Business Context and Reporting Period
This Form 8-K filing by The Blackstone Group L.P. (Blackstone) reports the issuance of a press release on October 28, 2010, announcing financial results for the third quarter ended September 30, 2010. The filing serves to disclose these results and define the company's key non-GAAP financial measures used for performance assessment.
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 methodologies for several non-GAAP measures included in the attached press release (Exhibit 99.1):
- Economic Net Income (ENI): 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: Earnings from operations excluding performance fees, allocations, carry plan costs, income from Blackstone Fund investments, and realized/unrealized gains from other investments (excluding Treasury cash management strategies).
- EBITDA-NFRE: Net Fee Related Earnings from Operations before segment interest, depreciation, amortization, and cash taxes.
- Distributable Earnings: A measure of net realized earnings available for distribution to unitholders, excluding the effects of consolidating Blackstone Funds. It includes management fees, interest/dividend revenue, realized performance fees, and realized investment income, less compensation, operating expenses, and cash taxes.
Material Changes
The filing text does not contain specific data regarding material changes in financial metrics compared to prior periods. It only references the attached press release for the actual results and reconciliations to GAAP measures.
Guidance, Outlook, and Management Commentary
Management Commentary: Management utilizes ENI for resource deployment and compensation decisions across four segments. Net Fee Related Earnings from Operations is used to assess if recurring revenue covers operating expenses. Distributable Earnings is intended to show amounts available for distribution to unitholders.
Distribution Policy: Blackstone intends 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.
Risks and Contingencies: The filing notes that non-GAAP measures should be considered in addition to, not as a substitute for, GAAP measures. No specific risks or contingencies are detailed in the text of this 8-K.
Investor Verification Checklist
- Review Exhibit 99.1 (Press Release) for specific numerical values of ENI, Net Fee Related Earnings, and Distributable Earnings for Q3 2010.
- Verify the reconciliation of non-GAAP measures to the most directly comparable GAAP financial measures as referenced in the press release.
- Confirm the specific amounts of realized versus unrealized gains/losses excluded from Net Fee Related Earnings.
- Check the attached press release for any updates on debt instruments or liquidity positions not detailed in this summary.