Oaktree Capital : Announces Second Quarter 2015 Financial Results

Assets under management reached a record $103 billion as of June 30, 2015, up 13% year-over-year, on capital inflows of $6.3 billion for the second quarter and a record $24.0 billion for the 12 months ended June 30, 2015. Adjusted net income declined to $85.3 million, or $0.44 per Class A unit, for the second quarter of 2015 from $134.7 million, or $0.75, for the second quarter of 2014, primarily on lower investment income and fee-related earnings. Distributable earnings declined to $111.2 million, or $0.59 per Class A unit, for the second quarter of 2015 from $116.2 million, or $0.64, for the second quarter of 2014, on lower fee-related earnings. GAAP net income attributable to Oaktree Capital Group, LLC was $19.8 million for the second quarter of 2015, as compared with $31.2 million for the second quarter of 2014. Oaktree declares a distribution of $0.50 per Class A unit with respect to the second quarter of 2015, bringing aggregate distributions relating to the last four quarters to $2.32.

Oaktree Capital Group, LLC (NYSE: OAK) today reported its unaudited financial results for the quarter ended June 30, 2015.

Jay Wintrob, CEO, said, “Second quarter adjusted net income declined year over year primarily due to lower overall returns from our fund investments. Fundraising in the second quarter totaled $6.3 billion, helping to achieve our highest-ever assets under management of $103 billion at June 30, up 13% from a year ago. Gross capital raised over the last twelve months of $24 billion set a new record for any such period, demonstrating the trust and confidence that our clients continue to place in us and the strength of our firm-wide distribution activities. With record dry powder of $20.1 billion, we're well positioned for future investment opportunities across multiple strategies.”

Assets under management (“AUM”) and management fee-generating assets under management (“management fee-generating AUM”) as of June 30, 2015 were $103.1 billion and $78.6 billion, respectively, up 13% and 1% from their respective June 30, 2014 balances of $91.1 billion and $77.8 billion. AUM of $103.1 billion surpassed the previous record high of $99.9 billion as of March 31, 2015.

Capital inflows drove the growth in AUM. Gross capital raised was $6.3 billion for the second quarter of 2015 and a record $24.0 billion for the last twelve months. The second quarter included $2.3 billion of new capital commitments for Oaktree Opportunities Funds X and Xb (“Opps X and Xb”), bringing to $9.4 billion their aggregate capital commitments to date, and a first closing of $1.3 billion for Oaktree Real Estate Opportunities Fund VII (“ROF VII”). None of these three funds had begun to generate management fees as of June 30, 2015.

Adjusted net income (“ANI”) declined to $85.3 million and $240.7 million for the second quarter and first six months of 2015, respectively, from $134.7 million and $381.7 million for the comparable periods last year. Distributable earnings declined to $111.2 million and $251.7 million for the second quarter and first six months of 2015, respectively, from $116.2 million and $349.3 million for the comparable periods last year. The second quarter declines were primarily attributable to lower fee-related earnings and, in the case of ANI, lower investment income. The declines in ANI and distributable earnings for the six-month period were largely attributable to lower incentive income, primarily stemming from the first quarter’s annual tax-related incentive distributions.

In addition to ANI, Oaktree calculates economic net income (“ENI”) to facilitate comparability with other alternative asset managers that report a measure similar to ENI as a performance metric. Unlike ANI, ENI measures incentive income based on market values of the funds’ holdings. ENI decreased to $17.7 million and $246.5 million for the second quarter and first six months of 2015, respectively, from $211.1 million and $438.4 million for the comparable periods last year. Per Class A unit, ENI was a loss of $0.02 and income of $1.21 for the second quarter and first six months of 2015, respectively, as compared to income of $1.17 and $2.50 for the comparable periods last year.

GAAP-basis results for the second quarter and first six months of 2015 included net income attributable to Oaktree Capital Group, LLC of $19.8 million and $58.1 million, respectively, as compared to $31.2 million and $83.0 million for the comparable periods last year.

Closed-end funds that Oaktree is currently marketing include Oaktree Mezzanine Fund IV (“Mezz IV”), ROF VII, Opps X and Xb, Oaktree Enhanced Income Fund III, Oaktree Infrastructure Fund, European Capital Solutions Fund and Oaktree European Principal Fund IV.

The table below presents (a) segment revenues, distributable earnings revenues, fee-related earnings revenues and economic net income revenues, in each case for the Operating Group; (b) adjusted net income, distributable earnings, fee-related earnings and economic net income, in each case for both the Operating Group and per Class A unit; and (c) assets under management and accrued incentives (fund level) data. Please refer to the Glossary for definitions.

		As of or for								As of or for
		the Three Months								the Six Months
		Ended June 30,								Ended June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data or as otherwise indicated)
Segment Results:
Segment revenues		$	270,071			$	302,516			$	664,458			$	830,272
Adjusted net income		85,346				134,749				240,684				381,694
Distributable earnings revenues		285,078				279,829				658,764				792,178
Distributable earnings		111,207				116,173				251,715				349,314
Fee-related earnings revenues		185,558				189,119				373,608				377,519
Fee-related earnings		53,720				63,535				109,675				121,258
Economic net income revenues		144,868				447,594				651,838				1,034,848
Economic net income		17,686				211,146				246,546				438,388
Per Class A unit:
Adjusted net income		$	0.44			$	0.75			$	1.28			$	2.18
Distributable earnings		0.59				0.64				1.39				2.01
Fee-related earnings		0.34				0.34				0.66				0.66
Economic net income (loss)		(0.02		)		1.17				1.21				2.50
Operating Metrics:
Assets under management (in millions):
Assets under management		$	103,060			$	91,089			$	103,060			$	91,089
Management fee-generating assets under management		78,596				77,781				78,596				77,781
Incentive-creating assets under management		33,860				35,088				33,860				35,088
Uncalled capital commitments		20,141				11,040				20,141				11,040
Accrued incentives (fund level):
Incentives created (fund level)		(64,055		)		204,276				201,407				556,650
Incentives created (fund level), net of associated incentive income compensation expense		(36,066		)		106,776				100,233				244,108
Accrued incentives (fund level)		1,936,787				2,481,015				1,936,787				2,481,015
Accrued incentives (fund level), net of associated incentive income compensation expense		1,005,785				1,291,920				1,005,785				1,291,920

Note: Oaktree discloses in this earnings release certain revenues and financial measures, including segment revenues, adjusted net income, adjusted net income per Class A unit, distributable earnings revenues, distributable earnings, distributable earnings per Class A unit, fee-related earnings revenues, fee-related earnings, fee-related earnings per Class A unit, economic net income revenues, economic net income and economic net income per Class A unit, that are calculated and presented on a basis other than generally accepted accounting principles in the United States (“non-GAAP”). Reconciliations of those non-GAAP financial measures to the most directly comparable GAAP financial measures are presented at Exhibit A. All non-GAAP measures and all interim results presented in this release are unaudited.

Operating Metrics

Assets Under Management

AUM was $103.1 billion as of June 30, 2015, $99.9 billion as of March 31, 2015 and $91.1 billion as of June 30, 2014. The $3.2 billion increase since March 31, 2015 reflected $4.7 billion in capital inflows for closed-end funds and a $0.4 billion favorable impact from foreign currency translation, partially offset by $1.4 billion of distributions to closed-end fund investors and $0.6 billion in uncalled capital commitments for closed-end funds at the end of their investment periods. Capital inflows for closed-end funds included $2.3 billion for Opps X and Xb, and $1.3 billion for ROF VII.

The $12.0 billion increase in AUM since June 30, 2014 reflected $18.1 billion of aggregate capital inflows and fee-generating leverage for closed-end and evergreen funds, $2.3 billion from the August 2014 Highstar acquisition and $1.9 billion of net inflows to open-end funds, partially offset by $7.1 billion of distributions to closed-end fund investors, a $2.2 billion negative impact from foreign currency translation and $1.0 billion in uncalled capital commitments for closed-end funds at the end of their investment periods. Capital inflows and fee-generating leverage for closed-end and evergreen funds included $9.4 billion for Opps X and Xb, $1.3 billion for ROF VII, $1.1 billion for Oaktree Enhanced Income Fund II, $1.1 billion for Oaktree Power Opportunities Fund IV (“Power Fund IV”) and $1.1 billion for collateralized loan obligation vehicles (“CLOs”). Distributions to closed-end fund investors included $3.3 billion by Distressed Debt funds, $1.3 billion by Real Estate funds, $1.1 billion by Mezzanine funds and $1.0 billion by Principal Investing funds.

Management Fee-generating Assets Under Management

Management fee-generating AUM was $78.6 billion as of June 30, 2015, $78.5 billion as of March 31, 2015 and $77.8 billion as of June 30, 2014. The $0.1 billion increase since March 31, 2015 reflected $0.4 billion in drawdowns or contributions by closed-end and evergreen funds for which management fees are based on drawn capital or NAV, $0.3 billion from net inflows to open-end funds, a $0.3 billion favorable impact from foreign currency translation and a $0.8 billion decline attributable to closed-end funds in liquidation. Of the $13.0 billion in aggregate potential management fee-generating AUM for Opps X and Xb, ROF VII, Power Fund IV, Oaktree Principal Fund VI (“PF VI”) and Mezz IV, only $168 million from PF VI and Mezz IV had become management fee-generating AUM as of June 30, 2015.

The $0.8 billion increase in management fee-generating AUM since June 30, 2014 reflected $3.0 billion from fee-generating leverage and drawdowns or contributions by closed-end and evergreen funds for which management fees are based on drawn capital or NAV, $1.9 billion from the Highstar acquisition, $1.8 billion from net inflows to open-end funds and $1.3 billion attributable to CLOs and capital commitments to closed-end funds, partially offset by $3.4 billion attributable to closed-end funds in liquidation, a $1.8 billion negative impact from foreign currency translation, $0.6 billion in uncalled capital commitments, $0.6 billion in market-value declines and $0.4 billion of distributions by funds that pay fees based on NAV.

Incentive-creating Assets Under Management

Incentive-creating assets under management (“incentive-creating AUM”) were $33.9 billion as of June 30, 2015, $34.5 billion as of March 31, 2015 and $35.1 billion as of June 30, 2014. The $0.6 billion decrease since March 31, 2015 reflected the net effect of $0.8 billion in drawdowns by closed-end funds, $1.3 billion in distributions by closed-end funds, $0.3 billion in market-value declines and a $0.2 billion positive impact from foreign currency translation. The $1.2 billion decrease since June 30, 2014 reflected the net effect of $4.4 billion in drawdowns by closed-end funds, $1.0 billion from the Highstar acquisition, $0.5 billion in market-value gains, $6.1 billion in distributions by closed-end funds and a $1.0 billion negative impact from foreign currency translation.

Of the $33.9 billion in incentive-creating AUM as of June 30, 2015, $20.1 billion, or 59.3%, was generating incentives at the fund level.

Accrued Incentives (Fund Level) and Incentives Created (Fund Level)

Accrued incentives (fund level) were $1.9 billion as of June 30, 2015, $2.1 billion as of March 31, 2015 and $2.5 billion as of June 30, 2014. The second quarter of 2015 reflected $64.1 million of negative incentives created (fund level) and $61.1 million of segment incentive income recognized.

Net of incentive income compensation expense, accrued incentives (fund level) were $1.0 billion as of June 30, 2015, $1.1 billion as of March 31, 2015 and $1.3 billion as of June 30, 2014. As of June 30, 2015, March 31, 2015 and June 30, 2014, the portion of net accrued incentives (fund level) represented by funds that were currently paying incentives was $371.1 million, $419.8 million and $475.3 million, respectively, with the remainder arising from funds that as of that date had not yet reached the stage of their cash distribution waterfall where Oaktree was entitled to receive incentives, other than possibly tax-related distributions.

Uncalled Capital Commitments

Uncalled capital commitments were $20.1 billion as of June 30, 2015, $17.2 billion as of March 31, 2015, and $11.0 billion as of June 30, 2014. Capital drawn by closed-end funds during the quarter and twelve months ended June 30, 2015 aggregated $1.5 billion and $7.3 billion, respectively, as compared with $2.5 billion and $7.4 billion for the corresponding prior-year periods.

Segment Results

Revenues

Segment revenues declined $32.4 million, or 10.7%, to $270.1 million in the second quarter of 2015, from $302.5 million in the second quarter of 2014, reflecting decreases of $3.5 million in management fees and $30.8 million in investment income, partially offset by $1.9 million in higher incentive income.

Management Fees

Management fees decreased $3.5 million, or 1.9%, to $185.6 million in the second quarter of 2015, from $189.1 million in the second quarter of 2014. The decline reflected the net effect of an aggregate decrease of $19.6 million primarily among closed-end funds in liquidation and an aggregate increase of $16.1 million from closed-end funds for which management fees are based on drawn capital or NAV, CLOs, net inflows to open-end and evergreen funds, and the Highstar acquisition.

