by
dialing (877) 303-2917 (U.S. callers) or +1 (253) 237-1135 (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 (855) 859-2056 (U.S. callers) and +1 (404) 537-3406 (non-U.S.
callers), pass code 32116366, 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 $78.3 billion in assets under management as of
March 31, 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 (NYSE: 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, fee related EBITDA,
committed dollars invested and syndicated capital, uncalled commitments, core
interest expense, cash and short-term investments 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 the
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 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
                                             March 31, 2013    March 31, 2012
Revenues
Fees                                         $ 151,240         $ 116,307      
                                                                
Expenses
Compensation and Benefits                      331,121           372,410
Occupancy and Related Charges                  14,521            15,197
General, Administrative and Other              93,688            57,651       
Total Expenses                                 439,330           445,258      
                                                                
Investment Income (Loss)
Net Gains (Losses) from Investment             2,269,817         3,086,865
Activities
Dividend Income                                39,469            172,939
Interest Income                                109,369           76,199
Interest Expense                               (23,023     )     (18,005     )
Total Investment Income (Loss)                 2,395,632         3,317,998    
                                                                
Income (Loss) Before Taxes                     2,107,542         2,989,047
                                                                
Income Taxes                                   9,356             17,072       
                                                                
Net Income (Loss)                              2,098,186         2,971,975
                                                                
Net Income (Loss) Attributable to
Redeemable Noncontrolling Interests            24,623            5,272
Net Income (Loss) Attributable to
Noncontrolling Interests                       1,880,124         2,776,267
                                                                
Net Income (Loss) Attributable to KKR        $ 193,439         $ 190,436      
& Co. L.P.
                                                                
Distributions Declared per KKR & Co.         $ 0.27            $ 0.15
L.P. Common Unit
                                                                
Net Income (Loss) Attributable to KKR
& Co. L.P. Per Common Unit
Basic                                        $ 0.75            $ 0.83
Diluted (a)                                  $ 0.69            $ 0.80
Weighted Average Common Units
Outstanding
Basic                                          257,044,184       229,099,335
Diluted (a)                                    282,042,521       237,832,106
                                                                

 
      KKR Holdings L.P. units have been excluded from the calculation of
      diluted earnings per common unit given that the exchange of these units
(a)   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) (a)
(Amounts in thousands, except unit and per unit amounts)
                                                                 
                           Quarter Ended
                           March 31, 2013   December 31, 2012   March 31, 2012
Fees
Management and
incentive fees:
Management fees            $ 152,963        $  144,355          $ 128,643
Incentive fees               18,849            12,350             9,670       
Management and               171,812           156,705            138,313     
incentive fees
                                                                 
Monitoring and
transaction fees:
Monitoring fees              32,068            32,988             25,822
Transaction fees             40,299            76,840             44,298
Fee credits                  (23,065    )      (37,991     )      (19,343    )
Net monitoring and           49,302            71,837             50,777      
transaction fees
                                                                 
Total fees                   221,114           228,542            189,090     
                                                                 
Expenses
Compensation and             75,162            76,001             62,724
benefits
Occupancy and                13,322            13,763             14,461
related charges
Other operating              44,630            52,799             38,549      
expenses
Total expenses               133,114           142,563            115,734     
                                                                 
Fee Related Earnings         88,000            85,979             73,356      
                                                                 
Investment income
(loss)
Realized carried             88,167            168,320            74,878
interest
Unrealized carried           331,198           100,616            394,486     
interest
Gross carried                419,365           268,936            469,364
interest
Less: allocation to          (169,504   )      (107,514    )      (191,506   )
KKR carry pool
Less: management fee         (9,216     )      (8,712      )      (40,708    )
refunds (b)
Net carried interest         240,645           152,710            237,150
Other investment             320,198           110,236            419,907     
income (loss)
Total investment             560,843           262,946            657,057     
income (loss)
                                                                 
Income (Loss) before
noncontrolling
interests
in Income of
consolidated                 648,843           348,925            730,413
entities
Income (Loss)
attributable to
noncontrolling               1,101             1,245              3,211       
interests
                                                                 
Economic Net Income        $ 647,742        $  347,680          $ 727,202     
(Loss)
                                                                 
Provision for Income         20,117            10,632             43,383
Taxes
                                                                 
Economic Net Income
(Loss), After Taxes        $ 627,625        $  337,048          $ 683,819     
(c)
                                                                 
