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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Oaktree Capital Group LLC | NYSE:OAK | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 51.52 | 0 | 01:00:00 |
FORM
|
10-K
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☒
|
ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.
|
|
|
|
Oaktree Capital Group, LLC
|
||
(Exact name of registrant as specified in its charter)
|
Delaware
|
26-0174894
|
(State or other jurisdiction of
incorporation or organization)
|
(I.R.S. Employer
Identification Number)
|
Title of each class
|
Trading Symbol(s)
|
Name of each exchange on which registered
|
6.625% Series A preferred units
|
OAK-A
|
New York Stock Exchange
|
6.550% Series B preferred units
|
OAK-B
|
New York Stock Exchange
|
Large Accelerated Filer
|
☒
|
|
Accelerated Filer
|
☐
|
Non-accelerated Filer
|
☐
|
|
Smaller Reporting Company
|
☐
|
|
|
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Emerging Growth Company
|
☐
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Page
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PART I.
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PART II.
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|
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PART III.
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|
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PART IV.
|
|
|
|
•
|
“incentive-creating assets under management,” or “incentive-creating AUM,” refers to the AUM that may eventually produce incentive income, as more fully described in “Management’s Discussion and Analysis of Financial Condition and Results of Operations—Non-GAAP Measures—Assets Under Management—Incentive-creating Assets Under Management.
|
•
|
Focus on Risk-Adjusted Returns. Oaktree’s primary goal is not simply to achieve superior investment performance, but to do so with less-than-commensurate risk. Oaktree believes that the best long-term records are built more through the avoidance of losses in bad times than the achievement of superior relative returns in good times. Thus, rather than merely searching for prospective profits, Oaktree places the highest priority on preventing losses. It is Oaktree’s overriding belief that, especially in the opportunistic markets in which it works, “if we avoid the losers, the winners will take care of themselves.”
|
•
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Emphasis on Consistency. Oaktree believes that a superior record is best built on a high batting average, rather than a mix of brilliant successes and dismal failures. Oscillating between top-quartile results in good years and bottom-quartile results in bad years is not acceptable.
|
•
|
The Importance of Market Inefficiency. Oaktree feels skill and hard work can lead to a “knowledge advantage,” and thus to potentially superior investment results, but not in the most efficient markets where larger numbers of participants have roughly equal access to information. Therefore, Oaktree only invests
|
•
|
Focus on Fundamental Analysis. Oaktree believes consistently excellent performance can only be achieved through superior knowledge of companies and their securities, not from macro-forecasting. Therefore, Oaktree employs a bottom-up approach to investing, based on proprietary, company-specific research. Oaktree’s investment professionals have developed a deep and thorough understanding of a wide number of companies and industries, providing Oaktree with a significant institutional knowledge base. Oaktree uses overall portfolio structuring as a defensive tool to help it avoid dangerous concentration, rather than as an aggressive weapon expected to enable it to hold more of the things that do best.
|
•
|
Disavowal of Market Timing. Oaktree does not believe in the predictive ability required to correctly time markets. However, concern about the market climate may cause Oaktree to tilt toward more defensive investments, increase selectivity or act more deliberately. In our open-end and evergreen funds, Oaktree keeps portfolios fully invested whenever attractively priced assets can be bought.
|
•
|
Specialization. Oaktree offers a broad array of specialized investment strategies. It believes this offers the surest path to the results Oaktree, and its clients, seek. Clients interested in a single investment strategy can limit themselves to the risk exposure of that particular strategy, while clients interested in more than one investment strategy can combine investments in Oaktree funds to achieve their desired mix. Oaktree also provides clients both commingled and customized solutions with one-stop access to the breadth of its credit platform through its Multi-Strategy Credit strategy, which invests in a number of Oaktree liquid and illiquid credit strategies. Oaktree’s focus on specific strategies has allowed it to build investment teams with extensive experience and expertise. At the same time, Oaktree teams access and leverage each other’s expertise, affording Oaktree both the benefits of specialization and the strengths of a larger organization.
|
(1)
|
Holds 100% of the Class B units, which represents 86.34% of the total combined voting power of our outstanding Class A and Class B units. The Class B units have no economic interest in us. The general partner of Oaktree Capital Group Holdings, L.P. is Oaktree Capital Group Holdings GP, LLC, which is controlled by our senior executives.
|
(2)
|
Oaktree Capital Group, LLC is the public registrant and the issuer of the Series A and Series B preferred units listed on the NYSE. It also holds, directly or indirectly, the preferred mirror units issued by Oaktree Capital I, L.P.
|
(3)
|
The percent economic interest in Oaktree Operating Group represents the aggregate number of Oaktree Operating Group units held, directly or indirectly, as a percentage of the total number of Oaktree Operating Group units outstanding. As of December 31, 2019, there were 159,891,277 Oaktree Operating Group Units outstanding.
|
(4)
|
One additional entity, not reflected in this diagram, owns less than 1% interest in OCM Holdings I, LLC.
|
•
|
from time to time, Oaktree has suspended marketing certain open-end funds or other funds sub-advised by us or our affiliates, sometimes for long periods, and have declined to participate in searches aggregating billions of dollars;
|
•
|
from time to time, Oaktree has returned capital from certain closed-end funds prior to the end of such funds’ respective investment periods or declined to call all of the capital committed to certain closed-end funds during those funds’ respective investment periods;
|
•
|
Oaktree intentionally sized certain closed-ended funds to be smaller than their predecessors even though additional capital could have been raised; and
|
•
|
since Oaktree’s founding it has turned away substantial amounts of capital offered to Oaktree for management.
|
•
|
future growth that does not follow our historical trends;
|
•
|
changes in the economic environment, competitive landscape and financial markets; and
|
•
|
new and additional costs and expenses attributable to our operations, including our operations as a public reporting company, and as a company within an extensively regulated industry.
|
•
|
a number of our competitors have more personnel and greater financial, technical, marketing and other resources than we do, and, in the case of some competitors, longer operating histories, more established relationships and/or greater experience;
|
•
|
some of our funds may not perform as well as competitors’ funds or other available investment products;
|
•
|
many of our competitors have raised, or are expected to raise, significant amounts of capital, and many of them have investment objectives similar to ours, which may create additional competition for investment opportunities and reduce the size and duration of pricing inefficiencies that we seek to exploit;
|
•
|
some of our competitors (including strategic competitors) may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our funds, particularly our funds that directly use leverage or rely on debt financing of their portfolio companies to generate superior investment returns;
|
•
|
some of our competitors have higher risk tolerances, different risk assessments or lower return thresholds, which could allow them to consider a wider variety of investments and to bid more aggressively than us for investments;
|
•
|
our competitors may be able to achieve synergistic cost savings in respect of an investment that we cannot, which may provide them with a competitive advantage in bidding for an investment;
|
•
|
there are relatively few barriers to entry impeding new investment funds, and the successful efforts of new entrants into our various lines of business, including major commercial and investment banks and other financial institutions, have resulted in increased competition;
|
•
|
some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do;
|
•
|
some investors may prefer to pursue investments directly instead of investing through one of our funds; and
|
•
|
other industry participants will from time to time seek to recruit our investment professionals and other employees away from us.
|
•
|
we may create new funds in the future that reflect a different asset mix and different investment strategies, as well as a varied geographic and industry exposure as compared to our present funds, and any such new funds could have different returns from our existing or previous funds;
|
•
|
our funds’ returns have previously benefited from investment opportunities and general market conditions that may not repeat themselves, and there can be no assurance that our current or future funds will be able to avail themselves of profitable investment opportunities;
|
•
|
many of our funds’ historical investments were made over a long period of time and over the course of various market and macroeconomic cycles, and the circumstances under which our current or future funds may make future investments may differ significantly from those conditions prevailing in the past;
|
•
|
newly established funds may generate lower returns during the period in which they initially deploy their capital;
|
•
|
our funds may not be able to successfully identify, make and realize upon any particular investment or generate returns for their investors; and
|
•
|
any material increase or decrease in the size of our funds could result in materially different rates of returns.
|
•
|
our funds’ abilities to exchange local currencies for U.S. dollars and other currency exchange matters, including fluctuations in currency exchange rates and costs associated with conversion of investment principal and income from one currency into another;
|
•
|
controls on, and changes in controls on, foreign investment and limitations on repatriation of invested capital;
|
•
|
less developed or less efficient financial markets than exist in the United States, which may lead to price volatility and relative illiquidity;
|
•
|
the absence of uniform accounting, auditing and financial reporting standards, practices and disclosure requirements and less government supervision and regulation;
|
•
|
differences in legal and regulatory environments, particularly with respect to bankruptcy and reorganization, less developed corporate laws regarding fiduciary duties and the protection of investors and less reliable judicial systems to enforce contracts and applicable law;
|
•
|
less publicly available information in respect of companies in non-U.S. markets;
|
•
|
heightened exposure to corruption risk;
|
•
|
certain economic and political risks, including potential exchange control regulations and restrictions on our non-U.S. investments and repatriation of capital, potential political, economic or social instability, the possibility of nationalization or expropriation or confiscatory taxation and adverse economic and political developments; and
|
•
|
the possible imposition of non-U.S. taxes or withholding on income and gains recognized with respect to the securities.
|
•
|
variations in our quarterly operating results or distributions, which may be substantial;
|
•
|
the incurrence of additional indebtedness or additional issuances of other series or classes of preferred units;
|
•
|
whether we declare or fail to declare distributions on the preferred units from time to time and our ability to make distributions under the terms of our indebtedness;
|
•
|
the credit ratings of the preferred units;
|
•
|
a lack of liquidity in the trading of our preferred units (including, if the preferred units are voluntarily or involuntarily delisted from the New York Stock Exchange);
|
•
|
the prevailing interest rates or rates of return being paid by other companies similar to us and the market for similar securities; and
|
•
|
general market, political and economic conditions.
|
•
|
it is or holds itself out as being engaged primarily, or proposes to engage primarily, in the business of investing, reinvesting or trading in securities; or
|
•
|
absent an applicable exemption, it owns or proposes to acquire investment securities having a value exceeding 40% of the value of its total assets (exclusive of U.S. government securities and cash items) on an unconsolidated basis.
|
Plan Category
|
Number of Securities to be Issued Upon Exercise of Outstanding Options, Warrants and Rights (1)
|
|
Weighted-Average Exercise Price of Outstanding Options, Warrants and Rights
|
|
Number of Securities Remaining Available for Future Issuance Under Equity Compensation Plans (excluding securities reflected in column (a)) (2)
|
|||
|
(a)
|
|
(b)
|
|
(c)
|
|||
Equity compensation plans approved by security holders
|
15,723,391
|
|
|
—
|
|
|
7,846,643
|
|
Equity compensation plans not approved by security holders
|
—
|
|
|
—
|
|
|
—
|
|
Total (3)
|
15,723,391
|
|
|
—
|
|
|
7,846,643
|
|
|
|
|
|
|
(1)
|
Reflects the aggregate number of OCGH units, Class A units, phantom units and EVUs granted under the 2011 Plan as of December 31, 2019. Please see note 16 to our consolidated financial statements included elsewhere in this annual report for additional information.
|
(2)
|
The 2011 Plan provides that the maximum number of Units that may be delivered pursuant to awards under the 2011 Plan is 22,300,000, as increased on January 1 of each year beginning in 2012 by a number of Units equal to the excess of (a) 15% of the number of outstanding Oaktree Operating Group units on December 31 of the immediately preceding year over (b) the number of Oaktree Operating Group units that have been issued or are issuable under the 2011 Plan as of such date, except that our board of directors may, in its discretion, increase the number of Units covered by the 2011 Plan by a lesser amount. The issuance of Units or the payment of cash upon the exercise of an award or in consideration of the cancellation or termination of an award will reduce the total number of Units available under the 2011 Plan, as applicable. Units underlying awards under the 2011 Plan that are forfeited, cancelled, expire unexercised or are settled in cash will be available again to be used as awards under the 2011 Plan. However, Units used to pay the required exercise price or tax obligations, or Units not issued in connection with the settlement of an award or that are used or withheld to satisfy tax obligations of a participant, will not be available again for other awards under the 2011 Plan.
|
(3)
|
As of December 31, 2019, 4,929,054 OCGH units have been granted under the 2007 Plan. However, such amounts are not reflected in this table because our board of directors has resolved that the administrator of the 2007 Plan will no longer grant awards under the 2007 Plan.
|
|
As of or for the Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except per unit data or as otherwise indicated)
|
||||||||||||||||||
Consolidated Statements of Operations Data: (1)(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
Total revenues
|
$
|
928,987
|
|
|
$
|
1,386,079
|
|
|
$
|
1,469,767
|
|
|
$
|
1,125,746
|
|
|
$
|
201,905
|
|
Total expenses
|
(842,531
|
)
|
|
(1,000,571
|
)
|
|
(1,025,343
|
)
|
|
(789,336
|
)
|
|
(940,908
|
)
|
|||||
Total other income (loss) (3)
|
310,502
|
|
|
103,816
|
|
|
460,500
|
|
|
272,212
|
|
|
(776,410
|
)
|
|||||
Income (loss) before income taxes
|
396,958
|
|
|
489,324
|
|
|
904,924
|
|
|
608,622
|
|
|
(1,515,413
|
)
|
|||||
Income taxes (3)
|
(9,620
|
)
|
|
(24,779
|
)
|
|
(215,442
|
)
|
|
(42,519
|
)
|
|
(17,549
|
)
|
|||||
Net income (loss)
|
387,338
|
|
|
464,545
|
|
|
689,482
|
|
|
566,103
|
|
|
(1,532,962
|
)
|
|||||
Less:
|
|
|
|
|
|
|
|
|
|
||||||||||
Net (income) loss attributable to non-controlling interests in consolidated funds
|
(93,620
|
)
|
|
41,691
|
|
|
(33,204
|
)
|
|
(22,921
|
)
|
|
1,809,683
|
|
|||||
Net income attributable to non-controlling interests in consolidated subsidiaries
|
(138,879
|
)
|
|
(282,818
|
)
|
|
(424,784
|
)
|
|
(348,477
|
)
|
|
(205,372
|
)
|
|||||
Net income attributable to OCG
|
154,839
|
|
|
223,418
|
|
|
231,494
|
|
|
194,705
|
|
|
71,349
|
|
|||||
Net income attributable to preferred unitholders
|
(27,316
|
)
|
|
(12,277
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to OCG Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
|
$
|
194,705
|
|
|
$
|
71,349
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Consolidated Statements of Financial Condition Data: (1)(2)
|
|
|
|
|
|
|
|
|
|
||||||||||
Total assets
|
$
|
9,264,762
|
|
|
$
|
10,432,178
|
|
|
$
|
9,014,796
|
|
|
$
|
7,649,110
|
|
|
$
|
51,762,731
|
|
Debt obligations
|
5,926,476
|
|
|
5,738,468
|
|
|
4,828,267
|
|
|
4,284,063
|
|
|
9,619,455
|
|
|||||
Non-controlling redeemable interests in consolidated funds
|
866,222
|
|
|
961,622
|
|
|
860,548
|
|
|
344,047
|
|
|
38,173,125
|
|
|
|
|
|
|
(1)
|
As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer our indirect subsidiaries. The deconsolidation of the four Oaktree Operating Group entities that are no longer our indirect subsidiaries is presented on a prospective basis and did not require that prior periods be recast. Accordingly, effective October 1, 2019, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) OCM Cayman, which represents Oaktree’s non-U.S. fee business.
|
(2)
|
In the first quarter of 2016, Oaktree adopted the new consolidation and collateralized financing entity guidance under the modified retrospective approach. The modified retrospective approach did not require prior periods to be recast. The adoption resulted in the deconsolidation of substantially all of Oaktree’s investment funds.
|
(3)
|
On December 22, 2017, the Tax Cuts and Jobs Act (the “Tax Act”) was signed into law, which, among other items, lowered the U.S. corporate tax rate. The 2017 results reflect the impact from the enactment of the Tax Act, which resulted in a net reduction to the Company’s net income attributable to OCG of $33.2 million, comprised of $178.2 million in additional tax expense from the remeasurement of our deferred tax assets at lower enacted corporate tax rates and a $145.1 million benefit to other income from the remeasurement of our tax receivable agreement liability, the value of which is based upon an 85% share of certain of our deferred tax assets.
|
|
As of or for the Year Ended December 31,
|
||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
|
2016
|
|
2015
|
||||||||||
|
(in thousands, except as otherwise indicated)
|
||||||||||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating Metrics: (1) (2)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Assets under management (in millions):
|
|
|
|
|
|
|
|
|
|
||||||||||
Incentive-creating assets under management
|
$
|
25,330
|
|
|
$
|
34,629
|
|
|
$
|
33,311
|
|
|
$
|
34,228
|
|
|
$
|
32,459
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Accrued incentives (fund level): (2)
|
|
|
|
|
|
|
|
|
|
||||||||||
Incentives created (fund level)
|
269,421
|
|
|
297,316
|
|
|
641,645
|
|
|
788,758
|
|
|
(96,069
|
)
|
|||||
Incentives created (fund level), net of associated incentive income compensation expense
|
132,959
|
|
|
148,362
|
|
|
306,885
|
|
|
325,198
|
|
|
(62,084
|
)
|
|||||
Accrued incentives (fund level)
|
938,806
|
|
|
1,722,120
|
|
|
1,920,339
|
|
|
2,014,097
|
|
|
1,585,217
|
|
|||||
Accrued incentives (fund level), net of associated incentive income compensation expense
|
439,128
|
|
|
811,796
|
|
|
920,852
|
|
|
946,542
|
|
|
811,540
|
|
|||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
As a result of the Restructuring, effective October 1, 2019, our Operating Metrics include only the portion associated with the two Oaktree Operating Group entities that remain our indirect subsidiaries.
|
(2)
|
Our funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many factors.
|
•
|
Net Income Attributable to Non-controlling Interests in Consolidated Funds. This category represents the economic interests of the unaffiliated investors in the consolidated funds, as well as the equity interests held by third-party investors in CLOs that had not yet priced as of the respective period end. Those interests are primarily driven by the investment performance of the consolidated funds. In comparison to net income, this measure excludes our operating results and other items solely attributable to the Company;
|
•
|
Net Income Attributable to Non-controlling Interests in Consolidated Subsidiaries. This category primarily represents the economic interest in the Oaktree Operating Group owned by OCGH (“OCGH non-controlling interest”), as well as the economic interest in certain consolidated subsidiaries held by third parties. Prior to the Restructuring, this category included the OCGH non-controlling interest in all six Oaktree Operating Group entities; subsequent to the Restructuring, it includes only the OCGH non-controlling interest in Oaktree Capital I and OCM Cayman. The OCGH non-controlling interest is determined at the Oaktree Operating Group level based on the weighted average proportionate share of Oaktree Operating Group units held by the OCGH unitholders. Inasmuch as the number of outstanding Oaktree Operating Group units corresponds with the total number of outstanding Class A and OCGH units, changes in the economic interest held by the OCGH unitholders are driven by our additional issuances of Class A and OCGH units, as well as repurchases and forfeitures of, and exchanges between, Class A and OCGH units. Certain of our expenses, such as income tax and related administrative expenses of Oaktree Capital Group, LLC and its Intermediate Holding Companies, are solely attributable to the Class A unitholders. Please see note 13 to our consolidated financial statements included elsewhere in this annual report for additional information on the economic interest in the Oaktree Operating Group owned by OCGH.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands, except per unit data)
|
||||||||||
Revenues:
|
|
|
|
|
|
||||||
Management fees
|
$
|
578,863
|
|
|
$
|
712,020
|
|
|
$
|
726,414
|
|
Incentive income
|
350,124
|
|
|
674,059
|
|
|
743,353
|
|
|||
Total revenues
|
928,987
|
|
|
1,386,079
|
|
|
1,469,767
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|||
Compensation and benefits
|
(368,196
|
)
|
|
(407,674
|
)
|
|
(392,827
|
)
|
|||
Equity-based compensation
|
(65,533
|
)
|
|
(62,989
|
)
|
|
(59,337
|
)
|
|||
Incentive income compensation
|
(175,753
|
)
|
|
(338,675
|
)
|
|
(416,481
|
)
|
|||
Total compensation and benefits expense
|
(609,482
|
)
|
|
(809,338
|
)
|
|
(868,645
|
)
|
|||
General and administrative
|
(189,447
|
)
|
|
(153,483
|
)
|
|
(130,892
|
)
|
|||
Depreciation and amortization
|
(20,287
|
)
|
|
(25,862
|
)
|
|
(15,776
|
)
|
|||
Consolidated fund expenses
|
(23,315
|
)
|
|
(11,888
|
)
|
|
(10,030
|
)
|
|||
Total expenses
|
(842,531
|
)
|
|
(1,000,571
|
)
|
|
(1,025,343
|
)
|
|||
Other income (loss):
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
(197,159
|
)
|
|
(160,111
|
)
|
|
(169,888
|
)
|
|||
Interest and dividend income
|
368,870
|
|
|
287,155
|
|
|
215,119
|
|
|||
Net realized gain (loss) on consolidated funds’ investments
|
(17,773
|
)
|
|
(23,528
|
)
|
|
20,400
|
|
|||
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments
|
9,937
|
|
|
(164,592
|
)
|
|
55,061
|
|
|||
Investment income
|
146,569
|
|
|
157,110
|
|
|
201,289
|
|
|||
Other income, net
|
58
|
|
|
7,782
|
|
|
138,519
|
|
|||
Total other income
|
310,502
|
|
|
103,816
|
|
|
460,500
|
|
|||
Income before income taxes
|
396,958
|
|
|
489,324
|
|
|
904,924
|
|
|||
Income taxes
|
(9,620
|
)
|
|
(24,779
|
)
|
|
(215,442
|
)
|
|||
Net income
|
387,338
|
|
|
464,545
|
|
|
689,482
|
|
|||
Less:
|
|
|
|
|
|
|
|
|
|||
Net (income) loss attributable to non-controlling interests in consolidated funds
|
(93,620
|
)
|
|
41,691
|
|
|
(33,204
|
)
|
|||
Net income attributable to non-controlling interests in consolidated subsidiaries
|
(138,879
|
)
|
|
(282,818
|
)
|
|
(424,784
|
)
|
|||
Net income attributable to Oaktree Capital Group, LLC
|
154,839
|
|
|
223,418
|
|
|
231,494
|
|
|||
Net income attributable to preferred unitholders
|
(27,316
|
)
|
|
(12,277
|
)
|
|
—
|
|
|||
Net income attributable to Oaktree Capital Group, LLC Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
|
|
|
|
|
|
||||||
Distributions declared per Class A unit
|
$
|
4.96
|
|
|
$
|
2.97
|
|
|
$
|
3.21
|
|
Net income per unit (basic and diluted):
|
|
|
|
|
|
|
|
|
|||
Net income per Class A unit
|
$
|
1.59
|
|
|
$
|
2.99
|
|
|
$
|
3.61
|
|
Weighted average number of Class A units outstanding
|
80,045
|
|
|
70,526
|
|
|
64,148
|
|
|
|
|
|
|
(1)
|
As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer our indirect subsidiaries. The deconsolidation of the four Oaktree Operating Group entities that are no longer our indirect subsidiaries is presented on a prospective basis and did not require that prior periods be recast. Accordingly, effective October 1, 2019, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) OCM Cayman, which represents Oaktree’s non-U.S. fee business.
