# Carlyle Group Inc. (CG) FY 2023 MD&A Verbatim Item 7 Management's Discussion and Analysis from Carlyle Group Inc.'s 10-K for fiscal year 2023. SEC filing source: https://www.sec.gov/Archives/edgar/data/1527166/000152716624000019/cg-20231231.htm Accession: 0001527166-24-000019 Filing date: 2024-02-22 Report date: 2023-12-31 Extracted structurally from real Item 7 body heading to real Item 7A/8 boundary. Confidence: high Company profile: /company/CG/ All MD&A years: /company/CG/mda/ Previous year: /company/CG/mda/fy2022/ (FY 2022) Next year: /company/CG/mda/fy2024/ (FY 2024) ITEM 7.MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Unless the context suggests otherwise, references in this report to “Carlyle,” the “Company,” “we,” “us” and “our” refer to The Carlyle Group Inc. and its consolidated subsidiaries. The following discussion should be read in conjunction with the consolidated financial statements and the related notes included in this Annual Report on Form 10-K. The following discussion includes a comparison of our results for the years ended December 31, 2023 and 2022. For a discussion of our results for the year ended December 31, 2021 and a comparison of results for the years ended December 31, 2022 and 2021, see Part II, Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations” of our Annual Report on Form 10-K for the year ended December 31, 2022, which specific discussion is incorporated herein by reference. Overview We are one of the world’s largest global investment firms that deploys private capital across its business, and we conduct our operations through three reportable segments: Global Private Equity, Global Credit, and Global Investment Solutions. •Global Private Equity—Our Global Private Equity segment advises our buyout, middle market and growth capital funds, our U.S. and internationally focused real estate funds, and our infrastructure and natural resources funds. The segment also includes the NGP Carry Funds advised by NGP. As of December 31, 2023, our Global Private Equity segment had $161.3 billion in AUM and $106.7 billion in Fee-earning AUM. •Global Credit—Our Global Credit segment advises funds and vehicles that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, distressed credit, aircraft financing and servicing, infrastructure debt, insurance solutions and global capital markets. As of December 31, 2023, our Global Credit segment had $187.8 billion in AUM and $155.2 billion in Fee-earning AUM. •Global Investment Solutions—Our Global Investment Solutions segment advises global private equity programs and related co-investment and secondary activities. As of December 31, 2023, our Global Investment Solutions segment had $76.9 billion in AUM and $45.5 billion in Fee-earning AUM. We earn management fees pursuant to contractual arrangements with the investment funds that we manage and fees for transaction advisory and oversight services provided to portfolio companies of these funds. We also typically receive a performance fee from an investment fund, which may be either an incentive fee or a special residual allocation of income, which we refer to as a performance allocation, or carried interest, in the event that specified investment returns are achieved by the fund. Under U.S. generally accepted accounting principles (“U.S. GAAP”), we are required to consolidate some of the investment funds that we advise. However, for segment reporting purposes, we present revenues and expenses on a basis that deconsolidates these investment funds. Accordingly, our segment revenues primarily consist of fund management fees and related transaction and portfolio advisory fees and other income, realized performance revenues (consisting of incentive fees and performance allocations), realized principal investment income, including realized gains on our investments in our funds and other trading securities, as well as interest income. Our segment expenses primarily consist of cash compensation and benefits expenses, including salaries, bonuses, and realized performance payment arrangements, and general and administrative expenses. While our segment expenses include depreciation and interest expense, our segment expenses exclude acquisition and disposition related charges and amortization of intangibles and impairment. Refer to Note 16 to the consolidated financial statements included in this Annual Report on Form 10-K for more information on the differences between our financial results reported pursuant to U.S. GAAP and our financial results for segment reporting purposes. 109 Trends Affecting our Business The global economy demonstrated resilience in 2023, despite aggressive monetary policy tightening by most central banks aimed at combating inflation. U.S. economic growth exceeded expectations despite volatility across underlying expenditure categories, the Euro-area economy showed resilience despite the downdraft from energy-intensive industrials and Germany, China’s economy achieved its growth targets despite uneven growth rates across sectors, while India and Korea maintained growth in economic activity and consumption. The U.S. economy grew at a 3.3% annualized rate in the fourth quarter of 2023, driven by strong consumer spending, continued business spending on technology (software, data analytics, AI, other digital services), and an ongoing rise in manufacturing facilities investment, which finished the year at more than two times 2019 levels. Although the overall level of spending on services (experiences) accounted for most of the consumption growth in 2023, spending patterns have begun to shift back towards goods. This shift, coupled with curtailed production schedules, has helped inventory-to-sales ratios normalize. This normalization is expected to lead to a rebound in industrial activity, following a weaker performance in 2023. Core and headline inflation finished the year up 3.9% and 3.4%, respectively, from a year earlier, driven by services costs, which were partially offset by declining core goods costs. However, the cessation of destocking, combined with the effects of the Red Sea blockage, has introduced upside price risks. The Federal Reserve is likely at the end of its tightening cycle, as inflationary pressures have become less pronounced and Fed officials have signaled that the current monetary policy has become sufficiently restrictive to curb inflation. Although price pressures have abated, inflation remains above target, the labor market remains resilient, and economic growth is steady, which has driven uncertainty amongst market participants on the timing and magnitude of potential rate cuts. In China, official data indicate the economy regained traction, growing 5.2% from a year ago, outpacing growth of just 3% in 2022. The expansion was largely propelled by strength in services consumption, which both our proprietary portfolio company data and official data through December 2023 highlight, with economy-wide retail foot traffic across our network increasing by 25.4% and catering and accommodation spending rising 14.5% relative to year-ago levels. This growth was partially offset by weakness in property markets, where new floor space sold in December was 24% lower than the same period a year earlier. This decline seems to be an intentional choice of policymakers, who wish to downsize the sector to levels more consistent with China’s current demographic realities and internal migration trends. Broad measures of economic activity in Korea suggest domestic demand continued to rise in the fourth quarter, and these measures in India suggest sustained growth momentum as well. Europe’s economy continued to perform reasonably well given the combined effects of the 450-basis point rise in base rates and the impacts from Russia’s ongoing war with Ukraine on energy. Our data are consistent with a 0.4% contraction in overall GDP for the fourth quarter, but most of that can be attributed to the decline in German industrial orders and energy- intensive manufacturing activity. When excluding Germany, overall economic activity in Europe is up about 8% from the time of Russia’s invasion of Ukraine in February 2022. Euro-area headline inflation finished 2023 up 2.9% from a year earlier, which suggests that the 25-basis point rate increase in September is likely the last for the ECB this cycle, placing them in a similar wait-and-see position to that of the Federal Reserve. Estimates of S&P 500 constituents’ earnings and revenue growth for 2023 highlight a significant deceleration from the pace observed in 2022. Earnings estimates were steadily marked down throughout the year, and earnings growth currently stands at just 0.9% for the year, while revenues are estimated to have grown just 2.4% in 2023. However, estimates anticipate that earnings grew by by 3.2% in the fourth quarter of 2023 versus the same period a year ago, led by communication services, consumer discretionary, and utilities. The estimated blended net profit margin for the fourth quarter of 2023 is reported to be 11.1%, nearly unchanged from the 11.2% margin observed a year earlier. U.S. equity markets performed well in 2023, buoyed by an AI-driven rebound in tech stocks, along with a collapse in rates expectations and risk premiums. The Dow Jones, Russell 2000, and Nasdaq 100 rose 13.7%, 15.1%, and 53.8%, respectively, from December 31, 2022, to December 31, 2023. In the United States, the top seven stocks (Apple, Microsoft, NVIDIA, Alphabet, Amazon, Tesla, and Meta) constituted over 60% of the S&P 500’s yearly gain of 24.2%—while the “S&P 493” appreciated 12.5% in 2023. During the same period, global equity markets also generally strengthened: the MSCI ACWI and EuroStoxx 600 appreciated 20.1% and 12.7%, respectively, while the Shanghai Composite fell 3.7% amid the lingering effects of China’s property downturn and geopolitical concerns. Our carry fund portfolio appreciated 7% during 2023. Within our Global Private Equity segment, our corporate private equity funds appreciated 5%, our infrastructure and natural resources funds appreciated 8%, and our real estate funds depreciated (1)%, reflecting the negative impact of higher cap rates. Our Global Credit carry funds (which represent approximately 11% of the total Global Credit remaining fair value as of December 31, 2023) appreciated 12% in 2023 and carry funds in our Global Investment Solutions segment appreciated 10%.  110 Strategic M&A activity in 2023 experienced the lowest annual volume since 2013, though began to see a pick-up towards the end of the year. Including financial-sponsor transactions, which accounted for approximately 13% of global M&A volume, deal activity totaled approximately $3.2 trillion, a 16% fall from the previous year to the lowest level in ten years. Global IPO activity remained sluggish as well in 2023, with total proceeds of just under $132 billion, a 33% decline from 2022. Our transaction and portfolio advisory fees, including the capital markets fees we earn in connection with activities related to the underwriting, issuance, and placement of debt and equity securities, generally track the pace of overall market activity. During the year ended December 31, 2023, our net transaction and portfolio advisory fees of $68.6 million decreased 35% from $106.2 million last year but picked up substantially in the fourth quarter of 2023, nearly doubling the fees earned in the fourth quarter of 2022. Consistent with the trends in the broader markets, our announced new investment and realization activity in our carry funds was slower in 2023, however we generated $20.6 billion in realized proceeds from our carry funds – in excess of the $19.8 billion we invested in new or follow-on transactions in our carry funds during 2023, providing net positive distributions to our investors.  