KKR & Co. L.P. Announces Second Quarter 2014 Results

  KKR & Co. L.P. Announces Second Quarter 2014 Results

           Exit Activity Drives Record Total Distributable Earnings

GAAP net income (loss) attributable to KKR & Co. L.P. was $178.2 million and
$388.3 million for the quarter and six months ended June 30, 2014,
respectively, up from $15.1 million and $208.6 million in the comparable
periods of 2013.

Total distributable earnings was $701.0 million and $1,147.8 million for the
quarter and six months ended June 30, 2014, respectively, up from $403.8
million and $694.4 million in the comparable periods of 2013.

Distribution per common unit was $0.67 and $1.10 for the quarter and six
months ended June 30, 2014, respectively, up from $0.42 and $0.69 in the
comparable periods of 2013.

Economic net income (“ENI”) was $501.6 million and $1,131.8 million for the
quarter and six months ended June 30, 2014, respectively, up from $144.4
million and $792.2 million in the comparable periods of 2013.

ENI after taxes per adjusted unit was $0.62 and $1.43 for the quarter and six
months ended June 30, 2014, respectively, up from $0.18 and $1.06 in the
comparable periods of 2013. ^ (1)

ENI after taxes and equity-based charges per adjusted unit was $0.57 and $1.32
for the quarter and six months ended June 30, 2014, respectively, up from
$0.15 and $0.99 for the quarter and six months ended June 30, 2013. ^(1)

Fee and yield earnings were $154.2 million and $317.0 million for the quarter
and six months ended June 30, 2014, respectively, up from $101.0 million and
$188.5 million in the comparable periods of 2013.

Book value was $10.4 billion on a total reportable segment basis as of June
30, 2014 or $12.52 per adjusted unit.

Return on equity and cash return on equity were 28.7% and 22.2%, respectively,
on a trailing twelve month basis.

Assets under management (“AUM”) and fee paying assets under management
(“FPAUM”) totaled $98.0 billion and $79.7 billion as of June 30, 2014,
respectively.

Previously announced acquisition of KFN has closed.

Business Wire

NEW YORK -- July 24, 2014

KKR & Co. L.P. (NYSE:KKR) today reported its second quarter 2014 results.

On April 30, 2014, KKR completed its acquisition of KKR Financial Holdings LLC
(“KFN”). Through the acquisition, KKR increased the scale, liquidity, and
yield profile of its balance sheet and added over $2 billion of net assets to
support the continued growth of its business.

For the three, six and trailing twelve months ended June 30, 2014, the
carrying value of our private equity portfolio appreciated 5.0%, 9.3%, and
23.7%, respectively.

KKR declares a distribution of $0.67 per common unit, which includes $0.41 of
realized cash carry, the 17^th consecutive quarter that realized cash carry
has been a component of the distribution.

“Our realization activity in the second quarter drove the highest cash carry
and total distributable earnings we’ve reported since going public,
contributing to a quarterly distribution of $0.67. Additionally, our cash flow
generation, investment performance, and balance sheet income resulted in a 29%
return on equity and 22% cash return on equity over the last twelve months,”
said Henry R. Kravis and George R. Roberts, Co-Chairmen and Co-Chief Executive
Officers of KKR. “We also closed the KFN acquisition in the second quarter,
bringing us recurring cash earnings and more permanent capital to grow the
firm.”

_________________________________________________________________________________________________

Note: Certain financial measures, including FRE, ENI, after-tax ENI, ENI after
taxes and equity-based charges, fee and yield 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.

(1) Prospectively, KKR plans to only report ENI after taxes and equity-based
charges per adjusted unit

GAAP RESULTS

GAAP results for the quarter and six months ended June 30, 2014, included net
income attributable to KKR & Co. L.P. of $178.2 million and $388.3 million,
respectively, and net income attributable to KKR & Co. L.P. per common unit of
$0.43 and $1.06, respectively, on a diluted basis. For the quarter and six
months ended June 30, 2013, net income attributable to KKR & Co. L.P. was
$15.1 million and $208.6 million, respectively, and net income attributable to
KKR & Co. L.P. per common unit was $0.05 and $0.72, respectively, on a diluted
basis. The increases in both comparable periods were primarily due to (i) an
increase in investment income; (ii) higher transaction fees; and (iii) an
increase in KKR & Co. L.P.’s ownership percentage in the KKR business.

SEGMENT RESULTS*

Private Markets

AUM was $59.4 billion as of June 30, 2014, a decrease of $1.1 billion, or
1.8%, compared to AUM of $60.5 billion as of March 31, 2014. The decrease was
primarily attributable to distributions to the limited partners of our private
equity funds arising from realizations which were partially offset by
appreciation in the fair value of our private equity portfolio and new capital
raised.

FPAUM was $46.2 billion as of June 30, 2014, a decrease of $2.0 billion, or
4.1%, compared to FPAUM of $48.2 billion as of March 31, 2014. The decrease
was primarily attributable to the bankruptcy filing of Energy Future Holdings
during the second quarter, and to a lesser extent, distributions to the
limited partners of our private equity funds arising from realizations. These
decreases were partially offset by new capital raised.

Total segment revenues were $642.9 million for the quarter ended June 30,
2014, an increase of $445.1 million compared to total segment revenues of
$197.8 million for the quarter ended June 30, 2013. Total segment revenues
were $1,373.6 million for the six months ended June 30, 2014, an increase of
$354.7 million compared to total segment revenues of $1,018.9 million for the
six months ended June 30, 2013. The increase in both comparable periods was
principally attributable to a higher level of net carried interest and total
investment income reflecting a higher level of appreciation in our private
equity portfolio.

ENI was $376.2 million for the quarter ended June 30, 2014, an increase of
$297.7 million compared to ENI of $78.5 million for the quarter ended June 30,
2013. ENI was $861.6 million for the six months ended June 30, 2014, an
increase of $217.1 million compared to ENI of $644.5 million for the six
months ended June 30, 2013. The increase in both comparable periods was
principally attributable to a higher level of net carried interest and total
investment income reflecting a higher level of appreciation in our private
equity portfolio. The increased total segment revenues were partially offset
by higher total segment expenses reflecting an increase in allocations to the
carry pool driven by a higher level of carried interest recognized during the
2014 periods.

Public Markets

AUM was $38.5 billion as of June 30, 2014, a decrease of $3.3 billion, or
7.9%, compared to AUM of $41.8 billion as of March 31, 2014. FPAUM was $33.5
billion as of June 30, 2014, a decrease of $1.9 billion, or 5.4%, compared to
FPAUM of $35.4 billion as of March 31, 2014. For both AUM and FPAUM, the
decreases were primarily attributable to the acquisition of KFN which
decreased AUM by approximately $4.5 billion and FPAUM by approximately $2.7
billion, partially offset by new capital raised and appreciation in net asset
values in our public markets strategies.