Incentive Income

Incentive income increased $1.9 million, or 3.2%, to $61.1 million in the second quarter of 2015, from $59.2 million in the second quarter of 2014. Oaktree Opportunities Fund VIIb accounted for $59.0 million and $38.9 million of the total incentive income in the second quarters of 2015 and 2014, respectively.

Investment Income

Investment income decreased $30.8 million, or 56.8%, to $23.4 million in the second quarter of 2015, from $54.2 million in the second quarter of 2014, primarily reflecting lower overall returns from our fund investments, amid generally weaker financial markets. Our one-fifth ownership stake in DoubleLine Capital LP and its affiliates (collectively, “DoubleLine”) accounted for investment income of $12.5 million and $10.6 million in the second quarters of 2015 and 2014, respectively, of which performance fees accounted for $0.6 million and $2.6 million, respectively.

Expenses

Compensation and Benefits

Compensation and benefits increased $11.2 million, or 12.1%, to $103.8 million for the second quarter of 2015, from $92.6 million for the second quarter of 2014. The increase primarily reflected growth in headcount, including the Highstar acquisition. The second quarters of 2015 and 2014 included a $1.2 million expense and a $2.0 million benefit, respectively, associated with our phantom equity awards, stemming from each period’s equity distribution and change in the Class A unit trading price.

Equity-based Compensation

Equity-based compensation increased $6.8 million, or 133.3%, to $11.9 million for the second quarter of 2015, from $5.1 million for the second quarter of 2014, primarily reflecting non-cash amortization expense associated with vesting of restricted unit grants made to employees and directors subsequent to our initial public offering in 2012.

Incentive Income Compensation

Incentive income compensation expense decreased $0.5 million, or 1.7%, to $29.6 million for the second quarter of 2015, from $30.1 million for the second quarter of 2014. Incentive income compensation expense declined while incentive income increased, primarily due to differences in the applicable compensation percentages.

General and Administrative

General and administrative expense decreased $5.1 million, or 16.4%, to $26.0 million for the second quarter of 2015, from $31.1 million for the second quarter of 2014. Excluding the impact of foreign currency-related items, general and administrative expense decreased $2.3 million, or 7.0%, to $30.4 million from $32.7 million.

Adjusted Net Income

ANI decreased $49.4 million, or 36.7%, to $85.3 million for the second quarter of 2015, from $134.7 million for the second quarter of 2014, primarily reflecting decreases of $30.8 million in investment income and $9.8 million in fee-related earnings. The portion of ANI attributable to our Class A units was $21.4 million and $32.7 million for the second quarters of 2015 and 2014, respectively. Per Class A unit, adjusted net income-OCG was $0.44 and $0.75 for the second quarters of 2015 and 2014, respectively.

The effective tax rate applied to ANI for the second quarters of 2015 and 2014 was 18% and 13%, respectively, resulting from estimated full-year effective rates of 17% and 11%, respectively. The 18% effective tax rate applied to ANI for the second quarter of 2015 was based on an estimated full-year effective tax rate on income that can be reliably forecasted combined with the actual tax expense in the current period on income that cannot be reliably estimated, such as incentive income. We would expect variability between quarters and for the full year because the effective tax rate is a function of the mix of income and other factors that often vary significantly within or between years, each of which can have a material impact on the particular year’s income tax expense.

Distributable Earnings

Distributable earnings declined $5.0 million, or 4.3%, to $111.2 million for the second quarter of 2015, from $116.2 million for the second quarter of 2014, reflecting a $9.8 million decrease in fee-related earnings, partially offset by a $6.9 million increase in investment income proceeds. For the second quarter of 2015, investment income proceeds totaled $38.4 million, including $30.2 million from fund distributions and $8.2 million from DoubleLine, as compared with total investment income proceeds in the prior-year quarter of $31.5 million, of which $22.9 million and $8.6 million was attributable to fund distributions and DoubleLine, respectively.

The portion of distributable earnings attributable to our Class A units was $0.59 and $0.64 per unit for the second quarters of 2015 and 2014, respectively, reflecting distributable earnings per Operating Group unit of $0.72 and $0.76, respectively, less costs borne by Class A unitholders for professional fees and other expenses, cash taxes attributable to the Intermediate Holding Companies and amounts payable pursuant to the tax receivable agreement.

Fee-related Earnings

Fee-related earnings decreased $9.8 million, or 15.4%, to $53.7 million for the second quarter of 2015, from $63.5 million for the second quarter of 2014. The decrease reflected $3.5 million of lower management fees, an $11.2 million increase in compensation and benefits, and a $5.1 million decrease in general and administrative expense. The portion of fee-related earnings attributable to our Class A units was $0.34 per unit for each of the second quarters of 2015 and 2014.

The effective tax rate applicable to fee-related earnings for the second quarters of 2015 and 2014 was -1% and 16%, respectively, resulting from full-year effective tax rates of 4% and 15%, respectively. The rate used for interim fiscal periods is based on the estimated full-year effective tax rate, which is subject to change as the year progresses. In general, the annual effective tax rate increases as annual fee-related earnings increase, and vice versa.

GAAP-basis Results

Net income attributable to Oaktree Capital Group, LLC was $19.8 million for the second quarter of 2015, as compared to $31.2 million for the second quarter of 2014.

Capital and Liquidity

As of June 30, 2015, Oaktree had $1.0 billion of cash and U.S. Treasury securities and $850 million of outstanding debt. Oaktree had then, and currently has, no borrowings outstanding against its $500 million revolving credit facility. As of June 30, 2015, Oaktree’s investments in funds and companies had a carrying value of $1.6 billion, with its 20% investment in DoubleLine carried at cost, as adjusted under the equity method of accounting. Accrued incentives (fund level), net of associated compensation expense, represented an additional $1.0 billion as of that date.

Distribution

Oaktree Capital Group, LLC has declared a distribution attributable to the second quarter of 2015 of $0.50 per Class A unit. This distribution will be paid on August 13, 2015 to Class A unitholders of record at the close of business on August 10, 2015.

Conference Call

Oaktree will host a conference call to discuss its second quarter 2015 results today at 11:00 a.m. Eastern Time / 8:00 a.m. Pacific Time. The conference call may be accessed by dialing [phone] (U.S. callers) or [phone] (non-U.S. callers), participant password OAKTREE. Alternatively, a live webcast of the conference call can be accessed through the Unitholders – Investor Relations section of the Oaktree website, http://ir.oaktreecapital.com/.

For those individuals unable to listen to the live broadcast of the conference call, a replay will be available for 30 days on Oaktree’s website, or by dialing [phone] (U.S. callers) or [phone] (non-U.S. callers), beginning approximately one hour after the broadcast.

About Oaktree

Oaktree is a leader among global investment managers specializing in alternative investments, with $103 billion in assets under management as of June 30, 2015. The firm emphasizes an opportunistic, value-oriented and risk-controlled approach to investments in distressed debt, corporate debt (including high yield debt and senior loans), control investing, convertible securities, real estate and listed equities. Headquartered in Los Angeles, the firm has over 900 employees and offices in 17 cities worldwide. For additional information, please visit Oaktree’s website at www.oaktreecapital.com.

Investor Relations Website

Investors and others should note that Oaktree uses the Investors section of its corporate website to announce material information to investors and the marketplace. While not all of the information that Oaktree posts on its corporate website is of a material nature, some information could be deemed to be material. Accordingly, Oaktree encourages investors, the media, and others interested in Oaktree to review the information that it shares on its corporate website at the Unitholders – Investor Relations section of the Oaktree website, http://ir.oaktreecapital.com/. Information contained on, or available through, our website is not incorporated by reference into this document.

Forward-Looking Statements

This release contains forward-looking statements within the meaning of Section 27A of the U.S. Securities Act of 1933, as amended, and Section 21E of the U.S. Securities Exchange Act of 1934, as amended, which reflect the current views of Oaktree Capital Group, LLC (“OCG”), with respect to, among other things, our future results of operations and financial performance. In some cases, you can identify forward-looking statements by words such as “anticipate,” “approximately,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “outlook,” “plan,” “potential,” “predict,” “seek,” “should,” “will” and “would” or the negative version of these words or other comparable or similar words. These statements identify prospective information. Important factors could cause actual results to differ, possibly materially, from those indicated in these statements. Forward-looking statements are based on our beliefs, assumptions and expectations of our future performance, taking into account all information currently available to us. Such forward-looking statements are subject to risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity, including, but not limited to, changes in our anticipated revenue and income, which are inherently volatile; changes in the value of our investments; the pace of our raising of new funds; changes in assets under management; the timing and receipt of, and impact of taxes on, carried interest; distributions from and liquidation of our existing funds; the amount and timing of distributions on our Class A units; changes in our operating or other expenses; the degree to which we encounter competition; and general economic and market conditions. The factors listed in the item captioned “Risk Factors” in our Annual Report on Form 10-K for the year ended December 31, 2014 filed with the SEC on February 27, 2015, which is accessible on the SEC’s website at www.sec.gov, provide examples of risks, uncertainties and events that may cause our actual results to differ materially from the expectations described in our forward-looking statements.

Forward-looking statements speak only as of the date the statements are made. Except as required by law, we do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

This release and its contents do not constitute and should not be construed as (a) a recommendation to buy, (b) an offer to buy or solicitation of an offer to buy, (c) an offer to sell or (d) advice in relation to, any securities of OCG or securities of any Oaktree investment fund.

Consolidated Statements of Operations Data (GAAP basis)
		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data)
Revenues:
Management fees		$	50,923			$	51,560			$	101,742			$	91,991
Incentive income		564				—				564				—
Total revenues		51,487				51,560				102,306				91,991
Expenses:
Compensation and benefits		(107,750		)		(92,735		)		(217,893		)		(191,027		)
Equity-based compensation		(16,083		)		(10,487		)		(27,789		)		(19,669		)
Incentive income compensation		(35,211		)		(36,259		)		(102,103		)		(127,753		)
Total compensation and benefits expense		(159,044		)		(139,481		)		(347,785		)		(338,449		)
General and administrative		(33,488		)		(31,665		)		(40,068		)		(63,903		)
Depreciation and amortization		(3,107		)		(1,815		)		(5,999		)		(3,736		)
Consolidated fund expenses		(50,290		)		(42,424		)		(88,051		)		(67,616		)
Total expenses		(245,929		)		(215,385		)		(481,903		)		(473,704		)
Other income (loss):
Interest expense		(52,742		)		(25,699		)		(99,311		)		(49,699		)
Interest and dividend income		478,311				284,061				1,001,240				646,197
Net realized gain on consolidated funds’ investments		857,548				514,178				1,332,378				1,168,329
Net change in unrealized appreciation (depreciation) on consolidated funds’ investments		(1,418,385		)		699,890				(910,902		)		1,470,368
Investment income		15,694				4,390				28,376				9,381
Other income (expense), net		2,863				9				7,557				(1,689		)
Total other income		(116,711		)		1,476,829				1,359,338				3,242,887
Income (loss) before income taxes		(311,153		)		1,313,004				979,741				2,861,174
Income taxes		(5,485		)		(5,761		)		(13,360		)		(13,747		)
Net income (loss)		(316,638		)		1,307,243				966,381				2,847,427
Less:
Net (income) loss attributable to non-controlling interests in consolidated funds		391,961				(1,184,244		)		(744,704		)		(2,509,076		)
Net income attributable to non-controlling interests in consolidated subsidiaries		(55,509		)		(91,813		)		(163,610		)		(255,371		)
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980
Distributions declared per Class A unit		$	0.64			$	0.98			$	1.20			$	1.98
Net income per unit (basic and diluted):
Net income per Class A unit		$	0.41			$	0.72			$	1.24			$	1.99
Weighted average number of Class A units outstanding		48,372				43,480				46,727				41,600

