SOURCE: Och-Ziff Capital Management Group LLC

Och-Ziff Capital Management Group LLC

August 04, 2015 07:30 ET

Och-Ziff Capital Management Group LLC Reports 2015 Second Quarter Results

2015 Second Quarter Dividend of $0.14 per Class A Share

NEW YORK, NY--(Marketwired - August 04, 2015) - Och-Ziff Capital Management Group LLC (NYSE: OZM) (the "Company" or "Och-Ziff") today reported GAAP net income allocated to Class A Shareholders ("GAAP Net Income") of $4.8 million, or $0.03 per basic and diluted Class A Share, for the second quarter ended June 30, 2015. The Company also declared a $0.14 per share cash dividend on its Class A Shares for the 2015 second quarter.

Summary Highlights

  • Distributable Earnings of $95.2 million, or $0.18 per Adjusted Class A Share, for the 2015 second quarter, 5% higher than $90.4 million, or $0.18 per Adjusted Class A Share, for the 2014 second quarter.
  • Assets under management totaled $48.0 billion as of June 30, 2015, increasing 5% year-over-year.
    • Longer-dated assets under management, which are those subject to initial commitment periods of three years or longer, were $16.5 billion, or 34% of the Company's total assets under management as of June 30, 2015, increasing 12% year-over-year.
    • Assets under management in the Company's dedicated credit, real estate and other single-strategy funds were $15.0 billion, comprising 31% of assets under management as of June 30, 2015, increasing 26% year-over-year.
    • Estimated assets under management totaled $46.5 billion as of August 1, 2015.
  • Assets under management in the Company's multi-strategy products totaled $33.0 billion as of June 30, 2015, decreasing 3% year-over-year.
    • Assets under management for the OZ Master Fund, the Company's global multi-strategy fund, were $27.0 billion as of June 30, 2015, essentially unchanged from June 30, 2014.
      • The fund generated a net return of 4.1% through June 30, 2015, and an annualized net return since inception of 12.7%(1). For July 2015, the fund's estimated net return was 0.7%.
      • The year-to-date net return reflects strong performance of the fund's long/short equity special situations strategies globally.
  • Assets under management in the Company's dedicated credit products totaled $11.7 billion as of June 30, 2015, increasing 29% year-over-year.
    • Assets under management in the Company's opportunistic credit funds were $5.1 billion as of June 30, 2015, increasing 2% year-over-year.
    • OZ Credit Opportunities Master Fund, the Company's global opportunistic credit fund, generated a net return of 1.1% through June 30, 2015, and an annualized net return since inception of 15.7%. Assets under management for the fund were $1.6 billion as of June 30, 2015, increasing 59% year-over-year.
    • Assets under management in Institutional Credit Strategies ("ICS"), the Company's asset management platform that invests in performing credits, were $6.6 billion as of June 30, 2015, increasing 63% year-over-year.
  • Assets under management in the Company's real estate funds totaled $2.0 billion as of June 30, 2015, increasing 9% year-over-year.
    • Since inception, Och-Ziff Real Estate Fund II, which finished its investment period in 2014, generated a net IRR of 22.9% through June 30, 2015 and a gross multiple of invested capital of 1.7x.

"During the second quarter, our funds performed well, capping a strong first half," said Daniel S. Och, Chairman and Chief Executive Officer of Och-Ziff. "We are extremely pleased with our fund performance across all asset classes this year.

"We believe we have built a significant competitive advantage in each of our strategies, which in turn has enabled us to diversify our business and build scale in these areas in a short period of time. We believe that institutional investors are migrating to alternative managers who have not only demonstrated consistent performance, but who can also offer products and investment expertise in a range of asset classes. This select group of managers, of which we believe we are one, has the size, scale and brand that enable them to identify and capitalize on emerging opportunities globally."

(1)Please see Exhibit 7 that accompanies this press release for additional information regarding the returns of the OZ Master Fund.

GAAP NET INCOME ALLOCATED TO CLASS A SHAREHOLDERS

For the 2015 second quarter, Och-Ziff reported GAAP Net Income of $4.8 million, or $0.03 per basic and diluted Class A Share, compared to $10.7 million, or $0.06 per basic and $0.05 per diluted Class A Share, for the 2014 second quarter. For the 2015 first half, Och-Ziff reported GAAP Net Income of $30.6 million, or $0.17 per basic and diluted Class A Share, compared to $34.6 million, or $0.20 per basic and diluted Class A Share, for the 2014 first half.

The year-over-year decrease in both the Company's second quarter and first half GAAP results was primarily driven by higher income tax expense (net of a corresponding reduction in the Company's tax receivable agreement liability) and other operating expenses. These decreases were partially offset by both higher management fees and incentive income. Also contributing to the year-to-date decrease was a gain on the sale of an investment held by a joint venture in the 2014 first quarter that did not reoccur in 2015.

Throughout this press release, the Company presents financial measures that are not prepared in accordance with GAAP. For a discussion of these non-GAAP measures, please see the section titled "Non-GAAP Financial Measures" at the end of this press release.

DISTRIBUTABLE EARNINGS (NON-GAAP)

The Company's Distributable Earnings for the 2015 second quarter were $95.2 million, or $0.18 per Adjusted Class A Share, 5% higher than $90.4 million, or $0.18 per Adjusted Class A Share, for the 2014 second quarter. Distributable Earnings for the 2015 first half were $221.9 million, or $0.43 per Adjusted Class A Share, slightly higher than $218.2 million, or $0.43 per Adjusted Class A Share, for the 2014 first half.

The year-over-year increases in Distributable Earnings were primarily due to higher management fees and incentive income, and lower Adjusted Income Taxes, partially offset by higher operating expenses. Please see the "Economic Income (Non-GAAP)" section of this press release for a discussion of the drivers affecting the Company's Economic Income.

Distributable Earnings is a non-GAAP measure. For reconciliations of Distributable Earnings to the respective GAAP Net Income for the periods discussed above, please see Exhibits 2 and 3 that accompanies this press release. Additionally, please see the section titled "Non-GAAP Financial Measures" at the end of this press release, including the definitions of Distributable Earnings, Adjusted Income Taxes and Adjusted Class A Shares.

 
ASSETS UNDER MANAGEMENT
Rounding differences may occur.
       
(dollars in billions)      
  June 30, 2015 June 30, 2014
Multi-strategy funds  $33.0  $34.0
Credit        
 Opportunistic credit funds   5.1   5.0
 Institutional Credit Strategies   6.6   4.0
Real estate funds   2.0   1.8
Other   1.3   1.1
Total  $48.0  $45.9
         
               
  Year-Over-Year Change 
(dollars in billions) Inflows / (Outflows)  Distributions / Other Reductions  Appreciation / (Depreciation) Total  % 
                   
Multi-strategy funds $(3.5) $-  $2.5 $(1.0) -3%
Credit                  
 Opportunistic credit funds  0.6   (0.8)  0.3  0.1  2%
 Institutional Credit Strategies  2.5   -   -  2.5  63%
Real estate funds  0.3   (0.2)  -  0.2  9%
Other  0.1   -   0.1  0.2  23%
Total $0.1  $(1.0) $2.9 $2.1  5%
                   

As of June 30, 2015, assets under management totaled $48.0 billion, an increase of $2.1 billion, or 5%, from June 30, 2014, which was driven by performance-related appreciation of $2.9 billion and capital net inflows of $129.9 million. These amounts were partially offset by $1.0 billion of distributions to investors in the Company's closed-end opportunistic credit and real estate funds, and other reductions.

Assets under management decreased to an estimated $46.5 billion as of August 1, 2015. This decrease reflected estimated performance-related appreciation of approximately $173.3 million in July and capital net outflows of approximately $1.6 billion, which was comprised of approximately $1.2 billion of capital net outflows on July 1, 2015 and approximately $392.0 million of capital net outflows from July 2, 2015 to August 1, 2015.

Please see detailed assets under management and fund information on Exhibits 6 and 7 that accompany this press release.