Total segment revenues were $157.2 million for the quarter ended June 30,
2014, an increase of $76.6 million compared to total segment revenues of $80.6
million for the quarter ended June 30, 2013. Total segment revenues were
$302.8 million for the six months ended June 30, 2014, an increase of $117.0
million compared to total segment revenues of $185.8 million for the six
months ended June 30, 2013. The increase in both comparable periods was
principally attributable to higher total investment income primarily relating
to the inclusion of KFN during the 2014 periods beginning on May 1, 2014 and
to a lesser extent higher management fees reflecting new capital raised.

ENI was $105.6 million for the quarter ended June 30, 2014, an increase of
$62.4 million compared to ENI of $43.2 million for the quarter ended June 30,
2013. ENI was $203.4 million for the six months ended June 30, 2014, an
increase of $92.7 million compared to ENI of $110.7 million for the six months
ended June 30, 2013. The increase in both comparable periods was principally
attributable to higher total investment income primarily due to the income
generated by KFN’s operations during the 2014 periods beginning on May 1, 2014
and to a lesser extent higher management fees reflecting new capital raised.
These increases were partially offset by higher compensation expense.

Capital Markets and Other

Total segment revenues were $34.0 million for the quarter ended June 30, 2014,
up slightly when compared to total segment revenues of $32.5 million for the
quarter ended June 30, 2013. Total segment revenues were $103.2 million for
the six months ended June 30, 2014, an increase of $45.6 million compared to
total segment revenues of $57.6 million for the quarter ended June 30, 2013.
The increase in total segment revenues in both comparable periods was
primarily driven by higher overall capital markets transaction activity.

ENI was $19.8 million for the quarter ended June 30, 2014, a decrease of $3.0
million compared to ENI of $22.8 million for the quarter ended June 30, 2013.
The decrease was principally attributable to higher compensation expense. ENI
was $66.9 million for the six months ended June 30, 2014, an increase of $30.0
million compared to ENI of $36.9 million for the six months ended June 30,
2013. The increase was principally attributable to higher transaction fees
driven by higher overall capital markets transaction activity, partially
offset by higher compensation expense.

___________________________________________________________________________________________

* All segment financial information presented in this release reflect a new
presentation as of the second quarter of 2014. For example, certain investment
income previously reported in our Capital Markets and Principal Activities
segment (which is now named Capital Markets and Other) is now reported in
either our Private Markets or Public Markets segment, depending upon the
nature of such income, and economic net income is presented as total segment
revenue less total segment expenses. As a result of the revised presentation,
segment information for historical periods has been restated from previously
published results and, consequently, is not consistent with such previously
reported information. The Investor Center for KKR& Co. L.P. at
http://ir.kkr.com/kkr_ir/kkr_events.cfm contains historical segment financial
information for the quarter ended March 31, 2014 and each of the quarterly
periods in the fiscal year ended December 31, 2013, as revised to give effect
to the new presentation.

CAPITAL AND LIQUIDITY

As of June 30, 2014, KKR had $3.4 billion of cash and short-term investments
and $2.5 billion of outstanding debt obligations on a total reportable segment
basis. In addition, with the acquisition of KFN, KKR reports KFN’s debt
obligations of $657.3 million and KFN’s 7.375% Series A LLC preferred shares
of $373.8 million. KFN’s debt obligations and preferred shares are
non-recourse to KKR beyond the assets of KFN. 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 June 30, 2014.

As of June 30, 2014, KKR’s portion of total uncalled commitments to its
investment funds was $976.9 million, consisting of the following (amounts in
thousands):

                                   
                                      Uncalled

                                      Commitments
Private Markets
Energy Income and Growth Fund         $  208,600
North America Fund XI                    178,200
Real Estate Partners Americas            141,300
Asian Fund II                            62,600
European Fund III                        59,800
2006 Fund                                57,900
Infrastructure                           15,000
Natural Resources                        11,600
Other Private Equity Funds               7,700
Co-Investment Vehicles                  32,200
Total Private Markets Commitments       774,900
                                      
Public Markets
Special Situations Vehicles              120,300
Direct Lending Vehicles                  66,300
Mezzanine Fund                           13,100
Other Credit Vehicles                   2,300
Total Public Markets Commitments        202,000
                                      
Total Uncalled Commitments            $  976,900
                                      

DISTRIBUTION

A distribution of $0.67 per common unit has been declared, comprised of (i)
$0.09 per common unit from after-tax FRE, (ii) $0.41 per common unit from
realized cash carry, (iii) $0.12 per common unit from KKR’s net realized
investment income and (iv) $0.05 per common unit from KFN’s net realized
investment income earned for the two months ended June 30, 2014. The
distribution will be paid on August 19, 2014 to unitholders of record as of
the close of business on August 4, 2014. 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 onThursday,
July 24, 2014at10:00 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 Investor
Center section of KKR's website athttp://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) or +1 (404) 537-3406 (non-U.S. callers), pass
code 71626990, 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

KKRis a leading global investment firm that manages investments across
multiple asset classes including private equity, energy, infrastructure, real
estate, credit and hedge funds. KKR aims to generate attractive investment
returns by following a patient and disciplined investment approach, employing
world-class people, and driving growth and value creation at the asset level.
KKR invests its own capital alongside its partners' capital and brings
opportunities to others through its capital markets business. References to
KKR’s investments may include the activities of its sponsored funds. For
additional information about KKR & Co. L.P. (NYSE: KKR), 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 and yield earnings, fee and yield 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, Avoca or KFN; 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, 2013, filed with the SEC on February 24, 2014, Quarterly
Report on Form 10-Q for the quarter ended March 31, 2014 filed with the SEC on
May 7, 2014 and other filings with the SEC, which are available at
www.sec.gov.