In leveraged finance markets, spreads tightened; however, given the continued increase in the base rate (SOFR rose over 500 bps from the beginning of 2022 through the end of the December 2023), financing costs remain close to previous peaks. Average debt multiples remained subdued during the fourth quarter. Refinancings remained the main purpose of leveraged loan issuance, accounting for more than 50% of total issuance in the U.S. institutional loan market during the quarter, but overall leveraged loan issuance for the year declined 26% from 2022 and fell to the lowest level since 2010. Despite considerably tighter financial conditions, LBO activity regained momentum, totaling more than $320 billion globally in 2023, led primarily by financial sponsors targeting acquisitions in the U.S. market. By contrast, venture capital and growth capital remained subdued, seeing the lowest number of funding rounds since 2014. As companies reevaluate their capital structures particularly in light of impending debt maturities, we expect there will be strong deployment opportunities in our Global Credit segment, particularly in our opportunistic credit strategy. We had $2.2 billion in CLO issuance during 2023, a pace that reflects sluggish volume in new broadly syndicated loan issuances; however, there are signs that the leveraged loan market is beginning to recover following a pullback in the market in connection with interest rate hikes. Our global CLO portfolio continues to experience a default rate less than the industry average, and we are actively managing our credit positions to maintain balanced risk-adjusted credit quality. However, while default rates have remained low, we saw default rates increase in 2023 as inflation and higher financing costs continue to pressure borrower debt-service capacity, a trend we expect to continue in the near term. Gross originations in our direct lending strategy totaled $1.7 billion in 2023, a slower pace than the record levels of originations in 2022, reflecting the slowdown in sponsor M&A activity. However, current year originations have been at yields higher than our historical average and at higher credit quality. In addition to gross originations, $2.0 billion in existing positions, or 18% of our direct lending portfolio, had improved covenants and documentation or benefited from additional sponsor equity during the year, with the effect of de-risking our portfolio and, in more than half of the volume, increasing the spread or earning an amendment fee. Dividend yields on our business development companies as of December 31, 2023 were approximately 10%, and approximately 10% for CTAC, our interval fund. We raised $37.1 billion in new capital in 2023, our third highest year of fundraising with Global Credit and Global Investment Solutions comprising over 75% of new commitments. While we believe that we will continue to attract a significant amount of capital for our buyout funds, we have seen, and expect to continue to see, a decline in buyout fund sizes across most geographies, reflecting the compounding impact of net negative distributions to investors across the industry, combined with increasing geopolitical risk and continued global economic uncertainty, on an already challenging fundraising landscape. The impact of muted realizations on investor liquidity has been exacerbated by an increase in demand on investor capital as the increased cost and reduced availability of subscription lines commonly used to bridge capital calls has led to borrowing repayments and restricted use in current investment activity. This may result in lower management fees in Global Private Equity in the future. The SEC has put forth several rule proposals, and we are evaluating the potential impacts to our business and operations and those of our portfolio companies. These proposals include, among others, extensive climate change disclosure regulations and safeguarding of advisory client assets for registered investment advisers. In July 2023, the SEC adopted final public company cybersecurity disclosure rules requiring issuers to provide current disclosure on Form 8-K of material cybersecurity incidents and periodic disclosures on Form 10-K of cybersecurity risk management, strategy, and governance. In August 2023, the SEC adopted final private fund adviser reform rules under the Investment Advisers Act of 1940 requiring private fund advisers registered with the SEC to, among other things, provide investors with quarterly and annual statements detailing information regarding private fund performance, fees, and expenses; obtain an annual audit for each private fund; obtain a fairness opinion or valuation opinion in connection with an adviser-led secondary transaction; not provide certain 111 preferential rights to investors in a fund and disclose other preferential rights prior to an investor closing into the fund; and obtain investor consent prior to allocating certain fees or expenses to a fund or borrowing or receiving credit from a fund. We are closely evaluating potential impacts to our business of these rule adoptions and various financial, regulatory, and other proposals put forth by the current Administration and Congress, as well as the Inflation Reduction Act of 2022. The potential for policy changes may create regulatory uncertainty for our investment strategies and our portfolio companies and could adversely affect our profitability and the profitability of our portfolio companies. Recent Developments Updates to Compensation Strategy Effective December 31, 2023, we updated our compensation and incentives program to enhance alignment across all of our stakeholders (our fund investors, our employees and other personnel, and our shareholders). In connection with this change, a higher proportion of our performance allocations revenue will be used to compensate our personnel (rather than retained by the Company), thereby increasing the portion of total personnel compensation that is related to the performance of our funds. Under the realigned program, we expect to allocate a range of 60% to 70% of performance allocations and incentive fees to our personnel, up from a range of generally 45% to 50% prior to December 31, 2023 (although actual amounts may vary by fund). This update of our compensation program resulted in a $1.1 billion charge to performance allocations and incentive fee related compensation expense in the Consolidated Statement of Operations for the year ended December 31, 2023, and an accrual for the same amount in accrued compensation and benefits on the Consolidated Balance Sheet as of December 31, 2023, to reflect the incremental expense on unrealized performance allocations. As it relates to our Segment results, we expect our realigned compensation program to positively impact Fee Related Earnings and reduce the portion of realized performance revenues retained by the Company in future periods. Stock Repurchase Program Our Board of Directors reset the total repurchase authorization to $1.4 billion in shares of our common stock, effective as of February 6, 2024. Under our repurchase program, shares of common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions, or otherwise, including through Rule 10b5-1 plans. The timing and actual number of shares of common stock repurchased will depend on a variety of factors, including legal requirements and price, economic, and market conditions. In addition to repurchases of common stock, the repurchase program will be used for the payment of tax withholding amounts upon net settlement of equity awards granted pursuant to our Equity Incentive Plan or otherwise based on the value of shares withheld that would otherwise be issued to the award holder. The share repurchase program may be suspended or discontinued at any time and does not have a specified expiration date. Dividends In February 2024, the Board of Directors declared a quarterly dividend of $0.35 per common share to common stockholders of record at the close of business on February 23, 2024, payable on March 1, 2024. 112 Key Financial Measures Our key financial measures and operating metrics are discussed in the following pages. Additional information regarding U.S. GAAP measures and our other significant accounting policies can be found in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K. Revenues Revenues primarily consist of Fund management fees, Incentive fees, Investment income (including Performance allocations, realized and unrealized gains of our investments in our funds and other principal investments), as well as Interest and other income. Fund management fees. Fund management fees include management fees and transaction and portfolio advisory fees. We earn management fees for advisory services we provide to funds in which we hold a general partner interest or to funds or certain portfolio companies with which we have an investment advisory or investment management agreement. These fees are largely from either traditional closed-end, long-dated funds, which are highly predictable and stable, or Perpetual Capital products as defined below. Management fees also include catch-up management fees, which are episodic in nature and represent management fees charged to fund investors in subsequent closings of a fund which apply to the time period between the fee initiation date and the subsequent closing date. We also earn management fees on our CLOs and other structured products. Transaction and portfolio advisory fees. Transaction and portfolio advisory fees generally include capital markets fees generated by Carlyle Global Capital Markets (“GCM”) in connection with activities related to the underwriting, issuance and placement of debt and equity securities, and loan syndication for our portfolio companies and third-party clients, which are generally not subject to rebate offsets as described below with respect to our most recent vintages (but are subject to the rebate offsets set forth below for older funds). Underwriting fees include gains, losses and fees arising from securities offerings in which we participate in the underwriter syndicate. Transaction and portfolio advisory fees also include fees we receive for the transaction and portfolio advisory services we provide to our portfolio companies. When covered by separate contractual agreements, we recognize transaction and portfolio advisory fees for these services when the performance obligation has been satisfied and collection is reasonably assured. We are generally required to offset our fund management fees by the transaction and advisory fees earned, which we refer to as “rebate offsets.” The recognition of portfolio advisory fees, transactions fees, and capital markets fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our investment pace. Incentive fees. Incentive fees consist of performance-based incentive arrangements pursuant to management contracts, primarily from certain of our Global Credit funds, when the return on assets under management exceeds certain benchmark returns or other performance targets. In such arrangements, incentive fees are recognized when the performance benchmark has been achieved. Investment income (loss). Investment income (loss) consists of our performance allocations as well as the realized and unrealized gains and losses resulting from our equity method investments and other principal investments. Performance allocations consist principally of the performance-based capital allocation from fund limited partners to us, commonly referred to as carried interest, from certain of our investment funds, which we refer to as the “carry funds.” Carried interest revenue is recognized by Carlyle upon appreciation of the valuation of our funds’ investments above certain return hurdles as set forth in each respective partnership agreement and is based on the amount that would be due to us pursuant to the fund partnership agreement at each period end as if the funds were liquidated at such date. Accordingly, the amount of carried interest recognized as performance allocations reflects our share of the fair value gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. As a result, the performance allocations earned in an applicable reporting period are not indicative of any future period, as fair values are based on conditions prevalent as of the reporting date. Refer to “—Trends Affecting our Business” for further discussion. For any given period, performance allocations revenue on our statement of operations may include reversals of previously recognized performance allocations due to a decrease in the value of a particular fund that results in a decrease of cumulative performance allocations earned to date. Since fund return hurdles are cumulative, previously recognized 113 performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate. Additionally, unrealized