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Share Name | Share Symbol | Market | Type |
---|---|---|---|
Och Ziff Capital Management Group Inc | NYSE:OZM | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 20.47 | 0 | 01:00:00 |
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☑
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QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the quarterly period ended June 30, 2019
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or
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☐
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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For the transition period from
to
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Delaware
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26-0354783
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(State or other jurisdiction of incorporation or organization)
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(I.R.S. Employer Identification No.)
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Title of each class
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Trading symbols
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Name of each exchange on which registered
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Class A Shares
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OZM
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New York Stock Exchange
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Large accelerated filer
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☐
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Accelerated filer
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☑
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Non-accelerated filer
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☐
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Smaller reporting company
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☐
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Emerging growth company
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☐
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If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.
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☐
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Page
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PART I — FINANCIAL INFORMATION
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Item 1.
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Item 2.
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Item 3.
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Item 4.
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PART II — OTHER INFORMATION
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Item 1.
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Item 1A.
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Item 2.
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Item 3.
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Item 4.
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Item 5.
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Item 6.
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2007 Offerings
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Refers collectively to our IPO and the concurrent private offering of approximately 38.1 million Class A Shares to DIC Sahir Limited, a wholly owned indirect subsidiary of Dubai Holdings LLC
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active executive managing directors
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Executive managing directors who remain active in our business
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Annual Report
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Our annual report on Form 10-K for the year ended December 31, 2018, dated March 15, 2019 and filed with the SEC
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Class A Shares
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Our Class A Shares, representing Class A common stock of Och-Ziff Capital Management Group Inc., which are publicly traded and listed on the NYSE
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Class B Shares
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Class B Shares of Och-Ziff Capital Management Group Inc., which are not publicly traded, are currently held solely by our executive managing directors and have no economic rights but entitle the holders thereof to one vote per share together with the holders of our Class A Shares
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CLOs
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Collateralized loan obligations
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Exchange Act
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Securities Exchange Act of 1934, as amended
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executive managing directors
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The current limited partners of the Oz Operating Partnerships other than Oz Corp, and, except where the context requires otherwise, include certain limited partners who are no longer active in our business
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funds
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The multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds and other alternative investment vehicles for which we provide asset management services
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GAAP
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U.S. generally accepted accounting principles
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Group A Units
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Refers collectively to one Class A operating group unit in each of the Oz Operating Partnerships. Group A Units are limited partner interests held by our executive managing directors
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Group A-1 Units
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Refers collectively to one Class A-1 operating group unit in each of the Oz Operating Partnerships. Group A-1 Units are limited partner interests held by our executive managing directors
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Group B Units
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Refers collectively to one Class B operating group unit in each of the Oz Operating Partnerships. Group B Units are limited partner interests held by Oz Corp
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Group D Units
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Refers collectively to one Class D operating group unit in each of the Oz Operating Partnerships. Group D Units are limited partner interests held by our executive managing directors
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Group E Units
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Refers collectively to one Class E operating group unit in each of the Oz Operating Partnerships. Group E Units are limited partner interests held by our executive managing directors
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Group P Units
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Refers collectively to one Class P operating group unit in each of the Oz Operating Partnerships. Group P Units are limited partner interests held by our executive managing directors
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Institutional Credit Strategies
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Our asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs and other customized solutions
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IPO
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Our initial public offering of 3.6 million Class A Shares that occurred in November 2007
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NYSE
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New York Stock Exchange
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the Company, Oz Management, the firm, we, us, our
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Refers, unless the context requires otherwise, to the Registrant and its consolidated subsidiaries, including the Oz Operating Group
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Oz Corp
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Och-Ziff Holding Corporation, a Delaware corporation
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Oz Operating Group
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Refers collectively to the Oz Operating Partnerships and their consolidated subsidiaries
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Oz Operating Partnerships
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Refers collectively to OZ Management LP, OZ Advisors LP and OZ Advisors II LP
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Partner Equity Units
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Refers collectively to the Group A Units, Group E Units and Group P Units
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Preferred Units
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One Class A cumulative preferred unit in each of the Oz Operating Partnerships collectively represents one “Preferred Unit.” Certain of our executive managing directors collectively own 100% of the Preferred Units. Preferred Units issued in 2016 and 2017 are, collectively, referred to as “2016 Preferred Units.” Preferred Units issued in 2019 are referred to as “2019 Preferred Units.”
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PSUs
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Class A performance-based RSUs
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Recapitalization
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Refers to the recapitalization of our business that occurred in February 2019. As part of the Recapitalization, a portion of the interests held by our active and former executive managing directors were reallocated to existing members of senior management. In addition, we restructured the previously outstanding senior debt and Preferred Units.
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Registrant
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Och-Ziff Capital Management Group Inc., a Delaware corporation
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RSUs
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Class A restricted share units
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SEC
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U.S. Securities and Exchange Commission
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Securities Act
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Securities Act of 1933, as amended
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Special Investments
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Investments that we, as investment manager, believe lack a readily ascertainable market value, are illiquid or should be held until the resolution of a special event or circumstance
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June 30, 2019
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December 31, 2018
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(dollars in thousands)
|
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Assets
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Cash and cash equivalents
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$
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174,743
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$
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315,809
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Restricted cash
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5,407
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8,075
|
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Investments (includes assets measured at fair value of $349,245 and $361,378, including assets sold under agreements to repurchase of $79,466 and $62,186 as of June 30, 2019, and December 31, 2018, respectively)
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405,083
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389,897
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Income and fees receivable
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51,345
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82,843
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Due from related parties
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18,741
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20,754
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Deferred income tax assets
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324,979
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355,025
|
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||
Operating lease assets
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120,951
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—
|
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Other assets, net
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85,127
|
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82,403
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Assets of consolidated funds:
|
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Investments of consolidated funds, at fair value
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98,865
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171,495
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Other assets of consolidated funds
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78,708
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21,090
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Total Assets
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$
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1,363,949
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$
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1,447,391
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Liabilities and Shareholders’ Equity (Deficit)
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Liabilities
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Compensation payable
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$
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43,477
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$
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105,036
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Unearned incentive income
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66,308
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61,397
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Due to related parties
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211,010
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281,821
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Operating lease liabilities
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133,671
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—
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Debt obligations
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302,108
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289,987
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Securities sold under agreements to repurchase
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78,648
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62,801
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Other liabilities
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37,792
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63,603
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Liabilities of consolidated funds:
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Other liabilities of consolidated funds
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76,645
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14,541
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Total Liabilities
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949,659
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879,186
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Commitments and Contingencies (Note 19)
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Redeemable Noncontrolling Interests (Note 4)
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247,229
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577,660
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Shareholders’ Equity (Deficit)
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Class A Shares, $0.01 and no par value, 100,000,000 and 100,000,000 shares authorized, 20,631,750 and 19,905,126 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
|
206
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|
|
—
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Class B Shares, $0.01 and no par value, 75,000,000 and 75,000,000 shares authorized, 29,208,952 and 29,458,948 shares issued and outstanding as of June 30, 2019 and December 31, 2018, respectively
|
292
|
|
|
—
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Additional paid-in capital
|
70,875
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3,135,841
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|
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Accumulated deficit
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(358,204
|
)
|
|
(3,564,727
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)
|
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Shareholders’ deficit attributable to Class A Shareholders
|
(286,831
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)
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(428,886
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)
|
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Shareholders’ equity attributable to noncontrolling interests
|
453,892
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|
419,431
|
|
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Total Shareholders’ Equity (Deficit)
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167,061
|
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|
(9,455
|
)
|
||
Total Liabilities, Redeemable Noncontrolling Interests and Shareholders’ Equity (Deficit)
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$
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1,363,949
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$
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1,447,391
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Three Months Ended June 30,
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Six Months Ended June 30,
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2019
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2018
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2019
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2018
|
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(dollars in thousands)
|
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Revenues
|
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|
||||||||
Management fees
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$
|
61,400
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$
|
70,593
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$
|
125,023
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|
|
$
|
143,043
|
|
Incentive income
|
34,757
|
|
|
34,656
|
|
|
87,955
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|
|
85,490
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|
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Other revenues
|
5,043
|
|
|
3,867
|
|
|
8,812
|
|
|
8,409
|
|
||||
Income of consolidated funds
|
2,308
|
|
|
650
|
|
|
4,912
|
|
|
1,234
|
|
||||
Total Revenues
|
103,508
|
|
|
109,766
|
|
|
226,702
|
|
|
238,176
|
|
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|
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|
||||||||
Expenses
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
80,709
|
|
|
74,502
|
|
|
166,424
|
|
|
143,426
|
|
||||
Interest expense
|
6,523
|
|
|
7,505
|
|
|
12,731
|
|
|
14,103
|
|
||||
General, administrative and other
|
28,427
|
|
|
48,509
|
|
|
66,215
|
|
|
86,359
|
|
||||
