10-QPeriod: Q3 FY2011

KKR & Co. Inc. Quarterly Report for Q3 Ended Sep 30, 2011

Filed November 8, 2011For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. (KKR) filed its 10-Q for the period ending September 30, 2011, reporting a net loss attributable to KKR & Co. L.P. of $243.4 million for the third quarter and $44.2 million for the first nine months of the year. This was largely driven by a significant net loss from investment activities in the third quarter, amounting to $3.34 billion, primarily due to unrealized losses on private equity investments. Total fees increased year-over-year, reflecting growth in transaction and management fees, but this was offset by a substantial increase in expenses, largely due to lower equity-based compensation in the prior year's comparable period. Despite the reported net loss, KKR's Assets Under Management (AUM) showed resilience, increasing to $58.7 billion as of September 30, 2011, up from $51.8 billion at the end of 2010, with the Private Markets segment showing a slight decrease in AUM due to market value declines and distributions, while the Public Markets segment saw a modest increase. The company's liquidity position remained adequate, with significant cash and cash equivalents, though it continued to manage its debt obligations.

Financial Highlights

23 data points
Beta

Net Income

-$243.40M

Total Assets

$38.63B

Cash & Equivalents

$821.77M

Free Cash Flow

-$1.31B

Financial Statements
Beta
Interest Expense$17.74M
Net Income-$243.40M

Key Highlights

  • 1KKR reported a net loss attributable to KKR & Co. L.P. of $243.4 million for Q3 2011 and $44.2 million for the first nine months of 2011.
  • 2Net losses from investment activities were substantial in Q3 2011, totaling $3.34 billion, primarily driven by unrealized losses in the private equity portfolio.
  • 3Total fees increased significantly, particularly transaction and management fees, indicating growth in advisory and capital markets activities.
  • 4Expenses also increased, notably compensation and benefits, though equity-based compensation charges decreased year-over-year.
  • 5Assets Under Management (AUM) grew to $58.7 billion as of September 30, 2011, demonstrating continued growth in the firm's managed capital.
  • 6The company maintained a strong liquidity position with $821.8 million in cash and cash equivalents at the end of Q3 2011.
  • 7Despite the net loss, the firm's Fee Related Earnings (FRE) and Economic Net Income (ENI) metrics showed segment-specific performance, with Private Markets experiencing a loss in ENI for the quarter, while Public Markets and Capital Markets segments showed positive ENI.

Frequently Asked Questions

KKR reported a net loss attributable to KKR & Co. L.P. of $243.4 million for the third quarter of 2011 and a net loss of $44.2 million for the first nine months of 2011. This performance was heavily impacted by significant unrealized losses in its investment portfolio, particularly in private equity, which resulted in a net loss from investment activities of $3.34 billion for the quarter.

KKR's total Assets Under Management (AUM) increased to $58.7 billion as of September 30, 2011, up from $51.8 billion at the end of 2010. The Private Markets segment saw a slight decrease in AUM primarily due to market value declines and distributions, while the Public Markets segment experienced a modest increase.

Total fees increased significantly due to higher transaction fees and management fees, reflecting growth in advisory and capital markets activities. However, expenses also rose, largely driven by an increase in compensation and benefits. While equity-based compensation charges decreased year-over-year, this was offset by other expense increases, including those related to personnel expansion and business growth.

Yes, KKR maintained a strong liquidity position, reporting $821.8 million in cash and cash equivalents at the end of the third quarter of 2011. The company also had access to significant credit facilities. Management believes these sources are sufficient to fund working capital requirements for the next 12 months.