Economic Net Income
(Loss), After Taxes        $ 0.88           $  0.48             $ 0.99
per Adjusted Unit
(c)
                                                                 
Assets Under               $ 78,253,400     $  75,527,500       $ 62,292,600
Management
Fee Paying Assets          $ 62,454,100     $  60,846,000       $ 47,226,500
Under Management
Committed Dollars
Invested and               $ 824,400        $  1,715,700        $ 1,033,000
Syndicated Capital
Uncalled Commitments       $ 16,207,300     $  16,071,900       $ 11,015,100  
                                                                 
Other Information
Fee Related Earnings       $ 88,000         $  85,979           $ 73,356
Plus: depreciation           3,681             3,580              2,553       
and amortization
Fee Related EBITDA         $ 91,681         $  89,559           $ 75,909      
                                                                 
Distributed Earnings       $ 198,720        $  179,412          $ 111,486
Plus: Undistributed
net realized                 91,894            366,878            52,618      
principal investment
income
Total Distributable        $ 290,614        $  546,290          $ 164,104     
Earnings (c)
                                                                 
GAAP interest              $ 23,023         $  16,407           $ 18,005
expense
Less: interest
expense related to
debt obligations
from investment
financing                    6,790             7,014              8,073       
arrangements
Core Interest              $ 16,233         $  9,393            $ 9,932       
Expense (c)
                                                                 

 
      Excludes a $27.4 million, $15.2 million and $16.3 million charge for
      non-cash equity based compensation during the quarters ended March 31,
(a)   2013, December 31, 2012, and March 31, 2012, respectively, associated
      with equity awards granted under the KKR & Co. L.P. 2010 Equity
      Incentive Plan. Excludes certain non-recurring litigation charges of
      $12.5 million during the quarter ended March 31, 2013.
 
(b)   As of March 31, 2013, there is no carried interest subject to management
      fee refunds, which may reduce carried interest in future periods.
 
      See definitions for after-tax ENI, adjusted units, total distributable
(c)   earnings, and core interest expense under “Notes to Reportable
      Segments.”

                                                               
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PRIVATE MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
                                                                 
                           Quarter Ended
                           March 31, 2013   December 31, 2012   March 31, 2012
Fees
Management and
incentive fees:
Management fees            $ 106,605        $  104,804          $ 106,912
Incentive fees               -                 -                  -           
Management and               106,605           104,804            106,912     
incentive fees
                                                                 
Monitoring and
transaction fees:
Monitoring fees              32,068            32,988             25,822
Transaction fees             16,412            41,231             11,667
Fee credits                  (21,009    )      (37,721     )      (17,706    )
Net monitoring and           27,471            36,498             19,783      
transaction fees
                                                                 
Total fees                   134,076           141,302            126,695     
                                                                 
Expenses
Compensation and             48,001            53,383             44,486
benefits
Occupancy and                11,425            12,075             12,805
related charges
Other operating              33,942            43,463             31,675      
expenses
Total expenses               93,368            108,921            88,966      
                                                                 
Fee Related Earnings         40,708            32,381             37,729      
                                                                 
Investment income
(loss)
Realized carried             88,167            168,320            74,878
interest
Unrealized carried           310,799           86,976             379,627     
interest
Gross carried                398,966           255,296            454,505
interest
Less: allocation to          (161,344   )      (102,058    )      (185,562   )
KKR carry pool
Less: management fee         (9,216     )      (8,712      )      (40,708    )
refunds
Net carried interest         228,406           144,526            228,235
Other investment             (2,035     )      1,158              1,652       
income (loss)
Total investment             226,371           145,684            229,887     
income (loss)
                                                                 
Income (Loss) before
noncontrolling
interests
in Income of
consolidated                 267,079           178,065            267,616
entities
Income (Loss)
attributable to
noncontrolling               398               292                2,296       
interests
                                                                 
Economic Net Income        $ 266,681        $  177,773          $ 265,320     
(Loss)
                                                                 
                                                                 
Assets Under               $ 50,340,400     $  49,127,600       $ 45,986,400
Management
Fee Paying Assets          $ 41,218,000     $  41,173,000       $ 37,974,800
Under Management
Committed Dollars          $ 598,500        $  1,220,800        $ 576,200
Invested
Uncalled Commitments       $ 14,560,900     $  14,271,100       $ 9,596,700
                                                                 