                                                                  
KKR
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (GAAP BASIS - UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
                                                                       
                 Quarter Ended                       Six Months Ended
                 June 30, 2014     June 30, 2013     June 30, 2014     June 30, 2013
Revenues
Fees             $ 249,370        $ 166,376        $ 552,296        $ 317,616     
                                                                       
Expenses
Compensation       358,730           200,602           689,768           531,723
and Benefits
Occupancy and
Related            16,059            13,878            31,467            28,399
Charges
General,
Administrative    210,536         77,542          337,261         171,230     
and Other
Total Expenses    585,325         292,022         1,058,496       731,352     
                                                                       
Investment
Income (Loss)
Net Gains
(Losses) from      1,971,850         98,537            3,944,030         2,368,354
Investment
Activities
Dividend           272,902           209,486           369,606           248,955
Income
Interest           215,872           128,020           377,832           237,389
Income
Interest          (65,997     )    (24,614     )    (100,728    )    (47,637     )
Expense
Total
Investment        2,394,627       411,429         4,590,740       2,807,061   
Income (Loss)
                                                                       
Income (Loss)      2,058,672         285,783           4,084,540         2,393,325
Before Taxes
                                                                       
Income Taxes      6,176           8,525           27,878          17,881      
                                                                       
Net Income         2,052,496         277,258           4,056,662         2,375,444
(Loss)
                                                                       
Net Income
(Loss)
Attributable
to
Redeemable
Noncontrolling     (6,809      )     (7,800      )     3,828             16,823
Interests
Net Income
(Loss)
Attributable
to
Noncontrolling     1,881,090         269,924           3,664,578         2,150,048
Interests
                                                                    
Net Income
(Loss)
Attributable     $ 178,215        $ 15,134         $ 388,256        $ 208,573     
to KKR & Co.
L.P.
                                                                       
Net Income
(Loss)
Attributable
to KKR & Co.
L.P. Per
Common Unit
Basic            $ 0.47            $ 0.06            $ 1.16            $ 0.79
Diluted (a)      $ 0.43            $ 0.05            $ 1.06            $ 0.72
Weighted
Average Common
Units
Outstanding
Basic              377,542,161       271,983,811       335,748,498       264,555,267
Diluted (a)        410,179,838       298,078,764       367,877,049       290,104,942
                                                                       

___________________________________________________________________________________________

        KKR Holdings L.P. units have been excluded from the calculation of
        diluted earnings per common unit given that the exchange of these
(a)   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                                         Six Months Ended
                 June 30, 2014     March 31, 2014    June 30, 2013     June 30, 2014     June 30, 2013
Segment
Revenues
Management,
Monitoring and
Transaction
Fees, Net
Management       $ 178,674         $ 195,393         $ 164,176         $ 374,067         $ 317,139
Fees
Monitoring         29,610            36,363            28,907            65,973            60,975
Fees
Transaction        84,305            163,516           62,785            247,821           103,084
Fees
Fee Credits       (49,830     )    (84,668     )    (34,751     )    (134,498    )    (57,816     )
Total
Management,
Monitoring and    242,759         310,604         221,117         553,363         423,382     
Transaction
Fees, Net
                                                                                         
Performance
Fees
Realized
Carried            555,488           193,550           269,828           749,038           357,995
Interest
Incentive Fees     11,478            17,019            15,590            28,497            34,439
Unrealized
Carried           (137,826    )    145,647         (206,753    )    7,821           115,229     
Interest
Total
Performance       429,140         356,216         78,665          785,356         507,663     
Fees
                                                                                         
Investment
Income (Loss)
Net Realized       221,661           181,728           147,579           403,389           301,206
Gains (Losses)
Net Unrealized    (119,935    )    85,759          (139,311    )    (34,176     )    27,731      
Gains (Losses)
Total Realized     101,726           267,487           8,268             369,213           328,937
and Unrealized
Net Interest      60,432          11,164          2,782           71,596          2,311       
and Dividends
Total
Investment        162,158         278,651         11,050          440,809         331,248     
Income (Loss)
                                                                                         
Total Segment     834,057         945,471         310,832         1,779,528       1,262,293   
Revenues
                                                                                         
Segment
Expenses
Compensation
and Benefits
Cash
Compensation       91,444            108,915           80,436            200,359           155,598
and Benefits
Realized
Allocation to      222,195           77,420            107,931           299,615           143,198
Carry Pool
Unrealized
Allocation to     (53,435     )    58,690          (81,395     )    5,255           52,842      
Carry Pool
Total
Compensation       260,204           245,025           106,972           505,229           351,638
and Benefits
Occupancy and
related            14,757            14,189            13,067            28,946            26,389
charges
Other
operating         54,311          52,801          45,027          107,112         89,657      
expenses
Total Segment     329,272         312,015         165,066         641,287         467,684     
Expenses
                                                                                         
Income (Loss)
attributable
to                3,206           3,202           1,323           6,408           2,424       
noncontrolling
interests
                                                                                         
Economic Net     $ 501,579        $ 630,254        $ 144,443        $ 1,131,833      $ 792,185     
Income (Loss)
                                                                                         
Provision for     6,330           36,581          13,486          42,911          33,603      
Income Taxes
                                                                                         
Economic Net
Income (Loss),   $ 495,249        $ 593,673        $ 130,957        $ 1,088,922      $ 758,582     
After Taxes
(a)
                                                                                         
Equity-based      40,877          39,353          25,936          80,230          53,354      
Charges
                                                                                         
Economic Net
Income (Loss),
After Taxes      $ 454,372        $ 554,320        $ 105,021        $ 1,008,692      $ 705,228     
and
Equity-based
Charges
                                                                                         
Economic Net
Income (Loss),
After Taxes
and              $ 0.57            $ 0.77            $ 0.15            $ 1.32            $ 0.99
Equity-based
Charges Per
Adjusted Unit
                                                                                         
Weighted
Average
Adjusted Units     800,747,528       724,579,220       715,453,358       762,873,784       713,353,287
(Fully Diluted
Basis) (a)
                                                                               
Assets Under     $ 97,957,900      $ 102,277,500     $ 83,500,900      $ 97,957,900      $ 83,500,900
Management
Fee Paying
Assets Under     $ 79,656,300      $ 83,611,600      $ 67,956,400      $ 79,656,300      $ 67,956,400
Management
Committed
Dollars
Invested and     $ 2,345,500       $ 3,377,300       $ 1,889,400       $ 5,722,800       $ 2,713,800
Syndicated
Capital
Uncalled        $ 19,784,200    $ 19,985,100    $ 21,364,400    $ 19,784,200    $ 21,364,400  
Commitments
                                                                               
Other
Information
Fee Related      $ 93,725          $ 151,718         $ 98,177          $ 245,443         $ 186,177
Earnings
Plus: Net
interest and      60,432          11,164          2,782           71,596          2,311       
dividends
Fee and Yield    $ 154,157        $ 162,882        $ 100,959        $ 317,039        $ 188,488     
Earnings (a)
Plus:
Depreciation       4,140             4,035             3,708             8,175             7,389
and
amortization
Plus: Core
Interest          19,205          18,400          16,210          37,605          32,443      
Expense
Fee and Yield    $ 177,502        $ 185,317        $ 120,877        $ 362,819        $ 228,320     
EBITDA (a)
                                                                                         
