We could not find any results for:
Make sure your spelling is correct or try broadening your search.
Register for streaming realtime charts, analysis tools, and prices.
| Name | Symbol | Market | Type |
|---|---|---|---|
| Simplify Macro Strategy ETF | NYSE:FIG | NYSE | Exchange Traded Fund |
| Price Change | % Change | Price | High Price | Low Price | Open Price | Traded | Last Trade | |
|---|---|---|---|---|---|---|---|---|
| 0.00 | 0.00% | 7.85 | 0 | 00:00:00 |
From Dec 2019 to Dec 2024
Fortress Investment Group LLC (NYSE: FIG) (“Fortress” or the “Company”) today reported its third quarter 2017 financial results.
FINANCIAL SUMMARY
BUSINESS HIGHLIGHTS
_____________________________
Note: This release contains certain Non-GAAP financial measures. Fortress urges you to read the “Non-GAAP Information” section below and to review the exhibits in this release for reconciliations of these measures to the comparable GAAP measures.
PROPOSED ACQUISITION BY SOFTBANK
On July 12, 2017, Fortress announced that, at its special meeting of shareholders, the Company’s shareholders had voted, among other things, in favor of the proposal to adopt the previously announced merger agreement pursuant to which certain subsidiaries of SoftBank Group Corp. (“SoftBank”) will acquire Fortress for approximately $3.3 billion in cash. Of the votes cast in respect of the proposal to adopt the merger agreement, approximately 99.7% of shares voted in favor. The transaction is anticipated to close in the fourth quarter of 2017, subject to certain regulatory approvals and other customary closing conditions, after which Fortress will operate as an independent business within SoftBank under the continuing leadership of Fortress Principals Pete Briger, Wes Edens and Randy Nardone.
SUMMARY FINANCIAL RESULTS
Fortress’s business model is highly diversified, and management believes that this positions the Company to capitalize on opportunities for investing, capital formation and harvesting profits that can occur at different points in any cycle for our individual businesses. Fortress’s business model generates stable and predictable management fees, which is a function of the majority of Fortress’s alternative AUM residing in long-term investment structures. Fortress’s alternative investment businesses also generate variable incentive income based on performance, and this incentive income can contribute meaningfully to financial results. Balance sheet investments represent a third component of Fortress’s business model, and the Company has built substantial value in these investments, which are made in Fortress funds alongside the funds’ limited partners. The table below summarizes Fortress’s operating results for the three months ended September 30, 2017. The condensed consolidated GAAP statement of operations and balance sheet are presented on pages 10-11 of this press release.
3Q 2Q 3Q % Change YTD YTD % Change 2017 2017 2016 QoQ YoY 2017 2016 QoQ (in millions, except per share amount) GAAP Revenues $ 254 $ 247 $ 261 3 % (3 )% $ 734 $ 725 1 % Expenses 248 210 225 18 % 10 % 699 671 4 % Other Income (loss) 231 8 29 N/A N/A 240 (27 ) N/A Net income (loss) 190 32 58 494 % 228 % 215 16 N/A Net income (loss) attributable to Class A Shareholders 89 15 31 493 % 187 % 100 8 N/A Per diluted share $ 0.37 $ 0.06 $ 0.07 N/A N/A $ 0.43 $ 0.02 N/A Weighted average Class A shares outstanding, diluted 394 395 390 394 390 Distributable Earnings Fund management DE $ 100 $ 82 $ 88 22 % 14 % $ 243 $ 249 (2 )% Pre-tax DE 291 86 90 238 % 223 % 451 255 77 % Per dividend paying share/unit $ 0.73 $ 0.22 $ 0.23 232 % 217 % $ 1.14 $ 0.64 78 % Weighted average dividend paying shares and units outstanding 396 397 394 397 396 Assets Under Management Private Equity and Permanent Capital $ 14,172 $ 14,682 $ 13,917 (3 )% 2 % $ 14,172 $ 13,917 2 % Credit1 16,816 17,708 18,287 (5 )% (8 )% 16,816 18,287 (8 )% Liquid Markets2 5,121 4,558 4,541 12 % 13 % 5,121 4,541 13 % Logan Circle3 - 35,483 33,386 N/A N/A - 33,386 N/A Total Assets Under Management $ 36,109 $ 72,431 $ 70,131 (50 )% (49 )% $ 36,109 $ 70,131 (49 )%____________________
1 The Assets Under Management presented for Credit includes $1,371 million of AUM related to co-managed funds as of 3Q 2017. 2 The Assets Under Management presented for Liquid Markets includes $5,083 million of AUM related to the Affiliated Manager as of 3Q 2017. 3 Fortress sold the Logan Circle business in September 2017.GAAP RESULTS
Fortress recorded GAAP net income of $190 million, or $0.37 per diluted Class A share, for the third quarter of 2017, compared to GAAP net income of $58 million, or $0.07 per diluted Class A share, for the third quarter of 2016. Our diluted earnings per share includes the income tax effects to net income (loss) attributable to Class A shareholders from the assumed conversion of Fortress Operating Group units to Class A shares in periods when the effect is dilutive.
The year-over-year change in Fortress’s third quarter 2017 GAAP net income was primarily driven by a $202 million increase in other income, partially offset by a $40 million increase in income tax expense, a $23 million increase in expenses and a $7 million decrease in revenues.
The $202 million increase in other income was primarily due to the completed sale of Logan Circle, which resulted in a gain on sale of $189 million, net of selling expenses.
The $23 million increase in expenses was primarily related to higher compensation and benefits expense.
The $7 million decrease in revenues was primarily related to lower incentive income from non-affiliates, lower other revenues and lower management fees from affiliates and non-affiliates, partially offset by higher incentive income from affiliates.
SEGMENT RESULTS (NON-GAAP)
This section provides information about each of Fortress’s businesses: (i) Credit Hedge Funds and Credit PE Funds, (ii) Private Equity Funds and Permanent Capital Vehicles, (iii) Liquid Hedge Funds, and (iv) Logan Circle. Fortress uses DE as the primary metric to manage its businesses and gauge the Company’s performance, and it uses DE exclusively to report segment results. All DE figures are presented on a pre-tax basis. Consolidated segment results are non-GAAP information and are not presented as a substitute for Fortress’s GAAP results. Fortress urges you to read “Non-GAAP Information” below.