Expenses of consolidated funds
|
84
|
|
|
24
|
|
|
139
|
|
|
108
|
|
||||
Total Expenses
|
115,743
|
|
|
130,540
|
|
|
245,509
|
|
|
243,996
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other Income (Loss)
|
|
|
|
|
|
|
|
||||||||
Changes in tax receivable agreement liability
|
5,362
|
|
|
—
|
|
|
5,362
|
|
|
—
|
|
||||
Net losses on early retirement of debt
|
(595
|
)
|
|
(14,303
|
)
|
|
(6,053
|
)
|
|
(14,303
|
)
|
||||
Net gains (losses) on investments
|
3,148
|
|
|
(785
|
)
|
|
5,837
|
|
|
(473
|
)
|
||||
Net gains (losses) of consolidated funds
|
482
|
|
|
(26
|
)
|
|
4,228
|
|
|
466
|
|
||||
Total Other Income (Loss)
|
8,397
|
|
|
(15,114
|
)
|
|
9,374
|
|
|
(14,310
|
)
|
||||
|
|
|
|
|
|
|
|
||||||||
Loss Before Income Taxes
|
(3,838
|
)
|
|
(35,888
|
)
|
|
(9,433
|
)
|
|
(20,130
|
)
|
||||
Income taxes
|
10,134
|
|
|
(2,524
|
)
|
|
13,520
|
|
|
488
|
|
||||
Consolidated and Comprehensive Net Loss
|
(13,972
|
)
|
|
(33,364
|
)
|
|
(22,953
|
)
|
|
(20,618
|
)
|
||||
Less: Net loss attributable to noncontrolling interests
|
7,984
|
|
|
21,440
|
|
|
15,218
|
|
|
12,805
|
|
||||
Less: Net income attributable to redeemable noncontrolling interests
|
(2,637
|
)
|
|
(332
|
)
|
|
(8,171
|
)
|
|
(953
|
)
|
||||
Net Loss Attributable to Och-Ziff Capital Management Group Inc.
|
(8,625
|
)
|
|
(12,256
|
)
|
|
(15,906
|
)
|
|
(8,766
|
)
|
||||
Less: Change in redemption value of Preferred Units
|
—
|
|
|
—
|
|
|
44,364
|
|
|
—
|
|
||||
Net (Loss) Income Attributable to Class A Shareholders
|
$
|
(8,625
|
)
|
|
$
|
(12,256
|
)
|
|
$
|
28,458
|
|
|
$
|
(8,766
|
)
|
|
|
|
|
|
|
|
|
||||||||
(Loss) Earnings per Class A Share
|
|
|
|
|
|
|
|
||||||||
(Loss) Earnings per Class A Share - basic
|
$
|
(0.42
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
1.38
|
|
|
$
|
(0.46
|
)
|
(Loss) Earnings per Class A Share - diluted
|
$
|
(0.46
|
)
|
|
$
|
(0.64
|
)
|
|
$
|
1.10
|
|
|
$
|
(0.46
|
)
|
Weighted-average Class A Shares outstanding - basic
|
20,722,510
|
|
|
19,256,246
|
|
|
20,599,616
|
|
|
19,239,761
|
|
||||
Weighted-average Class A Shares outstanding - diluted
|
36,714,012
|
|
|
19,256,246
|
|
|
25,942,105
|
|
|
19,239,761
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Number of Class A Shares
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
20,484,430
|
|
|
19,112,977
|
|
|
19,905,126
|
|
|
18,957,321
|
|
||||
Equity-based compensation
|
147,320
|
|
|
13,981
|
|
|
726,624
|
|
|
169,637
|
|
||||
Ending Balance
|
20,631,750
|
|
|
19,126,958
|
|
|
20,631,750
|
|
|
19,126,958
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Number of Class B Shares
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
29,208,952
|
|
|
30,433,948
|
|
|
29,458,948
|
|
|
33,933,948
|
|
||||
Equity-based compensation
|
—
|
|
|
(50,000
|
)
|
|
(249,996
|
)
|
|
(3,550,000
|
)
|
||||
Ending Balance
|
29,208,952
|
|
|
30,383,948
|
|
|
29,208,952
|
|
|
30,383,948
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Class A Shares Par Value
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Equity-based compensation
|
1
|
|
|
—
|
|
|
1
|
|
|
—
|
|
||||
Reclassification upon corporate conversion
|
205
|
|
|
—
|
|
|
205
|
|
|
—
|
|
||||
Ending Balance
|
$
|
206
|
|
|
$
|
—
|
|
|
$
|
206
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Class B Shares Par Value
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reclassification upon corporate conversion
|
292
|
|
|
—
|
|
|
292
|
|
|
—
|
|
||||
Ending Balance
|
$
|
292
|
|
|
$
|
—
|
|
|
$
|
292
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
||||||||
Additional Paid-in Capital
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
3,235,728
|
|
|
$
|
3,111,139
|
|
|
$
|
3,135,841
|
|
|
$
|
3,102,074
|
|
Dividend equivalents on Class A restricted share units
|
(61
|
)
|
|
(195
|
)
|
|
478
|
|
|
877
|
|
||||
Equity-based compensation, net of taxes
|
20,618
|
|
|
9,025
|
|
|
40,318
|
|
|
16,828
|
|
||||
Reclassification upon corporate conversion
|
(3,235,728
|
)
|
|
—
|
|
|
(3,235,728
|
)
|
|
—
|
|
||||
Impact of changes in Oz Operating Group ownership
|
—
|
|
|
(505
|
)
|
|
(124
|
)
|
|
(315
|
)
|
||||
Reallocation of equity and income tax effects of Recapitalization
|
—
|
|
|
—
|
|
|
35,408
|
|
|
—
|
|
||||
Amendment to tax receivable agreement
|
50,318
|
|
|
—
|
|
|
50,318
|
|
|
—
|
|
||||
Change in redemption value of Preferred Units
|
—
|
|
|
—
|
|
|
44,364
|
|
|
—
|
|
||||
Ending Balance
|
$
|
70,875
|
|
|
$
|
3,119,464
|
|
|
$
|
70,875
|
|
|
$
|
3,119,464
|
|
|
|
|
|
|
|
|
|
||||||||
Accumulated Deficit
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
(3,577,250
|
)
|
|
$
|
(3,524,919
|
)
|
|
$
|
(3,564,727
|
)
|
|
$
|
(3,555,905
|
)
|
Impact of adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
41,922
|
|
||||
Cash dividends declared on Class A Shares
|
(7,621
|
)
|
|
(3,823
|
)
|
|
(12,324
|
)
|
|
(17,177
|
)
|
||||
Dividend equivalents on Class A restricted share units
|
61
|
|
|
195
|
|
|
(478
|
)
|
|
(877
|
)
|
||||
Reclassification upon corporate conversion
|
3,235,231
|
|
|
—
|
|
|
3,235,231
|
|
|
—
|
|
||||
Comprehensive net loss, excluding amounts attributable to redeemable noncontrolling interests
|
(8,625
|
)
|
|
(12,256
|
)
|
|
(15,906
|
)
|
|
(8,766
|
)
|
||||
Ending Balance
|
$
|
(358,204
|
)
|
|
$
|
(3,540,803
|
)
|
|
$
|
(358,204
|
)
|
|
$
|
(3,540,803
|
)
|
Shareholders’ Deficit Attributable to Class A Shareholders
|
(286,831
|
)
|
|
(421,339
|
)
|
|
(286,831
|
)
|
|
(421,339
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Shareholders’ Equity Attributable to Noncontrolling Interests
|
|
|
|
|
|
|
|
||||||||
Beginning balance
|
$
|
444,837
|
|
|
$
|
435,142
|
|
|
$
|
419,431
|
|
|
$
|
357,902
|
|
Impact of adoption of ASU 2014-09
|
—
|
|
|
—
|
|
|
—
|
|
|
75,062
|
|
||||
Capital contributions
|
191
|
|
|
128
|
|
|
618
|
|
|
878
|
|
||||
Capital distributions
|
(342
|
)
|
|
(6,793
|
)
|
|
(627
|
)
|
|
(24,483
|
)
|
||||
Equity-based compensation, net of taxes
|
17,190
|
|
|
12,344
|
|
|
31,608
|
|
|
23,017
|
|
||||
Impact of changes in Oz Operating Group ownership
|
—
|
|
|
505
|
|
|
124
|
|
|
315
|
|
||||
Reallocation of equity and income tax effects of Recapitalization
|
—
|
|
|
—
|
|
|
(39,086
|
)
|
|
—
|
|
||||
Change in redemption value of Preferred Units
|
—
|
|
|
—
|
|
|
57,042
|
|
|
—
|
|
||||
Comprehensive net loss, excluding amounts attributable to redeemable noncontrolling interests
|
(7,984
|
)
|
|
(21,440
|
)
|
|
(15,218
|
)
|
|
(12,805
|
)
|
||||
Ending Balance
|
453,892
|
|
|
419,886
|
|
|
453,892
|
|
|
419,886
|
|
||||
Total Shareholders’ Equity (Deficit)
|
$
|
167,061
|
|
|
$
|
(1,453
|
)
|
|
$
|
167,061
|
|
|
$
|
(1,453
|
)
|
|
|
|
|
|
|
|
|
||||||||
Cash dividends paid on Class A Shares
|
$
|
0.37
|
|
|
$
|
0.20
|
|
|
$
|
0.60
|
|
|
$
|
0.90
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Cash Flows from Operating Activities
|
|
|
|
||||
Consolidated net loss
|
$
|
(22,953
|
)
|
|
$
|
(20,618
|
)
|
Adjustments to reconcile consolidated net loss to net cash provided by operating activities:
|
|
|
|
||||
Amortization of equity-based compensation
|
74,318
|
|
|
45,537
|
|
||
Depreciation, amortization and net gains and losses on fixed assets
|
4,775
|
|
|
5,166
|
|
||
Net losses on early retirement of debt
|
6,053
|
|
|
14,303
|
|
||
Deferred income taxes
|
10,373
|
|
|
(1,653
|
)
|
||
Operating and finance lease assets amortization
|
5,331
|
|
|
—
|
|
||
Operating and finance lease liabilities accretion
|
5,287
|
|
|
—
|
|
||
Net (gains) losses on investments, net of dividends
|
(4,843
|
)
|
|
1,941
|
|
||
Operating cash flows due to changes in:
|
|
|
|
||||
Income and fees receivable
|
31,498
|
|
|
324,119
|
|
||
Due from related parties
|
2,013
|
|
|
(4,049
|
)
|
||
Other assets, net
|
779
|
|
|
33,070
|
|
||
Compensation payable
|
(63,288
|
)
|
|
(164,122
|
)
|
||
Unearned incentive income
|
4,911
|
|
|
12,967
|
|
||
Due to related parties
|
(4,491
|
)
|
|
167
|
|
||
Operating lease liabilities
|
(7,513
|
)
|
|
—
|
|
||
Other liabilities
|
(19,886
|
)
|
|
(9,799
|
)
|
||
Consolidated funds related items:
|
|
|
|
||||
Net gains of consolidated funds
|
(4,228
|
)
|
|
(466
|
)
|
||
Purchases of investments
|
(99,407
|
)
|
|
(170,149
|
)
|
||
Proceeds from sale of investments
|
176,284
|
|
|
133,992
|
|
||
Other assets of consolidated funds
|
(57,639
|
)
|
|
(31,706
|
)
|
||
Other liabilities of consolidated funds
|
5,695
|
|
|
39,752
|
|
||
Net Cash Provided by Operating Activities
|
43,069
|
|
|
208,452
|
|
||
|
|
|
|
||||
Cash Flows from Investing Activities
|
|
|
|
||||
Purchases of fixed assets
|
(720
|
)
|
|
(2,360
|
)
|
||
Purchases of United States government obligations
|
(161,066
|
)
|
|
(250,555
|
)
|
||
Maturities of United States government obligations
|
175,029
|
|
|
13,000
|
|
||
Investments in funds
|
(59,210
|
)
|
|
(127,279
|
)
|
||
Return of investments in funds
|
35,756
|
|
|
166,383
|
|
||
Net Cash Used in Investing Activities
|
(10,211
|
)
|
|
(200,811
|
)
|
||
|
|
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Cash Flows from Financing Activities
|
|
|
|
||||
Contributions from noncontrolling and redeemable noncontrolling interests
|
4,263
|
|
|
38,163
|
|
||
Distributions to noncontrolling and redeemable noncontrolling interests
|
(16,462
|
)
|
|
(34,832
|
)
|
||
Dividends on Class A Shares
|
(12,324
|
)
|
|
(17,177
|
)
|
||
Proceeds from debt obligations, net of issuance costs
|
—
|
|
|
301,678
|
|
||
Repayment of debt obligations, including prepayment costs
|
(166,068
|
)
|
|
(577,759
|
)
|
||
Proceeds from securities sold under agreements to repurchase, net of issuance costs
|
16,328
|
|
|
—
|
|
||
Other, net
|
(2,329
|
)
|
|
(3,259
|
)
|
||
Net Cash Used in Financing Activities
|
(176,592
|
)
|
|
(293,186
|
)
|
||
Net Change in Cash and Cash Equivalents and Restricted Cash
|
(143,734
|
)
|
|
(285,545
|
)
|
||
Cash and Cash Equivalents and Restricted Cash, Beginning of Period
|
323,884
|
|
|
469,513
|
|
||
Cash and Cash Equivalents and Restricted Cash, End of Period
|
$
|
180,150
|
|
|
$
|
183,968
|
|
|
|
|
|
||||
Supplemental Disclosure of Cash Flow Information
|
|
|
|
|
|||
Cash paid during the period:
|
|
|
|
|
|||
Interest
|
$
|
7,696
|
|
|
$
|
18,199
|
|
Income taxes
|
$
|
3,373
|
|
|
$
|
1,636
|
|
|
|
|
|
||||
Non-cash transactions:
|
|
|
|
||||
Increase in paid-in capital as a result of tax receivable agreement amendment (Note 19)
|
$
|
50,318
|
|
|
$
|
—
|
|
|
|
|
|
||||
Reconciliation of cash and cash equivalents and restricted cash:
|
|
|
|
||||
Cash and cash equivalents
|
$
|
174,743
|
|
|
$
|
183,968
|
|
Restricted cash
|
$
|
5,407
|
|
|
$
|
—
|
|
Total Cash and Cash Equivalents and Restricted Cash
|
$
|
180,150
|
|
|
$
|
183,968
|
|
•
|
Class A Shares
—Class A Shares are publicly traded and entitle the holders thereof to one vote per share on matters submitted to a vote of shareholders. The holders of Class A Shares are entitled to any distributions declared by the Registrant’s Board of Directors (the “Board”).
|
•
|
Class B Shares
—Class B Shares are held by the Company’s executive managing directors. These shares are not publicly traded but rather entitle the executive managing directors to one vote per share on matters submitted to a vote of shareholders. These shares do not participate in the earnings of the Registrant, as the executive managing
|
•
|
Group A Units
—Group A Units are limited partner interests issued to certain executive managing directors. Beginning on the final day of the Distribution Holiday (as defined in Note
3
), each executive managing director may exchange his or her vested and booked-up (as defined below) Group A Units for an equal number of Class A Shares (or the cash equivalent thereof) over a period of two years in three equal installments commencing upon the final day of the Distribution Holiday and on each of the first and second anniversary thereof (or, for units that become vested and booked-up Group A Units after the final day of the Distribution Holiday, from the later of the date on which they would have been exchangeable in accordance with the foregoing and the date on which they become vested and booked-up Group A Units) (and thereafter such units will remain exchangeable), in each case, subject to certain restrictions. A “book-up” is when sufficient appreciation has occurred to meet a prescribed capital account book-up target under the terms of the Oz Operating Partnership limited partnership agreements.
|
•
|
Group A-1 Units
—Group A-1 Units are limited partner interests into which
0.35
of each Group A Unit was recapitalized in connection with the reallocation that was effectuated by the Recapitalization. The Group A-1 Units will be canceled at such time and to the extent that the Group E Units granted in connection with the Recapitalization vest and achieve a book-up. Group A-1 Units are not eligible to receive distributions at any time and do not participate in the net income (loss) of the Oz Operating Group. However, the holders of Group A-1 Units shall participate in any sale, change of control or other liquidity event. In the Recapitalization, the holders of the 2016 Preferred Units (as defined below) forfeited an additional
749,813
Group A Units, which were recapitalized into Group A-1 Units.
|
•
|
Group B Units
—Oz Corp holds a general partner interest and Group B Units in each Oz Operating Group entity. Oz Corp owns all of the Group B Units, which represent equity interest in the Oz Operating Group. Except during the Distribution Holiday as described above, the Group B Units are economically identical to the Group A Units held by executive managing directors but are not exchangeable for Class A Shares and are not subject to vesting, forfeiture or minimum retained ownership requirements.
|
•
|
Group E Units
—Group E Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains. Each Group E Unit converts into a Group A Unit and becomes exchangeable for one Class A Share (or the cash equivalent thereof) to the extent there has been a sufficient amount of appreciation for a Group E Unit to achieve a book-up target and, subject to other conditions contained in the limited partnership agreements of the Oz Operating Partnerships, the Distribution Holiday has ended (or an earlier exchange date is established by the Exchange Committee). The Group E Units are entitled to share in residual assets upon liquidation, dissolution or winding up and become eligible to participate in any tag along right
,
in a change of control transaction or other liquidity event only to the extent of their relative positive capital accounts (if any). In connection with the Recapitalization, all outstanding Group D Units, which were non-equity profits interests, converted into Group E Units on a one-for-one basis. Holders of Group E Units do not receive distributions during the Distribution Holiday. See Note
3
for additional information. Group E Unit grants are accounted for as equity-based compensation. See Note
14
for additional information.
|
•
|
Group P Units
—Group P Units are limited partner interests issued to certain executive managing directors that are only entitled to future profits and gains. Each Group P Unit becomes exchangeable for one Class A Share (or the cash equivalent thereof), in each case upon satisfaction of certain service and performance conditions at such time and, with respect to exchanges, to the extent there has been sufficient appreciation for a Group P Unit to achieve a
|
•
|
Preferred Units
— The Preferred Units are non-voting preferred equity interests in the Oz Operating Group entities. Preferred Units issued in 2016 and 2017 are collectively referred to as the “2016 Preferred Units.” The Preferred Units issued in 2019 are referred to as the “2019 Preferred Units.” See Note
10
for additional information.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
|
|
|
|
|
|
|
|
||||||||
Oz Management LP
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(18,769
|
)
|
|
$
|
(30,901
|
)
|
|
$
|
(50,818
|
)
|
|
$
|
(28,496
|
)
|
Blended participation percentage
|
43
|
%
|
|
58
|
%
|
|
44
|
%
|
|
58
|
%
|
||||
Net Loss Attributable to Group A Units
|
$
|
(8,148
|
)
|
|
$
|
(17,847
|
)
|
|
$
|
(22,212
|
)
|
|
$
|
(16,458
|
)
|
|
|
|
|
|
|
|
|
||||||||
Oz Advisors LP
|
|
|
|
|
|
|
|
||||||||
Net (loss) income
|
$
|
(9,523
|
)
|
|
$
|
(20,164
|
)
|
|
$
|
7,974
|
|
|
$
|
(2,429
|
)
|
Blended participation percentage
|
0
|
%
|
|
58
|
%
|
|
84
|
%
|
|
58
|
%
|
||||
Net (Loss) Income Attributable to Group A Units
|
$
|
—
|
|
|
$
|
(11,647
|
)
|
|
$
|
6,695
|
|
|
$
|
(1,400
|
)
|
|
|
|
|
|
|
|
|
||||||||
Oz Advisors II LP
|
|
|
|
|
|
|
|
||||||||
Net income
|
$
|
14,550
|
|
|
$
|
13,125
|
|
|
$
|
16,603
|
|
|
$
|
7,470
|
|
Blended participation percentage
|
0
|
%
|
|
58
|
%
|
|
0
|
%
|
|
58
|
%
|
||||
Net Income Attributable to Group A Units
|
$
|
—
|
|
|
$
|
7,579
|
|
|
$
|
—
|
|
|
$
|
4,313
|
|
|
|
|
|
|
|
|
|
||||||||
Total Oz Operating Group
|
|
|
|
|
|
|
|
||||||||
Net loss
|
$
|
(13,742
|
)
|
|
$
|
(37,940
|
)
|
|
$
|
(26,241
|
)
|
|
$
|
(23,455
|
)
|
Blended participation percentage
|
59
|
%
|
|
58
|
%
|
|
59
|
%
|
|
58
|
%
|
||||
Net Loss Attributable to Group A Units
|
$
|
(8,148
|
)
|
|
$
|
(21,915
|
)
|
|
$
|
(15,517
|
)
|
|
$
|
(13,545
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Group A Units
|
$
|
(8,148
|
)
|
|
$
|
(21,915
|
)
|
|
$
|
(15,517
|
)
|
|
$
|
(13,545
|
)
|
Other
|
164
|
|
|
475
|
|
|
299
|
|
|
740
|
|
||||
|
$
|
(7,984
|
)
|
|
$
|
(21,440
|
)
|
|
$
|
(15,218
|
)
|
|
$
|
(12,805
|
)
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Group A Units
|
$
|
450,099
|
|
|
$
|
415,928
|
|
Other
|
3,793
|
|
|
3,503
|
|
||
|
$
|
453,892
|
|
|
$
|
419,431
|
|
|
Three Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
Funds
|
|
Preferred Units
|
|
Total
|
|
Funds
|
|
Preferred Units
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Beginning balance
|
$
|
149,290
|
|
|
$
|
150,000
|
|
|
$
|
299,290
|
|
|
$
|
48,012
|
|
|
$
|
420,000
|
|
|
$
|
468,012
|
|
Capital contributions
|
1,938
|
|
|
—
|
|
|
1,938
|
|
|
15,178
|
|
|
—
|
|
|
15,178
|
|
||||||
Capital distributions
|
(56,636
|
)
|
|
—
|
|
|
(56,636
|
)
|
|
(10,015
|
)
|
|
—
|
|
|
(10,015
|
)
|
||||||
Comprehensive income
|
2,637
|
|
|
—
|
|
|
2,637
|
|
|
332
|
|
|
—
|
|
|
332
|
|
||||||
Ending Balance
|
$
|
97,229
|
|
|
$
|
150,000
|
|
|
$
|
247,229
|
|
|
$
|
53,507
|
|
|
$
|
420,000
|
|
|
$
|
473,507
|
|
|
Six Months Ended June 30,
|
||||||||||||||||||||||
|
2019
|
|
2018
|
||||||||||||||||||||
|
Funds
|
|
Preferred Units
|
|
Total
|
|
Funds
|
|
Preferred Units
|
|
Total
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Beginning balance
|
$
|
157,660
|
|
|
$
|
420,000
|
|
|
$
|
577,660
|
|
|
$
|
25,617
|
|
|
$
|
420,000
|
|
|
$
|
445,617
|
|
Fair value of Debt Securities exchanged for 2016 Preferred Units
|
—
|
|
|
(167,799
|
)
|
|
(167,799
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Fair value of 2019 Preferred Units exchanged for 2016 Preferred Units
|
—
|
|
|
(137,759
|
)
|
|
(137,759
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Issuance of 2019 Preferred Units, net of issuance costs
|
—
|
|
|
136,964
|
|
|
136,964
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Change in redemption value of Preferred Units
|
—
|
|
|
(101,406
|
)
|
|
(101,406
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
||||||
Capital contributions
|
3,645
|
|
|
—
|
|
|
3,645
|
|
|
37,285
|
|
|
—
|
|
|
37,285
|
|
||||||
Capital distributions
|
(72,247
|
)
|
|
—
|
|
|
(72,247
|
)
|
|
(10,348
|
)
|
|
—
|
|
|
(10,348
|
)
|
||||||
Comprehensive income
|
8,171
|
|
|
—
|
|
|
8,171
|
|
|
953
|
|
|
—
|
|
|
953
|
|
||||||
Ending Balance
|
$
|
97,229
|
|
|
$
|
150,000
|
|
|
$
|
247,229
|
|
|
$
|
53,507
|
|
|
$
|
420,000
|
|
|
$
|
473,507
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
(dollars in thousands)
|
||||||
United States government obligations, at fair value
|
$
|
167,698
|
|
|
$
|
179,510
|
|
CLOs, at fair value
|
181,547
|
|
|
181,868
|
|
||
Other investments, equity method
|
55,838
|
|
|
28,519
|
|
||
Total Investments
|
$
|
405,083
|
|
|
$
|
389,897
|
|
•
|
Level I
– Fair value is determined using quoted prices that are available in active markets for identical assets or liabilities. The types of assets and liabilities that would generally be included in this category are certain listed equities, U.S. government obligations and certain listed derivatives.
