10-QPeriod: Q1 FY2011

KKR & Co. Inc. Quarterly Report for Q1 Ended Mar 31, 2011

Filed May 5, 2011For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. (KKR) reported its first quarter 2011 financial results, showing a notable increase in total fees to $231.8 million, up from $106.0 million in the prior year period. This growth was primarily driven by a significant rise in monitoring and transaction fees. Despite an increase in operating expenses, largely due to higher compensation and benefits, KKR's net income attributable to KKR & Co. L.P. increased to $159.6 million from $113.8 million in Q1 2010. The firm's investment activities generated substantial gains, with Net Gains from Investment Activities totaling $2.5 billion for the quarter. Assets Under Management (AUM) grew to $61.0 billion. The company's balance sheet remains solid, with total assets of $39.9 billion and total liabilities of $2.6 billion as of March 31, 2011. KKR continues to manage its capital effectively, with significant uncalled commitments available for future investments.

Financial Highlights

18 data points
Beta

Net Income

$159.56M

Total Assets

$39.87B

Cash & Equivalents

$1.05B

Free Cash Flow

$1.58B

Financial Statements
Beta
Interest Expense$17.25M
Net Income$159.56M

Key Highlights

  • 1Total fees increased significantly to $231.8 million in Q1 2011 from $106.0 million in Q1 2010, driven by higher monitoring and transaction fees.
  • 2Net income attributable to KKR & Co. L.P. rose to $159.6 million ($0.75 per diluted unit) in Q1 2011, up from $113.8 million ($0.56 per diluted unit) in Q1 2010.
  • 3Assets Under Management (AUM) grew to $61.0 billion as of March 31, 2011, compared to $54.7 billion in the prior year period.
  • 4Net Gains from Investment Activities were robust at $2.5 billion for the quarter, primarily from Private Equity Investments.
  • 5Total expenses decreased to $423.8 million in Q1 2011 from $463.3 million in Q1 2010, largely due to a reduction in equity-based payments.
  • 6The company maintained a strong liquidity position with $1.05 billion in cash and cash equivalents at the end of the quarter.
  • 7Uncalled commitments stood at $13.3 billion as of March 31, 2011, providing ample capital for future investments.

Frequently Asked Questions

The substantial increase in total fees to $231.8 million was primarily driven by a net increase in gross monitoring fees of $88.1 million and an increase in gross transaction fees of $31.7 million. A portion of the monitoring fees included termination payments related to initial public offerings (IPOs) of portfolio companies like HCA and The Nielsen Company, which are infrequent but significant events.

KKR's profitability, as measured by net income attributable to KKR & Co. L.P., improved significantly to $159.6 million in the first quarter of 2011, up from $113.8 million in the same period of 2010. This increase was achieved despite a slight decrease in income before taxes, primarily due to a substantial reduction in expenses, particularly equity-based payments.

As of March 31, 2011, KKR's AUM reached $61.0 billion, an increase from $54.7 billion in the prior year period. This growth, combined with $13.3 billion in uncalled commitments, indicates a strong capital base and significant capacity for future investment and business expansion.

KKR's investment activities continue to be a major driver of its financial results. Net Gains from Investment Activities were $2.5 billion for the quarter, largely driven by its private equity portfolio. While dividend income decreased significantly compared to the prior year, the overall strength in investment gains suggests a positive performance for its core strategies. The company continues to benefit from its diversified investment approach across private and public markets.