Multi-strategy funds

Assets under management in the Company's multi-strategy funds totaled $33.0 billion as of June 30, 2015, decreasing 3%, or $1.0 billion, year-over-year. This change was driven by net capital outflows of $3.5 billion, partially offset by performance-related appreciation of $2.5 billion.

Credit

Assets under management in the Company's dedicated credit products totaled $11.7 billion as of June 30, 2015, increasing $2.7 billion, or 29%, year-over-year. This change was driven by capital net inflows of $3.2 billion, and performance-related appreciation of $299.9 million, partially offset by $809.3 million of distributions and other reductions in the Company's closed-end opportunistic credit funds.

Opportunistic credit

The Company's opportunistic credit funds seek to generate risk-adjusted returns by capturing value in mispriced investments across disrupted, dislocated and distressed corporate, structured and private credit markets globally.

Assets under management in the Company's opportunistic credit funds totaled $5.1 billion as of June 30, 2015, increasing 2% year-over-year. This increase was primarily due to $286.0 million of performance-related appreciation, driven by positive investment performance across all of these funds and platforms, including the OZ Credit Opportunities Master Fund, the Company's global opportunistic credit fund.

Net capital flows were comprised of $633.8 million of capital net inflows, primarily into the OZ Credit Opportunities Master Fund, which were offset by $809.3 million of distributions and other reductions related to the Company's closed-end opportunistic credit funds.

Institutional Credit Strategies

ICS is the Company's asset management platform that invests in performing credits, including leveraged loans, high-yield bonds, private credit/bespoke financing and investment grade credit via CLOs and other customized solutions for clients.

Assets under management in ICS totaled $6.6 billion as of June 30, 2015, increasing $2.5 billion, or 63%, year-over-year. The increase was primarily driven by four CLOs that closed in the year-over-year period. ICS managed 11 CLOs as of June 30, 2015.

Real estate funds

Assets under management in the Company's real estate funds totaled $2.0 billion as of June 30, 2015, increasing $170.1 million, or 9%, year-over-year. The increase in assets under management was driven by additional commitments to Och-Ziff Real Estate Fund III, partially offset by distributions and other reductions from Och-Ziff Real Estate Funds I and II. Since inception, the net IRR for Och-Ziff Real Estate Fund II (for which the investment period ended in 2014) was 22.9% through June 30, 2015. Since inception, the net IRR for Och-Ziff Real Estate Fund I (for which the investment period ended in 2010) was 15.4% through June 30, 2015.

ECONOMIC INCOME (NON-GAAP)

In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes certain adjustments that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating operating performance in any given period.

For reconciliations of Economic Income and its components to the respective GAAP measures, please see Exhibits 2 through 5 that accompany this press release. Additionally, please see the discussion of "Non-GAAP Financial Measures" at the end of this press release.

Economic Income Revenues (Non-GAAP)

Economic Income revenues for the 2015 second quarter were $199.1 million, a 14% increase from $174.2 million for the 2014 second quarter. Management fees were $167.0 million, 5% higher than $159.7 million for the prior-year period. Incentive income was $31.5 million, 119% higher than the $14.4 million for the prior-year period.

Economic Income revenues for the 2015 first half were 428.6 million, a 10% increase from $388.2 million for the 2014 first half. Management fees were $330.9 million, 5% higher than $314.2 million for the prior-year period. Incentive income was $96.8 million, 32% higher than the $73.4 million for the prior-year period.

The year-over-year increase in management fees for the quarter-to-date and year-to-date periods was driven primarily by the year-over-year growth in assets under management. The year-over-year increase in incentive income for the quarter-to-date period was driven primarily by incentive income from redemptions in the Company's multi-strategy funds. Also contributing to the increase was higher incentive income from certain of the Company's real estate funds.

The year-over-year increase in incentive income for the year-to-date period was driven by certain of the Company's opportunistic credit funds, resulting from higher tax distributions taken in the 2015 first quarter to cover tax liabilities on incentive income that has been accrued but will not be realized until the end of the relevant commitment period. Also contributing to the year-over-year increase was higher incentive income from redemptions in the Company's multi-strategy funds, as well as higher incentive income from certain of the Company's real estate funds. These increases were partially offset by a decrease in incentive income earned from the Company's closed-end opportunistic credit funds.

The average management fee rate was 1.42% for the 2015 second quarter and first half. The Company's average management fee will vary from quarter to quarter based on the mix of products that comprise its assets under management.

Compensation and Benefits (Non-GAAP)

Compensation and benefits for the 2015 second quarter totaled $33.1 million, up 11% from $29.8 million for the 2014 second quarter. Salaries and benefits were $27.7 million, 11% higher than $25.1 million in the prior-year period due to an increase in the Company's headcount globally. Bonus expense for the 2015 second quarter totaled $5.3 million, compared to $4.7 million for the prior-year period.

Compensation and benefits for the 2015 first half totaled $66.4 million, a 13% increase from $59.0 million for the 2014 first half. Salaries and benefits were $55.6 million, 10% higher than $50.7 million in the prior-year period due to an increase in the Company's headcount globally. Bonus expense for the 2015 first half totaled $10.8 million, compared to $8.2 million for the prior-year period.

The ratio of salaries and benefits to management fees was 17% for the 2015 second quarter and first half, compared to 16% for the 2014 second quarter and first half.

Non-Compensation Expenses (Non-GAAP)

Non-compensation expenses for the 2015 second quarter totaled $50.7 million, up 63% from $31.1 million in the prior-year period. Non-compensation expenses for the 2015 first half totaled $91.0 million, up 52% from $60.0 million in the prior-year period. The year-over-year increases were driven by higher professional fees primarily due to increased legal expenses relating to certain regulatory and legal matters, as well as higher interest expense primarily due to the issuance of the Company's Senior Notes in the 2014 fourth quarter.

The ratio of non-compensation expenses to management fees was 30% for the 2015 second quarter and 28% for the 2015 first half, respectively, compared to 19% for 2014 second quarter and first half.

Economic Income (Non-GAAP)

Economic Income for the 2015 second quarter was $115.3 million, slightly higher than the $113.4 million for the 2014 second quarter. Economic Income for the 2015 first half was $271.2 million, slightly lower than the $274.2 million for the 2014 first half.

The year-over-year increase in Economic Income for the quarter-to-date period was primarily due to higher management fees and incentive income, partially offset by higher operating expenses. The year-over-year decrease in Economic Income for the year-to-date period was due to higher operating costs and a net gain on the sale of an investment held by a joint venture in the 2014 first quarter that did not reoccur in 2015, partially offset by higher management fees and incentive income.

CAPITAL

As of June 30, 2015, the number of Class A Shares outstanding was 177,195,620. For purposes of calculating Distributable Earnings per Share, the Company assumes that all the interests held by its executive managing directors and Ziff Investors Partnership, L.P. II and certain of its affiliates and control persons (the "Ziffs") (until the Ziffs exchanged their remaining interests during the 2014 second quarter) in the Company's principal operating subsidiaries (the "Och-Ziff Operating Group") (collectively, "Partner Units"), as well as Class A Restricted Share Units ("RSUs") outstanding during the applicable period, have been converted on a one-to-one basis into Class A Shares ("Adjusted Class A Shares"). For the second quarter and the first half ended June 30, 2015, the total weighted-average Adjusted Class A Shares outstanding were 516,752,646 and 515,738,818, respectively.

DIVIDEND

The Board of Directors of Och-Ziff declared a 2015 second-quarter dividend of $0.14 per Class A Share. The dividend is payable on August 21, 2015 to holders of record as of the close of business on August 14, 2015.

For U.S. federal income tax purposes, the dividend will be treated as a partnership distribution. Based on the best information currently available, the Company estimates that when calculating withholding taxes, the entire amount of the 2015 second-quarter dividend will be treated as return of capital.

Non-U.S. holders of Class A Shares are generally subject to U.S. federal withholding tax at a rate of 30% (subject to reduction by applicable treaty or other exception) on their share of U.S. source dividends and certain other types of U.S. source income realized by the Company. With respect to interest, however, no withholding is generally required if proper certification (on an IRS Form W-8) of a beneficial owner's foreign status has been filed with the withholding agent. Non-U.S. holders must generally provide the withholding agent with a properly completed IRS Form W-8 to obtain any reduction in withholding.