|
(2)
|
In the first quarter of 2018, Oaktree adopted the new revenue recognition standard on a modified retrospective basis, which did not require prior periods to be recast. Instead, a cumulative-effect adjustment to increase retained earnings of $48.7 million, net of tax, was recorded as of January 1, 2018. This adjustment relates to revenues that would have met the recognition criteria under the new standard as of January 1, 2018.
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Incentive Income:
|
|
|
|
||||
Oaktree funds:
|
|
|
|
||||
Credit
|
$
|
267,780
|
|
|
$
|
326,344
|
|
Private Equity
|
41,438
|
|
|
285,622
|
|
||
Real Assets
|
24,477
|
|
|
61,496
|
|
||
Listed Equities
|
13,022
|
|
|
103
|
|
||
Non-Oaktree
|
3,407
|
|
|
494
|
|
||
Total incentive income
|
$
|
350,124
|
|
|
$
|
674,059
|
|
|
Year Ended December 31,
|
||||||
|
2019
|
|
2018
|
||||
Income (loss) from investments in funds:
|
(in thousands)
|
||||||
Oaktree funds:
|
|
|
|
|
|
||
Credit
|
$
|
38,792
|
|
|
$
|
38,139
|
|
Private Equity
|
22,095
|
|
|
12,663
|
|
||
Real Assets
|
5,954
|
|
|
21,028
|
|
||
Listed Equities
|
14,561
|
|
|
(4,585
|
)
|
||
Non-Oaktree
|
65,167
|
|
|
89,865
|
|
||
Total investment income
|
$
|
146,569
|
|
|
$
|
157,110
|
|
|
As of or for the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands except as otherwise indicated)
|
||||||||||
|
|
|
|
|
|
||||||
Operating Metrics: (1)
|
|
|
|
|
|
||||||
Assets under management (in millions):
|
|
|
|
|
|
||||||
Incentive-creating assets under management
|
$
|
25,330
|
|
|
$
|
34,629
|
|
|
$
|
33,311
|
|
Accrued incentives (fund level):
|
|
|
|
|
|
||||||
Incentives created (fund level)
|
269,421
|
|
|
297,316
|
|
|
641,645
|
|
|||
Incentives created (fund level), net of associated incentive income compensation expense
|
132,959
|
|
|
148,362
|
|
|
306,885
|
|
|||
Accrued incentives (fund level)
|
938,806
|
|
|
1,722,120
|
|
|
1,920,339
|
|
|||
Accrued incentives (fund level), net of associated incentive income compensation expense
|
439,128
|
|
|
811,796
|
|
|
920,852
|
|
(1)
|
As a result of the Restructuring, effective October 1, 2019, our Operating Metrics include only the portion associated with the two Oaktree Operating Group entities that remain our indirect subsidiaries.
|
(2)
|
Our funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many factors.
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in millions)
|
||||||||||
Incentive-creating Assets Under Management:
|
|
|
|
|
|
||||||
Closed-end funds
|
$
|
21,530
|
|
|
$
|
27,809
|
|
|
$
|
27,322
|
|
Evergreen funds
|
3,800
|
|
|
6,215
|
|
|
5,383
|
|
|||
DoubleLine
|
—
|
|
|
605
|
|
|
606
|
|
|||
Total
|
$
|
25,330
|
|
|
$
|
34,629
|
|
|
$
|
33,311
|
|
|
As of or for the Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
(in thousands)
|
||||||||||
Accrued Incentives (Fund Level): (1)
|
|
|
|
|
|
|
|
|
|||
Beginning balance
|
$
|
1,722,120
|
|
|
$
|
1,920,339
|
|
|
$
|
2,014,097
|
|
Incentives created (fund level):
|
|
|
|
|
|
||||||
Closed-end funds
|
227,680
|
|
|
270,694
|
|
|
588,220
|
|
|||
Evergreen funds
|
37,141
|
|
|
24,622
|
|
|
49,246
|
|
|||
DoubleLine
|
4,600
|
|
|
2,000
|
|
|
4,179
|
|
|||
Total incentives created (fund level)
|
269,421
|
|
|
297,316
|
|
|
641,645
|
|
|||
Less: incentive income recognized by us
|
(537,139
|
)
|
|
(495,535
|
)
|
|
(735,403
|
)
|
|||
Less: Restructuring reallocation of accrued incentives
|
$
|
(515,596
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
Ending balance
|
$
|
938,806
|
|
|
$
|
1,722,120
|
|
|
$
|
1,920,339
|
|
Accrued incentives (fund level), net of associated incentive income compensation expense
|
$
|
439,128
|
|
|
$
|
811,796
|
|
|
$
|
920,852
|
|
(1)
|
As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer our indirect subsidiaries. Accordingly, effective October 1, 2019, our consolidated financial statements reflect our indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I, which acts as or controls the general partner of certain Oaktree funds and which holds a majority of Oaktree’s investments in its funds and (ii) OCM Cayman, which represents Oaktree’s non-U.S. fee business. Additionally, effective October 1, 2019, our Operating Metrics include only the portion associated with the remaining two Oaktree Operating Group entities.
|
|
As of December 31, 2019
|
||||||||||||||
|
Oaktree and Operating Subsidiaries
|
|
Consolidated Funds
|
|
Eliminations
|
|
Consolidated
|
||||||||
|
(in thousands)
|
||||||||||||||
Assets:
|
|
|
|
|
|
|
|
||||||||
Cash and cash-equivalents
|
$
|
323,550
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
323,550
|
|
U.S. Treasury and other securities
|
9,232
|
|
|
—
|
|
|
—
|
|
|
9,232
|
|
||||
Corporate investments
|
1,378,578
|
|
|
—
|
|
|
(669,441
|
)
|
|
709,137
|
|
||||
Deferred tax assets
|
3,096
|
|
|
—
|
|
|
—
|
|
|
3,096
|
|
||||
Operating lease assets
|
39,702
|
|
|
—
|
|
|
—
|
|
|
39,702
|
|
||||
Receivables and other assets
|
222,575
|
|
|
—
|
|
|
(3,744
|
)
|
|
218,831
|
|
||||
Assets of consolidated funds
|
—
|
|
|
7,961,214
|
|
|
—
|
|
|
7,961,214
|
|
||||
Total assets
|
$
|
1,976,733
|
|
|
$
|
7,961,214
|
|
|
$
|
(673,185
|
)
|
|
$
|
9,264,762
|
|
Liabilities and Capital:
|
|
|
|
|
|
|
|
||||||||
Liabilities:
|
|
|
|
|
|
|
|
||||||||
Accounts payable and accrued expenses
|
$
|
141,708
|
|
|
$
|
—
|
|
|
$
|
426
|
|
|
$
|
142,134
|
|
Due to affiliates
|
87,063
|
|
|
—
|
|
|
—
|
|
|
87,063
|
|
||||
Lease liabilities
|
45,793
|
|
|
—
|
|
|
—
|
|
|
45,793
|
|
||||
Debt obligations
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
Liabilities of consolidated funds
|
—
|
|
|
6,441,343
|
|
|
(19,962
|
)
|
|
6,421,381
|
|
||||
Total liabilities
|
274,564
|
|
|
6,441,343
|
|
|
(19,536
|
)
|
|
6,696,371
|
|
||||
Non-controlling redeemable interests in consolidated funds
|
—
|
|
|
—
|
|
|
866,222
|
|
|
866,222
|
|
||||
Capital:
|
|
|
|
|
|
|
|
||||||||
Capital attributable to OCG preferred unitholders
|
400,584
|
|
|
—
|
|
|
—
|
|
|
400,584
|
|
||||
Capital attributable to OCG Class A unitholders
|
798,332
|
|
|
400,817
|
|
|
(400,817
|
)
|
|
798,332
|
|
||||
Non-controlling interest in consolidated subsidiaries
|
503,253
|
|
|
252,832
|
|
|
(252,832
|
)
|
|
503,253
|
|
||||
Non-controlling interest in consolidated funds
|
—
|
|
|
866,222
|
|
|
(866,222
|
)
|
|
—
|
|
||||
Total capital
|
1,702,169
|
|
|
1,519,871
|
|
|
(1,519,871
|
)
|
|
1,702,169
|
|
||||
Total liabilities and capital
|
$
|
1,976,733
|
|
|
$
|
7,961,214
|
|
|
$
|
(673,185
|
)
|
|
$
|
9,264,762
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
(in thousands)
|
||||||
Oaktree funds:
|
|
|
|
||||
Credit
|
$
|
932,445
|
|
|
$
|
994,292
|
|
Private Equity
|
241,062
|
|
|
237,913
|
|
||
Real Assets
|
172,078
|
|
|
357,382
|
|
||
Listed Equities
|
28,846
|
|
|
94,736
|
|
||
Non-Oaktree
|
4,147
|
|
|
86,907
|
|
||
Total corporate investments – Oaktree and operating subsidiaries
|
1,378,578
|
|
|
1,771,230
|
|
||
Eliminations
|
(669,441
|
)
|
|
(561,466
|
)
|
||
Total corporate investments – Consolidated
|
$
|
709,137
|
|
|
$
|
1,209,764
|
|
•
|
raising capital from third-party investors;
|
•
|
using the capital provided by us and third-party investors to fund investments and operating expenses;
|
•
|
financing certain investments with indebtedness;
|
•
|
generating cash flows through the realization of investments, as well as the collection of interest and dividend income; and
|
•
|
distributing net cash flows to fund investors and to us.
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Funds
|
|
$
|
1,000.6
|
|
|
$
|
739.2
|
|
|
$
|
487.2
|
|
Eliminated in consolidation
|
|
(735.9
|
)
|
|
(297.0
|
)
|
|
(328.5
|
)
|
|||
Total investments
|
|
$
|
264.7
|
|
|
$
|
442.2
|
|
|
$
|
158.7
|
|
|
|
Year Ended December 31,
|
||||||||||
|
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
(in millions)
|
||||||||||
Funds
|
|
$
|
897.1
|
|
|
$
|
562.9
|
|
|
$
|
369.6
|
|
Eliminated in consolidation
|
|
(401.6
|
)
|
|
(238.0
|
)
|
|
(105.4
|
)
|
|||
Total investments
|
|
$
|
495.5
|
|
|
$
|
324.9
|
|
|
$
|
264.2
|
|
|
2020
|
|
2021-2022
|
|
2023-2024
|
|
Thereafter
|
|
Total
|
||||||||||
|
(in thousands)
|
||||||||||||||||||
Oaktree and Operating Subsidiaries:
|
|
|
|
|
|
|
|
|
|
||||||||||
Operating lease obligations (1)
|
$
|
6,262
|
|
|
$
|
11,581
|
|
|
$
|
9,024
|
|
|
$
|
28,778
|
|
|
$
|
55,645
|
|
Commitments to Oaktree and third-party funds (4)
|
237,250
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
237,250
|
|
|||||
Subtotal
|
243,512
|
|
|
11,581
|
|
|
9,024
|
|
|
28,778
|
|
|
292,895
|
|
|||||
Consolidated Funds:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Debt obligations payable (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
159,411
|
|
|
159,411
|
|
|||||
Interest obligations on debt (3)
|
3,660
|
|
|
7,320
|
|
|
7,320
|
|
|
7,106
|
|
|
25,406
|
|
|||||
Debt obligations of CLOs (2)
|
204,290
|
|
|
—
|
|
|
—
|
|
|
5,622,072
|
|
|
5,826,362
|
|
|||||
Interest on debt obligations of CLOs (3)
|
158,717
|
|
|
259,771
|
|
|
258,085
|
|
|
682,164
|
|
|
1,358,737
|
|
|||||
Commitments to fund investments (5)
|
2,263
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,263
|
|
|||||
Total
|
$
|
612,442
|
|
|
$
|
278,672
|
|
|
$
|
274,429
|
|
|
$
|
6,499,531
|
|
|
$
|
7,665,074
|
|
|
|
|
|
|
(1)
|
We lease our office space under agreements that expire periodically through 2031. The table includes both guaranteed and expected minimum lease payments for these leases and does not project other lease-related payments.
|
(2)
|
These obligations represent future principal payments, gross of debt issuance costs, and for CLOs, the par value.
|
(3)
|
Interest obligations include accrued interest on outstanding indebtedness. Where applicable, current interest rates are applied to estimate future interest obligations on variable-rate debt.
|
(4)
|
These obligations represent commitments by us to provide general partner capital funding to our funds and limited partner capital funding to funds managed by unaffiliated third parties. These amounts are generally due on demand and are therefore presented in the 2020 column. Capital commitments are expected to be called over a period of several years.
|
(5)
|
These obligations represent commitments by our funds to make investments or fund uncalled contingent commitments. These amounts are generally due either on demand or by various contractual dates that vary by investment and are therefore presented in the 2020 column. Capital commitments are expected to be called over a period of several years.
|
•
|
our management fees (relating to (a) and (b) above) would have increased by $13.1 million;
|
•
|
our operating expenses would have increased by $17.1 million;
|
•
|
OCGH interest in net income of consolidated subsidiaries would have decreased by $2.2 million; and
|
•
|
our income tax expense would have decreased by $0.4 million.
|
Audited Consolidated Financial Statements:
|
Page
|
|
|
Valuation of investments which utilize significant unobservable inputs
|
Description of the Matter
|
|
At December 31, 2019, the balances of the Company’s investments, at fair value, categorized as Level III within the fair value hierarchy totaled $542.7 million. The fair value of these investments is determined by management using the valuation techniques and significant unobservable inputs described in Notes 2 and 7 to the consolidated financial statements.
Auditing the fair value of the Company’s investments categorized as Level III within the fair value hierarchy was complex and involved a high degree of auditor subjectivity due to the estimation uncertainty resulting from the unobservable nature of the inputs used in the valuations and the limited number of comparable market transactions for the same or similar investments.
|
How We Addressed the Matter in Our Audit
|
|
We obtained an understanding, evaluated the design and tested the operating effectiveness of controls over the Company’s investment valuation process, including management's assessment of the significant inputs and estimates used in the fair value measurements.
We performed the following procedures, among others, for a sample of the Company’s Level III investments:
We tested the mathematical accuracy of the Company’s valuation models utilized and agreed the values in the models to the Company’s books and records. We evaluated the valuation techniques used by the Company and considered the consistency in application of the valuation techniques to each subject investment and investment class. We evaluated the reasonableness of the significant unobservable inputs by comparing the inputs used by the Company to third-party sources, such as recent trades, market indexes or other market data and evaluated the consistency of expected cash flows with historical operating results. Where applicable, we utilized our internal valuation specialists to assist with these procedures, including developing independent ranges of inputs that we compared to the inputs selected by management or independent fair value estimates that we compared to the Company’s fair value estimates. We considered other information obtained during the audit that corroborated or contradicted the Company’s inputs or fair value measurements. For a sample of investments sold during the year, we compared the transaction price to the Company’s fair value estimate as of the prior reporting period to assess the reasonableness of management’s fair value estimates. We also reviewed subsequent events and transactions, including sales of a sample of investments subsequent to the balance sheet date, and considered whether they corroborated or contradicted the Company’s year-end valuations.
|
|
|
Brookfield transaction
|
Description of the Matter
|
|
As discussed in Notes 1 and 16 to the consolidated financial statements, the Company and Brookfield Asset Management Inc. (“Brookfield”) entered into an agreement and plan of merger pursuant to which Brookfield acquired 61.2% of the Company’s business in a stock and cash transaction that closed on September 30, 2019 (the “Merger”). Following the Merger, the remaining 38.8% of the business continues to be owned by Oaktree Capital Group Holdings, L.P (“OCGH”).
On October 1, 2019, the Company and certain other entities completed a restructuring (the "Restructuring") pursuant to which the Company’s direct and indirect ownership of general partner and limited partner interests in certain operating entities (the “Oaktree Operating Group entities”) were transferred to newly-formed, indirect subsidiaries of Brookfield. As a result of the Restructuring, four of the six Oaktree Operating Group entities are no longer the Company’s indirect subsidiaries.