As of September 30, 2017 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle Partners10
(in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Assets Under Management4 $ 36,109 $ 6,249 $ 7,923 $ 8,452 $ 8,364 $ 5,121 $ - Dry Powder $ 7,484 $ 627 $ - $ 365 $ 6,492 N/A N/A Average Management Fee Rate5 1.2 % 1.5 % 2.0 % 1.3 % 1.0 % N/A Incentive Eligible NAV Above Incentive Income Threshold6 $ 22,123 $ 1,973 $ 4,840 $ 6,042 $ 9,268 $ - $ - Undistributed Incentive Income: Unrecognized $ 1,402 $ 254 $ 56 $ 69 $ 1,023 $ - $ - Undistributed Incentive Income: Recognized $ 98 - 34 64 - - - Undistributed Incentive Income7 $ 1,500 $ 254 $ 90 $ 133 $ 1,023 $ - $ - Three Months Ended September 30, 2017 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle Partners10
(in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Third-Party Capital Raised $ 242 $ - $ - $ 242 $ - $ - $ - Segment Revenues Management fees $ 131 $ 20 $ 31 $ 37 $ 29 $ 1 $ 13 Incentive income 140 11 58 28 42 1 - Total 271 31 89 65 71 2 13 Segment Expenses Operating expenses8 (122 ) (7 ) (34 ) (27 ) (32 ) (2 ) (15 ) Profit sharing compensation expenses (41 ) (3 ) (3 ) (13 ) (22 ) - - Total (163 ) (10 ) (37 ) (40 ) (54 ) (2 ) (15 ) Earnings From Affiliated Manager 4 - - - - 4 - Principal Performance Payments (12 ) (2 ) (6 ) (2 ) (2 ) - - Fund Management DE8 $ 100 $ 19 $ 46 $ 23 $ 15 $ 4 $ (2 ) Net Investment Income9 191 15 - 1 6 - 170 Pre-tax Distributable Earnings8,9 $ 291 $ 34 $ 46 $ 24 $ 21 $ 4 $ 168__________________________
4 The Assets Under Management presented for the Credit Hedge Funds includes $1,371 million related to co-managed funds and $743 million related to the third party originated JP Funds and Value Recovery Funds. The Assets Under Management presented for the Liquid Hedge Funds includes $5,083 million related to the Affiliated Manager. 5 The Average Management Fee Rate presented for the Credit Hedge Funds excludes the co-managed funds and third-party originated JP Funds and Value Recovery Funds (see footnote 4 above). The Average Management Fee Rate presented for the Liquid Hedge Funds excludes the Affiliated Manager. 6 The Incentive Eligible NAV Above Incentive Income Threshold presented for Credit Hedge Funds excludes co-managed funds, certain third party originated funds and sidepocket investments and for Liquid Hedge Funds, excludes the Affiliated Manager and sidepocket investments. The Incentive Eligible NAV Above Incentive Income Threshold presented for Private Equity Funds and Credit PE Funds (except for a portion of Long Dated Value Fund I, whose capital was above the incentive income threshold as of September 30, 2017), represents total fund NAV. The Incentive Eligible NAV Above Incentive Income Threshold presented for the Permanent Capital Vehicles represents the equity basis that is used to calculate incentive income. 7 Undistributed Incentive Income - Recognized represents the results of the main fund investments for the Credit Hedge Funds including the impact of realized gains and losses and unrealized losses on sidepocket investments. Undistributed Incentive Income - Unrecognized represents the results of the Private Equity Funds, Credit PE Funds and Liquid and Credit Hedge Fund sidepocket and redeeming capital account (RCA) investments which have not been recognized in Distributable Earnings and will be recognized when realized. The Undistributed Incentive Income presented for the Credit Hedge Funds excludes co-managed funds and certain third party originated funds and for Liquid Hedge Funds, excludes the Affiliated Manager. Undistributed Incentive Income for Credit PE Funds includes $5 million of net unrealized gains that would have been recorded in Distributable Earnings if Fortress had settled Japanese Yen foreign exchange derivative contracts used to economically hedge estimated future incentive income it had outstanding as of September 30, 2017. Undistributed Incentive Income for Permanent Capital Vehicles includes $56 million of incentive income that would have been recorded in Distributable Earnings if Fortress had (i) exercised all of its in-the-money options it holds in the Permanent Capital Vehicles and sold all of the resulting shares, (ii) sold all of its Permanent Capital Vehicle common shares which it received as incentive income and (iii) sold all of its Permanent Capital Vehicle common shares which it received from previously exercised Permanent Capital Vehicle options, based on their respective September 30, 2017 closing prices. 8 Includes Unallocated Expenses of $5 million incurred by Fortress related to the proposed acquisition by SoftBank. 9 Includes Unallocated Investment Income of $1 million and Unallocated Expenses of $2 million. 10 Fortress sold the Logan Circle business in September 2017.Pre-tax DE was $291 million in the third quarter of 2017, up from $90 million in the third quarter of 2016, primarily due to higher investment income and incentive income, partially offset by higher operating expenses and lower management fees.
Management fees were $131 million in the third quarter of 2017, down from $136 million in the third quarter of 2016. The decrease was primarily due to lower management fees from the Credit PE Funds, Credit Hedge Funds, Logan Circle and Private Equity Funds, partially offset by higher management fees from the Permanent Capital Vehicles.
Incentive income in the third quarter of 2017 totaled $140 million, up from $113 million in the third quarter of 2016, primarily due to higher incentive income from the Permanent Capital Vehicles and Private Equity Funds, partially offset by lower incentive income from the Credit PE Funds and Credit Hedge Funds.
Earnings from the Affiliated Manager totaled $4 million in the third quarter of 2017, up from $3 million in the third quarter of 2016.
The Company’s segment revenues and distributable earnings will fluctuate materially depending upon the performance of its funds and the realization events within its private equity businesses, as well as other factors. Accordingly, the revenues and distributable earnings in any particular period should not be expected to be indicative of future results.
ASSETS UNDER MANAGEMENT
As of September 30, 2017, AUM totaled $36.1 billion. As of quarter end, approximately 85% of AUM was in funds with long-term investment structures.
During the quarter, Fortress’s AUM decreased primarily due to (i) the sale of Logan Circle which had $37.1 billion of AUM, (ii) $2.1 billion of capital distributions to investors, (iii) $0.2 billion in distributions to investors in redeeming capital accounts, and (iv) a $0.2 billion capital reset adjustment. These decreases to AUM were partially offset by (i) $0.6 billion in market-driven valuation gains, (ii) a $0.5 billion increase in the AUM of the Affiliated Manager and co-managed funds, (iii) a $0.3 billion increase in invested capital, and (iv) $0.2 billion of new capital raised that was directly added to AUM.
As of September 30, 2017, the Credit Funds and Private Equity Funds had $6.9 billion and $0.6 billion of uncalled capital, respectively, that will become AUM if called. Uncalled capital or dry powder – capital committed to the funds but not invested and generating management fees – includes $3.0 billion that is only available for follow-on investments, management fees and other fund expenses.
BUSINESS SEGMENT RESULTS
Below is a discussion of third quarter 2017 segment results and business highlights.
Credit:
(See supplemental data on pages 17-18 for more detail on Credit results)
The Credit business, which includes our Credit PE Funds and Credit Hedge Funds, generated pre-tax DE of $45 million in the third quarter of 2017, down from $68 million in the third quarter of 2016. The year-over-year decrease in DE was primarily driven by lower incentive income, partially offset by lower profit sharing expense.
The Credit Hedge Funds generated pre-tax DE of $24 million for the quarter, down from $36 million in the third quarter of 2016, primarily due to lower incentive income. Fortress’s flagship credit hedge fund, DBSO LP, had net returns of 2.0% for the quarter and annualized inception to date net returns of 10.6% as of September 30, 2017.
The Credit PE Funds generated pre-tax DE of $21 million in the quarter, compared to $32 million in the third quarter of 2016, primarily due to lower incentive income. Over the last twelve months, the Credit PE Funds have recognized $161 million of gross incentive income, while gross unrecognized Credit PE incentive income has increased $129 million year-over-year to $1.0 billion as of September 30, 2017.
Private Equity and Permanent Capital Vehicles:
(See supplemental data on pages 15-16 for more detail on Private Equity results)
The Private Equity business recorded pre-tax DE of $80 million in the third quarter of 2017, up from $27 million in the third quarter of 2016. The year-over-year increase was primarily driven by higher incentive income and higher investment income.
The Permanent Capital Vehicles generated pre-tax DE of $46 million in the quarter, up from $14 million in the third quarter of 2016, primarily due to higher incentive income. The Private Equity Funds generated pre-tax DE of $34 million, up from $13 million in the third quarter of 2016, primarily due to higher investment income and higher incentive income.
Liquid Hedge Funds:
(See supplemental data on page 19 for more detail on Liquid Hedge Funds results)
The Liquid Hedge Funds recorded pre-tax DE of $4 million in the third quarter of 2017, up from a $5 million pre-tax DE loss in the third quarter of 2016. The year-over-year increase was due to higher earnings from the Affiliated Manager and lower operating expenses.
Logan Circle:
(See supplemental data on page 20 for more detail on Logan Circle results)
Logan Circle recorded $168 million of pre-tax DE for the third quarter of 2017, including $170 million of investment income primarily related to the completed sale of Logan Circle to MetLife in September 2017.
LIQUIDITY & CAPITAL
As of September 30, 2017, Fortress had cash and cash equivalents of $666 million and debt obligations of $105 million.
As of September 30, 2017, Fortress had approximately $0.9 billion of investments in Fortress funds and options in publicly traded permanent capital vehicles and a total of $183 million in outstanding commitments to its funds. In addition, the NAV of Fortress’s investments in its own funds exceeded its segment cost basis by $507 million at quarter end, representing net unrealized gains that have not yet been recognized for segment reporting purposes.
DIVIDEND
In connection with the proposed merger between Fortress and an affiliate of SoftBank, Fortress has contractually agreed that it will not pay any dividends with respect to periods ending after March 31, 2017 while the merger agreement remains in effect.