The Company will host a conference call today, August 4, 2015, at 8:30 a.m. Eastern Time to discuss its 2015 second quarter results. The call will be open to the public and can be accessed by dialing +1-888-713-4205 (callers inside the U.S.) or +1-617-213-4862 (callers outside the U.S.). The number should be dialed at least ten minutes prior to the start of the call and the passcode will be 17125716. A simultaneous webcast of the call will be available to the public on a listen-only basis through the Public Investors section of the Company's website (www.ozcap.com).

For those unable to listen to the live broadcast, a replay will be available by dialing +1-888-286-8010 (callers inside the U.S.) or +1-617-801-6888 (callers outside the U.S.), passcode 12112929, beginning approximately two hours after the event for two weeks. A webcast replay of the event will also be available on the Company's website as noted above.

Non-GAAP Financial Measures

Management evaluates Economic Income for the Och-Ziff Funds segment, the Company's only reportable operating segment under GAAP, and for the Company's Other Operations. Economic Income for the Company equals the sum of Economic Income for the Och-Ziff Funds segment and the Company's Other Operations.

The Company conducts substantially all of its business through the Och-Ziff Funds segment, which provides asset management services to its multi-strategy, opportunistic credit and equity funds, Institutional Credit Strategies and other alternative investment vehicles. The Company's Other Operations are primarily comprised of its real estate business, which provides asset management services to its real estate funds.

The Company's non-GAAP measures should not be considered as alternatives to the Company's GAAP Net Income or cash flow from operations, or as indicative of liquidity or the cash available to fund operations. The Company's non-GAAP measures may not be comparable to similarly titled measures used by other companies.

For reconciliations of the Company's non-GAAP measures to the most directly comparable GAAP measures, please see Exhibits 2 and 3 that accompany this press release.

Economic Income

In addition to analyzing the Company's results on a GAAP basis, management also reviews the Company's results on an "Economic Income" basis. Economic Income excludes the adjustments described below that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating the operating performance of the Company in any given period. Management uses Economic Income as the basis on which it evaluates the financial performance of the Company and makes resource allocation and other operating decisions. Management considers it important that investors review the same operating information that it uses.

Economic Income is a measure of pre-tax operating performance that excludes the following from the Company's results on a GAAP basis:

  • Income allocations to the Company's executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter) on their direct interests in the Och-Ziff Operating Group. Management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations.
  • Reorganization expenses related to the Company's IPO, equity-based compensation expenses and depreciation and amortization expenses, as management does not consider these non-cash expenses to be reflective of operating performance. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement.
  • Changes in the tax receivable agreement liability and net gains (losses) on investments in Och-Ziff funds, as management does not consider these items to be reflective of operating performance.
  • Amounts related to the consolidated Och-Ziff funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned in relation to total assets under management and fund performance. The Company also defers the recognition of incentive income allocations from the consolidated Och-Ziff funds until all clawback contingencies are resolved, consistent with the revenue recognition policy for the funds the Company does not consolidate.

In addition, expenses related to compensation and profit-sharing arrangements based on fund investment performance are recognized at the end of the relevant commitment period, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund.

As a result of the adjustments described above, as well as an adjustment to present management fees net of recurring placement and related service fees (rather than considering these fees an expense), management fees, incentive income, compensation and benefits, non-compensation expenses and net income allocated to noncontrolling interests as presented on an Economic Income basis are also non-GAAP measures.

Distributable Earnings

Distributable Earnings is a non-GAAP measure of after-tax operating performance and equals Economic Income less Adjusted Income Taxes. Adjusted Income Taxes are estimated assuming the conversion of all outstanding Partner Units into Class A Shares, on a one-to-one basis, and include the impact of payments under the tax receivable agreement. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC. Partner Units represent interests in the Och-Ziff Operating Group held by the Company's executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter), including the Och-Ziff Operating Group A Units and Och-Ziff Operating Group D Units. Distributable Earnings per Share is equal to Distributable Earnings divided by the weighted-average number of Adjusted Class A Shares.

Management believes Distributable Earnings provides useful information to investors because it uses Distributable Earnings, among other financial information, to determine the earnings available to distribute as dividends to holders of the Company's Class A Shares and to the Company's executive managing directors with respect to their Partner Units.

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward-looking statements by terminology such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "comfortable," "assume," "remain," "maintain," "sustain," "achieve," "see," "think," "position" or the negative version of those words or other comparable words.

Any forward-looking statements contained in this press release are based upon historical information and on the Company's current plans, estimates and expectations. The inclusion of this or other forward-looking information should not be regarded as a representation by the Company or any other person that the future plans, estimates or expectations contemplated by the Company will be achieved. We caution that forward-looking statements are subject to numerous assumptions, estimates, risks and uncertainties, including but not limited to the following: global economic, business, market and geopolitical conditions; U.S. and foreign regulatory developments relating to, among other things, financial institutions and markets, government oversight, fiscal and tax policy; conditions impacting the alternative asset management industry; the Company's ability to successfully compete for fund investors, assets, professional talent and investment opportunities; the Company's ability to retain its active executive managing directors, managing directors and other investment professionals; the Company's successful formulation and execution of its business and growth strategies; the Company's ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to its business; and assumptions relating to the Company's operations, investment performance, financial results, financial condition, business prospects, growth strategy and liquidity.

If one or more of these or other risks or uncertainties materialize, or if the Company assumptions or estimates prove to be incorrect, its actual results may vary materially from those indicated in these statements. These factors are not and should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and risks that are included in the Company's filings with the U.S. Securities and Exchange Commission ("SEC"), including but not limited to the Company's annual report on Form 10-K for the year ended December 31, 2014, dated February 23, 2015, and in the Company's quarterly report on Form 10-Q for the quarter ended March 31, 2015, dated May 5, 2015, as well as may be updated from time to time in the Company's other SEC filings. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not known. The forward-looking statements contained in this press release are made only as of the date of this press release. The Company does not undertake to update any forward-looking statement because of new information, future developments or otherwise.

This press release does not constitute an offer of any Och-Ziff fund.

About Och-Ziff Capital Management Group LLC

Och-Ziff Capital Management Group LLC is one of the largest institutional alternative asset managers in the world with offices in New York, London, Hong Kong, Mumbai, Beijing, Dubai and Shanghai. Och-Ziff provides asset management services to investors globally through its multi-strategy funds, dedicated credit funds, including opportunistic credit funds and Institutional Credit Strategies products, real estate funds and other alternative investment vehicles. Och-Ziff seeks to generate consistent, positive, absolute returns across market cycles, with low volatility compared to the broader markets, and with an emphasis on preservation of capital. Och-Ziff's funds invest across multiple strategies and geographies, consistent with the investment objectives for each fund. The global investment strategies Och-Ziff employs include convertible and derivative arbitrage, corporate credit, long/short equity special situations, merger arbitrage, private investments, real estate and structured credit. As of August 1, 2015, Och-Ziff had approximately $46.5 billion in assets under management. For more information, please visit Och-Ziff's website (www.ozcap.com).