|
•
|
Level II
– Fair value is determined using quotations received from dealers making a market for these assets or liabilities (“broker quotes”), valuations obtained from independent third-party pricing services, the use of models or
|
•
|
Level III
– Fair value is determined using pricing inputs that are unobservable in the market and includes situations where there is little, if any, market activity for the asset or liability. The fair value of assets and liabilities in this category may require significant judgment or estimation in determining fair value of the assets or liabilities. The fair value of these assets and liabilities may be estimated using a combination of observed transaction prices, independent pricing services, relevant broker quotes, models or other valuation methodologies based on pricing inputs that are neither directly or indirectly market observable. The types of assets and liabilities that would generally be included in this category include CLOs, real estate investments, equity and debt securities issued by private entities, limited partnerships, certain corporate bonds, certain credit default swap contracts, certain bank debt securities, certain commercial real estate debt, certain OTC derivatives, residential and commercial mortgage-backed securities, asset-backed securities, collateralized debt obligations and investments in affiliated credit funds.
|
|
As of June 30, 2019
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Assets, at Fair Value
|
|
|
|
|
|
|
|
||||||||
Included within cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
United States government obligations
|
$
|
63,740
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
63,740
|
|
|
|
|
|
|
|
|
|
||||||||
Included within investments:
|
|
|
|
|
|
|
|
||||||||
United States government obligations
|
$
|
167,698
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
167,698
|
|
CLOs
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181,547
|
|
|
$
|
181,547
|
|
|
|
|
|
|
|
|
|
||||||||
Investments of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Bank debt
|
$
|
—
|
|
|
$
|
60,935
|
|
|
$
|
36,130
|
|
|
$
|
97,065
|
|
Corporate bonds
|
$
|
—
|
|
|
$
|
1,800
|
|
|
$
|
—
|
|
|
$
|
1,800
|
|
Total Investments of Consolidated Funds
|
$
|
—
|
|
|
$
|
62,735
|
|
|
$
|
36,130
|
|
|
$
|
98,865
|
|
|
As of December 31, 2018
|
||||||||||||||
|
Level I
|
|
Level II
|
|
Level III
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Assets, at Fair Value
|
|
|
|
|
|
|
|
||||||||
Included within cash and cash equivalents:
|
|
|
|
|
|
|
|
||||||||
United States government obligations
|
$
|
58,054
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
58,054
|
|
|
|
|
|
|
|
|
|
||||||||
Included within investments:
|
|
|
|
|
|
|
|
||||||||
United States government obligations
|
$
|
179,510
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
179,510
|
|
CLOs
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
181,868
|
|
|
$
|
181,868
|
|
|
|
|
|
|
|
|
|
||||||||
Investments of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Bank debt
|
$
|
—
|
|
|
$
|
91,345
|
|
|
$
|
75,613
|
|
|
$
|
166,958
|
|
Corporate bonds
|
$
|
—
|
|
|
$
|
4,537
|
|
|
$
|
—
|
|
|
$
|
4,537
|
|
Total Investments of Consolidated Funds
|
$
|
—
|
|
|
$
|
95,882
|
|
|
$
|
75,613
|
|
|
$
|
171,495
|
|
|
March 31, 2018
|
|
Transfers
In |
|
Transfers
Out |
|
Investment
Purchases |
|
Investment
Sales / Settlements |
|
Gains / Losses
|
|
June 30, 2018
|
||||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||||||
Assets, at Fair Value
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Included within investments:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
CLOs
|
$
|
286,970
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
29,827
|
|
|
$
|
(162,145
|
)
|
|
$
|
(6,525
|
)
|
|
$
|
148,127
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||||
Investments of consolidated funds:
|
|
|
|
|
|
|
|
|
|||||||||||||||||||
Bank debt
|
$
|
19,134
|
|
|
$
|
9,410
|
|
|
$
|
(2,705
|
)
|
|
$
|
42,537
|
|
|
$
|
(35,986
|
)
|
|
$
|
125
|
|
|
$
|
32,515
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Assets, at Fair Value
|
|
|
|
|
|
|
|
||||||||
Included within investments:
|
|
|
|
|
|
|
|
||||||||
CLOs
|
$
|
85
|
|
|
$
|
(4,729
|
)
|
|
$
|
877
|
|
|
$
|
(3,368
|
)
|
|
|
|
|
|
|
|
|
||||||||
Investments of consolidated funds:
|
|
|
|
|
|
|
|
||||||||
Bank debt
|
$
|
114
|
|
|
$
|
4
|
|
|
$
|
694
|
|
|
$
|
76
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Assets
|
|
|
|
|
|
||
Assets of consolidated funds:
|
|
|
|
|
|
||
Investments of consolidated funds, at fair value
|
$
|
98,865
|
|
|
$
|
171,495
|
|
Other assets of consolidated funds
|
78,708
|
|
|
21,090
|
|
||
Total Assets
|
$
|
177,573
|
|
|
$
|
192,585
|
|
|
|
|
|
||||
Liabilities
|
|
|
|
|
|
||
Liabilities of consolidated funds:
|
|
|
|
|
|
||
Other liabilities of consolidated funds
|
76,645
|
|
|
14,541
|
|
||
Total Liabilities
|
$
|
76,645
|
|
|
$
|
14,541
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Net assets of unconsolidated VIEs in which the Company has a variable interest
|
$
|
8,331,080
|
|
|
$
|
10,236,438
|
|
|
|
|
|
||||
Maximum risk of loss as a result of the Company’s involvement with VIEs:
|
|
|
|
||||
Unearned revenues
|
69,710
|
|
|
62,038
|
|
||
Income and fees receivable
|
8,417
|
|
|
31,658
|
|
||
Investments in funds
|
194,975
|
|
|
190,674
|
|
||
Maximum Exposure to Loss
|
$
|
273,102
|
|
|
$
|
284,370
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Lease Cost
|
|
|
|
||||
Operating lease cost
|
$
|
5,146
|
|
|
$
|
10,295
|
|
Short-term lease cost
|
14
|
|
|
32
|
|
||
Finance lease cost - amortization of leased assets
|
137
|
|
|
274
|
|
||
Finance lease cost - imputed interest on lease liabilities
|
25
|
|
|
49
|
|
||
Less: Sublease income
|
(381
|
)
|
|
(765
|
)
|
||
Net Lease Cost
|
$
|
4,941
|
|
|
$
|
9,885
|
|
|
Three Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2019
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Supplemental Lease Cash Flow Information
|
|
|
|
||||
Cash paid for amounts included in the measurement of lease liabilities
|
|
|
|
||||
Operating cash flows for operating leases
|
$
|
7,380
|
|
|
$
|
11,378
|
|
Operating cash flows for finance leases
|
$
|
25
|
|
|
$
|
49
|
|
Finance cash flows for finance leases
|
$
|
—
|
|
|
$
|
457
|
|
|
|
|
|
||||
Right-of-use assets obtained in exchange for lease obligations
|
|
|
|
||||
Operating leases
|
$
|
7
|
|
|
$
|
126,007
|
|
Finance leases
|
$
|
—
|
|
|
$
|
1,702
|
|
|
June 30, 2019
|
|
|
|
|
Lease Term and Discount Rate
|
|
|
Weighted average remaining lease term
|
|
|
Operating leases
|
9.7 years
|
|
Finance leases
|
2.7 years
|
|
|
|
|
Weighted average discount rate
|
|
|
Operating leases
|
7.9
|
%
|
Finance leases
|
7.9
|
%
|
|
Operating
Leases |
|
Finance
Leases |
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Maturity of Lease Liabilities
|
|
|
|
||||
July 1, 2019 to December 31, 2019
|
$
|
11,230
|
|
|
$
|
156
|
|
2020
|
22,468
|
|
|
618
|
|
||
2021
|
20,970
|
|
|
618
|
|
||
2022
|
19,780
|
|
|
—
|
|
||
2023
|
19,085
|
|
|
—
|
|
||
Thereafter
|
97,587
|
|
|
—
|
|
||
Total Lease Payments
|
191,120
|
|
|
1,392
|
|
||
Imputed interest
|
(57,449
|
)
|
|
(103
|
)
|
||
Total Lease Liabilities
|
$
|
133,671
|
|
|
$
|
1,289
|
|
|
Operating Leases
|
||
|
|
||
|
(dollars in thousands)
|
||
Sublease Rent Payments Receivable
|
|
||
July 1, 2019 to December 31, 2019
|
$
|
1,135
|
|
2020
|
1,514
|
|
|
2021
|
1,514
|
|
|
2022
|
1,514
|
|
|
2023
|
1,185
|
|
|
Thereafter
|
—
|
|
|
Total Sublease Rent Payments Receivable
|
$
|
6,862
|
|
|
Debt Securities
|
|
2018 Term Loan
|
|
CLO Investments Loans
|
|
Total
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Maturity of Debt Obligations
|
|
|
|
|
|
|
|
||||||||
July 1, 2019 to December 31, 2019
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
2020
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2021
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
||||
2022
|
40,000
|
|
|
—
|
|
|
—
|
|
|
40,000
|
|
||||
2023
|
40,000
|
|
|
55,000
|
|
|
17,238
|
|
|
112,238
|
|
||||
Thereafter
|
120,000
|
|
|
—
|
|
|
57,758
|
|
|
177,758
|
|
||||
Total Payments
|
200,000
|
|
|
55,000
|
|
|
74,996
|
|
|
329,996
|
|
||||
Unamortized discounts & deferred financing costs
|
(26,155
|
)
|
|
(1,261
|
)
|
|
(472
|
)
|
|
(27,888
|
)
|
||||
Total Debt Obligations
|
$
|
173,845
|
|
|
$
|
53,739
|
|
|
$
|
74,524
|
|
|
$
|
302,108
|
|
Borrowing Date
|
|
Contractual Rate
|
|
Final Maturity Date
|
|
Carrying Value
|
||||||
|
|
|
|
|
|
June 2019
|
|
December 2018
|
||||
|
|
|
|
|
|
|
|
|
||||
|
|
|
|
|
|
(dollars in thousands)
|
||||||
November 28, 2016
|
|
EURIBOR plus 2.23%
|
|
December 15, 2023
|
|
$
|
17,125
|
|
|
$
|
17,235
|
|
June 7, 2017
|
|
LIBOR plus 1.48%
|
|
November 16, 2029
|
|
17,235
|
|
|
17,224
|
|
||
August 2, 2017
|
|
LIBOR plus 1.41%
|
|
January 21, 2030
|
|
21,676
|
|
|
21,674
|
|
||
September 14, 2017
|
|
EURIBOR plus 2.21%
|
|
September 14, 2024
|
|
18,488
|
|
|
18,614
|
|
||
February 21, 2018
|
|
LIBOR plus 1.27%
|
|
February 21, 2019
|
|
—
|
|
|
21,060
|
|
||
|
|
|
|
|
|
$
|
74,524
|
|
|
$
|
95,807
|
|
Securities Sold under Agreements to Repurchase
|
|
Gross Amounts of Recognized Liabilities
|
|
Gross Amounts Offset in the Consolidated Balance Sheet
|
|
Net Amounts of Liabilities in the Consolidated Balance Sheet
|
|
Securities Transferred
|
|
Net Amount
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in thousands)
|
||||||||||||||||||
As of June 30, 2019
|
|
$
|
78,648
|
|
|
$
|
—
|
|
|
$
|
78,648
|
|
|
$
|
78,648
|
|
|
$
|
—
|
|
As of December 31, 2018
|
|
$
|
62,801
|
|
|
$
|
—
|
|
|
$
|
62,801
|
|
|
$
|
62,186
|
|
|
$
|
615
|
|
|
|
Investments in CLOs
|
||||||||||||||||||
Securities Sold under Agreements to Repurchase
|
|
Overnight and Continuous
|
|
Up to 30 Days
|
|
30-90 Days
|
|
Greater Than 90 Days
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
||||||||||
|
|
(dollars in thousands)
|
||||||||||||||||||
As of June 30, 2019
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
78,648
|
|
|
$
|
78,648
|
|
As of December 31, 2018
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
62,801
|
|
|
$
|
62,801
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Fixed Assets:
|
|
|
|
|
|
||
Leasehold improvements
|
$
|
54,257
|
|
|
$
|
54,257
|
|
Computer hardware and software
|
46,269
|
|
|
48,178
|
|
||
Furniture, fixtures and equipment
|
8,373
|
|
|
8,373
|
|
||
Accumulated depreciation and amortization
|
(71,285
|
)
|
|
(67,558
|
)
|
||
Fixed assets, net