performance allocations reverse when performance allocations are realized, and unrealized performance allocations can be negative if the amount of realized performance allocations exceed total performance allocations generated in the period. The timing and receipt of realized performance allocations varies with the life cycle of our carry funds and there is often a difference between the time we start accruing performance allocations and realization. The timing of performance allocations realizations from our Global Investment Solutions, Carlyle Aviation, and Abingworth funds is typically later than in our other carry funds based on the terms of such arrangements. Under our arrangements with the historical owners and management teams of AlpInvest and Abingworth, the amount of carried interest to which we are entitled varies. In some cases, we are entitled to 15% of the carried interest in respect of commitments from the historical owners of AlpInvest for the period between 2011 and 2020. In certain instances, carried interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in the Netherlands. Additionally, in connection with the acquisition of Abingworth, we are entitled to up to 15% of carried interest generated from certain Abingworth funds. Realized carried interest may be clawed back or given back to the fund if the fund’s investment values decline below certain return hurdles, which vary from fund to fund. This amount is known as the “giveback obligation.” In all cases, each investment fund is considered separately in evaluating carried interest and potential giveback obligations. See Note 9 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information. Accrued performance allocations and accrued giveback obligations at a point in time assume a hypothetical liquidation of the funds’ investments at their then current fair values. Each investment fund is considered separately in evaluating carried interest and potential giveback obligations. These assets and liabilities will continue to fluctuate in accordance with the fair values of the funds’ investments until they are realized. The Company uses “net accrued performance revenues” to refer to the aggregation of the accrued performance allocations and incentive fees net of (i) accrued giveback obligations, (ii) accrued performance allocations and incentive fee related compensation, (iii) performance allocations and incentive fee related tax obligations, and (iv) accrued performance allocations and incentive fees attributable to non-controlling interests. Net accrued performance revenues excludes any net accrued performance allocations and incentive fees that have been realized but will be collected in subsequent periods, as well as net accrued performance revenues which are presented as fee related performance revenues when realized in our non-GAAP financial measures. In addition, realized performance allocations may be reversed in future periods to the extent that such amounts become subject to a giveback obligation. The aggregate amount of giveback obligations realized since Carlyle’s inception totaled $242.4 million, $160.8 million of which was related to various Legacy Energy Funds. Given current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships are responsible for paying the majority of the realized giveback obligation, only $72.3 million of the $242.4 million aggregate giveback obligation realized since inception was attributable to Carlyle. The realization of giveback obligations for the Company’s portion of such obligations reduces Distributable Earnings in the period realized. Further, each individual who holds equity interests in carried interest generated by our funds and is a recipient of realized carried interest typically signs a guarantee agreement or partnership agreement that personally obligates such person to return his/her pro rata share of any amounts of realized carried interest previously distributed that are later clawed back. Accordingly, carried interest as performance allocation compensation is subject to return to the Company in the event a giveback obligation is funded. Generally, the actual giveback liability, if any, does not become due until the end of a fund’s life. In addition, in our discussion of our non-GAAP results, we use the term “realized net performance revenues” to refer to realized performance allocations and incentive fees from our funds, net of the portion allocated to our investment professionals and other employees and certain tax expenses associated with carried interest attributable to certain partners and employees, which are reflected as realized performance allocations and incentive fees related compensation expense. See “— Non-GAAP Financial Measures” and “—Segment Analysis” for the amount of realized net performance revenues recognized each period and related discussion. Investment income also represents the realized and unrealized gains and losses on our principal investments, including our investments in Carlyle funds that are not consolidated, and our strategic investments in NGP as described below, as well as any interest and other income. Realized principal investment income (loss) is recorded when we redeem all or a portion of our investment or when we receive or are due cash income, such as dividends or distributions. A realized principal investment loss is also recorded when an investment is deemed to be worthless. Unrealized principal investment income (loss) results from changes in the fair value of the underlying investment, as well as the reversal of previously recognized unrealized gains (losses) at the time an investment is realized. 114 We account for our investments in NGP under the equity method of accounting. Our investments in NGP include the equity interests in NGP Management Company, L.L.C. (“NGP Management”) and the general partners of certain carry funds advised by NGP. These interests entitle us to an allocation of income equal to 55.0% of the management fee related revenues of NGP Management, which serves as the investment advisor to certain NGP funds as well as 47.5% (40% or 42.75% in the case of certain funds) of the performance allocations that NGP receives from the NGP Carry Funds. We record investment income (loss) for our equity income allocation from NGP management fee related revenues and also record our share of any allocated expenses from NGP Management, expenses associated with the compensatory elements of the strategic investment. We also record our equity income allocation from NGP performance allocations in principal investment income (loss) from equity method investments rather than performance allocations in our consolidated statements of operations. We do not control or manage NGP. Moreover, we do not operate NGP’s business, have representation on NGP’s board or serve as an investment advisor to any investment fund sponsored by NGP, nor do we direct the operations of any of NGP portfolio companies. While we have consent rights over certain major actions by NGP outside of the ordinary course of NGP’s business (including, for example, consent rights over items such as amendments to the organizational documents of the entity in which we are invested, changes to the management fee streams earned by NGP under its fund agreements, or the incurrence of certain debt by NGP and other similar items), we have no voting rights or consent rights on any NGP investment committee that selects investments to be made by NGP funds. For further information regarding our strategic investments in NGP, refer to Note 5 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K. Interest and other income. Interest and other income primarily represents reimbursement of certain costs incurred on behalf of our funds as well as interest income that we earn such as from our cash and money market accounts and other investments, including CLO senior and subordinated notes. Interest and other income of Consolidated Funds. Interest and other income of Consolidated Funds primarily represents the interest earned on CLO assets. Net investment income (loss) of Consolidated Funds. Net investment income (loss) of Consolidated Funds generally measures the change in the difference in fair value between the assets and the liabilities of the Consolidated Funds. Income (loss) indicates that the fair value of the assets of the Consolidated Funds appreciated more (less), or depreciated less (more), than the fair value of the liabilities of the Consolidated Funds. Income or loss is not necessarily indicative of the investment performance of the Consolidated Funds and does not impact the management or incentive fees received by Carlyle for its management of the Consolidated Funds. The portion of the net investment income (losses) of Consolidated Funds attributable to the limited partner investors is allocated to non-controlling interests. Therefore, income or loss is not expected to have a material impact on the revenues or profitability of the Company. Moreover, although the assets of the Consolidated Funds are consolidated onto our balance sheet pursuant to U.S. GAAP, ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us. Therefore, income or loss from the Consolidated Funds generally does not impact the assets available to our common stockholders. Expenses Compensation and benefits. Compensation includes salaries, bonuses, equity-based compensation, and performance payment arrangements. Bonuses are accrued over the service period to which they relate. We recognize as compensation expense the portion of performance allocations and incentive fees that are due to our employees, senior Carlyle professionals, advisors, and operating executives in a manner consistent with how we recognize the performance allocations and incentive fee revenue. These amounts are accounted for as compensation expense in conjunction with the related performance allocations and incentive fee revenue and, until paid, are recognized as a component of the accrued compensation and benefits liability. Compensation in respect of performance allocations and incentive fees is paid when the related performance allocations and incentive fees are realized, and not when such performance allocations and incentive fees are accrued. The funds do not have a uniform allocation of performance allocations and incentive fees to our employees, senior Carlyle professionals, advisors, and operating executives. However, subsequent to the updates made to our compensation strategy effective December 31, 2023, we generally expect to allocate a range of 60% to 70% of performance allocations and incentive fees. As a result, we expect that performance allocations and incentive fee related compensation will increase and cash-based compensation and benefits will decrease beginning in 2024. In addition, we have implemented various equity-based compensation arrangements that require senior Carlyle professionals and other employees to provide services over a service period of generally one year to four years in order to vest in the applicable equity interests, which under U.S. GAAP will result in compensation charges over current and future periods. In certain of our equity-based compensation arrangements, vesting is based on the achievement of certain performance targets or market conditions. See Note 15 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10- 115 K for additional information. Compensation charges associated with all equity-based compensation grants are excluded from Fee Related Earnings and Distributable Earnings. We may hire additional individuals and overall compensation levels may correspondingly increase, which could result in an increase in compensation and benefits expense. As a result of prior acquisitions, we have charges associated with contingent consideration taking the form of earn-outs and profit participation, some of which are reflected as compensation expense. General, administrative and other expenses. General, administrative and other expenses include occupancy and equipment expenses and other expenses, which consist principally of professional fees, including those related to our global regulatory compliance program, external costs of fundraising, travel and related expenses, communications and information services, depreciation and amortization (including intangible asset amortization and impairment) and foreign currency transactions. We expect that general, administrative and other expenses will vary due to infrequently occurring or unusual items, such as impairment of intangible assets or lease right-of-use assets and expenses or insurance recoveries associated with litigation and contingencies. Also, in periods of significant fundraising, to the extent that we use third parties to assist in our fundraising efforts, our general, administrative and other expenses may increase accordingly. Similarly, our general, administrative and other expenses may increase as a result of professional and other fees incurred as part of due diligence related to strategic acquisitions and new product development. Additionally, we anticipate that general, administrative and other expenses will fluctuate from period to period due to the impact of foreign exchange transactions. Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds consist primarily of interest expense related primarily to our CLO loans, professional fees and other third-party expenses. Income taxes. Income taxes are accounted for using the asset and liability method of accounting. Under this method, deferred tax assets and liabilities are recognized for the expected future tax consequences of differences between the carrying amounts of assets and liabilities and their respective tax basis, using currently enacted tax rates. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period in which the change is enacted. Deferred tax assets are reduced by a valuation allowance when it is more likely than not that some or all of the deferred tax assets will not be realized. Non-controlling Interests in Consolidated Entities. Non-controlling interests in consolidated entities represent the component of equity in consolidated entities not held by us. These interests are adjusted for general partner allocations. Earnings Per Common Share. We compute earnings per common share in accordance with ASC 260, Earnings Per Share. Basic earnings per common share is calculated by dividing net income (loss) attributable to the common shares of the Company by the weighted average number of common shares outstanding for the period. Diluted earnings per common share reflects the assumed conversion of all dilutive securities. See Note 13 to the consolidated financial statements in Part II, Item 8 of this Annual Report on Form 10-K for additional information. Non-GAAP Financial Measures Distributable Earnings. Distributable Earnings, or “DE,” is a key performance benchmark used in our industry and is evaluated regularly by management in making resource deployment and compensation decisions, and in assessing the performance of our three segments. We also use DE in our budgeting, forecasting, and the overall management of our segments. We believe that reporting DE is helpful to understanding our business and that investors should review the same supplemental financial measure that management uses to analyze our segment performance. DE is intended to show the amount of net realized earnings without the effects of consolidation of the Consolidated Funds. DE is derived from our segment reported results and is an additional measure to assess performance. Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S. GAAP in that it includes certain tax expenses associated with certain foreign performance revenues (comprised of performance allocations and incentive fees), and does not include unrealized performance allocations and related compensation expense, unrealized principal investment income, equity-based compensation expense, net income (loss) attributable to non-Carlyle interest in consolidated entities, or charges (credits) related to Carlyle corporate actions and non-recurring items. Charges (credits) related to Carlyle corporate actions and non-recurring items include: charges associated with acquisitions, dispositions or strategic investments, changes in the tax receivable agreement liability, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earn- outs and contingent consideration including gains and losses associated with the estimated fair value of contingent consideration issued in conjunction with acquisitions or strategic investments, impairment charges associated with lease right- of-use assets, gains and losses from the retirement of debt, charges associated with contract terminations and employee 116 severance, and certain general, administrative and other expenses when the timing of any future payment is uncertain. We believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance. This measure supplements and should be considered in addition to and not in lieu of the results of operations discussed further under “—Consolidated Results of Operations” prepared in accordance with U.S. GAAP. Fee Related Earnings. Fee Related Earnings, or “FRE,” is a component of DE and is used to assess the ability of the business to cover base compensation and operating expenses from total fee revenues. FRE adjusts DE to exclude net realized performance revenues, realized principal investment income from investments in Carlyle funds, and net interest (interest income less interest expense). Fee Related Earnings includes fee related performance revenues and related compensation expense, which is generally approximately 45% of fee related performance revenues. Fee related performance revenues represent the realized portion of performance revenues that are measured and received on a recurring basis, are not dependent on realization events, and which have no risk of giveback. Operating Metrics We monitor certain operating metrics that are common to the asset management industry. Fee-earning Assets under Management. Fee-earning assets under management or Fee-earning AUM refers to the assets we manage or advise from which we derive recurring fund management fees. Our Fee-earning AUM is generally based on one of the following, once fees have been activated: (a)the amount of limited partner capital commitments, generally for carry funds where the original investment period has not expired and for AlpInvest carry funds during the commitment fee period (see “Fee-earning AUM based on capital commitments” in the table below for the amount of this component at each period); (b)the remaining amount of limited partner invested capital at cost, generally for carry funds and certain co- investment vehicles where the original investment period has expired and one of our business development companies (see “Fee-earning AUM based on invested capital” in the table below for the amount of this component at each period); (c)the amount of aggregate fee-earning collateral balance at par of our CLOs and other securitization vehicles, as defined in the fund indentures (pre-2020 CLO vintages are generally exclusive of equities and defaulted positions) as of the quarterly cut-off date; (d)the external investor portion of the net asset value of certain carry funds (see “Fee-earning AUM based on net asset value” in the table below for the amount of this component at each period); (e)the fair value of Fortitude’s general account assets invested under the strategic advisory services agreement (see “Fee-earning AUM based on fair value and other” in the table below); (f)the gross assets (including assets acquired with leverage), excluding cash and cash equivalents, of one of our business development companies and certain carry funds (included in “Fee-earning AUM based on lower of cost or fair value and other” in the table below); and (g)the lower of cost or fair value of invested capital, generally for AlpInvest carry funds where the commitment fee period has expired and certain carry funds where the investment period has expired, (included in “Fee-earning AUM based on lower of cost or fair value and other” in the table below). 117 The chart below presents Fee-earning AUM by segment at each period, in billions. The table below details Fee-earning AUM by its respective components at each period. [[GREPCENT_TABLE]] [["","As of December 31,"],["","2023","","2022"],["Consolidated Results","(Dollars in millions)"],["Components of Fee-earning AUM"],["Fee-earning AUM based on capital commitments","$71,920","","$81,057"],["Fee-earning AUM based on invested capital","69,371","","60,459"],["Fee-earning AUM based on collateral balances, at par","49,999","","46,173"],["Fee-earning AUM based on net asset value","19,537","","11,979"],["Fee-earning AUM based on fair value and other","96,591","","66,909"],["Balance, End of Period(1)","$307,418","","$266,577"]] [[/GREPCENT_TABLE]] (1)Ending balances as of December 31, 2023 and 2022 exclude $15.3 billion and $11.1 billion, respectively, of pending Fee-earning AUM for which fees have not yet been activated. The table below provides the period to period rollforward of Fee-earning AUM. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["Consolidated Results","(Dollars in millions)"],["Fee-earning AUM Rollforward"],["Balance, Beginning of Period","$266,577","","$193,419"],["Inflows(1)","55,531","","95,534"],["Outflows (including realizations)(2)","(18,329)","","(18,431)"],["Market Activity & Other(3)","2,873","","(505)"],["Foreign Exchange(4)","766","","(3,440)"],["Balance, End of Period","$307,418","","$266,577"]] [[/GREPCENT_TABLE]] (1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, closed reinsurance transactions at Fortitude, as well as 118 gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM. Inflows for the year ended December 31, 2023 include $26 billion of Fee-earning AUM related to closed reinsurance transactions at Fortitude. Inflows for the year ended December 31, 2022 include $2 billion of Fee-earning AUM acquired as part of the August 2022 Abingworth transaction, $48 billion of Fee-earning AUM associated with the strategic advisory services agreement with Fortitude that was effective April 1, 2022, and $15 billion of Fee-earning AUM acquired in the March 2022 CBAM transaction. (2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-end funds, and runoff of CLO collateral balances. Distributions for funds earning management fees based on commitments during the period do not affect Fee- earning AUM. (3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value, activity of funds with fees based on gross asset value, and changes in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Refer to “—Segment Analysis” for a detailed discussion by segment of the activity affecting Fee-earning AUM for each of the periods presented by segment. Assets under Management. Assets under management or “AUM” refers to the assets we manage or advise. Our AUM generally equals the sum of the following: (a)  the aggregate fair value of our carry funds and related co-investment vehicles, and separately managed accounts, plus the capital that Carlyle is entitled to call from investors in those funds and vehicles (including Carlyle commitments to those funds and vehicles and those of senior Carlyle professionals and employees) pursuant to the terms of their capital commitments to those funds and vehicles; (b) the amount of aggregate collateral balance and principal cash at par or aggregate principal amount of the notes of our CLOs and other structured products (inclusive of all positions); (c) the net asset value of certain carry funds; (d)the fair value of Fortitude’s general account assets invested under the strategic advisory services agreement; and (e) the gross assets (including assets acquired with leverage) of our business development companies, plus the capital that Carlyle is entitled to call from investors in those vehicles pursuant to the terms of their capital commitments to those vehicles. 