Segment Financial Data
		As of or for								As of or for
		the Three Months								the Six Months
		Ended June 30,								Ended June 30,
		2015				2014				2015				2014
Segment Statements of Operations Data: (1)		(in thousands, except per unit data or as otherwise indicated)
Revenues:
Management fees		$	185,558			$	189,119			$	373,608			$	377,519
Incentive income		61,148				59,198				214,027				352,074
Investment income		23,365				54,199				76,823				100,679
Total revenues		270,071				302,516				664,458				830,272
Expenses:
Compensation and benefits		(103,761		)		(92,638		)		(209,615		)		(190,832		)
Equity-based compensation		(11,901		)		(5,111		)		(18,924		)		(9,094		)
Incentive income compensation		(29,554		)		(30,147		)		(119,656		)		(167,975		)
General and administrative		(25,972		)		(31,131		)		(50,322		)		(61,693		)
Depreciation and amortization		(2,105		)		(1,815		)		(3,996		)		(3,736		)
Total expenses		(173,293		)		(160,842		)		(402,513		)		(433,330		)
Adjusted net income before interest and other income (expense)		96,778				141,674				261,945				396,942
Interest expense, net of interest income (2).		(8,782		)		(6,934		)		(17,715		)		(13,559		)
Other income (expense), net		(2,650		)		9				(3,546		)		(1,689		)
Adjusted net income		$	85,346			$	134,749			$	240,684			$	381,694
Adjusted net income-OCG		$	21,443			$	32,719			$	59,728			$	90,594
Adjusted net income per Class A unit		0.44				0.75				1.28				2.18
Distributable earnings		111,207				116,173				251,715				349,314
Distributable earnings-OCG		28,656				27,782				64,951				83,594
Distributable earnings per Class A unit		0.59				0.64				1.39				2.01
Fee-related earnings		53,720				63,535				109,675				121,258
Fee-related earnings-OCG		16,451				14,601				31,007				27,524
Fee-related earnings per Class A unit		0.34				0.34				0.66				0.66
Economic net income		17,686				211,146				246,546				438,388
Economic net income (loss)-OCG		(957		)		50,674				56,522				103,896
Economic net income (loss) per Class A unit		(0.02		)		1.17				1.21				2.50
Weighted average number of Operating Group units outstanding		153,839				152,701				153,540				152,487
Weighted average number of Class A units outstanding		48,372				43,480				46,727				41,600
Operating Metrics:
Assets under management (in millions):
Assets under management		$	103,060			$	91,089			$	103,060			$	91,089
Management fee-generating assets under management		78,596				77,781				78,596				77,781
Incentive-creating assets under management		33,860				35,088				33,860				35,088
Uncalled capital commitments (3).		20,141				11,040				20,141				11,040
Accrued incentives (fund level): (4)
Incentives created (fund level)		(64,055		)		204,276				201,407				556,650
Incentives created (fund level), net of associated incentive income compensation expense		(36,066		)		106,776				100,233				244,108
Accrued incentives (fund level)		1,936,787				2,481,015				1,936,787				2,481,015
Accrued incentives (fund level), net of associated incentive income compensation expense		1,005,785				1,291,920				1,005,785				1,291,920

(1)		Our business is comprised of one segment, our investment management segment, which consists of the investment management services that we provide to our clients. The components of revenues and expenses used in determining adjusted net income do not give effect to the consolidation of the funds that we manage. Segment revenues include investment income (loss) that is classified in other income (loss) in the GAAP-basis statements of operations. Segment revenues and expenses also reflect Oaktree's proportionate economic interest in Highstar, whereby amounts received for contractually reimbursable costs are included with segment expenses, as compared to being recorded as other income under GAAP. In addition, adjusted net income excludes the effect of (a) non-cash equity-based compensation charges related to unit grants made before our initial public offering, (b) acquisition-related items including amortization of intangibles and changes in the contingent consideration liability, (c) differences arising from equity value units (“EVUs”) that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes, (d) income taxes, (e) other income or expenses applicable to OCG or its Intermediate Holding Companies and (f) the adjustment for non-controlling interests. Incentive income and incentive income compensation expense are included in adjusted net income when the underlying fund distributions are known or knowable as of the respective quarter end, which may be later than the time at which the same revenue or expense is included in the GAAP-basis statements of operations, for which the revenue standard is fixed or determinable and the expense standard is probable and reasonably estimable. Adjusted net income is calculated at the Operating Group level. For additional information regarding the reconciling adjustments discussed above, please see Exhibit A.
(2)		Interest income was $1.2 million and $0.7 million for the three months ended June 30, 2015 and 2014, respectively, and $2.2 million and $1.8 million for the six months ended June 30, 2015 and 2014, respectively.
(3)		Uncalled capital commitments represent undrawn capital commitments by partners (including Oaktree as general partner) of our closed-end funds through their investment periods and certain evergreen funds. If a fund distributes capital during its investment period, that capital is typically subject to possible recall, in which case it is included in uncalled capital commitments.
(4)		Our funds record as accrued incentives the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as segment incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals. Incentives created (fund level), incentive income and accrued incentives (fund level) are presented gross, without deduction for direct compensation expense that is owed to our investment professionals associated with the particular fund when we earn the incentive income. We call that charge “incentive income compensation expense.” Incentive income compensation expense varies by the investment strategy and vintage of the particular fund, among many factors.

Operating Metrics

We monitor certain operating metrics that are either common to the alternative asset management industry or that we believe provide important data regarding our business. As described below, these operating metrics include AUM, management fee-generating AUM, incentive-creating AUM, incentives created (fund level), accrued incentives (fund level) and uncalled capital commitments.

Assets Under Management						As of
						June 30,				March 31,				June 30,
						2015				2015				2014
						(in millions)
Assets Under Management:
Closed-end funds						$	59,014			$	56,259			$	48,162
Open-end funds							38,813				38,340				37,980
Evergreen funds							5,233				5,304				4,947
Total						$	103,060			$	99,903			$	91,089
		Three Months Ended								Twelve Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
		(in millions)
Change in Assets Under Management:
Beginning balance		$	99,903			$	86,226			$	91,089			$	76,400
Closed-end funds:
Capital commitments/other (1)			4,741				1,160				16,110				5,801
Acquisition (Highstar)			—				—				2,349				—
Distributions for a realization event/other (2)			(1,405	)			(1,245	)			(7,101	)			(7,335	)
Uncalled capital commitments at end of investment period			(632	)			—				(1,041	)			(146	)
Foreign currency translation			249				(46	)			(1,350	)			293
Change in market value (3)			(209	)			1,138				760				4,923
Change in applicable leverage			11				253				1,125				429
Open-end funds:
Contributions			1,501				3,618				7,021				8,496
Redemptions			(1,189	)			(1,291	)			(5,163	)			(3,569	)
Foreign currency translation			134				(21	)			(825	)			189
Change in market value (3)			27				763				(200	)			3,593
Evergreen funds:
Contributions or new capital commitments			27				544				866				1,830
Redemptions or distributions			(115	)			(94	)			(281	)			(219	)
Distributions from restructured funds			—				—				(44	)			(34	)
Foreign currency translation			2				(1	)			9				2
Change in market value (3)			15				85				(264	)			436
Ending balance		$	103,060			$	91,089			$	103,060			$	91,089

(1)		These amounts represent capital commitments, as well as the aggregate par value of collateral assets and principal cash associated with our CLOs.
(2)		These amounts represent distributions for a realization event, tax-related distributions, reductions in the par value of collateral assets and principal cash resulting from the repayment of debt by our CLOs, and recallable distributions at the end of the investment period.
(3)		The change in market value reflects the change in NAV of our funds resulting from current income and realized and unrealized gains/losses on investments, less management fees and other fund expenses, as well as changes in the aggregate par value of collateral assets and principal cash held by our CLOs resulting from other activities.

Management Fee-generating AUM						As of
						June 30,				March 31,				June 30,
						2015				2015				2014
Management Fee-generating Assets Under Management:						(in millions)
Closed-end funds:
Senior Loans						$	6,108			$	6,032			$	3,855
Other closed-end funds							30,108				30,614				32,658
Open-end funds							38,731				38,257				37,940
Evergreen funds							3,649				3,594				3,328
Total						$	78,596			$	78,497			$	77,781
		Three Months Ended June 30,								Twelve Months Ended June 30,
		2015				2014				2015				2014
Change in Management Fee-generating Assets Under Management:		(in millions)
Beginning balance		$	78,497			$	74,027			$	77,781			$	64,614
Closed-end funds:
Capital commitments to funds that pay fees based on committed capital/other (1)			114				541				1,287				6,766
Acquisition (Highstar)			—				—				1,882				—
Capital drawn by funds that pay fees based on drawn capital or NAV			203				317				1,002				946
Change attributable to funds in liquidation (2)			(754	)			(603	)			(3,417	)			(4,117	)
Uncalled capital commitments at end of investment period for funds that pay fees based on committed capital			(36	)			—				(640	)			(664	)
Distributions by funds that pay fees based on NAV/other (3)			(136	)			(208	)			(440	)			(522	)
Foreign currency translation			138				(11	)			(964	)			272
Change in market value (4)			(22	)			57				(142	)			298
Change in applicable leverage			63				244				1,135				415
Open-end funds:
Contributions			1,501				3,636				6,976				8,500
Redemptions			(1,189	)			(1,292	)			(5,147	)			(3,572	)
Foreign currency translation			135				(21	)			(823	)			189
Change in market value			27				762				(215	)			3,588
Evergreen funds:
Contributions or capital drawn by funds that pay fees based on drawn capital or NAV			168				369				833				914
Redemptions or distributions			(114	)			(94	)			(261	)			(219	)
Change in market value			1				57				(251	)			373
Ending balance		$	78,596			$	77,781			$	78,596			$	77,781

(1)		These amounts represent capital commitments to funds that pay fees based on committed capital, as well as the aggregate par value of collateral assets and principal cash associated with our CLOs.
(2)		These amounts represent the change for funds that pay fees based on the lesser of funded capital or cost basis during the liquidation period, as well as recallable distributions at the end of the investment period. For most closed-end funds, management fees are charged during the liquidation period on the lesser of (a) total funded capital or (b) the cost basis of assets remaining in the fund, with the cost basis of assets generally calculated by excluding cash balances. Thus, changes in fee basis during the liquidation period are not dependent on distributions made from the fund; rather, they are tied to the cost basis of the fund’s investments, which generally declines as the fund sells assets.
(3)		These amounts represent distributions by funds that pay fees based on NAV, as well as reductions in the par value of collateral assets and principal cash resulting from the repayment of debt by our CLOs.
(4)		The change in market value reflects certain funds that pay management fees based on NAV and leverage, as applicable, as well as changes in the aggregate par value of collateral assets and principal cash held by our CLOs resulting from other activities.

		As of
		June 30,				March 31,				June 30,
		2015				2015				2014
Reconciliation of Assets Under Management to Management Fee-generating Assets Under Management:		(in millions)
Assets under management		$	103,060			$	99,903			$	91,089
Difference between assets under management and committed capital or cost basis for applicable closed-end funds (1)			(4,595	)			(5,620	)			(7,373	)
Undrawn capital commitments to funds that have not yet commenced their investment periods			(13,184	)			(9,190	)			(571	)
Undrawn capital commitments to funds for which management fees are based on drawn capital or NAV			(4,237	)			(4,238	)			(3,623	)
Oaktree’s general partner investments in management fee-generating funds			(1,200	)			(1,200	)			(1,118	)
Closed-end funds that are no longer paying management fees and co-investments that pay no management fees			(1,032	)			(939	)			(425	)
Funds for which management fees were permanently waived			(216	)			(219	)			(198	)
Management fee-generating assets under management		$	78,596			$	78,497			$	77,781

(1)		This difference is not applicable to closed-end funds that pay management fees based on NAV or leverage.

The period-end weighted average annual management fee rates applicable to the respective management fee-generating AUM balances above are set forth below, and reflect the applicable contractual fee rates, exclusive of the impact of special items such as retroactive management fees and the collection of deferred contingent management fees.

		As of
		June 30,			March 31,			June 30,
Weighted Average Annual Management Fee Rates:		2015			2015			2014
Closed-end funds:
Senior Loans		0.50	%		0.50	%		0.50	%
Other closed-end funds		1.54			1.54			1.55
Open-end funds		0.48			0.47			0.47
Evergreen funds		1.49			1.50			1.57
Overall		0.93			0.94			0.97

Incentive-creating AUM
		As of
		June 30,			March 31,			June 30,
		2015			2015			2014
Incentive-creating Assets Under Management:		(in millions)
Closed-end funds		$	31,811		$	32,374		$	32,789
Evergreen funds			2,049			2,084			2,299
Total		$	33,860		$	34,458		$	35,088

Accrued Incentives (Fund Level) and Incentives Created (Fund Level)
		As of or for								As of or for
		the Three Months								the Six Months
		Ended June 30,								Ended June 30,
		2015				2014				2015				2014
Accrued Incentives (Fund Level):		(in thousands)
Beginning balance		$	2,061,990			$	2,335,937			$	1,949,407			$	2,276,439
Incentives created (fund level):
Closed-end funds			(64,685	)			197,639				200,772				535,222
Evergreen funds			630				6,637				635				21,428
Total incentives created (fund level)			(64,055	)			204,276				201,407				556,650
Less: segment incentive income recognized by us			(61,148	)			(59,198	)			(214,027	)			(352,074	)
Ending balance		$	1,936,787			$	2,481,015			$	1,936,787			$	2,481,015
Accrued incentives (fund level), net of associated incentive income compensation expense		$	1,005,785			$	1,291,920			$	1,005,785			$	1,291,920

Uncalled Capital Commitments

Uncalled capital commitments were $20.1 billion as of June 30, 2015, as compared with $17.2 billion as of March 31, 2015 and $11.0 billion as of June 30, 2014.

Segment Results

Our business is comprised of one segment, our investment management segment, which consists of the investment management services that we provide to our clients.