|
37,614
|
|
|
43,250
|
|
||
Goodwill
|
22,691
|
|
|
22,691
|
|
||
Prepaid expenses
|
16,928
|
|
|
11,629
|
|
||
Other
|
7,894
|
|
|
4,833
|
|
||
Total Other Assets, Net
|
$
|
85,127
|
|
|
$
|
82,403
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Accrued expenses
|
$
|
18,100
|
|
|
$
|
27,683
|
|
Unused trade commissions
|
5,822
|
|
|
8,615
|
|
||
Uncertain tax positions
|
7,000
|
|
|
7,000
|
|
||
Deferred rent credit
|
—
|
|
|
6,231
|
|
||
Trades payable
|
—
|
|
|
4,978
|
|
||
Other
|
6,870
|
|
|
9,096
|
|
||
Total Other Liabilities
|
$
|
37,792
|
|
|
$
|
63,603
|
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||
|
Management Fees
|
|
Incentive Income
|
|
Management Fees
|
|
Incentive Income
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Multi-strategy funds
|
$
|
34,219
|
|
|
$
|
30,800
|
|
|
$
|
44,394
|
|
|
$
|
31,094
|
|
Credit
|
|
|
|
|
|
|
|
||||||||
Opportunistic credit funds
(1)
|
10,704
|
|
|
2,069
|
|
|
7,997
|
|
|
(3,704
|
)
|
||||
Institutional Credit Strategies
|
13,848
|
|
|
—
|
|
|
12,555
|
|
|
—
|
|
||||
Real estate funds
|
2,417
|
|
|
1,888
|
|
|
5,077
|
|
|
6,324
|
|
||||
Other
|
212
|
|
|
—
|
|
|
570
|
|
|
942
|
|
||||
Total
|
$
|
61,400
|
|
|
$
|
34,757
|
|
|
$
|
70,593
|
|
|
$
|
34,656
|
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||
|
Management Fees
|
|
Incentive Income
|
|
Management Fees
|
|
Incentive Income
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Multi-strategy funds
|
$
|
68,600
|
|
|
$
|
45,784
|
|
|
$
|
88,800
|
|
|
$
|
42,926
|
|
Credit
|
|
|
|
|
|
|
|
||||||||
Opportunistic credit funds
|
21,139
|
|
|
32,989
|
|
|
19,104
|
|
|
30,531
|
|
||||
Institutional Credit Strategies
|
27,571
|
|
|
—
|
|
|
23,748
|
|
|
—
|
|
||||
Real estate funds
|
7,249
|
|
|
9,182
|
|
|
9,841
|
|
|
11,091
|
|
||||
Other
|
464
|
|
|
—
|
|
|
1,550
|
|
|
942
|
|
||||
Total
|
$
|
125,023
|
|
|
$
|
87,955
|
|
|
$
|
143,043
|
|
|
$
|
85,490
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
(dollars in thousands)
|
||||||
Beginning of Period
|
$
|
61,397
|
|
|
$
|
143,710
|
|
Effects of adoption of ASU 2014-09
|
—
|
|
|
(99,422
|
)
|
||
Amounts collected during the period
|
11,338
|
|
|
23,336
|
|
||
Amounts recognized during the period
|
(6,427
|
)
|
|
(10,369
|
)
|
||
End of Period
|
$
|
66,308
|
|
|
$
|
57,255
|
|
|
June 30, 2019
|
|
December 31, 2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Management fees
|
$
|
22,137
|
|
|
$
|
20,368
|
|
Incentive income
|
29,208
|
|
|
62,475
|
|
||
Income and Fees Receivable
|
$
|
51,345
|
|
|
$
|
82,843
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Expense recorded within compensation and benefits
|
$
|
37,095
|
|
|
$
|
23,366
|
|
|
$
|
74,318
|
|
|
$
|
45,537
|
|
Corresponding tax benefit
|
$
|
4,616
|
|
|
$
|
2,094
|
|
|
$
|
6,552
|
|
|
$
|
3,820
|
|
|
Equity-Classified RSUs
|
|
Liability-Classified RSUs
|
|
PSUs
|
|||||||||||||||
|
Unvested RSUs
|
|
Weighted-Average
Grant-Date Fair Value
|
|
Unvested RSUs
|
|
Weighted-Average
Grant-Date Fair Value |
|
Unvested PSUs
|
|
Weighted-Average
Grant-Date Fair Value |
|||||||||
December 31, 2018
|
3,784,536
|
|
|
$
|
30.00
|
|
|
433,133
|
|
|
$
|
66.75
|
|
|
1,000,000
|
|
|
$
|
11.82
|
|
Granted
|
1,561,250
|
|
|
$
|
13.91
|
|
|
57,295
|
|
|
$
|
14.37
|
|
|
—
|
|
|
$
|
—
|
|
Vested
|
(766,839
|
)
|
|
$
|
23.24
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
Canceled or forfeited
|
(143,324
|
)
|
|
$
|
27.55
|
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
June 30, 2019
|
4,435,623
|
|
|
$
|
25.63
|
|
|
490,428
|
|
|
$
|
60.36
|
|
|
1,000,000
|
|
|
$
|
11.82
|
|
|
Group A Units
|
|
Group E Units
|
|
Group P Units
|
|||||||||||||||
|
Unvested Group A Units
|
|
Weighted-Average
Grant-Date Fair Value |
|
Unvested Group E Units
|
|
Weighted-Average
Grant-Date Fair Value |
|
Unvested Group
P Units
|
|
Weighted-Average
Grant-Date Fair Value |
|||||||||
December 31, 2018
|
74,962
|
|
|
$
|
105.26
|
|
|
—
|
|
|
$
|
—
|
|
|
3,460,000
|
|
|
$
|
12.46
|
|
Granted
|
—
|
|
|
$
|
—
|
|
|
13,542,440
|
|
|
$
|
8.22
|
|
|
—
|
|
|
$
|
—
|
|
Vested
|
(24,271
|
)
|
|
$
|
105.26
|
|
|
(1,173,671
|
)
|
|
$
|
8.12
|
|
|
—
|
|
|
$
|
—
|
|
Canceled or forfeited
|
(26,421
|
)
|
|
$
|
105.26
|
|
|
(56,620
|
)
|
|
$
|
8.12
|
|
|
(250,000
|
)
|
|
$
|
12.46
|
|
June 30, 2019
|
24,270
|
|
|
$
|
105.26
|
|
|
12,312,149
|
|
|
$
|
8.23
|
|
|
3,210,000
|
|
|
$
|
12.46
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Fair value of RSUs settled in Class A Shares
|
$
|
9,934
|
|
|
$
|
4,133
|
|
Fair value of RSUs settled in cash
|
$
|
—
|
|
|
$
|
276
|
|
Fair value of RSUs withheld to satisfy tax withholding obligations
|
$
|
661
|
|
|
$
|
2,364
|
|
Number of RSUs withheld to satisfy tax withholding obligations
|
35,502
|
|
|
107,593
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||
Statutory U.S. federal income tax rate
|
21.00
|
%
|
|
21.00
|
%
|
|
21.00
|
%
|
|
21.00
|
%
|
Income passed through to noncontrolling interests
|
-78.62
|
%
|
|
-15.17
|
%
|
|
-54.78
|
%
|
|
-16.77
|
%
|
Nondeductible transaction costs
|
-2.85
|
%
|
|
—
|
%
|
|
-23.15
|
%
|
|
—
|
%
|
Tax effects of income recorded to equity in connection with the Recapitalization
|
—
|
%
|
|
—
|
%
|
|
17.18
|
%
|
|
—
|
%
|
Foreign income taxes
|
-34.29
|
%
|
|
-2.29
|
%
|
|
-25.05
|
%
|
|
-6.42
|
%
|
RSU excess deferred income tax write-off
|
-15.57
|
%
|
|
-0.44
|
%
|
|
-17.32
|
%
|
|
-2.21
|
%
|
State and local income taxes
|
-160.11
|
%
|
|
0.87
|
%
|
|
-73.23
|
%
|
|
-1.06
|
%
|
Income not subject to entity level tax
|
—
|
%
|
|
2.99
|
%
|
|
4.64
|
%
|
|
3.03
|
%
|
Other, net
|
6.40
|
%
|
|
0.07
|
%
|
|
7.38
|
%
|
|
0.01
|
%
|
Effective Income Tax Rate
|
-264.04
|
%
|
|
7.03
|
%
|
|
-143.33
|
%
|
|
-2.42
|
%
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Occupancy and equipment
|
$
|
7,524
|
|
|
$
|
7,830
|
|
|
$
|
15,108
|
|
|
$
|
14,295
|
|
Professional services
|
6,730
|
|
|
9,035
|
|
|
21,690
|
|
|
22,506
|
|
||||
Information processing and communications
|
5,488
|
|
|
6,607
|
|
|
10,850
|
|
|
13,401
|
|
||||
Recurring placement and related service fees
|
3,503
|
|
|
4,161
|
|
|
6,845
|
|
|
8,510
|
|
||||
Insurance
|
2,172
|
|
|
1,835
|
|
|
4,324
|
|
|
3,687
|
|
||||
Business development
|
859
|
|
|
1,163
|
|
|
1,957
|
|
|
2,253
|
|
||||
Foreign exchange (gains) and losses
|
(402
|
)
|
|
1,504
|
|
|
(354
|
)
|
|
2,587
|
|
||||
Other expenses
|
2,553
|
|
|
3,374
|
|
|
5,795
|
|
|
6,120
|
|
||||
|
28,427
|
|
|
35,509
|
|
|
66,215
|
|
|
73,359
|
|
||||
Settlements expense
|
—
|
|
|
13,000
|
|
|
—
|
|
|
13,000
|
|
||||
Total General, Administrative and Other
|
$
|
28,427
|
|
|
$
|
48,509
|
|
|
$
|
66,215
|
|
|
$
|
86,359
|
|
Three Months Ended June 30, 2019
|
Net Loss Attributable to Class A Shareholders
|
|
Weighted- Average Class A Shares Outstanding
|
|
Loss Per Class A Share
|
|
Number of Antidilutive Units Excluded from Diluted Calculation
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||
Basic
|
$
|
(8,625
|
)
|
|
20,722,510
|
|
|
$
|
(0.42
|
)
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||
Group A Units
|
(8,146
|
)
|
|
15,991,502
|
|
|
|
|
—
|
|
|||
Group E Units
|
—
|
|
|
—
|
|
|
|
|
13,541,818
|
|
|||
RSUs
|
—
|
|
|
—
|
|
|
|
|
4,882,433
|
|
|||
Diluted
|
$
|
(16,771
|
)
|
|
36,714,012
|
|
|
$
|
(0.46
|
)
|
|
|
Three Months Ended June 30, 2018
|
Net Loss Attributable to Class A Shareholders
|
|
Weighted- Average Class A Shares Outstanding
|
|
Loss Per Class A Share
|
|
Number of Antidilutive Units Excluded from Diluted Calculation
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||
Basic
|
$
|
(12,256
|
)
|
|
19,256,246
|
|
|
$
|
(0.64
|
)
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||
Group A Units
|
—
|
|
|
—
|
|
|
|
|
26,148,948
|
|
|||
RSUs
|
—
|
|
|
—
|
|
|
|
|
4,886,465
|
|
|||
Diluted
|
$
|
(12,256
|
)
|
|
19,256,246
|
|
|
$
|
(0.64
|
)
|
|
|
Six Months Ended June 30, 2019
|
Net Income Attributable to Class A Shareholders
|
|
Weighted- Average Class A Shares Outstanding
|
|
Earnings Per Class A Share
|
|
Number of Antidilutive Units Excluded from Diluted Calculation
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||
Basic
|
$
|
28,458
|
|
|
20,599,616
|
|
|
$
|
1.38
|
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||
Group A Units
|
—
|
|
|
—
|
|
|
|
|
18,018,619
|
|
|||
Group E Units
|
—
|
|
|
5,291,581
|
|
|
|
|
—
|
|
|||
RSUs
|
—
|
|
|
50,908
|
|
|
|
|
—
|
|
|||
Diluted
|
$
|
28,458
|
|
|
25,942,105
|
|
|
$
|
1.10
|
|
|
|
Six Months Ended June 30, 2018
|
Net Loss Attributable to Class A Shareholders
|
|
Weighted- Average Class A Shares Outstanding
|
|
Loss Per Class A Share
|
|
Number of Antidilutive Units Excluded from Diluted Calculation
|
||||||
|
|
|
|
|
|
|
|
||||||
|
(dollars in thousands, except per share amounts)
|
||||||||||||
Basic
|
$
|
(8,766
|
)
|
|
19,239,761
|
|
|
$
|
(0.46
|
)
|
|
|
|
Effect of dilutive securities:
|
|
|
|
|
|
|
|
||||||
Group A Units
|
—
|
|
|
—
|
|
|
|
|
26,301,434
|
|
|||
RSUs
|
—
|
|
|
—
|
|
|
|
|
4,184,987
|
|
|||
Diluted
|
$
|
(8,766
|
)
|
|
19,239,761
|
|
|
$
|
(0.46
|
)
|
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Fees charged on investments held by related parties:
|
|
|
|
|
|
|
|
||||||||
Management fees
|
$
|
1,671
|
|
|
$
|
4,391
|
|
|
$
|
4,396
|
|
|
$
|
6,473
|
|
Incentive income
|
$
|
3,207
|
|
|
$
|
1,190
|
|
|
$
|
4,768
|
|
|
$
|
2,454
|
|
|
Potential Payments Under Tax Receivable Agreement
|
||
|
(dollars in thousands)
|
||
July 1, 2019 to December 31, 2019
|
$
|
—
|
|
2020
|
27,363
|
|
|
2021
|
28,045
|
|
|
2022
|
33,633
|
|
|
2023
|
34,540
|
|
|
Thereafter
|
82,510
|
|
|
Total Payments
|
$
|
206,091
|
|
•
|
Income allocations to the Company’s executive managing directors on their direct interests in the Oz Operating Group. Management reviews operating performance at the Oz Operating Group level, where substantially all of the Company’s operations are performed, prior to making any income allocations.
|
•
|
Equity-based compensation expenses, depreciation and amortization expenses, changes in the tax receivable agreement liability, net losses on early retirement of debt, gains and losses on fixed assets, and gains and losses on investments in funds, as management does not consider these items to be reflective of operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement.
|
•
|
Non-cash interest expense accretion on Debt Securities issued in exchange for 2016 Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP; however, management does not consider this interest accretion to be reflective of the operating performance of the Company.