 
EXHIBIT 1
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Consolidated Statements of Comprehensive Income (Unaudited)
(dollars in thousands, except per share amounts)
       
   Three Months Ended June 30,  Six Months Ended June 30,
   2015   2014  2015   2014
Revenues
             
              
 Management fees  $167,486   $164,031  $333,429  $322,801
 Incentive income   28,537    10,918   85,647   63,011
 Other revenues   508    201   969   647
 Income of consolidated Och-Ziff funds   124,868    87,319   234,205   161,490
 Total Revenues   321,399    262,469   654,250   547,949
                  
Expenses                 
 Compensation and benefits   71,375    66,694   141,293   132,549
 Reorganization expenses   4,017    4,021   8,034   8,042
 Interest expense   5,405    1,693   10,650   3,359
 General, administrative and other   12,013    43,231   61,848   79,143
 Expenses of consolidated Och-Ziff funds   78,383    38,456   138,271   77,133
 Total Expenses   171,193    154,095   360,096   300,226
                  
Other Income (Loss)                 
 Net gains on investments in Och-Ziff funds and joint ventures   72    390   189   5,873
 Net gains (losses) of consolidated Och-Ziff funds   (3,399 )  65,768   42,486   120,267
 Total Other Income (Loss)   (3,327 )  66,158   42,675   126,140
                  
Income Before Income Taxes   146,879    174,532   336,829   373,863
 Income taxes   82,025    21,328   107,185   54,919
Consolidated and Comprehensive Net Income  $64,854   $153,204  $229,644  $318,944
                  
Allocation of Consolidated and Comprehensive Net Income                 
 Class A Shareholders  $4,760   $10,716  $30,631  $34,568
 Noncontrolling interests   58,022    128,596   191,375   260,661
 Redeemable noncontrolling interests   2,072    13,892   7,638   23,715
   $64,854   $153,204  $229,644  $318,944
                  
Earnings Per Class A Share                 
 Basic  $0.03   $0.06  $0.17  $0.20
 Diluted  $0.03   $0.05  $0.17  $0.20
                  
Weighted-Average Class A Shares Outstanding                 
 Basic   177,693,164    172,733,171   177,664,174   172,329,212
 Diluted   182,095,697    479,894,909   181,126,383   176,821,370
                  
 
EXHIBIT 2
OCH-ZIFFCAPITAL MANAGEMENT GROUP LLC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures (Unaudited)
(dollars in thousands,except per share amounts)
 
  Three Months Ended June 30, 2015
 
   Och-Ziff
Funds Segment
  Other Operations   Total
Company
 
Net income (loss) allocated to Class A Shareholders-GAAP $(12,328) $17,088  $4,760 
Net income allocated to the Och-Ziff Operating Group A Units   50,802    -    50,802  
Equity-based compensation   29,269    978    30,247  
Income taxes   82,025    -    82,025  
Adjustment for incentive income allocations from consolidated funds subject to clawback   (3,066 )  (15,739 )  (18,805 )
Allocations to Och-Ziff Operating Group D Units   5,189    225    5,414  
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance   -    2,175    2,175  
Reorganization expenses   4,017    -    4,017  
Changes in tax receivable agreement liability   (48,401 )  -    (48,401 )
Depreciation and amortization   2,814    186    3,000  
Other adjustments   190    (147 )  43  
Economic Income-Non-GAAP  $110,511   $4,766    115,277  
Adjusted Income Taxes-Non-GAAP(1)            (20,068 )
Distributable Earnings-Non-GAAP           $95,209  
                
Weighted-Average Class A Shares Outstanding            177,693,164  
Weighted-Average Partner Units            324,501,026  
Weighted-Average Class A Restricted Share Units (RSUs)            14,558,456  
Weighted-Average Adjusted Class A Shares            516,752,646  
                
Distributable Earnings Per Adjusted Class A Share-Non-GAAP           $0.18  
                 
    
  Three Months Ended June 30, 2014 
  Och-Ziff
Funds Segment
  Other Operations
  Total
Company
 
Net income (loss) allocated to Class A Shareholders-GAAP $12,992  $(2,276) $10,716 
Net income allocated to the Och-Ziff Operating Group A Units  48,981   -   48,981 
Equity-based compensation  28,422   317   28,739 
Income taxes  21,217   111   21,328 
Adjustment for incentive income allocations from consolidated funds subject to clawback  (10,575)  769   (9,806)
Allocations to Och-Ziff Operating Group D Units  4,317   -   4,317 
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance  2,192   1,671   3,863 
Reorganization expenses  4,021   -   4,021 
Changes in tax receivable agreement liability  (4)  -   (4)
Depreciation and amortization  1,617   186   1,803 
Other adjustments  (371)  (236)  (607)
Economic Income-Non-GAAP $112,809  $ 542   113,351 
Adjusted Income Taxes-Non-GAAP(1)          (22,905)
Distributable Earnings-Non-GAAP         $90,446 
             
Weighted-Average Class A Shares Outstanding          172,733,171 
Weighted-Average Partner Units          320,719,223 
Weighted-Average Class A Restricted Share Units (RSUs)          15,187,951 
Weighted-Average Adjusted Class A Shares          508,640,345 
             
Distributable Earnings Per Adjusted Class A Share-Non-GAAP         $0.18 
             
(1)Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis, as well as the impact of payments under the tax receivable agreement. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.
  
 
EXHIBIT 3
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Reconciliation of Non-GAAP Measures to the Respective GAAP Measures (Unaudited)
(dollars in thousands, except per share amounts)
 
  Six Months Ended June 30, 2015 
   Och-Ziff
Funds Segment
  Other Operations   Total
Company
 
Net income (loss) allocated to Class A Shareholders-GAAP $(7,866) $38,497  $30,631 
Net income allocated to the Och-Ziff Operating Group A Units   131,734    -    131,734  
Equity-based compensation   57,274    1,769    59,043  
Income taxes   107,185    -    107,185  
Adjustment for incentive income allocations from consolidated funds subject to clawback   (826 )  (36,452 )  (37,278 )
Allocations to Och-Ziff Operating Group D Units   10,886    563    11,449  
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance   -    3,594    3,594  
Reorganization expenses   8,034    -    8,034  
Changes in tax receivable agreement liability   (48,426 )  -    (48,426 )
Depreciation and amortization   4,778    371    5,149  
Other adjustments   401    (291 )  110  
Economic Income-Non-GAAP  $263,174   $8,051    271,225  
Adjusted Income Taxes-Non-GAAP(1)            (49,318 )
Distributable Earnings-Non-GAAP           $221,907  
                
Weighted-Average Class A Shares Outstanding            177,664,174  
Weighted-Average Partner Units            324,495,004  
Weighted-Average Class A Restricted Share Units (RSUs)            13,579,640  
Weighted-Average Adjusted Class A Shares            515,738,818  
                
Distributable Earnings Per Adjusted Class A Share-Non-GAAP           $0.43  
             
                 
  Six Months Ended June 30, 2014 
  Och-Ziff
Funds Segment
  Other Operations  Total
Company
 
Net income (loss) allocated to Class A Shareholders-GAAP $37,437  $(2,869) $34,568 
Net income allocated to the Och-Ziff Operating Group A Units  122,562   -   122,562 
Equity-based compensation  55,552   317   55,869 
Income taxes  54,808   111   54,919 
Adjustment for incentive income allocations from consolidated funds subject to clawback  (18,219)  96   (18,123)
Allocations to Och-Ziff Operating Group D Units  9,474   -   9,474 
Adjustment for expenses related to compensation and profit-sharing arrangements based on fund investment performance  3,293   4,936   8,229 
Reorganization expenses  8,042   -   8,042 
Changes in tax receivable agreement liability  (3,819)  -   (3,819)
Depreciation and amortization  3,260   371   3,631 
Other adjustments  (983)  (178)  (1,161)
Economic Income-Non-GAAP $271,407  $2,784   274,191 
Adjusted Income Taxes-Non-GAAP(1)          (55,944)
Distributable Earnings-Non-GAAP         $218,247 
             
Weighted-Average Class A Shares Outstanding          172,329,212 
Weighted-Average Partner Units          320,777,704 
Weighted-Average Class A Restricted Share Units (RSUs)          13,893,047 
Weighted-Average Adjusted Class A Shares          506,999,963 
             
Distributable Earnings Per Adjusted Class A Share-Non-GAAP         $0.43 
             
(1)Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis, as well as the impact of payments under the tax receivable agreement. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.
  
