Business Context and Reporting Period
Company: The Blackstone Group L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: February 3, 2011
Reporting Period: Fourth quarter and full year ended December 31, 2010.
This filing serves to announce the release of financial results for the specified period via a press release attached as Exhibit 99.1. The filing explicitly states that the detailed financial information contained in the press release is furnished but not filed.
Key Financial Metrics
The 8-K filing itself does not contain specific numerical values for revenue, profit, cash flow, margins, debt, or liquidity. Instead, it defines the non-GAAP financial measures used by management to assess performance:
- Economic Net Income (ENI): A key measure of value creation representing segment net income excluding income taxes, IPO/acquisition-related items, equity-based compensation charges, and intangible amortization. Revenues and expenses are presented on a basis that deconsolidates managed investment funds.
- Economic Net Income After Taxes: ENI adjusted for an implied income tax provision calculated consistent with ENI concepts.
- Net Fee Related Earnings from Operations: Highlights earnings from operations excluding performance fees, income from Blackstone Funds investments, and realized/unrealized gains from other investments (excluding Treasury cash management). Used to assess if recurring revenue covers operating expenses.
- EBITDA-NFRE: Earnings Before Interest, Taxes, Depreciation, and Amortization derived from Net Fee Related Earnings from Operations, used as an indicator of the ability to cover recurring operating expenses.
- Distributable Earnings: A supplemental measure assessing amounts available for distribution to unitholders. It represents net realized earnings without the effects of consolidating Blackstone Funds, calculated as total management fees, interest/dividend revenue, other revenue, realized performance fees, and realized investment income, less compensation, operating expenses, and cash taxes.
Note: Specific GAAP and non-GAAP numerical results are located in the attached press release (Exhibit 99.1) and are not present in the text of this 8-K filing.
Material Changes
The filing text does not provide specific data regarding material changes in financial metrics compared to the prior comparable period. It only confirms the issuance of results for the fourth quarter and year ended December 31, 2010.
Guidance, Outlook, and Management Commentary
Distribution Policy: Management states its current intention to distribute to unitholders, on an annual basis, all Distributable Earnings in excess of amounts deemed necessary by the general partner for business conduct, investments, legal compliance, debt obligations, or future distribution reserves.
Use of Non-GAAP Measures: Management utilizes ENI for resource deployment and compensation decisions across four segments. Net Fee Related Earnings from Operations is used to assess the sufficiency of recurring revenue. The filing emphasizes that these non-GAAP measures should be considered in addition to, not as a substitute for, GAAP measures.
Risks and Contingencies: No specific risks or contingencies are detailed in the body of this 8-K filing; the document focuses on the announcement of results and the definition of financial metrics.
Investor Verification Checklist
- Review the attached press release (Exhibit 99.1) for specific numerical values regarding revenue, ENI, and Distributable Earnings for Q4 and FY 2010.
- Verify the reconciliation of non-GAAP measures (ENI, EBITDA-NFRE, Distributable Earnings) to the most directly comparable GAAP financial measures as referenced in the press release.
- Confirm the specific amounts allocated to "amounts necessary or appropriate" for business conduct and future distributions to understand the actual payout ratio.
- Examine the segment reporting details to understand the deconsolidation of investment funds and its impact on reported revenues and expenses.