Total
Distributable    $ 700,973         $ 446,808         $ 403,776         $ 1,147,781       $ 694,390
Earnings (a)
                                                                                         
GAAP interest    $ 65,997          $ 34,731          $ 24,614          $ 100,728         $ 47,637
expense
Less: interest
expense
related to
debt
obligations
from
investment
financing         46,792          16,331          8,404           63,123          15,194      
arrangements
and KFN
Core Interest    $ 19,205         $ 18,400         $ 16,210         $ 37,605         $ 32,443      
Expense (a)
                                                                               
                                                                                         

_____________________________________________________________________________________________

        See definitions for economic net income (loss), adjusted units, fee
(a)   and yield earnings, fee and yield EBITDA, total distributable 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                                      Six Months Ended
                 June 30, 2014    March 31, 2014   June 30, 2013    June 30, 2014    June 30, 2013
Segment
Revenues
Management,
Monitoring and
Transaction
Fees, Net
Management       $ 111,542        $ 123,039        $ 114,700        $ 234,581        $ 221,305
Fees
Monitoring         29,610           36,363           28,907           65,973           60,975
Fees
Transaction        45,340           93,020           25,231           138,360          41,643
Fees
Fee Credits       (43,478    )    (80,338    )    (29,547    )    (123,816   )    (50,556    )
Total
Management,
Monitoring and    143,014        172,084        139,291        315,098        273,367    
Transaction
Fees, Net
                                                                                     
Performance
Fees
Realized
Carried            555,488          168,800          269,828          724,288          357,995
Interest
Incentive Fees     -                -                -                -                -
Unrealized
Carried           (163,564   )    145,776        (217,544   )    (17,788    )    84,039     
Interest
Total
Performance       391,924        314,576        52,284         706,500        442,034    
Fees
                                                                                     
Investment
Income (Loss)
Net Realized       207,892          176,198          148,827          384,090          297,689
Gains (Losses)
Net Unrealized    (122,729   )    70,673         (138,758   )    (52,056    )    15,884     
Gains (Losses)
Total Realized     85,163           246,871          10,069           332,034          313,573
and Unrealized
Net Interest      22,760         (2,808     )    (3,868     )    19,952         (10,066    )
and Dividends
Total
Investment        107,923        244,063        6,201          351,986        303,507    
Income (Loss)
                                                                                     
Total Segment     642,861        730,723        197,776        1,373,584      1,018,908  
Revenues
                                                                                     
Segment
Expenses
Compensation
and Benefits
Cash
Compensation       56,522           66,898           51,516           123,420          99,517
and Benefits
Realized
Allocation to      222,195          67,520           107,931          289,715          143,198
Carry Pool
Unrealized
Allocation to     (63,730    )    58,743         (85,711    )    (4,987     )    40,366     
Carry Pool
Total
Compensation       214,987          193,161          73,736           408,148          283,081
and Benefits
Occupancy and
related            11,764           11,560           11,143           23,324           22,568
charges
Other
operating         39,589         40,059         33,988         79,648         67,930     
expenses
Total Segment     266,340        244,780        118,867        511,120        373,579    
Expenses
                                                                                     
Income (Loss)
attributable
to                335            515            411            850            809        
noncontrolling
interests
                                                                                     
Economic Net     $ 376,186       $ 485,428       $ 78,498        $ 861,614       $ 644,520    
Income (Loss)
                                                                           
Assets Under     $ 59,417,000     $ 60,520,300     $ 54,452,400     $ 59,417,000     $ 54,452,400
Management
Fee Paying
Assets Under     $ 46,167,300     $ 48,211,000     $ 45,907,500     $ 46,167,300     $ 45,907,500
Management
Committed
Dollars          $ 1,454,400      $ 2,551,800      $ 1,314,000      $ 4,006,200      $ 1,912,500
Invested
Uncalled        $ 17,109,800   $ 18,256,800   $ 19,972,800   $ 17,109,800   $ 19,972,800 
Commitments
                                                                                     


KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
PUBLIC MARKETS SEGMENT (UNAUDITED)
(Amounts in thousands)
                                                                               
                 Quarter Ended                                      Six Months Ended
                 June 30, 2014    March 31, 2014   June 30, 2013    June 30, 2014    June 30, 2013
Segment
Revenues
Management,
Monitoring and
Transaction
Fees, Net
Management       $ 67,132         $ 72,354         $ 49,476         $ 139,486        $ 95,834
Fees
Monitoring         -                -                -                -                -
Fees
Transaction        7,350            6,022            7,243            13,372           10,349
Fees
Fee Credits       (6,352     )    (4,330     )    (5,204     )    (10,682    )    (7,260     )
Total
Management,
Monitoring and    68,130         74,046         51,515         142,176        98,923     
Transaction
Fees, Net
                                                                                     
Performance
Fees
Realized
Carried            -                24,750           -                24,750           -
Interest
Incentive Fees     11,478           17,019           15,590           28,497           34,439
Unrealized
Carried           25,738         (129       )    10,791         25,609         31,190     
Interest
Total
Performance       37,216         41,640         26,381         78,856         65,629     
Fees
                                                                                     
Investment
Income (Loss)
Net Realized       14,284           5,479            (64        )     19,763           5,149
Gains (Losses)
Net Unrealized    3,751          14,814         (741       )    18,565         9,328      
Gains (Losses)
Total Realized     18,035           20,293           (805       )     38,328           14,477
and Unrealized
Net Interest      33,822         9,577          3,508          43,399         6,748      
and Dividends
Total
Investment        51,857         29,870         2,703          81,727         21,225     
Income (Loss)
                                                                                     
Total Segment     157,203        145,556        80,599         302,759        185,777    
Revenues
                                                                                     
Segment
Expenses
Compensation
and Benefits
Cash
Compensation       26,904           26,745           21,990           53,649           41,690
and Benefits
Realized
Allocation to      -                9,900            -                9,900            -
Carry Pool
Unrealized
Allocation to     10,295         (53        )    4,316          10,242         12,476     
Carry Pool
Total
Compensation       37,199           36,592           26,306           73,791           54,166
and Benefits
Occupancy and
related            2,544            2,172            1,615            4,716            3,157
charges
Other
operating         11,474         8,507          9,147          19,981         16,973     
expenses
Total Segment     51,217         47,271         37,068         98,488         74,296     
Expenses
                                                                                     