 
EXHIBIT 4
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Components of Economic Income and Reconciliation of These Non-GAAP Measures to the Respective GAAP Measures (Unaudited)
(dollars in thousands)
 
  Three Months Ended June 30, 2015
 
   Och-Ziff
Funds Segment
  Other Operations   Total Company  
Management fees-GAAP $162,660  $4,826  $167,486 
Adjustment to management fees(1)   (477 )  -    (477 )
Management Fees-Economic Income Basis-Non-GAAP   162,183    4,826    167,009  
                 
Incentive income-GAAP   28,537    -    28,537  
Adjustment to incentive income(2)   758    2,242    3,000  
Incentive Income-Economic Income Basis-Non-GAAP   29,295    2,242    31,537  
Other revenues   499    9    508  
Total Revenues-Economic Income Basis-Non-GAAP  $191,977   $7,077   $199,054  
                 
Compensation and benefits-GAAP  $66,209   $5,166   $71,375  
Adjustment to compensation and benefits(3)   (34,920 )  (3,378 )  (38,298 )
Compensation and Benefits-Economic Income Basis-Non-GAAP  $31,289   $1,788   $33,077  
                 
Interest expense and general, administrative and other expenses-GAAP  $16,712   $706   $17,418  
Adjustment to interest expense and general, administrative and other expenses(4)   33,464    (183 )  33,281  
Non-Compensation Expenses-Economic Income Basis-Non-GAAP  $50,176   $523   $50,699  
                 
Net gains on investments in Och-Ziff funds and joint ventures-GAAP  $70   $2   $72  
Adjustment to net gains on investments in Och-Ziff funds and joint ventures(5)   (70 )  (2 )  (72 )
Net Gains on Joint Ventures-GAAP  $-   $-   $-  
                 
Net income allocated to noncontrolling interests-GAAP  $22,112   $35,910   $58,022  
Adjustment to net income allocated to noncontrolling interests(6)   (22,111 )  (35,910 )  (58,021 )
Net Income Allocated to Noncontrolling Interests-Economic Income Basis-Non-GAAP  $1   $-   $1  
                 
     
  Three Months Ended June 30, 2014 
  Och-Ziff
Funds Segment
  Other Operations  Total Company 
Management fees-GAAP $161,463  $2,568  $164,031 
Adjustment to management fees(1)  (4,377)  -   (4,377)
Management Fees-Economic Income Basis-Non-GAAP  157,086   2,568   159,654 
             
Incentive income-GAAP  10,918   -   10,918 
Adjustment to incentive income(2)  3,461   -   3,461 
Incentive Income-Economic Income Basis-Non-GAAP  14,379   -   14,379 
Other revenues  194   7   201 
Total Revenues-Economic Income Basis-Non-GAAP $171,659  $2,575  $174,234 
             
Compensation and benefits-GAAP $63,640  $3,054  $66,694 
Adjustment to compensation and benefits(3)  (34,929)  (1,989)  (36,918)
Compensation and Benefits-Economic Income Basis-Non-GAAP $28,711  $1,065  $29,776 
             
Interest expense and general, administrative and other expenses-GAAP $43,770  $1,154  $44,924 
Adjustment to interest expense and general, administrative and other expenses(4)  (13,631)  (186)  (13,817)
Non-Compensation Expenses-Economic Income Basis-Non-GAAP $30,139  $968  $31,107 
             
Net gains on investments in Och-Ziff funds and joint ventures-GAAP $390  $-  $390 
Adjustment to net gains on investments in Och-Ziff funds and joint ventures(5)  (390)  -   (390)
Net Gains on Joint Ventures-GAAP $-  $-  $- 
             
Net income allocated to noncontrolling interests-GAAP $95,303  $33,293  $128,596 
Adjustment to net income allocated to noncontrolling interests(6)  (95,303)  (33,293)  (128,596)
Net Income Allocated to Noncontrolling Interests-Economic Income Basis-Non-GAAP $-  $-  $- 
             
(1)Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense. The impact of eliminations related to the consolidated Och-Ziff funds is also removed.
(2)Adjustment to exclude the impact of eliminations related to the consolidated Och-Ziff funds.
(3)Adjustment to exclude equity-based compensation, as management does not consider these non-cash expenses to be reflective of the operating performance of the Company. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement. Further, expenses related to compensation and profit-sharing arrangements based on fund investment performance are recognized at the end of the relevant commitment period, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund. Distributions to the Och-Ziff Operating Group D Units are also excluded, as management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations.
(4)Adjustment to exclude depreciation, amortization and changes in the tax receivable agreement liability, as management does not consider these items to be reflective of the operating performance of the Company. Additionally, recurring placement and related service fees are excluded, as management considers these fees a reduction in management fees, not an expense.
(5)Adjustment to exclude net gains on investments in Och-Ziff funds, as management does not consider these gains to be reflective of the operating performance of the Company.
(6)Adjustment to exclude amounts allocated to the executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter) on their interests in the Och-Ziff Operating Group, as management reviews the operating performance of the Company at the Och-Ziff Operating Group level. The Company conducts substantially all of its activities through the Och-Ziff Operating Group. Additionally, the impact of the consolidated Och-Ziff funds, including the allocation of earnings to investors in those funds, is also removed.
  
 
EXHIBIT 5
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Components of Economic Income and Reconciliation of These Non-GAAP Measures to the Respective GAAP Measures (Unaudited)
(dollars in thousands)
 
  Six Months Ended June 30, 2015 
   Och-Ziff
Funds Segment
  Other Operations   Total
Company
 
Management fees-GAAP $323,828  $9,601  $333,429 
Adjustment to management fees(1)   (2,577 )  -    (2,577 )
Management Fees-Economic Income Basis-Non-GAAP   321,251    9,601    330,852  
                 
Incentive income-GAAP   85,647    -    85,647  
Adjustment to incentive income(2)   7,418    3,755    11,173  
Incentive Income-Economic Income Basis-Non-GAAP   93,065    3,755    96,820  
Other revenues   951    18    969  
Total Revenues-Economic Income Basis-Non-GAAP  $415,267   $13,374   $428,641  
                 
Compensation and benefits-GAAP  $131,019   $10,274   $141,293  
Adjustment to compensation and benefits(3)   (68,948 )  (5,926 )  (74,874 )
Compensation and Benefits-Economic Income Basis-Non-GAAP  $62,071   $4,348   $66,419  
                 
Interest expense and general, administrative and other expenses-GAAP  $71,151   $1,347   $72,498  
Adjustment to interest expense and general, administrative and other expenses(4)   18,878    (372 )  18,506  
Non-Compensation Expenses-Economic Income Basis-Non-GAAP  $90,029   $975   $91,004  
                 
Net gains on investments in Och-Ziff funds and joint ventures-GAAP  $187   $2   $189  
Adjustment to net gains on investments in Och-Ziff funds and joint ventures(5)   (187 )  (2 )  (189 )
Net Gains on Joint Ventures-GAAP  $-   $-   $-  
                 
Net income allocated to noncontrolling interests-GAAP  $148,601   $42,774   $191,375  
Adjustment to net income allocated to noncontrolling interests(6)   (148,608 )  (42,774 )  (191,382 )
Net Loss Allocated to Noncontrolling Interests-Economic Income Basis-Non-GAAP  $(7 ) $-   $(7 )
                 
     
  Six Months Ended June 30, 2014 
  Och-Ziff
Funds Segment
  Other Operations  Total
Company
 
Management fees-GAAP $317,559  $5,242  $322,801 
Adjustment to management fees(1)  (8,587)  -   (8,587)
Management Fees-Economic Income Basis-Non-GAAP  308,972   5,242   314,214 
             
Incentive income-GAAP  63,011   -   63,011 
Adjustment to incentive income(2)  10,376   -   10,376 
Incentive Income-Economic Income Basis-Non-GAAP  73,387   -   73,387 
Other revenues  633   14   647 
Total Revenues-Economic Income Basis-Non-GAAP $382,992  $5,256  $388,248 
             
Compensation and benefits-GAAP $125,153  $7,396  $132,549 
Adjustment to compensation and benefits(3)  (68,318)  (5,254)  (73,572)
Compensation and Benefits-Economic Income Basis-Non-GAAP $56,835  $2,142  $58,977 
             
Interest expense and general, administrative and other expenses-GAAP $81,801  $701  $82,502 
Adjustment to interest expense and general, administrative and other expenses(4)  (22,176)  (371)  (22,547)
Non-Compensation Expenses-Economic Income Basis-Non-GAAP $59,625  $330  $59,955 
             