Adjusted Net Income

Adjusted net income and adjusted net income-OCG, as well as per unit data, are set forth below:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data)
Revenues:
Management fees		$	185,558			$	189,119			$	373,608			$	377,519
Incentive income			61,148				59,198				214,027				352,074
Investment income			23,365				54,199				76,823				100,679
Total revenues			270,071				302,516				664,458				830,272
Expenses:
Compensation and benefits			(103,761	)			(92,638	)			(209,615	)			(190,832	)
Equity-based compensation			(11,901	)			(5,111	)			(18,924	)			(9,094	)
Incentive income compensation			(29,554	)			(30,147	)			(119,656	)			(167,975	)
General and administrative			(25,972	)			(31,131	)			(50,322	)			(61,693	)
Depreciation and amortization			(2,105	)			(1,815	)			(3,996	)			(3,736	)
Total expenses			(173,293	)			(160,842	)			(402,513	)			(433,330	)
Adjusted net income before interest and other income (expense)			96,778				141,674				261,945				396,942
Interest expense, net of interest income			(8,782	)			(6,934	)			(17,715	)			(13,559	)
Other income (expense), net			(2,650	)			9				(3,546	)			(1,689	)
Adjusted net income			85,346				134,749				240,684				381,694
Adjusted net income attributable to OCGH non-controlling interest			(58,510	)			(96,382	)			(168,167	)			(278,943	)
Non-Operating Group expenses			(626	)			(603	)			(960	)			(885	)
Adjusted net income-OCG before income taxes			26,210				37,764				71,557				101,866
Income taxes-OCG			(4,767	)			(5,045	)			(11,829	)			(11,272	)
Adjusted net income-OCG		$	21,443			$	32,719			$	59,728			$	90,594
Adjusted net income per Class A unit		$	0.44			$	0.75			$	1.28			$	2.18
Weighted average number of Class A units outstanding			48,372				43,480				46,727				41,600

Investment Income
		Three Months Ended							Six Months Ended
		June 30,							June 30,
		2015				2014			2015				2014
Income (loss) from investments in funds:		(in thousands)
Oaktree funds:
Corporate Debt		$	4,662			$	8,329		$	16,013			$	17,164
Convertible Securities			63				531			1,011				939
Distressed Debt			(6,648	)			18,719			(4,712	)			39,193
Control Investing			1,526				5,640			19,283				16,682
Real Estate			3,254				7,272			9,023				12,738
Listed Equities			6,010				10,131			9,150				6,171
Non-Oaktree funds			2,140				380			4,733				1,303
Income from investments in companies			12,358				3,197			22,322				6,489
Total investment income		$	23,365			$	54,199		$	76,823			$	100,679

Distributable Earnings and Distribution Calculation

Distributable earnings and the calculation of distributions are set forth below:

		Three Months Ended								Six Months Ended
		June 30,								June 30,
		2015				2014				2015				2014
Distributable Earnings:		(in thousands, except per unit data)
Revenues:
Management fees		$	185,558			$	189,119			$	373,608			$	377,519
Incentive income			61,148				59,198				214,027				352,074
Receipts of investment income from funds (1)			30,197				22,911				54,158				44,569
Receipts of investment income from companies			8,175				8,601				16,971				18,016
Total distributable earnings revenues			285,078				279,829				658,764				792,178
Expenses:
Compensation and benefits			(103,761	)			(92,638	)			(209,615	)			(190,832	)
Incentive income compensation			(29,554	)			(30,147	)			(119,656	)			(167,975	)
General and administrative			(25,972	)			(31,131	)			(50,322	)			(61,693	)
Depreciation and amortization			(2,105	)			(1,815	)			(3,996	)			(3,736	)
Total expenses			(161,392	)			(155,731	)			(383,589	)			(424,236	)
Other income (expense):
Interest expense, net of interest income			(8,782	)			(6,934	)			(17,715	)			(13,559	)
Operating Group income taxes			(1,047	)			(1,000	)			(2,199	)			(3,380	)
Other income (expense), net			(2,650	)			9				(3,546	)			(1,689	)
Distributable earnings		$	111,207			$	116,173			$	251,715			$	349,314
Distribution Calculation:
Operating Group distribution with respect to the period		$	93,940			$	102,307			$	212,398			$	287,078
Distribution per Operating Group unit		$	0.61			$	0.67			$	1.38			$	1.88
Adjustments per Class A unit:
Distributable earnings-OCG income tax expense			—				(0.02	)			(0.02	)			(0.15	)
Tax receivable agreement			(0.10	)			(0.09	)			(0.20	)			(0.18	)
Non-Operating Group expenses			(0.01	)			(0.01	)			(0.02	)			(0.02	)
Distribution per Class A unit (2)		$	0.50			$	0.55			$	1.14			$	1.53

(1)		This adjustment characterizes a portion of the distributions received from funds as receipts of investment income or loss. In general, the income or loss component of a fund distribution is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends.
(2)		With respect to the quarter ended June 30, 2015, the distribution was announced on July 28, 2015 and is payable on August 13, 2015.

Units Outstanding
	Three Months Ended				Six Months Ended
	June 30,				June 30,
	2015		2014		2015		2014
	(in thousands)
Weighted Average Units:
OCGH	105,467		109,221		106,813		110,887
Class A	48,372		43,480		46,727		41,600
Total	153,839		152,701		153,540		152,487
Units Eligible for Fiscal Period Distribution:
OCGH	105,628		109,217
Class A	48,372		43,480
Total	154,000		152,697

Fee-related Earnings

Fee-related earnings and fee-related earnings-OCG, as well as per unit data, are set forth below:

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data)
Management fees:
Closed-end funds		$	124,508			$	132,256			$	254,110			$	269,294
Open-end funds		46,577				43,544				91,018				83,198
Evergreen funds		14,473				13,319				28,480				25,027
Total management fees		185,558				189,119				373,608				377,519
Expenses:
Compensation and benefits		(103,761		)		(92,638		)		(209,615		)		(190,832		)
General and administrative		(25,972		)		(31,131		)		(50,322		)		(61,693		)
Depreciation and amortization		(2,105		)		(1,815		)		(3,996		)		(3,736		)
Total expenses		(131,838		)		(125,584		)		(263,933		)		(256,261		)
Fee-related earnings		53,720				63,535				109,675				121,258
Fee-related earnings attributable to OCGH non-controlling interest		(36,829		)		(45,445		)		(76,329		)		(88,118		)
Non-Operating Group expenses		(652		)		(604		)		(987		)		(886		)
Fee-related earnings-OCG before income taxes		16,239				17,486				32,359				32,254
Fee-related earnings-OCG income tax (expense) benefit		212				(2,885		)		(1,352		)		(4,730		)
Fee-related earnings-OCG		$	16,451			$	14,601			$	31,007			$	27,524
Fee-related earnings per Class A unit		$	0.34			$	0.34			$	0.66			$	0.66
Weighted average number of Class A units outstanding		48,372				43,480				46,727				41,600

Segment Statements of Financial Condition

		As of
		June 30, 2015				March 31, 2015				June 30, 2014
		(in thousands)
Assets:
Cash and cash-equivalents		$	308,192			$	434,232			$	413,864
U.S. Treasury securities		681,197				570,749				405,089
Corporate investments		1,560,235				1,503,621				1,468,517
Deferred tax assets		430,756				430,873				373,037
Receivables and other assets		269,112				313,599				249,318
Total assets		$	3,249,492			$	3,253,074			$	2,909,825
Liabilities and Capital:
Liabilities:
Accounts payable and accrued expenses		$	267,925			$	252,006			$	261,104
Due to affiliates		371,276				371,988				322,949
Debt obligations		850,000				850,000				600,000
Total liabilities		1,489,201				1,473,994				1,184,053
Capital:
OCGH non-controlling interest in consolidated subsidiaries		1,146,303				1,159,339				1,180,620
Unitholders’ capital attributable to Oaktree Capital Group, LLC		613,988				619,741				545,152
Total capital		1,760,291				1,779,080				1,725,772
Total liabilities and capital		$	3,249,492			$	3,253,074			$	2,909,825

Corporate Investments

		As of
		June 30, 2015				March 31, 2015				June 30, 2014
Investments in funds:		(in thousands)
Oaktree funds:
Corporate Debt		$	491,685			$	426,543			$	291,241
Convertible Securities		19,709				19,647				19,494
Distressed Debt		416,532				429,173				508,477
Control Investing		256,963				262,492				244,913
Real Estate		142,513				145,330				136,312
Listed Equities		152,914				148,383				145,934
Non-Oaktree funds		65,351				49,706				50,400
Investments in companies		14,568				22,347				71,746
Total corporate investments		$	1,560,235			$	1,503,621			$	1,468,517

Fund Data

Information regarding our closed-end, open-end and evergreen funds, together with benchmark data where applicable, is set forth below. For our closed-end and evergreen funds, no benchmarks are presented in the tables as there are no known comparable benchmarks for these funds’ investment philosophy, strategy and implementation.

Closed-end Funds

						As of June 30, 2015
		Investment Period				Total Committed Capital				Drawn Capital (1)				Fund Net Income Since Inception				Distri- butions Since Inception				Net Asset Value				Manage- ment Fee- gener- ating AUM				Oaktree Segment Incentive Income Recog- nized				Accrued Incentives (Fund Level) (2)				Unreturned Drawn Capital Plus Accrued Preferred Return (3)				IRR Since Inception (4)						Multiple of Drawn Capital (5)
		Start Date		End Date																																						Gross			Net
		(in millions)
Distressed Debt
Oaktree Opportunities Fund Xb		TBD		—		$	6,657			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			n/a			n/a			n/a
Oaktree Opportunities Fund X		TBD		—		2,793				—				—				—				—				—				—				—				—				n/a			n/a			n/a
Oaktree Opportunities Fund IX		Jan. 2014		Jan. 2017		5,066				4,813				(25		)		2				4,786				4,966				—				—				5,296				3.5	%		(0.5	)%		1.1x
Oaktree Opportunities Fund VIIIb		Aug. 2011		Aug. 2014		2,692				2,692				656				631				2,717				2,319				44				—				2,756				10.9			8.1			1.3
Special Account B		Nov. 2009		Nov. 2012		1,031				1,092				556				950				698				698				15				9				549				15.4			12.9			1.6
Oaktree Opportunities Fund VIII		Oct. 2009		Oct. 2012		4,507				4,507				2,268				3,936				2,839				2,282				140				302				2,112				14.3			10.0			1.6
Special Account A		Nov. 2008		Oct. 2012		253				253				306				463				96				75				42				19				—				29.5			24.0			2.2
OCM Opportunities Fund VIIb		May 2008		May 2011		10,940				9,844				9,123				17,327				1,640				1,389				1,453				320				—				22.6			17.2			2.0
OCM Opportunities Fund VII		Mar. 2007		Mar. 2010		3,598				3,598				1,515				4,506				607				880				81				—				631				10.6			8.1			1.5
OCM Opportunities Fund VI		Jul. 2005		Jul. 2008		1,773				1,773				1,320				2,833				260				378				134				124				—				12.1			8.9			1.8
OCM Opportunities Fund V		Jun. 2004		Jun. 2007		1,179				1,179				956				2,049				86				—				170				17				—				18.5			14.2			1.9
Legacy funds (6)		Various		Various		9,543				9,543				8,199				17,695				47				—				1,113				10				—				24.2			19.3			1.9
																																										22.4	%		16.8	%
Real Estate Opportunities
Oaktree Real Estate Opportunities Fund VII		TBD		—		$	1,345			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			n/a			n/a			n/a
Oaktree Real Estate Opportunities Fund VI		Aug. 2012		Aug. 2016		2,677				2,410				780				52				3,138				2,610				2				149				2,667				25.1	%		16.8	%		1.4x
Oaktree Real Estate Opportunities Fund V		Mar. 2011		Mar. 2015		1,283				1,283				827				876				1,234				704				28				130				789				19.4			14.2			1.7
Special Account D		Nov. 2009		Nov. 2012		256				263				171				246				188				96				2				15				122				15.8			13.6			1.7
Oaktree Real Estate Opportunities Fund IV		Dec. 2007		Dec. 2011		450				450				384				534				300				190				15				57				126				16.9			11.5			2.0
OCM Real Estate Opportunities Fund III		Sep. 2002		Sep. 2005		707				707				643				1,290				60				—				115				12				—				15.5			11.6			2.0
Legacy funds (6)		Various		Various		1,634				1,610				1,399				3,009				—				—				112				—				—				15.2			12.0			1.9
																																										15.9	%		12.4	%
Real Estate Debt
Oaktree Real Estate Debt Fund (7)		Sep. 2013		Sep. 2016		$	1,112			$	173			$	29			$	16			$	186			$	189			$	—			$	4			$	165			25.8	%		18.0	%		1.2x
Oaktree PPIP Fund (8)		Dec. 2009		Dec. 2012		2,322				1,113				457				1,570				—				—				47				—				—				28.2			n/a			1.4
European Principal Investments (9)
Oaktree European Principal Fund III		Nov. 2011		Nov. 2016		€	3,164			€	2,291			€	1,037			€	284			€	3,044			€	3,230			€	—			€	201			€	2,411			24.2	%		15.5	%		1.6x
OCM European Principal Opportunities Fund II		Dec. 2007		Dec. 2012		€	1,759			€	1,685			€	863			€	1,475			€	1,073			€	1,007			€	29			€	123			€	909			13.4			8.4			1.7
OCM European Principal Opportunities Fund		Mar. 2006		Mar. 2009		$	495			$	473			$	452			$	822			$	103			$	91			$	30			$	56			$	—			11.8			8.9			2.1
																																										15.4	%		10.4	%
European Private Debt
Oaktree European Dislocation Fund (7)		Oct. 2013		Oct. 2016		€	294			€	127			€	19			€	48			€	98			€	124			€	—			€	3			€	83			36.4%			26.6%			1.2x
Special Account E		Oct. 2013		Apr. 2015		€	379			€	245			€	34			€	29			€	250			€	202			€	—			€	5			€	232			19.3			15.0			1.2
																																										23.4%			17.8%

