10-QPeriod: Q3 FY2012

KKR & Co. Inc. Quarterly Report for Q3 Ended Sep 30, 2012

Filed November 2, 2012For Securities:KKRKKRTKKR-PDKKRS

Summary

KKR & Co. Inc. reported a significant turnaround in its financial performance for the nine months ended September 30, 2012, compared to the same period in 2011. The company generated substantial "Net Income Attributable to KKR & Co. L.P." of $464.1 million, a marked improvement from a loss of $44.2 million in the prior year. This turnaround was largely driven by a dramatic increase in "Net Gains (Losses) from Investment Activities," which surged to $7.0 billion from $0.7 billion, primarily due to strong appreciation in the company's private equity portfolio. Fee income saw a notable decrease, however, from $514.3 million to $390.8 million, largely driven by a decline in monitoring and transaction fees. The company's Assets Under Management (AUM) grew to $49.8 billion in the Private Markets segment, up from $43.6 billion at the end of 2011, indicating successful capital deployment and market appreciation. Despite the increase in AUM, Fee Paying AUM (FPAUM) also saw growth, suggesting a healthy base for management fees. The company continues to manage a substantial amount of uncalled capital, indicating future investment potential. Overall, the report signals a period of strong investment performance recovery for KKR, driven by its private equity investments, although fee generation experienced some headwinds.

Financial Highlights

25 data points
Beta

Net Income

$127.41M

Total Assets

$43.65B

Cash & Equivalents

$1.28B

Free Cash Flow

$1.87B

Financial Statements
Beta
Interest Expense$17.87M
Net Income$127.41M

Key Highlights

  • 1Net Income Attributable to KKR & Co. L.P. increased significantly to $464.1 million for the nine months ended September 30, 2012, from a loss of $44.2 million in the prior year's period.
  • 2Total Investment Income (Loss) showed a dramatic improvement, reaching $7.5 billion for the nine months ended September 30, 2012, compared to $0.7 billion in the same period of 2011, driven primarily by gains in the private equity portfolio.
  • 3Total Fees decreased by $123.5 million to $390.8 million for the nine months ended September 30, 2012, mainly due to lower monitoring and transaction fees.
  • 4Total Expenses increased by $356.6 million to $1,240.5 million for the nine months ended September 30, 2012, largely due to higher compensation and benefits.
  • 5Assets Under Management (AUM) in the Private Markets segment grew to $49.8 billion as of September 30, 2012, indicating successful capital raising and investment growth.
  • 6The company reported $1.3 billion in outstanding Senior Notes as of September 30, 2012, a slight increase from $1.56 billion at December 31, 2011.

Frequently Asked Questions

KKR demonstrated a significant financial recovery. Net Income Attributable to KKR & Co. L.P. rose to $464.1 million, a substantial improvement from a net loss of $44.2 million in the same period of 2011. This was primarily driven by a large increase in investment income, particularly from its private equity portfolio.

Fee income decreased to $390.8 million for the nine months ended September 30, 2012, down from $514.3 million in the comparable period of 2011. This decline was mainly attributed to lower monitoring and transaction fees, although incentive fees saw an increase.

KKR's AUM in its Private Markets segment saw healthy growth, reaching $49.8 billion as of September 30, 2012, up from $43.6 billion at the end of 2011. This growth reflects successful capital deployment and market appreciation.

The significant increase in investment income to $7.0 billion for the first nine months of 2012, from $0.7 billion in the prior year, was primarily driven by strong appreciation in the company's private equity portfolio. This includes both realized and unrealized gains from investment activities.