The principal consideration for our determination that the Merger and Restructuring (collectively the “Transaction”) is a critical audit matter was the high degree of complexity and auditor judgment involved in evaluating the accounting and reporting considerations in connection with the Transaction, including evaluating the Company’s conclusion that the transfer of assets associated with the Restructuring was among entities under common control, evaluating the Company’s reassessment of its consolidation determination with respect to certain affiliated entities subsequent to the Restructuring, and evaluating the Company’s conclusions regarding its modification accounting for its outstanding equity-based compensation awards, including that there was no incremental compensation cost related to unvested Class A and OCGH units resulting from the modifications of the awards.
|
How We Addressed the Matter in Our Audit
|
|
We read the Transaction agreements and performed the following procedures, among others, related to the Transaction:
We evaluated the Company’s assessment of whether the transfer of assets associated with the Restructuring was a common control transaction by agreeing changes in the capital structures to supporting documentation and evaluating the voting rights and powers of each interest holder before and after the Restructuring. We evaluated the Company’s reassessment of its consolidation determination for a sample of affiliated entities subsequent to the Restructuring by evaluating management’s assessment, based upon qualitative criteria, of the entity in the related party group that was most closely associated with each selected affiliated entity. We read the relevant agreements for a sample of affiliated entities and evaluated the Company’s contractual rights and ownership interests with respect to each selected entity. We also evaluated the relationship and significance of each selected entity’s activities to the Company and the Company’s exposure to the performance of the selected entity. We evaluated the Company’s application of modification accounting for outstanding equity-based compensation awards by reading the terms of the Transaction agreements. We also evaluated whether the modifications resulted in incremental compensation cost related to unvested Class A and OCGH units by testing the key inputs and assumptions used by management to value the Company’s modified awards. We tested these key inputs and assumptions by agreeing them to supporting documentation and evaluating other relevant information that corroborated or contradicted them. Additionally, we assessed the completeness and accuracy of the Company’s disclosures included in Notes 1 and 16 in relation to these matters.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Assets
|
|
|
|
||||
Cash and cash-equivalents
|
$
|
323,550
|
|
|
$
|
460,937
|
|
U.S. Treasury and other securities
|
9,232
|
|
|
546,531
|
|
||
Corporate investments (includes $34,934 and $74,899 measured at fair value as of December 31, 2019 and 2018, respectively)
|
709,137
|
|
|
1,209,764
|
|
||
Due from affiliates
|
164,189
|
|
|
442,912
|
|
||
Deferred tax assets
|
3,096
|
|
|
229,100
|
|
||
Other assets
|
41,198
|
|
|
533,044
|
|
||
Right-of-use assets
|
39,702
|
|
|
—
|
|
||
Assets of consolidated funds:
|
|
|
|
|
|||
Cash and cash-equivalents
|
518,243
|
|
|
370,790
|
|
||
Investments, at fair value
|
7,358,409
|
|
|
6,531,385
|
|
||
Dividends and interest receivable
|
25,058
|
|
|
26,792
|
|
||
Due from brokers
|
—
|
|
|
11,599
|
|
||
Receivable for securities sold
|
58,622
|
|
|
65,884
|
|
||
Derivative assets, at fair value
|
6,890
|
|
|
2,464
|
|
||
Other assets
|
7,436
|
|
|
976
|
|
||
Total assets
|
$
|
9,264,762
|
|
|
$
|
10,432,178
|
|
Liabilities and Unitholders’ Capital
|
|
|
|
|
|||
Liabilities:
|
|
|
|
|
|||
Accrued compensation expense
|
$
|
130,818
|
|
|
$
|
437,966
|
|
Accounts payable, accrued expenses and other liabilities
|
11,316
|
|
|
128,729
|
|
||
Due to affiliates
|
87,063
|
|
|
188,367
|
|
||
Debt obligations
|
—
|
|
|
745,945
|
|
||
Operating lease liabilities
|
45,793
|
|
|
—
|
|
||
Liabilities of consolidated funds:
|
|
|
|
|
|||
Accounts payable, accrued expenses and other liabilities
|
89,937
|
|
|
31,000
|
|
||
Payables for securities purchased
|
367,983
|
|
|
450,172
|
|
||
Securities sold short, at fair value
|
—
|
|
|
2,609
|
|
||
Derivative liabilities, at fair value
|
2,551
|
|
|
643
|
|
||
Distributions payable
|
34,434
|
|
|
4,885
|
|
||
Borrowings under credit facilities
|
158,477
|
|
|
864,529
|
|
||
Debt obligations of CLOs
|
5,767,999
|
|
|
4,127,994
|
|
||
Total liabilities
|
6,696,371
|
|
|
6,982,839
|
|
||
Commitments and contingencies (Note 18)
|
|
|
|
|
|||
Non-controlling redeemable interests in consolidated funds
|
866,222
|
|
|
961,622
|
|
||
Unitholders’ capital:
|
|
|
|
|
|||
Series A preferred units, 7,200,000 units issued and outstanding as of December 31, 2019
|
173,669
|
|
|
173,669
|
|
||
Series B preferred units, 9,400,000 units issued and outstanding as of December 31, 2019
|
226,915
|
|
|
226,915
|
|
||
Class A units, no par value, unlimited units authorized, 97,967,255 and 71,661,623 units issued and outstanding as of December 31, 2019 and 2018, respectively
|
—
|
|
|
—
|
|
||
Class B units, no par value, unlimited units authorized, 61,793,286 and 85,471,937 units issued and outstanding as of December 31, 2019 and 2018, respectively
|
—
|
|
|
—
|
|
||
Paid-in capital
|
750,299
|
|
|
893,043
|
|
||
Retained earnings
|
51,534
|
|
|
100,683
|
|
||
Accumulated other comprehensive (loss) income
|
(3,501
|
)
|
|
1,053
|
|
||
Unitholders’ capital attributable to Oaktree Capital Group, LLC
|
1,198,916
|
|
|
1,395,363
|
|
||
Non-controlling interests in consolidated subsidiaries
|
503,253
|
|
|
1,092,354
|
|
||
Total unitholders’ capital
|
1,702,169
|
|
|
2,487,717
|
|
||
Total liabilities and unitholders’ capital
|
$
|
9,264,762
|
|
|
$
|
10,432,178
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Revenues:
|
|
|
|
|
|
|
|
||||
Management fees
|
$
|
578,863
|
|
|
$
|
712,020
|
|
|
$
|
726,414
|
|
Incentive income
|
350,124
|
|
|
674,059
|
|
|
743,353
|
|
|||
Total revenues
|
928,987
|
|
|
1,386,079
|
|
|
1,469,767
|
|
|||
Expenses:
|
|
|
|
|
|
|
|
|
|||
Compensation and benefits
|
(368,196
|
)
|
|
(407,674
|
)
|
|
(392,827
|
)
|
|||
Equity-based compensation
|
(65,533
|
)
|
|
(62,989
|
)
|
|
(59,337
|
)
|
|||
Incentive income compensation
|
(175,753
|
)
|
|
(338,675
|
)
|
|
(416,481
|
)
|
|||
Total compensation and benefits expense
|
(609,482
|
)
|
|
(809,338
|
)
|
|
(868,645
|
)
|
|||
General and administrative
|
(189,447
|
)
|
|
(153,483
|
)
|
|
(130,892
|
)
|
|||
Depreciation and amortization
|
(20,287
|
)
|
|
(25,862
|
)
|
|
(15,776
|
)
|
|||
Consolidated fund expenses
|
(23,315
|
)
|
|
(11,888
|
)
|
|
(10,030
|
)
|
|||
Total expenses
|
(842,531
|
)
|
|
(1,000,571
|
)
|
|
(1,025,343
|
)
|
|||
Other income (loss):
|
|
|
|
|
|
|
|
|
|||
Interest expense
|
(197,159
|
)
|
|
(160,111
|
)
|
|
(169,888
|
)
|
|||
Interest and dividend income
|
368,870
|
|
|
287,155
|
|
|
215,119
|
|
|||
Net realized gain (loss) on consolidated funds’ investments
|
(17,773
|
)
|
|
(23,528
|
)
|
|
20,400
|
|
|||
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments
|
9,937
|
|
|
(164,592
|
)
|
|
55,061
|
|
|||
Investment income
|
146,569
|
|
|
157,110
|
|
|
201,289
|
|
|||
Other income, net
|
58
|
|
|
7,782
|
|
|
138,519
|
|
|||
Total other income
|
310,502
|
|
|
103,816
|
|
|
460,500
|
|
|||
Income before income taxes
|
396,958
|
|
|
489,324
|
|
|
904,924
|
|
|||
Income taxes
|
(9,620
|
)
|
|
(24,779
|
)
|
|
(215,442
|
)
|
|||
Net income
|
387,338
|
|
|
464,545
|
|
|
689,482
|
|
|||
Less:
|
|
|
|
|
|
|
|
|
|||
Net (income) loss attributable to non-controlling interests in consolidated funds
|
(93,620
|
)
|
|
41,691
|
|
|
(33,204
|
)
|
|||
Net income attributable to non-controlling interests in consolidated subsidiaries
|
(138,879
|
)
|
|
(282,818
|
)
|
|
(424,784
|
)
|
|||
Net income attributable to Oaktree Capital Group, LLC
|
154,839
|
|
|
223,418
|
|
|
231,494
|
|
|||
Net income attributable to preferred unitholders
|
(27,316
|
)
|
|
(12,277
|
)
|
|
—
|
|
|||
Net income attributable to Oaktree Capital Group, LLC Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
|
|
|
|
|
|
||||||
Distributions declared per Class A unit
|
$
|
4.96
|
|
|
$
|
2.97
|
|
|
$
|
3.21
|
|
Net income per unit (basic and diluted):
|
|
|
|
|
|
|
|
|
|||
Net income per Class A unit
|
$
|
1.59
|
|
|
$
|
2.99
|
|
|
$
|
3.61
|
|
Weighted average number of Class A units outstanding
|
80,045
|
|
|
70,526
|
|
|
64,148
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Net income
|
$
|
387,338
|
|
|
$
|
464,545
|
|
|
$
|
689,482
|
|
Other comprehensive income (loss), net of tax:
|
|
|
|
|
|
||||||
Foreign currency translation adjustments
|
(5,928
|
)
|
|
1,363
|
|
|
(3,389
|
)
|
|||
Unrealized gain on interest rate swap designated as cash flow hedge
|
—
|
|
|
—
|
|
|
60
|
|
|||
Other comprehensive income (loss), net of tax
|
(5,928
|
)
|
|
1,363
|
|
|
(3,329
|
)
|
|||
Total comprehensive income
|
381,410
|
|
|
465,908
|
|
|
686,153
|
|
|||
Less:
|
|
|
|
|
|
||||||
Comprehensive (income) loss attributable to non-controlling interests in consolidated funds
|
(93,620
|
)
|
|
41,691
|
|
|
(33,204
|
)
|
|||
Comprehensive income attributable to non-controlling interests in consolidated subsidiaries
|
(137,505
|
)
|
|
(283,571
|
)
|
|
(422,805
|
)
|
|||
Comprehensive income attributable to OCG
|
150,285
|
|
|
224,028
|
|
|
230,144
|
|
|||
Comprehensive income attributable to preferred unitholders
|
(27,316
|
)
|
|
(12,277
|
)
|
|
—
|
|
|||
Comprehensive income attributable to OCG Class A unitholders
|
$
|
122,969
|
|
|
$
|
211,751
|
|
|
$
|
230,144
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from operating activities:
|
|
|
|
|
|
||||||
Net income
|
$
|
387,338
|
|
|
$
|
464,545
|
|
|
$
|
689,482
|
|
Adjustments to reconcile net income to net cash used in operating activities:
|
|
|
|
|
|
|
|
||||
Adoption of revenue recognition standard
|
—
|
|
|
48,709
|
|
|
—
|
|
|||
Investment income
|
(146,569
|
)
|
|
(157,110
|
)
|
|
(201,289
|
)
|
|||
Depreciation and amortization
|
20,287
|
|
|
25,862
|
|
|
15,776
|
|
|||
Equity-based compensation
|
65,533
|
|
|
62,989
|
|
|
59,337
|
|
|||
Net realized and unrealized (gain) loss from consolidated funds’ investments
|
7,836
|
|
|
188,120
|
|
|
(75,461
|
)
|
|||
Amortization (accretion) of original issue and market discount of consolidated funds’ investments, net
|
(3,625
|
)
|
|
(4,999
|
)
|
|
(3,816
|
)
|
|||
Income distributions from corporate investments in funds and companies
|
134,512
|
|
|
197,801
|
|
|
182,844
|
|
|||
Other non-cash items
|
2,929
|
|
|
1,961
|
|
|
1,028
|
|
|||
Cash flows due to changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||
Decrease in deferred tax assets
|
122
|
|
|
13,122
|
|
|
202,294
|
|
|||
(Increase) decrease in other assets
|
4,365
|
|
|
10,745
|
|
|
7,818
|
|
|||
Increase (decrease) in net due to affiliates
|
177,615
|
|
|
(241,067
|
)
|
|
(184,616
|
)
|
|||
Increase (decrease) in accrued compensation expense
|
(155,900
|
)
|
|
161,526
|
|
|
(9,143
|
)
|
|||
Increase (decrease) in accounts payable, accrued expenses and other liabilities
|
63,972
|
|
|
(22,537
|
)
|
|
7,533
|
|
|||
Cash flows due to changes in operating assets and liabilities of consolidated funds:
|
|
|
|
|
|
|
|
||||
Increase in dividends and interest receivable
|
(7,092
|
)
|
|
(6,554
|
)
|
|
(4,328
|
)
|
|||
Decrease in due from brokers
|
11,476
|
|
|
42,683
|
|
|
44,457
|
|
|||
(Increase) decrease in receivables for securities sold
|
(25,285
|
)
|
|
75,122
|
|
|
(101,668
|
)
|
|||
Increase in other assets
|
(5,251
|
)
|
|
(286
|
)
|
|
(286
|
)
|
|||
Increase in accounts payable, accrued expenses and other liabilities
|
61,380
|
|
|
13,632
|
|
|
2,802
|
|
|||
Increase (decrease) in payables for securities purchased
|
56,694
|
|
|
(118,813
|
)
|
|
259,652
|
|
|||
Purchases of securities
|
(6,684,118
|
)
|
|
(4,949,238
|
)
|
|
(5,337,361
|
)
|
|||
Proceeds from maturities and sales of securities
|
2,900,134
|
|
|
3,576,770
|
|
|
4,108,640
|
|
|||
Net cash used in operating activities
|
(3,133,647
|
)
|
|
(617,017
|
)
|
|
(336,305
|
)
|
|||
Cash flows from investing activities:
|
|
|
|
|
|
|
|
||||
Purchases of U.S. Treasury and other securities
|
(602,600
|
)
|
|
(1,048,083
|
)
|
|
(610,474
|
)
|
|||
Proceeds from maturities and sales of U.S. Treasury and other securities
|
1,129,930
|
|
|
678,067
|
|
|
1,191,670
|
|
|||
Corporate investments in funds and companies
|
(264,673
|
)
|
|
(442,216
|
)
|
|
(158,663
|
)
|
|||
Distributions and proceeds from corporate investments in funds and companies
|
495,509
|
|
|
324,898
|
|
|
264,226
|
|
|||
Acquisition (BDCs)
|
—
|
|
|
—
|
|
|
(319,435
|
)
|
|||
Purchases of fixed assets
|
(6,764
|
)
|
|
(5,816
|
)
|
|
(29,413
|
)
|
|||
Proceeds from sale of fixed assets
|
—
|
|
|
—
|
|
|
5,048
|
|
|||
Net cash provided by (used in) investing activities
|
751,402
|
|
|
(493,150
|
)
|
|
342,959
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Cash flows from financing activities:
|
|
|
|
|
|
||||||
Proceeds from issuance of debt obligations
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
250,000
|
|
Repayments of debt obligations
|
—
|
|
|
—
|
|
|
(250,000
|
)
|
|||
Net proceeds from issuance of Class A units
|
—
|
|
|
219,750
|
|
|
—
|
|
|||
Purchase of OCGH units
|
—
|
|
|
(219,525
|
)
|
|
—
|
|
|||
Repurchase and cancellation of units
|
(12,191
|
)
|
|
(12,195
|
)
|
|
(12,317
|
)
|
|||
Distributions to Class A unitholders
|
(439,433
|
)
|
|
(210,941
|
)
|
|
(206,212
|
)
|
|||
Distributions to preferred unitholders
|
(27,316
|
)
|
|
(12,277
|
)
|
|
—
|
|
|||
Distributions to OCGH unitholders
|
(360,321
|
)
|
|
(284,507
|
)
|
|
(355,834
|
)
|
|||
Distributions to non-controlling interests
|
(3,421
|
)
|
|
(4,921
|
)
|
|
(4,784
|
)
|
|||
Net proceeds from issuance of preferred units
|
—
|
|
|
400,584
|
|
|
—
|
|
|||
Payment of debt issuance costs
|
—
|
|
|
(2,235
|
)
|
|
—
|
|
|||
Cash flows from financing activities of consolidated funds:
|
|
|
|
|
|
|
|
||||
Contributions from non-controlling interests
|
664,679
|
|
|
447,260
|
|
|
331,764
|
|
|||
Distributions to non-controlling interests
|
(107,499
|
)
|
|
(335,041
|
)
|
|
(148,617
|
)
|
|||
Proceeds from debt obligations issued by CLOs
|
4,754,098
|
|
|
1,741,258
|
|
|
1,709,592
|
|
|||
Payment of debt issuance costs
|
(4,199
|
)
|
|
(1,771
|
)
|
|
(8,159
|
)
|
|||
Repayment on debt obligations issued by CLOs
|
(1,893,506
|
)
|
|
(730,456
|
)
|
|
(1,688,229
|
)
|
|||
Borrowings on credit facilities
|
531,411
|
|
|
—
|
|
|
702,100
|
|
|||
Repayments on credit facilities
|
(372,000
|
)
|
|
—
|
|
|
(370,336
|
)
|
|||
Net cash provided by (used in) financing activities
|
2,730,302
|
|
|
994,983
|
|
|
(51,032
|
)
|
|||
Effect of exchange rate changes on cash
|
(8,289
|
)
|
|
(239
|
)
|
|
39,285
|
|
|||
Net increase (decrease) in cash and cash-equivalents
|
339,768
|
|
|
(115,423
|
)
|
|
(5,093
|
)
|
|||
Deconsolidation due to restructuring
|
(145,295
|
)
|
|
—
|
|
|
—
|
|
|||
Initial consolidation (deconsolidation) of funds
|
(184,407
|
)
|
|
(12,315
|
)
|
|
5,358
|
|
|||
Cash and cash-equivalents, beginning balance
|
831,727
|
|
|
959,465
|
|
|
959,200
|
|
|||
Cash and cash-equivalents, ending balance
|
$
|
841,793
|
|
|
$
|
831,727
|
|
|
$
|
959,465
|
|
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
* * *
|
|||||||||||
Supplemental cash flow disclosures:
|
|
|
|
|
|
||||||
Cash paid for interest
|
$
|
136,385
|
|
|
$
|
131,113
|
|
|
$
|
146,341
|
|
Cash paid for income taxes
|
8,887
|
|
|
13,103
|
|
|
22,853
|
|
|||
|
|
|
|
|
|
||||||
Supplemental disclosure of non-cash activities:
|
|
|
|
|
|
||||||
Net assets related to the initial consolidation of funds
|
$
|
162,630
|
|
|
$
|
—
|
|
|
$
|
296,971
|
|
Net assets related to the deconsolidation of funds
|
1,030,712
|
|
|
8,165
|
|
|
—
|
|
|||
Net assets related to the deconsolidation due to restructuring
|
500,629
|
|
|
$
|
—
|
|
|
—
|
|
||
|
|
|
|
|
|
||||||
|
|
|
|
|
|
||||||
Reconciliation of cash and cash-equivalents
|
|
|
|
|
|
||||||
Cash and cash-equivalents – Oaktree
|
$
|
323,550
|
|
|
$
|
460,937
|
|
|
$
|
481,631
|
|
Cash and cash-equivalents – Consolidated Funds
|
518,243
|
|
|
370,790
|
|
|
477,834
|
|
|||
Total cash and cash-equivalents
|
$
|
841,793
|
|
|
$
|
831,727
|
|
|
$
|
959,465
|
|
|
Oaktree Capital Group, LLC
|
|
Non-controlling Interests in Consolidated Subsidiaries
|
|
Non-controlling Interests in Consolidated Funds
|
|
Total Unitholders’ Capital
|
||||||||||||||||||||||||||||||
|
Class A Units
|
|
Class B Units
|
|
Series A Preferred Units
|
|
Series B Preferred Units
|
|
Paid-in Capital
|
|
Retained Earnings (Accumulated Deficit)
|
|
Accumulated Other Comprehensive Income (Loss)
|
|
|
||||||||||||||||||||||
Unitholders' capital as of December 31, 2016
|
63,032
|
|
|
91,758
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
749,618
|
|
|
$
|
54,494
|
|
|
$
|
1,793
|
|
|
$
|
1,050,319
|
|
|
$
|
28,947
|
|
|
$
|
1,885,171
|
|
Activity for the year ended December 31, 2017:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Cumulative-effect adjustment from adoption of accounting guidance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(352
|
)
|
|
352
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Issuance of units
|
2,507
|
|
|
524
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cancellation of units associated with forfeitures
|
(21
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cancellation of units
|
—
|
|
|
(1,221
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Change in deferred taxes resulting from increase in Class A ownership percentage
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475
|
|
||||||||
Repurchase and cancellation of units
|
(208
|
)
|
|
(85
|
)
|
|
—
|
|
|
—
|
|
|
(9,073
|
)
|
|
—
|
|
|
—
|
|
|
(3,244
|
)
|
|
—
|
|
|
(12,317
|
)
|
||||||||
Equity reallocation between controlling and non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
23,151
|
|
|
—
|
|
|
—
|
|
|
(23,151
|
)
|
|
—
|
|
|
—
|
|
||||||||
Capital increase related to equity-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24,594
|
|
|
—
|
|
|
—
|
|
|
35,126
|
|
|
—
|
|
|
59,720
|
|
||||||||
Distributions declared
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(206,212
|
)
|
|
—
|
|
|
(360,618
|
)
|
|
(2,223
|
)
|
|
(569,053
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
231,494
|
|
|
—
|
|
|
424,784
|
|
|
3,672
|
|
|
659,950
|
|
||||||||
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,374
|
)
|
|
(2,015
|
)
|
|
—
|
|
|
(3,389
|
)
|
||||||||
Unrealized gain on interest-rate swap designated as cash-flow hedge, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
24
|
|
|
36
|
|
|
—
|
|
|
60
|
|
||||||||
Unitholders' capital as of December 31, 2017
|
65,310
|
|
|
90,976
|
|
|
—
|
|
|
—
|
|
|
788,413
|
|
|
80,128
|
|
|
443
|
|
|
1,121,237
|
|
|
30,396
|
|
|
2,020,617
|
|
||||||||
Activity for the year ended December 31, 2018:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Cumulative-effect adjustment from adoption of accounting guidance
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
20,355
|
|
|
—
|
|
|
28,354
|
|
|
—
|
|
|
48,709
|
|
||||||||
Issuance of units
|
6,688
|
|
|
182
|
|
|
173,669
|
|
|
226,915
|
|
|
219,750
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
620,334
|
|
||||||||
Cancellation of units associated with forfeitures
|
(115
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cancellation of units
|
—
|
|
|
(582
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Repurchase and cancellation of units
|
(221
|
)
|
|
(5,104
|
)
|
|
—
|
|
|
—
|
|
|
(228,469
|
)
|
|
—
|
|
|
—
|
|
|
(3,251
|
)
|
|
—
|
|
|
(231,720
|
)
|
||||||||
Purchase of non-controlling interests in subsidiary
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,320
|
)
|
|
—
|
|
|
—
|
|
|
(1,596
|
)
|
|
—
|
|
|
(2,916
|
)
|
||||||||
Deferred tax effect resulting from the purchase of OCGH units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,103
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
7,103
|
|
||||||||
Equity reallocation between controlling and non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
80,106
|
|
|
—
|
|
|
—
|
|
|
(80,106
|
)
|
|
—
|
|
|
—
|
|
||||||||
Capital increase related to equity-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
27,460
|
|
|
—
|
|
|
—
|
|
|
33,573
|
|
|
—
|
|
|
61,033
|
|
||||||||
Distributions declared
|
—
|
|
|
—
|
|
|
(6,890
|
)
|
|
(5,387
|
)
|
|
—
|
|
|
(210,941
|
)
|
|
—
|
|
|
(289,428
|
)
|
|
(29,635
|
)
|
|
(542,281
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
6,890
|
|
|
5,387
|
|
|
—
|
|
|
211,141
|
|
|
—
|
|
|
282,818
|
|
|
(761
|
)
|
|
505,475
|
|
||||||||
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
610
|
|
|
753
|
|
|
—
|
|
|
1,363
|
|
||||||||
Unitholders’ capital as of December 31, 2018
|
71,662
|
|
|
85,472
|
|
|
173,669
|
|
|
226,915
|
|
|
893,043
|
|
|
100,683
|
|
|
1,053
|
|
|
1,092,354
|
|
|
—
|
|
|
2,487,717
|
|
||||||||
Activity for the year ended December 31, 2019:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||||
Issuance of units
|
29,713
|
|
|
5,153
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Cancellation of units
|
(3,149
|
)
|
|
(3,429
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Repurchase and cancellation of units
|
(259
|
)
|
|
(25,403
|
)
|
|
—
|
|
|
—
|
|
|
(8,378
|
)
|
|
—
|
|
|
—
|
|
|
(3,813
|
)
|
|
—
|
|
|
(12,191
|
)
|
||||||||
Restructuring equity distribution of entities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(413,074
|
)
|
|
—
|
|
|
—
|
|
|
(87,555
|
)
|
|
—
|
|
|
(500,629
|
)
|
||||||||
Deferred tax effect resulting from the purchase of OCGH units
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
203,511
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
203,511
|
|
||||||||
Equity reallocation between controlling and non-controlling interests
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
306,015
|
|
|
—
|
|
|
—
|
|
|
(306,015
|
)
|
|
—
|
|
|
—
|
|
||||||||
Capital increase related to equity-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
31,943
|
|
|
—
|
|
|
—
|
|
|
34,519
|
|
|
—
|
|
|
66,462
|
|
||||||||
Distributions declared
|
—
|
|
|
—
|
|
|
(11,924
|
)
|
|
(15,392
|
)
|
|
(262,761
|
)
|
|
(176,672
|
)
|
|
—
|
|
|
(363,742
|
)
|
|
—
|
|
|
(830,491
|
)
|
||||||||
Net income
|
—
|
|
|
—
|
|
|
11,924
|
|
|
15,392
|
|
|
—
|
|
|
127,523
|
|
|
—
|
|
|
138,879
|
|
|
—
|
|
|
293,718
|
|
||||||||
Foreign currency translation adjustment, net of tax
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,554
|
)
|
|
(1,374
|
)
|
|
—
|
|
|
(5,928
|
)
|
||||||||
Unitholders’ capital as of December 31, 2019
|
97,967
|
|
|
61,793
|
|
|
$
|
173,669
|
|
|
$
|
226,915
|
|
|
$
|
750,299
|
|
|
$
|
51,534
|
|
|
$
|
(3,501
|
)
|
|
$
|
503,253
|
|
|
$
|
—
|
|
|
$
|
1,702,169
|
|
•
|
Level I – Quoted unadjusted prices for identical instruments in active markets to which the Company has access at the date of measurement. The types of investments in Level I include exchange-traded equities, debt and derivatives with quoted prices.