Net gains on investments in Och-Ziff funds and joint ventures-GAAP $5,873  $-  $5,873 
Adjustment to net gains on investments in Och-Ziff funds and joint ventures(5)  (999)  -   (999)
Net Gains on Joint Ventures-GAAP $4,874  $-  $4,874 
             
Net income allocated to noncontrolling interests-GAAP $191,532  $69,129  $260,661 
Adjustment to net income allocated to noncontrolling interests(6)  (191,533)  (69,129)  (260,662)
Net Loss Allocated to Noncontrolling Interests-Economic Income Basis-Non-GAAP $(1) $-  $(1)
             
(1)Adjustment to present management fees net of recurring placement and related service fees, as management considers these fees a reduction in management fees, not an expense. The impact of eliminations related to the consolidated Och-Ziff funds is also removed.
(2)Adjustment to exclude the impact of eliminations related to the consolidated Och-Ziff funds.
(3)Adjustment to exclude equity-based compensation, as management does not consider these non-cash expenses to be reflective of the operating performance of the Company. However, the fair value of RSUs that are settled in cash to employees or executive managing directors is included as an expense at the time of settlement. Further, expenses related to compensation and profit-sharing arrangements based on fund investment performance are recognized at the end of the relevant commitment period, as management reviews the total compensation expense related to these arrangements in relation to any incentive income earned by the relevant fund. Distributions to the Och-Ziff Operating Group D Units are also excluded, as management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations.
(4)Adjustment to exclude depreciation, amortization and changes in the tax receivable agreement liability, as management does not consider these items to be reflective of the operating performance of the Company. Additionally, recurring placement and related service fees are excluded, as management considers these fees a reduction in management fees, not an expense.
(5)Adjustment to exclude net gains on investments in Och-Ziff funds, as management does not consider these gains to be reflective of the operating performance of the Company.
(6)Adjustment to exclude amounts allocated to the executive managing directors and the Ziffs (until they exchanged their remaining interests during the 2014 second quarter) on their interests in the Och-Ziff Operating Group, as management reviews the operating performance of the Company at the Och-Ziff Operating Group level. The Company conducts substantially all of its activities through the Och-Ziff Operating Group. Additionally, the impact of the consolidated Och-Ziff funds, including the allocation of earnings to investors in those funds, is also removed.
  
EXHIBIT 6
OCH-ZIFF   CAPITAL MANAGEMENT GROUP LLC
Summary Of Changes In   Assets Under Management(1) (Unaudited)
(dollars in thousands)
      
   Three Months Ended June 30, 2015  
  March 31, 2015 Inflows / (Outflows)  Distributions / Other Reductions 
Multi-strategy funds  $33,872,642  $(1,139,366 ) $-  
Credit               
 Opportunistic credit funds   5,191,989   18,201    (174,260 )
 Institutional Credit Strategies   5,857,399   707,095    -  
Real estate funds   2,058,366   9,488    (68,649 )
Other   1,329,831   (22,800 )  -  
Total  $48,310,227  $(427,382 ) $(242,909 )
                
  Three Months Ended June 30, 2015     
  Appreciation / (Depreciation) (2) June 30, 2015     
Multi-strategy funds $257,182 $32,990,458     
Credit           
 Opportunistic credit funds  48,681  5,084,611     
 Institutional Credit Strategies  3,486  6,567,980     
Real estate funds  4,347  2,003,552     
Other  16,282  1,323,313     
Total $329,978 $47,969,914     
            
      
   Three Months Ended June 30, 2014  
  March 31, 2014 Inflows / (Outflows) Distributions / Other Reductions 
Multi-strategy funds  $32,539,862  $957,224  $-  
Credit              
 Opportunistic credit funds   4,760,825   92,336   (50,788 )
 Institutional Credit Strategies   2,636,458   1,387,838   -  
Real estate funds   1,733,042   434,324   (337,951 )
Other   956,205   101,828   -  
Total  $42,626,392  $2,973,550  $(388,739 )
               
  Three Months Ended June 30, 2014    
  Appreciation / (Depreciation) (2) June 30, 2014    
Multi-strategy funds $471,829 $33,968,915    
Credit          
 Opportunistic credit funds  171,694  4,974,067    
 Institutional Credit Strategies  3,614  4,027,910    
Real estate funds  4,056  1,833,471    
Other  21,808  1,079,841    
Total $673,001 $45,884,204    
           
    
  Six Months Ended June 30, 2015 
  December 31, 2014 Inflows / (Outflows)
  Distributions / Other Reductions
 
Multi-strategy funds $34,100,390 $(2,600,685) $- 
Credit           
 Opportunistic credit funds  5,098,600  416,454   (537,190)
 Institutional Credit Strategies  5,166,734  1,395,147   - 
Real estate funds  2,022,399  64,001   (82,941)
Other  1,146,292  91,132   (1)
Total $47,534,415 $(633,951) $(620,132)
            
   Six Months Ended June 30, 2015      
  Appreciation / (Depreciation) (2)
 June 30, 2015
     
Multi-strategy funds  $1,490,753  $32,990,458      
Credit              
 Opportunistic credit funds   106,747   5,084,611      
 Institutional Credit Strategies   6,099   6,567,980      
Real estate funds   93   2,003,552      
Other   85,890   1,323,313      
Total  $1,689,582  $47,969,914      
               
      
   Six Months Ended June 30, 2014  
  December 31, 2013  Inflows / (Outflows) Distributions / Other Reductions 
Multi-strategy funds  $31,768,578   $1,738,393  $-  
Credit               
 Opportunistic credit funds   4,305,438    531,787   (229,865 )
 Institutional Credit Strategies   2,605,628    1,422,838   -  
Real estate funds   970,568    1,203,740   (345,425 )
Other   588,600    474,134   -  
Total  $40,238,812   $5,370,892  $(575,290 )
                
  Six Months Ended June 30, 2014    
  Appreciation / (Depreciation) (2)
  June 30, 2014    
Multi-strategy funds $461,944  $33,968,915    
Credit           
 Opportunistic credit funds  366,707   4,974,067    
 Institutional Credit Strategies  (556)  4,027,910    
Real estate funds  4,588   1,833,471    
Other  17,107   1,079,841    
Total $849,790  $45,884,204    
            
(1)Includes amounts invested by the Company, its executive managing directors, employees and certain other related parties for which the Company charged no management fees and received no incentive income for the periods presented. Amounts presented in this table are not the amounts used to calculate management fees and incentive income for the respective periods.
(2)Appreciation (depreciation) reflects the aggregate net capital appreciation (depreciation) for the entire period and is presented on a total return basis, net of all fees and expenses (except incentive income on unrealized gains attributable to investments in certain funds that the Company, as investment manager, determines lack a readily ascertainable fair value, are illiquid or otherwise should be held until the resolution of a special event or circumstance that could reduce returns on these investments at the time of realization), and includes the reinvestment of all dividends and other income. Management fees and incentive income vary by product.
  