Income (Loss)
attributable
to                385            522            378            907            733        
noncontrolling
interests
                                                                                     
Economic Net     $ 105,601       $ 97,763        $ 43,153        $ 203,364       $ 110,748    
Income (Loss)
                                                                           
Assets Under     $ 38,540,900     $ 41,757,200     $ 29,048,500     $ 38,540,900     $ 29,048,500
Management
Fee Paying
Assets Under     $ 33,489,000     $ 35,400,600     $ 22,048,900     $ 33,489,000     $ 22,048,900
Management
Committed
Dollars          $ 724,400        $ 734,100        $ 370,800        $ 1,458,500      $ 535,700
Invested
Uncalled         $ 2,674,400      $ 1,728,300      $ 1,391,600      $ 2,674,400      $ 1,391,600
Commitments
Gross Dollars   $ 768,200      $ 989,700      $ 847,300      $ 1,757,900    $ 1,225,300  
Invested
                                                                                     


KKR
STATEMENTS OF OPERATIONS AND OTHER SELECTED FINANCIAL INFORMATION
CAPITAL MARKETS AND OTHER SEGMENT (UNAUDITED)
(Amounts in thousands)
                                                                
                 Quarter Ended                          Six Months Ended
                 June 30,      March      June 30,      June 30,      June 30,
                 2014          31, 2014   2013          2014          2013
Segment
Revenues
Management,
Monitoring and
Transaction
Fees, Net
Management       $ -           $ -        $ -           $ -           $ -
Fees
Monitoring         -             -          -             -             -
Fees
Transaction        31,615        64,474     30,311        96,089        51,092
Fees
Fee Credits       -           -         -           -           -       
Total
Management,
Monitoring and    31,615      64,474    30,311      96,089      51,092  
Transaction
Fees, Net
                                                                      
Performance
Fees
Realized
Carried            -             -          -             -             -
Interest
Incentive Fees     -             -          -             -             -
Unrealized
Carried           -           -         -           -           -       
Interest
Total
Performance       -           -         -           -           -       
Fees
                                                                      
Investment
Income (Loss)
Net Realized       (515    )     51         (1,184  )     (464    )     (1,632  )
Gains (Losses)
Net Unrealized    (957    )    272       188         (685    )    2,519   
Gains (Losses)
Total Realized     (1,472  )     323        (996    )     (1,149  )     887
and Unrealized
Net Interest      3,850       4,395     3,142       8,245       5,629   
and Dividends
Total
Investment        2,378       4,718     2,146       7,096       6,516   
Income (Loss)
                                                                      
Total Segment     33,993      69,192    32,457      103,185     57,608  
Revenues
                                                                      
Segment
Expenses
Compensation
and Benefits
Cash
Compensation       8,018         15,272     6,930         23,290        14,391
and Benefits
Realized
Allocation to      -             -          -             -             -
Carry Pool
Unrealized
Allocation to     -           -         -           -           -       
Carry Pool
Total
Compensation       8,018         15,272     6,930         23,290        14,391
and Benefits
Occupancy and
related            449           457        309           906           664
charges
Other
operating         3,248       4,235     1,892       7,483       4,754   
expenses
Total Segment     11,715      19,964    9,131       31,679      19,809  
Expenses
                                                                      
Income (Loss)
attributable
to                2,486       2,165     534         4,651       882     
noncontrolling
interests
                                                                      
Economic Net     $ 19,792     $ 47,063   $ 22,792     $ 66,855     $ 36,917  
Income (Loss)
                                                            
Syndicated      $ 166,700   $ 91,400  $ 204,600   $ 258,100   $ 265,600 
Capital
                                                                      


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

                               June 30, 2014           December 31, 2013
                                                                           
Cash and short-term            $  3,375,164            $    2,161,097
investments
Investments                       8,125,042    (a)          4,980,265
Unrealized carry                  1,207,172    (b)          1,179,338      (b)
Other assets                     746,828                  662,357
Total assets                   $  13,454,206           $    8,983,057
                                                                           
Debt obligations - KKR         $  1,500,000            $    1,000,000
Debt obligations - KFN            657,310                   -
Preferred shares - KFN            373,750                   -
Other liabilities                356,874                  149,196
Total liabilities                2,887,934                1,149,196
Noncontrolling interests          122,686                   71,261
                                                      
Book value                     $  10,443,586           $    7,762,600
Book value per adjusted unit   $  12.52                $    10.83
                                                                           
                                                                           
                                                                  
                                                                           
                                                                           
(a) See schedule of investments that follows on the next page.
                                                                           
                               As of                   As of
(b) Unrealized Carry
                               June 30, 2014           December 31, 2013
Private Markets                $  1,129,463            $    1,116,996
Public Markets                   77,709                   62,342
Total                          $  1,207,172            $    1,179,338
                                                                           


KKR
SCHEDULE OF INVESTMENTS
TOTAL REPORTABLE SEGMENTS (UNAUDITED)
(Amounts in thousands, except percentage amounts)
                                                         
                                   As of June 30, 2014
                                                 Fair          Fair Value as a
Investments                        Cost                        Percentage of
                                                 Value         Investments
                                                               
Private Equity                     $ 1,522,326   $ 2,032,431   25       %
Co-Investments
Private Equity Funds                970,662      1,190,723   15       %
Private Equity Total                2,492,988    3,223,154   40       %
                                                               
Energy                               794,981       787,389     10       %
Real Estate                          280,432       293,896     3        %
Infrastructure                      49,545       53,916      1        %
Real Assets Total                   1,124,958    1,135,201   14       %
                                                               
Other                                137,000       145,346     2        %
                                                               
Private Markets Total               3,754,946    4,503,701   56       %
                                                               
Special Situations                   575,752       625,272     8        %
Mezzanine                            123,455       129,458     1        %
Direct Lending                      52,920       58,883      1        %
Alternative Credit                   752,127       813,613     10       %
CLOs                                 1,590,350     1,595,038   20       %
Liquid Credit                       307,869      339,196     3        %
Credit Total                        2,650,346    2,747,847   33       %
                                                               
Other                                58,623        59,242      1        %
                                                               
Public Markets Total                2,708,969    2,807,089   34       %
                                                               
Specialty Finance                    256,219       260,790     3        %
Other                                513,793       553,462     7        %
                                                               
Capital Markets and Other           770,012      814,252     10       %
Total
                                                             
Total Investments                  $ 7,233,927   $ 8,125,042   100      %
                                                               
                                                       
                                                               