NON-GAAP INFORMATION
DE is a supplemental metric used by management to measure Fortress’s operating performance. DE is a measure that management uses to manage, and thus report on, Fortress’s segments, namely: Private Equity, Permanent Capital Vehicles, Credit Hedge Funds, Credit PE Funds, Liquid Hedge Funds and Logan Circle. DE differs from GAAP net income in a number of material ways. For a detailed description of the calculation of pre-tax DE and fund management DE, see Exhibit 3 to this release and note 10 to the financial statements included in the Company’s most recent quarterly report on Form 10-Q.
Fortress aggregates its segment results to report consolidated segment results, as shown in the table under “Summary Financial Results” and in the “Total” column of the table under “Consolidated Segment Results (Non-GAAP).” The consolidated segment results are non-GAAP financial information. Management believes that consolidated segment results provide a meaningful basis for comparison among present and future periods. However, consolidated segment results should not be considered a substitute for Fortress’s consolidated GAAP results. The exhibits to this release contain reconciliations of the components of Fortress’s consolidated segment results to the comparable GAAP measures, and Fortress urges you to review these exhibits. Fortress also uses weighted average dividend paying shares and units outstanding (used to calculate pre-tax DE per dividend paying share) and net cash and investments. The exhibits to this release contain reconciliations of these measures to the comparable GAAP measures, and Fortress urges you to review these exhibits.
ABOUT FORTRESS
Fortress Investment Group LLC is a leading, highly diversified global investment firm with $36.1 billion in assets under management as of September 30, 2017. Founded in 1998, Fortress manages assets on behalf of over 1,750 institutional clients and private investors worldwide across a range of credit, real estate, permanent capital and private equity investment strategies. Fortress is publicly traded on the New York Stock Exchange (NYSE:FIG). For more information regarding Fortress Investment Group LLC or to be added to its e-mail distribution list, please visit www.fortress.com.
CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS
Certain statements in this communication may constitute “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. These statements are generally identified by the use of words such as “outlook,” “believe,” “expect,” “potential,” “continue,” “may,” “will,” “should,” “could,” “would,” “seek,” “approximately,” “predict,” “intend,” “plan,” “estimate,” “anticipate,” “opportunity,” “pipeline,” “comfortable,” “assume,” “remain,” “maintain,” “sustain,” “achieve” or the negative version of those words or other comparable words. Forward-looking statements are not historical facts, but instead represent only Fortress’s beliefs as of the date of this communication regarding future events, many of which, by their nature, are inherently uncertain and outside of Fortress’s control. Numerous factors could cause actual events to differ from these forward-looking statements, and any such differences could cause our actual results to differ materially from the results expressed or implied by these forward-looking statements. Such factors include but are not limited to the following: (1) conditions to the closing of the merger, including the obtaining of required regulatory approvals, may not be satisfied; (2) the merger may involve unexpected costs, liabilities or delays; (3) the business of Fortress may suffer as a result of uncertainty surrounding the merger; (4) the outcome of any legal proceedings related to the merger; (5) Fortress may be adversely affected by other economic, business, and/or competitive factors, including the net asset value of assets in certain of Fortress’s funds; (6) the occurrence of any event, change or other circumstances that could give rise to the termination of the merger agreement; (7) risks that the merger disrupts current plans and operations and the potential difficulties in employee retention as a result of the merger; (8) other risks to consummation of the merger, including the risk that the merger will not be consummated within the expected time period or at all; and (9) the risks described from time to time in Fortress’s reports filed with the SEC under the heading “Risk Factors,” including the Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K and in other of Fortress’s filings with the SEC. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Fortress to predict or assess the impact of every factor that may cause its actual results to differ from those expressed or implied in any forward-looking statements.
Accordingly, you should not place undue reliance on any forward-looking statements contained in this communication, and you should not regard any forward-looking statement as a representation by Fortress or any other person that the future plans, estimates or expectations currently contemplated by Fortress will be achieved. Fortress can give no assurance that the expectations of any forward-looking statement will be obtained. Such forward-looking statements speak only as of the date of this communication. Fortress expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in Fortress’s expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.
Fortress Investment Group LLC
Condensed Consolidated Statements of Operations (Unaudited)
(dollars in thousands, except per share data)
Three Months Ended September 30, Nine Months Ended June 30, 2017 2016 2017 2016 Revenues Management fees: affiliates $ 117,229 $ 123,491 $ 363,108 $ 377,269 Management fees: non-affiliates 12,435 14,455 41,132 42,066 Incentive income: affiliates 59,434 17,396 145,219 71,334 Incentive income: non-affiliates 570 31,000 1,761 40,862 Expense reimbursements: affiliates 55,073 54,602 167,860 166,041 Expense reimbursements: non-affiliates 271 1,258 1,182 4,064 Other revenues 9,351 18,943 13,318 23,832 Total Revenues 254,363 261,145 733,580 725,468 Expenses Compensation and benefits 200,645 184,159 546,037 539,643 General, administrative and other 41,048 33,046 133,573 104,942 Depreciation and amortization 4,135 5,275 13,010 17,362 Interest expense 2,246 2,643 6,451 8,662 Total Expenses 248,074 225,123 699,071 670,609 Other Income (Loss) Gains (losses) 19,640 1,862 21,706 (22,077 ) Tax receivable agreement liability adjustment - - - (2,699 ) Earnings (losses) from equity method investees 22,577 27,467 29,221 (2,420 ) Gain on sale of Logan Circle 188,638 - 188,638 - Total Other Income (Loss) 230,855 29,329 239,565 (27,196 ) Income (Loss) Before Income Taxes 237,144 65,351 274,074 27,663 Income tax benefit (expense) (46,840 ) (7,008 ) (58,795 ) (11,863 ) Net Income (Loss) $ 190,304 $ 58,343 $ 215,279 $ 15,800 Allocation of Net Income (Loss) Principals' and Others' Interests in Income (Loss) of Consolidated Subsidiaries 101,484 27,181 115,200 7,609 Net Income (Loss) Attributable to Class A Shareholders 88,820 31,162 100,079 8,191 $ 190,304 $ 58,343 $ 215,279 $ 15,800Earnings (Loss) Per Class A Share