                                                               
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
                                                                 
                           Quarter Ended
                           March 31, 2013   December 31, 2012   March 31, 2012
Fees
Management and
incentive fees:
Management fees            $ 46,358         $  39,551           $ 21,731
Incentive fees               18,849            12,350             9,670       
Management and               65,207            51,901             31,401      
incentive fees
                                                                 
Monitoring and
transaction fees:
Monitoring fees              -                 -                  -
Transaction fees             3,106             1,974              2,422
Fee credits                  (2,056     )      (270        )      (1,637     )
Net monitoring and           1,050             1,704              785         
transaction fees
                                                                 
Total fees                   66,257            53,605             32,186      
                                                                 
Expenses
Compensation and             19,700            16,097             11,382
benefits
Occupancy and                1,542             1,479              1,418
related charges
Other operating              7,826             6,596              3,977       
expenses
Total expenses               29,068            24,172             16,777      
                                                                 
Fee Related Earnings         37,189            29,433             15,409      
                                                                 
Investment income
(loss)
Realized carried             -                 -                  -
interest
Unrealized carried           20,399            13,640             14,859      
interest
Gross carried                20,399            13,640             14,859
interest
Less: allocation to          (8,160     )      (5,456      )      (5,944     )
KKR carry pool
Less: management fee         -                 -                  -           
refunds
Net carried interest         12,239            8,184              8,915
Other investment             62                30                 (23        )
income (loss)
Total investment             12,301            8,214              8,892       
income (loss)
                                                                 
Income (Loss) before
noncontrolling
interests
in Income of
consolidated                 49,490            37,647             24,301
entities
Income (Loss)
attributable to
noncontrolling               355               292                431         
interests
                                                                 
Economic Net Income        $ 49,135         $  37,355           $ 23,870      
(Loss)
                                                                 
Assets Under               $ 27,913,000     $  26,399,900       $ 16,306,200
Management
Fee Paying Assets          $ 21,236,100     $  19,673,000       $ 9,251,700
Under Management
Committed Dollars          $ 164,900        $  226,400          $ 206,200
Invested
Uncalled Commitments       $ 1,646,400      $  1,800,800        $ 1,418,400
                                                                              

                                                               
KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT (UNAUDITED)
(Amounts in thousands)
                                                                 
                                Quarter Ended
                                March 31, 2013   December 31,   March 31, 2012
                                                 2012
Fees
Management and incentive
fees:
Management fees                 $    -           $   -          $    -
Incentive fees                       -               -               -
Management and incentive             -               -               -
fees
                                                                 
Monitoring and
transaction fees:
Monitoring fees                      -               -               -
Transaction fees                     20,781          33,635          30,209
Fee credits                          -               -               -
Net monitoring and                   20,781          33,635          30,209
transaction fees
                                                                 
Total fees                           20,781          33,635          30,209
                                                                 
Expenses
Compensation and benefits            7,461           6,521           6,856
Occupancy and related                355             209             238
charges
Other operating expenses             2,862           2,740           2,897
Total expenses                       10,678          9,470           9,991
                                                                 
Fee Related Earnings                 10,103          24,165          20,218
                                                                 
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              322,171         109,048         418,278
(loss)
Total investment income              322,171         109,048         418,278
(loss)
                                                                 
Income (Loss) before
noncontrolling interests
in Income of consolidated            332,274         133,213         438,496
entities
Income (Loss)
attributable to
noncontrolling interests             348             661             484
                                                                 
Economic Net Income             $    331,926     $   132,552    $    438,012
(Loss)
                                                                 
                                                                 
Syndicated Capital              $    61,000      $   268,500    $    250,600
                                      

                                                                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended March 31, 2013
(Amounts in thousands)
                                                                   
                                                                   
                                                     Capital      Total
                                                     Markets
                      Private Markets   Public       and          Reportable
                                        Markets      Principal
                      Segment           Segment      Activities   Segments
                                                     Segment
                                                                   
Fees
Management and
incentive fees:
Management fees       $  106,605        $ 46,358     $  -         $ 152,963
Incentive fees           -                18,849        -           18,849    
Management and           106,605          65,207        -           171,812   
incentive fees
                                                                   
Monitoring and
transaction
fees:
Monitoring fees          32,068           -             -           32,068
Transaction              16,412           3,106         20,781      40,299
fees
Fee credits              (21,009   )      (2,056 )      -           (23,065  )
Net monitoring
and transaction          27,471           1,050         20,781      49,302    
fees
                                                                   
