Business Context and Reporting Period
Company: The Blackstone Group L.P.
Filing Type: Form 8-K (Current Report)
Date of Report: November 6, 2009
Reporting Period: Quarter ended September 30, 2009
This filing announces the release of financial results for the quarter ended September 30, 2009, via a press release attached as Exhibit 99.1. The filing primarily serves to disclose the availability of these results and defines the non-GAAP financial measures used by management.
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 following non-GAAP metrics used 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 as a key measure of value creation.
- 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, 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. Used as an indicator of the ability to cover recurring operating expenses.
- Adjusted Cash Flows from Operations: Operating cash flows adjusted for IPO/acquisition actions, changes in operating assets/liabilities, fund-related investment activity, and other timing differences. Used to assess liquidity and distribution capacity.
Material Changes
The filing text does not contain specific data comparing the current period to prior periods. It states that reconciliations of the non-GAAP measures to GAAP measures are included in the attached press release (Exhibit 99.1), which is not part of the provided text.
Guidance, Outlook, and Risks
Management Commentary: Management utilizes ENI for resource deployment and compensation decisions across four segments. Adjusted Cash Flows from Operations are used to evaluate amounts available for distributions to unitholders and personnel.
Liquidity Strategy: The company manages liquidity by focusing on cash flows before the consolidation of Blackstone Funds and normal changes in short-term assets and liabilities. Management notes that normal movements in short-term assets do not affect distribution decisions given current balance sheet liquidity, including available cash, marketable securities, and borrowing capability.
Risks and Contingencies: No specific risks or contingencies are detailed in this filing text beyond the standard disclosure that non-GAAP measures should not be considered a substitute for GAAP measures.
Investor Verification Checklist
- Review the attached press release (Exhibit 99.1) for specific numerical values of ENI, Net Fee Related Earnings, and Adjusted Cash Flows.
- Examine the reconciliation tables in the press release to understand the adjustments made to reach non-GAAP figures from GAAP results.
- Verify the specific impact of IPO and acquisition-related items on the reported segment net income.
- Confirm the details of the company's available borrowing capability and marketable securities mentioned in the liquidity discussion.