Net income (loss) per Class A share, basic $ 0.39 $ 0.14 $ 0.44 $ 0.03 Net income (loss) per Class A share, diluted $ 0.37 $ 0.07 $ 0.43 $ 0.02 Weighted average number of Class A shares outstanding, basic 219,388,077 216,913,032 220,044,051 218,160,131 Weighted average number of Class A shares outstanding, diluted 394,250,689 390,293,844 394,234,346 390,240,731Fortress Investment Group LLC
Condensed Consolidated Balance Sheets
(dollars in thousands)
September 30, 2017
(Unaudited)
December 31, 2016 Assets Cash and cash equivalents $ 665,566 $ 397,125 Due from affiliates 240,122 320,633 Investments 842,421 880,001 Investments in options 69,414 53,206 Deferred tax asset, net 408,560 424,244 Other assets 91,393 126,165 Total Assets $ 2,317,476 $ 2,201,374 Liabilities and Equity Liabilities Accrued compensation and benefits $ 304,042 $ 370,413 Due to affiliates 391,271 360,769 Deferred incentive income 398,211 330,354 Debt obligations payable 105,000 182,838 Other liabilities 125,784 69,255 Total Liabilities 1,324,308 1,313,629 Commitments and Contingencies Equity Class A shares, no par value, 1,000,000,000 shares authorized, 219,367,912 and 216,891,601 shares issued and outstanding at September 30, 2017 and December 31, 2016, respectively - - Class B shares, no par value, 750,000,000 shares authorized, 169,207,335 issued and outstanding at September 30, 2017 and December 31, 2016, respectively - - Paid-in capital 1,874,340 1,899,163 Retained earnings (accumulated deficit) (1,234,351 ) (1,333,828 ) Accumulated other comprehensive income (loss) (2,643 ) (1,094 ) Total Fortress shareholders' equity 637,346 564,241 Principals' and others' interests in equity of consolidated subsidiaries 355,822 323,504 Total Equity 993,168 887,745 $ 2,317,476 $ 2,201,374Fortress Investment Group LLC
Exhibit 1-a
Supplemental Data for the Three Months Ended September 30, 2017 and 2016
Three Months Ended September 30, 2017 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle (in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Assets Under Management AUM - July 1, 2017 $ 72,431 $ 6,850 $ 7,832 $ 8,310 $ 9,398 $ 4,558 $ 35,483 Capital raised 199 - - 199 - - - Equity raised (Permanent Capital Vehicles) - - - - - - - Increase in invested capital 332 111 - - 219 2 - Redemptions (17 ) - - (17 ) - - - RCA distributions11 (178 ) - - (178 ) - - - Return of capital distributions (2,056 ) (964 ) (36 ) 1 (1,057 ) - - Adjustment for capital reset (183 ) - - - (183 ) - - Crystallized Incentive Income (3 ) - - (3 ) - - - Change in AUM of Affiliated Manager and co-managed funds 505 - - (62 ) - 567 - Divested Businesses (37,098 ) - - - - - (37,098 ) Net Client Flows 888 - - - - - 888 Income (loss) and foreign exchange 1,289 252 127 202 (13 ) (6 ) 727 AUM - Ending Balance $ 36,109 $ 6,249 $ 7,923 $ 8,452 $ 8,364 $ 5,121 $ - Third-Party Capital Raised $ 242 $ - $ - $ 242 $ - $ - $ - Segment Revenues Management fees $ 131 $ 20 $ 31 $ 37 $ 29 $ 1 $ 13 Incentive income 140 11 58 28 42 1 - Total 271 31 89 65 71 2 13 Segment Expenses Operating expenses12 (122 ) (7 ) (34 ) (27 ) (32 ) (2 ) (15 ) Profit sharing compensation expenses (41 ) (3 ) (3 ) (13 ) (22 ) - - Total (163 ) (10 ) (37 ) (40 ) (54 ) (2 ) (15 ) Earnings From Affiliated Manager 4 - - - - 4 - Fund Management DE (before Principal Performance Payments) 112 21 52 25 17 4 (2 ) Principal Performance Payments (12 ) (2 ) (6 ) (2 ) (2 ) - - Fund Management DE 100 19 46 23 15 4 (2 ) Investment Income 192 15 - 1 6 - 170 Unallocated Investment Income 1 Unallocated Expenses (2 ) Pre-tax Distributable Earnings $ 291 $ 34 $ 46 $ 24 $ 21 $ 4 $ 168 Pre-tax Distributable Earnings per Dividend Paying Share $ 0.73 Three Months Ended September 30, 2016 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle (in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Assets Under Management AUM - July 1, 2016 $ 70,195 $ 6,640 $ 6,644 $ 8,966 $ 9,243 $ 4,622 $ 34,080 Capital raised 120 - - - 120 - - Equity raised (Permanent Capital Vehicles) 279 - 279 - - - - Increase in invested capital 335 1 - - 334 - - Redemptions (209 ) - - (1 ) - (208 ) - RCA distributions11 (141 ) - - (141 ) - - - Return of capital distributions (408 ) (115 ) (45 ) - (248 ) - - Crystallized Incentive Income (6 ) - - (6 ) - - - Change in AUM of Affiliated Manager and co-managed funds (113 ) - - (240 ) - 127 - Net Client Flows (1,453 ) - - - - - (1,453 ) Income (loss) and foreign exchange 1,532 545 (32 ) 226 34 - 759 AUM - Ending Balance $ 70,131 $ 7,071 $ 6,846 $ 8,804 $ 9,483 $ 4,541 $ 33,386 Third-Party Capital Raised $ 399 $ - $ 279 $ - $ 120 $ - $ - Segment Revenues Management fees $ 136 $ 21 $ 28 $ 39 $ 32 $ 1 $ 15 Incentive income 113 - 10 44 59 - - Total 249 21 38 83 91 1 15 Segment Expenses Operating expenses (104 ) (8 ) (17 ) (25 ) (34 ) (7 ) (13 ) Profit sharing compensation expenses (50 ) - (5 ) (16 ) (29 ) - - Total (154 ) (8 ) (22 ) (41 ) (63 ) (7 ) (13 ) Earnings From Affiliated Manager 3 - - - - 3 - Fund Management DE (before Principal Performance Payments) 98 13 16 42 28 (3 ) 2 Principal Performance Payments (10 ) - (2 ) (8 ) - - - Fund Management DE 88 13 14 34 28 (3 ) 2 Investment Income 4 - - 2 4 (2 ) - Unallocated Expenses (2 ) Pre-tax Distributable Earnings $ 90 $ 13 $ 14 $ 36 $ 32 $ (5 ) $ 2 Pre-tax Distributable Earnings per Dividend Paying Share $ 0.23_______________________
11 Represents distributions from (i) assets held by redeeming capital accounts in the Drawbridge Special Opportunities Funds, and (ii) the Value Recovery Funds. 12 Includes Unallocated Expenses of $5 million incurred by Fortress related to the proposed acquisition by SoftBank.Fortress Investment Group LLC
Exhibit 1-a
Supplemental Data for the Nine Months Ended September 30, 2017 and 2016
Nine Months Ended September 30, 2017 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle (in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Assets Under Management AUM - January 1, 2017 $ 69,627 $ 6,532 $ 6,961 $ 8,803 $ 9,306 $ 4,589 $ 33,436 Capital raised 226 - - 226 - - - Equity raised (Permanent Capital Vehicles) 835 - 835 - - - - Increase in invested capital 1,073 133 - 44 894 2 - Redemptions (160 ) - - (160 ) - - - RCA distributions13 (497 ) - - (497 ) - - - Return of capital distributions (3,040 ) (1,083 ) (150 ) (7 ) (1,630 ) (170 ) - Adjustment for capital reset (183 ) - - - (183 ) - - Crystallized Incentive Income (111 ) - - (111 ) - - - Equity buyback (5 ) - (5 ) - - - - Change in AUM of Affiliated Manager and co-managed funds 393 - - (325 ) - 718 - Divested Businesses (37,098 ) - - - - - (37,098 ) Net Client Flows 1,230 - - - - - 1,230 Income (loss) and foreign exchange 3,819 667 282 479 (23 ) (18 ) 2,432 AUM - Ending Balance $ 36,109 $ 6,249 $ 7,923 $ 8,452 $ 8,364 $ 5,121 $ - Third-Party Capital Raised $ 1,846 $ - $ 835 $ 309 $ 702 $ - $ - Segment Revenues Management fees $ 398 $ 60 $ 92 $ 112 $ 89 $ 2 $ 43 Incentive income 327 12 122 75 117 1 - Total 725 72 214 187 206 3 43 Segment Expenses Operating expenses14 (365 ) (22 ) (87 ) (82 ) (95 ) (7 ) (44 ) Profit sharing compensation expenses (98 ) (3 ) (3 ) (32 ) (60 ) - - Total (463 ) (25 ) (90 ) (114 ) (155 ) (7 ) (44 ) Earnings From Affiliated Manager 11 - - - - 11 - Fund Management DE (before Principal Performance Payments) 273 47 124 73 51 7 (1 ) Principal Performance Payments (30 ) (2 ) (16 ) (7 ) (5 ) - - Fund Management DE 243 45 108 66 46 7 (1 ) Investment Income 212 15 2 4 10 11 170 Unallocated Investment Income 2 Unallocated Expenses (6 ) Pre-tax Distributable Earnings $ 451 $ 60 $ 110 $ 70 $ 56 $ 18 $ 169 Pre-tax Distributable Earnings per Dividend Paying Share $ 1.14 Nine Months Ended September 30, 2016 Private Equity Credit FundsLiquid Hedge Funds