Total fees               134,076          66,257        20,781      221,114   
                                                                   
Expenses
Compensation             48,001           19,700        7,461       75,162
and benefits
Occupancy and            11,425           1,542         355         13,322
related charges
Other operating          33,942           7,826         2,862       44,630    
expenses
Total expenses           93,368           29,068        10,678      133,114   
                                                                   
Fee Related              40,708           37,189        10,103      88,000    
Earnings
                                                                   
Investment
income (loss)
Realized
carried                  88,167           -             -           88,167
interest
Unrealized
carried                  310,799          20,399        -           331,198   
interest
Gross carried            398,966          20,399        -           419,365
interest
Less:
allocation to            (161,344  )      (8,160 )      -           (169,504 )
KKR carry pool
Less:
management fee           (9,216    )      -             -           (9,216   )
refunds
Net carried              228,406          12,239        -           240,645
interest
Other
investment               (2,035    )      62            322,171     320,198   
income (loss)
Total
investment               226,371          12,301        322,171     560,843   
income (loss)
                                                                   
Income (Loss)
before
noncontrolling
interests
in Income of
consolidated             267,079          49,490        332,274     648,843
entities
Income (Loss)
attributable to
noncontrolling           398              355           348         1,101
interests
                                                                   
Economic Net          $  266,681        $ 49,135     $  331,926   $ 647,742   
Income (Loss)
                                                                   

                                                                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended December 31, 2012
(Amounts in thousands)
                                                                   
                                                                   
                                                     Capital      Total
                                                     Markets
                      Private Markets   Public       and          Reportable
                                        Markets      Principal
                      Segment           Segment      Activities   Segments
                                                     Segment
                                                                   
Fees
Management and
incentive fees:
Management fees       $  104,804        $ 39,551     $  -         $ 144,355
Incentive fees           -                12,350        -           12,350    
Management and           104,804          51,901        -           156,705   
incentive fees
                                                                   
Monitoring and
transaction
fees:
Monitoring fees          32,988           -             -           32,988
Transaction              41,231           1,974         33,635      76,840
fees
Fee credits              (37,721   )      (270   )      -           (37,991  )
Net monitoring
and transaction          36,498           1,704         33,635      71,837    
fees
                                                                   
Total fees               141,302          53,605        33,635      228,542   
                                                                   
Expenses
Compensation             53,383           16,097        6,521       76,001
and benefits
Occupancy and            12,075           1,479         209         13,763
related charges
Other operating          43,463           6,596         2,740       52,799    
expenses
Total expenses           108,921          24,172        9,470       142,563   
                                                                   
Fee Related              32,381           29,433        24,165      85,979    
Earnings
                                                                   
Investment
income (loss)
Realized
carried                  168,320          -             -           168,320
interest
Unrealized
carried                  86,976           13,640        -           100,616   
interest
Gross carried            255,296          13,640        -           268,936
interest
Less:
allocation to            (102,058  )      (5,456 )      -           (107,514 )
KKR carry pool
Less:
management fee           (8,712    )      -             -           (8,712   )
refunds
Net carried              144,526          8,184         -           152,710
interest
Other
investment               1,158            30            109,048     110,236   
income (loss)
Total
investment               145,684          8,214         109,048     262,946   
income (loss)
                                                                   
Income (Loss)
before
noncontrolling
interests
in Income of
consolidated             178,065          37,647        133,213     348,925
entities
Income (Loss)
attributable to
noncontrolling           292              292           661         1,245
interests
                                                                   
Economic Net          $  177,773        $ 37,355     $  132,552   $ 347,680   
Income (Loss)
                                                                   

                                                                 
KKR
STATEMENTS OF OPERATIONS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
Quarter Ended March 31, 2012
(Amounts in thousands)
                                                                   
                                                                   
                                                     Capital      Total
                                                     Markets
                      Private Markets   Public       and          Reportable
                                        Markets      Principal
                      Segment           Segment      Activities   Segments
                                                     Segment
                                                                   
Fees
Management and
incentive fees:
Management fees       $  106,912        $ 21,731     $  -         $ 128,643
Incentive fees           -                9,670         -           9,670     
Management and           106,912          31,401        -           138,313   
incentive fees
                                                                   
Monitoring and
transaction
fees:
Monitoring fees          25,822           -             -           25,822
Transaction              11,667           2,422         30,209      44,298
fees
Fee credits              (17,706   )      (1,637 )      -           (19,343  )
Net monitoring
and transaction          19,783           785           30,209      50,777    
fees
                                                                   