Significant Aggregate
Portfolio Company
Investments: (a)
Alliance Boots GmbH                $ 228,769     $ 743,446     9        %
First Data Corporation               327,212       265,062     3        %
Biomet, Inc.                         164,644       213,245     3        %
HCA Inc.                             35,583        172,072     2        %
The Nielsen Company B.V.            52,900       171,818     2        %
                                    809,108      1,565,643   19       %
Other Investments                   6,424,819    6,559,399   81       %
Total Investments                  $ 7,233,927   $ 8,125,042   100      %
                                                               

____________________________________________________________________________________________

        The significant aggregate portfolio company investments include the
        top five investments in portfolio companies based on their fair market
(a)   value as of June 30, 2014. 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 June
30, 2014
                                                               
March 31, 2014      $ 60,520,300          $ 41,757,200         $ 102,277,500
New Capital Raised    1,114,200             1,945,800            3,060,000
KFN Acquisition (a)   -                     (4,511,900 )         (4,511,900  )
Distributions         (4,445,200  )         (1,061,300 )   (d)   (5,506,500  )
Change in Value      2,227,700           411,100            2,638,800   
June 30, 2014       $ 59,417,000         $ 38,540,900        $ 97,957,900  
                                                               
Six Months Ended
June 30, 2014
                                                               
December 31, 2013   $ 61,242,900          $ 33,077,400         $ 94,320,300
New Capital Raised    1,703,100             3,066,800            4,769,900
Acquisitions (b)      -                     8,423,000            8,423,000
KFN Acquisition (a)   -                     (4,511,900 )         (4,511,900  )
Distributions         (6,634,800  )         (2,387,600 )   (e)   (9,022,400  )
Net Changes in Fee
Base of Certain       (933,800    )         -                    (933,800    )
Funds (c)
Change in Value      4,039,600           873,200            4,912,800   
June 30, 2014       $ 59,417,000         $ 38,540,900        $ 97,957,900  
                                                               
Trailing Twelve
Months Ended June
30, 2014
                                                               
June 30, 2013       $ 54,452,400          $ 29,048,500         $ 83,500,900
New Capital Raised    7,668,000             7,412,300            15,080,300
Acquisitions (b)      -                     8,423,000            8,423,000
KFN Acquisition (a)   -                     (4,511,900 )         (4,511,900  )
Distributions         (11,315,300 )         (3,675,000 )   (f)   (14,990,300 )
Net Changes in Fee
Base of Certain       (933,800    )         -                    (933,800    )
Funds (c)
Change in Value      9,545,700           1,844,000          11,389,700  
June 30, 2014       $ 59,417,000         $ 38,540,900        $ 97,957,900  
                                                               

______________________________________________________________________________________________

*     Exclude those assets managed by entities where KKR holds less than a
        50% ownership interest.
        
(a)     Certain assets that were externally managed prior to the acquisition
        of KFN are now reported on the balance sheet and excluded from AUM.
(b)     Represents the AUM of Avoca.
(c)     Represents the impact of certain funds entering the post-investment
        period.
(d)     Includes $745.9 million of redemptions by fund investors.
(e)     Includes $1,288.4 million of redemptions by fund investors.
(f)     Includes $1,771.0 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
June 30, 2014
                                                                
March 31, 2014    $ 48,211,000           $ 35,400,600           $ 83,611,600
New Capital         921,700                1,649,100              2,570,800
Raised
KFN Acquisition     -                      (2,684,700 )           (2,684,700 )
(a)
Distributions       (2,940,400 )   (b)     (1,094,600 )   (e)     (4,035,000 )
Change in Value    (25,000    )          218,600              193,600    
June 30, 2014     $ 46,167,300          $ 33,489,000          $ 79,656,300 
                                                                
Six Months
Ended June 30,
2014
                                                                
December 31,      $ 50,156,300           $ 27,241,200           $ 77,397,500
2013
New Capital         1,357,000              2,759,300              4,116,300
Raised
Acquisitions        -                      7,971,000              7,971,000
(c)
KFN Acquisition     -                      (2,684,700 )           (2,684,700 )
(a)
Distributions       (4,366,900 )   (b)     (2,330,100 )   (f)     (6,697,000 )
Net Changes in
Fee Base of         (964,700   )           -                      (964,700   )
Certain Funds
(d)
Change in Value    (14,400    )          532,300              517,900    
June 30, 2014     $ 46,167,300          $ 33,489,000          $ 79,656,300 
                                                                
Trailing Twelve
Months Ended
June 30, 2014
                                                                
June 30, 2013     $ 45,907,500           $ 22,048,900           $ 67,956,400
New Capital         7,193,700              7,952,500              15,146,200
Raised
Acquisitions        -                      7,971,000              7,971,000
(c)
KFN Acquisition     -                      (2,684,700 )           (2,684,700 )
(a)
Distributions       (6,276,700 )   (b)     (3,232,300 )   (g)     (9,509,000 )
Net Changes in
Fee Base of         (964,700   )           -                      (964,700   )
Certain Funds
(d)
Change in Value    307,500              1,433,600            1,741,100  
June 30, 2014     $ 46,167,300          $ 33,489,000          $ 79,656,300 
                                                                             

______________________________________________________________________________________________

*     Exclude those assets managed by entities where KKR holds less than a
        50% ownership interest.
(a)     Certain assets that were externally managed prior to the acquisition
        of KFN are now reported on the balance sheet and excluded from AUM.
(b)     Includes the reduction in FPAUM attributed to the invested capital of
        Energy Future Holdings due to its bankruptcy.
(c)     Represents the FPAUM of Avoca.
(d)     Represents the impact of certain funds entering the post-investment
        period.
(e)     Includes $745.9 million of redemptions by fund investors.
(f)     Includes $1,288.4 million of redemptions by fund investors.
(g)     Includes $1,771.0 million of redemptions by fund investors.