Logan Circle (in millions) Total FundsPermanent Capital Vehicles
Hedge Funds PE Funds Assets Under Management AUM - January 1, 2016 $ 70,501 $ 8,991 $ 6,816 $ 8,799 $ 9,308 $ 5,409 $ 31,178 Capital raised 523 - - 268 176 79 - Equity raised (Permanent Capital Vehicles) 279 - 279 - - - - Increase in invested capital 765 19 - 66 680 - - Capital acquisitions 682 - - 682 - - - Redemptions (532 ) - - (65 ) - (467 ) - RCA distributions13 (314 ) - - (314 ) - - - Return of capital distributions (1,834 ) (717 ) (105 ) (4 ) (979 ) (29 ) - Adjustment for capital reset (650 ) (650 ) - - - - - Crystallized Incentive Income (63 ) - - (63 ) - - - Equity buyback (125 ) - (125 ) - - - - Change in AUM of Affiliated Manager and co-managed funds (1,271 ) - - (1,015 ) - (256 ) - Divested Businesses (177 ) - - - - (177 ) - Net Client Flows (1,174 ) - - - - - (1,174 ) Income (loss) and foreign exchange 3,521 (572 ) (19 ) 450 298 (18 ) 3,382 AUM - Ending Balance $ 70,131 $ 7,071 $ 6,846 $ 8,804 $ 9,483 $ 4,541 $ 33,386 Third-Party Capital Raised $ 833 $ - $ 279 $ 299 $ 176 $ 79 $ - Segment Revenues Management fees $ 418 $ 73 $ 82 $ 113 $ 94 $ 13 $ 43 Incentive income 308 - 26 84 197 1 - Total 726 73 108 197 291 14 43 Segment Expenses Operating expenses (319 ) (28 ) (54 ) (80 ) (95 ) (23 ) (39 ) Profit sharing compensation expenses (139 ) - (9 ) (30 ) (99 ) (1 ) - Total (458 ) (28 ) (63 ) (110 ) (194 ) (24 ) (39 ) Earnings From Affiliated Manager 5 - - - - 5 - Fund Management DE (before Principal Performance Payments) 273 45 45 87 97 (5 ) 4 Principal Performance Payments (24 ) - (6 ) (14 ) (4 ) - - Fund Management DE 249 45 39 73 93 (5 ) 4 Investment Income 15 (1 ) 2 3 14 (4 ) 1 Unallocated Expenses (9 ) Pre-tax Distributable Earnings $ 255 $ 44 $ 41 $ 76 $ 107 $ (9 ) $ 5 Pre-tax Distributable Earnings per Dividend Paying Share $ 0.64______________________
13 Represents distributions from (i) assets held by redeeming capital accounts in the Drawbridge Special Opportunities Funds, and (ii) the Value Recovery Funds. 14 Includes Unallocated Expenses of $28 million incurred by Fortress related to the proposed acquisition by SoftBank.Fortress Investment Group LLC
Exhibit 2-a
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year
2016
Three Months EndedNine Months Ended September 30, 2017
FortressMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Private Equity Funds $ 7,179 $ 6,640 $ 7,071 $ 6,532 $ 6,532 $ 6,695 $ 6,850 $ 6,249 $ 6,249 Permanent Capital Vehicles 6,773 6,644 6,846 6,961 6,961 7,816 7,832 7,923 7,923 Credit Hedge Funds15 9,336 8,966 8,804 8,803 8,803 8,633 8,310 8,452 8,452 Credit Private Equity Funds 9,353 9,243 9,483 9,306 9,306 9,098 9,398 8,364 8,364 Liquid Hedge Funds16 5,195 4,622 4,541 4,589 4,589 4,198 4,558 5,121 5,121 Logan Circle17 32,801 34,080 33,386 33,436 33,436 33,719 35,483 - - AUM - Ending Balance $ 70,637 $ 70,195 $ 70,131 $ 69,627 $ 69,627 $ 70,159 $ 72,431 $ 36,109 $ 36,109 Third-Party Capital Raised $ 348 $ 86 $ 399 $ 437 $ 1,270 $ 1,550 $ 54 $ 242 $ 1,846 Segment Revenues Management fees $ 141 $ 141 $ 136 $ 133 $ 551 $ 133 $ 134 $ 131 $ 398 Incentive income 64 131 113 133 441 103 84 140 327 Total 205 272 249 266 992 236 218 271 725 Segment Expenses Operating expenses18 (109 ) (106 ) (104 ) (119 ) (438 ) (127 ) (116 ) (122 ) (365 ) Profit sharing compensation expenses (31 ) (58 ) (50 ) (49 ) (188 ) (40 ) (17 ) (41 ) (98 ) Total (140 ) (164 ) (154 ) (168 ) (626 ) (167 ) (133 ) (163 ) (463 ) Earnings From Affiliated Manager 1 1 3 10 15 1 6 4 11 Fund Management DE (before Principal Performance Payments) 66 109 98 108 381 70 91 112 273 Principal Performance Payments (3 ) (11 ) (10 ) (12 ) (36 ) (9 ) (9 ) (12 ) (30 ) Fund Management DE $ 63 $ 98 $ 88 $ 96 $ 345 $ 61 $ 82 $ 100 $ 243 Net Investment Income 1 3 2 11 17 13 4 191 208 Pre-tax Distributable Earnings $ 64 $ 101 $ 90 $ 107 $ 362 $ 74 $ 86 $ 291 $ 451________________________
15 The Assets Under Management presented for the Credit Hedge Funds includes $1,371 million related to co-managed funds as of 3Q 2017. 16 The Assets Under Management presented for the Liquid Hedge Funds includes $5,083 million related to the Affiliated Manager as of 3Q 2017. 17 Fortress sold the Logan Circle business in September 2017. 18 Includes Unallocated Expenses of $21 million, $2 million and $5 million incurred by Fortress related to the proposed acquisition by SoftBank in 1Q 2017, 2Q 2017 and 3Q 2017, respectively.Fortress Investment Group LLC
Exhibit 2-b
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
Private Equity FundsMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Main Funds19 $ 4,907 $ 4,479 $ 4,980 $ 4,502 $ 4,502 $ 4,676 $ 4,660 $ 4,234 $ 4,234 Coinvestment Funds20 1,552 1,463 1,412 1,374 1,374 1,378 1,617 1,464 1,464 MSR Opportunities Funds21 333 309 285 261 261 239 220 203 203 Italian NPL Opportunities Fund 231 225 228 213 213 216 163 151 151 Fortress Equity Partners 156 164 166 182 182 186 190 197 197 AUM - Ending Balance $ 7,179 $ 6,640 $ 7,071 $ 6,532 $ 6,532 $ 6,695 $ 6,850 $ 6,249 $ 6,249 Third-Party Capital Raised $ - $ - $ - $ - $ - $ - $ - $ - $ - Segment Revenues Management fees $ 26 $ 26 $ 21 $ 21 $ 94 $ 20 $ 20 $ 20 $ 60 Incentive income - - - - - - 1 11 12 Total 26 26 21 21 94 20 21 31 72 Segment Expenses Operating expenses (10 ) (10 ) (8 ) (8 ) (36 ) (8 ) (7 ) (7 ) (22 ) Profit sharing compensation expenses - - - - - - - (3 ) (3 ) Total (10 ) (10 ) (8 ) (8 ) (36 ) (8 ) (7 ) (10 ) (25 ) Fund Management DE (before Principal Performance Payments) 16 16 13 13 58 12 14 21 47 Principal Performance Payments - - - - - - - (2 ) (2 ) Fund Management DE $ 16 $ 16 $ 13 $ 13 $ 58 $ 12 $ 14 $ 19 $ 45 Net Investment Income (2 ) 1 - 2 1 - - 15 15 Pre-tax Distributable Earnings $ 14 $ 17 $ 13 $ 15 $ 59 $ 12 $ 14 $ 34 $ 60____________________
19 Combined AUM for Fund IV and Fund V. 20 Combined AUM for Fund IV Coinvestment, Fund V Coinvestment, FHIF and FECI. 21 Combined AUM for MSR Opportunities Fund I A, MSR Opportunities Fund I B, MSR Opportunities Fund II A, MSR Opportunities Fund II B and MSR Opportunities Fund MA I.Fortress Investment Group LLC
Exhibit 2-c
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year
2016
Three Months EndedNine Months Ended September 30, 2017