Total fees               126,695          32,186        30,209      189,090   
                                                                   
Expenses
Compensation             44,486           11,382        6,856       62,724
and benefits
Occupancy and            12,805           1,418         238         14,461
related charges
Other operating          31,675           3,977         2,897       38,549    
expenses
Total expenses           88,966           16,777        9,991       115,734   
                                                                   
Fee Related              37,729           15,409        20,218      73,356    
Earnings
                                                                   
Investment
income (loss)
Realized
carried                  74,878           -             -           74,878
interest
Unrealized
carried                  379,627          14,859        -           394,486   
interest
Gross carried            454,505          14,859        -           469,364
interest
Less:
allocation to            (185,562  )      (5,944 )      -           (191,506 )
KKR carry pool
Less:
management fee           (40,708   )      -             -           (40,708  )
refunds
Net carried              228,235          8,915         -           237,150
interest
Other
investment               1,652            (23    )      418,278     419,907   
income (loss)
Total
investment               229,887          8,892         418,278     657,057   
income (loss)
                                                                   
Income (Loss)
before
noncontrolling
interests
in Income of
consolidated             267,616          24,301        438,496     730,413
entities
Income (Loss)
attributable to
noncontrolling           2,296            431           484         3,211
interests
                                                                   
Economic Net          $  265,320        $ 23,870     $  438,012   $ 727,202   
Income (Loss)
                                                                   

                                                                  
KKR
BALANCE SHEETS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except per unit amounts)
                                                                    
                                                                    
As of March 31, 2013
                                               Capital
                     Private       Public      Markets and         Total
                     Markets       Markets     Principal           Reportable
                     Segment       Segment     Activities          Segments
                                               Segment
                                                                    
Cash and
short-term           $ 224,496     $ 20,132    $ 1,751,709         $ 1,996,337
investments
Investments            -             -           4,634,383   (a)     4,634,383
Unrealized             897,747       37,178      -                   934,925
carry
Other assets           256,193       325,903     72,378              654,474
Total assets         $ 1,378,436   $ 383,213   $ 6,458,470         $ 8,220,119
                                                                    
Debt                 $ -           $ -         $ 1,000,000         $ 1,000,000
obligations
Other                  88,962        23,300      18,961              131,223
liabilities
Total                  88,962        23,300      1,018,961           1,131,223
liabilities
                                                                    
Noncontrolling         1,444         801         18,259              20,504
interests
                                                                    
Book value           $ 1,288,030   $ 359,112   $ 5,421,250         $ 7,068,392
                                                                    
Book value per       $ 1.80        $ 0.50      $ 7.59              $ 9.89
adjusted unit
                                                                    
                                                                    
As of December 31, 2012
                                               Capital
                     Private       Public      Markets and         Total
                     Markets       Markets     Principal           Reportable
                     Segment       Segment     Activities          Segments
                                               Segment
                                                                    
Cash and
short-term           $ 358,237     $ 28,690    $ 1,147,360         $ 1,534,287
investments
Investments            -             -           4,758,157           4,758,157
Unrealized             730,292       24,939      -                   755,231
carry
Other assets           207,047       280,472     62,119              549,638
Total assets         $ 1,295,576   $ 334,101   $ 5,967,636         $ 7,597,313
                                                                    
Debt                 $ -           $ -         $ 500,000           $ 500,000
obligations
Other                  78,724        16,433      24,275              119,432
liabilities
Total                  78,724        16,433      524,275             619,432
liabilities
                                                                    
Noncontrolling         1,339         739         18,619              20,697
interests
                                                                    
Book value           $ 1,215,513   $ 316,929   $ 5,424,742         $ 6,957,184
                                                                    
Book value per       $ 1.72        $ 0.45      $ 7.70              $ 9.87
adjusted unit
                                                                      

 
(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 March 31, 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       445,082     9.6         %
HCA Inc.                           96,289        345,580     7.5         %
The Nielsen Company B.V.           110,966       265,407     5.7         %
Dollar General Corporation         37,733        211,028     4.6         %
NXP B.V.                           167,276       191,975     4.2         %
Samson Resources                   237,514       190,012     4.1         %
Corporation
KION Group GmbH                    128,058       172,732     3.7         %
ProSiebenSat.1 Media AG            226,913       142,646     3.1         %
US Foods, Inc.                     100,000       130,000     2.8         %
Biomet, Inc.                       151,444       121,155     2.6         %
First Data Corporation             135,258       94,681      2.0         %
Energy Future Holdings             200,000       10,000      0.2         %
Corp.
PagesJaunes Groupe S.A.            235,201       -           0.0         %
                                   2,022,292     2,320,298   50.1        %
                                                              