|
•
|
Amounts related to the consolidated funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total assets under management and fund performance.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Oz Funds:
|
|
|
|
|
|
|
|
||||||||
Economic Income Revenues
|
$
|
93,319
|
|
|
$
|
93,738
|
|
|
$
|
198,383
|
|
|
$
|
207,385
|
|
Economic Income
|
$
|
34,043
|
|
|
$
|
5,618
|
|
|
$
|
67,333
|
|
|
$
|
56,893
|
|
Real Estate:
|
|
|
|
|
|
|
|
||||||||
Economic Income Revenues
|
$
|
4,116
|
|
|
$
|
10,901
|
|
|
$
|
16,034
|
|
|
$
|
20,300
|
|
Economic Income
|
$
|
(1,631
|
)
|
|
$
|
2,576
|
|
|
$
|
2,856
|
|
|
$
|
4,043
|
|
Total Company:
|
|
|
|
|
|
|
|
||||||||
Economic Income Revenues
|
$
|
97,435
|
|
|
$
|
104,639
|
|
|
$
|
214,417
|
|
|
$
|
227,685
|
|
Economic Income
|
$
|
32,412
|
|
|
$
|
8,194
|
|
|
$
|
70,189
|
|
|
$
|
60,936
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Total consolidated revenues
|
$
|
103,508
|
|
|
$
|
109,766
|
|
|
$
|
226,702
|
|
|
$
|
238,176
|
|
Adjustment to management fees
(1)
|
(3,765
|
)
|
|
(4,477
|
)
|
|
(7,373
|
)
|
|
(9,218
|
)
|
||||
Adjustment to other revenues
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
||||
Income of consolidated funds
|
(2,308
|
)
|
|
(650
|
)
|
|
(4,912
|
)
|
|
(1,234
|
)
|
||||
Total Segment Revenues
|
$
|
97,435
|
|
|
$
|
104,639
|
|
|
$
|
214,417
|
|
|
$
|
227,685
|
|
(1)
|
Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense. The impact of eliminations related to the consolidated funds is also removed.
|
(2)
|
Adjustment to exclude realized gains on sale of fixed assets.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Net (Loss) Income Attributable to Class A Shareholders
|
$
|
(8,625
|
)
|
|
$
|
(12,256
|
)
|
|
$
|
28,458
|
|
|
$
|
(8,766
|
)
|
Change in redemption value of Preferred Units
|
—
|
|
|
—
|
|
|
(44,364
|
)
|
|
—
|
|
||||
Net Loss Allocated to Och-Ziff Capital Management Group Inc.
|
$
|
(8,625
|
)
|
|
$
|
(12,256
|
)
|
|
$
|
(15,906
|
)
|
|
$
|
(8,766
|
)
|
Net loss allocated to Group A Units
|
(8,148
|
)
|
|
(21,915
|
)
|
|
(15,517
|
)
|
|
(13,545
|
)
|
||||
Equity-based compensation, net of RSUs settled in cash
|
37,095
|
|
|
23,366
|
|
|
74,318
|
|
|
45,261
|
|
||||
Adjustment to recognize deferred cash compensation in the period of grant
|
2,017
|
|
|
1,974
|
|
|
4,585
|
|
|
14,757
|
|
||||
Recapitalization-related non-cash interest expense accretion
|
4,104
|
|
|
—
|
|
|
6,415
|
|
|
—
|
|
||||
Income taxes
|
10,134
|
|
|
(2,524
|
)
|
|
13,520
|
|
|
488
|
|
||||
Net losses on early retirement of debt
|
595
|
|
|
14,303
|
|
|
6,053
|
|
|
14,303
|
|
||||
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance
|
1,282
|
|
|
555
|
|
|
3,659
|
|
|
393
|
|
||||
Changes in tax receivable agreement liability
|
(5,362
|
)
|
|
—
|
|
|
(5,362
|
)
|
|
—
|
|
||||
Depreciation, amortization and net gains and losses on fixed assets
|
2,364
|
|
|
2,794
|
|
|
4,775
|
|
|
5,166
|
|
||||
Other adjustments
|
(3,044
|
)
|
|
1,897
|
|
|
(6,351
|
)
|
|
2,879
|
|
||||
Economic Income
|
$
|
32,412
|
|
|
$
|
8,194
|
|
|
$
|
70,189
|
|
|
$
|
60,936
|
|
|
Three Months Ended June 30, 2019
|
||||||||||||||||||
|
March 31, 2019
|
|
Inflows / (Outflows)
|
|
Distributions / Other Reductions
|
|
Appreciation / (Depreciation)
|
|
June 30, 2019
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Multi-strategy funds
|
$
|
10,292,551
|
|
|
$
|
(848,872
|
)
|
|
$
|
(5,699
|
)
|
|
$
|
337,415
|
|
|
$
|
9,775,395
|
|
Credit
|
|
|
|
|
|
|
|
|
|
||||||||||
Opportunistic credit funds
|
5,787,118
|
|
|
188,858
|
|
|
(5,204
|
)
|
|
55,183
|
|
|
6,025,955
|
|
|||||
Institutional Credit Strategies
|
13,365,643
|
|
|
1,460,664
|
|
|
(1,986
|
)
|
|
(105,580
|
)
|
|
14,718,741
|
|
|||||
Real estate funds
|
2,652,488
|
|
|
279,085
|
|
|
(10,048
|
)
|
|
—
|
|
|
2,921,525
|
|
|||||
Other
|
224,146
|
|
|
—
|
|
|
(6,296
|
)
|
|
—
|
|
|
217,850
|
|
|||||
Total
|
$
|
32,321,946
|
|
|
$
|
1,079,735
|
|
|
$
|
(29,233
|
)
|
|
$
|
287,018
|
|
|
$
|
33,659,466
|
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||
|
March 31, 2018
|
|
Inflows / (Outflows)
|
|
Distributions / Other Reductions
|
|
Appreciation / (Depreciation)
|
|
June 30, 2018
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Multi-strategy funds
|
$
|
13,325,230
|
|
|
$
|
(366,710
|
)
|
|
$
|
(491,023
|
)
|
|
$
|
235,571
|
|
|
$
|
12,703,068
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||
Opportunistic credit funds
|
5,424,991
|
|
|
(51,237
|
)
|
|
(2,801
|
)
|
|
148,468
|
|
|
5,519,421
|
|
|||||
Institutional Credit Strategies
|
11,176,106
|
|
|
1,621,887
|
|
|
—
|
|
|
(50,666
|
)
|
|
12,747,327
|
|
|||||
Real estate funds
|
2,471,498
|
|
|
77,804
|
|
|
(9,917
|
)
|
|
(33
|
)
|
|
2,539,352
|
|
|||||
Other
|
438,734
|
|
|
(34,599
|
)
|
|
(5,087
|
)
|
|
169
|
|
|
399,217
|
|
|||||
Total
|
$
|
32,836,559
|
|
|
$
|
1,247,145
|
|
|
$
|
(508,828
|
)
|
|
$
|
333,509
|
|
|
$
|
33,908,385
|
|
|
Six Months Ended June 30, 2019
|
||||||||||||||||||
|
December 31, 2018
|
|
Inflows / (Outflows)
|
|
Distributions / Other Reductions
|
|
Appreciation / (Depreciation)
|
|
June 30, 2019
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Multi-strategy funds
|
$
|
10,420,858
|
|
|
$
|
(1,735,225
|
)
|
|
$
|
(26,977
|
)
|
|
$
|
1,116,739
|
|
|
$
|
9,775,395
|
|
Credit
|
|
|
|
|
|
|
|
|
|
|
|||||||||
Opportunistic credit funds
|
5,751,411
|
|
|
125,328
|
|
|
(32,176
|
)
|
|
181,392
|
|
|
6,025,955
|
|
|||||
Institutional Credit Strategies
|
13,491,734
|
|
|
1,474,170
|
|
|
(109,133
|
)
|
|
(138,030
|
)
|
|
14,718,741
|
|
|||||
Real estate funds
|
2,577,040
|
|
|
354,555
|
|
|
(10,048
|
)
|
|
(22
|
)
|
|
2,921,525
|
|
|||||
Other
|
286,635
|
|
|
(62,868
|
)
|
|
(6,296
|
)
|
|
379
|
|
|
217,850
|
|
|||||
Total
|
$
|
32,527,678
|
|
|
$
|
155,960
|
|
|
$
|
(184,630
|
)
|
|
$
|
1,160,458
|
|
|
$
|
33,659,466
|
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||
|
December 31, 2017
|
|
Inflows / (Outflows)
|
|
Distributions / Other Reductions
|
|
Appreciation / (Depreciation)
|
|
June 30, 2018
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Multi-strategy funds
|
$
|
13,695,040
|
|
|
$
|
(918,380
|
)
|
|
$
|
(594,991
|
)
|
|
$
|
521,399
|
|
|
$
|
12,703,068
|
|
Credit
|
|
|
|
|
|
|
|
|
|
||||||||||
Opportunistic credit funds
|
5,513,618
|
|
|
(150,077
|
)
|
|
(118,786
|
)
|
|
274,666
|
|
|
5,519,421
|
|
|||||
Institutional Credit Strategies
|
10,136,991
|
|
|
2,653,517
|
|
|
—
|
|
|
(43,181
|
)
|
|
12,747,327
|
|
|||||
Real estate funds
|
2,495,190
|
|
|
77,804
|
|
|
(33,593
|
)
|
|
(49
|
)
|
|
2,539,352
|
|
|||||
Other
|
587,723
|
|
|
(35,169
|
)
|
|
(159,258
|
)
|
|
5,921
|
|
|
399,217
|
|
|||||
Total
|
$
|
32,428,562
|
|
|
$
|
1,627,695
|
|
|
$
|
(906,628
|
)
|
|
$
|
758,756
|
|
|
$
|
33,908,385
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Weighted-average assets under management
|
$
|
32,125,578
|
|
|
$
|
32,680,905
|
|
|
$
|
31,858,459
|
|
|
$
|
32,515,304
|
|
Average management fee rates
|
0.72
|
%
|
|
0.80
|
%
|
|
0.74
|
%
|
|
0.83
|
%
|
|
Assets Under Management as of June 30,
|
|
Returns for the Six Months Ended June 30,
|
|
Annualized Returns Since Inception Through June 30, 2019
|
|
||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|
|||||||||||||||||
|
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fund
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oz Master Fund
(1)
|
$
|
8,886,655
|
|
|
$
|
11,104,223
|
|
|
14.8
|
%
|
|
11.7
|
%
|
|
6.2
|
%
|
|
4.4
|
%
|
|
16.3
|
%
|
(1)
|
11.4
|
%
|
(1)
|
Oz Enhanced Master Fund
|
693,290
|
|
|
683,444
|
|
|
24.6
|
%
|
|
19.8
|
%
|
|
9.2
|
%
|
|
6.7
|
%
|
|
14.9
|
%
|
|
10.2
|
%
|
|
||
Other funds
|
195,450
|
|
|
915,401
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
||
|
$
|
9,775,395
|
|
|
$
|
12,703,068
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
The annualized returns since inception are those of the Oz Multi-Strategy Composite, which represents the composite performance of all accounts that were managed in accordance with our broad multi-strategy mandate that were not subject to portfolio investment restrictions or other factors that limited our investment discretion since inception on April 1, 1994. Performance is calculated using the total return of all such accounts net of all investment fees and expenses of such accounts, except incentive income on unrealized gains attributable to Special Investments that could reduce returns in these investments at the time of realization, and the returns include the reinvestment of all dividends and other income. The performance calculation for the Oz Master Fund excludes realized and unrealized gains and losses attributable to currency hedging specific to certain investors investing in Oz Master Fund in currencies other than the U.S. Dollar. For the period from April 1, 1994 through December 31, 1997, the returns are gross of certain overhead expenses that were reimbursed by the accounts. Such reimbursement arrangements were terminated at the inception of the Oz Master Fund on January 1, 1998. The size of the accounts comprising the composite during the time period shown vary materially. Such differences impacted our investment decisions and the diversity of the investment strategies followed. Furthermore, the composition of the investment strategies we follow is subject to our discretion, has varied materially since inception and is expected to vary materially in the future. As of
June 30, 2019
, the gross and net annualized returns since the Oz Master Fund’s inception on January 1, 1998 were
12.8%
and
8.7%
, respectively.
|
|
Assets Under Management as of June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Opportunistic credit funds
|
$
|
6,025,955
|
|
|
$
|
5,519,421
|
|
Institutional Credit Strategies
|
14,718,741
|
|
|
12,747,327
|
|
||
|
$
|
20,744,696
|
|
|
$
|
18,266,748
|
|
|
Assets Under Management as of June 30,
|
|
Returns for the Six Months Ended June 30,
|
Annualized Returns Since Inception Through June 30, 2019
|
|||||||||||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
|
|||||||||||||||||
|
|
|
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
|
Gross
|
|
Net
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fund
|
(dollars in thousands)
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Oz Credit Opportunities Master Fund
|
$
|
1,691,379
|
|
|
$
|
1,764,733
|
|
|
4.4
|
%
|
|
3.3
|
%
|
|
8.9
|
%
|
|
6.2
|
%
|
|
15.8
|
%
|
|
11.5
|
%
|
Customized Credit Focused Platform
|
3,239,374
|
|
|
3,081,947
|
|
|
6.9
|
%
|
|
5.2
|
%
|
|
7.5
|
%
|
|
5.6
|
%
|
|
17.6
|
%
|
|
13.3
|
%
|
||
Closed-end opportunistic credit funds
|
550,079
|
|
|
224,081
|
|
|
See below for return information on our closed-end opportunistic credit funds.
|
||||||||||||||||||
Other funds
|
545,123
|
|
|
448,660
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
||
|
$
|
6,025,955
|
|
|
$
|
5,519,421
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets Under Management as of June 30,
|
Inception to Date as of June 30, 2019
|
|||||||||||||||||||||
|
|
|
|
|
|
|
|
|
IRR
|
|
|
||||||||||||
|
2019
|
|
2018
|
|
Total Commitments
|
|
Total Invested Capital
(1)
|
|
Gross
(2)
|
|
Net
(3)
|
|
Gross MOIC
(4)
|
||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Fund (Investment Period)
|
(dollars in thousands)
|
|
|
|
|
|
|
||||||||||||||||
Oz European Credit Opportunities Fund (2012-2015)
|
$
|
1,240
|
|
|
$
|
46,090
|
|
|
$
|
459,600
|
|
|
$
|
305,487
|
|
|
15.7
|
%
|
|
11.8
|
%
|
|
1.5x
|
Oz Structured Products Domestic Fund II (2011-2014)
|
61,228
|
|
|
82,023
|
|
|
326,850
|
|
|
326,850
|
|
|
19.8
|
%
|
|
15.6
|
%
|
|
2.1x
|
||||
Oz Structured Products Offshore Fund II (2011-2014)
|
64,860
|
|
|
84,196
|
|
|
304,531
|
|
|
304,531
|
|
|
17.3
|
%
|
|
13.5
|
%
|
|
1.9x
|
||||
Oz Structured Products Offshore Fund I (2010-2013)
|
4,580
|
|
|
6,109
|
|
|
155,098
|
|
|
155,098
|
|
|
23.9
|
%
|
|
19.1
|
%
|
|
2.1x
|
||||
Oz Structured Products Domestic Fund I (2010-2013)
|
4,260
|
|
|
5,486
|
|
|
99,986
|
|
|
99,986
|
|
|
22.7
|
%
|
|
18.1
|
%
|
|
2.0x
|
||||
Other funds
|
413,911
|
|
|
177
|
|
|
414,750
|
|
|
11,127
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
||||
|
$
|
550,079
|
|
|
$
|
224,081
|
|
|
$
|
1,760,815
|
|
|
$
|
1,203,079
|
|
|
|
|
|
|
|
(1)
|
Represents funded capital commitments net of recallable distributions to investors.