Permanent Capital VehiclesMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Drive Shack Inc. $ 680 $ 680 $ 680 $ 680 $ 680 $ 680 $ 681 $ 681 $ 681 New Residential Investment Corp. 2,689 2,689 2,948 2,948 2,948 3,782 3,782 3,782 3,782 Eurocastle Investment Limited 608 510 486 488 488 587 627 745 745 New Media Investment Group Inc. 637 637 637 772 772 712 707 707 707 New Senior Investment Group Inc. 1,024 1,024 1,024 1,024 1,024 1,020 1,020 1,020 1,020 Fortress Transportation and Infrastructure Investors LLC 1,135 1,104 1,071 1,049 1,049 1,035 1,015 988 988 AUM - Ending Balance $ 6,773 $ 6,644 $ 6,846 $ 6,961 $ 6,961 $ 7,816 $ 7,832 $ 7,923 $ 7,923 Third-Party Capital Raised $ - $ - $ 279 $ 135 $ 414 $ 835 $ - $ - $ 835 Segment Revenues Management fees $ 27 $ 27 $ 28 $ 28 $ 110 $ 31 $ 30 $ 31 $ 92 Incentive income 2 14 10 41 67 16 48 58 122 Total 29 41 38 69 177 47 78 89 214 Segment Expenses Operating expenses (19 ) (18 ) (17 ) (26 ) (80 ) (24 ) (29 ) (34 ) (87 ) Profit sharing compensation expenses (1 ) (3 ) (5 ) (6 ) (15 ) - - (3 ) (3 ) Total (20 ) (21 ) (22 ) (32 ) (95 ) (24 ) (29 ) (37 ) (90 ) Fund Management DE (before Principal Performance Payments) 9 20 16 37 82 23 49 52 124 Principal Performance Payments (1 ) (3 ) (2 ) (6 ) (12 ) (4 ) (6 ) (6 ) (16 ) Fund Management DE $ 8 $ 17 $ 14 $ 31 $ 70 $ 19 $ 43 $ 46 $ 108 Net Investment Income 1 1 - 1 3 1 1 - 2 Pre-tax Distributable Earnings $ 9 $ 18 $ 14 $ 32 $ 73 $ 20 $ 44 $ 46 $ 110Fortress Investment Group LLC
Exhibit 2-d
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
Credit Hedge FundsMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Drawbridge Special Opportunities Funds22 $ 5,816 $ 5,928 $ 6,019 $ 6,153 $ 6,153 $ 6,054 $ 6,010 $ 6,047 $ 6,047 Third Party Originated Funds23 815 837 821 840 840 831 706 743 743 Japan Income Fund 116 123 125 114 114 143 161 163 163 Asset-Based Income Fund - - - - - - - 128 128 Co-Managed Funds24 2,589 2,078 1,838 1,696 1,696 1,605 1,433 1,371 1,371 AUM - Ending Balance $ 9,336 $ 8,966 $ 8,804 $ 8,803 $ 8,803 $ 8,633 $ 8,310 $ 8,452 $ 8,452 Third-Party Capital Raised $ 272 $ 27 $ - $ - $ 299 $ 13 $ 54 $ 242 $ 309 Segment Revenues Management fees $ 37 $ 37 $ 39 $ 37 $ 150 $ 37 $ 38 $ 37 $ 112 Incentive income 7 33 44 47 131 32 15 28 75 Total 44 70 83 84 281 69 53 65 187 Segment Expenses Operating expenses (26 ) (29 ) (25 ) (27 ) (107 ) (27 ) (28 ) (27 ) (82 ) Profit sharing compensation expenses (3 ) (11 ) (16 ) (20 ) (50 ) (13 ) (6 ) (13 ) (32 ) Total (29 ) (40 ) (41 ) (47 ) (157 ) (40 ) (34 ) (40 ) (114 ) Fund Management DE (before Principal Performance Payments) 15 30 42 37 124 29 19 25 73 Principal Performance Payments (1 ) (5 ) (8 ) (5 ) (19 ) (2 ) (3 ) (2 ) (7 ) Fund Management DE $ 14 $ 25 $ 34 $ 32 $ 105 $ 27 $ 16 $ 23 $ 66 Net Investment Income - 1 2 3 6 1 2 1 4 Pre-tax Distributable Earnings $ 14 $ 26 $ 36 $ 35 $ 111 $ 28 $ 18 $ 24 $ 70Net Returns25
Drawbridge Special Opportunities Fund LP 0.6 % 2.8 % 2.7 % 3.3 % 9.7 % 2.4 % 1.2 % 2.0 % 5.6 % Drawbridge Special Opportunities Fund Ltd (1.3 %) 1.5 % 3.1 % 2.6 % 5.9 % 2.2 % 1.0 % 2.6 % 5.8 %_________________________
22 Combined AUM for Drawbridge Special Opportunities Fund LP, Drawbridge Special Opportunities Fund Ltd, Drawbridge Special Opportunities Fund managed accounts, Worden Fund LP and Worden Fund II LP. Worden Fund II LP was closed in 1Q 2016. 23 Combined AUM for the third party originated JP Funds and third party originated Value Recovery Funds. 24 Combined AUM for the Mount Kellett investment funds and related accounts. 25 The performance data contained herein reflects returns for a "new issue eligible," single investor class as of the close of business on the last day of the relevant period. Net returns reflect performance data after taking into account management fees borne by the Fund and incentive allocations. The returns for the Drawbridge Special Opportunities Funds reflect the performance of each fund excluding special investments and the performance of the redeeming capital accounts which relate to December 31, 2009, December 31, 2010, December 31, 2011, December 31, 2012, December 31, 2013, December 31, 2014, December 31, 2015 and December 31, 2016 redemptions.Fortress Investment Group LLC
Exhibit 2-e
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
Credit Private Equity FundsMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Long Dated Value Funds26 $ 292 $ 203 $ 186 $ 186 $ 186 $ 186 $ 186 $ 186 $ 186 Real Assets Funds 50 33 33 33 33 33 - - - Fortress Credit Opportunities Funds27 6,894 6,765 7,031 7,112 7,112 6,773 7,145 6,133 6,133 Japan Opportunity Funds28 2,117 2,242 2,234 1,975 1,975 2,107 2,067 2,045 2,045 AUM - Ending Balance $ 9,353 $ 9,243 $ 9,483 $ 9,306 $ 9,306 $ 9,098 $ 9,398 $ 8,364 $ 8,364 Third-Party Capital Raised $ 13 $ 43 $ 120 $ 302 $ 478 $ 702 $ - $ - $ 702 Segment Revenues Management fees $ 31 $ 31 $ 32 $ 32 $ 126 $ 30 $ 30 $ 29 $ 89 Incentive income 53 85 59 44 241 55 20 42 117 Total 84 116 91 76 367 85 50 71 206 Segment Expenses Operating expenses (32 ) (29 ) (34 ) (38 ) (133 ) (31 ) (32 ) (32 ) (95 ) Profit sharing compensation expenses (26 ) (44 ) (29 ) (23 ) (122 ) (27 ) (11 ) (22 ) (60 )Total
(58 ) (73 ) (63 ) (61 ) (255 ) (58 ) (43 ) (54 ) (155 ) Fund Management DE (before Principal Performance Payments) 26 43 28 15 112 27 7 17 51 Principal Performance Payments (1 ) (3 ) - (1 ) (5 ) (3 ) - (2 ) (5 ) Fund Management DE $ 25 $ 40 $ 28 $ 14 $ 107 $ 24 $ 7 $ 15 $ 46 Net Investment Income 3 7 4 6 20 3 1 6 10 Pre-tax Distributable Earnings $ 28 $ 47 $ 32 $ 20 $ 127 $ 27 $ 8 $ 21 $ 56______________________
26 Combined AUM for Long Dated Value Fund I, Long Dated Value Fund II, Long Dated Value Fund III and LDVF Patent Fund. 27 Combined AUM for Credit Opportunities Fund, Credit Opportunities Fund II, Credit Opportunities Fund III, Credit Opportunities Fund IV, FCO Managed Accounts, Global Opportunities Funds, Life Settlements Fund, Life Settlements Fund MA, SIP managed account, Real Estate Opportunities Fund, Real Estate Opportunities Fund II, Real Estate Opportunities REOC Fund and Secured Lending Fund I. 28 Combined AUM for Japan Opportunity Fund, Japan Opportunity Fund II (Dollar), Japan Opportunity Fund II (Yen), Japan Opportunity Fund III (Dollar), Japan Opportunity Fund III (Yen), FJOF3 Residential Coinvestment Fund (Dollar) and FJOF3 Residential Coinvestment Fund (Yen).Fortress Investment Group LLC
Exhibit 2-f
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
Liquid Hedge FundsMarch 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management Drawbridge Global Macro Funds29 116 112 101 39 39 39 35 38 38 Fortress Convex Asia Funds30 176 - - - - - - - - Fortress Centaurus Global Funds31 206 182 - - - - - - - Fortress Partners Funds32 228 215 199 186 186 9 7 - - Affiliated Manager33 4,469 4,113 4,240 4,365 4,365 4,150 4,516 5,083 5,083 AUM - Ending Balance $ 5,195 $ 4,622 $ 4,541 $ 4,589 $ 4,589 $ 4,198 $ 4,558 $ 5,121 $ 5,121 Third-Party Capital Raised $ 63 $ 16 $ - $ - $ 79 $ - $ - $ - $ - Segment Revenues Management fees $ 6 $ 6 $ 1 $ 1 $ 14 $ - $ 1 $ 1 $ 2 Incentive income 2 (1 ) - - 1 - - 1 1 Total 8 5 1 1 15 - 1 2 3 Segment Expenses Operating expenses (9 ) (7 ) (7 ) (5 ) (28 ) (2 ) (3 ) (2 ) (7 ) Profit sharing compensation expenses (1 ) - - - (1 ) - - - - Total (10 ) (7 ) (7 ) (5 ) (29 ) (2 ) (3 ) (2 ) (7 ) Earnings From Affiliated Manager 1 1 3 10 15 1 6 4 11 Fund Management DE (before Principal Performance Payments) (1 ) (1 ) (3 ) 6 1 (1 ) 4 4 7 Principal Performance Payments - - - - - - - - - Fund Management DE $ (1 ) $ (1 ) $ (3 ) $ 6 $ 1 $ (1 ) $ 4 $ 4 $ 7 Net Investment Income 3 (5 ) (2 ) 1 (3 ) 9 2 - 11 Pre-tax Distributable Earnings $ 2 $ (6 ) $ (5 ) $ 7 $ (2 ) $ 8 $ 6 $ 4 $ 18Net Returns34