                                                                                                                
                                                                                                                           
KKR
INVESTMENT VEHICLE SUMMARY ^ (a) (UNAUDITED)
As of June 30, 2014
(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
Asian Fund II    4/2013         4/2019      $ 5,825.0    $  4,889.8    1.3    %     $ 935.2      $ -          $ 935.2      $ 1,012.1
North America    9/2012         9/2018        8,718.4       4,712.4    2.9    %       4,006.0      95.4         4,006.0      4,583.7
Fund XI
China Growth     11/2010        11/2016       1,010.0       560.2      1.0    %       449.8        32.6         432.4        512.9
Fund
E2 Investors     8/2009         11/2013       209.4         13.6       4.5    %       195.8        144.4        54.5         302.6
(Annex Fund)
European Fund    3/2008         3/2014        6,229.8       816.3      4.6    %       5,413.5      1,494.3      4,620.7      6,601.4
III
Asian Fund       7/2007         4/2013        3,983.3       57.5       2.5    %       3,925.8      3,864.7      2,585.1      3,618.5
2006 Fund        9/2006         9/2012        17,642.2      1,067.9    2.1    %       16,574.3     12,881.7     9,538.5      15,500.0
European Fund    11/2005        10/2008       5,750.8       -          2.1    %       5,750.8      5,352.4      1,655.9      3,207.1
II
Millennium       12/2002        12/2008       6,000.0       -          2.5    %       6,000.0      11,246.2     1,320.8      2,265.5
Fund
European Fund    12/1999        12/2005      3,085.4     -          3.2    %      3,085.4    8,736.6    -          40.8
Total Private                                 58,454.3      12,117.7                  46,336.6     43,848.3     25,149.1     37,644.6
Equity Funds
                                                                                                                           
Co-Investment    Various        Various       2,903.9       780.3      Various        2,123.6      1,005.1      1,814.0      2,393.7
Vehicles
                                                                                                                   
Total Private                                61,358.2    12,898.0                 48,460.2   44,853.4    26,963.1   40,038.3
Equity
                                                                                                                           
Real Assets
Energy Income
and Growth       9/2013         9/2018        1,974.2       1,617.7    12.8   %       356.5        22.2         339.1        351.2
Fund
Natural          Various        Various       893.8         320.9      Various        572.9        95.1         496.4        312.8
Resources Fund
Global Energy    Various        Various       1,028.4       894.2      Various        134.2        6.1          134.2        108.5
Opportunities
Infrastructure   Various        Various       1,042.2       259.9      4.8    %       782.3        34.1         782.3        819.7
Fund
Infrastructure   Various        Various       1,355.3       250.8      Various        1,104.5      261.6        1,104.5      1,395.2
Co-Investments
Real Estate
Partners         5/2013         12/2016      1,229.1     868.3      16.0   %      360.8      129.2       360.4      402.2
Americas
Real Assets                                  7,523.0     4,211.8                  3,311.2    548.2       3,216.9    3,389.6
                                                       
Private                                      68,881.2    17,109.8                 51,771.4   45,401.6   30,180.0   43,427.9
Markets Total
                                                                                                                           
Public Markets
                                                                                                                           
Special
Situations       Various        Various       4,713.8       1,939.7    Various        2,774.1      981.4        2,231.4      2,660.6
Vehicles
Mezzanine Fund   3/2010         8/2015        987.0         287.3      4.6    %       699.7        198.5        611.1        721.7
Direct Lending   Various        Various       1,001.9       447.4      Various        554.5        51.0         554.5        604.3
Vehicles
                                                                                                                  
Public Markets                               6,702.7     2,674.4                  4,028.3    1,230.9    3,397.0    3,986.6
Total
                                                                                                                           
Grand Total                                 $ 75,583.9  $  19,784.2                $ 55,799.7  $ 46,632.5  $ 33,577.0  $ 47,414.5
                                                                                                                           

_____________________________________________________________________________________________

(a)   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                                         Six Months Ended
                 June 30, 2014     March 31, 2014    June 30, 2013     June 30, 2014   June 30, 2013
Cash Revenues
Fees             $ 254,237         $ 327,623         $ 236,707         $ 581,860       $ 457,821
Realized cash      555,488           193,550           269,828           749,038         357,995
carry
Net realized
investment         245,711           192,892           150,361           438,603         303,517
income - KKR
Net realized
investment        36,382          -               -               36,382        -         
income - KFN
Total Cash        1,091,818       714,065         656,896         1,805,883     1,119,333 
Revenue
                                                                                       
Cash Expenses
Compensation       91,444            108,915           80,436            200,359         155,598
and benefits
Realized cash
carry              222,195           77,420            107,931           299,615         143,198
allocated to
carry pool
Occupancy and
related            14,757            14,189            13,067            28,946          26,389
charges
Other
operating         54,311          52,801          45,027          107,112       89,657    
expenses
Total Cash        382,707         253,325         246,461         636,032       414,842   
Expenses
                                                                                       
                                                                                       
Cash income
(loss) before
noncontrolling     709,111           460,740           410,435           1,169,851       704,491
interests and
local taxes
                                                                                       
Less: local        (4,932      )     (10,730     )     (5,336      )     (15,662   )     (7,677    )
income taxes
Less:
noncontrolling    (3,206      )    (3,202      )    (1,323      )    (6,408    )    (2,424    )
interests
Total
Distributable      700,973           446,808           403,776           1,147,781       694,390
Earnings
                                                                                       
Less:
estimated
current           (19,025     )    (33,445     )    (25,138     )    (52,470   )    (41,865   )
corporate
income taxes
                                                                                       
Distributable
Earnings, net      681,948           413,363           378,638           1,095,311       652,525
of taxes
                                                                                       
Less:
Undistributed
net realized      (147,427    )    (115,735    )    (90,217     )    (263,162  )    (182,110  )
investment
income - KKR
                                                                                       
Distributed      $ 534,521        $ 297,628        $ 288,421        $ 832,149      $ 470,415   
Earnings
                                                                                       
Distributable
Earnings, net
of taxes per     $ 0.85            $ 0.59            $ 0.55            $ 1.44          $ 0.95
KKR & Co. L.P.
common unit
                                                                                       
Distribution
per KKR & Co.    $ 0.67            $ 0.43            $ 0.42            $ 1.10          $ 0.69
L.P. common
unit
                                                                                       
                                                                             
Components of
Distribution
per KKR & Co.
L.P. Common
unit
                                                                                       
After-tax FRE    $ 0.09            $ 0.15            $ 0.10            $ 0.24          $ 0.20
Realized Cash    $ 0.41            $ 0.17            $ 0.23            $ 0.58          $ 0.31
Carry
Distributed
Net Realized     $ 0.12            $ 0.11            $ 0.09            $ 0.23          $ 0.18
Investment
Income - KKR
Distributed
Net Realized    $ 0.05          $ -             $ -             $ 0.05        $ -         
Investment
Income - KFN
                                                                             
Fee and yield
earnings
distribution    $ 0.15          $ 0.16          $ 0.10          $ 0.31        $ 0.20      
per KKR & Co.
L.P. common
unit
                                                                                       
Adjusted Units
Eligible For       803,719,050       696,070,615       689,795,274
Distribution
                                                                                       
Payout Ratio       78.4        %     72.0        %     76.2        %     76.0      %     72.1      %
                                                                                       

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
the KKR’s investment management business, 40% of the net realized investment
income of KKR (other than KFN), and 100% of the net realized investment income
of KFN, 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, (iii) 40% of
the net realized investment income from KKR (other than KFN) and (iv) 100% of
the net realized investment income from KFN. 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 (i) total management, monitoring and
transaction fees, net, plus incentive fees, less (ii) cash compensation and
benefits, occupancy and related charges and other operating expenses. This
measure is used by management as an alternative measurement of the operating
earnings of KKR and its business segments before carried interest and related
carry pool allocations and 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-based 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
carried interest and related carry pool allocations and investment income. ENI
is comprised of total segment revenues; less total segment expensesand
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.