 
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information(1) (Unaudited)
(dollars in thousands)
 
   Assets Under Management as of June 30,
       
   2015  2014
         
Multi-strategy funds        
 OZ Master Fund(2)  $27,046,091  $27,136,636
 OZ Asia Master Fund   1,272,444   1,377,662
 OZ Europe Master Fund   918,757   1,302,832
 OZ Enhanced Master Fund   1,262,828   997,022
 Och-Ziff European Multi-Strategy UCITS Fund   302,105   612,146
 Other funds   2,188,233   2,542,617
    32,990,458   33,968,915
Credit        
Opportunistic credit funds:        
 OZ Credit Opportunities Master Fund   1,573,470   992,645
 Customized Credit Focused Platform   1,814,973   1,712,405
 Closed-end opportunistic credit funds   1,130,221   1,795,291
 Other funds   565,947   473,726
    5,084,611   4,974,067
Institutional Credit Strategies   6,567,980   4,027,910
    11,652,591   9,001,977
         
Real estate funds   2,003,552   1,833,471
         
Other   1,323,313   1,079,841
         
Total  $47,969,914  $45,884,204
         
          
  Returns for the Six Months Ended June 30,      
  2015  2014  Annualized Returns Since Inception Through June 30, 2015   
  Gross  Net  Gross  Net  Gross     Net    
                         
Multi-strategy funds                        
 OZ Master Fund(2) 6.1% 4.1% 3.5% 2.1% 18.0% (2) 12.7% (2)
 OZ Asia Master Fund 15.7% 12.0% -5.7% -6.7% 10.9%    6.5%   
 OZ Europe Master Fund 7.3% 5.2% -1.0% -1.9% 12.4%    8.2%   
 OZ Enhanced Master Fund 9.8% 7.0% 3.8% 2.3% 20.1%    14.1%   
 Och-Ziff European Multi-Strategy UCITS Fund 8.0% 5.9% -4.5% -5.6% 6.4%    3.4%   
 Other funds n/m  n/m  n/m  n/m  n/m     n/m    
                         
Credit                        
Opportunistic credit funds:                        
 OZ Credit Opportunities Master Fund 1.5% 1.1% 9.4% 6.9% 21.1%    15.7%   
 Customized Credit Focused Platform 3.7% 2.7% 11.8% 9.0% 22.0%    16.7%   
 Closed-end opportunistic credit funds See the following page for information on the Company's closed-end opportunistic credit funds. 
 Other funds n/m  n/m  n/m  n/m  n/m     n/m    
                         
Institutional Credit Strategies See the following page for information on the Company's institutional credit strategies. 
                         
                         
Real estate funds See the second following page for information on the Company's real estate funds. 
                         
Other n/m  n/m  n/m  n/m  n/m     n/m    
                         

n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.

 
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - continued (Unaudited)
(dollars in thousands)
 
   Assets Under Management as of June 30,
     
   2015  2014
         
Closed-end Opportunistic Credit Funds (Investment Period)        
OZ European Credit Opportunities Fund (2012-2015)  $312,700  $554,853
OZ Structured Products Domestic Fund II (2011-2014)(7)   349,142   490,591
OZ Structured Products Offshore Fund II (2011-2014)(7)   301,982   418,592
OZ Structured Products Offshore Fund I (2010-2013)(7)   25,089   38,784
OZ Structured Products Domestic Fund I (2010-2013)(7)   15,425   32,562
Other funds   125,883   259,909
   $1,130,221  $1,795,291
         
       
  Inception to Date as of June 30, 2015
      IRR   
  Total Commitments Total Invested Capital(3) Gross(4)  Net(5)  Gross
MOIC
(6)
               
Closed-end Opportunistic Credit Funds (Investment Period)              
OZ European Credit Opportunities Fund (2012-2015) $459,600 $305,487 18.6% 14.1% 1.4x
OZ Structured Products Domestic Fund II (2011-2014)(7)  326,850  326,850 22.8% 17.7% 1.8x
OZ Structured Products Offshore Fund II (2011-2014)(7)  304,531  304,531 20.3% 15.6% 1.7x
OZ Structured Products Offshore Fund I (2010-2013)(7)  155,098  155,098 24.0% 19.4% 2.1x
OZ Structured Products Domestic Fund I (2010-2013)(7)  99,986  99,986 23.1% 18.3% 2.0x
Other funds  298,250  268,250 n/m  n/m  n/m
  $1,644,315 $1,460,202        
               

n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.

          
         Assets Under Management as of June 30,
  Closing Date Initial Deal Size 2015 2014
Institutional Credit Strategies               
CLOs:               
 OZLM I  July 19, 2012  $510,700  $505,682  $466,691
 OZLM II  November 1, 2012   560,100   518,066   515,616
 OZLM III  February 20, 2013   653,250   614,041   611,665
 OZLM IV  June 27, 2013   600,000   543,525   541,287
 OZLM V  December 17, 2013   501,250   471,074   469,813
 OZLM VI  April 16, 2014   621,250   593,269   591,865
 OZLM VII  June 26, 2014   824,750   796,434   795,973
 OZLM VIII  September 9, 2014   622,250   596,239   -
 OZLM IX  December 22, 2014   510,208   495,667   -
 OZLM XI  March 12, 2015   510,500   490,977   -
 OZLM XII  May 28, 2015   565,650   546,435   -
       6,479,908   6,171,409   3,992,910
Other funds  n/a   n/a   396,571   35,000
      $6,479,908  $6,567,980  $4,027,910
                
EXHIBIT 7
OCH-ZIFF   CAPITAL MANAGEMENT GROUP LLC
Fund   Information - continued (Unaudited)
(dollars in thousands)
   
  Assets Under Management as of June 30,
     
  2015 2014
Real Estate Funds (Investment Period)      
Och-Ziff Real Estate Fund I (2005-2010)(7) $39,368 $61,881
Och-Ziff Real Estate Fund II (2011-2014)(7)  393,876  453,304
Och-Ziff Real Estate Fund III (2014-2019)(13)  1,445,391  1,176,671
Other funds  124,917  141,615
  $2,003,552 $1,833,471
       
 Inception to Date as of June 30, 2015
   Total Investments
 Total Commitments Invested Capital (9) Total Value (10) Gross IRR (11)  Net IRR (5)  Gross MOIC (12)
Real Estate Funds (Investment Period)                
Och-Ziff Real Estate Fund I (2005-2010)(7) $408,081  $384,603  $767,722  25.1 % 15.4 % 2.0x
Och-Ziff Real Estate Fund II (2011-2014)(7)  839,508   712,495   1,199,285  36.1 % 22.9 % 1.7x
Och-Ziff Real Estate Fund III (2014-2019)(13)  1,500,000   171,000   175,152  n/m   n/m   n/m
Other funds  232,701   118,283   151,975  n/m   n/m   n/m
  $2,980,290  $1,386,381  $2,294,134           
                       
  Inception to Date as of June 30, 2015
  Realized/Partially Realized Investments(8)
  Invested Capital Total Value Gross IRR (11)  Gross MOIC (12)
Real Estate Funds (Investment Period)           
Och-Ziff Real Estate Fund I (2005-2010)(7) $359,360 $760,491 28.0% 2.1x
Och-Ziff Real Estate Fund II (2011-2014)(7)  462,955  844,377 43.7% 1.8x
Och-Ziff Real Estate Fund III (2014-2019)(13)  -  - n/m  n/m
Other funds  -  - n/m  n/m
  $822,315 $1,604,868     
            
   Unrealized Investments
as of June 30, 2015
   Invested Capital  Total Value  Gross MOIC (12)
Real Estate Funds (Investment Period)           
Och-Ziff Real Estate Fund I (2005-2010)(7)  $25,243  $7,231  0.3x
Och-Ziff Real Estate Fund II (2011-2014)(7)   249,540   354,908  1.4x
Och-Ziff Real Estate Fund III (2014-2019)(13)   171,000   175,152  n/m
Other funds   118,283   151,975  n/m
   $564,066  $689,266   
            

n/m not meaningful
Please see the last page of this Exhibit 7 ("Fund Information-Footnotes") for important disclosures related to the footnotes referenced herein.