|
•
|
Level II – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations in which all significant inputs are directly or indirectly observable. Level II inputs include interest rates, yield curves, volatilities, prepayment risks, loss severities, credit risks and default rates. The types of investments in Level II generally include corporate bonds and loans, government and agency securities, less liquid and restricted equity investments, over-the-counter traded derivatives, debt obligations of consolidated CLOs, and other investments where the fair value is based on observable inputs.
|
•
|
Level III – Valuations for which one or more significant inputs are unobservable. These inputs reflect the Company’s assessment of the assumptions that market participants use to value the investment based on the best available information. Level III inputs include prices of quoted securities in markets for which there are few transactions, less public information exists or prices vary among brokered market makers. The types of investments in Level III include non-publicly traded equity, debt, real estate and derivatives.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Receivables (1)
|
$
|
65,346
|
|
|
$
|
74,795
|
|
Contract assets (1)
|
73,907
|
|
|
288,176
|
|
||
Contract liabilities (2)
|
—
|
|
|
26,549
|
|
|
|
|
|
|
(1)
|
The changes in the balances primarily relate to accruals, net of payments received.
|
(2)
|
Revenue recognized in the year ended December 31, 2019 from amounts included in the contract liability balance was $17.1 million.
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Corporate investments
|
$
|
693,090
|
|
|
$
|
1,093,294
|
|
Due from affiliates
|
87,524
|
|
|
384,225
|
|
||
Maximum exposure to loss
|
$
|
780,614
|
|
|
$
|
1,477,519
|
|
|
As of December 31,
|
||||||
Corporate Investments
|
2019
|
|
2018
|
||||
Equity-method investments:
|
|
|
|
||||
Funds
|
$
|
670,348
|
|
|
$
|
1,089,068
|
|
Companies
|
3,855
|
|
|
45,797
|
|
||
Other investments, at fair value
|
34,934
|
|
|
74,899
|
|
||
Total corporate investments
|
$
|
709,137
|
|
|
$
|
1,209,764
|
|
|
Year Ended December 31,
|
||||||||||
Investment Income
|
2019
|
|
2018
|
|
2017
|
||||||
Equity-method investments:
|
|
|
|
|
|
||||||
Funds
|
$
|
68,145
|
|
|
$
|
66,922
|
|
|
$
|
138,465
|
|
Companies
|
57,475
|
|
|
73,868
|
|
|
71,311
|
|
|||
Other investments, at fair value
|
20,949
|
|
|
16,320
|
|
|
(8,487
|
)
|
|||
Total investment income
|
$
|
146,569
|
|
|
$
|
157,110
|
|
|
$
|
201,289
|
|
|
As of December 31,
|
||||||
Statements of Financial Condition
|
2019
|
|
2018
|
||||
Assets:
|
|
|
|
||||
Cash and cash-equivalents
|
$
|
1,892,353
|
|
|
$
|
3,875,072
|
|
Investments, at fair value
|
25,213,422
|
|
|
39,711,382
|
|
||
Other assets
|
635,277
|
|
|
2,832,960
|
|
||
Total assets
|
$
|
27,741,052
|
|
|
$
|
46,419,414
|
|
Liabilities and Capital:
|
|
|
|
||||
Debt obligations
|
$
|
3,558,139
|
|
|
$
|
7,234,596
|
|
Other liabilities
|
3,779,527
|
|
|
2,662,850
|
|
||
Total liabilities
|
7,337,666
|
|
|
9,897,446
|
|
||
Total capital
|
20,403,386
|
|
|
36,521,968
|
|
||
Total liabilities and capital
|
$
|
27,741,052
|
|
|
$
|
46,419,414
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Statements of Operations
|
|
|
|
|
|
||||||
Revenues / investment income
|
$
|
766,096
|
|
|
$
|
1,861,551
|
|
|
$
|
1,982,828
|
|
Interest expense
|
(150,078
|
)
|
|
(276,779
|
)
|
|
(235,266
|
)
|
|||
Other expenses
|
(402,814
|
)
|
|
(876,627
|
)
|
|
(821,083
|
)
|
|||
Net realized and unrealized gain on investments
|
1,077,761
|
|
|
1,087,345
|
|
|
3,795,102
|
|
|||
Net income
|
$
|
1,290,965
|
|
|
$
|
1,795,490
|
|
|
$
|
4,721,581
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Realized gain (loss)
|
$
|
7,763
|
|
|
$
|
18,208
|
|
|
$
|
8,439
|
|
Net change in unrealized gain (loss)
|
13,186
|
|
|
(1,888
|
)
|
|
(16,926
|
)
|
|||
Total gain (loss)
|
$
|
20,949
|
|
|
$
|
16,320
|
|
|
$
|
(8,487
|
)
|
|
Fair Value as of December 31,
|
|
Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
|
||||||||||
Investments
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
United States:
|
|
|
|
|
|
|
|
||||||
Debt securities:
|
|
|
|
|
|
|
|
||||||
Communication services
|
$
|
464,356
|
|
|
$
|
543,948
|
|
|
6.4
|
%
|
|
8.4
|
%
|
Consumer discretionary
|
508,701
|
|
|
506,551
|
|
|
6.9
|
|
|
7.8
|
|
||
Consumer staples
|
92,102
|
|
|
112,197
|
|
|
1.3
|
|
|
1.7
|
|
||
Energy
|
223,671
|
|
|
204,568
|
|
|
3.0
|
|
|
3.1
|
|
||
Financials
|
355,113
|
|
|
332,240
|
|
|
4.8
|
|
|
5.1
|
|
||
Health care
|
512,864
|
|
|
537,592
|
|
|
7.0
|
|
|
8.2
|
|
||
Industrials
|
563,920
|
|
|
443,406
|
|
|
7.7
|
|
|
6.8
|
|
||
Information technology
|
524,390
|
|
|
536,000
|
|
|
7.1
|
|
|
8.2
|
|
||
Materials
|
294,300
|
|
|
289,499
|
|
|
4.0
|
|
|
4.4
|
|
||
Real estate
|
204,933
|
|
|
217,633
|
|
|
2.8
|
|
|
3.3
|
|
||
Utilities
|
216,053
|
|
|
137,031
|
|
|
2.9
|
|
|
2.1
|
|
||
Total debt securities (cost: $3,981,956 and $4,019,823 as of December 31, 2019 and 2018, respectively)
|
3,960,403
|
|
|
3,860,665
|
|
|
53.9
|
|
|
59.1
|
|
||
Equity securities:
|
|
|
|
|
|
|
|
|
|
||||
Communication services
|
312
|
|
|
—
|
|
|
0.0
|
|
|
0.0
|
|
||
Consumer discretionary
|
658
|
|
|
1,915
|
|
|
0.0
|
|
|
0.1
|
|
||
Energy
|
256
|
|
|
131
|
|
|
0.0
|
|
|
0.0
|
|
||
Financials
|
—
|
|
|
837
|
|
|
0.0
|
|
|
0.0
|
|
||
Health care
|
—
|
|
|
1,348
|
|
|
0.0
|
|
|
0.0
|
|
||
Industrials
|
—
|
|
|
88
|
|
|
0.0
|
|
|
0.0
|
|
||
Utilities
|
130,671
|
|
|
1,107
|
|
|
1.8
|
|
|
0.0
|
|
||
Total equity securities (cost: $137,149 and $6,117 as of December 31, 2019 and 2018, respectively)
|
131,897
|
|
|
5,426
|
|
|
1.8
|
|
|
0.1
|
|
||
Real estate:
|
|
|
|
|
|
|
|
||||||
Real estate
|
230,741
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
||
Total real estate (cost: $230,741 and $0 as of December 31, 2019 and 2018, respectively)
|
230,741
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
|
Fair Value as of December 31,
|
|
Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
|
||||||||||
Investments
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Europe:
|
|
|
|
|
|
|
|
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
||||||
Communication services
|
$
|
469,822
|
|
|
$
|
530,337
|
|
|
6.4
|
%
|
|
8.1
|
%
|
Consumer discretionary
|
659,001
|
|
|
545,324
|
|
|
9.0
|
|
|
8.3
|
|
||
Consumer staples
|
178,609
|
|
|
160,406
|
|
|
2.4
|
|
|
2.5
|
|
||
Energy
|
11,316
|
|
|
15,260
|
|
|
0.2
|
|
|
0.2
|
|
||
Financials
|
101,933
|
|
|
48,545
|
|
|
1.4
|
|
|
0.7
|
|
||
Health care
|
579,765
|
|
|
418,516
|
|
|
7.9
|
|
|
6.4
|
|
||
Industrials
|
362,120
|
|
|
246,640
|
|
|
4.9
|
|
|
3.8
|
|
||
Information technology
|
177,152
|
|
|
194,988
|
|
|
2.4
|
|
|
3.0
|
|
||
Materials
|
230,289
|
|
|
221,660
|
|
|
3.1
|
|
|
3.4
|
|
||
Real estate
|
96,315
|
|
|
30,045
|
|
|
1.3
|
|
|
0.5
|
|
||
Utilities
|
3,852
|
|
|
1,559
|
|
|
0.1
|
|
|
0.0
|
|
||
Total debt securities (cost: $2,876,531 and $2,477,821 as of December 31, 2019 and 2018, respectively)
|
2,870,174
|
|
|
2,413,280
|
|
|
39.0
|
|
|
36.9
|
|
||
Equity securities:
|
|
|
|
|
|
|
|
||||||
Consumer Discretionary
|
94
|
|
|
—
|
|
|
0.0
|
|
|
—
|
|
||
Consumer staples
|
—
|
|
|
38
|
|
|
—
|
|
|
0.0
|
|
||
Health care
|
—
|
|
|
948
|
|
|
—
|
|
|
0.1
|
|
||
Total equity securities (cost: $1,227 and $320 as of December 31, 2019 and 2018, respectively)
|
94
|
|
|
986
|
|
|
0.0
|
|
|
0.1
|
|
||
Asia and other:
|
|
|
|
|
|
|
|
|
|
||||
Debt securities:
|
|
|
|
|
|
|
|
|
|
||||
Communication services
|
15,750
|
|
|
12,069
|
|
|
0.2
|
|
|
0.2
|
|
||
Consumer discretionary
|
40,073
|
|
|
36,822
|
|
|
0.5
|
|
|
0.6
|
|
||
Consumer staples
|
11,545
|
|
|
11,867
|
|
|
0.2
|
|
|
0.2
|
|
||
Energy
|
13,471
|
|
|
20,594
|
|
|
0.1
|
|
|
0.3
|
|
||
Financials
|
10,313
|
|
|
13,995
|
|
|
0.1
|
|
|
0.2
|
|
||
Government
|
917
|
|
|
12,155
|
|
|
0.0
|
|
|
0.2
|
|
||
Health care
|
8,923
|
|
|
9,633
|
|
|
0.1
|
|
|
0.1
|
|
||
Industrials
|
31,814
|
|
|
40,468
|
|
|
0.4
|
|
|
0.7
|
|
||
Information technology
|
5,639
|
|
|
1,887
|
|
|
0.1
|
|
|
0.0
|
|
||
Materials
|
5,604
|
|
|
15,516
|
|
|
0.1
|
|
|
0.2
|
|
||
Real estate
|
751
|
|
|
38,592
|
|
|
0.0
|
|
|
0.6
|
|
||
Utilities
|
20,300
|
|
|
14,870
|
|
|
0.3
|
|
|
0.2
|
|
||
Total debt securities (cost: $164,650 and $233,603 as of December 31, 2019 and 2018, respectively)
|
165,100
|
|
|
228,468
|
|
|
2.2
|
|
|
3.5
|
|
|
Fair Value as of December 31,
|
|
Fair Value as a Percentage of Investments of Consolidated Funds as of December 31,
|
||||||||||
Investments
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||
Asia and other:
|
|
|
|
|
|
|
|
||||||
Equity securities:
|
|
|
|
|
|
|
|
|
|||||
Consumer discretionary
|
—
|
|
|
874
|
|
|
—
|
|
|
0.0
|
|
||
Consumer staples
|
—
|
|
|
997
|
|
|
—
|
|
|
0.0
|
|
||
Energy
|
—
|
|
|
382
|
|
|
—
|
|
|
0.0
|
|
||
Financials
|
—
|
|
|
2,935
|
|
|
—
|
|
|
0.0
|
|
||
Industrials
|
—
|
|
|
11,265
|
|
|
—
|
|
|
0.2
|
|
||
Information technology
|
—
|
|
|
1,725
|
|
|
—
|
|
|
0.0
|
|
||
Materials
|
—
|
|
|
4,382
|
|
|
—
|
|
|
0.1
|
|
||
Total equity securities (cost: $0 and $22,977 as of December 31, 2019 and 2018, respectively)
|
—
|
|
|
22,560
|
|
|
—
|
|
|
0.3
|
|
||
Total debt securities
|
6,995,677
|
|
|
6,502,413
|
|
|
95.1
|
|
|
99.5
|
|
||
Total equity securities
|
131,991
|
|
|
28,972
|
|
|
1.8
|
|
|
0.5
|
|
||
Total real estate
|
230,741
|
|
|
—
|
|
|
3.1
|
|
|
—
|
|
||
Total investments, at fair value
|
$
|
7,358,409
|
|
|
$
|
6,531,385
|
|
|
100.0
|
%
|
|
100.0
|
%
|
Securities Sold Short
|
|
|
|
|
|
|
|
|
|||||
Equity securities (proceeds: $0 and $2,644 as of December 31, 2019 and 2018, respectively)
|
$
|
—
|
|
|
$
|
(2,609
|
)
|
|
|
|
|
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
||||||||||||
Investments and other financial instruments
|
$
|
(11,227
|
)
|
|
$
|
137,521
|
|
|
$
|
(26,109
|
)
|
|
$
|
(252,038
|
)
|
|
$
|
27,910
|
|
|
$
|
(1,151
|
)
|
CLO liabilities (1)
|
—
|
|
|
(131,948
|
)
|
|
—
|
|
|
85,014
|
|
|
—
|
|
|
53,351
|
|
||||||
Foreign-currency forward contracts (2)
|
(6,546
|
)
|
|
4,364
|
|
|
513
|
|
|
2,327
|
|
|
(2,917
|
)
|
|
1,909
|
|
||||||
Total-return and interest-rate swaps (2)
|
—
|
|
|
—
|
|
|
858
|
|
|
29
|
|
|
232
|
|
|
378
|
|
||||||
Options and futures (2)
|
—
|
|
|
—
|
|
|
1,210
|
|
|
76
|
|
|
(4,825
|
)
|
|
574
|
|
||||||
Total
|
$
|
(17,773
|
)
|
|
$
|
9,937
|
|
|
$
|
(23,528
|
)
|
|
$
|
(164,592
|
)
|
|
$
|
20,400
|
|
|
$
|
55,061
|
|
|
|
|
|
|
(1)
|
Represents the net change in the fair value of CLO liabilities based on the more observable fair value of CLO assets, as measured under the CLO measurement guidance. Please see note 2 for more information.
|
(2)
|
Please see note 8 for additional information.