Private Equity Investment
Vehicles
KKR 2006 Fund L.P.                 371,155       450,932     9.7         %
KKR European Fund III L.P.         190,681       229,628     5.0         %
KKR Asian Fund L.P.                77,033        102,601     2.2         %
KKR European Fund II L.P.          63,819        56,074      1.2         %
KKR Millennium Fund L.P.           56,463        46,671      1.0         %
KKR E2 Investors, L.P.             10,418        19,824      0.4         %
KKR North America Fund XI          18,287        19,358      0.4         %
L.P.
KKR European Fund L.P.             47,664        4,314       0.1         %
KKR China Growth Fund L.P.         3,449         3,584       0.1         %
Co-Investment Vehicles             490           592         0.0         %
                                   839,459       933,578     20.1        %
                                                              
Private Equity Total               2,861,751     3,253,876   70.2        %
                                                              
Energy & Infrastructure
Investment Strategies
Royalties and Drilling             112,925       121,898     2.6         %
Infrastructure Fund                24,447        25,778      0.6         %
Co-Investments                     10,718        13,076      0.3         %
Natural Resources                  13,372        8,871       0.2         %
Energy & Infrastructure            161,462       169,623     3.7         %
Total
                                                              
Private Markets Total              3,023,213     3,423,499   73.9        %
                                                              
Public Markets Investment
Strategies
Liquid Credit SMAs                 187,163       197,572     4.3         %
Long/Short Equities                100,000       112,172     2.4         %
Credit Relative Value              65,000        69,583      1.5         %
Direct Lending                     30,424        34,485      0.7         %
Special Situations                 24,408        27,428      0.6         %
Mezzanine Fund                     12,560        15,481      0.3         %
Public Markets Total               419,555       456,721     9.8         %
                                                              
Other                              747,364       754,163     16.3        %
                                                              
Total Investments                $ 4,190,132   $ 4,634,383   100.0       %
                                                              

                                                                
KKR
CAPITAL MARKETS AND PRINCIPAL ACTIVITIES SEGMENT SCHEDULE OF INVESTMENTS,
CONTINUED (UNAUDITED)
(Amounts in thousands, except percentage amounts)
                                                                  
                                As of March 31, 2013
                                                                 Fair Value as
                                                                 a Percentage
                                                 Fair            of Total
Investment                      Cost
                                                 Value           Investments
                                                                  
Significant Aggregate
Investments: (a)
Alliance Boots GmbH             $  228,769       $  513,427      11.1     %
HCA Inc.                           117,624          411,104      8.9      %
Dollar General                     52,359           279,391      6.0      %
Corporation
The Nielsen Company                110,966          265,407      5.7      %
B.V.
                                   509,718          1,469,329    31.7     %
                                                                  
Other investments                  3,680,414        3,165,054    68.3     %
Total Investments               $  4,190,132     $  4,634,383    100.0    %
                                                                  

 
      The significant aggregate investments include investments in portfolio
      companies with individual fair values of 5% or more of the Capital
(a)   Markets and Principal Activities segment investments balance as of March
      31, 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)
                                                               
                                                               
                                       Public
                     Private                                  Total Reportable
                     Markets           Markets                Segments
                     Segment
                                       Segment
Quarter Ended
March 31, 2013
                                                               
December 31,         $ 49,127,600      $ 26,399,900           $  75,527,500
2012
New Capital            967,200           1,531,500               2,498,700
Raised
Distributions          (1,832,000  )     (679,700   )   (b)      (2,511,700  )
Foreign                (23,600     )     -                       (23,600     )
Exchange
Change in              2,101,200         661,300                 2,762,500    
Value
March 31, 2013       $ 50,340,400      $ 27,913,000           $  78,253,400   
                                                               