119 The chart below presents Total AUM by segment at each period, in billions. We include in our calculation of AUM and Fee-earning AUM the Legacy Energy Funds that we jointly advise with Riverstone and the NGP Energy Funds that are advised by NGP. Our calculation of AUM also includes third-party capital raised for the investment in Fortitude through a Carlyle-affiliated investment fund and from strategic investors who directly invest in Fortitude alongside the fund. The AUM and Fee-earning AUM related to the strategic advisory services agreement with Fortitude is inclusive of the net asset value of investments in Carlyle products. These amounts are also reflected in the AUM and Fee-earning AUM of the strategy in which they are invested. For most of our carry funds, total AUM includes the fair value of the capital invested, whereas Fee-earning AUM includes the amount of capital commitments or the remaining amount of invested capital, depending on whether the original investment period for the fund has expired. As such, Fee-earning AUM may be greater than total AUM when the aggregate fair value of the remaining investments is less than the cost of those investments. Our calculations of AUM and Fee-earning AUM may differ from the calculations of other asset managers. As a result, these measures may not be comparable to similar measures presented by other asset managers. In addition, our calculation of AUM (but not Fee-earning AUM) includes uncalled commitments to, and the fair value of invested capital in, our investment funds from Carlyle and our personnel, regardless of whether such commitments or invested capital are subject to management fees or performance allocations. Our calculations of AUM or Fee-earning AUM are not based on any definition of AUM or Fee-earning AUM that is set forth in the agreements governing the investment funds that we manage or advise. We generally use Fee-earning AUM as a metric to measure changes in the assets from which we earn recurring management fees. Total AUM tends to be a better measure of our investment and fundraising performance as it reflects investments at fair value plus available capital. 120 The table below provides the period to period rollforward of Total AUM. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Consolidated Results"],["Total AUM Rollforward"],["Balance, Beginning of Period","$372,691","","$300,957"],["Inflows(1)","63,466","","94,824"],["Outflows (including realizations)(2)","(25,880)","","(35,665)"],["Market Activity & Other(3)","13,563","","18,109"],["Foreign Exchange(4)","2,154","","(5,534)"],["Balance, End of Period","$425,994","","$372,691"]] [[/GREPCENT_TABLE]] (1)Inflows reflects the impact of gross fundraising and closed reinsurance transactions at Fortitude during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing. Inflows for the year ended December 31, 2023 include $26 billion of AUM related to closed reinsurance transactions at Fortitude. Inflows for the year ended December 31, 2022 include $2 billion of AUM acquired as part of the August 2022 Abingworth transaction, AUM of $48 billion associated with the strategic advisory services agreement with Fortitude that was effective April 1, 2022, and AUM of $15 billion acquired in the March 2022 CBAM transaction. (2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-end funds, runoff of CLO collateral balances and the expiration of available capital. (3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, and separately managed accounts, as well as the net impact of fees, expenses and non-investment income, change in gross asset value for our business development companies, changes in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement, and other changes in AUM. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Please refer to “—Segment Analysis” for a detailed discussion by segment of the activity affecting Total AUM for each of the periods presented. Available Capital. “Available Capital” refers to the amount of capital commitments available to be called for investments, which may be reduced for equity invested that is funded via a fund credit facility and expected to be called from investors at a later date, plus any additional assets/liabilities at the fund level other than active investments. Amounts previously called may be added back to available capital following certain distributions. “Expired Available Capital” occurs when a fund has passed the investment and follow-on periods and can no longer invest capital into new or existing deals. Any remaining Available Capital, typically a result of either recycled distributions or specific reserves established for the follow-on period that are not drawn, can only be called for fees and expenses and is therefore removed from the Total AUM calculation. Perpetual Capital. “Perpetual Capital” refers to the assets we manage or advise which have an indefinite term and for which there is no immediate requirement to return capital to investors upon the realization of investments made with such capital, except as required by applicable law. Perpetual Capital may be materially reduced or terminated under certain conditions, including reductions from changes in valuations and payments to investors, including through elections by investors to redeem their investments, dividend payments, and other payment obligations, as well as the termination of or failure to renew the respective investment advisory agreements. Perpetual Capital includes: (a) assets managed under the strategic advisory services agreement with Fortitude, (b) our Core Plus real estate fund, (c) our business development companies and certain other direct lending products, (d) our Interval Fund (“CTAC”) and (e) our closed-end tender offer fund Carlyle AlpInvest Private Markets Fund (“CAPM”). As of December 31, 2023, our total AUM and Fee-earning AUM included $92.0 billion and $89.1 billion, respectively, of Perpetual Capital. Performance Fee Eligible AUM. “Performance Fee Eligible AUM” represents the AUM of funds for which we are entitled to receive performance allocations, inclusive of the fair value of investments in those funds (which we refer to as “Performance Fee Eligible Fair Value”) and their Available Capital. Performance Fee Eligible Fair Value is “Performance Fee- Generating” when the associated fund has achieved the specified investment returns required under the terms of the fund’s agreement and is accruing performance revenue as of the quarter-end reporting date. Funds whose performance allocations are 121 treated as fee related performance allocations are excluded from these metrics. As of December 31, 2023, our total AUM included $217.6 billion of Performance Fee Eligible AUM. Consolidation of Certain Carlyle Funds The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities. The entities we consolidate are referred to collectively as the Consolidated Funds in our consolidated financial statements. As of December 31, 2023, our Consolidated Funds represent approximately 2% of our AUM; 2% of our management fees; and 40% of our total investment income or loss on an unconsolidated basis for the year ended December 31, 2023. We are not required under the consolidation guidance to consolidate in our financial statements most of the investment funds we advise. However, we consolidate certain CLOs and certain other funds that we advise. As of December 31, 2023, the assets and liabilities of the Consolidated Funds were primarily related to our consolidated CLOs which held approximately $6.8 billion of total assets and $6.7 billion of total liabilities of the Consolidated Funds. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the liabilities of the Consolidated Funds are non-recourse to us. Generally, the consolidation of the Consolidated Funds has a gross-up effect on our assets, liabilities and cash flows but has no net effect on the net income attributable to the Company and equity. The majority of the net economic ownership interests of the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the consolidated financial statements. The Consolidated Funds are not the same entities in all periods presented. The Consolidated Funds in future periods may change due to changes in fund terms, formation of new funds, and terminations of funds. Because only a small portion of our funds are consolidated, the performance of the Consolidated Funds is not necessarily consistent with or representative of the combined performance trends of all of our funds. For further information on our consolidation policy and the consolidation of certain funds, see Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K. Consolidated Results of Operations The following table and discussion sets forth information regarding our consolidated results of operations for the years ended December 31, 2023 and 2022. Our consolidated financial statements have been prepared on substantially the same basis for all historical periods presented; however, the consolidated funds are not the same entities in all periods shown due to changes in fund terms and the creation and termination of funds. As further described above, the consolidation of these funds primarily has the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment income (losses) of Consolidated Funds in the year that the fund is initially consolidated. The consolidation of these funds had no effect on net income attributable to the Company for the periods presented. 122 [[GREPCENT_TABLE]] [["","Year Ended December 31,","","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Revenues"],["Fund management fees","$2,043.2","","$2,030.1","","$13.1","","1%"],["Incentive fees","93.7","","63.7","","30.0","","47%"],["Investment income"],["Performance allocations","(88.6)","","1,327.5","","(1,416.1)","","NM"],["Principal investment income","133.4","","570.5","","(437.1)","","(77)%"],["Total investment income","44.8","","1,898.0","","(1,853.2)","","(98)%"],["Interest and other income","212.1","","135.9","","76.2","","56%"],["Interest and other income of Consolidated Funds","570.1","","311.0","","259.1","","83%"],["Total revenues","2,963.9","","4,438.7","","(1,474.8)","","(33)%"],["Expenses"],["Compensation and benefits"],["Cash-based compensation and benefits","1,023.7","","1,052.0","","(28.3)","","(3)%"],["Equity-based compensation","249.1","","154.0","","95.1","","62%"],["Performance allocations and incentive fee related compensation","1,103.7","","719.9","","383.8","","53%"],["Total compensation and benefits","2,376.5","","1,925.9","","450.6","","23%"],["General, administrative and other expenses","652.1","","575.8","","76.3","","13%"],["Interest","123.8","","110.4","","13.4","","12%"],["Interest and other expenses of Consolidated Funds","419.1","","211.6","","207.5","","98%"],["Other non-operating expenses","0.2","","1.0","","(0.8)","","(80)%"],["Total expenses","3,571.7","","2,824.7","","747.0","","26%"],["Other income (loss)"],["Net investment income (loss) of Consolidated Funds","6.9","","(41.5)","","48.4","","NM"],["Income (loss) before provision for income taxes","(600.9)","","1,572.5","","(2,173.4)","","NM"],["Provision (benefit) for income taxes","(104.2)","","287.8","","(392.0)","","NM"],["Net income (loss)","(496.7)","","1,284.7","","(1,781.4)","","NM"],["Net income attributable to non-controlling interests in consolidated entities","111.7","","59.7","","52.0","","87%"],["Net income (loss) attributable to The Carlyle Group Inc. Common Stockholders","$(608.4)","","$1,225.0","","$(1,833.4)","","NM"]] [[/GREPCENT_TABLE]] NM - Not meaningful. 