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||||||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
U.S. Treasury and other securities (1)
|
$
|
9,232
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
9,232
|
|
|
$
|
546,531
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
546,531
|
|
Corporate investments
|
—
|
|
|
4,717
|
|
|
30,311
|
|
|
35,028
|
|
|
—
|
|
|
29,476
|
|
|
45,426
|
|
|
74,902
|
|
||||||||
Foreign-currency forward contracts (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,654
|
|
|
—
|
|
|
1,654
|
|
||||||||
Cross-currency swap (2)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,384
|
|
|
—
|
|
|
2,384
|
|
||||||||
Total assets
|
$
|
9,232
|
|
|
$
|
4,717
|
|
|
$
|
30,311
|
|
|
$
|
44,260
|
|
|
$
|
546,531
|
|
|
$
|
33,514
|
|
|
$
|
45,426
|
|
|
$
|
625,471
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Contingent consideration (3)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(6,657
|
)
|
|
$
|
(6,657
|
)
|
Foreign-currency forward contracts (4)
|
—
|
|
|
(1,703
|
)
|
|
—
|
|
|
(1,703
|
)
|
|
—
|
|
|
(2,318
|
)
|
|
—
|
|
|
(2,318
|
)
|
||||||||
Total liabilities
|
$
|
—
|
|
|
$
|
(1,703
|
)
|
|
$
|
—
|
|
|
$
|
(1,703
|
)
|
|
$
|
—
|
|
|
$
|
(2,318
|
)
|
|
$
|
(6,657
|
)
|
|
$
|
(8,975
|
)
|
|
|
|
|
|
(1)
|
Carrying value approximates fair value due to the short-term nature.
|
(2)
|
Amounts are included in other assets in the consolidated statements of financial condition.
|
(3)
|
Amounts are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition.
|
(4)
|
Amounts are included in accounts payable, accrued expenses and other liabilities in the consolidated statements of financial condition, except for $94 and $3 as of December 31, 2019 and 2018, respectively, which are included within corporate investments in the consolidated statements of financial condition.
|
|
Year Ended December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Corporate Investments
|
|
Contingent Consideration Liability
|
|
Corporate Investments
|
|
Contingent Consideration Liability
|
||||||||
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
45,426
|
|
|
$
|
(6,657
|
)
|
|
$
|
50,902
|
|
|
$
|
(18,778
|
)
|
Contributions or additions
|
937
|
|
|
—
|
|
|
19,382
|
|
|
—
|
|
||||
Distributions
|
(9,643
|
)
|
|
—
|
|
|
(31,614
|
)
|
|
—
|
|
||||
Restructuring distribution of net assets
|
(14,416
|
)
|
|
6,657
|
|
|
—
|
|
|
—
|
|
||||
Net gain (loss) included in earnings
|
8,007
|
|
|
—
|
|
|
6,756
|
|
|
12,121
|
|
||||
Ending balance
|
$
|
30,311
|
|
|
$
|
—
|
|
|
$
|
45,426
|
|
|
$
|
(6,657
|
)
|
|
|
|
|
|
|
|
|
||||||||
Net change in unrealized gains (losses) attributable to financial instruments still held at end of period
|
$
|
8,007
|
|
|
$
|
—
|
|
|
$
|
4,796
|
|
|
$
|
12,121
|
|
|
|
Fair Value as of December 31,
|
|
|
|
Significant Unobservable Input
|
|
|
|
Weighted Average
|
||||||
Financial Instrument
|
|
2019
|
|
2018
|
|
Valuation Technique
|
|
|
Range
|
|
||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
||||
Corporate investment – Limited partnership interests
|
|
$
|
30,311
|
|
|
$
|
45,426
|
|
|
Market approach
(value of underlying assets) |
|
Not applicable
|
|
Not applicable
|
|
Not applicable
|
Contingent liability
|
|
—
|
|
|
(6,657
|
)
|
|
Discounted cash flow
|
|
Assumed % of total potential contingent payments
|
|
0% – 100%
|
|
23%
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||||||||||||||||||
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
|||||||||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Corporate debt – bank debt
|
$
|
—
|
|
|
$
|
5,911,523
|
|
|
$
|
149,642
|
|
|
$
|
6,061,165
|
|
|
$
|
—
|
|
|
$
|
5,216,923
|
|
|
$
|
136,055
|
|
|
$
|
5,352,978
|
|
Corporate debt – all other
|
—
|
|
|
903,246
|
|
|
31,266
|
|
|
934,512
|
|
|
634
|
|
|
963,423
|
|
|
185,378
|
|
|
1,149,435
|
|
||||||||
Equities – common stock
|
552
|
|
|
345
|
|
|
130,437
|
|
|
131,334
|
|
|
24,483
|
|
|
—
|
|
|
3,063
|
|
|
27,546
|
|
||||||||
Equities – preferred stock
|
—
|
|
|
—
|
|
|
657
|
|
|
657
|
|
|
—
|
|
|
—
|
|
|
1,426
|
|
|
1,426
|
|
||||||||
Real estate
|
—
|
|
|
—
|
|
|
230,741
|
|
|
230,741
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||||
Total investments
|
552
|
|
|
6,815,114
|
|
|
542,743
|
|
|
7,358,409
|
|
|
25,117
|
|
|
6,180,346
|
|
|
325,922
|
|
|
6,531,385
|
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign-currency forward contracts
|
27
|
|
|
6,863
|
|
|
—
|
|
|
6,890
|
|
|
—
|
|
|
2,275
|
|
|
—
|
|
|
2,275
|
|
||||||||
Options and futures
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
|||||||||
Total derivatives
|
27
|
|
|
6,863
|
|
|
—
|
|
|
6,890
|
|
|
189
|
|
|
2,275
|
|
|
—
|
|
|
2,464
|
|
||||||||
Total assets
|
$
|
579
|
|
|
$
|
6,821,977
|
|
|
$
|
542,743
|
|
|
$
|
7,365,299
|
|
|
$
|
25,306
|
|
|
$
|
6,182,621
|
|
|
$
|
325,922
|
|
|
$
|
6,533,849
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
CLO debt obligations:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Senior secured notes (1)
|
$
|
—
|
|
|
$
|
(5,613,846
|
)
|
|
$
|
—
|
|
|
$
|
(5,613,846
|
)
|
|
$
|
—
|
|
|
$
|
(3,976,602
|
)
|
|
$
|
—
|
|
|
$
|
(3,976,602
|
)
|
Subordinated notes (1)
|
—
|
|
|
(154,153
|
)
|
|
—
|
|
|
(154,153
|
)
|
|
—
|
|
|
(151,392
|
)
|
|
—
|
|
|
(151,392
|
)
|
||||||||
Total CLO debt obligations
|
—
|
|
|
(5,767,999
|
)
|
|
—
|
|
|
(5,767,999
|
)
|
|
—
|
|
|
(4,127,994
|
)
|
|
—
|
|
|
(4,127,994
|
)
|
||||||||
Securities sold short:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Equity securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2,609
|
)
|
|
—
|
|
|
—
|
|
|
(2,609
|
)
|
||||||||
Derivatives:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||||
Foreign-currency forward contracts
|
(202
|
)
|
|
(2,349
|
)
|
|
—
|
|
|
(2,551
|
)
|
|
—
|
|
|
(643
|
)
|
|
—
|
|
|
(643
|
)
|
||||||||
Total liabilities
|
$
|
(202
|
)
|
|
$
|
(5,770,348
|
)
|
|
$
|
—
|
|
|
$
|
(5,770,550
|
)
|
|
$
|
(2,609
|
)
|
|
$
|
(4,128,637
|
)
|
|
$
|
—
|
|
|
$
|
(4,131,246
|
)
|
|
|
|
|
|
(1)
|
The fair value of CLO liabilities is classified based on the more observable fair value of CLO assets. Please see notes 2 and 11 for more information.
|
|
Corporate Debt – Bank Debt
|
|
Corporate Debt – All Other
|
|
Equities – Common Stock
|
|
Equities – Preferred Stock
|
|
Real Estate
|
|
Total
|
||||||||||||
2019
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
136,055
|
|
|
$
|
185,378
|
|
|
$
|
3,063
|
|
|
$
|
1,426
|
|
|
$
|
—
|
|
|
$
|
325,922
|
|
Deconsolidation of funds
|
(121,146
|
)
|
|
(116,714
|
)
|
|
(3,063
|
)
|
|
(1,426
|
)
|
|
—
|
|
|
$
|
(242,349
|
)
|
|||||
Transfers into Level III
|
9,300
|
|
|
—
|
|
|
2,391
|
|
|
776
|
|
|
—
|
|
|
12,467
|
|
||||||
Transfers out of Level III
|
(5,293
|
)
|
|
(57,325
|
)
|
|
(504
|
)
|
|
—
|
|
|
—
|
|
|
(63,122
|
)
|
||||||
Purchases
|
155,546
|
|
|
27,857
|
|
|
130,341
|
|
|
—
|
|
|
230,741
|
|
|
544,485
|
|
||||||
Sales
|
(15,282
|
)
|
|
(8,471
|
)
|
|
(266
|
)
|
|
—
|
|
|
—
|
|
|
(24,019
|
)
|
||||||
Realized gains (losses), net
|
46
|
|
|
(119
|
)
|
|
(106
|
)
|
|
—
|
|
|
—
|
|
|
(179
|
)
|
||||||
Unrealized (depreciation) appreciation, net
|
(9,584
|
)
|
|
660
|
|
|
(1,419
|
)
|
|
(119
|
)
|
|
—
|
|
|
(10,462
|
)
|
||||||
Ending balance
|
$
|
149,642
|
|
|
$
|
31,266
|
|
|
$
|
130,437
|
|
|
$
|
657
|
|
|
$
|
230,741
|
|
|
$
|
542,743
|
|
Net change in unrealized (depreciation) appreciation attributable to assets still held at end of period
|
$
|
(9,780
|
)
|
|
$
|
390
|
|
|
$
|
(1,419
|
)
|
|
$
|
(119
|
)
|
|
$
|
—
|
|
|
$
|
(10,928
|
)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
2018
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Beginning balance
|
$
|
86,999
|
|
|
$
|
75,388
|
|
|
$
|
3,427
|
|
|
$
|
—
|
|
|
$
|
121,588
|
|
|
$
|
287,402
|
|
Deconsolidation of funds
|
—
|
|
|
—
|
|
|
(52,000
|
)
|
|
(172
|
)
|
|
(121,087
|
)
|
|
(173,259
|
)
|
||||||
Transfers into Level III
|
48,312
|
|
|
2,034
|
|
|
490
|
|
|
—
|
|
|
—
|
|
|
50,836
|
|
||||||
Transfers out of Level III
|
(26,845
|
)
|
|
(10,984
|
)
|
|
(658
|
)
|
|
—
|
|
|
—
|
|
|
(38,487
|
)
|
||||||
Purchases
|
83,199
|
|
|
186,210
|
|
|
52,533
|
|
|
1,248
|
|
|
—
|
|
|
323,190
|
|
||||||
Sales
|
(54,649
|
)
|
|
(57,414
|
)
|
|
(387
|
)
|
|
—
|
|
|
(501
|
)
|
|
(112,951
|
)
|
||||||
Realized gains (losses), net
|
659
|
|
|
351
|
|
|
59
|
|
|
—
|
|
|
|
|
|
1,069
|
|
||||||
Unrealized (depreciation) appreciation, net
|
(1,620
|
)
|
|
(10,207
|
)
|
|
(401
|
)
|
|
350
|
|
|
—
|
|
|
(11,878
|
)
|
||||||
Ending balance
|
$
|
136,055
|
|
|
$
|
185,378
|
|
|
$
|
3,063
|
|
|
$
|
1,426
|
|
|
$
|
—
|
|
|
$
|
325,922
|
|
Net change in unrealized (depreciation) appreciation attributable to assets still held at end of period
|
$
|
(1,729
|
)
|
|
$
|
(7,619
|
)
|
|
$
|
(401
|
)
|
|
$
|
350
|
|
|
$
|
—
|
|
|
$
|
(9,399
|
)
|
Investment Type
|
|
Fair Value
|
|
Valuation Technique
|
|
Significant Unobservable
Inputs (1)(2) |
|
Range
|
|
Weighted Average (3)
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Credit-oriented investments:
|
|
|
|
|
|
|
|
|
|
|
||
Consumer discretionary:
|
|
$
|
16,836
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
Financials:
|
|
17,274
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
Health care:
|
|
26,863
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
Real estate:
|
|
16,755
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
|
|
71,906
|
|
|
Recent transaction price (4)
|
|
|
|
|
|
|
|
Other:
|
|
31,274
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
Equity investments:
|
|
|
|
|
|
|
|
|
|
|
||
|
|
130,341
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
6% – 8%
|
|
7%
|
|
|
|
753
|
|
|
Recent market information (5)
|
|
|
|
|
|
|
|
Real estate-oriented:
|
|
|
|
|
|
|
|
|
|
|
||
|
|
230,741
|
|
|
Recent transaction price (4)
|
|
Not Applicable
|
|
Not applicable
|
|
Not applicable
|
|
Total Level III
investments |
|
$
|
542,743
|
|
|
|
|
|
|
|
|
|
Investment Type
|
|
Fair Value
|
|
Valuation Technique
|
|
Significant Unobservable
Inputs (1)(2) |
|
Range
|
|
Weighted Average (3)
|
||
|
|
|
|
|
|
|
|
|
|
|
||
Credit-oriented investments:
|
|
|
|
|
|
|
|
|
|
|
||
Communication services:
|
|
$
|
20,746
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
|
2,416
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
12% – 14%
|
|
13%
|
|
FInancials:
|
|
108,277
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
|
|
3,608
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
9% – 15%
|
|
14%
|
|
Health care:
|
|
37,724
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
|
|
2,550
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
10% – 16%
|
|
14%
|
|
Real estate:
|
|
79,562
|
|
|
Recent market information (5)
|
|
Quoted prices
|
|
Not applicable
|
|
Not applicable
|
|
|
|
4,570
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
12% – 23%
|
|
14%
|
|
Other:
|
|
38,959
|
|
|
Recent market information (5)
|
|
Quotes prices
|
|
Not applicable
|
|
Not applicable
|
|
|
|
17,943
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
8% – 15%
|
|
13%
|
|
|
|
5,078
|
|
|
Recent transaction price (8)
|
|
Not applicable
|
|
Not applicable
|
|
Not applicable
|
|
Equity investments:
|
|
|
|
|
|
|
|
|
|
|
||
|
|
2,390
|
|
|
Discounted cash flow (4)
|
|
Discount rate
|
|
10% – 30%
|
|
12%
|
|
|
|
2,099
|
|
|
Market approach
(comparable companies) (6) |
|
Earnings multiple (7)
|
|
4x – 10x
|
|
7x
|
|
Total Level III
investments |
|
$
|
325,922
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The discount rate is the significant unobservable input used in the fair-value measurement of performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments and real estate loan portfolios. An increase (decrease) in the discount rate would result in a lower (higher) fair-value measurement.
|
(2)
|
Multiple of either earnings or underlying assets is the significant unobservable input used in the market approach for the fair-value measurement of distressed credit-oriented investments, credit-oriented investments in which the consolidated funds have a controlling interest in the underlying issuer, equity investments and certain real estate-oriented investments. An increase (decrease) in the multiple would result in a higher (lower) fair-value measurement.
|
(3)
|
The weighted average is based on the fair value of the investments included in the range.
|
(4)
|
A discounted cash-flow method is generally used to value performing credit-oriented investments in which the consolidated funds do not have a controlling interest in the underlying issuer, as well as certain equity investments, real estate-oriented investments and real estate loan portfolios.
|
(5)
|
Certain investments are valued using vendor prices or broker quotes for the subject or similar securities. Generally, investments valued in this manner are classified as Level III because the quoted prices may be indicative in nature for securities that are in an inactive market, may be for similar securities, or may require adjustment for investment-specific factors or restrictions.
|
(6)
|
A market approach is generally used to value distressed investments and investments in which the consolidated funds have a controlling interest in the underlying issuer.
|
(7)
|
Earnings multiples are based on comparable public companies and transactions with comparable companies. The Company typically utilizes multiples of EBITDA; however, in certain cases the Company may use other earnings multiples believed to be most relevant to the investment. The Company typically applies the multiple to trailing twelve-months’ EBITDA. However, in certain cases other earnings measures, such as pro forma EBITDA, may be utilized if deemed to be more relevant.
|
(8)
|
Certain investments are valued based on recent transactions, generally defined as investments purchased or sold within six months of the valuation date. The fair value may also be based on a pending transaction expected to close after the valuation date.
|
|
Assets
|
|
Liabilities
|
||||||||||||
|
Notional
|
|
Fair Value
|
|
Notional
|
|
Fair Value
|
||||||||
As of December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(156,281
|
)
|
|
$
|
(1,703
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(156,281
|
)
|
|
$
|
(1,703
|
)
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
58,254
|
|
|
$
|
1,654
|
|
|
$
|
(77,156
|
)
|
|
$
|
(2,318
|
)
|
Cross-currency swap
|
242,450
|
|
|
2,384
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
300,704
|
|
|
$
|
4,038
|
|
|
$
|
(77,156
|
)
|
|
$
|
(2,318
|
)
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
|
|
|
|
|
|
||||||
Investment income
|
$
|
5,243
|
|
|
$
|
9,191
|
|
|
$
|
(16,707
|
)
|
General and administrative expense (1)
|
2,143
|
|
|
(1,322
|
)
|
|
(14,199
|
)
|
|||
Total gain (loss)
|
$
|
7,386
|
|
|
$
|
7,869
|
|
|
$
|
(30,906
|
)
|
|
|
|
|
|
(1)
|
To the extent that the Company’s freestanding derivatives are utilized to hedge its foreign-currency exposure to investment income and management fees earned from consolidated funds, the related hedged items are eliminated in consolidation, with the derivative impact (a positive number reflects a reduction in expenses) reflected in consolidated general and administrative expense.