 
EXHIBIT 7
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Fund Information - Footnotes
 
(1)The return information reflected in these tables represents, where applicable, the composite performance of all feeder funds that comprise each of the master funds presented. Gross return information is generally calculated using the total return of all feeder funds, net of all fees and expenses except management fees and incentive income of such feeder funds and master funds and the returns of each feeder fund include the reinvestment of all dividends and other income. Net return information is generally calculated as the gross returns less management fees and incentive income (except incentive income on unrealized gains attributable to investments in certain funds that the Company, as investment manager, determines lack a readily ascertainable fair value, are illiquid or otherwise should be held until the resolution of a special event or circumstance ("Special Investments") that could reduce returns on these investments at the time of realization). Return information also includes realized and unrealized gains and losses attributable to Special Investments and initial public offering investments that are not allocated to all investors in the feeder funds. Investors that were not allocated Special Investments and/or initial public offering investments may experience materially different returns. The performance calculation for the OZ Master Fund excludes realized and unrealized gains and losses attributable to currency hedging specific to certain investors investing in OZ Master Fund in currencies other than the U.S. Dollar.
(2)The annualized returns since inception are those of the Och-Ziff Multi-Strategy Composite, which represents the composite performance of all accounts that were managed in accordance with the Company's broad multi-strategy mandate that were not subject to portfolio investment restrictions or other factors that limited the Company's investment discretion since inception on April 1, 1994. Performance is calculated using the total return of all such accounts net of all investment fees and expenses of such accounts, except incentive income on unrealized gains attributable to Special Investments that could reduce returns in these investments at the time of realization, and the returns include the reinvestment of all dividends and other income. For the period from April 1, 1994 through December 31, 1997, the returns are gross of certain overhead expenses that were reimbursed by the accounts. Such reimbursement arrangements were terminated at the inception of the OZ Master Fund on January 1, 1998. The size of the accounts comprising the composite during the time period shown vary materially. Such differences impacted the Company's investment decisions and the diversity of the investment strategies followed. Furthermore, the composition of the investment strategies the Company follows is subject to its discretion and have varied materially since inception and are expected to vary materially in the future. As of June 30, 2015, the gross and net annualized returns since the OZ Master Fund's inception on January 1, 1998 were 14.1% and 9.6%, respectively.
(3)Represents funded capital commitments net of recallable distributions to investors.
(4)Gross internal rate of return ("IRR") for the Company's closed-end opportunistic credit funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the fund as of June 30, 2015, including the fair value of unrealized investments as of such date, together with any appreciation or depreciation from related hedging activity. Gross IRR does not include the effects of management fees or incentive income, which would reduce the return, and includes the reinvestment of all fund income.
(5)Net IRR is calculated as described in footnotes (4) and (11), but is reduced by all management fees and for the real estate funds other fund-level fees and expenses not adjusted for in the calculation of gross IRR. Net IRR is further reduced by accrued and paid incentive income, which will be payable upon the distribution of each fund's capital in accordance with the terms of the relevant fund. Accrued incentive income may be higher or lower at such time. The net IRR represents a composite rate of return for a fund and does not reflect the net IRR specific to any individual investor.
(6)Gross multiple of invested capital ("MOIC") for the Company's closed-end opportunistic credit funds is calculated by dividing the sum of the net asset value of the fund, accrued incentive income, life-to-date incentive income and management fees paid and any non-recallable distributions made from the fund by the invested capital.
(7)These funds have concluded their investment periods, and therefore the Company expects assets under management for these funds to decrease as investments are sold and the related proceeds are distributed to the investors in these funds.
(8)An investment is considered partially realized when the total amount of proceeds received, including dividends, interest or other distributions of income and return of capital, represents at least 50% of invested capital.
(9)Invested capital represents total aggregate contributions made for investments by the fund.
(10)Total value represents the sum of realized distributions and the fair value of unrealized and partially realized investments as of June 30, 2015. Total value will be impacted (either positively or negatively) by future economic and other factors. Accordingly, the total value ultimately realized will likely be higher or lower than the amounts presented as of June 30, 2015.
(11)Gross IRR for the Company's real estate funds represents the estimated, unaudited, annualized return based on the timing of cash inflows and outflows for the aggregated investments as of June 30, 2015, including the fair value of unrealized and partially realized investments as of such date, together with any unrealized appreciation or depreciation from related hedging activity. Gross IRR is not adjusted for estimated management fees, incentive income or other fees or expenses to be paid by the fund, which would reduce the return.
(12)Gross MOIC for the Company's real estate funds is calculated by dividing the value of a fund's investments by the invested capital, prior to adjustments for incentive income, management fees or other expenses to be paid by the fund.
(13)This fund recently launched and has only invested a small portion of its committed capital; therefore, IRR and MOIC information is not presented, as it is not meaningful.
  
 
EXHIBIT 8
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Longer-Term Assets Under Management (Unaudited)
(dollars in thousands)
 

As of June 30, 2015, approximately 34% of the Company's assets under management were subject to initial commitment periods of three years or longer. The Company earns incentive income on these assets based on the cumulative investment performance generated over this commitment period. The table below presents the amount of these assets under management, as well as the amount of incentive income accrued at the fund level but for which the commitment period has not concluded. These amounts have not yet been recognized in our revenues, as the Company recognizes incentive income at the end of the commitment period when amounts are no longer subject to clawback. Further, these amounts may ultimately not be recognized as revenue by the Company in the event of future losses in the respective funds.

    
   June 30, 2015
  Longer-Term Assets Under Management Accrued Unrecognized Incentive
Multi-strategy funds  $3,857,901  $96,643
Credit        
 Opportunistic credit funds   3,862,268   150,924
 Institutional Credit Strategies   6,532,775   -
Real estate funds   2,003,552   105,486
Other   283,901   -
   $16,540,397  $353,053
         

The Company recognizes incentive income on its longer-term assets under management in multi-strategy funds and open-end opportunistic credit funds at the end of their respective commitment periods, which are generally three to five years. The Company expects the commitment period with respect to approximately 6% and 17% of the longer-term assets under management in the multi-strategy funds to mature during the third quarter of 2015 and remainder of 2015, respectively. The Company does not expect the initial commitment period for a significant amount of longer-term assets under management in its open-end opportunistic credit funds to expire in 2015. Incentive income related to assets under management in the Company's closed-end opportunistic credit funds and its real estate funds is generally recognized at or near the end of the life of each fund. These funds generally begin to make distributions after the conclusion of their respective investment period, as presented in the tables in Exhibit 7. However, these investment periods may generally be extended for an additional one to two years.

   
EXHIBIT 9  
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC  
Financial Supplement (Unaudited)  
As of July 1, 2015  
             
OZ Master Fund by Investment Strategy      Investors by Type(1)     
 Long/Short Equity Special Situations  68 %  Pensions  33 %
 Structured Credit  10 %  Private Banks  17 %
 Convertible and Derivative Arbitrage  8 %  Fund-of-Funds  13 %
 Merger Arbitrage  7 %  Corporate, Institutional and Other  12 %
 Corporate Credit  6 %  Foundations and Endowments  12 %
 Private Investments  1 %  Related Parties  7 %
        Family Offices and Individuals  6 %
             
Assets Under Management by Geography(2)      Investors by Geography(1)     
 North America  74 %  North America  74 %
 Europe  15 %  Europe  15 %
 Asia  11 %  Asia and Other  11 %
             
(1)Presents the composition of the Company's fund investor base across its funds excluding investors in its CLOs.
(2)The North American exposure includes the United States, Canada, Central America and South America. The European exposure includes Africa and the Middle East. The Asian exposure includes Australia and New Zealand.
  
 
EXHIBIT 10
OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC
Assets Under Management Trends (Unaudited)
(dollars in thousands)
 
   Assets Under Management as of  
  June 30, 2015  December 31, 2014  December 31, 2013  December 31, 2012 
Total Assets Under Management  $47,969,914   $47,534,415   $40,238,812   $32,603,930  
Year-over-Year Growth   5 %  18 %  23 %  13 %
                      
Longer-Term Assets Under Management(1)  $16,540,397   $15,150,049   $10,640,836   $6,947,746  
% of Total Assets Under Management   34 %  32 %  26 %  21 %
                      
                      
Assets Under Management by Product                     
Multi-strategy funds   69 %  72 %  79 %  85 %
Credit                     
 Opportunistic credit funds   11 %  11 %  11 %  7 %
 Institutional Credit Strategies   14 %  11 %  6 %  3 %
Real estate funds   4 %  4 %  2 %  3 %
Other   2 %  2 %  2 %  2 %
Total assets under management in credit, real estate and other funds   31 %  28 %  21 %  15 %
                      
(1)Longer-term assets under management are those subject to initial commitment periods of three years or longer. Please see Exhibit 8 for additional information.
  

Contact Information

  • Investor Relations Contact:
    Tina Madon
    Managing Director
    Head of Investor Relations
    Och-Ziff Capital Management Group LLC
    +1-212-719-7381
    tina.madon@ozcap.com

    Media Relations Contact:
    George Sard or Jonathan Gasthalter
    Sard Verbinnen & Co
    +1-212-687-8080