123 Revenues Fund management fees. Fund management fees increased $13.1 million for the year ended December 31, 2023 compared to 2022, primarily due to the following: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Higher management fees from the commencement of the investment period for certain newly raised funds","$73.8"],["Lower management fees resulting from the change in basis from commitments to invested capital for certain funds and from net investment activity in funds whose management fees are based on invested capital, including the impact of changes in rate and/or base under the strategic advisory services agreement with Fortitude","(48.7)"],["Increase in catch-up management fees from subsequent closes of funds that are in the fundraising period","6.8"],["Higher management fees due to CBAM and Abingworth acquisitions","26.7"],["Lower transaction and portfolio advisory fees","(37.6)"],["All other changes","(7.9)"],["Total increase in Fund management fees(1)","$13.1"]] [[/GREPCENT_TABLE]] (1) Total increase in Fund management fees does not include our equity income allocation from NGP management fee related revenues. We do not control NGP and account for our strategic investment in NGP as an equity method investment under U.S. GAAP. Therefore, Fund management fees associated with NGP are included in Principal investment income (loss) in our U.S. GAAP results. Management fees attributable to Carlyle Partners VIII, L.P. (“CP VIII”), our eighth U.S. buyout fund was approximately 11% and 10% of fund management fees recognized during the years ended December 31, 2023 and December 31, 2022, respectively. No other fund generated over 10% of total management fees in the periods presented. Fund management fees include transaction and portfolio advisory fees, net of rebate offsets, of $68.6 million and $106.2 million for the years ended December 31, 2023 and 2022, respectively. Incentive fees. Incentive fees increased $30.0 million for the year ended December 31, 2023 compared to 2022, primarily due to an increase in incentive fees realized in our Global Credit segment, primarily related to CTAC, CLOs acquired as part of the CBAM acquisition, and our BDCs. 124 Investment income. Investment income decreased $1.9 billion for the year ended December 31, 2023 compared to 2022, which included a decrease in Performance allocations of $1.4 billion and a decrease in Principal investment income (loss) of $0.4 billion. The components of investment income are included in the following table: [[GREPCENT_TABLE]] [["","Year Ended December 31,","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Performance allocations","$(88.6)","","$1,327.5","","$(1,416.1)","","NM"],["Principal investment income (loss):"],["Investment income from NGP, which includes performance allocations","138.3","","663.3","","(525.0)","","(79)%"],["Investment income (loss) from our carry funds:"],["Global Private Equity","16.4","","76.4","","(60.0)","","(79)%"],["Global Credit","10.7","","(14.6)","","25.3","","NM"],["Global Investment Solutions","19.2","","9.5","","9.7","","NM"],["Investment income (loss) from our CLOs","21.3","","(48.6)","","69.9","","NM"],["Investment loss from Carlyle FRL","(100.7)","","(119.0)","","18.3","","(15)%"],["Investment income (loss) from our other Global Credit products","34.3","","(0.7)","","35.0","","NM"],["Investment income on foreign currency hedges","2.0","","1.1","","0.9","","82%"],["All other investment income (loss)","(8.1)","","3.1","","(11.2)","","NM"],["Total Principal investment income (loss)","133.4","","570.5","","(437.1)","","(77)%"],["Total investment income","$44.8","","$1,898.0","","$(1,853.2)","","(98)%"]] [[/GREPCENT_TABLE]] Performance allocations. Performance allocations by segment for years ended December 31, 2023 and 2022 comprised the following: [[GREPCENT_TABLE]] [["","Year Ended December 31,","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Global Private Equity","$(551.5)","","$1,098.3","","$(1,649.8)","","NM"],["Global Credit","163.7","","24.0","","139.7","","NM"],["Global Investment Solutions","299.2","","205.2","","94.0","","46%"],["Total performance allocations","$(88.6)","","$1,327.5","","$(1,416.1)","","NM"]] [[/GREPCENT_TABLE]] Primary drivers for the decrease in Performance allocations for the year ended December 31, 2023 compared to 2022 included: •A decrease of $1.6 billion in our Global Private Equity segment for the year ended December 31, 2023 compared to 2022, primarily driven by reversals of accrued carry in CP VII as preferred returns outpaced carry fund portfolio appreciation, and lower accruals in our Europe buyout and technology funds, partially offset by lower reversals in CP VI driven by lower portfolio depreciation. Additionally, the decrease for the year ended December 31, 2023 compared to 2022 also included lower carry accruals in our real estate and infrastructure and natural resources funds driven by lower carry fund portfolio appreciation. •An increase of $139.7 million in our Global Credit segment, primarily driven by carry accruals in CCOF II related to portfolio appreciation for the year ended December 31, 2023, compared to reversals of accrued carry in CSP IV in 2022. •An increase of $94.0 million in our Global Investment Solutions segment for the year ended December 31, 2023 compared to 2022, primarily driven by higher carry accruals related to appreciation in our secondaries and co- investment strategies. 125 Overall carry fund portfolio appreciation was 7% for the year ended December 31, 2023 compared to 11% for the year ended December 31, 2022. Portfolio appreciation of 7% in 2023 is comprised of: 5% appreciation for carry funds within our Global Private Equity segment, with 5% appreciation for funds focusing on corporate private equity, 1% depreciation for funds focusing on real estate, and 8% appreciation for fund focusing on infrastructure and natural resources; 12% appreciation for carry funds in our Global Credit segment; and 10% appreciation for carry funds in our Global Investment Solutions segment. Our publicly traded investments, which comprise 5% of the total fair value in our carry fund portfolio, were flat during the year. While there is no perfectly comparable market index benchmark for the overall portfolio or any of its segments or strategies, the MSCI ACWI, FTSE NAREIT Composite, and S&P Leveraged Loan Index appreciation for the year was 20%, 7%, and 4%, respectively, while the S&P Oil and Gas Exploration & Production Index depreciation was 4%. While the S&P 500 appreciated 24% in 2023, the top seven stocks (Apple, Microsoft, NVIDIA, Alphabet, Amazon, Tesla, and Meta) constituted over 60% of the yearly gain—excluding these seven stocks, the “S&P 493” appreciated 13% in 2023. See “— Trends Affecting our Business” for further details. Principal investment income (loss). The decrease in Principal investment income (loss) for the year ended December 31, 2023 compared to 2022 was primarily due to a decrease in investment income related to our equity method investment in the general partners of certain carry funds advised by NGP, driven by lower carry accruals related to NGP XI and NGP XII, partially offset by investment income from our CLOs for year ended December 31, 2023 compared to investment loss for the year ended December 31, 2022. In addition, investment loss from our equity method investment in Carlyle FRL for the year ended December 31, 2023 included an investment loss of $104.0 million which was recorded as a result of the dilution of our indirect ownership in Fortitude from 13.5% to 10.5% in connection with the final drawdown of the Fortitude capital raise. Investment loss from our equity method investment in Carlyle FRL during the year ended December 31, 2022 included an investment loss of $176.9 million which was recorded as a result of the dilution of our indirect ownership in Fortitude from 19.9% to 13.5% in connection with the initial drawdown of the Fortitude capital raise. See Note 5 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for more information. Interest and other income. Interest and other income increased $76.2 million for the year ended December 31, 2023 as compared to 2022. The increase for the year ended December 31, 2023 was primarily due to an increase in interest income earned on corporate treasury investments, cash, and other money market investments driven by higher interest rates, and an increase in the reimbursement of certain costs incurred on behalf of Carlyle funds. Interest and other income of Consolidated Funds. Interest and other income of Consolidated Funds increased $259.1 million for the year ended December 31, 2023 as compared to 2022. Substantially all of the increase in interest and other income of Consolidated Funds relates to increased interest income from consolidated CLOs. Our CLOs generate interest income primarily from investments in bonds and loans inclusive of amortization of discounts and generate other income from consent and amendment fees. Substantially all interest and other income of the CLOs and other consolidated funds together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company. Expenses Total compensation and benefits. Total compensation and benefits increased $450.6 million for the year ended December 31, 2023 compared to 2022, driven by an increase in Performance allocations and incentive fee related compensation of $383.8 million and an increase in equity-based compensation of $95.1 million, partially offset by a decrease in cash-based compensation and benefits of $28.3 million. Performance allocations and incentive fee related compensation expense. The increase in Performance allocations and incentive fee related compensation expense was primarily driven by a $1.1 billion charge to reflect the incremental expense on unrealized performance allocations as of December 31, 2023 as a result of the updated compensation program (see “—Recent Developments—Updates to Compensation Strategy”). This increase was partially offset by the impact of the decrease in Performance allocations, on which Performance allocations and incentive fee related compensation is based. Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fees fluctuates depending on the mix of funds contributing to performance allocations and incentive fees in a given period. For example, Performance allocations from our Global Investment Solutions segment may pay a higher ratio of 126 performance allocations and incentive fees as compensation, primarily as a result of the terms of our acquisition of AlpInvest (see “—Key Financial Measures—Revenues—Investment Income” for more information regarding the terms of our acquisition). Equity-based compensation. The increase in Equity-based compensation, net of forfeitures, was primarily due to an increase in grants of restricted stock units for the year ended December 31, 2023 compared to 2022. In 2023, we granted a total of 11.2 million restricted stock units to our personnel, including certain senior Carlyle professionals and other key personnel, as well as an aggregate 6.8 million of time and performance-based inducement equity awards in connection with the appointment of our chief executive officer. The year ended December 31, 2022 included approximately $10 million of net expense related to the modification of certain restricted stock awards in connection with the departure of our former chief executive officer. In February 2024, we granted 18.1 million restricted stock units. These awards included 13.2 million restricted stock units granted to certain senior Carlyle professionals with an estimated grant date fair value of approximately $347 million and which are subject to vesting based on the achievement of stock price performance conditions over a service period of three years. As a result of these grants, combined with grants of long-term strategic restricted awards in 2021 and the larger number of grants in 2023, we expect equity-based compensation will be higher in 2024 before declining thereafter. Cash-based compensation and benefits. The decrease in Cash-based compensation and benefits was primarily due to a decrease in compensation expense associated with contingent earn-out payments related to previous acquisitions totaling $77.6 million, partially offset by the impact of increased headcount to support our growth and optimization initiatives. General, administrative and other expenses. General, administrative and other expenses increased $76.3 million for the year ended December 31, 2023 compared to 2022, primarily due to an increase in foreign currency translation adjustments of $38.9 million, reflecting foreign exchange losses for the year ended December 31, 2023 compared to foreign exchange gains for the year ended December 31, 2022 related to movement in EUR relative to USD, an increase in intangible asset amortization of $31.1 million primarily related to the CBAM and Abingworth acquisitions, and an increase in technology expense, occupancy costs and fundraising costs of $20.3 million. These were partially offset by a decrease in professional fees of $33.3 million. Interest. Interest increased $13.4 million for the year ended December 31, 2023 as compared to 2022 primarily due to higher benchmark rates on our CLO term loans, interest on CLO term loans related to CBAM, which was acquired in March 2022, and to a lesser extent a new CLO term loan entered into during 2023. See Note 7 to the consolidated financial statements in Item 8 of this Annual Report on Form 10-K for more information. Interest and other expenses of Consolidated Funds. Interest and other expenses of Consolidated Funds increased $207.5 million for the year ended