Fortress Convex Asia Fund Ltd 1.5 % (1.2 %) N/A N/A 0.3 % N/A N/A N/A N/A Fortress Centaurus Global Fund Ltd 1.9 % (6.1 %) (3.3 %) N/A (7.5 %) N/A N/A N/A N/A________________________
29 Combined AUM for Drawbridge Global Macro Fund LP and Drawbridge Global Macro Intermediate Fund LP. 30 Combined AUM for Fortress Convex Asia Fund LP, Fortress Convex Asia Fund Ltd, Fortress Convex Asia Fund PF LP and Fortress Convex Asia Fund PF Ltd. In 2Q 2016, Fortress transferred its interests as general partner and investment manager of the Fortress Convex Asia Funds to a third party. 31 Combined AUM for Fortress Centaurus Global Fund LP and Fortress Centaurus Global Fund Ltd. In 3Q 2016, Fortress closed the Fortress Centaurus Global Funds. 32 Combined AUM for Fortress Partners Fund LP and Fortress Partners Offshore Fund LP. 33 In 1Q 2015, the Fortress Asia Macro Funds and related managed accounts transitioned to Graticule Asset Management and became an Affiliated Manager. 34 The performance data contained herein reflects returns for a "new issue eligible," single investor class as of the close of business on the last day of the relevant period. Net returns reflect performance data after taking into account management fees borne by the Fund and incentive allocations.Fortress Investment Group LLC
Exhibit 2-g
Assets Under Management and Fund Management DE
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
Logan Circle35March 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
Assets Under Management AUM - Ending Balance $ 32,801 $ 34,080 $ 33,386 $ 33,436 $ 33,436 $ 33,719 $ 35,483 $ - $ - Net Client Flows $ 261 $ 18 $ (1,453 ) $ 1,049 $ (125 ) $ (362 ) $ 704 $ 888 $ 1,230 Segment Revenues Management fees $ 14 $ 14 $ 15 $ 14 $ 57 $ 15 $ 15 $ 13 $ 43 Incentive income - - - 1 1 - - - - Total 14 14 15 15 58 15 15 13 43 Segment Expenses Operating expenses (13 ) (13 ) (13 ) (15 ) (54 ) (14 ) (15 ) (15 ) (44 ) Profit sharing compensation expenses - - - - - - - - - Total (13 ) (13 ) (13 ) (15 ) (54 ) (14 ) (15 ) (15 ) (44 ) Fund Management DE $ 1 $ 1 $ 2 $ - $ 4 $ 1 $ - $ (2 ) $ (1 ) Net Investment Income - 1 - (1 ) - - - 170 170 Pre-tax Distributable Earnings $ 1 $ 2 $ 2 $ (1 ) $ 4 $ 1 $ - $ 168 $ 169___________________________
35 Fortress sold the Logan Circle business in September 2017.Fortress Investment Group LLC
Exhibit 3
Reconciliation of GAAP Net Income (Loss) to Pre-tax Distributable Earnings and Fund Management DE,
Reconciliation of GAAP Revenues to Segment Revenues and Reconciliation of GAAP Expenses to Segment Expenses
(dollars in millions)
Three Months EndedFull Year 2016
Three Months EndedNine Months Ended September 30, 2017
March 31,
2016
June 30,
2016
September 30,
2016
December 31,
2016
March 31,
2017
June 30,
2017
September 30,
2017
GAAP Net Income (Loss) $ (16 ) $ (27 ) $ 58 $ 165 $ 181 $ (7 ) $ 32 $ 190 $ 215 Principals' and Others' Interests in (Income) Loss of Consolidated Subsidiaries 7 13 (28 ) (79 ) (87 ) 4 (17 ) (101 ) (115 ) Redeemable non-controlling interests in Income (Loss) - - - - - - - - - GAAP Net Income (Loss) Attributable to Class A Shareholders $ (9 ) $ (14 ) $ 31 $ 86 $ 94 $ (3 ) $ 15 $ 89 $ 100 Private Equity incentive income 23 73 8 (38 ) 66 41 12 12 65 Hedge Fund, PCV and Logan Circle incentive income 8 26 35 (69 ) - 31 16 51 98 Incentive income received related to exercise of options - - 4 - 4 - - 10 10 Distributions of earnings from equity method investees 3 8 4 11 26 13 3 19 36 Losses (earnings) from equity method investees 24 8 (24 ) 30 38 22 (20 ) (16 ) (14 ) Losses (gains) on options 2 (12 ) (4 ) (9 ) (23 ) (27 ) 23 (15 ) (19 ) Losses (gains) on other Investments 15 19 1 (37 ) (2 ) 6 (3 ) (4 ) (1 ) Impairment of investments (2 ) (1 ) - (1 ) (4 ) - - - - Adjust income from the receipt of options - - (2 ) (3 ) (5 ) (8 ) - - (8 ) Amortization of intangible assets and impairment of goodwill 1 - 1 1 3 1 - 1 2 Employee, Principal and director compensation 3 2 2 37 44 3 10 15 28 Adjust non-controlling interests related to Fortress Operating Group units (8 ) (12 ) 27 79 86 (4 ) 17 102 115 Tax receivable agreement liability reduction 3 - - 4 7 - - - - Adjust income taxes and other tax related items 1 4 7 16 28 (1 ) 13 47 59 Adjust gain on sale of Logan Circle - - - - - - - (20 ) (20 ) Pre-tax Distributable Earnings $ 64 $ 101 $ 90 $ 107 $ 362 $ 74 $ 86 $ 291 $ 451 Investment Loss (income) (4 ) (6 ) (4 ) (13 ) (27 ) (15 ) (6 ) (193 ) (214 ) Interest Expense 3 3 2 2 10 2 2 2 6 Fund Management DE $ 63 $ 98 $ 88 $ 96 $ 345 $ 61 $ 82 $ 100 $ 243 GAAP Revenues $ 232 $ 232 $ 261 $ 438 $ 1,164 $ 232 $ 247 $ 254 $ 734 Adjust management fees 1 - - - 1 1 - 1 2 Adjust incentive income 31 100 65 (107 ) 89 72 28 79 179 Adjust income from the receipt of options - - (2 ) (3 ) (5 ) (8 ) - - (8 ) Other revenues (59 ) (60 ) (75 ) (62 ) (257 ) (61 ) (57 ) (63 ) (182 ) Segment Revenues $ 205 $ 272 $ 249 $ 266 $ 992 $ 236 $ 218 $ 271 $ 725 GAAP Expenses $ 207 $ 238 $ 226 $ 280 $ 951 $ 241 $ 210 $ 248 $ 699 Adjust interest expense (3 ) (3 ) (2 ) (2 ) (10 ) (2 ) (2 ) (2 ) (6 ) Adjust employee, Principal and director compensation (2 ) (1 ) (1 ) (35 ) (39 ) (2 ) (6 ) (8 ) (16 ) Adjust amortization of intangible assets and impairment of goodwill (1 ) - (1 ) (1 ) (3 ) (1 ) - (1 ) (2 ) Adjust expense reimbursements from affiliates and non-affiliates (57 ) (58 ) (58 ) (60 ) (233 ) (58 ) (57 ) (56 ) (171 ) Adjust Principal Performance Payments (4 ) (12 ) (10 ) (14 ) (40 ) (11 ) (12 ) (18 ) (41 ) Segment Expenses $ 140 $ 164 $ 154 $ 168 $ 626 $ 167 $ 133 $ 163 $ 463‘‘Distributable earnings’’ is Fortress’s supplemental measure of operating performance used by management in analyzing segment and overall results. As compared to generally accepted accounting principles (‘‘GAAP’’) net income, distributable earnings excludes the effects of unrealized gains (or losses) on illiquid investments, reflects contingent revenue which has been received as income to the extent it is not expected to be reversed, and disregards expenses which do not require an outlay of assets, whether currently or on an accrued basis. Distributable earnings is reflected on an unconsolidated and pre-tax basis, and, therefore, the interests in consolidated subsidiaries related to Fortress Operating Group units (held by the principals) and income tax expense are added back in its calculation. Distributable earnings is not a measure of cash generated by operations which is available for distribution nor should it be considered in isolation or as an alternative to cash flow or net income in accordance with GAAP and it is not necessarily indicative of liquidity or cash available to fund the Company’s operations. For a complete discussion of distributable earnings and its reconciliation to GAAP, as well as an explanation of the calculation of distributable earnings impairment, see note 10 to the financial statements included in the Company’s Quarterly Report on Form 10-Q for the quarter ended September 30, 2017.