 
Trailing
Twelve Months
Ended March
31, 2013
                                                               
March 31, 2012       $ 45,986,400      $ 16,306,200           $  62,292,600
New Capital            8,267,800         4,256,200               12,524,000
Raised
Acquisitions           -                 8,086,900               8,086,900
(a)
Distributions          (10,104,700 )     (2,101,100 )   (c)      (12,205,800 )
Net Changes in
Fee Base of            (1,327,900  )     -                       (1,327,900  )
Certain Funds
(d)
Foreign                (58,800     )     -                       (58,800     )
Exchange
Change in              7,577,600         1,364,800               8,942,400    
Value
March 31, 2013       $ 50,340,400      $ 27,913,000           $  78,253,400   
                                                               
                                                               
                                                               
                                                               
KKR
FEE PAYING ASSETS UNDER MANAGEMENT (UNAUDITED)
(Amounts in thousands)
                                                               
                                                               
                                       Public
                     Private                                  Total Reportable
                     Markets           Markets                Segments
                     Segment
                                       Segment
Quarter Ended
March 31, 2013
                                                               
December 31,         $ 41,173,000      $ 19,673,000           $  60,846,000
2012
New Capital            961,800           1,531,300               2,493,100
Raised
Distributions          (841,100    )     (536,500   )   (b)      (1,377,600  )
Foreign                (103,700    )     -                       (103,700    )
Exchange
Change in              28,000            568,300                 596,300      
Value
March 31, 2013       $ 41,218,000      $ 21,236,100           $  62,454,100   
                                                               
                                                               
Trailing
Twelve Months
Ended March
31, 2013
                                                               
March 31, 2012       $ 37,974,800      $ 9,251,700            $  47,226,500
New Capital            8,354,700         4,019,400               12,374,100
Raised
Acquisitions           -                 8,078,400               8,078,400
(a)
Distributions          (1,807,200  )     (1,345,500 )   (c)      (3,152,700  )
Net Changes in
Fee Base of            (3,205,400  )     -                       (3,205,400  )
Certain Funds
(d)
Foreign                (156,000    )     -                       (156,000    )
Exchange
Change in              57,100            1,232,100               1,289,200    
Value
March 31, 2013       $ 41,218,000      $ 21,236,100           $  62,454,100   
                                                               

 
      Represents AUM and FPAUM of Prisma as of October 1, 2012, the date of
(a)   acquisition. These figures exclude new capital raised and distributions
      since the acquisition.
(b)   Includes $345.7 million of redemptions by fund investors.
(c)   Includes $767.5 million of redemptions by fund investors.
(d)   Represents the impact of including certain funds entering the
      post-investment period including KKR 2006 Fund L.P.

                                   
KKR
INVESTMENT VEHICLE SUMMARY* (UNAUDITED)
As of March 31, 2013
(Amounts in millions, except percentages)
                                                                                                                            
                                                                                                                              
                     Investment Period        Amount
                                                                         Percentage
                     Commencement   End       Commitment   Uncalled      Committed    Invested     Realized     Remaining    Remaining
                     Date           Date                   Commitments   by General                             Cost         Fair Value
                                                                         Partner
Private
Markets
                                                                                                                              
Private Equity
Funds
North America        9/2012         9/2018    $ 7,230.7    $  6,784.4    3.5%         $ 446.3      $ -          $ 446.3      $ 473.4
Fund XI
China Growth         11/2010        11/2016     1,010.0       692.4      1.0%           317.6        -            317.6        331.6
Fund
E2 Investors         8/2009         11/2013     345.0         190.8      4.3%           154.2        -            154.2        314.2
(Annex Fund)
European Fund        3/2008         3/2014      6,065.5       2,361.6    4.6%           3,703.9      -            3,703.9      4,526.6
III
Asian Fund           7/2007         4/2013      3,983.2       584.0      2.5%           3,399.2      793.3        2,926.2      5,325.7
2006 Fund            9/2006         9/2012      17,642.2      1,293.5    2.1%           16,348.7     9,668.9      10,330.0     15,028.7
European Fund        11/2005        10/2008     5,750.8       -          2.1%           5,750.8      2,390.2      3,975.2      4,867.2
II
Millennium           12/2002        12/2008     6,000.0       -          2.5%           6,000.0      9,148.5      2,302.5      3,620.3
Fund
European Fund        12/1999        12/2005     3,085.4       -          3.2%           3,085.4      8,720.0      -            51.6
Total Private                                   51,112.8      11,906.7                  39,206.1     30,720.9     24,155.9     34,539.3
Equity Funds
                                                                                                                              
Co-Investment        Various        Various     2,133.5       207.1      Various        1,926.4      2,080.8      1,352.9      1,944.3
Vehicles
Total Private                                   53,246.3      12,113.8                  41,132.5     32,801.7     25,508.8     36,483.6
Equity
                                                                                                                              