|
|
Assets
|
|
Liabilities
|
||||||||||||
|
Notional
|
|
Fair Value
|
|
Notional
|
|
Fair Value
|
||||||||
As of December 31, 2019
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
166,917
|
|
|
$
|
6,890
|
|
|
$
|
(140,276
|
)
|
|
$
|
(2,551
|
)
|
|
$
|
166,917
|
|
|
$
|
6,890
|
|
|
$
|
(140,276
|
)
|
|
$
|
(2,551
|
)
|
|
|
|
|
|
|
|
|
||||||||
As of December 31, 2018
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
95,980
|
|
|
$
|
2,275
|
|
|
$
|
(48,081
|
)
|
|
$
|
(643
|
)
|
Options and futures
|
11,126
|
|
|
189
|
|
|
—
|
|
|
—
|
|
||||
|
$
|
107,106
|
|
|
$
|
2,464
|
|
|
$
|
(48,081
|
)
|
|
$
|
(643
|
)
|
|
Year Ended December 31,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||||||||||||||
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
|
Net Realized Gain (Loss) on Investments
|
|
Net Change in Unrealized Appreciation (Depreciation) on Investments
|
||||||||||||
Foreign-currency forward contracts
|
$
|
(6,546
|
)
|
|
$
|
4,364
|
|
|
$
|
513
|
|
|
$
|
2,327
|
|
|
$
|
(2,917
|
)
|
|
$
|
1,909
|
|
Total-return and interest-rate swaps
|
—
|
|
|
—
|
|
|
858
|
|
|
29
|
|
|
232
|
|
|
378
|
|
||||||
Options and futures
|
—
|
|
|
—
|
|
|
1,210
|
|
|
76
|
|
|
(4,825
|
)
|
|
574
|
|
||||||
Total
|
$
|
(6,546
|
)
|
|
$
|
4,364
|
|
|
$
|
2,581
|
|
|
$
|
2,432
|
|
|
$
|
(7,510
|
)
|
|
$
|
2,861
|
|
|
Gross and Net Amounts of Assets (Liabilities) Presented
|
|
Gross Amounts Not Offset in Statements of Financial Condition
|
|
Net Amount
|
||||||||||
As of December 31, 2019
|
|
Derivative Assets (Liabilities)
|
|
Cash Collateral Received (Pledged)
|
|
||||||||||
Derivative Assets:
|
|
|
|
|
|
|
|
||||||||
Derivative assets of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
6,890
|
|
|
—
|
|
|
—
|
|
|
6,890
|
|
||||
Subtotal
|
6,890
|
|
|
—
|
|
|
—
|
|
|
6,890
|
|
||||
Total
|
$
|
6,890
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,890
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
(1,703
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(1,703
|
)
|
Derivative liabilities of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
(2,551
|
)
|
|
—
|
|
|
—
|
|
|
(2,551
|
)
|
||||
Total
|
$
|
(4,254
|
)
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
(4,254
|
)
|
|
Gross and Net Amounts of Assets (Liabilities) Presented
|
|
Gross Amounts Not Offset in Statements of Financial Condition
|
|
Net Amount
|
||||||||||
As of December 31, 2018
|
|
Derivative Assets (Liabilities)
|
|
Cash Collateral Received (Pledged)
|
|
||||||||||
Derivative Assets:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
1,654
|
|
|
$
|
1,497
|
|
|
$
|
—
|
|
|
$
|
157
|
|
Cross-currency swap
|
2,384
|
|
|
—
|
|
|
—
|
|
|
2,384
|
|
||||
Subtotal
|
4,038
|
|
|
1,497
|
|
|
—
|
|
|
2,541
|
|
||||
Derivative assets of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
2,275
|
|
|
—
|
|
|
—
|
|
|
2,275
|
|
||||
Options and futures
|
189
|
|
|
—
|
|
|
—
|
|
|
189
|
|
||||
Subtotal
|
2,464
|
|
|
—
|
|
|
—
|
|
|
2,464
|
|
||||
Total
|
$
|
6,502
|
|
|
$
|
1,497
|
|
|
$
|
—
|
|
|
$
|
5,005
|
|
|
|
|
|
|
|
|
|
||||||||
Derivative Liabilities:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
$
|
(2,318
|
)
|
|
$
|
(1,497
|
)
|
|
$
|
—
|
|
|
$
|
(821
|
)
|
Derivative liabilities of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Foreign-currency forward contracts
|
(643
|
)
|
|
—
|
|
|
—
|
|
|
(643
|
)
|
||||
Total
|
$
|
(2,961
|
)
|
|
$
|
(1,497
|
)
|
|
$
|
—
|
|
|
$
|
(1,464
|
)
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Furniture, equipment and capitalized software
|
$
|
9,608
|
|
|
$
|
26,345
|
|
Leasehold improvements
|
25,764
|
|
|
70,270
|
|
||
Corporate aircraft
|
—
|
|
|
66,120
|
|
||
Other
|
937
|
|
|
4,859
|
|
||
Fixed assets
|
36,309
|
|
|
167,594
|
|
||
Accumulated depreciation
|
(22,227
|
)
|
|
(61,879
|
)
|
||
Fixed assets, net
|
$
|
14,082
|
|
|
$
|
105,715
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Contractual rights
|
$
|
—
|
|
|
$
|
347,452
|
|
Accumulated amortization
|
—
|
|
|
(33,173
|
)
|
||
Intangible assets, net
|
$
|
—
|
|
|
$
|
314,279
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
$250,000, 3.78%, issued in December 2017, payable on December 18, 2032
|
$
|
—
|
|
|
$
|
250,000
|
|
$250,000, variable-rate term loan, issued in March 2014, payable on March 29, 2023 (1)
|
—
|
|
|
150,000
|
|
||
$50,000, 3.91%, issued in September 2014, payable on September 3, 2024
|
—
|
|
|
50,000
|
|
||
$100,000, 4.01%, issued in September 2014, payable on September 3, 2026
|
—
|
|
|
100,000
|
|
||
$100,000, 4.21%, issued in September 2014, payable on September 3, 2029
|
—
|
|
|
100,000
|
|
||
$100,000, 3.69%, issued in July 2016, payable on July 12, 2031
|
—
|
|
|
100,000
|
|
||
Total remaining principal
|
—
|
|
|
750,000
|
|
||
Less: Debt issuance costs
|
—
|
|
|
(4,055
|
)
|
||
Debt obligations
|
$
|
—
|
|
|
$
|
745,945
|
|
|
|
|
|
|
(1)
|
On December 13, 2019, the credit facility was amended to among other things, increase the revolving loan commitment from $500 million to $650 million, provide for the refinancing of the then-outstanding $150 million term loan with revolving loans, extend the maturity date from March 29, 2023 to December 13, 2024, favorably update the commitment fee and interest rate in the corporate ratings-based pricing grid and increase the asset under management covenant threshold from $60 million to $65 million. Borrowings generally bear interest at a spread to either LIBOR or an alternative base rate. Based on the current credit ratings of OCM, the interest rate on borrowings is LIBOR plus 0.88% per annum and the commitment fee on the unused portions of the revolving credit facility is 0.08% per annum. The credit agreement contains customary financial covenants and restrictions, including ones regarding a maximum leverage ratio and a minimum required level of assets under management (as defined in the credit agreement, as amended above). As of December 31, 2019, OCM had $150 million outstanding under the revolving credit facility and the Company had no outstanding borrowings under the revolving credit facility. OCM and the Company were in compliance with all financial maintenance covenants associated with its senior notes and bank credit facility as of December 31, 2019 and 2018, respectively.
|
|
Outstanding Amount as of December 31,
|
|
Facility Capacity
|
|
Weighted Average Interest Rate
|
|
Weighted Average Remaining Maturity (years)
|
|
Commitment Fee Rate
|
|
L/C Fee
|
||||||||
Credit Agreement
|
2019
|
|
2018
|
||||||||||||||||
Senior variable rate notes
|
$
|
159,411
|
|
|
$
|
870,098
|
|
|
$
|
159,411
|
|
|
3.42%
|
|
4.4
|
|
N/A
|
|
N/A
|
Less: Debt issuance costs
|
(934
|
)
|
|
(5,569
|
)
|
|
|
|
|
|
|
|
|
|
|
||||
Total debt obligations, net
|
$
|
158,477
|
|
|
$
|
864,529
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31, 2019
|
|
As of December 31, 2018
|
||||||||||||
|
Fair Value (1)
|
|
Weighted Average Interest Rate
|
|
Weighted Average Remaining Maturity (years)
|
|
Fair Value (1)
|
|
Weighted Average Interest Rate
|
|
Weighted Average Remaining Maturity (years)
|
||||
Senior secured notes
|
$
|
5,613,846
|
|
|
2.85%
|
|
8.6
|
|
$
|
3,976,602
|
|
|
2.69%
|
|
9.9
|
Subordinated notes (2)
|
154,153
|
|
|
N/A
|
|
10.4
|
|
151,392
|
|
|
N/A
|
|
9.7
|
||
Total CLO debt obligations
|
$
|
5,767,999
|
|
|
|
|
|
|
$
|
4,127,994
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The fair value of CLO liabilities was measured as the fair value of CLO assets less the sum of (a) the fair value of any beneficial interests held by the Company and (b) the carrying value of any beneficial interests that represent compensation for services. Please see notes 2 and 7 for more information.
|
(2)
|
The subordinated notes do not have a contractual interest rate; instead, they receive distributions from the excess cash flows generated by the CLO.
|
2020
|
$
|
204,290
|
|
2021
|
—
|
|
|
2022
|
—
|
|
|
2023
|
—
|
|
|
2024
|
—
|
|
|
Thereafter
|
5,622,072
|
|
|
Total
|
$
|
5,826,362
|
|
|
|
Twelve months ended December 31, 2019
|
||
|
|
|
||
Operating lease cost
|
|
$
|
15,984
|
|
Sublease income
|
|
(631
|
)
|
|
Total lease cost
|
|
$
|
15,353
|
|
|
Twelve months ended December 31, 2019
|
||
Cash paid for amounts included in the measurement of lease liabilities:
|
|
||
Operating cash flows used for operating leases
|
$
|
16,224
|
|
Weighted average remaining lease term for operating leases (in years)
|
10.7
|
|
|
Weighted average discount rate for operating leases
|
4.4
|
%
|
|
|
||
2020
|
6,262
|
|
|
2021
|
6,101
|
|
|
2022
|
5,480
|
|
|
2023
|
4,800
|
|
|
2024
|
4,224
|
|
|
Thereafter
|
28,778
|
|
|
Total lease payments
|
55,645
|
|
|
Less: imputed interest
|
(9,852
|
)
|
|
Total operating lease liabilities
|
$
|
45,793
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Beginning balance
|
$
|
961,622
|
|
|
$
|
860,548
|
|
|
$
|
344,047
|
|
Initial consolidation of a fund
|
96,248
|
|
|
—
|
|
|
296,971
|
|
|||
Deconsolidation of funds due to restructuring
|
(406,058
|
)
|
|
—
|
|
|
—
|
|
|||
Deconsolidation of funds
|
(423,598
|
)
|
|
—
|
|
|
—
|
|
|||
Contributions
|
664,679
|
|
|
447,260
|
|
|
331,764
|
|
|||
Distributions
|
(107,499
|
)
|
|
(305,406
|
)
|
|
(146,393
|
)
|
|||
Net income (loss)
|
93,620
|
|
|
(40,930
|
)
|
|
29,532
|
|
|||
Change in distributions payable
|
(16,105
|
)
|
|
2,469
|
|
|
1,853
|
|
|||
Foreign-currency translation and other
|
3,313
|
|
|
(2,319
|
)
|
|
2,774
|
|
|||
Ending balance
|
$
|
866,222
|
|
|
$
|
961,622
|
|
|
$
|
860,548
|
|
Payment Date
|
|
Record Date
|
|
Applicable to Quarterly Period Ended
|
|
Distribution Per Unit
|
||
November 12, 2019
|
|
October 31, 2019
|
|
September 30, 2019
|
|
$
|
0.03
|
|
September 30, 2019
|
|
September 30, 2019
|
|
-
|
|
3.13
|
|
|
May 10, 2019
|
|
May 6, 2019
|
|
March 31, 2019
|
|
1.05
|
|
|
February 22, 2019
|
|
February 15, 2019
|
|
December 31, 2018
|
|
0.75
|
|
|
Total 2019
|
|
$
|
4.96
|
|
||||
|
|
|
|
|
|
|
||
November 13, 2018
|
|
November 5, 2018
|
|
September 30, 2018
|
|
$
|
0.70
|
|
August 10, 2018
|
|
August 6, 2018
|
|
June 30, 2018
|
|
0.55
|
|
|
May 11, 2018
|
|
May 7, 2018
|
|
March 31, 2018
|
|
0.96
|
|
|
February 23, 2018
|
|
February 16, 2018
|
|
December 31, 2017
|
|
0.76
|
|
|
Total 2018
|
|
$
|
2.97
|
|
||||
|
|
|
|
|
|
|
||
November 10, 2017
|
|
November 6, 2017
|
|
September 30, 2017
|
|
$
|
0.56
|
|
August 11, 2017
|
|
August 7, 2017
|
|
June 30, 2017
|
|
1.31
|
|
|
May 12, 2017
|
|
May 8, 2017
|
|
March 31, 2017
|
|
0.71
|
|
|
February 24, 2017
|
|
February 17, 2017
|
|
December 31, 2016
|
|
0.63
|
|
|
Total 2017
|
|
$
|
3.21
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Weighted average Oaktree Operating Group units outstanding
(in thousands):
|
|
|
|
|
|
||||||
OCGH non-controlling interest
|
79,084
|
|
|
86,390
|
|
|
91,643
|
|
|||
Class A unitholders
|
80,045
|
|
|
70,526
|
|
|
64,148
|
|
|||
Total weighted average units outstanding
|
159,129
|
|
|
156,916
|
|
|
155,791
|
|
|||
Oaktree Operating Group net income:
|
|
|
|
|
|
|
|
||||
Net income attributable to preferred unitholders (1)
|
$
|
27,316
|
|
|
$
|
12,277
|
|
|
$
|
—
|
|
Net income attributable to OCGH non-controlling interest
|
137,100
|
|
|
280,159
|
|
|
422,122
|
|
|||
Net income attributable to OCG Class A unitholders
|
137,921
|
|
|
228,791
|
|
|
295,161
|
|
|||
Oaktree Operating Group net income (2)
|
$
|
302,337
|
|
|
$
|
521,227
|
|
|
$
|
717,283
|
|
Net income attributable to OCG Class A unitholders:
|
|
|
|
|
|
|
|
||||
Oaktree Operating Group net income attributable to OCG Class A unitholders
|
$
|
137,921
|
|
|
$
|
228,791
|
|
|
$
|
295,161
|
|
Non-Operating Group income (expense)
|
(8,662
|
)
|
|
(632
|
)
|
|
144,143
|
|
|||
Income tax expense of Intermediate Holding Companies
|
(1,736
|
)
|
|
(17,018
|
)
|
|
(207,810
|
)
|
|||
Net income attributable to OCG Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
|
|
|
|
|
(1)
|
Represents distributions declared, if any, on the preferred units.
|
(2)
|
Oaktree Operating Group net income does not include amounts attributable to other non-controlling interests, which amounted to $1,779, $2,659 and $2,662 for the years ended December 31, 2019, 2018 and 2017, respectively. As a result of the Restructuring, as of October 1, 2019, four of the six Oaktree Operating Group entities are no longer indirect subsidiaries of the Company. Accordingly, subsequent to that date, the consolidated financial statements reflect the Company’s indirect economic interest in only two of the Oaktree Operating Group entities: (i) Oaktree Capital I and (ii) OCM Cayman.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income attributable to OCG Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
Equity reallocation between controlling and non-controlling interests
|
306,015
|
|
|
80,106
|
|
|
23,151
|
|
|||
Change from net income attributable to OCG Class A unitholders and transfers from non-controlling interests
|
$
|
433,538
|
|
|
$
|
291,247
|
|
|
$
|
254,645
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Net income per Class A unit (basic and diluted):
|
(in thousands, except per unit amounts)
|
||||||||||
|
|
|
|
|
|||||||
Net income attributable to OCG Class A unitholders
|
$
|
127,523
|
|
|
$
|
211,141
|
|
|
$
|
231,494
|
|
Weighted average number of Class A units outstanding (basic and diluted)
|
80,045
|
|
|
70,526
|
|
|
64,148
|
|
|||
Basic and diluted net income per Class A unit
|
$
|
1.59
|
|
|
$
|
2.99
|
|
|
$
|
3.61
|
|
•
|
Messrs. Howard Marks, Bruce Karsh, Jay Wintrob, John Frank, Sheldon Stone, Richard Masson and Larry Keele can, for the Open Period beginning in 2022, exchange up to 20% of the OCGH Units held by them collectively at the closing of the Mergers (or issued pursuant to agreements in place on March 19, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 20% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges), such that they will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2026 (subject to yearly caps and inclusive of any prior exchanges).
|
•
|
Current employees other than those included in the group named in the preceding bullet can, for the Open Period beginning in 2022, sell up to 12.5% of the OCGH Units held by them collectively at the closing (or issued pursuant to agreements in place on March 13, 2019, or as agreed to by Brookfield). For each year thereafter, they will be able to exchange an additional 12.5% of such OCGH Units (subject to yearly caps and inclusive of any prior exchanges). They will be entitled to exchange 100% of their OCGH Units beginning during the Open Period in 2029 (subject to yearly caps).
|
•
|
Brookfield is not obligated to permit Exchanges that, in the aggregate together with Exchanges requested by all other OCGH limited partners, exceed certain maximum amounts per year. These maximum amounts are: 20% of the exchangeable OCGH Units in calendar year 2022, 25% in 2023, 30% in 2024, and 35% in 2025 and each year thereafter.
|
•
|
In the event that OCGH limited partners wish to sell or exchange units in excess of the maximum amount for a given year, OCGH will have the right to allocate the opportunity to sell the exchangeable units among
|
|
Converted OCGH Units (1)
|
|
OCGH Units
|
||||||||||
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
|
Number of Units
|
|
Weighted Average Grant Date Fair Value
|
||||||
Balance, December 31, 2016
|
2,128,400
|
|
|
$
|
41.86
|
|
|
2,337,953
|
|
|
$
|
39.85
|
|
Granted
|
1,285,548
|
|
|
45.42
|
|
|
274,018
|
|
|
37.15
|
|
||
Vested
|
(837,254
|
)
|
|
40.57
|
|
|
(453,136
|
)
|
|
38.50
|
|
||
Forfeited
|
(20,378
|
)
|
|
45.59
|
|
|
—
|
|
|
—
|
|
||
Balance, December 31, 2017
|
2,556,316
|
|
|
44.05
|
|
|
2,158,835
|
|
|
39.79
|
|
||
Granted
|
1,164,601
|
|
|
39.61
|
|
|
124,051
|
|
|
31.80
|
|
||
Vested
|
(920,439
|
)
|
|
42.57
|
|
|
(418,837
|
)
|
|
37.23
|
|
||
Forfeited
|
(99,893
|
)
|
|
40.59
|
|
|
—
|
|
|
—
|
|
||
Balance, December 31, 2018
|
2,700,585
|
|
|
42.76
|
|
|
1,864,049
|
|
|
39.83
|
|
||
Granted
|
1,494,324
|
|
|
49.56
|
|
|
1,873,155
|
|
|
39.95
|
|
||
Vested
|
(975,072
|
)
|
|
43.06
|
|
|
(515,534
|
)
|
|
35.44
|
|
||
Restructuring (2)
|
(2,380,641
|
)
|
|
45.83
|
|
|
(2,600,264
|
)
|
|
40.87
|
|
||
Forfeited
|
(107,955
|
)
|
|
44.63
|
|
|
—
|
|
|
—
|
|
||
Balance, December 31, 2019
|
731,241
|
|
|
$
|
45.99
|
|
|
621,406
|
|
|
$
|
39.49
|
|
|
|
|
|
|
(1)
|
Upon the completion of the Merger, each unvested Class A Unit held by current, or in certain cases former, employees, officers and directors of Oaktree and its subsidiaries was converted into one unvested OCGH Unit (each, a “Converted OCGH Unit”) and became subject to the terms and conditions of the OCGH limited partnership agreement. The Converted OCGH Units will (i) be subject to the same vesting terms that were applicable to such units prior to the completion of the Merger, (ii) be entitled to receive ongoing distributions in respect of earnings, but not capital distributions and (iii) upon vesting, receive the accumulated value of capital distributions that accrued while such units were unvested. However, in 2020 and 2021, Converted OCGH Units will be valued at $49.00 per unit, less the amount of any capital distributions received upon vesting.
|
(2)
|
Effective with the Restructuring, compensation related to unvested equity awards granted for service provided by employees of OCM is no longer included in these consolidated financial statements.