						As of June 30, 2015
		Investment Period				Total Committed Capital				Drawn Capital (1)				Fund Net Income Since Inception				Distri- butions Since Inception				Net Asset Value				Manage- ment Fee- gener- ating AUM				Oaktree Segment Incentive Income Recog- nized				Accrued Incentives (Fund Level) (2)				Unreturned Drawn Capital Plus Accrued Preferred Return (3)				IRR Since Inception (4)						Multiple of Drawn Capital (5)
		Start Date		End Date																																						Gross			Net
		(in millions)
Global Principal Investments
Oaktree Principal Fund VI (10)		TBD (11)		—		$	1,006			$	59			$	29			$	14			$	74			$	58			$	—			$	—			$	47			nm			nm			1.6x
Oaktree Principal Fund V		Feb. 2009		Feb. 2015		2,827				2,586				683				1,100				2,169				1,839				50				—				2,265				12.0	%		7.6	%		1.4
Special Account C		Dec. 2008		Feb. 2014		505				457				281				296				442				395				16				39				323				15.9			11.4			1.7
OCM Principal Opportunities Fund IV		Oct. 2006		Oct. 2011		3,328				3,328				2,051				3,438				1,941				1,225				22				190				1,703				11.1			8.2			1.7
OCM Principal Opportunities Fund III		Nov. 2003		Nov. 2008		1,400				1,400				885				2,159				126				—				147				24				—				13.9			9.6			1.8
Legacy funds (6)		Various		Various		2,301				2,301				1,839				4,137				3				—				236				1				—				14.5			11.6			1.8
																																										13.4	%		9.9	%
Power Opportunities
Oaktree Power Opportunities Fund IV		TBD		—		$	1,106			$	—			$	—			$	—			$	—			$	—			$	—			$	—			$	—			n/a			n/a			n/a
Oaktree Power Opportunities Fund III		Apr. 2010		Apr. 2015		1,062				648				197				195				650				511				—				37				573				19.7	%		10.4	%		1.4x
OCM/GFI Power Opportunities Fund II		Nov. 2004		Nov. 2009		1,021				541				1,458				1,930				69				39				96				4				—				76.1			58.8			3.9
OCM/GFI Power Opportunities Fund		Nov. 1999		Nov. 2004		449				383				251				634				—				—				23				—				—				20.1			13.1			1.8
																																										34.7	%		26.6	%
Infrastructure Investing
Highstar Capital IV (12)		Nov. 2010		Nov. 2016		$	2,346			$	1,843			$	251			$	268			$	1,826			$	1,882			$	—			$	—			$	1,492			14.1	%		6.7	%		1.3x
Mezzanine Finance
Oaktree Mezzanine Fund IV (7) (10)		Oct. 2014		Oct. 2019		$	597			$	114			$	3			$	—			$	117			$	111			$	—			$	—			$	117			nm			nm			1.0x
Oaktree Mezzanine Fund III (13)		Dec. 2009		Dec. 2014		1,592				1,423				307				1,069				661				618				1				11				648				15.1	%	10.4% / 8.1%				1.3
OCM Mezzanine Fund II		Jun. 2005		Jun. 2010		1,251				1,107				517				1,396				228				260				—				—				241				11.4			7.9			1.6
OCM Mezzanine Fund (14)		Oct. 2001		Oct. 2006		808				773				302				1,073				2				—				38				—				—				15.4			10.8 / 10.5			1.5
																																										13.2	%		8.9	%
Emerging Markets Opportunities
Oaktree Emerging Market Opportunities Fund		Sep. 2013		Sep. 2016		$	384			$	162			$	(19	)		$	—			$	143			$	364			$	—			$	—			$	176			(7.5	)%		(10.8	)%		0.9x
Special Account F (10)		Jan. 2014		Jan. 2017		253				112				(13		)		—				99				98				—				—				120				nm			nm			0.9
										69,858		(15)														29,351		(15)						1,900		(15)
				Other (16)						11,015																6,565								32
				Total (17)						$	80,873	(18)														$	35,916							$	1,932

(1)		Drawn capital reflects the capital contributions of investors in the fund, net of any distributions to such investors of uninvested capital.
(2)		Accrued incentives (fund level) exclude Oaktree segment incentive income previously recognized.
(3)		Unreturned drawn capital plus accrued preferred return reflects the amount the fund needs to distribute to its investors as a return of capital and a preferred return (as applicable) before Oaktree is entitled to receive incentive income (other than tax distributions) from the fund.
(4)		The internal rate of return (“IRR”) is the annualized implied discount rate calculated from a series of cash flows. It is the return that equates the present value of all capital invested in an investment to the present value of all returns of capital, or the discount rate that will provide a net present value of all cash flows equal to zero. Fund-level IRRs are calculated based upon the actual timing of cash contributions/distributions to investors and the residual value of such investor’s capital accounts at the end of the applicable period being measured. Gross IRRs reflect returns before allocation of management fees, expenses and any incentive allocation to the fund’s general partner. To the extent material, gross returns include certain transaction, advisory, directors or other ancillary fees (“fee income”) paid directly to us in connection with our funds’ activities (we credit all such fee income back to the respective fund(s) so that our funds’ investors share pro rata in the fee income’s economic benefit). Net IRRs reflect returns to non-affiliated investors after allocation of management fees, expenses and any incentive allocation to the fund’s general partner.
(5)		Multiple of drawn capital is calculated as drawn capital plus gross income and, if applicable, fee income before fees and expenses divided by drawn capital.
(6)		Legacy funds represent certain predecessor funds within the relevant strategy that have substantially or completely liquidated their assets, including funds managed by certain Oaktree investment professionals while employed at the Trust Company of the West prior to Oaktree’s founding in 1995. When these employees joined Oaktree upon, or shortly after, its founding, they continued to manage the fund through the end of its term pursuant to a sub-advisory relationship between the Trust Company of the West and Oaktree.
(7)		Management fees during the investment period are calculated on drawn, rather than committed, capital. As a result, as of June 30, 2015 management fee-generating AUM included only that portion of committed capital that had been drawn.
(8)		Due to the differences in allocations of income and expenses to this fund’s two primary limited partners, the U.S. Treasury and Oaktree PPIP Private Fund, a combined net IRR is not presented. Oaktree PPIP Fund had liquidated all of its investments and made its final liquidating distribution as of December 31, 2013. Oaktree PPIP Fund and Oaktree PPIP Private Fund were dissolved as of December 31, 2013. Of the $2,322 million in capital commitments, $1,161 million related to the Oaktree PPIP Private Fund. The gross and net IRR for the Oaktree PPIP Private Fund were 24.7% and 18.6%, respectively.
(9)		Aggregate IRRs are based on the conversion of cash flows from Euros to USD using the June 30, 2015 spot rate of $1.11.
(10)		The IRR is not considered meaningful (“nm”) as the period from the initial capital contribution through June 30, 2015 was less than 18 months.
(11)		As of June 30, 2015, Oaktree Principal Fund VI had made an aggregate $59 million drawdown against its $1.0 billion of committed capital. Oaktree has not yet commenced the fund's investment period and, as a result, as of June 30, 2015 management fees were assessed only on the drawn capital, and management fee-generating AUM included only that portion of committed capital.
(12)		The fund includes co-investments of $456 million in AUM for which we earn no management fees or incentive allocation. Those co-investments have been excluded from the calculation of gross and net IRR, as well as the unreturned drawn capital plus accrued preferred return amount and multiple of drawn capital. The fund follows the American-style distribution waterfall, whereby the general partner may receive an incentive allocation as soon as it has returned the drawn capital and paid a preferred return on the fund’s realized investments (i.e., on a deal-by-deal basis). However, such cash distributions of incentives may be subject to repayment, or clawback. As of June 30, 2015, Oaktree had not recognized any incentive income from this fund. Additionally, under the terms of the Highstar acquisition, Oaktree is effectively entitled to approximately 8% of the potential incentives generated by this fund.
(13)		The fund’s partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. The net IRR for Class A interests was 10.4% and Class B interests was 8.1%. The combined net IRR for Class A and Class B interests was 9.5%.
(14)		The fund’s partnership interests are divided into Class A and Class B interests, with the Class A interests having priority with respect to the distribution of current income and disposition proceeds. The net IRR for Class A interests was 10.8% and Class B interests was 10.5%. The combined net IRR for the Class A and Class B interests was 10.6%.
(15)		Totals are based on the conversion of Euro amounts to USD using the June 30, 2015 spot rate of $1.11.
(16)		This includes our closed-end Senior Loan funds, Oaktree Asia Special Situations Fund, OCM Asia Principal Opportunities Fund, CLOs, two closed-end separate accounts and, in the case of management fee-generating AUM and accrued incentives (fund level), a non-Oaktree fund and two evergreen separate accounts in our Real Estate Debt strategy.
(17)		This excludes two closed-end funds with management fee-generating AUM aggregating $445 million as of June 30, 2015, which has been included as part of the Strategic Credit strategy within the evergreen funds table, and includes two evergreen separate accounts in our Real Estate Debt strategy with an aggregate $145 million of management fee-generating AUM.
(18)		The aggregate change in drawn capital for the three months ended June 30, 2015 was $1.5 billion.

Open-end Funds

				Manage- ment Fee- gener- ating AUM as of June 30, 2015				Twelve Months Ended June 30, 2015									Since Inception through June 30, 2015
		Strategy Inception						Rates of Return (1)									Annualized Rates of Return (1)									Sharpe Ratio
								Oaktree						Rele- vant Bench- mark			Oaktree						Rele- vant Bench- mark			Oaktree Gross		Rele- vant Bench- mark
								Gross			Net						Gross			Net
				(in millions)
U.S. High Yield Bonds		Jan. 1986		$	16,365			(0.1	)%		(0.6	)%		(0.8	)%		9.6	%		9.1	%		8.5	%		0.81		0.56
Global High Yield Bonds		Nov. 2010		4,345				0.1			(0.4	)		(0.1	)		8.0			7.4			7.1			1.21		1.15
European High Yield Bonds		May 1999		1,146				3.0			2.5			2.2			8.2			7.6			6.2			0.67		0.40
U.S. Convertibles		Apr. 1987		5,100				0.7			0.2			3.5			9.9			9.4			8.4			0.43		0.28
Non-U.S. Convertibles		Oct. 1994		2,423				4.8			4.3			4.8			8.8			8.3			6.0			0.80		0.42
High Income Convertibles		Aug. 1989		965				2.3			1.5			(0.9	)		11.7			10.8			8.4			1.05		0.59
U.S. Senior Loans		Sep. 2008		2,814				0.9			0.4			2.2			6.8			6.2			5.6			1.15		0.63
European Senior Loans		May 2009		1,562				2.4			1.9			3.4			9.3			8.8			10.4			1.73		1.81
Emerging Markets Equities		Jul. 2011		4,011				(9.9	)		(10.6	)		(5.1	)		(0.6	)		(1.4	)		(1.6	)		(0.03)		(0.09)
Total				$	38,731

(1)		Returns represent time-weighted rates of return, including reinvestment of income, net of commissions and transaction costs. The returns for Relevant Benchmarks are presented on a gross basis.