Energy &
Infrastructure
Natural              Various        Various     1,222.6       649.7      Various        572.9        35.2         559.1        387.3
Resources Fund
Global Energy        Various        Various     1,011.0       900.3      Various        110.7        -            110.7        97.7
Opportunities
Infrastructure       Various        Various     1,041.2       644.5      4.8%           396.7        1.7          396.7        415.1
Fund
Infrastructure       Various        Various     1,357.1       252.6      Various        1,104.5      167.8        1,104.5      1,378.5
Co-Investments
Energy &
Infrastructure                                  4,631.9       2,447.1                   2,184.8      204.7        2,171.0      2,278.6
Total
                                                                                                                              
Private                                         57,878.2      14,560.9                  43,317.3     33,006.4     27,679.8     38,762.2
Markets Total
                                                                                                                              
Public Markets
                                                                                                                              
Special
Situations           Various        Various     2,119.5       500.4      Various        1,619.1      260.1        1,566.8      1,895.0
Vehicles
Mezzanine Fund       3/2010         8/2015      987.0         695.1      4.6%           291.9        48.8         291.9        339.5
Direct Lending       Various        Various     668.5         450.9      Various        217.6        4.1          217.6        234.8
Vehicles
                                                                                                                            
Public Markets                                  3,775.0       1,646.4                   2,128.6      313.0        2,076.3      2,469.3
Total
                                                                                                                              
Grand Total                                   $ 61,653.2   $  16,207.3                $ 45,445.9   $ 33,319.4   $ 29,756.1   $ 41,231.5
                                                                                                                              

 
*   Reflects investment vehicles for which KKR has the ability to earn carried
    interest.

                                                              
KKR
DISTRIBUTION CALCULATION (UNAUDITED)
(Amounts in thousands, except unit and
per unit amounts)
                                                                
                                                                
                         Quarter Ended
                         March 31, 2013    December 31, 2012   March 31, 2012
                                                                
FRE (a)                  $ 88,000          $  85,979           $ 73,356
Realized cash              52,900             100,992            44,927
carry
Net realized
principal                  153,156            366,878            52,618
investment income
Less: local income         (2,341      )      (6,314       )     (3,586      )
taxes
Less:
noncontrolling             (1,101      )      (1,245       )     (3,211      )
interests
Total
Distributable              290,614            546,290            164,104      
Earnings
                                                                
Less:
Undistributed net          (91,894     )      (366,878     )     (52,618     )
realized principal
investment income
                                                                
Distributed                198,720            179,412            111,486      
Earnings
                                                                
Distributed
Earnings to KKR &          75,749             66,275             37,800
Co. L.P. (b)
                                                                
Less: estimated
current corporate          (6,376      )      (8,525       )     (4,022      )
income taxes
                                                                
Distributed
Earnings to KKR &          69,373             57,750             33,778
Co. L.P., After
Taxes
                                                                
Additional                 -                  119,081            -
Distribution (c)
                                                                
Total Distribution       $ 69,373          $  176,831          $ 33,778       
to KKR & Co. L.P.
                                                                
Distribution per
KKR & Co. L.P.           $ 0.27            $  0.70             $ 0.15
common unit
                                                                
Components of
Distribution per
KKR & Co. L.P.
common unit
                                                                
After-tax FRE            $ 0.10            $  0.08             $ 0.08
Realized Cash            $ 0.08            $  0.15             $ 0.07
Carry
Distributed Net
Realized Principal       $ 0.09            $  0.47             $ -            
Investment Income
/ Other
                                                                
Outstanding KKR &
Co. L.P. common            261,781,303        253,363,691        231,698,206
units
                                                                

 
(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.
 
(c)   Additional distribution was calculated for certain taxes in respect of
      2012 and prior years.

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 proceeds 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 and 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 and management fee refunds; 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.

After-tax ENI 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. After-tax ENI 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.

Net realized principal investment income refers to net cash income from (i)
realized investment gains and losses, (ii) dividend income and (iii) interest
income net of interest expense, 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
capital committed to such transactions by carry-yielding co-investment
vehicles, which is instead reported in committed dollars invested. 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.

<td colsp*Story too large*
                                                              
KKR
EXHIBIT A
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON
UNIT (GAAP BASIS)
TO AFTER TAX ENI PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
                                                                     

[TRUNCATED]
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