Fee and Yield Earnings is comprised of FRE and net interest and dividends from
KKR’s business segments. This measure is used by management as a measure of
the cash earnings of KKR and its business segments investment income. We
believe this measure is useful to unitholders as it provides insight into the
amount of KKR’s cash earnings, significant portions of which tend to be more
recurring than realized carried interest and net realized gains from quarter
to quarter.

Fee and Yield EBITDA is comprised of Fee and Yield Earnings before the impact
of depreciation of fixed assets and core interest expense. This is used by
management as another measure of the cash earnings of KKR and its business
segments investment income. We believe this measure is also useful to
unitholders as it provides insight into the amount of KKR’s cash earnings
before the impact of interest expense, significant portions of which tend to
be more recurring than realized carried interest and realized investment
income from quarter to quarter.

Net realized investment income – KKR refers to net cash income from (i)
realized investment gains and losses excluding certain realized investment
losses 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 investment income in each case generated by KKR (excluding KFN). This
term describes a portion of KKR’s quarterly distribution and excludes net
realized investment income of KFN.

Net realized investment income – KFN refers to net cash income from (i)
realized investment gains and losses, (ii) dividend income and (iii) interest
income net of interest expense less certain general and administrative
expenses incurred in the generation of net realized investment income in each
case generated by KFN. This term describes a portion of KKR’s quarterly
distribution and excludes net realized investment income of KKR.

Investments is a term used solely for purposes of financial presentation of a
portion of KKR’s balance sheet and includes majority investments in
subsidiaries that operate KKR’s asset management and broker-dealer businesses,
including the general partner interests of KKR’s investment funds.

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, (iii) net realized investment income – KKR and (iv) net
realized investment income – KFN; 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. 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 CLOs
(excluding CLOs wholly owned by KKR); 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, for only those funds, 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 carried
interest and (ii)capital invested by KKR’s investment funds.

Gross dollars invested is the aggregate amount of capital that has been
invested by all of KKR’s Public Markets investment vehicles in our private
credit non-liquid strategies and is used as a measure of investment activity
for KKR’s Public Markets in a given period. We believe this measure is useful
to unitholders as it provides additional insight into KAM’s investment of
capital across its private credit non-liquid strategies for all the investment
vehicles which it manages. Such amounts include capital invested by fund
investors and co-investors with respect to which KKR’s Public Markets business
is entitled to a fee or carried interest.

Syndicated capital is generally the aggregate amount of capital in
transactions originated by KKR investment funds and carry-yielding
co-investment vehicles, which has been distributed to third parties in
exchange for a fee. It does not include (i) capital invested in such
transactions by KKR investment funds and 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. 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 Other 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
to make future investments.

Adjusted units are used as a measure of the total equity ownership of KKR that
is held primarily 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 and other
exchangeable securities 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 and also excludes interest expense incurred by KFN. The
financing arrangements excluded from core interest expense are not direct
obligations of the general partners of KKR’s private equity funds or its
management companies, and in the case of debt obligations of KFN are
non-recourse to KKR beyond the assets of KFN. On a segment basis, interest
expense is included in net interest and dividends within total 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, other noncontrolling
interest holders and KFN. Additionally, we believe this measure is useful for
analyzing KKR’s ability to service its debt obligations other than the debt
obligations of KFN.

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 KKR’s
investment portfolio, including carried interest, as well as KKR’s 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 KKR& Co. L.P. Partners’ Capital on a GAAP
basis primarily as a result of the exclusion of ownership interests
attributable to KKR Holdings.

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.

Return on equity measures the amount of net income generated as a percentage
of capital invested in KKR’s business. Return on equity is calculated by
dividing Economic Net Income (Loss), After Taxes and Equity-based Charges on a
trailing twelve-month basis by the average book value during the period.

Cash return on equity measures the amount of cash income generated as a
percentage of capital invested in KKR’s business. Cash return on equity is
calculated by dividing Total Distributable Earnings on a trailing twelve-month
basis by the average book value during the period.

                                                             
KKR
EXHIBIT A
RECONCILIATION OF NET INCOME (LOSS) ATTRIBUTABLE TO KKR & CO. L.P. PER COMMON
UNIT (GAAP BASIS)
TO ENI AFTER TAXES AND EQUITY-BASED CHARGES PER ADJUSTED UNIT (UNAUDITED)
(Amounts in thousands, except common unit and per common unit amounts)
                                                                 
                                                                 
                                Quarter Ended
                                June 30, 2014   March 31, 2014   June 30, 2013
                                                                 
Net income (loss)
attributable to KKR &           $ 0.47          $  0.72          $ 0.06
Co. L.P. per common
unit - Basic
Weighted Average Common
Units Outstanding -               377,542,161      293,490,461     271,983,811
Basic
Net income (loss)
attributable to KKR &             178,215          210,041         15,134
Co. L.P.
Plus: Net income (loss)
attributable to
noncontrolling
interests held by KKR             186,776          300,814         28,106
Holdings L.P.
Plus: Non-cash equity             92,957           77,528          80,318
based charges
Plus: Amortization of
intangibles and other,            37,455           20,169          12,360
net
Plus: Income taxes               6,176           21,702         8,525
Economic net income               501,579          630,254         144,443
(loss)
Less: Provision for              6,330           36,581         13,486
income taxes
Economic net income               495,249          593,673         130,957
(loss) after taxes
Less: Equity-based
charges associated with          40,877          39,353         25,936
the KKR & Co. L.P. 2010
equity incentive plan
Economic net income
(loss) after taxes and            454,372          554,320         105,021
equity-based charges
Weighted Average                 800,747,528     724,579,220    715,453,358
Adjusted Units
Economic net income
(loss) after taxes and          $ 0.57          $  0.77          $ 0.15
equity-based charges
per adjusted unit
                        *Story
                        too
                        large*

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