December 31, 2023 as compared to 2022, primarily due to higher interest expense on the consolidated CLOs. The CLOs incur interest expense on their loans payable and incur other expenses consisting of trustee fees, rating agency fees and professional fees. Substantially all interest and other income of our CLOs together with interest expense of our CLOs and net investment gains (losses) of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors. Accordingly, such amounts have no material impact on net income attributable to the Company. Net Investment Gains (Losses) of Consolidated Funds The table below summarizes the components of net investment gains (losses) of our Consolidated Funds, including our consolidated CLOs and certain other funds: [[GREPCENT_TABLE]] [["","Year Ended December 31,","","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Realized gains (losses)","$(80.8)","","$(29.6)","","$(51.2)","","NM"],["Net change in unrealized gains (losses)","327.7","","(378.5)","","706.2","","NM"],["Total gains (losses)","246.9","","(408.1)","","655.0","","NM"],["Gains (losses) from liabilities of CLOs","(240.0)","","366.6","","(606.6)","","NM"],["Total net investment gains (losses) of Consolidated Funds","$6.9","","$(41.5)","","$48.4","","NM"]] [[/GREPCENT_TABLE]] Provision (Benefit) for Income Taxes For the years ended December 31, 2023 and 2022, our provision (benefit) for income taxes was $(104.2) million and $287.8 million, respectively, and our effective tax rates were 17.3% and 18.3%, respectively. The effective tax rate for years ended December 31, 2023 and 2022 was primarily comprised of the 21% U.S. federal corporate income tax rate plus the impact of U.S. state and foreign corporate income tax provision (benefit) and non-controlling interests. The effective tax rate for the 127 year ended December 31, 2023 also differs from the statutory rate due to the impact of non-deductible restricted stock units. The effective tax rate for the year ended December 31, 2022 also differs from the statutory rate due to a net tax benefit from the vesting of deductible restricted stock units and a tax benefit due to a restructuring of ownership in our Global Investment Solutions business. As of December 31, 2023 and 2022, the Company had federal, state, local and foreign taxes payable of $46.9 million and $39.7 million, respectively, which is recorded as a component of accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance sheets. Net Income Attributable to Non-controlling Interests in Consolidated Entities Net income attributable to non-controlling interests in consolidated entities was $111.7 million and $59.7 million for the years ended December 31, 2023 and 2022, respectively. These amounts are primarily attributable to the net earnings of the Consolidated Funds for each period, which are substantially all allocated to the related fund’s limited partners or CLO investors, as well as net earnings from our Insurance Solutions business and certain other products that are allocated to certain third party investors. The net income (loss) of our Consolidated Funds, after eliminations, was $82.6 million and $36.1 million for the years ended December 31, 2023 and 2022, respectively. These amounts also reflect the net income attributable to non- controlling interests in carried interest, giveback obligations, and cash held for carried interest distributions. Non-GAAP Financial Measures The following tables set forth information in the format used by management when making resource deployment decisions and in assessing performance of our segments. These non-GAAP financial measures are presented for the years ended December 31, 2023 and 2022. Our non-GAAP financial measures exclude the effects of unrealized performance allocations net of related compensation expense, unrealized principal investment income, consolidated funds, acquisition and disposition- related items including amortization and any impairment charges of acquired intangible assets and contingent consideration taking the form of earn-outs, impairment charges associated with lease right-of-use assets, charges associated with equity-based compensation, changes in the tax receivable agreement liability, corporate actions and infrequently occurring or unusual events. The following table shows our total segment DE and FRE, for the years ended December 31, 2023 and 2022. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Total Segment Revenues","$3,405.1","","$4,401.4"],["Total Segment Expenses","1,974.6","","2,492.4"],["(=) Distributable Earnings","$1,430.5","","$1,909.0"],["(-) Realized Net Performance Revenues","531.0","","998.5"],["(-) Realized Principal Investment Income","88.8","","150.6"],["(+) Net Interest","48.7","","74.5"],["(=) Fee Related Earnings","$859.4","","$834.4"]] [[/GREPCENT_TABLE]] 128 The following table sets forth our total segment revenues for the years ended December 31, 2023 and 2022. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Segment Revenues"],["Fund level fee revenues"],["Fund management fees","$2,064.4","","$1,996.9"],["Portfolio advisory and transaction fees, net and other","80.4","","111.1"],["Fee related performance revenues","161.0","","129.3"],["Total fund level fee revenues","2,305.8","","2,237.3"],["Realized performance revenues","938.3","","1,980.7"],["Realized principal investment income","88.8","","150.6"],["Interest income","72.2","","32.8"],["Total Segment Revenues","$3,405.1","","$4,401.4"]] [[/GREPCENT_TABLE]] The following table sets forth our total segment expenses for the years ended December 31, 2023 and 2022. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Segment Expenses"],["Compensation and benefits"],["Cash-based compensation and benefits","$1,031.9","","$994.2"],["Realized performance revenue related compensation","407.3","","982.2"],["Total compensation and benefits","1,439.2","","1,976.4"],["General, administrative, and other indirect expenses","376.5","","369.8"],["Depreciation and amortization expense","38.0","","38.9"],["Interest expense","120.9","","107.3"],["Total Segment Expenses","$1,974.6","","$2,492.4"]] [[/GREPCENT_TABLE]] 129 Income (loss) before provision for income taxes is the U.S. GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings. The following table is a reconciliation of income (loss) before provision for income taxes to Distributable Earnings and to Fee Related Earnings. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Income (loss) before provision for income taxes","$(600.9)","","$1,572.5"],["Adjustments:"],["Net unrealized performance and fee related performance revenues","1,659.2","","(183.7)"],["Unrealized principal investment (income) loss","(36.1)","","38.3"],["Principal investment loss from dilution of indirect investment in Fortitude","104.0","","176.9"],["Equity-based compensation(1)","260.1","","161.9"],["Acquisition or disposition-related charges, including amortization of intangibles and impairment","145.3","","187.4"],["Tax (expense) benefit associated with certain foreign performance revenues","(1.0)","","3.0"],["Net income attributable to non-controlling interests in consolidated entities","(111.7)","","(59.7)"],["Other adjustments, including severance","11.6","","12.4"],["(=) Distributable Earnings","1,430.5","","1,909.0"],["(-) Realized net performance revenues, net of related compensation(2)","531.0","","998.5"],["(-) Realized principal investment income(2)","88.8","","150.6"],["(+) Net interest","48.7","","74.5"],["(=) Fee Related Earnings","$859.4","","$834.4"]] [[/GREPCENT_TABLE]] (1)Equity-based compensation for the years ended December 31, 2023 and 2022 includes amounts presented in principal investment income and general, administrative and other expenses in our U.S. GAAP statement of operations. (2) See reconciliation to most directly comparable U.S. GAAP measure below: [[GREPCENT_TABLE]] [["","Year Ended December 31, 2023"],["","CarlyleConsolidated","","Adjustments(3)","","TotalReportableSegments"],["","(Dollars in millions)"],["Performance revenues","$(88.6)","","$1,026.9","","$938.3"],["Performance revenues related compensation expense","1,103.7","","(696.4)","","407.3"],["Net performance revenues","$(1,192.3)","","$1,723.3","","$531.0"],["Principal investment income (loss)","$133.4","","$(44.6)","","$88.8"],["","Year Ended December 31, 2022"],["","CarlyleConsolidated","","Adjustments(3)","","TotalReportableSegments"],["","(Dollars in millions)"],["Performance revenues","$1,327.5","","$653.2","","$1,980.7"],["Performance revenues related compensation expense","719.9","","262.3","","982.2"],["Net performance revenues","$607.6","","$390.9","","$998.5"],["Principal investment income (loss)","$570.5","","$(419.9)","","$150.6"]] [[/GREPCENT_TABLE]] (3)Adjustments to performance revenues and principal investment income (loss) relate to (i) unrealized performance allocations net of related compensation expense and unrealized principal investment income, which are excluded from our Non-GAAP results, (ii) amounts earned from the Consolidated Funds, which were eliminated in the U.S. GAAP consolidation but were included in the Non-GAAP results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the Non-GAAP results, (iv) the reclassification of NGP performance revenues, which are included in investment income in the U.S. GAAP financial statements, (v) the reclassification of fee related performance revenues, which are included in fund level fee 130 revenues in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues. Adjustments to principal investment income (loss) also include the reclassification of earnings for the investment in NGP Management and its affiliates to the appropriate operating captions for the Non-GAAP results, the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the Non-GAAP results, and the exclusion of the principal investment loss from dilution of the indirect investment in Fortitude (see Note 5 to the consolidated financial statements). Distributable Earnings for our reportable segments are as follows: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Private Equity","$1,071.8","","$1,505.6"],["Global Credit","274.4","","315.5"],["Global Investment Solutions","84.3","","87.9"],["Distributable Earnings","$1,430.5","","$1,909.0"]] [[/GREPCENT_TABLE]] Segment Analysis Discussed below is our DE and FRE for our segments for the periods presented. Our segment information is reflected in the manner used by our senior management to make operating and compensation decisions, assess performance and allocate resources. For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated Funds. As a result, segment revenues from management fees, realized performance revenues and realized principal investment income (loss) are different than those presented on a consolidated U.S. GAAP basis because these revenues recognized in certain segments are received from Consolidated Funds and are eliminated in consolidation when presented on a consolidated U.S. GAAP basis. Furthermore, segment expenses are different than related amounts presented on a consolidated U.S. GAAP basis due to the exclusion of fund expenses that are paid by the Consolidated Funds. We expect our realigned compensation program effective December 31, 2023 to positively impact Fee Related Earnings and reduce the portion of realized performance revenues retained by the Company beginning in 2024. 