|
(2)
|
Gross IRR for our closed-end opportunistic credit funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the fund as of
June 30, 2019
, including the fair value of unrealized investments as of such date, together with any appreciation or depreciation from related hedging activity. Gross IRR does not include the effects of management fees or incentive income, which would reduce the return, and includes the reinvestment of all fund income.
|
(3)
|
Net IRR is calculated as described in footnote (2), but is reduced by all management fees, as well as paid incentive and accrued incentive income that will be payable upon the distribution of each fund’s capital in accordance with the terms of the relevant fund. Accrued incentive income may be higher or lower at such time. The net IRR represents a composite rate of return for a fund and does not reflect the net IRR specific to any individual investor.
|
(4)
|
Gross MOIC for our closed-end opportunistic credit funds is calculated by dividing the sum of the net asset value of the fund, accrued incentive income, life-to-date incentive income and management fees paid and any non-recallable distributions made from the fund by the invested capital.
|
|
|
|
|
|
Assets Under Management as of June 30,
|
||||||||
|
Initial Closing Date (Most Recent Refinance Date)
|
|
Deal Size
|
|
2019
|
|
2018
|
||||||
|
|
|
|
|
|
|
|
||||||
|
|
|
(dollars in thousands)
|
||||||||||
CLOs
|
|
|
|
|
|
|
|
||||||
OZLM I
|
July 19, 2012 (July 24, 2017)
|
|
$
|
523,550
|
|
|
$
|
495,746
|
|
|
$
|
496,421
|
|
OZLM II
|
November 1, 2012 (August 29, 2018)
|
|
567,100
|
|
|
507,940
|
|
|
508,227
|
|
|||
OZLM III
|
February 20, 2013 (December 15, 2016)
|
|
653,250
|
|
|
605,880
|
|
|
607,892
|
|
|||
OZLM IV
|
June 27, 2013 (September 15, 2017)
|
|
615,500
|
|
|
536,821
|
|
|
539,585
|
|
|||
OZLM VI
|
April 16, 2014 (April 17, 2018)
|
|
621,250
|
|
|
593,369
|
|
|
594,290
|
|
|||
OZLM VII
|
June 26, 2014 (July 17, 2018)
|
|
636,775
|
|
|
593,286
|
|
|
792,034
|
|
|||
OZLM VIII
|
September 9, 2014 (November 15, 2018)
|
|
622,250
|
|
|
594,877
|
|
|
593,984
|
|
|||
OZLM IX
|
December 22, 2014 (November 8, 2018)
|
|
510,208
|
|
|
498,227
|
|
|
498,264
|
|
|||
OZLM XI
|
March 12, 2015 (August 18, 2017)
|
|
541,532
|
|
|
513,735
|
|
|
515,151
|
|
|||
OZLM XII
|
May 28, 2015 (September 18, 2018)
|
|
565,650
|
|
|
546,049
|
|
|
548,200
|
|
|||
OZLM XIII
|
August 6, 2015 (September 18, 2018)
|
|
511,600
|
|
|
491,357
|
|
|
494,418
|
|
|||
OZLM XIV
|
December 21, 2015 (June 4, 2018)
|
|
507,420
|
|
|
499,878
|
|
|
500,992
|
|
|||
OZLM XV
|
December 20, 2016
|
|
409,250
|
|
|
394,957
|
|
|
395,505
|
|
|||
OZLME I
|
December 15, 2016
|
|
430,490
|
|
|
453,403
|
|
|
465,059
|
|
|||
OZLM XVI
|
June 8, 2017
|
|
410,250
|
|
|
399,548
|
|
|
400,021
|
|
|||
OZLM XVII
|
August 3, 2017
|
|
512,000
|
|
|
497,587
|
|
|
497,830
|
|
|||
OZLME II
|
September 14, 2017
|
|
494,708
|
|
|
450,598
|
|
|
462,407
|
|
|||
OZLM XIX
|
November 21, 2017
|
|
610,800
|
|
|
600,122
|
|
|
600,329
|
|
|||
OZLM XXI
|
January 26, 2018
|
|
510,600
|
|
|
500,299
|
|
|
500,956
|
|
|||
OZLME III
|
January 31, 2018
|
|
509,118
|
|
|
453,221
|
|
|
466,138
|
|
|||
OZLM XXII
|
February 22, 2018
|
|
509,200
|
|
|
463,338
|
|
|
466,967
|
|
|||
OZLM XVIII
|
April 4, 2018
|
|
508,000
|
|
|
498,260
|
|
|
499,622
|
|
|||
OZLM XX
|
May 11, 2018
|
|
464,150
|
|
|
446,739
|
|
|
447,813
|
|
|||
OZLME IV
|
August 1, 2018
|
|
479,385
|
|
|
456,193
|
|
|
—
|
|
|||
OZLME V
|
December 11, 2018
|
|
471,987
|
|
|
456,353
|
|
|
—
|
|
|||
OZLM XXIII
|
May 2, 2019
|
|
505,425
|
|
|
483,975
|
|
|
—
|
|
|||
OZLME VI
|
June 20, 2019
|
|
462,146
|
|
|
456,363
|
|
|
—
|
|
|||
|
|
|
14,163,594
|
|
|
13,488,121
|
|
|
11,892,105
|
|
|||
STARR 2018-1
|
June 27, 2018
|
|
696,000
|
|
|
497,611
|
|
|
680,231
|
|
|||
STARR 2019-1
|
April 18, 2019
|
|
589,000
|
|
|
542,822
|
|
|
—
|
|
|||
Other funds
|
n/a
|
|
n/a
|
|
|
190,187
|
|
|
174,991
|
|
|||
|
|
|
$
|
15,448,594
|
|
|
$
|
14,718,741
|
|
|
$
|
12,747,327
|
|
|
Assets Under Management as of June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
Fund
|
(dollars in thousands)
|
||||||
Och-Ziff Real Estate Fund I
|
$
|
13,578
|
|
|
$
|
13,478
|
|
Och-Ziff Real Estate Fund II
|
92,234
|
|
|
143,803
|
|
||
Och-Ziff Real Estate Fund III
|
1,487,960
|
|
|
1,462,161
|
|
||
Och-Ziff Real Estate Credit Fund I
|
724,854
|
|
|
697,704
|
|
||
Other funds
|
602,899
|
|
|
222,206
|
|
||
|
$
|
2,921,525
|
|
|
$
|
2,539,352
|
|
|
Inception to Date as of June 30, 2019
|
|||||||||||||||||||||||||||||||
|
|
|
Total Investments
|
|
Realized/Partially Realized Investments
(1)
|
|||||||||||||||||||||||||||
|
Total Commitments
|
|
Invested Capital
(2)
|
|
Total
Value
(3)
|
|
Gross IRR
(4)
|
|
Net IRR
(5)
|
|
Gross MOIC
(6)
|
|
Invested Capital
|
|
Total
Value
|
|
Gross IRR
(4)
|
|
Gross MOIC
(6)
|
|||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||||||||||
Fund (Investment Period)
|
(dollars in thousands)
|
|
|
|
|
|||||||||||||||||||||||||||
Och-Ziff Real Estate Fund I
(7)
(2005-2010)
|
$
|
408,081
|
|
|
$
|
386,298
|
|
|
$
|
837,573
|
|
|
25.4
|
%
|
|
16.0
|
%
|
|
2.2x
|
|
$
|
372,720
|
|
|
$
|
837,262
|
|
|
26.8
|
%
|
|
2.2x
|
Och-Ziff Real Estate Fund II
(7)
(2011-2014)
|
839,508
|
|
|
762,588
|
|
|
1,523,027
|
|
|
32.9
|
%
|
|
21.5
|
%
|
|
2.0x
|
|
718,888
|
|
|
1,437,600
|
|
|
33.0
|
%
|
|
2.0x
|
|||||
Och-Ziff Real Estate Fund III
(2014-2019)
|
1,500,000
|
|
|
1,006,086
|
|
|
1,596,343
|
|
|
31.1
|
%
|
|
20.5
|
%
|
|
1.6x
|
|
526,695
|
|
|
990,332
|
|
|
37.6
|
%
|
|
1.9x
|
|||||
Och-Ziff Real Estate Credit Fund I
(8)
(2015-2020)
|
736,225
|
|
|
171,080
|
|
|
209,349
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
87,921
|
|
|
113,630
|
|
|
n/m
|
|
|
n/m
|
|||||
Other funds
|
742,221
|
|
|
229,546
|
|
|
317,365
|
|
|
n/m
|
|
|
n/m
|
|
|
n/m
|
|
60,438
|
|
|
110,832
|
|
|
n/m
|
|
|
n/m
|
|||||
|
$
|
4,226,035
|
|
|
$
|
2,555,598
|
|
|
$
|
4,483,657
|
|
|
|
|
|
|
|
|
$
|
1,766,662
|
|
|
$
|
3,489,656
|
|
|
|
|
|
|
Unrealized Investments as of June 30, 2019
|
||||||||
|
Invested Capital
|
|
Total
Value
|
|
Gross
MOIC
(6)
|
||||
|
|
|
|
|
|
||||
Fund (Investment Period)
|
(dollars in thousands)
|
|
|
||||||
Och-Ziff Real Estate Fund I (2005-2010)
(7)
|
$
|
13,578
|
|
|
$
|
311
|
|
|
0.0x
|
Och-Ziff Real Estate Fund II (2011-2014)
(7)
|
43,700
|
|
|
85,427
|
|
|
2.0x
|
||
Och-Ziff Real Estate Fund III (2014-2019)
|
479,391
|
|
|
606,011
|
|
|
1.3x
|
||
Och-Ziff Real Estate Credit Fund I (2015-2020)
(8)
|
83,159
|
|
|
95,719
|
|
|
n/m
|
||
Other funds
|
169,108
|
|
|
206,533
|
|
|
n/m
|
||
|
$
|
788,936
|
|
|
$
|
994,001
|
|
|
|
(1)
|
An investment is considered partially realized when the total amount of proceeds received, including dividends, interest or other distributions of income and return of capital, represents at least 50% of invested capital.
|
(2)
|
Invested capital represents total aggregate contributions made for investments by the fund.
|
(3)
|
Total value represents the sum of realized distributions and the fair value of unrealized and partially realized investments as of
June 30, 2019
. Total value will be impacted (either positively or negatively) by future economic and other factors. Accordingly, the total value ultimately realized will likely be higher or lower than the amounts presented as of
June 30, 2019
.
|
(4)
|
Gross IRR for our real estate funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the aggregated investments as of
June 30, 2019
, including the fair value of unrealized and partially realized investments as of such date, together with any unrealized appreciation or depreciation from related hedging activity. Gross IRR is not adjusted for estimated management fees, incentive income or other fees or expenses to be paid by the fund, which would reduce the return.
|
(5)
|
Net IRR is calculated as described in footnote (4), but is reduced by all management fees and other fund-level fees and expenses not adjusted for in the calculation of gross IRR. Net IRR is further reduced by paid incentive and accrued incentive income that will be payable upon the distribution of each fund’s capital in accordance with the terms of the relevant fund. Accrued incentive income may be higher or lower at such time. The net IRR represents a composite rate of return for a fund and does not reflect the net IRR specific to any individual investor.
|
(6)
|
Gross MOIC for our real estate funds is calculated by dividing the value of a fund’s investments by the invested capital, prior to adjustments for incentive income, management fees or other expenses to be paid by the fund.
|
(7)
|
These funds have concluded their investment periods, and therefore we expect assets under management for these funds to decrease as investments are sold and the related proceeds are distributed to the investors in these funds.
|
(8)
|
This fund has invested less than half of its committed capital; therefore, IRR and MOIC information is not presented, as it is not meaningful.
|
|
June 30, 2019
|
||||||
|
Longer-Term Assets Under Management
|
|
Accrued Unrecognized Incentive Income
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Multi-strategy funds
|
$
|
324,361
|
|
|
$
|
11,268
|
|
Credit
|
|
|
|
|
|
||
Opportunistic credit funds
|
3,972,886
|
|
|
158,470
|
|
||
Institutional Credit Strategies
|
14,561,052
|
|
|
—
|
|
||
Real estate funds
|
2,921,524
|
|
|
105,443
|
|
||
Other
|
217,851
|
|
|
—
|
|
||
|
$
|
21,997,674
|
|
|
$
|
275,181
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Management fees
|
$
|
61,400
|
|
|
$
|
70,593
|
|
|
$
|
125,023
|
|
|
$
|
143,043
|
|
Incentive income
|
34,757
|
|
|
34,656
|
|
|
87,955
|
|
|
85,490
|
|
||||
Other revenues
|
5,043
|
|
|
3,867
|
|
|
8,812
|
|
|
8,409
|
|
||||
Income of consolidated funds
|
2,308
|
|
|
650
|
|
|
4,912
|
|
|
1,234
|
|
||||
Total Revenues
|
$
|
103,508
|
|
|
$
|
109,766
|
|
|
$
|
226,702
|
|
|
$
|
238,176
|
|
•
|
A
$9.2 million
decrease
in management fees, driven primarily by a $10.2 million decrease in multi-strategy funds due to lower average assets under management and a $2.7 million decrease in real estate funds, primarily due to a step down in the management fee basis from committed capital to invested capital effective April 1, 2019, for Och-Ziff Real Estate Fund III. These decreases were partially offset by (i) a $2.7 million increase in opportunistic credit funds due to higher average assets under management; and (ii) a $1.3 million increase in Institutional Credit Strategies, primarily due to launches of additional CLOs and an aircraft securitization. See “—Assets Under Management and Fund Performance—Weighted-Average Assets Under Management and Average Management Fee Rates” above for information regarding our average management fee rate.
|
•
|
Incentive income remained relatively flat, primarily due to the following:
|
◦
|
Multi-strategy funds.
A $702 thousand increase in incentive income from our multi-strategy funds, primarily due to a $4.0 million increase related to fund investor redemptions, partially offset by a $3.1 million decrease from longer-term assets under management.
|
◦
|
Opportunistic credit funds.
A $5.8 million increase in incentive income from our opportunistic credit funds, primarily due to (i) a $7.1 million increase due to a contract modification that resulted in an offset to previously recognized incentive income in the prior year period; and (ii) a $1.2 million increase from longer-term assets under management. These increases were partially offset by (i) a $1.8 million decrease from assets under management subject to a one-year measurement period; and (ii) a $723 thousand decrease related to fund investor redemptions.
|
◦
|
Real estate funds.
A $4.4 million decrease
in incentive income from our real estate funds primarily due to lower realizations.
|
◦
|
Other funds.
A $1.9 million decrease primarily due to incentive income received in the prior year related to funds that have since been closed.
|
•
|
A
$1.2 million
increase
in other revenues primarily due to $1.6 million of certain transaction fees recognized in the current year period related to Institutional Credit Strategies. Partially offsetting this increase was lower interest income earned on our investments in CLOs due to the sale of a majority of our U.S. CLO risk retention investments in 2018.
|
•
|
A
$1.7 million
increase
in income of consolidated funds primarily due to higher interest income period-over-period.
|
•
|
An
$18.0 million
decrease
in management fees, driven primarily by a $20.2 million decrease in multi-strategy funds due to lower average assets under management and a $2.6 million decrease in real estate funds, primarily due to a step down in the management fee basis from committed capital to invested capital effective April 1, 2019, for Och-Ziff Real Estate Fund III. These decreases were partially offset by (i) a $2.0 million increase in opportunistic credit funds due to higher average assets under management; and (ii) a $3.8 million increase in Institutional Credit Strategies, primarily due to launches of additional CLOs and an aircraft securitization. See “—Assets Under Management and Fund Performance—Weighted-Average Assets Under Management and Average Management Fee Rates” above for information regarding our average management fee rate.
|
•
|
A
$2.5 million
increase
in incentive income, primarily due to the following:
|
◦
|
Multi-strategy funds.