Fortress’s management uses distributable earnings:
Growing distributable earnings is a key component to the Company’s business strategy and distributable earnings is the supplemental measure used by management to evaluate the economic profitability of each of the Company’s businesses and total operations. Therefore, Fortress believes that it provides useful information to investors in evaluating its operating performance. Fortress’s definition of distributable earnings is not based on any definition contained in its amended and restated operating agreement.
“Fund management DE” is equal to pre-tax distributable earnings excluding our direct investment-related results. Fund management DE is comprised of “Pre-tax Distributable Earnings” excluding “Investment Loss (Income)” and “Interest Expense.” Fund management DE and its components are used by management to analyze and measure the performance of our investment management business on a stand-alone basis. Fortress defines segment operating margin to be equal to fund management DE divided by segment revenues. The Company believes that it is useful to provide investors with the opportunity to review our investment management business using the same metrics. Fund management DE and its components are subject to the same limitations as pre-tax distributable earnings, as described above.
Fortress Investment Group LLC
Exhibit 4
Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average Dividend Paying Shares and Units Outstanding (Used for DEPS)
Three Months Ended September 30, Nine Months Ended June 30, 2017 2016 2017 2016Weighted Average Class A Shares Outstanding (Used for Basic EPS)
219,388,077 216,913,032 220,044,051 218,160,131 Weighted average fully vested restricted Class A share units with dividend equivalent rights (20,165) (303,762) (1,471,162) (755,599) Weighted average restricted Class A shares (934,192) (886,867) (933,845) (822,628)Weighted Average Class A Shares Outstanding
218,433,720 215,722,403 217,639,044 216,581,904 Weighted average restricted Class A shares36 934,192 886,867 933,845 822,628 Weighted average fully vested restricted Class A share units which are entitled to dividend equivalent payments 20,165 303,762 1,471,162 755,599 Weighted average unvested restricted Class A share units which are entitled to dividend equivalent payments 7,461,953 8,063,715 7,396,854 7,982,073 Weighted average Fortress Operating Group units 169,207,335 169,437,692 169,207,335 169,488,696Weighted Average Class A Shares Outstanding (Used for DEPS)
396,057,365 394,414,439 396,648,240 395,630,900 Weighted average vested and unvested restricted Class A share units which are not entitled to dividend equivalent payments 8,458,814 9,197,150 8,321,531 9,099,458Weighted Average Fully Diluted Shares and Units Outstanding (Used for Diluted DEPS)
404,516,179 403,611,589 404,969,771 404,730,358“Dividend paying shares and units” represents the number of shares and units outstanding at the end of the period which were entitled to receive dividends or related distributions. It excludes certain potentially dilutive equity instruments, primarily non-dividend paying restricted Class A share units, and, therefore, is limited in its usefulness in computing per share amounts. Accordingly, dividend paying shares and units should be considered only as a supplement and not an alternative to GAAP basic and diluted shares outstanding. The Company’s calculation of dividend paying shares and units may be different from the calculation used by other companies and, therefore, comparability may be limited.
____________________
36 Includes both fully vested and unvested restricted Class A shares.Fortress Investment Group LLC
Exhibit 5
Reconciliation of GAAP Book Value Per Share to Net Cash and Investments Per Share
(dollars and shares in thousands)
As of September 30, 2017 As of December 31, 2016GAAP
Book Value
Net Cash and Investments
GAAP
Book Value
Net Cash and Investments
Cash and Cash equivalents $ 665,566 $ 665,566 $ 397,125 $ 397,125 Investments 842,421 842,421 880,001 880,001 Investments in options37 69,414 - 53,206 - Due from Affiliates 240,122 - 320,633 - Deferred Tax Asset, net 408,560 - 424,244 - Other Assets 91,393 - 126,165 - Total Assets 2,317,476 1,507,987 2,201,374 1,277,126 Debt Obligations Payable $ 105,000 $ 105,000 $ 182,838 $ 182,838 Accrued Compensation and Benefits 304,042 - 370,413 - Due to Affiliates 391,271 - 360,769 - Deferred Incentive Income 398,211 - 330,354 - Other Liabilities 125,784 - 69,255 - Total Liabilities 1,324,308 105,000 1,313,629 182,838 Net $ 993,168 $ 1,402,987 $ 887,745 $ 1,094,288Shares Outstanding
Dividend Paying Shares and Units Outstanding
Shares Outstanding
Dividend Paying Shares and Units Outstanding
Class A Shares 218,434 218,434 216,005 216,005 Restricted Class A Shares 934 934 887 887 Fortress Operating Group Units 169,207 169,207 169,207 169,207 Fully Vested Class A Shares - Dividend Paying - 71 - 468 Unvested Class A Shares - Dividend Paying - 7,462 - 8,064 Shares Outstanding 388,575 396,108 386,099 394,631 Per Share $ 2.56 $ 3.54 $ 2.30 $ 2.77Net cash and investments represents cash and cash equivalents plus investments less debt outstanding. The Company believes that net cash and investments is a useful supplemental measure because it provides investors with information regarding the Company’s net investment assets. Net cash and investments excludes certain assets (investments in options, due from affiliates, deferred tax asset, other assets) and liabilities (due to affiliates, accrued compensation and benefits, deferred incentive income and other liabilities) and its utility as a measure of financial position is limited. Accordingly, net cash and investments should be considered only as a supplement and not an alternative to GAAP book value as a measure of the Company’s financial position. The Company’s calculation of net cash and investments may be different from the calculation used by other companies and, therefore, comparability may be limited.
___________________________
37 The intrinsic value of options in equity method investees totaled $48 million at quarter end and is included in our undistributed, unrecognized incentive income. This value represents incentive income that would have been recorded in Distributable Earnings if Fortress had exercised all of its in-the-money options it holds in the Permanent Capital Vehicles and sold all of the resulting shares at their September 30, 2017 closing price and differs from the fair value derived from option pricing models included in the table above.
View source version on businesswire.com: http://www.businesswire.com/news/home/20171109005749/en/
INVESTOR & MEDIA RELATIONS CONTACTFortress Investment GroupGordon E. Runté, +1-212-798-6082grunte@fortress.com
1 Year Simplify Exchang Chart |
1 Month Simplify Exchang Chart |
It looks like you are not logged in. Click the button below to log in and keep track of your recent history.
Support: +44 (0) 203 8794 460 | support@advfn.com
By accessing the services available at ADVFN you are agreeing to be bound by ADVFN's Terms & Conditions
Hot Features
Premium