Evergreen Funds

			As of June 30, 2015												Twelve Months Ended June 30, 2015						Since Inception through June 30, 2015
			AUM				Manage- ment Fee-gener- ating AUM				Accrued Incen- tives (Fund Level)
	Strategy Inception														Rates of Return (1)						Annualized Rates of Return (1)
															Gross			Net			Gross			Net
			(in millions)
Strategic Credit (2)	Jul. 2012		$	3,098			$	1,884			$ n/a				(0.8	)%		(1.4	)%		10.5	%		8.0	%
Value Opportunities	Sep. 2007		1,641				1,578				—			(3)	(10.1	)		(11.1	)		10.9			6.5
Value Equities (4)	Apr. 2014		332				216				—			(3)	nm			nm			nm			nm
Emerging Markets Opportunities	Sep. 2013		197				83				—			(3)	(16.1	)		(17.0	)		4.7			(1.1	)
Emerging Markets Total Return (4)	Jan. 2014		135				50				—				nm			nm			nm			nm
Emerging Markets Absolute Return	Apr. 1997		161				138				—			(3)	(1.2	)		(1.6	)		14.0			9.5
							3,949				—
Restructured funds (5)							—				5
Total (2)(6)							$	3,949			$	5

(1)		Returns represent time-weighted rates of return.
(2)		Includes two closed-end funds with an aggregate $748 million and $445 million of AUM and management fee-generating AUM, respectively.
(3)		As of June 30, 2015, the aggregate depreciation below high-water marks previously established for individual investors in the fund totaled approximately $111 million for Value Opportunities, $4 million for Value Equities, $15 million for Emerging Markets Opportunities and $1 million for Emerging Markets Absolute Return.
(4)		Rates of return are not considered meaningful (“nm”) because the since-inception period as of June 30, 2015 was less than 18 months.
(5)		Oaktree manages three restructured evergreen funds that are in liquidation: Oaktree European Credit Opportunities Fund, Oaktree High Yield Plus Fund and Oaktree Japan Opportunities Fund (Yen class). As of June 30, 2015, these funds had gross and net IRRs since inception of (2.2)% and (4.7)%, 7.6% and 5.3%, and (4.8)% and (5.7)%, respectively, and in the aggregate had AUM of $128 million. Additionally, Oaktree High Yield Plus Fund had accrued incentives (fund level) of $5 million as of June 30, 2015.
(6)		Total excludes two evergreen separate accounts in our Real Estate Debt strategy with an aggregate $145 million of management fee-generating AUM.

GLOSSARY

Accrued incentives (fund level) represents the incentive income that would be paid to us if the funds were liquidated at their reported values as of the date of the financial statements. Incentives created (fund level) refers to the gross amount of potential incentives generated by the funds during the period. We refer to the amount of incentive income recognized as revenue by us as segment incentive income. Amounts recognized by us as incentive income are no longer included in accrued incentives (fund level), the term we use for remaining fund-level accruals.

Adjusted net income (“ANI”) is a measure of profitability for our investment management segment. The components of revenues (“segment revenues”) and expenses used in the determination of ANI do not give effect to the consolidation of the funds that we manage. Segment revenues include investment income (loss) that is classified in other income (loss) in the GAAP-basis statements of operations. Segment revenues and expenses also reflect Oaktree's proportionate economic interest in Highstar, whereby amounts received for contractually reimbursable costs are included with segment expenses, as compared to being recorded as other income under GAAP. In addition, ANI excludes the effect of (a) non-cash equity-based compensation charges related to unit grants made before our initial public offering, (b) acquisition-related items including amortization of intangibles and changes in the contingent consideration liability, (c) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes, (d) income taxes, (e) other income or expenses applicable to OCG or its Intermediate Holding Companies and (f) the adjustment for non-controlling interests. Incentive income and incentive income compensation expense are included in ANI when the underlying fund distributions are known or knowable as of the respective quarter end, which may be later than the time at which the same revenue or expense is included in the GAAP-basis statements of operations, for which the revenue standard is fixed or determinable and the expense standard is probable and reasonably estimable. ANI is calculated at the Operating Group level.

Adjusted net income–OCG, or adjusted net income per Class A unit, a non-GAAP measure, is calculated to provide Class A unitholders with a measure that shows the portion of ANI attributable to their ownership. Adjusted net income-OCG represents ANI including the effect of (a) the OCGH non-controlling interest, (b) other income or expenses, such as income tax expense, applicable to OCG or its Intermediate Holding Companies and (c) any Operating Group income taxes attributable to OCG. Two of our Intermediate Holding Companies incur federal and state income taxes for their shares of Operating Group income. Generally, those two corporate entities hold an interest in the Operating Group’s management fee-generating assets and a small portion of its incentive and investment income-generating assets. As a result, historically our fee-related earnings generally have been subject to corporate-level taxation, and most of our incentive income and investment income generally has not been subject to corporate-level taxation. Thus, the blended effective income tax rate has generally tended to be higher to the extent that fee-related earnings represented a larger proportion of our ANI. Myriad other factors affect income tax expense and the effective income tax rate, and there can be no assurance that this historical relationship will continue going forward.

Assets under management (“AUM”) generally refers to the assets we manage and equals the NAV of the assets we manage, the fund-level leverage on which management fees are charged, the undrawn capital that we are entitled to call from investors in our funds pursuant to their capital commitments and the aggregate par value of collateral assets and principal cash held by our CLOs.

• Management fee-generating assets under management (“management fee-generating AUM”) is a forward-looking metric and reflects the AUM on which we will earn management fees in the following quarter. Our closed-end funds typically pay management fees based on committed capital or drawn capital during the investment period, without regard to changes in NAV, and during the liquidation period on the lesser of (a) total funded capital or (b) the cost basis of assets remaining in the fund. The annual management fee rate remains unchanged from the investment period through the liquidation period. Our open-end and evergreen funds typically pay management fees based on their NAV, and our CLOs pay management fees based on the aggregate par value of collateral assets and principal cash held by them, as defined in the applicable CLO indentures. As compared with AUM, management fee-generating AUM generally excludes the following:
  • Differences between AUM and either committed capital or cost basis for most closed-end funds, other than for closed-end funds that pay management fees based on NAV and leverage, as applicable;
  • Undrawn capital commitments to closed-end funds that have not yet commenced their investment periods;
  • Undrawn capital commitments to funds for which management fees are based on drawn capital or NAV;
  • The investments we make in our funds as general partner;
  • Closed-end funds that are beyond the term during which they pay management fees and co-investments that pay no management fees; and
  • AUM in restructured and liquidating evergreen funds for which management fees were waived.

• Incentive-creating assets under management (“incentive-creating AUM”) refers to the AUM that may eventually produce incentive income. It represents the NAV of our funds for which we are entitled to receive an incentive allocation, excluding CLOs and investments made by us and our employees and directors (which are not subject to an incentive allocation). All funds for which we are entitled to receive an incentive allocation are included in incentive-creating AUM, regardless of whether or not they are currently generating incentives. Incentive-creating AUM does not include undrawn capital commitments.

Consolidated funds refers to the funds and CLOs that Oaktree consolidates through a majority voting interest or otherwise, including those funds in which Oaktree as the general partner is presumed to have control.

Distributable earnings is a non-GAAP performance measure derived from our segment results that we use to measure our earnings at the Operating Group level without the effects of the consolidated funds for the purpose of, among other things, assisting in the determination of equity distributions from the Operating Group. However, the declaration, payment and determination of the amount of equity distributions, if any, is at the sole discretion of our board of directors, which may change our distribution policy at any time.

Distributable earnings and distributable earnings revenues differ from ANI in that they exclude segment investment income or loss and include the receipt of investment income or loss from distributions by our investments in funds and companies. In addition, distributable earnings differs from ANI in that it is net of Operating Group income taxes and excludes non-cash equity-based compensation charges related to unit grants made after our initial public offering in 2012.

Distributable earnings–OCG, or distributable earnings per Class A unit, a non-GAAP measure, is calculated to provide Class A unitholders with a measure that shows the portion of distributable earnings attributable to their ownership. Distributable earnings-OCG represents distributable earnings including the effect of (a) the OCGH non-controlling interest, (b) expenses, such as current income tax expense, applicable to OCG or its Intermediate Holding Companies and (c) amounts payable under a tax receivable agreement. The income tax expense included in distributable earnings-OCG represents the implied current provision for income taxes calculated using an approach similar to that which is used in calculating the income tax provision for adjusted net income-OCG.

Economic net income (“ENI”) is a non-GAAP measure that we use to evaluate the financial performance of our segment by applying the “Method 2,” instead of the “Method 1,” revenue recognition approach to accounting for incentive income. ANI follows Method 1, except incentive income is recognized when the underlying fund distributions are known or knowable as of the respective quarter end, as opposed to the fixed or determinable standard of Method 1. The Method 2 approach followed by ENI recognizes incentive income as if the funds were liquidated at their reported values as of the date of the financial statements. ENI is computed by adjusting ANI for the change in accrued incentives (fund level), net of associated incentive income compensation expense, during the period.

Economic net income revenues is a non-GAAP measure applying the Method 2, instead of the Method 1, approach to accounting for segment incentive income, and reflects the adjustments described above and under the definition of ANI.

Economic net income–OCG, or economic net income per Class A unit, a non-GAAP measure, is calculated to provide Class A unitholders with a measure that shows the portion of ENI attributable to their ownership. Economic net income-OCG represents ENI, including the effect of (a) the OCGH non-controlling interest, (b) other income or expenses, such as income tax expense, applicable to OCG or its Intermediate Holding Companies and (c) any Operating Group income taxes attributable to OCG. The income tax expense included in economic net income-OCG represents the implied provision for income taxes calculated using an approach similar to that which is used in calculating the income tax provision for adjusted net income-OCG.

Equity value units (“EVUs”) represent special limited partnership units in Oaktree Capital Group Holdings, L.P. (“OCGH”) that entitle the holder the right to receive a one-time special distribution that will be settled in OCGH units, based on value created during a specified period (“Term”) in excess of a fixed “Base Value.” The value created will be measured on a per unit basis, based on Class A unit trading prices and certain components of quarterly distributions with respect to the period during the Term. EVUs also give the holder the right, subject to service vesting and Oaktree performance relative to the accreting Base Value, to receive certain quarterly distributions from OCGH. EVUs do not entitle the holder to any voting rights.

Fee-related earnings (“FRE”) is a non-GAAP measure that we use to monitor the baseline earnings of our business. FRE is comprised of segment management fees (“fee-related earnings revenues”) less segment operating expenses other than incentive income compensation expense and non-cash equity-based compensation charges related to unit grants made after our initial public offering. FRE is considered baseline because it applies all cash compensation and benefits other than incentive income compensation expense, as well as all general and administrative expenses, to management fees, even though a significant portion of those expenses is attributable to incentive and investment income. FRE is presented before income taxes.

Fee-related earnings–OCG, or fee-related earnings per Class A unit, is a non-GAAP measure calculated to provide Class A unitholders with a measure that shows the portion of FRE attributable to their ownership. Fee-related earnings–OCG represents FRE including the effect of (a) the OCGH non-controlling interest, (b) other income or expenses, such as income tax expense, applicable to OCG or its Intermediate Holding Companies and (c) any Operating Group income taxes attributable to OCG. Fee-related earnings–OCG income taxes is calculated excluding any segment incentive income or investment income (loss).

Intermediate Holding Companies collectively refers to the subsidiaries wholly owned by us.

Net asset value (“NAV”) refers to the value of all the assets of a fund (including cash and accrued interest and dividends) less all liabilities of the fund (including accrued expenses and any reserves established by us, in our discretion, for contingent liabilities) without reduction for accrued incentives (fund level) because they are reflected in the partners’ capital of the fund.

Oaktree, OCG, we, us, our or the Company refers to Oaktree Capital Group, LLC and, where applicable, its subsidiaries and affiliates.

Oaktree Operating Group (“Operating Group”) refers collectively to the entities that control the general partners and investment advisors of our funds in which we have a minority economic interest and indirect control.

Relevant Benchmark refers, with respect to:

• our U.S. High Yield Bond strategy, to the Citigroup U.S. High Yield Cash-Pay Capped Index;
• our Global High Yield Bond strategy, to an Oaktree custom global high yield index that represents 60% BofA Merrill Lynch High Yield Master II Constrained Index and 40% BofA Merrill Lynch Global Non-Financial High Yield European Issuers 3% Constrained, ex-Russia Index – USD Hedged from inception through December 31, 2012, and the BofA Merrill Lynch Non-Financial Developed Markets High Yield Constrained Index – USD Hedged thereafter;
• our European High Yield Bond strategy, to the BofA Merrill Lynch Global Non-Financial High Yield European Issuers excluding Russia 3% Constrained Index (USD Hedged);
• our U.S. Senior Loan strategy (with the exception of the closed-end funds), to the Credit Suisse Leveraged Loan Index;
• our European Senior Loan strategy, to the Credit Suisse Western European Leveraged Loan Index (EUR Hedged);
• our U.S. Convertible Securities strategy, to an Oaktree custom convertible index that represents the Credit Suisse Convertible Securities Index from inception through December 31, 1999, the Goldman Sachs/Bloomberg Convertible 100 Index from January 1, 2000 through June 30, 2004 and the BofA Merrill Lynch All U.S. Convertibles Index thereafter;
• our non-U.S. Convertible Securities strategy, to an Oaktree custom non-U.S. convertible index that represents the JACI Global ex-U.S. (Local) Index from inception through December 31, 2014 and the Thomson Reuters Global Focus ex-U.S. (USD hedged) Index thereafter;
• our High Income Convertible Securities strategy, to the Citigroup U.S. High Yield Market Index; and
• our Emerging Markets Equities strategy, to the Morgan Stanley Capital International Emerging Markets Index (Net).