A $2.9 million increase in incentive income from our multi-strategy funds, primarily due to an $8.6 million increase related to fund investor redemptions, which was partially offset by (i) a $3.0 million decrease from assets under management subject to a one-year measurement period; and (ii) a $2.1 million decrease from longer-term assets under management.
|
◦
|
Opportunistic credit funds.
A $2.5 million increase in incentive income from our opportunistic credit funds, primarily due to (i) a $7.8 million increase in tax distributions taken to cover tax liabilities on incentive income that has been accrued on certain longer-term assets under management; (ii) a $6.2 million increase due to a contract modification that resulted in an offset to previously recognized incentive income in the prior year period; and (iii) a $1.8 million increase from assets under management subject to a one-year measurement period. These increases were partially offset by a $13.4 million decrease from longer-term assets under management.
|
◦
|
Real estate funds.
A $1.9 million decrease in incentive income from our real estate funds, primarily due to a $2.2 million decrease in tax distributions.
|
◦
|
Other funds.
A $941 thousand decrease in incentive income, primarily due to a $1.9 million decrease in incentive income received in the prior year related to funds that have since been closed, partially offset by a $1.0 million increase from assets under management subject to a one-year measurement period in certain strategy-specific funds.
|
•
|
A
$3.7 million
increase
in income of consolidated funds primarily due to higher interest income year-over-year.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Compensation and benefits
|
$
|
80,709
|
|
|
$
|
74,502
|
|
|
$
|
166,424
|
|
|
$
|
143,426
|
|
Interest expense
|
6,523
|
|
|
7,505
|
|
|
12,731
|
|
|
14,103
|
|
||||
General, administrative and other
|
28,427
|
|
|
48,509
|
|
|
66,215
|
|
|
86,359
|
|
||||
Expenses of consolidated funds
|
84
|
|
|
24
|
|
|
139
|
|
|
108
|
|
||||
Total Expenses
|
$
|
115,743
|
|
|
$
|
130,540
|
|
|
$
|
245,509
|
|
|
$
|
243,996
|
|
•
|
A
$20.1 million
decrease
in general, administrative and other expenses primarily driven by (i) a $13.0 million legal provision accrual in the prior year period related to certain legal matters; and (ii) a $2.3 million decrease in professional services primarily driven by lower legal expenses incurred period-over-period.
|
•
|
A
$1.0 million
decrease
in interest expense,
which was primarily driven by lower average debt outstanding balance, offset by a
$4.1 million
increase related to non-cash interest expense accretion on Debt Securities issued in exchange for Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP
.
|
•
|
An offsetting
$6.2 million
increase
in compensation and benefits expenses driven by a $13.7 million increase in equity-based compensation expense, primarily driven by the Recapitalization-related equity-based compensation grants. This increase was partially offset by (i) a $3.3 million decrease
in bonus expense, primarily due to lower minimum bonus accruals
; and (ii) a $3.3 million decrease in salary and benefits, as our worldwide headcount decreased to
394
as of
June 30, 2019
, from
442
as of
June 30, 2018
.
|
•
|
A
$23.0 million
increase
in compensation and benefits expenses driven by (i) a $28.8 million increase in equity-based compensation expense, primarily driven by the Recapitalization-related equity-based compensation grants; and (ii) a$2.8 million increase in bonus expense due to certain reversals in the prior year period. These increases were partially offset by (i) a $6.3 million
decrease
in salaries and benefits due to a lower headcount, as described above; and (ii) a $2.3 million
decrease in expenses related to distributions accrued on Group D Units, as no amounts were accrued in the current-year period as there were no Group D Units outstanding at
June 30, 2019
.
|
•
|
An offsetting
$20.1 million
decrease
in general, administrative, and other expenses primarily due to (i) a $13.0 million legal provision accrual in the prior year period related to certain legal matters; (ii) a $2.9 million decrease in foreign exchange losses; and (iii) a $2.6 million decrease in information processing and communications expenses, as well as reductions across various other operating expense categories.
|
•
|
An offsetting
$1.4 million
decrease
in interest expense
,
which was primarily driven by lower average debt outstanding balance, offset by a
$6.4 million
increase related to non-cash interest expense accretion on Debt Securities issued in exchange for Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP
.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Changes in tax receivable agreement liability
|
$
|
5,362
|
|
|
$
|
—
|
|
|
$
|
5,362
|
|
|
$
|
—
|
|
Net losses on early retirement of debt
|
(595
|
)
|
|
(14,303
|
)
|
|
(6,053
|
)
|
|
(14,303
|
)
|
||||
Net gains (losses) on investments
|
3,148
|
|
|
(785
|
)
|
|
5,837
|
|
|
(473
|
)
|
||||
Net gains of consolidated funds
|
482
|
|
|
(26
|
)
|
|
4,228
|
|
|
466
|
|
||||
Total Other Income (Loss)
|
$
|
8,397
|
|
|
$
|
(15,114
|
)
|
|
$
|
9,374
|
|
|
$
|
(14,310
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Income taxes
|
$
|
10,134
|
|
|
$
|
(2,524
|
)
|
|
$
|
13,520
|
|
|
$
|
488
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Group A Units
|
$
|
(8,148
|
)
|
|
$
|
(21,915
|
)
|
|
$
|
(15,517
|
)
|
|
$
|
(13,545
|
)
|
Other
|
164
|
|
|
475
|
|
|
299
|
|
|
740
|
|
||||
Total
|
$
|
(7,984
|
)
|
|
$
|
(21,440
|
)
|
|
$
|
(15,218
|
)
|
|
$
|
(12,805
|
)
|
|
|
|
|
|
|
|
|
||||||||
Redeemable noncontrolling interests
|
$
|
2,637
|
|
|
$
|
332
|
|
|
$
|
8,171
|
|
|
$
|
953
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Net (Loss) Income Attributable to Class A Shareholders
|
$
|
(8,625
|
)
|
|
$
|
(12,256
|
)
|
|
$
|
28,458
|
|
|
$
|
(8,766
|
)
|
•
|
Income allocations to our executive managing directors on their direct interests in the Oz Operating Group. Management reviews operating performance at the Oz Operating Group level, where our operations are performed, prior to making any income allocations.
|
•
|
Equity-based compensation expenses, depreciation and amortization expenses, changes in the tax receivable agreement liability, net losses on early retirement of debt, gains and losses on fixed assets, and gains and losses on investments in funds, as management does not consider these items to be reflective of operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement.
|
•
|
Amounts related to non-cash interest expense accretion on Debt Securities issued in exchange for 2016 Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP; however, management does not consider this interest accretion to be reflective of our operating performance.
|
•
|
Amounts related to the consolidated funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total assets under management and fund performance.
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company |
|
Oz Funds
|
|
Real Estate
|
|
Total
Company |
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Management fees
|
$
|
55,233
|
|
|
$
|
2,402
|
|
|
$
|
57,635
|
|
|
$
|
61,067
|
|
|
$
|
5,049
|
|
|
$
|
66,116
|
|
Incentive income
|
33,249
|
|
|
1,508
|
|
|
34,757
|
|
|
28,921
|
|
|
5,735
|
|
|
34,656
|
|
||||||
Other revenues
|
4,837
|
|
|
206
|
|
|
5,043
|
|
|
3,750
|
|
|
117
|
|
|
3,867
|
|
||||||
Total Economic Income Revenues
|
$
|
93,319
|
|
|
$
|
4,116
|
|
|
$
|
97,435
|
|
|
$
|
93,738
|
|
|
$
|
10,901
|
|
|
$
|
104,639
|
|
•
|
A
$5.8 million
decrease
in management fees, driven primarily by a $9.5 million decrease in multi-strategy funds due to lower average assets under management, partially offset by (i) a $2.7 million increase in opportunistic credit funds due to higher average assets under management; and (ii) a $1.3 million increase in Institutional Credit Strategies, primarily due to launches of additional CLOs and an aircraft securitization. See “—Assets Under Management and Fund Performance—Weighted-Average Assets Under Management and Average Management Fee Rates” above for information regarding our average management fee rate.
|
•
|
A
$4.3 million
increase
in incentive income primarily due to the following:
|
◦
|
Multi-strategy funds.
A $702 thousand increase in incentive income from our multi-strategy funds, primarily due to a $4.0 million increase related to fund investor redemptions, partially offset by a $3.1 million decrease from longer-term assets under management.
|
◦
|
Opportunistic credit funds.
A $5.8 million increase in incentive income from our opportunistic credit funds, primarily due to (i) a $7.1 million increase due to a contract modification that resulted in an offset to previously recognized incentive income in the prior year period; and (ii) a $1.2 million increase from longer-term assets under management. These increases were partially offset by (i) a $1.8 million decrease from assets under management subject to a one-year measurement period; and (ii) a $723 thousand decrease related to fund investor redemptions.
|
◦
|
Other funds.
A $1.9 million decrease primarily due to incentive income received in the prior year related to funds that have since been closed.
|
•
|
A
$1.2 million
increase
in other revenues primarily due to $1.6 million of certain transaction fees recognized in the current year period related to Institutional Credit Strategies. Partially offsetting this increase was lower interest income earned on our investments in CLOs due to the sale of a majority of our U.S. CLO risk retention investments in 2018.
|
•
|
A
$2.6 million
decrease
in management fees from our real estate funds, primarily due to a step down in the management fee basis from committed capital to invested capital effective April 1, 2019, for Och-Ziff Real Estate Fund III.
|
•
|
A
$4.2 million
decrease
in incentive income from our real estate funds driven primarily by lower realizations.
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Management fees
|
$
|
110,430
|
|
|
$
|
7,220
|
|
|
$
|
117,650
|
|
|
$
|
124,042
|
|
|
$
|
9,783
|
|
|
$
|
133,825
|
|
Incentive income
|
79,539
|
|
|
8,416
|
|
|
87,955
|
|
|
75,160
|
|
|
10,330
|
|
|
85,490
|
|
||||||
Other revenues
|
8,414
|
|
|
398
|
|
|
8,812
|
|
|
8,183
|
|
|
187
|
|
|
8,370
|
|
||||||
Total Economic Income Revenues
|
$
|
198,383
|
|
|
$
|
16,034
|
|
|
$
|
214,417
|
|
|
$
|
207,385
|
|
|
$
|
20,300
|
|
|
$
|
227,685
|
|
•
|
A
$13.6 million
decrease
in management fees, driven primarily by a $18.5 million decrease in multi-strategy funds due to lower average assets under management, partially offset by (i) a $2.0 million increase in opportunistic credit funds due to higher average assets under management; and (ii) a $4.0 million increase in Institutional Credit Strategies, primarily due to launches of additional CLOs and an aircraft securitization. See “—Assets Under Management and Fund Performance—Weighted-Average Assets Under Management and Average Management Fee Rates” above for information regarding our average management fee rate.
|
•
|
A
$4.4 million
increase
in incentive income primarily due to the following
:
|
◦
|
Multi-strategy funds.
A $2.9 million increase in incentive income from our multi-strategy funds, primarily due to an $8.6 million increase related to fund investor redemptions, which was partially offset by (i) a $3.0 million decrease from assets under management subject to a one-year measurement period; and (ii) a $2.1 million decrease from longer-term assets under management.
|
◦
|
Opportunistic credit funds.
A $2.5 million increase in incentive income from our opportunistic credit funds, primarily due to (i) a $7.8 million increase in tax distributions taken to cover tax liabilities on incentive income that has been accrued on certain longer-term assets under management; (ii) a $6.2 million increase due to a contract modification that resulted in an offset to previously recognized incentive income in the prior year period; and (iii) a $1.8 million increase from assets under management subject to a one-year measurement period. These increases were partially offset by a $13.4 million decrease from longer-term assets under management.
|
◦
|
Other funds.
A $941 thousand decrease in incentive income, primarily due to a $1.9 million decrease in incentive income received in the prior year related to funds that have since been closed, partially offset by a $1.0 million increase from assets under management subject to a one-year measurement period in certain strategy-specific funds.
|
•
|
A
$2.6 million
decrease in management fees from our real estate funds, primarily due to a step down in the management fee basis from committed capital to invested capital effective April 1, 2019, for Och-Ziff Real Estate Fund III.
|
•
|
A $1.9 million decrease in incentive income from our real estate funds, primarily due to a $2.2 million decrease in tax distributions.
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation and benefits
|
$
|
35,260
|
|
|
$
|
5,056
|
|
|
$
|
40,316
|
|
|
$
|
39,890
|
|
|
$
|
7,832
|
|
|
$
|
47,722
|
|
Interest expense
|
2,419
|
|
|
—
|
|
|
2,419
|
|
|
7,505
|
|
|
—
|
|
|
7,505
|
|
||||||
General, administrative and other expenses
|
21,599
|
|
|
691
|
|
|
22,290
|
|
|
40,727
|
|
|
493
|
|
|
41,220
|
|
||||||
Total Economic Income Expenses
|
$
|
59,278
|
|
|
$
|
5,747
|
|
|
$
|
65,025
|
|
|
$
|
88,122
|
|
|
$
|
8,325
|
|
|
$
|
96,447
|
|
•
|
A
$19.1 million
decrease
in general, administrative and other expenses. This was primarily driven by (i) a $13.0 million legal provision accrual in the prior year period; and (ii) a $2.4 million decrease in professional services primarily driven by lower legal expenses incurred year-over-year; as well as reductions across various other operating expense categories.
|
•
|
A
$5.1 million
decrease
in interest expense, driven primarily by lower average debt outstanding balance.
|
•
|
A
$4.6 million
decrease
in compensation and benefits expenses driven primarily by (i) a $3.2 million
decrease
in salaries and benefits; and (ii) a $1.4 million decrease in bonus expense, each of which is driven by lower headcount year-over-year.
