Blackstone Inc. current report, 25 February 2010

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Business Context and Reporting Period

Company: The Blackstone Group L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: February 25, 2010
Reporting Period: Fourth quarter and full year ended December 31, 2009.

This filing serves to announce the issuance of a press release (Exhibit 99.1) containing financial results for the specified period. The information within the press release is furnished but not filed as part of this 8-K.

Key Financial Metrics

The filing text does not provide 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): Segment net income excluding income taxes, IPO/acquisition-related items, equity-based compensation charges, and intangible amortization. Used for resource deployment and compensation decisions.
  • Economic Net Income After Taxes: ENI adjusted for an implied income tax provision.
  • Net Fee Related Earnings from Operations: Earnings from operations excluding performance fees, allocations, carry plan costs, and investment gains/losses. Used to assess if recurring revenue covers operating expenses.
  • EBITDA-NFRE: Net Fee Related Earnings from Operations before segment interest, depreciation, amortization, and cash taxes.
  • Adjusted Cash Flows from Operations: A supplemental liquidity measure adjusted for IPO actions, operating asset/liability changes, fund-related investments, and realized gains/losses. This measure is being retired.
  • Distributable Earnings: A new non-GAAP measure replacing Adjusted Cash Flows from Operations. It represents net realized earnings excluding the effects of fund consolidation, intended to show amounts available for distribution to unitholders.

Material Changes

The filing text does not provide specific comparative data or material changes versus prior periods. It notes a strategic change in financial reporting methodology: Blackstone will retire "Adjusted Cash Flows from Operations" and begin disclosing "Distributable Earnings" going forward.

Guidance, Outlook, and Management Commentary

Management Commentary:

  • Management utilizes ENI and Net Fee Related Earnings to evaluate segment performance and recurring revenue adequacy.
  • Liquidity is managed by focusing on cash flows before the consolidation of Blackstone Funds and normal changes in short-term assets and liabilities.
  • The company intends to distribute all Distributable Earnings to unitholders annually, subject to amounts retained for business conduct, investments, legal compliance, and debt obligations.
Risks and Contingencies:
  • The filing states that non-GAAP measures should be considered in addition to, not as a substitute for, GAAP measures.
  • Reconciliations to GAAP measures are contained in the attached press release (Exhibit 99.1), which is not included in the text of this 8-K.
Unusual Items:
  • The filing explicitly excludes IPO and acquisition-related items, equity-based compensation amortization, and intangible amortization from its key performance metrics.

Investor Verification Checklist

  • Review Exhibit 99.1 (Press Release) for specific numerical values regarding revenue, ENI, and Distributable Earnings for Q4 and FY 2009.
  • Verify the reconciliation of non-GAAP measures (ENI, Distributable Earnings) to GAAP financial statements as referenced in the press release.
  • Confirm the specific impact of the transition from "Adjusted Cash Flows from Operations" to "Distributable Earnings" on reported liquidity and distribution capacity.
  • Check for details on "IPO and acquisition-related items" excluded from ENI to understand the magnitude of one-time charges.