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Current:
|
|
|
|
|
|
||||||
U.S. federal income tax
|
$
|
(93
|
)
|
|
$
|
4,645
|
|
|
$
|
4,085
|
|
State and local income tax
|
1,674
|
|
|
2,934
|
|
|
2,687
|
|
|||
Foreign income tax
|
7,933
|
|
|
7,402
|
|
|
5,907
|
|
|||
|
$
|
9,514
|
|
|
$
|
14,981
|
|
|
$
|
12,679
|
|
Deferred:
|
|
|
|
|
|
|
|
||||
U.S. federal income tax
|
$
|
519
|
|
|
$
|
8,934
|
|
|
$
|
191,488
|
|
State and local income tax
|
(158
|
)
|
|
844
|
|
|
10,928
|
|
|||
Foreign income tax
|
(255
|
)
|
|
20
|
|
|
347
|
|
|||
|
$
|
106
|
|
|
$
|
9,798
|
|
|
$
|
202,763
|
|
Total:
|
|
|
|
|
|
|
|
||||
U.S. federal income tax
|
$
|
426
|
|
|
$
|
13,579
|
|
|
$
|
195,573
|
|
State and local income tax
|
1,516
|
|
|
3,778
|
|
|
13,615
|
|
|||
Foreign income tax
|
7,678
|
|
|
7,422
|
|
|
6,254
|
|
|||
Income tax expense
|
$
|
9,620
|
|
|
$
|
24,779
|
|
|
$
|
215,442
|
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Domestic income (loss) before income taxes
|
$
|
380,653
|
|
|
$
|
467,264
|
|
|
$
|
894,911
|
|
Foreign income (loss) before income taxes
|
16,305
|
|
|
22,060
|
|
|
10,013
|
|
|||
Total income (loss) before income taxes
|
$
|
396,958
|
|
|
$
|
489,324
|
|
|
$
|
904,924
|
|
|
Year Ended December 31,
|
|||||||
|
2019
|
|
2018
|
|
2017
|
|||
Income tax expense at federal statutory rate
|
21.00
|
%
|
|
21.00
|
%
|
|
35.00
|
%
|
Income passed through
|
(20.96
|
)
|
|
(17.78
|
)
|
|
(31.61
|
)
|
State and local taxes, net of federal benefit
|
0.45
|
|
|
0.55
|
|
|
0.38
|
|
Foreign taxes
|
1.07
|
|
|
0.57
|
|
|
0.23
|
|
Deferred tax adjustment
|
—
|
|
|
—
|
|
|
19.76
|
|
Other, net
|
0.86
|
|
|
0.72
|
|
|
0.05
|
|
Total effective rate
|
2.42
|
%
|
|
5.06
|
%
|
|
23.81
|
%
|
|
As of December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Deferred tax assets:
|
|
|
|
|
|
|
|
|
|||
Investment in partnerships
|
$
|
—
|
|
|
$
|
210,678
|
|
|
$
|
191,713
|
|
Equity-based compensation expense
|
—
|
|
|
5,535
|
|
|
3,537
|
|
|||
Net operating losses
|
—
|
|
|
7,393
|
|
|
—
|
|
|||
Other (1)
|
3,096
|
|
|
9,191
|
|
|
9,311
|
|
|||
Total deferred tax assets
|
3,096
|
|
|
232,797
|
|
|
204,561
|
|
|||
Total deferred tax liabilities
|
—
|
|
|
3,697
|
|
|
2,101
|
|
|||
Net deferred tax assets before valuation allowance
|
3,096
|
|
|
229,100
|
|
|
202,460
|
|
|||
Valuation allowance
|
—
|
|
|
—
|
|
|
—
|
|
|||
Net deferred tax assets
|
$
|
3,096
|
|
|
$
|
229,100
|
|
|
$
|
202,460
|
|
|
|
|
|
|
(1)
|
As of December 31, 2019, balance of Other of $3,096 relates to deferred tax assets in foreign jurisdictions (relating primarily to fixed assets and accruals).
|
|
Year Ended December 31,
|
||||||||||
|
2019
|
|
2018
|
|
2017
|
||||||
Unrecognized tax benefits, January 1
|
$
|
2,699
|
|
|
$
|
4,366
|
|
|
$
|
5,768
|
|
Additions for tax positions related to the current year
|
—
|
|
|
—
|
|
|
350
|
|
|||
Additions for tax positions related to prior years
|
—
|
|
|
—
|
|
|
—
|
|
|||
Reductions for tax positions related to prior years (1)
|
(2,440
|
)
|
|
(18
|
)
|
|
(412
|
)
|
|||
Settlements
|
—
|
|
|
(1,423
|
)
|
|
—
|
|
|||
Lapse in statute of limitations
|
(152
|
)
|
|
(226
|
)
|
|
(1,340
|
)
|
|||
Unrecognized tax benefits, December 31
|
$
|
107
|
|
|
$
|
2,699
|
|
|
$
|
4,366
|
|
|
|
|
|
|
(1)
|
Reduction of $2,440 during 2019 relates to the transfer of unrecognized tax benefits to Brookfield.
|
2020
|
$
|
6,262
|
|
2021
|
6,101
|
|
|
2022
|
5,480
|
|
|
2023
|
4,800
|
|
|
2024
|
4,224
|
|
|
Thereafter
|
28,778
|
|
|
Total
|
$
|
55,645
|
|
|
As of December 31,
|
||||||
|
2019
|
|
2018
|
||||
Due from affiliates:
|
|
|
|
||||
Loans
|
$
|
2,596
|
|
|
$
|
3,857
|
|
Amounts due from unconsolidated funds
|
2,415
|
|
|
72,588
|
|
||
Management fees and incentive income due from unconsolidated funds
|
88,043
|
|
|
362,971
|
|
||
Payments made on behalf of unconsolidated entities
|
71,051
|
|
|
3,469
|
|
||
Non-interest bearing advances made to certain non-controlling interest holders and employees
|
84
|
|
|
27
|
|
||
Total due from affiliates
|
$
|
164,189
|
|
|
$
|
442,912
|
|
Due to affiliates:
|
|
|
|
|
|||
Due to OCGH unitholders in connection with the tax receivable agreement (please see note 17)
|
$
|
—
|
|
|
$
|
187,872
|
|
Amounts due to unconsolidated entities
|
86,575
|
|
|
—
|
|
||
Amounts due to senior executives, certain non-controlling interest holders and employees
|
488
|
|
|
495
|
|
||
Total due to affiliates
|
$
|
87,063
|
|
|
$
|
188,367
|
|
|
Three Months Ended
|
||||||||||||||
|
March 31, 2019
|
|
June 30, 2019
|
|
September 30, 2019
|
|
December 31, 2019
|
||||||||
Revenues
|
$
|
266,415
|
|
|
$
|
313,483
|
|
|
$
|
205,190
|
|
|
$
|
143,899
|
|
Expenses
|
(237,474
|
)
|
|
(265,888
|
)
|
|
(245,480
|
)
|
|
(93,689
|
)
|
||||
Other income
|
159,957
|
|
|
75,785
|
|
|
24,190
|
|
|
50,570
|
|
||||
Income before income taxes
|
$
|
188,898
|
|
|
$
|
123,380
|
|
|
$
|
(16,100
|
)
|
|
$
|
100,780
|
|
Net income
|
$
|
184,400
|
|
|
$
|
121,528
|
|
|
$
|
(20,898
|
)
|
|
$
|
102,308
|
|
Net income attributable to OCG Class A unitholders
|
$
|
47,254
|
|
|
$
|
42,444
|
|
|
$
|
(16,648
|
)
|
|
$
|
54,473
|
|
Net income per unit (basic and diluted):
|
|
|
|
|
|
|
|
||||||||
Net income per Class A unit
|
$
|
0.66
|
|
|
$
|
0.57
|
|
|
$
|
(0.22
|
)
|
|
$
|
0.56
|
|
Distributions declared per Class A unit
|
$
|
0.75
|
|
|
$
|
1.05
|
|
|
$
|
3.13
|
|
|
$
|
0.03
|
|
|
|
|
|
|
|
|
|
||||||||
|
Three Months Ended
|
||||||||||||||
|
March 31, 2018
|
|
June 30, 2018
|
|
September 30, 2018
|
|
December 31, 2018
|
||||||||
Revenues
|
$
|
337,321
|
|
|
$
|
213,283
|
|
|
$
|
241,227
|
|
|
$
|
594,248
|
|
Expenses
|
(251,036
|
)
|
|
(184,606
|
)
|
|
(191,167
|
)
|
|
(373,762
|
)
|
||||
Other income
|
57,513
|
|
|
41,947
|
|
|
99,599
|
|
|
(95,243
|
)
|
||||
Income before income taxes
|
$
|
143,798
|
|
|
$
|
70,624
|
|
|
$
|
149,659
|
|
|
$
|
125,243
|
|
Net income
|
$
|
137,401
|
|
|
$
|
65,757
|
|
|
$
|
143,091
|
|
|
$
|
118,296
|
|
Net income attributable to OCG Class A unitholders
|
$
|
52,732
|
|
|
$
|
31,121
|
|
|
$
|
52,750
|
|
|
$
|
74,538
|
|
Net income per unit (basic and diluted):
|
|
|
|
|
|
|
|
||||||||
Net income per Class A unit
|
$
|
0.78
|
|
|
$
|
0.44
|
|
|
$
|
0.74
|
|
|
$
|
1.04
|
|
Distributions declared per Class A unit
|
$
|
0.76
|
|
|
$
|
0.96
|
|
|
$
|
0.55
|
|
|
$
|
0.70
|
|
Name
|
Age
|
Position
|
Howard S. Marks
|
73
|
Director and Co-Chairman
|
|
|
|
Bruce A. Karsh
|
64
|
Director, Co-Chairman and Chief Investment Officer
|
|
|
|
Jay S. Wintrob
|
62
|
Director and Chief Executive Officer
|
|
|
|
John B. Frank
|
63
|
Director and Vice Chairman
|
|
|
|
Daniel D. Levin
|
41
|
Chief Financial Officer
|
|
|
|
Sheldon M. Stone
|
67
|
Director and Principal
|
|
|
|
Justin B. Beber
|
50
|
Director
|
|
|
|
J. Bruce Flatt
|
54
|
Director
|
|
|
|
Steven J. Gilbert
|
72
|
Director
|
|
|
|
D. Richard Masson
|
61
|
Director
|
|
|
|
Marna C. Whittington
|
72
|
Director
|
|
|
|
Todd E. Molz
|
48
|
General Counsel, Chief Administrative Officer and Secretary
|
NEO
|
Compensation Elements
|
Bruce A. Karsh
|
● Carried interest payments
|
Jay S. Wintrob
|
● Profit sharing arrangement
● Equity grants |
Daniel D. Levin
|
● Base salary
● Annual bonus
● Equity grants
|
John B. Frank
|
● Profit sharing arrangement
● Carried interest payments |
Todd E. Molz
|
● Base salary
● Annual bonus
● Equity grants
|
Name
|
|
Number of OCGH Units (1)
|
|
Number of EVUs
|
|
Number of Converted OCGH Units
|
|
Total Number of Units
|
|
Percentage of Beneficial Ownership of Oaktree Operating Group
|
|||||
Bruce A. Karsh
|
12,042,778
|
|
|
—
|
|
|
101,826
|
|
|
12,144,604
|
|
|
7.5
|
%
|
|
Jay S. Wintrob
|
209,776
|
|
|
2,000,000
|
|
|
122,936
|
|
|
2,332,712
|
|
|
*
|
|
|
Daniel D. Levin
|
29,856
|
|
|
—
|
|
|
91,773
|
|
|
121,629
|
|
|
*
|
|
|
John B. Frank
|
1,492,138
|
|
|
—
|
|
|
—
|
|
|
1,492,138
|
|
|
*
|
|
|
Todd E. Molz
|
151,161
|
|
|
—
|
|
|
87,049
|
|
|
238,210
|
|
|
*
|
|
|
|
|
|
|
*
|
Less than 1%
|
(1)
|
As part of a restructuring in May 2007, the OCGH unitholders’ interests in OCGH continued to take into account any disproportionate sharing in historical incentive income in accordance with the terms of the governing agreements that were in effect prior to the May 2007 restructuring. As a result, distributions to the OCGH unitholders by OCGH that are attributable to historical incentive income (i.e., attributable to funds formed before 2007) are not made pro rata in proportion to the OCGH unitholders’ interest in OCGH units but instead will be adjusted to account for the disproportionate sharing of historical incentive income. As of December 31, 2019, there was no more disproportionate sharing in historical incentive income and, therefore, all OCGH units will share in the same amount of future distributions by OCGH that are attributable to incentive income.
|
A.
|
Bruce A. Karsh
|
B.
|
Jay S. Wintrob
|
•
|
First, by calculating the excess (if any) of (A) the sum of (x) the equity value of OCGH (calculated in accordance with the Third Amended and Restated Exchange Agreement, as described above, but using the valuation as of the exchange date next succeeding December 31, 2019, December 31, 2020 or December 31, 2021, respectively) and (y) the aggregate cash distributions made on a per-OCGH unit basis in respect of such period, excluding distributions attributable to net incentive income from pre-employment funds, over (B) the Base Values of $61.00, $65.00, and $69.00, respectively.
|
•
|
Second, by multiplying such excess by one-third of 2,000,000 (the aggregate number of EVUs) on each of the applicable recapitalization dates.
|
•
|
Third, by reducing such amount by that portion of Mr. Wintrob’s profit sharing payments under his employment agreement that are attributable to net incentive income from pre-employment funds and payable (i) prior to December 31, 2019 with respect to the first recapitalization, (ii) during 2020 for the second recapitalization and (iii) from January 1, 2021 through March 31, 2022, for the third recapitalization.
|
•
|
Fourth, by reducing such amount by the excess of (i) any cash distributions attributable to the 2017 OCGH grant paid or payable to Mr. Wintrob over (ii) any portion of such amount that has been applied to reduce the cash distributions paid or payable in respect of his EVUs (such EVU cash distributions, and the manner in which they are reduced by cash distributions attributable to the
|
•
|
Fifth, for the first recapitalization, by reducing such amount by the vested portion of the value of the 2017 OCGH grant. For this purpose the full value of the 2017 OCGH grant is assumed to be $10,359,563, which is the product of 225,000 and the average daily closing price of a Class A unit over the 20 trading day period preceding the grant date of the OCGH units.
|
•
|
Sixth, for the first recapitalization, by reducing such amount by the unvested portion of the value of the 2017 OCGH grant.
|
•
|
Seventh, for the second and third recapitalizations, if, for the preceding recapitalization, the calculation in the above steps resulted in a negative number, then any portion of reductions for the pre-employment funds profit sharing payments, the cash distributions attributable to the 2017 OCGH Grant or the OCGH Grant Value (third through sixth steps above) that was not applied to reduce the calculation below zero, is applied to reduce the calculation in this recapitalization.
|
•
|
Eighth, by dividing the result of the above calculation by the applicable current equity value of OCGH described in the first step, above.
|
•
|
The reference OCGH units are not real OCGH units; they represent a reference point for purposes of calculating cash distributions only.
|
•
|
The number of reference OCGH units based off of which the cash distributions are to be calculated is determined by application of a vesting schedule (described below) and a performance condition. The performance condition for each year is appreciation in value in a Class A unit (before the Merger) or an OCGH unit (after the Merger) and in the aggregate cash distributions made on a per-OCGH unit basis over a pre-set hurdle.
|
•
|
Once the number of reference OCGH units is determined for a given fiscal year, Mr. Wintrob will be entitled to receive, for each reference OCGH unit, the amount of the per-OCGH unit distributions all OCGH unitholders otherwise receive for the applicable year.
|
•
|
All distributions to which Mr. Wintrob becomes entitled will be reduced, dollar-for-dollar, by any cash distributions attributable to the 2017 OCGH grant that Mr. Wintrob has received prior to the date of payment of any EVU distributions, without duplication.
|
•
|
Mr. Wintrob’s entitlement to cash distributions in one year does not mean he will be entitled to them in the next year.
|
•
|
2,000,000 EVUs (reduced to 1,333,334 with respect to 2020 and 666,667 with respect to 2021), multiplied by
|
•
|
Mr. Wintrob’s vested percentage in the EVUs as of the December 31 preceding the year of distribution, multiplied by
|
•
|
the amount by which the value of the OCGH units plus the eligible cash distributions exceeds the applicable annual hurdle, divided by
|
•
|
the end of year volume weighted average trading price of our Class A units over the 60-day period before and 60-day period after the testing date (or, for a testing date after the Merger, based on the current equity value of an OCGH unit (calculated in accordance with the Third Amended and Restated Exchange Agreement, as described above)).
|
C.
|
Daniel D. Levin
|
D.
|
John B. Frank
|
E.
|
Todd E. Molz
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
|
|
Bonus ($)
|
|
Stock Awards ($) (1)(3)
|
|
Non—Equity Incentive Plan Compensation ($)
|
|
All Other Compensation ($) (4)
|
|
Total ($)
|
||||||||||||
Bruce A. Karsh,
Co-Chairman and Chief Investment Officer |
|
2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,417,737
|
|
|
$
|
12,417,737
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
12,212,938
|
|
|
$
|
12,212,938
|
|
|
|
2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,436,027
|
|
|
$
|
7,436,027
|
|
Jay S. Wintrob,
Chief Executive Officer |
|
2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
2,973,118
|
|
|
$
|
—
|
|
|
$
|
4,114,485
|
|
|
$
|
7,087,603
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
1,134,392
|
|
|
$
|
—
|
|
|
$
|
5,514,142
|
|
|
$
|
6,648,534
|
|
|
|
2017
|
(2)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,505,638
|
|
|
$
|
—
|
|
|
$
|
8,078,582
|
|
|
$
|
15,584,220
|
|
Daniel D. Levin,
Chief Financial Officer |
|
2019
|
|
$
|
375,000
|
|
|
$
|
1,104,375
|
|
|
$
|
2,393,609
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,872,984
|
|
|
|
2018
|
|
$
|
500,000
|
|
|
$
|
1,472,500
|
|
|
$
|
1,662,646
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,635,146
|
|
|
|
2017
|
|
$
|
500,000
|
|
|
$
|
1,375,000
|
|
|
$
|
1,870,120
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,745,120
|
|
John B. Frank,
Vice Chairman
|
|
2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
6,872,568
|
|
|
$
|
6,872,568
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
7,671,314
|
|
|
$
|
7,671,314
|
|
|
|
2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,984,023
|
|
|
$
|
4,984,023
|
|
Todd E. Molz,
General Counsel and Chief Administrative Officer
|
|
2019
|
|
$
|
375,000
|
|
|
$
|
1,875,000
|
|
|
$
|
1,182,785
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,432,785
|
|
|
|
2018
|
|
$
|
500,000
|
|
|
$
|
2,500,000
|
|
|
$
|
911,038
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
3,911,038
|
|
|
|
2017
|
|
$
|
500,000
|
|
|
$
|
2,500,000
|
|
|
$
|
1,024,731
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
4,024,731
|
|
(1)
|
For Mr. Wintrob, reflects a grant of Class A units in respect of $3,357,138 earned in 2016 and the first half of 2017 as profits participation, the grant of 225,000 OCGH units on April 26, 2017 and amendments to Mr. Wintrob’s EVUs on the same date, the grant of 28,305 Class A units on March 28, 2018 in respect of his 2017 compensation, the grant of 328 Class A Units on August 8, 2018, the grant of 43,379 Class A Units on March 28, 2019 and the grant of 16,013 Class A units on September 26, 2019. For Mr. Levin, reflects a grant of 41,283 Class A units on March 31, 2017 in respect of his 2016 compensation, a grant of 41,986 Class A units on March 28, 2018 in respect of his 2017 compensation and a grant of 23,705 Class A units and 29,856 OCGH units on March 28, 2019 in respect of his 2018 compensation. For Mr. Molz, reflects a grant of 22,621 Class A units on March 31, 2017 in respect of his 2016 compensation, a grant of 23,006 Class A units on March 28, 2018 in respect of his 2017 compensation and a grant of 23,885 Class A units on March 28, 2019 in respect of his 2018 compensation.
|
(2)
|
For Mr. Wintrob, the amount in this row in respect of his equity interest in OCGH reflects the incremental fair value associated with the modification of Mr. Wintrob’s EVUs and the grant of the 225,000 OCGH units, as determined in accordance with ASC Topic 718, which is based, in part, on the April 26, 2017 price of $46.55 per Class A unit, less a discount applied to the OCGH units as detailed in notes 2 and 16 to our consolidated financial statements.
|
(3)
|
Amounts reflected in this “Stock Awards” column of this Summary Compensation Table represent the aggregate grant date fair value of the applicable equity interests received by our NEOs during each year set forth in the table, calculated in accordance with Financial Accounting Standards Board Accounting Codification (ASC) Topic 718 or “ASC Topic 718,” Accounting for Stock Compensation. Please see notes 2 and 16 to our consolidated financial statements included elsewhere in this annual report for further information concerning the assumptions
|
(4)
|
Please see the “All Other Compensation Supplemental Table” below.
|
Name
|
|
Year
|
|
Payments in Respect of Carried Interest (1)
|
|
Profits Participation (2)
|
|
Airplane Use (3)
|
|
Perquisites (4)
|
|
Total
|
||||||||||
Bruce A. Karsh
|
|
2019
|
|
$
|
11,239,082
|
|
|
$
|
—
|
|
|
$
|
1,142,639
|
|
|
$
|
36,016
|
|
|
$
|
12,417,737
|
|
|
|
2018
|
|
$
|
11,291,186
|
|
|
$
|
—
|
|
|
$
|
835,537
|
|
|
$
|
86,215
|
|
|
$
|
12,212,938
|
|
|
|
2017
|
|
$
|
6,425,935
|
|
|
$
|
—
|
|
|
$
|
933,131
|
|
|
$
|
76,961
|
|
|
$
|
7,436,027
|
|
Jay S. Wintrob
|
|
2019
|
|
$
|
—
|
|
|
$
|
4,089,204
|
|
|
$
|
—
|
|
|
$
|
25,281
|
|
|
$
|
4,114,485
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
5,489,434
|
|
|
$
|
—
|
|
|
$
|
24,708
|
|
|
$
|
5,514,142
|
|
|
|
2017
|
|
$
|
—
|
|
|
$
|
8,031,479
|
|
|
$
|
—
|
|
|
$
|
47,103
|
|
|
$
|
8,078,582
|
|
Daniel D. Levin
|
|
2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
John B. Frank
|
|
2019
|
|
$
|
4,355,588
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
16,980
|
|
|
$
|
6,872,568
|
|
|
|
2018
|
|
$
|
5,154,630
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
16,684
|
|
|
$
|
7,671,314
|
|
|
|
2017
|
|
$
|
2,463,584
|
|
|
$
|
2,500,000
|
|
|
$
|
—
|
|
|
$
|
20,439
|
|
|
$
|
4,984,023
|
|
Todd E. Molz
|
|
2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
2017
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
(1)
|
Amounts included for 2019 represent amounts earned on an accrual basis in respect of participation interests in incentive income generated by our funds with respect to the year ended December 31, 2019. To the extent that timing differences may exist between when amounts are earned on an accrual basis and paid in cash, these amounts do not reflect actual cash carried interest distributions to the NEOs during such periods. Timing differences typically arise when cash is distributed in the quarter immediately following the one in which the related income was earned.