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Compensation and benefits
|
$
|
72,021
|
|
|
$
|
11,841
|
|
|
$
|
83,862
|
|
|
$
|
65,688
|
|
|
$
|
15,053
|
|
|
$
|
80,741
|
|
Interest expense
|
6,316
|
|
|
—
|
|
|
6,316
|
|
|
14,103
|
|
|
—
|
|
|
14,103
|
|
||||||
General, administrative and other expenses
|
52,715
|
|
|
1,337
|
|
|
54,052
|
|
|
70,714
|
|
|
1,204
|
|
|
71,918
|
|
||||||
Total Economic Income Expenses
|
$
|
131,052
|
|
|
$
|
13,178
|
|
|
$
|
144,230
|
|
|
$
|
150,505
|
|
|
$
|
16,257
|
|
|
$
|
166,762
|
|
•
|
General, administrative and other expenses
decreased
by
$18.0 million
period-over-period. This was primarily due to (i) a $13.0 million legal provision accrual in the prior year period; (ii) a $3.0 million decrease in foreign exchange loss; and (iii) a $2.3 million decrease in information, processing and communications expenses incurred period-over-period. During the first half of 2019, we incurred $10.2 million of expenses related to the Recapitalization, which were offset by decreases across various operating expenses categories.
|
•
|
A
$7.8 million
decrease
in interest expense, driven primarily by lower average debt outstanding balance.
|
•
|
An offsetting
$6.3 million
increase
in compensation and benefits expenses driven by a $12.8 million in
crease
in bonus expense, primarily due to $12.6 million of deferred cash compensation forfeiture reversals in the prior year period. This increase was partially offset by a $6.5 million
decrease
in salaries and benefits due to lower headcount.
|
|
Three Months Ended June 30, 2019
|
|
Three Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss attributable to noncontrolling interests
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
Six Months Ended June 30, 2019
|
|
Six Months Ended June 30, 2018
|
||||||||||||||||||||
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
|
Oz Funds
|
|
Real Estate
|
|
Total
Company
|
||||||||||||
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
|
(dollars in thousands)
|
||||||||||||||||||||||
Economic Income Basis
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Net loss attributable to noncontrolling interests
|
$
|
(2
|
)
|
|
$
|
—
|
|
|
$
|
(2
|
)
|
|
$
|
(13
|
)
|
|
$
|
—
|
|
|
$
|
(13
|
)
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||
Economic Income:
|
|
|
|
|
|
|
|
||||||||
Oz Funds
|
$
|
34,043
|
|
|
$
|
5,618
|
|
|
$
|
67,333
|
|
|
$
|
56,893
|
|
Real Estate
|
(1,631
|
)
|
|
2,576
|
|
|
2,856
|
|
|
4,043
|
|
||||
Total Company
|
$
|
32,412
|
|
|
$
|
8,194
|
|
|
$
|
70,189
|
|
|
$
|
60,936
|
|
•
|
Pay our operating expenses.
|
•
|
Pay interest and principal, as applicable, on our debt obligations, repurchase agreements and 2019 Preferred Units.
|
•
|
Provide capital to facilitate the growth of our business, including making risk retention investments in CLOs managed by us that are subject to EU risk retention rules.
|
•
|
Pay income taxes as well as compensation-related tax withholding obligations.
|
•
|
Make cash distributions in accordance with our distribution policy as discussed below under “—Dividends and Distributions.”
|
•
|
Support the future growth in our business.
|
•
|
Create new or enhance existing products and investment platforms.
|
•
|
Repay borrowings.
|
•
|
Pursue new investment opportunities.
|
•
|
Develop new distribution channels.
|
•
|
Cover potential costs incurred in connection with the legal and regulatory matters described in the notes to our consolidated financial statements included in this report.
|
•
|
The amount and timing of our income will impact the payments to be made under the tax receivable agreement. To the extent that we do not have sufficient taxable income to utilize the amortization deductions available as a result of the increased tax basis in the Oz Operating Partnerships’ assets, payments required under the tax receivable agreement would be reduced.
|
•
|
The price of our Class A Shares at the time of any exchange will determine the actual increase in tax basis of the Oz Operating Partnerships’ assets resulting from such exchange; payments under the tax receivable agreement resulting from future exchanges, if any, will be dependent in part upon such actual increase in tax basis.
|
•
|
The composition of the Oz Operating Group assets at the time of any exchange will determine the extent to which we may benefit from amortizing the increased tax basis in such assets and thus will impact the amount of future payments under the tax receivable agreement resulting from any future exchanges.
|
•
|
The extent to which future exchanges are taxable will impact the extent to which we will receive an increase in tax basis of the Oz Operating Group assets as a result of such exchanges, and thus will impact the benefit derived by us and the resulting payments, if any, to be made under the tax receivable agreement.
|
•
|
The tax rates in effect at the time any potential tax savings are realized, which would affect the amount of any future payments under the tax receivable agreement.
|
|
July 1, 2019-December 31, 2019
|
|
2020 - 2021
|
|
2022 - 2023
|
|
2024 - Thereafter
|
|
Total
|
||||||||||
|
|
|
|
|
|
|
|
|
|
||||||||||
|
(dollars in thousands)
|
||||||||||||||||||
Long-term debt
(1)
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
152,239
|
|
|
$
|
177,758
|
|
|
$
|
329,997
|
|
Estimated interest on long-term debt
(2)
|
2,022
|
|
|
36,624
|
|
|
29,731
|
|
|
32,731
|
|
|
101,108
|
|
|||||
Securities sold under agreements to repurchase
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
79,357
|
|
|
79,357
|
|
|||||
Operating leases
(4)
|
11,230
|
|
|
43,438
|
|
|
38,865
|
|
|
97,587
|
|
|
191,120
|
|
|||||
Tax receivable agreement
(5)
|
—
|
|
|
55,408
|
|
|
68,173
|
|
|
82,510
|
|
|
206,091
|
|
|||||
Unrecognized tax benefits
(6)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Incentive income subject to clawback
(7)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Total Contractual Obligations
|
$
|
13,252
|
|
|
$
|
135,470
|
|
|
$
|
289,008
|
|
|
$
|
469,943
|
|
|
$
|
907,673
|
|
(1)
|
Represents indebtedness outstanding under the Debt Securities, 2018 Term Loan and the CLO Investments Loans. In relation to CLO Investments Loans, the amounts present our best estimate of the timing of expected payments on investments in CLOs, as the timing of payments on CLO Investments Loans is contingent on principal payments made to us on our investments in CLOs. Amounts presented represent expected cash payments, and have not been reduced for any discounts or deferred debt issuance costs that are netted against these balances for presentation in our consolidated balance sheet.
|
(2)
|
Represents expected future interest payments on long-term debt based on the LIBOR and EURIBOR rates that were in effect as of
June 30, 2019
.
|
(3)
|
Represents payments on securities sold under agreements to repurchase in accordance with the set scheduled maturity date that corresponds to the maturities of the securities sold under such transaction and exclude any interest payments as such amounts cannot be reasonably estimated. Interest payments on securities sold under agreements are based on the weighted average effective interest rate of each class of securities that have been sold, plus a spread to be agreed upon by the parties
|
(4)
|
Represents the payments required under our various operating leases for office space and data centers.
|
(5)
|
Represents the maximum amounts that would be payable to our executive managing directors and the Ziffs under the tax receivable agreement assuming that we will have sufficient taxable income each year to fully realize the expected tax savings resulting from the purchase by the Oz Operating Group of
|
(6)
|
We are not currently able to make a reasonable estimate of the timing of payments in individual years in connection with our unrecognized tax benefits of $7.0 million, and therefore these amounts are not included in the table above.
|
(7)
|
As of
June 30, 2019
, we had incentive income collected from certain of our funds that is subject to clawback in the event of future losses in the respective fund. We are not currently able to make a reasonable estimate of the timing of payments, if any, as the payments are contingent on future realizations of investments in the respective fund, the timing of which is uncertain.
|
|
Three Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Net Loss Attributable to Class A Shareholders—GAAP
|
$
|
(8,625
|
)
|
|
$
|
(12,256
|
)
|
Change in redemption value of Preferred Units
|
—
|
|
|
—
|
|
||
Net Loss Allocated to Och-Ziff Capital Management Group Inc—GAAP
|
(8,625
|
)
|
|
(12,256
|
)
|
||
Net loss allocated to Group A Units
|
(8,148
|
)
|
|
(21,915
|
)
|
||
Equity-based compensation, net of RSUs settled in cash
|
37,095
|
|
|
23,366
|
|
||
Adjustment to recognize deferred cash compensation in the period of grant
|
2,017
|
|
|
1,974
|
|
||
Recapitalization-related non-cash interest expense accretion
|
4,104
|
|
|
—
|
|
||
Income taxes
|
10,134
|
|
|
(2,524
|
)
|
||
Net losses on early retirement of debt
|
595
|
|
|
14,303
|
|
||
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance
|
1,282
|
|
|
555
|
|
||
Changes in tax receivable agreement liability
|
(5,362
|
)
|
|
—
|
|
||
Depreciation, amortization and net gains and losses on fixed assets
|
2,364
|
|
|
2,794
|
|
||
Other adjustments
|
(3,044
|
)
|
|
1,897
|
|
||
Economic Income
|
$
|
32,412
|
|
|
$
|
8,194
|
|
|
Six Months Ended June 30,
|
||||||
|
2019
|
|
2018
|
||||
|
|
|
|
||||
|
(dollars in thousands)
|
||||||
Net Income (Loss) Attributable to Class A Shareholders—GAAP
|
$
|
28,458
|
|
|
$
|
(8,766
|
)
|
Change in redemption value of Preferred Units
|
(44,364
|
)
|
|
—
|
|
||
Net Loss Allocated to Och-Ziff Capital Management Group Inc—GAAP
|
(15,906
|
)
|
|
(8,766
|
)
|
||
Net loss allocated to Group A Units
|
(15,517
|
)
|
|
(13,545
|
)
|
||
Equity-based compensation, net of RSUs settled in cash
|
74,318
|
|
|
45,261
|
|
||
Adjustment to recognize deferred cash compensation in the period of grant
|
4,585
|
|
|
14,757
|
|
||
Recapitalization-related non-cash interest expense accretion
|
6,415
|
|
|
—
|
|
||
Income taxes
|
13,520
|
|
|
488
|
|
||
Net losses on early retirement of debt
|
6,053
|
|
|
14,303
|
|
||
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance
|
3,659
|
|
|
393
|
|
||
Changes in tax receivable agreement liability
|
(5,362
|
)
|
|
—
|
|
||
Depreciation, amortization and net gains and losses on fixed assets
|
4,775
|
|
|
5,166
|
|
||
Other adjustments
|
(6,351
|
)
|
|
2,879
|
|
||
Economic Income
|
$
|
70,189
|
|
|
$
|
60,936
|
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Management fees—GAAP
|
$
|
61,400
|
|
|
$
|
70,593
|
|
|
$
|
125,023
|
|
|
$
|
143,043
|
|
Adjustment to management fees
(1)
|
(3,765
|
)
|
|
(4,477
|
)
|
|
(7,373
|
)
|
|
(9,218
|
)
|
||||
Management Fees—Economic Income Basis—Non-GAAP
|
57,635
|
|
|
66,116
|
|
|
117,650
|
|
|
133,825
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Incentive Income—Economic Income Basis—GAAP and Non-GAAP
|
34,757
|
|
|
34,656
|
|
|
87,955
|
|
|
85,490
|
|
||||
|
|
|
|
|
|
|
|
||||||||
Other revenues—GAAP
|
5,043
|
|
|
3,867
|
|
|
8,812
|
|
|
8,409
|
|
||||
Adjustment to other revenues
(2)
|
—
|
|
|
—
|
|
|
—
|
|
|
(39
|
)
|
||||
Other Revenues—Economic Income Basis—Non-GAAP
|
5,043
|
|
|
3,867
|
|
|
8,812
|
|
|
8,370
|
|
||||
Total Revenues—Economic Income Basis—Non-GAAP
|
$
|
97,435
|
|
|
$
|
104,639
|
|
|
$
|
214,417
|
|
|
$
|
227,685
|
|
(1)
|
Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense. The impact of eliminations related to the consolidated funds is also removed.
|
(2)
|
Adjustment to exclude gains on fixed assets.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Compensation and benefits—GAAP
|
$
|
80,709
|
|
|
$
|
74,502
|
|
|
$
|
166,424
|
|
|
$
|
143,426
|
|
Adjustment to compensation and benefits
(1)
|
(40,393
|
)
|
|
(26,780
|
)
|
|
(82,562
|
)
|
|
(62,685
|
)
|
||||
Compensation and Benefits—Economic Income Basis—Non-GAAP
|
$
|
40,316
|
|
|
$
|
47,722
|
|
|
$
|
83,862
|
|
|
$
|
80,741
|
|
|
|
|
|
|
|
|
|
||||||||
Interest expense—GAAP
|
$
|
6,523
|
|
|
$
|
7,505
|
|
|
$
|
12,731
|
|
|
$
|
14,103
|
|
Adjustment to interest expense
(2)
|
(4,104
|
)
|
|
—
|
|
|
(6,415
|
)
|
|
—
|
|
||||
Interest Expense—Economic Income Basis—Non-GAAP
|
$
|
2,419
|
|
|
$
|
7,505
|
|
|
$
|
6,316
|
|
|
$
|
14,103
|
|
|
|
|
|
|
|
|
|
||||||||
General, administrative and other expenses—GAAP
|
$
|
28,427
|
|
|
$
|
48,509
|
|
|
$
|
66,215
|
|
|
$
|
86,359
|
|
Adjustment to general, administrative and other expenses
(3)
|
(6,137
|
)
|
|
(7,289
|
)
|
|
(12,163
|
)
|
|
(14,441
|
)
|
||||
General, Administrative and Other Expenses—Economic Income Basis—Non-GAAP
|
$
|
22,290
|
|
|
$
|
41,220
|
|
|
$
|
54,052
|
|
|
$
|
71,918
|
|
(1)
|
Adjustment to exclude equity-based compensation, as management does not consider these non-cash expenses to be reflective of our operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement. In addition, expenses related to incentive income profit-sharing arrangements are generally recognized at the same time the related incentive income revenue is recognized, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund. Further, deferred cash compensation is expensed in full in the year granted for Economic Income, rather than over the service period for GAAP. Distributions to the Group D Units are also excluded, as management reviews operating performance at the Oz Operating Group level, where substantially all of our operations are performed, prior to making any income allocations.
|
(2)
|
Adjustment to exclude non-cash interest expense accretion on Debt Securities issued in exchange for 2016 Preferred Units in connection with the Recapitalization. Upon exchange, Debt Securities were recognized at fair value and are being accreted to par value over time through interest expense for GAAP; however, management does not consider this interest accretion to be reflective of the operating performance of the Company.
|
(3)
|
Adjustment to exclude depreciation, amortization and losses on fixed assets as management does not consider these items to be reflective of our operating performance. Additionally, recurring placement and related service fees are excluded, as management considers these fees a reduction in management fees, not an expense.
|
|
Three Months Ended June 30,
|
|
Six Months Ended June 30,
|
||||||||||||
|
2019
|
|
2018
|
|
2019
|
|
2018
|
||||||||
|
|
|
|
|
|
|
|
||||||||
|
(dollars in thousands)
|
||||||||||||||
Net loss attributable to noncontrolling interests—GAAP
|
$
|
(7,984
|
)
|
|
$
|
(21,440
|
)
|
|
$
|
(15,218
|
)
|
|
$
|
(12,805
|
)
|
Adjustment to net loss attributable to noncontrolling interests
(1)
|
7,982
|
|
|
21,438
|
|
|
15,216
|
|
|
12,792
|
|
||||
Net Loss Attributable to Noncontrolling Interests—Economic Income Basis—Non-GAAP
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(2
|
)
|
|
$
|
(13
|
)
|
(1)
|
Adjustment to exclude amounts allocated to our executive managing directors on their interests in the Oz Operating Group, as management reviews operating performance at the Oz Operating Group level. We conduct substantially all of our activities through the Oz Operating Group.
|
|
OCH-ZIFF CAPITAL MANAGEMENT GROUP INC.
|
||
|
|
|
|
|
By:
|
|
/s/ Thomas M. Sipp
|
|
|
|
Thomas M. Sipp
|
|
|
|
Chief Financial Officer and Executive Managing Director
|
1 Year Och Ziff Capital Managem... Chart |
1 Month Och Ziff Capital Managem... Chart |
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