Sharpe Ratio refers to a metric used to calculate risk-adjusted return. The Sharpe Ratio is the ratio of excess return to volatility, with excess return defined as the return above that of a riskless asset (based on the three-month U.S. Treasury bill, or for our European senior loan strategy, the Euro Overnight Index Average) divided by the standard deviation of such return. A higher Sharpe Ratio indicates a return that is higher than would be expected for the level of risk compared to the risk-free rate.

EXHIBIT A

Use of Non-GAAP Financial Information

Oaktree discloses certain non-GAAP financial measures in this earnings release. Reconciliations of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are presented below. Management makes operating decisions and assesses the performance of Oaktree’s business based on these non-GAAP financial measures. These non-GAAP financial measures should be considered in addition to and not as a substitute for, or superior to, financial measures presented in accordance with GAAP.

Reconciliation of Segment Results to GAAP Net Income

The following table reconciles fee-related earnings and adjusted net income to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Fee-related earnings (1)		$	53,720			$	63,535			$	109,675			$	121,258
Incentive income		61,148				59,198				214,027				352,074
Incentive income compensation		(29,554		)		(30,147		)		(119,656		)		(167,975		)
Investment income		23,365				54,199				76,823				100,679
Equity-based compensation (2)		(11,901		)		(5,111		)		(18,924		)		(9,094		)
Interest expense, net of interest income		(8,782		)		(6,934		)		(17,715		)		(13,559		)
Other income (expense), net		(2,650		)		9				(3,546		)		(1,689		)
Adjusted net income		85,346				134,749				240,684				381,694
Incentive income (3)		5,805				6,102				(11,573		)		(58,358		)
Incentive income compensation (3)		(5,657		)		(6,112		)		17,553				40,222
Equity-based compensation (4)		(4,182		)		(5,376		)		(8,865		)		(10,575		)
Acquisition-related items (5)		(1,695		)		—				(3,502		)		—
Income taxes (6)		(5,485		)		(5,761		)		(13,360		)		(13,747		)
Non-Operating Group expenses (7)		(626		)		(603		)		(960		)		(885		)
Non-controlling interests (7)		(53,692		)		(91,813		)		(161,910		)		(255,371		)
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		Fee-related earnings is a component of adjusted net income and is comprised of segment management fees less segment operating expenses other than incentive income compensation expense and non-cash equity-based compensation charges related to unit grants made after our initial public offering.
(2)		This adjustment adds back the effect of equity-based compensation charges related to unit grants made after our initial public offering, which is excluded from fee-related earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions.
(3)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense between adjusted net income and net income attributable to OCG.
(4)		This adjustment adds back the effect of (a) equity-based compensation charges related to unit grants made before our initial public offering, which is excluded from adjusted net income and fee-related earnings because it is a non-cash charge that does not affect our financial position, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(5)		This adjustment adds back the effect of acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability.
(6)		Because adjusted net income and fee-related earnings are pre-tax measures, this adjustment adds back the effect of income tax expense.
(7)		Because adjusted net income and fee-related earnings are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or non-controlling interests.

The following table reconciles fee-related earnings-OCG and adjusted net income-OCG to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Fee-related earnings-OCG (1)		$	16,451			$	14,601			$	31,007			$	27,524
Incentive income attributable to OCG		19,227				16,856				64,185				93,215
Incentive income compensation attributable to OCG		(9,292		)		(8,584		)		(35,789		)		(44,519		)
Investment income attributable to OCG		7,346				15,433				23,067				27,551
Equity-based compensation attributable to OCG (2)		(3,742		)		(1,455		)		(5,807		)		(2,494		)
Interest expense, net of interest income attributable to OCG		(2,735		)		(1,975		)		(5,361		)		(3,701		)
Other income (expense) attributable to OCG		(833		)		3				(1,097		)		(440		)
Non-fee-related earnings income taxes attributable to OCG (3)		(4,979		)		(2,160		)		(10,477		)		(6,542		)
Adjusted net income-OCG (1)		21,443				32,719				59,728				90,594
Incentive income attributable to OCG (4)		1,825				1,738				(3,285		)		(15,068		)
Incentive income compensation attributable to OCG (4)		(1,778		)		(1,740		)		5,047				10,340
Equity-based compensation attributable to OCG (5)		(1,315		)		(1,531		)		(2,692		)		(2,886		)
Acquisition-related items attributable to OCG (6)		(533		)		—				(1,064		)		—
Non-controlling interests attributable to OCG (6)		172				—				333				—
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		Fee-related earnings-OCG and adjusted net income-OCG are calculated to evaluate the portion of adjusted net income and fee-related earnings attributable to Class A unitholders. These measures are net of income taxes and other income or expenses applicable to OCG or its Intermediate Holding Companies.
(2)		This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made after our initial public offering, which is excluded from fee-related earnings-OCG because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions.
(3)		This adjustment adds back income taxes associated with segment incentive income, incentive income compensation expense or investment income or loss, which are not included in the calculation of fee-related earnings-OCG.
(4)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense attributable to OCG between adjusted net income-OCG and net income attributable to OCG.
(5)		This adjustment adds back the effect of (a) equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income-OCG and fee-related earnings-OCG because it is a non-cash charge that does not affect our financial position, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(6)		This adjustment adds back the effect of (a) acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability and (b) non-controlling interests.

The following table reconciles fee-related earnings revenues and segment revenues to GAAP revenues.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Fee-related earnings revenues		$	185,558			$	189,119			$	373,608			$	377,519
Incentive income		61,148				59,198				214,027				352,074
Investment income		23,365				54,199				76,823				100,679
Segment revenues		270,071				302,516				664,458				830,272
Consolidated funds (1)		(202,890		)		(246,566		)		(533,776		)		(728,900		)
Investment income (2)		(15,694		)		(4,390		)		(28,376		)		(9,381		)
GAAP revenues		$	51,487			$	51,560			$	102,306			$	91,991

(1)		This adjustment reflects the elimination of amounts attributable to the consolidated funds.
(2)		This adjustment reclassifies consolidated investment income from revenues to other income (loss).

The following table reconciles distributable earnings and adjusted net income to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Distributable earnings		$	111,207			$	116,173			$	251,715			$	349,314
Investment income (1)		23,365				54,199				76,823				100,679
Receipts of investment income from funds (2)		(30,197		)		(22,911		)		(54,158		)		(44,569		)
Receipts of investment income from companies		(8,175		)		(8,601		)		(16,971		)		(18,016		)
Equity-based compensation (3)		(11,901		)		(5,111		)		(18,924		)		(9,094		)
Operating Group income taxes		1,047				1,000				2,199				3,380
Adjusted net income		85,346				134,749				240,684				381,694
Incentive income (4)		5,805				6,102				(11,573		)		(58,358		)
Incentive income compensation (4)		(5,657		)		(6,112		)		17,553				40,222
Equity-based compensation (5)		(4,182		)		(5,376		)		(8,865		)		(10,575		)
Acquisition-related items (6)		(1,695		)		—				(3,502		)		—
Income taxes (7)		(5,485		)		(5,761		)		(13,360		)		(13,747		)
Non-Operating Group expenses (8)		(626		)		(603		)		(960		)		(885		)
Non-controlling interests (8)		(53,692		)		(91,813		)		(161,910		)		(255,371		)
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		This adjustment adds back segment investment income, which with respect to investments in funds is initially largely non-cash in nature and is thus not available to fund our operations or make equity distributions.
(2)		This adjustment eliminates the portion of distributions received from funds characterized as receipts of investment income or loss. In general, the income or loss component of a distribution from a fund is calculated by multiplying the amount of the distribution by the ratio of our investment’s undistributed income or loss to our remaining investment balance. In addition, if the distribution is made during the investment period, it is generally not reflected in distributable earnings until after the investment period ends.
(3)		This adjustment adds back the effect of equity-based compensation charges related to unit grants made after our initial public offering, which is excluded from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions.
(4)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense between adjusted net income and net income attributable to OCG.
(5)		This adjustment adds back the effect of (a) equity-based compensation charges related to unit grants made before our initial public offering, which is excluded from adjusted net income because it does not affect our financial position and from distributable earnings because it is non-cash in nature and does not impact our ability to fund operations or make equity distributions, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(6)		This adjustment adds back the effect of acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability.
(7)		Because adjusted net income and distributable earnings are pre-tax measures, this adjustment adds back the effect of income tax expense.
(8)		Because adjusted net income and distributable earnings are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or non-controlling interests.

The following table reconciles distributable earnings-OCG and adjusted net income-OCG to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Distributable earnings-OCG (1)		$	28,656			$	27,782			$	64,951			$	83,594
Investment income attributable to OCG		7,346				15,433				23,067				27,551
Receipts of investment income from funds attributable to OCG		(9,495		)		(6,524		)		(16,541		)		(12,171		)
Receipts of investment income from companies attributable to OCG		(2,570		)		(2,449		)		(5,157		)		(4,904		)
Equity-based compensation attributable to OCG (2)		(3,742		)		(1,455		)		(5,807		)		(2,494		)
Distributable earnings-OCG income taxes		806				739				1,086				1,478
Tax receivable agreement		4,880				3,954				9,290				7,907
Income taxes of Intermediate Holding Companies		(4,438		)		(4,761		)		(11,161		)		(10,367		)
Adjusted net income-OCG (1)		21,443				32,719				59,728				90,594
Incentive income attributable to OCG (3)		1,825				1,738				(3,285		)		(15,068		)
Incentive income compensation attributable to OCG (3)		(1,778		)		(1,740		)		5,047				10,340
Equity-based compensation attributable to OCG (4)		(1,315		)		(1,531		)		(2,692		)		(2,886		)
Acquisition-related items attributable to OCG (5)		(533		)		—				(1,064		)		—
Non-controlling interests attributable to OCG (5)		172				—				333				—
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		Distributable earnings-OCG and adjusted net income-OCG are calculated to evaluate the portion of adjusted net income and distributable earnings attributable to Class A unitholders. These measures are net of income taxes and expenses applicable to OCG or its Intermediate Holding Companies. A reconciliation of distributable earnings to distributable earnings-OCG is presented below.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data)
Distributable earnings		$	111,207			$	116,173			$	251,715			$	349,314
Distributable earnings attributable to OCGH non-controlling interest		(76,239		)		(83,095		)		(175,428		)		(255,450		)
Non-Operating Group expenses		(626		)		(603		)		(960		)		(885		)
Distributable earnings-OCG income taxes		(806		)		(739		)		(1,086		)		(1,478		)
Tax receivable agreement		(4,880		)		(3,954		)		(9,290		)		(7,907		)
Distributable earnings-OCG		$	28,656			$	27,782			$	64,951			$	83,594
Distributable earnings-OCG per Class A unit		$	0.59			$	0.64			$	1.39			$	2.01

(2)		This adjustment adds back the effect of equity-based compensation charges attributable to OCG related to unit grants made after our initial public offering, which is excluded from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions.
(3)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense attributable to OCG between adjusted net income-OCG and net income attributable to OCG.
(4)		This adjustment adds back the effect of (a) equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income because it does not affect our financial position and from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(5)		This adjustment adds back the effect of (a) acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability and (b) non-controlling interests.

The following table reconciles distributable earnings revenues and segment revenues to GAAP revenues.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Distributable earnings revenues		$	285,078			$	279,829			$	658,764			$	792,178
Investment income		23,365				54,199				76,823				100,679
Receipts of investment income from funds		(30,197		)		(22,911		)		(54,158		)		(44,569		)
Receipts of investment income from companies		(8,175		)		(8,601		)		(16,971		)		(18,016		)
Segment revenues		270,071				302,516				664,458				830,272
Consolidated funds (1)		(202,890		)		(246,566		)		(533,776		)		(728,900		)
Investment income (2)		(15,694		)		(4,390		)		(28,376		)		(9,381		)
GAAP revenues		$	51,487			$	51,560			$	102,306			$	91,991

(1)		This adjustment reflects the elimination of amounts attributable to the consolidated funds.
(2)		This adjustment reclassifies consolidated investment income from revenues to other income (loss).