|
(2)
|
Amounts included for 2019 represent the amounts earned on an accrual basis in a given year in respect of the NEO’s annual profits participation interest.
|
(3)
|
Amounts included for 2019 reflect Mr. Karsh’s personal use of an aircraft leased from Mr. Karsh by us. Pursuant to the terms of that lease, the value of personal travel by Mr. Karsh on the leased aircraft is based on direct operating costs (fuel, airport fees, incremental pilot costs, hourly charges of maintenance programs, cost attributable to ‘deadhead’ segments, etc.). These amounts reflect the perquisites earned by Mr. Karsh during 2019 from us or OCM, without regard to whether such perquisites were provided before or after the Merger. Mr. Karsh is also entitled to reimbursement of the costs of certain business-related travel pursuant to that lease, which amounts are not included in the compensation reflected above—please refer to “Item 13—Certain Relationships and Related Transactions, and Director Independence—Aircraft Use” for more information.
|
(4)
|
Amounts included for 2019 represent tax preparation fees of $15,000 and $21,016 related to internet services provided for Mr. Karsh; tax preparation fees of $11,105 and $14,176 related to internet services provided for Mr. Wintrob and tax preparation fees of $15,000 and $1,980 related to internet services provided for Mr. Frank. These amounts reflect all perquisites earned by our NEOs during 2019 from us or OCM, without regard to whether their services were provided before or after the Merger.
|
•
|
engage in any business activity in which we operate, including any Competitive Business (as defined below);
|
•
|
render any services to any Competitive Business; or
|
•
|
acquire a financial interest in or become actively involved with any Competitive Business (other than as a passive investor holding a minimal percentage of the stock of a public company).
|
Name
|
Grant Date
|
|
All Other Stock Awards: Number of Shares of Stock or Units
|
|
Grant Date Fair Value of Stock Awards (5)
|
|||
Jay S. Wintrob
|
3/28/2019
|
|
43,379
|
|
(1)
|
$
|
2,148,128
|
|
|
9/26/2019
|
|
16,013
|
|
(2)
|
$
|
824,990
|
|
Daniel D. Levin
|
3/28/2019
|
|
53,561
|
|
(3)
|
$
|
2,393,609
|
|
Todd E. Molz
|
3/28/2019
|
|
23,885
|
|
(4)
|
$
|
1,182,785
|
|
|
|
|
|
|
(1)
|
Reflects a grant of 43,379 Class A units, which vests ratably over four years.
|
(2)
|
Reflects a grant of 16,013 Class A units, which vests ratably over four years.
|
(3)
|
Reflects a grant of 23,705 Class A units, which vests ratably over four years and a grant of 29,856 OCGH units, which vests ratably over ten years.
|
(4)
|
Reflects a grant of 23,885 Class A units, which vests ratably over four years.
|
(5)
|
Grant date fair value is based on the grant date determined under ASC Topic 718 as of March 28, 2019 for the Class A and OCGH units of Messrs. Wintrob, Levin and Molz and as of September 25, 2019 for the Class A units of Mr. Wintrob. Accordingly, the grant date fair value for the Class A units is based on the Class A unit price of $49.52 per unit on March 28, 2019 for Messrs. Wintrob, Levin and Molz. The grant date fair value for the OCGH units issued to Mr. Levin on March 28, 2019 is $40.85 and the grant date fair value for the Class A units issued to Mr. Wintrob on September 26, 2019 is $51.52.
|
|
|
Stock Awards
|
|||||
Name
|
|
Number of Units That Have Not Vested
|
|
Market Value of Units That Have Not Vested (1)
|
|||
Bruce A. Karsh
|
—
|
|
|
$
|
—
|
|
|
Jay S. Wintrob
|
702,936
|
|
(2)
|
$
|
13,135,664
|
|
|
Daniel D. Levin
|
121,629
|
|
(3)
|
$
|
5,676,488
|
|
|
John B. Frank
|
50,000
|
|
(4)
|
$
|
1,975,500
|
|
|
Todd E. Molz
|
119,316
|
|
(5)
|
$
|
5,540,270
|
|
|
|
|
|
|
(1)
|
The fair market value of $49.00 per Converted OCGH Unit and $39.51 per other OCGH unit is based on the Current Equity Value of the OCGH units (calculated as provided in the Third Amended and Restated Exchange Agreement) as determined pursuant to ASC Topic 718, Accounting for Stock Compensation on December 31, 2019. The fair value of $0.00 per EVU was determined as of December 31, 2019 using a Monte Carlo simulation model as detailed in note 16 to our consolidated financial statements.
|
(2)
|
Mr. Wintrob’s units are composed of 400,000 EVUs, 122,936 Converted OCGH Units and 180,000 other OCGH units. With respect to the EVUs, 400,000 will vest following December 31 of 2019. The Converted OCGH Units will vest on (i) February 15 of each of 2020 through 2023, respectively, in the following amounts: 34,068, 28,585, 17,922 and 10,845, and (ii) on August 1 of each of 2020 through 2023, respectively, respectively, in the following amounts: 11,713, 11,714, 4,085 and 4,004. Subject to Mr. Wintrob’s EVU grant agreement, the other OCGH units will vest as to 22,500 OCGH units on February 15 of each of 2020 through 2027, respectively.
|
(3)
|
Mr. Levin’s units are composed of 91,773 Converted OCGH Units and 29,856 other OCGH units, which will vest on February 15 of each of 2020 through 2029 in annual increments of 2,986. The Converted OCGH Units will vest on February 15 of each of 2020 through 2025, respectively, in the following amounts: 32,751, 28,729, 18,408, 7,912, 1,985, and 1,988.
|
(4)
|
Mr. Frank’s units are composed of 50,000 OCGH units. With respect to the OCGH units (i) 10,000 will vest on January 1 of each of 2020 and 2021, and (ii) 10,000 will vest on February 15 of each of 2020 through 2022.
|
(5)
|
Mr. Molz’s units are composed of 87,049 Converted OCGH Units and 32,267 other OCGH units. With respect to the Converted OCGH Units (i) 5,000 will vest on January 1 of each of 2020 through 2021 and (ii) the following amounts will vest on February 15 of each of 2020 through 2023, respectively: 31,280, 27,760, 12,037, and 5,972. With respect to the other OCGH units, the following amounts will vest on February 15 of each of 2020 through 2026, respectively: 3,687, 894, 10,961, 6,276, 6,276, 3,279 and 894.
|
|
|
Stock Awards (1)
|
|||||
Name
|
|
Number of Units Acquiring on Vesting
|
|
Market Value of Units Vesting (2)
|
|||
Bruce A. Karsh
|
—
|
|
|
$
|
—
|
|
|
Jay S. Wintrob
|
453,433
|
|
|
$
|
2,278,525
|
|
|
Daniel D. Levin
|
26,823
|
|
|
$
|
1,123,615
|
|
|
John B. Frank
|
20,000
|
|
|
$
|
708,293
|
|
|
Todd E. Molz
|
35,841
|
|
|
$
|
1,463,651
|
|
|
|
|
|
|
(1)
|
The references to Stock Awards or units in this table refer to 400,000 EVUs, 30,933 Class A units and 22,500 OCGH units in the case of Mr. Wintrob; 26,823 Class A units in the case of Mr. Levin; 5,000 Class A units and 15,000 OCGH units in the case of Mr. Frank; and 32,154 Class A units and 3,687 OCGH units in the case of Mr. Molz.
|
(2)
|
The fair market value per unit is based on the trading price for our Class A units on applicable vesting dates of January 1, 2019, February 15, 2019 and August 1, 2019, respectively, less a discount applied to OCGH units. The fair market value of $.34 per EVU was determined as of January 1, 2019 using a Monte Carlo simulation model. Please see notes 2 and 16 to our consolidated financial statements for more details.
|
•
|
the participating NEO’s interest prior to such resignation; and
|
•
|
the participating NEO’s vested percentage as of the resignation date (as discussed above under “—Carried Interest or Incentive Income”).
|
Name
|
|
Liquidation Value of Interests Subject to Vesting Acceleration
|
||
Bruce A. Karsh
|
$
|
6,354,952
|
|
|
John B. Frank
|
$
|
2,036,070
|
|
•
|
“cause” includes (i) willful and continued failure to fulfill responsibilities under the employment agreement, (ii) gross negligence or willful misconduct detrimental to Oaktree, (iii) material breach of the employment agreement or any other agreement with Oaktree, (iv) material violation of a material regulation or regulatory rule, (v) conviction of, or entry of a guilty plea or of no contest to, certain felonies, (vi) court or regulatory order removing Mr. Wintrob as an officer (or equivalent person) of Oaktree or prohibiting him from participating in the conduct of any Oaktree affairs, (vii) fraud, theft misappropriation or dishonesty relating to Oaktree, or (viii) material breach of Oaktree policies; and
|
•
|
“good reason” includes (i) a material diminution or adverse change in duties, authority, responsibilities, positions or reporting lines of authority under the employment agreement, (ii) relocation of Mr. Wintrob’s principal job location or office by more than 35 miles, and (iii) any material breach by Oaktree of the employment agreement.
|
|
|
OCGH Units or Converted OCGH Units (1)
|
||||||||||||
Name
|
|
Number of Units Subject to Vesting Acceleration on Termination without Cause
|
|
Market Value of Accelerated Vesting of Units (2)
|
|
Number of Units Subject to Vesting Acceleration due to Death or Disability
|
|
Market Value of Accelerated Vesting of Units (2)
|
||||||
Bruce A. Karsh
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
Jay S. Wintrob
|
122,936
|
|
|
$
|
6,023,864
|
|
|
302,936
|
|
|
$
|
13,135,664
|
|
|
Daniel D. Levin
|
109,716
|
|
|
$
|
5,092,751
|
|
|
121,629
|
|
|
$
|
5,676,488
|
|
|
John B. Frank
|
—
|
|
|
$
|
—
|
|
|
50,000
|
|
|
$
|
1,975,500
|
|
|
Todd E. Molz
|
58,764
|
|
|
$
|
2,852,930
|
|
|
119,316
|
|
|
$
|
5,540,270
|
|
|
|
|
|
|
(1)
|
The references to stock awards or units in this table refer to both Converted OCGH Units other OCGH units.
|
(2)
|
The fair market value of $49.00 per Converted OCGH Unit and $39.51 per OCGH unit is based on the Current Equity Value of the OCGH units (calculated as provided in the Third Amended and Restated Exchange Agreement) as determined pursuant to ASC Topic 718, Accounting for Stock Compensation on December 31, 2019.
|
Name
|
Fees Earned or Paid in Cash (1)
|
|
Unit Awards (2)
|
|
Other Compensation (5)
|
|
Total
|
||||||||
Robert E. Denham (3)
|
$
|
56,250
|
|
|
$
|
118,254
|
|
|
$
|
—
|
|
|
$
|
174,504
|
|
Steven J. Gilbert
|
$
|
100,000
|
|
|
$
|
118,254
|
|
|
$
|
430,000
|
|
|
$
|
648,254
|
|
D. Richard Masson
|
$
|
100,000
|
|
|
$
|
118,254
|
|
|
$
|
—
|
|
|
$
|
218,254
|
|
Wayne G. Pierson (4)
|
$
|
75,000
|
|
|
$
|
118,254
|
|
|
$
|
—
|
|
|
$
|
193,254
|
|
Marna C. Whittington
|
$
|
115,000
|
|
|
$
|
118,254
|
|
|
$
|
430,000
|
|
|
$
|
663,254
|
|
|
|
|
|
|
(1)
|
Annual cash retainer and fees for serving on our board of directors and, other than Mr. Denham, for serving on the Audit Committee of our Board. Following the Restructuring, the members of our board of directors also serve on the board of Atlas OCM Holdings, LLC for no additional compensation.
|
(2)
|
On March 28, 2019, we granted 2,388 Class A units to each of Messrs. Denham, Gilbert, Masson and Pierson and Ms. Whittington, which vest ratably over four years beginning on February 15, 2019, in consideration of their service as members of our board of directors in 2019. In connection with the Merger, for Messrs. Denham and Pierson, the unvested Class A Units were accelerated and treated as vested Class A Units in the Merger, which did not result in incremental compensation expense pursuant to ASC Topic 718, and, in the case of the other outside directors, the unvested Class A Units were converted to unvested OCGH units. The number of outstanding and unvested OCGH units held by Messrs. Masson and Gilbert and Ms. Whittington as of December 31, 2019 was 5,804, 5,387 and 5,804 units, respectively. We recognize expense for financial statement reporting purposes in respect of the unvested Class A units or Converted OCGH Units received by our directors on the basis of the value of those units at the time of the grant pursuant to ASC Topic 718, Accounting for Stock Compensation. Please see notes 2 and 16 to our consolidated financial statements included elsewhere in this annual report for further information concerning the assumptions underlying such expense.
|
(3)
|
Mr. Denham resigned from the board of directors on September 30, 2019, in connection with the Merger.
|
(4)
|
Mr. Pierson resigned from the board of directors on September 30, 2019, in connection with the Merger.
|
(5)
|
Represent payments in the form of cash to Ms. Whittington and Mr. Gilbert for serving on a special committee of the board of directors in connection with the board’s review and evaluation of the Merger.
|
•
|
each person known to us to beneficially own more than 5% of any class of the outstanding voting securities of Oaktree Capital Group, LLC;
|
•
|
each of our directors;
|
•
|
each of our named executive officers; and
|
•
|
all directors and executive officers as a group.
|
|
|
Class A Units
Beneficially Owned
|
|
Class B Units
Beneficially Owned
|
|
OCGH Units
Beneficially Owned (1)
|
|
Series A Preferred Units
Beneficially Owned
|
|
Series B Preferred Units
Beneficially Owned
|
||||||||||||||||||||
Named Executive Officers and Directors
|
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
|
Number
|
|
Percent
|
||||||||||
Howard S. Marks
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
—
|
|
|
12,047,050
|
|
|
7.5
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Bruce A. Karsh
|
|
—
|
|
|
—
|
|
|
—
|
|
(2)
|
—
|
|
|
12,042,778
|
|
|
7.5
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Jay S. Wintrob
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
332,712
|
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
John B. Frank
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,465,604
|
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Daniel D. Levin
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
121,629
|
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Sheldon M. Stone
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
6,493,406
|
|
|
4.1
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Todd E. Molz
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
238,210
|
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Justin B. Beber
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Bruce Flatt
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Steven J. Gilbert
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,347
|
|
|
*
|
|
4,211
|
|
|
*
|
|
25,000
|
|
|
*
|
|||
D. Richard Masson
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
2,151,744
|
|
|
1.3
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Marna C. Whittington
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
5,804
|
|
|
*
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
All executive officers and directors as a group (12 persons)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
34,904,284
|
|
|
21.8
|
|
|
4,211
|
|
|
*
|
|
25,000
|
|
|
*
|
||
5% Unitholders
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Oaktree Capital Group Holdings, L.P.
|
|
—
|
|
|
—
|
|
|
61,816,685
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
Brookfield U.S. Holdings, Inc.
|
|
97,967,255
|
|
|
100
|
%
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
|
|
*
|
Represents less than 1%.
|
(1)
|
Subject to certain restrictions, each OCGH unitholder has the right to exchange his or her vested units for cash, Brookfield Class A shares, notes issued by a Brookfield subsidiary and/or equity interests in a subsidiary of OCGH that will entitle such unitholder to the proceeds from a note. The form of the consideration in an exchange is generally in the discretion of Brookfield, subject to certain limitations.
|
(2)
|
Excludes 61,816,685 Class B units held by OCGH. The general partner of OCGH is Oaktree Capital Group Holdings GP, LLC. In their capacities as members of the executive committee of Oaktree Capital Group Holdings GP, LLC holding more than 50% of the aggregate number of OCGH units held by all of the members of the executive committee as a group, Mr. Marks and Mr. Karsh may be deemed to be beneficial owners of the securities held by OCGH. Each of Mr. Marks and Mr. Karsh disclaims beneficial ownership of such securities.
|
|
For the Year Ended December 31,
|
||||||||||||||
|
2019
|
|
2018
|
||||||||||||
|
Oaktree Capital Group, LLC
|
|
Oaktree Consolidated Funds and Affiliates
|
|
Oaktree Capital Group, LLC
|
|
Oaktree Consolidated Funds and Affiliates
|
||||||||
|
($ in thousands)
|
||||||||||||||
Audit fees (1)
|
$
|
3,932
|
|
|
$
|
768
|
|
|
$
|
3,640
|
|
|
$
|
590
|
|
Audit-related fees (2)
|
306
|
|
|
87
|
|
|
281
|
|
|
212
|
|
||||
Tax fees (3)
|
8,658
|
|
|
321
|
|
|
5,434
|
|
|
616
|
|
|
|
|
|
|
(1)
|
Audit fees consist of fees for services related to the annual audit of our consolidated financial statements, the audit of the effectiveness of internal control over financial reporting, reviews of our interim consolidated financial statements on Form 10-Q, statutory audits, and services that only the independent auditors can reasonably provide such as services associated with SEC registration statements or other documents issued in connection with securities offerings (including consents and comfort letters), and accounting consultations and services that are normally provided in connection with statutory and regulatory filings and engagements.
|
(2)
|
Audit-related fees include fees associated with examinations of operating controls at our investment adviser, accounting consultations, and attestation services not required by statute or regulation.
|
(3)
|
Tax fees consist of fees related to tax compliance and tax advisory services. Tax fees in 2019 include $3,209 for tax compliance services and $5,770 for tax advisory services. Tax fees in 2018 include $3,137 for tax compliance services and $2,913 for tax advisory services.
|
(1)
|
Financial statements: Please see Item 8 above.
|
(2)
|
Financial statement schedules: Schedules for which provision is made in the applicable accounting regulations of the SEC are not required under the related instructions or are not applicable and therefore have been omitted.
|
(3)
|
Exhibits: For a list of exhibits filed with this report, please refer to the Exhibits Index on the page immediately preceding the exhibits, which Exhibit Index is incorporated herein by reference.
|
|
Oaktree Capital Group, LLC
|
|
|
By:
|
/s/ Daniel D. Levin
|
|
Name:
|
Daniel D. Levin
|
|
|
|
|
Title:
|
Chief Financial Officer and Authorized Signatory
|
Signature
|
|
|
Title
|
|
/s/ Howard S. Marks
|
|
|
||
Howard S. Marks
|
|
Director and Co-Chairman
|
||
/s/ Bruce A. Karsh
|
|
|
||
Bruce A. Karsh
|
|
Director, Co-Chairman and Chief Investment Officer
|
||
/s/ Jay S. Wintrob
|
|
|
||
Jay S. Wintrob
|
|
Director and Chief Executive Officer
(Principal Executive Officer)
|
||
/s/ John B. Frank
|
|
|
||
John B. Frank
|
|
Director and Vice Chairman
|
||
/s/ Daniel D. Levin
|
|
|
||
Daniel D. Levin
|
|
Chief Financial Officer
(Principal Financial Officer and Principal Accounting Officer)
|
||
/s/ Sheldon M. Stone
|
|
|
||
Sheldon M. Stone
|
|
Director and Principal
|
||
/s/ Justin B. Beber
|
|
|
||
Justin B. Beber
|
|
Director
|
||
/s/ J. Bruce Flatt
|
|
|
||
J. Bruce Flatt
|
|
Director
|
||
/s/ Steven J. Gilbert
|
|
|
||
Steven J. Gilbert
|
|
Director
|
||
/s/ D. Richard Masson
|
|
|
||
D. Richard Masson
|
|
Director
|
||
/s/ Marna C. Whittington
|
|
|
||
Marna C. Whittington
|
|
Director
|
Exhibit No.
|
Description of Exhibit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
101.INS
|
XBRL Instance Document.
|
|
|
101.SCH
|
XBRL Taxonomy Extension Schema Document.
|
|
|
101.CAL
|
XBRL Taxonomy Extension Calculation Linkbase Document.
|
|
|
101.LAB
|
XBRL Taxonomy Extension Label Linkbase Document.
|
|
|
101.PRE
|
XBRL Taxonomy Extension Presentation Linkbase Document.
|
|
|
101.DEF
|
XBRL Taxonomy Extension Definition Linkbase Document.
|
|
|
|
|
|
*
|
Management contract or compensatory plan or arrangement.
|
†
|
Filed herewith.
|
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