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 July 22, 2010, announcing financial results for the second quarter ended June 30, 2010. The filing serves to disclose these results pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934.
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, which are detailed in the attached press release (Exhibit 99.1). Key metrics defined include:
- 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.
- Net Fee Related Earnings from Operations: Earnings from operations excluding performance fees, allocations, carry plan costs, and investment income/losses (except Treasury cash management). This measures recurring revenue sufficiency to cover operating expenses.
- EBITDA-NFRE: Net Fee Related Earnings from Operations before segment interest, depreciation, amortization, and cash taxes.
- Distributable Earnings: A supplemental measure of net realized earnings available for distribution to unitholders, excluding the effects of consolidating Blackstone Funds.
Material Changes
The filing text does not contain specific data regarding material changes in financial position or results of operations compared to the prior comparable period. It references an attached press release for the actual results and reconciliations to GAAP measures.
Guidance, Outlook, and Management Commentary
Management utilizes the defined non-GAAP measures for resource deployment, compensation decisions, and assessing the ability to cover recurring operating expenses. Regarding distributions, Blackstone states its current intention to distribute to unitholders, on an annual basis, all Distributable Earnings in excess of amounts deemed necessary for business conduct, investments, legal compliance, debt obligations, or future distribution reserves.
The filing notes that all information in the attached press release is furnished but not filed. It emphasizes that non-GAAP measures should be considered in addition to, not as a substitute for, GAAP financial measures.
Investor Verification Checklist
- Review the attached press release (Exhibit 99.1) for specific numerical values of ENI, Net Fee Related Earnings, and Distributable Earnings for Q2 2010.
- Examine the reconciliation tables in the press release to understand the adjustments between non-GAAP measures and GAAP net income.
- Verify the specific amounts of realized performance fees and allocations included in Distributable Earnings.
- Confirm the status of the Tax Receivable Agreement payables mentioned in the Distributable Earnings calculation.
- Check for any updates on the company's intention to distribute earnings versus retaining capital for business investments.