The following table reconciles economic net income and adjusted net income to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Economic net income (1)		$	17,686			$	211,146			$	246,546			$	438,388
Change in accrued incentives (fund level), net of associated incentive income compensation (2).		67,660				(76,397		)		(5,862		)		(56,694		)
Adjusted net income		85,346				134,749				240,684				381,694
Incentive income (3)		5,805				6,102				(11,573		)		(58,358		)
Incentive income compensation (3)		(5,657		)		(6,112		)		17,553				40,222
Equity-based compensation (4)		(4,182		)		(5,376		)		(8,865		)		(10,575		)
Acquisition-related items (5)		(1,695		)		—				(3,502		)		—
Income taxes (6)		(5,485		)		(5,761		)		(13,360		)		(13,747		)
Non-Operating Group expenses (7)		(626		)		(603		)		(960		)		(885		)
Non-controlling interests (7)		(53,692		)		(91,813		)		(161,910		)		(255,371		)
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		Please see Glossary for the definition of economic net income.
(2)		The change in accrued incentives (fund level), net of associated incentive income compensation expense, represents the difference between (a) our recognition of net incentive income and (b) the incentive income generated by the funds during the period that would be due to us if the funds were liquidated at their reported values as of that date, net of associated incentive income compensation expense.
(3)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense between adjusted net income and net income attributable to OCG.
(4)		This adjustment adds back the effect of (a) equity-based compensation charges related to unit grants made before our initial public offering, which is excluded from adjusted net income and economic net income because it is a non-cash charge that does not affect our financial position, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(5)		This adjustment adds back the effect of acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability.
(6)		Because adjusted net income and economic net income are pre-tax measures, this adjustment adds back the effect of income tax expense.
(7)		Because adjusted net income and economic net income are calculated at the Operating Group level, this adjustment adds back the effect of items applicable to OCG, its Intermediate Holding Companies or non-controlling interests.

The following table reconciles economic net income-OCG and adjusted net income-OCG to net income attributable to Oaktree Capital Group, LLC.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Economic net income (loss)-OCG (1)		$	(957	)		$	50,674			$	56,522			$	103,896
Change in accrued incentives (fund level), net of associated incentive income compensation attributable to OCG		21,274				(21,753		)		(348		)		(16,616		)
Economic net income (loss)-OCG income taxes		5,893				8,843				15,383				14,586
Income taxes-OCG		(4,767		)		(5,045		)		(11,829		)		(11,272		)
Adjusted net income-OCG (1)		21,443				32,719				59,728				90,594
Incentive income attributable to OCG (2)		1,825				1,738				(3,285		)		(15,068		)
Incentive income compensation attributable to OCG (2)		(1,778		)		(1,740		)		5,047				10,340
Equity-based compensation attributable to OCG (3)		(1,315		)		(1,531		)		(2,692		)		(2,886		)
Acquisition-related items attributable to OCG (4)		(533		)		—				(1,064		)		—
Non-controlling interests attributable to OCG (4)		172				—				333				—
Net income attributable to Oaktree Capital Group, LLC		$	19,814			$	31,186			$	58,067			$	82,980

(1)		Economic net income-OCG and adjusted net income-OCG are calculated to evaluate the portion of adjusted net income and economic net income attributable to Class A unitholders. These measures are net of income taxes and other income or expenses applicable to OCG or its Intermediate Holding Companies. A reconciliation of economic net income to economic net income-OCG is presented below.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands, except per unit data)
Economic net income		$	17,686			$	211,146			$	246,546			$	438,388
Economic net income attributable to OCGH non-controlling interest		(12,124		)		(151,026		)		(173,681		)		(319,021		)
Non-Operating Group expenses		(626		)		(603		)		(960		)		(885		)
Economic net income (loss)-OCG income taxes		(5,893		)		(8,843		)		(15,383		)		(14,586		)
Economic net income (loss)-OCG		$	(957	)		$	50,674			$	56,522			$	103,896
Economic net income (loss) per Class A unit		$	(0.02	)		$	1.17			$	1.21			$	2.50

(2)		This adjustment adds back the effect of timing differences associated with the recognition of incentive income and incentive income compensation expense attributable to OCG between adjusted net income-OCG and net income attributable to OCG.
(3)		This adjustment adds back the effect of (a) equity-based compensation charges attributable to OCG related to unit grants made before our initial public offering, which is excluded from adjusted net income because it does not affect our financial position and from distributable earnings because it is non-cash in nature and does not impact our ability to fund our operations or make equity distributions, and (b) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes.
(4)		This adjustment adds back the effect of (a) acquisition-related items associated with the amortization of intangibles and changes in the contingent consideration liability and (b) non-controlling interests.

The following table reconciles economic net income revenues and segment revenues to GAAP revenues.

		Three Months Ended June 30,								Six Months Ended June 30,
		2015				2014				2015				2014
		(in thousands)
Economic net income revenues		$	144,868			$	447,594			$	651,838			$	1,034,848
Incentives created		64,055				(204,276		)		(201,407		)		(556,650		)
Incentive income		61,148				59,198				214,027				352,074
Segment revenues		270,071				302,516				664,458				830,272
Consolidated funds (1)		(202,890		)		(246,566		)		(533,776		)		(728,900		)
Investment income (2)		(15,694		)		(4,390		)		(28,376		)		(9,381		)
GAAP revenues		$	51,487			$	51,560			$	102,306			$	91,991

(1)		This adjustment reflects the elimination of amounts attributable to the consolidated funds.
(2)		This adjustment reclassifies consolidated investment income from revenues to other income (loss).

The following tables reconcile segment information to consolidated financial data:

		As of or for the Three Months Ended June 30, 2015
		Segment				Adjustments				Consolidated
		(in thousands)
Management fees (1)		$	185,558			$	(134,635	)		$	50,923
Incentive income (1)		61,148				(60,584		)		564
Investment income (1)		23,365				(7,671		)		15,694
Total expenses (2)		(173,293		)		(72,636		)		(245,929		)
Interest expense, net (3)		(8,782		)		(43,960		)		(52,742		)
Other income (expense), net (4)		(2,650		)		5,513				2,863
Other income of consolidated funds (5)		—				(82,526		)		(82,526		)
Income taxes		—				(5,485		)		(5,485		)
Net loss attributable to non-controlling interests in consolidated funds		—				391,961				391,961
Net income attributable to non-controlling interests in consolidated subsidiaries		—				(55,509		)		(55,509		)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC		$	85,346			$	(65,532	)		$	19,814
Corporate investments (6)		$	1,560,235			$	(1,383,557	)		$	176,678
Total assets (7)		$	3,249,492			$	51,962,327			$	55,211,819

(1)		The adjustment represents the elimination of amounts earned from the consolidated funds.
(2)		The expense adjustment consists of (a) equity-based compensation charges of $4,010 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $54,920, (c) expenses incurred by the Intermediate Holding Companies of $652, (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $5,657, (e) acquisition-related items of $1,695, (f) adjustments related to amounts received for contractually reimbursable costs that are included with segment expenses, as compared to being recorded as other income under GAAP of $5,513, (g) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes of $173 and (h) other expenses of $16.
(3)		The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income.
(4)		The adjustment to other income (expense), net represents adjustments related to amounts received for contractually reimbursable costs that are included with segment expenses, as compared to being recorded as other income under GAAP.
(5)		The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds.
(6)		The adjustment to corporate investments is to remove from segment assets our investments in the consolidated funds, including investments in our CLOs, that are treated as equity- or cost-method investments for segment reporting. Of the $1.6 billion, equity-method investments accounted for $1.3 billion.
(7)		The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable.

		As of or for the Three Months Ended June 30, 2014
		Segment				Adjustments				Consolidated
		(in thousands)
Management fees (1)		$	189,119			$	(137,559	)		$	51,560
Incentive income (1)		59,198				(59,198		)		—
Investment income (1)		54,199				(49,809		)		4,390
Total expenses (2)		(160,842		)		(54,543		)		(215,385		)
Interest expense, net (3)		(6,934		)		(18,765		)		(25,699		)
Other income, net		9				—				9
Other income of consolidated funds (4)		—				1,498,129				1,498,129
Income taxes		—				(5,761		)		(5,761		)
Net income attributable to non-controlling interests in consolidated funds		—				(1,184,244		)		(1,184,244		)
Net income attributable to non-controlling interests in consolidated subsidiaries		—				(91,813		)		(91,813		)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC		$	134,749			$	(103,563	)		$	31,186
Corporate investments (5)		$	1,468,517			$	(1,300,354	)		$	168,163
Total assets (6)		$	2,909,825			$	48,340,012			$	51,249,837

(1)		The adjustment represents the elimination of amounts earned from the consolidated funds.
(2)		The expense adjustment consists of (a) equity-based compensation charges of $5,376 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $42,452, (c) expenses incurred by the Intermediate Holding Companies of $603 and (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $6,112.
(3)		The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income.
(4)		The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds.
(5)		The adjustment to corporate investments is to remove from segment assets our investments in the consolidated funds, including investments in our CLOs, that are treated as equity- or cost-method investments for segment reporting. Of the $1.5 billion, equity-method investments accounted for $1.3 billion.
(6)		The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable.

		As of or for the Six Months Ended June 30, 2015
		Segment				Adjustments				Consolidated
		(in thousands)
Management fees (1)		$	373,608			$	(271,866	)		$	101,742
Incentive income (1)		214,027				(213,463		)		564
Investment income (1)		76,823				(48,447		)		28,376
Total expenses (2)		(402,513		)		(79,390		)		(481,903		)
Interest expense, net (3)		(17,715		)		(81,596		)		(99,311		)
Other income (expense), net (4)		(3,546		)		11,103				7,557
Other income of consolidated funds (5)		—				1,422,716				1,422,716
Income taxes		—				(13,360		)		(13,360		)
Net income attributable to non-controlling interests in consolidated funds		—				(744,704		)		(744,704		)
Net income attributable to non-controlling interests in consolidated subsidiaries		—				(163,610		)		(163,610		)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC		$	240,684			$	(182,617	)		$	58,067
Corporate investments (6)		$	1,560,235			$	(1,383,557	)		$	176,678
Total assets (7)		$	3,249,492			$	51,962,327			$	55,211,819

(1)		The adjustment represents the elimination of amounts earned from the consolidated funds.
(2)		The expense adjustment consists of (a) equity-based compensation charges of $8,605 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $72,430, (c) expenses incurred by the Intermediate Holding Companies of $987, (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $17,553, (e) acquisition-related items of $3,502, (f) adjustments related to amounts received for contractually reimbursable costs that are included with segment expenses, as compared to being recorded as other income under GAAP of $11,103, (g) differences arising from EVUs that are classified as liability awards under GAAP, but classified as equity awards for segment reporting purposes of $261 and (h) other expenses of $55.
(3)		The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income.
(4)		The adjustment to other income (expense), net represents adjustments related to amounts received for contractually reimbursable costs that are included with segment expenses, as compared to being recorded as other income under GAAP.
(5)		The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds.
(6)		The adjustment to corporate investments is to remove from segment assets our investments in the consolidated funds, including investments in our CLOs, that are treated as equity- or cost-method investments for segment reporting. Of the $1.6 billion, equity-method investments accounted for $1.3 billion.
(7)		The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable.

		As of or for the Six Months Ended June 30, 2014
		Segment				Adjustments				Consolidated
		(in thousands)
Management fees (1)		$	377,519			$	(285,528	)		$	91,991
Incentive income (1)		352,074				(352,074		)		—
Investment income (1)		100,679				(91,298		)		9,381
Total expenses (2)		(433,330		)		(40,374		)		(473,704		)
Interest expense, net (3)		(13,559		)		(36,140		)		(49,699		)
Other income, net		(1,689		)		—				(1,689		)
Other income of consolidated funds (4)		—				3,284,894				3,284,894
Income taxes		—				(13,747		)		(13,747		)
Net income attributable to non-controlling interests in consolidated funds		—				(2,509,076		)		(2,509,076		)
Net income attributable to non-controlling interests in consolidated subsidiaries		—				(255,371		)		(255,371		)
Adjusted net income/net income attributable to Oaktree Capital Group, LLC		$	381,694			$	(298,714	)		$	82,980
Corporate investments (5)		$	1,468,517			$	(1,300,354	)		$	168,163
Total assets (6)		$	2,909,825			$	48,340,012			$	51,249,837

(1)		The adjustment represents the elimination of amounts earned from the consolidated funds.
(2)		The expense adjustment consists of (a) equity-based compensation charges of $10,575 related to unit grants made before our initial public offering, (b) consolidated fund expenses of $69,136, (c) expenses incurred by the Intermediate Holding Companies of $885 and (d) the effect of timing differences in the recognition of incentive income compensation expense between adjusted net income and net income attributable to OCG of $40,222.
(3)		The interest expense adjustment represents the inclusion of interest expense attributable to non-controlling interests of the consolidated funds and the exclusion of segment interest income.
(4)		The adjustment to other income of consolidated funds primarily represents the inclusion of interest, dividend and other investment income attributable to non-controlling interests of the consolidated funds.
(5)		The adjustment to corporate investments is to remove from segment assets our investments in the consolidated funds, including investments in our CLOs, that are treated as equity- or cost-method investments for segment reporting. Of the $1.5 billion, equity-method investments accounted for $1.3 billion.
(6)		The total assets adjustment represents the inclusion of investments and other assets of the consolidated funds, net of segment assets eliminated in consolidation, which are primarily corporate investments in funds and incentive income receivable.

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