131 Global Private Equity The following table presents our results of operations for our Global Private Equity(1) segment: [[GREPCENT_TABLE]] [["","Year Ended December 31,","","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Segment Revenues"],["Fund level fee revenues"],["Fund management fees","$1,309.8","","$1,300.9","","$8.9","","1%"],["Portfolio advisory and transaction fees, net and other","18.4","","29.5","","(11.1)","","(38)%"],["Fee related performance revenues","68.3","","69.4","","(1.1)","","(2)%"],["Total fund level fee revenues","1,396.5","","1,399.8","","(3.3)","","\u2014%"],["Realized performance revenues","805.1","","1,656.6","","(851.5)","","(51)%"],["Realized principal investment income","45.3","","108.7","","(63.4)","","(58)%"],["Interest income","31.6","","14.9","","16.7","","NM"],["Total revenues","2,278.5","","3,180.0","","(901.5)","","(28)%"],["Segment Expenses"],["Compensation and benefits"],["Cash-based compensation and benefits","583.8","","598.3","","(14.5)","","(2)%"],["Realized performance revenues related compensation","308.1","","751.5","","(443.4)","","(59)%"],["Total compensation and benefits","891.9","","1,349.8","","(457.9)","","(34)%"],["General, administrative, and other indirect expenses","221.9","","235.3","","(13.4)","","(6)%"],["Depreciation and amortization expense","26.0","","25.6","","0.4","","2%"],["Interest expense","66.9","","63.7","","3.2","","5%"],["Total expenses","1,206.7","","1,674.4","","(467.7)","","(28)%"],["(=) Distributable Earnings","$1,071.8","","$1,505.6","","$(433.8)","","(29)%"],["(-) Realized Net Performance Revenues","497.0","","905.1","","(408.1)","","(45)%"],["(-) Realized Principal Investment Income","45.3","","108.7","","(63.4)","","(58)%"],["(+) Net Interest","35.3","","48.8","","(13.5)","","(28)%"],["(=) Fee Related Earnings","$564.8","","$540.6","","$24.2","","4%"]] [[/GREPCENT_TABLE]] (1)  For purposes of presenting our results of operations for this segment, our earnings from our investments in NGP are presented in the respective operating captions. 132 Distributable Earnings Distributable Earnings decreased $433.8 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the changes in Distributable Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Distributable Earnings, December 31, 2022","$1,505.6"],["Increase in fee related earnings","24.2"],["Decrease in realized net performance revenues","(408.1)"],["Decrease in realized principal investment income","(63.4)"],["Decrease in net interest","13.5"],["Total decrease","(433.8)"],["Distributable Earnings, December 31, 2023","$1,071.8"]] [[/GREPCENT_TABLE]] Realized Net Performance Revenues. Realized net performance revenues decreased $408.1 million for the year ended December 31, 2023 as compared to 2022, reflecting the sharp slowdown in market activity during 2023 in response to higher interest rates and uncertainty in the economic outlook. The decrease was driven primarily by certain U.S., Europe, Asia and Japan buyout, U.S. real estate and Europe technology funds, partially offset by realized performance revenues from NGP and an increase in carry realizations in our equity opportunities funds. Realized net performance revenues were primarily generated by the following funds for the years ended December 31, 2023 and 2022, respectively: [[GREPCENT_TABLE]] [["Year Ended December 31,"],["2023","","2022"],["NGP XII(1)","","CP V"],["CEOF II","","CP VI"],["CEOF I","","CEOF II"],["CEP IV","","CGFSP II"],["CP VI","","CEP IV"],["CRP VIII","","CAP IV"],["","","CJP III"],["","","CETP IV"],["","","CRP VIII"]] [[/GREPCENT_TABLE]] (1)  Prior to the updated employee compensation program effective December 31, 2023 (see “—Recent Developments—Updates to Compensation Strategy”), our realized performance revenues related compensation as a percentage of realized performance revenues is generally 45% in our Global Private Equity segment. Our equity interests in the general partners of the NGP Carry Funds generally entitle us to 47.5% of performance revenues earned by such funds, which are primarily allocated to Carlyle because the investment teams for the NGP funds are not employed by Carlyle. As a result, realized performance revenues related compensation as a percentage of realized performance revenues in our Global Private Equity segment for the year ended December 31, 2023 was 38%. We do not control or advise the NGP Carry Funds. Realized Principal Investment Income. Realized principal investment income decreased $63.4 million for the year ended December 31, 2023 as compared to 2022, primarily driven by a decline in realizations in our U.S., Europe and Asia buyout and U.S. real estate funds. 133 Fee Related Earnings Fee Related Earnings increased $24.2 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the change in Fee Related Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Fee Related Earnings, December 31, 2022","$540.6"],["Decrease in fee revenues","(3.3)"],["Decrease in cash-based compensation and benefits","14.5"],["Decrease in general, administrative and other indirect expenses","13.4"],["All other changes","(0.4)"],["Total increase","24.2"],["Fee Related Earnings, December 31, 2023","$564.8"]] [[/GREPCENT_TABLE]] Fee Revenues. Total fee revenues decreased $3.3 million for the year ended December 31, 2023 as compared to 2022, due to the following: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Higher fund management fees","$8.9"],["Lower portfolio advisory and transaction fees, net and other","(11.1)"],["Lower fee related performance revenues","(1.1)"],["Total decrease in fee revenues","$(3.3)"]] [[/GREPCENT_TABLE]] The increase in fund management fees for the year ended December 31, 2023 as compared to 2022 was primarily due to the impact of a full year of management fees and additional fundraising in CETP V and CRSEF II, which activated fees during 2022, additional fundraising and catch-up management fees in CP VIII and CP Growth, as well as the impact of fundraising across the platform and management fees from Abingworth, which was acquired in August 2022. These increases were partially offset by the impact of investment realizations in funds on which management fees are based on invested capital. See “—Fee-earning AUM” below for additional details regarding changes in the Fee-earning AUM for the segment during the year ended December 31, 2023. The decrease in fee related performance revenues for the year ended December 31, 2023 as compared to 2022 was driven by CPI, which will fluctuate from quarter to quarter. Portfolio advisory and transaction fees, net and other decreased for the year ended December 31, 2023 as compared to 2022, primarily driven by the termination of portfolio fees in connection with the realization of investments in certain portfolio companies over the last year, as well as a transaction fee related to our U.S. buyout strategy earned in 2022. The recognition of portfolio advisory and transaction fees can be volatile as they are primarily generated by investment activity within our funds, and therefore are impacted by our investment pace. Cash-based compensation and benefits expense. Cash-based compensation and benefits expense decreased $14.5 million, for the year ended December 31, 2023 as compared to 2022, primarily due to a decrease in headcount partially offset by the impact of the Abingworth acquisition in August 2022. General, administrative and other indirect expenses. General, administrative and other indirect expenses decreased $13.4 million for the year ended December 31, 2023 as compared to 2022, primarily due to to lower professional fees as well as the reimbursement of $7.5 million in advances to a portfolio company, previously reserved in 2022, partially offset by lower foreign currency gains. 134 Fee-earning AUM Fee-earning AUM is presented below for each period together with the components of change during each respective period. The table below breaks out Fee-earning AUM by its respective components at each period. [[GREPCENT_TABLE]] [["","As of December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Private Equity"],["Components of Fee-earning AUM(1)"],["Fee-earning AUM based on capital commitments","$52,172","","$55,227"],["Fee-earning AUM based on invested capital","44,524","","42,028"],["Fee-earning AUM based on net asset value","6,877","","6,188"],["Fee-earning AUM based on lower of cost or fair value and other","3,078","","4,358"],["Total Fee-earning AUM","$106,651","","$107,801"],["Annualized Management Fee Rate(2)","1.22%","","1.23%"]] [[/GREPCENT_TABLE]] (1)For additional information concerning the components of Fee-earning AUM, see “—Key Financial Measures—Operating Metrics.” (2)Represents Fund management fees divided by the average of the beginning of year and each quarter end’s Fee-earning AUM in the reporting period. The table below provides the period to period rollforward of Fee-earning AUM. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Private Equity"],["Fee-earning AUM Rollforward"],["Balance, Beginning of Period","$107,801","","$104,252"],["Inflows(1)","6,863","","12,983"],["Outflows (including realizations)(2)","(7,917)","","(8,306)"],["Market Activity & Other(3)","(413)","","61"],["Foreign Exchange(4)","317","","(1,189)"],["Balance, End of Period","$106,651","","$107,801"]] [[/GREPCENT_TABLE]] (1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows for the year ended December 31, 2022 include $2 billion of Fee-earning AUM associated with the Abingworth transaction in August 2022. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM. (2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, and reductions for funds that are no longer calling for fees. Realizations for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. (3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Fee-earning AUM was $106.7 billion at December 31, 2023, a decrease of $1.1 billion, or 1%, compared to $107.8 billion at December 31, 2022. The decrease was driven by outflows of $7.9 billion from realizations in funds that charge fees based on invested capital. The decrease was partially offset by inflows of $6.9 billion primarily related to the activation of management fees in NGP XIII and CRSEF II, capital deployment in CPI, and additional fee-paying commitments raised in CP 135 VIII and CP Growth. Investment and distribution activity by funds still in the investment period does not impact Fee-earning AUM as these funds are based on commitments. Total AUM The table below provides the period to period rollforward of Total AUM. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Private Equity"],["Total AUM Rollforward"],["Balance, Beginning of Period","$163,098","","$162,117"],["Inflows(1)","8,759","","12,391"],["Outflows (including realizations)(2)","(14,375)","","(22,086)"],["Market Activity & Other(3)","3,073","","12,554"],["Foreign Exchange(4)","753","","(1,878)"],["Balance, End of Period","$161,308","","$163,098"]] [[/GREPCENT_TABLE]] (1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing. Inflows for the year ended December 31, 2022 include $2 billion of AUM associated with the August 2022 Abingworth acquisition. (2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-ended funds, and the expiration of available capital. (3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, and other changes in AUM. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Total AUM was $161.3 billion at December 31, 2023, a decrease of $1.8 billion, or 1%, compared to $163.1 billion at December 31, 2022. Driving the decrease were outflows of $14.4 billion primarily from distributions of investment proceeds in the NGP Energy, U.S. Real Estate, U.S. Buyout, and International Energy funds. Offsetting this were $8.8 billion of inflows, largely attributable to capital raised in CAP VI, NGP XIII, and CJP V, which had first closings during the year, and additional capital raised in CP VIII and CP Growth. Portfolio appreciation of $3.1 billion was driven by appreciation of $1.1 billion in CP VII, $1.0 billion in CP VIII, and $0.7 billion in NGP XII, partially offset by depreciation of $1.3 billion in CP VI. Fund Performance Metrics Fund performance information for our investment funds that generally have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of December 31, 2023, which we refer to as our “significant funds,” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See Part I, Item 1A “Risk Factors—Risks Related to Our Business Operations—Risks Related to the Assets We Manage—The historical returns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.” The following tables reflect the performance of our significant funds in our Global Private Equity business. See Part I, Item 1 “Business—Our Global Investment Offerings” for a legend of the fund acronyms listed below. 136 [[GREPCENT_TABLE]] [["(Amounts in millions)","","","","","TOTAL INVESTMENTS","","REALIZED/PARTIALLY REALIZED INVESTMENTS (5)"],["","","","","","As of December 31, 2023","","As of December 31, 2023"],["Fund (Fee Initiation Date/Stepdown Date) (19)","","CommittedCapital (20)","CumulativeInvestedCapital (1)","Percent Invested","RealizedValue (2)","Remaining Fair Value (3)","MOIC (4)","Gross IRR (6)(12)","Net IRR (7)(12)","Net Accrued Carry/(Giveback) (8)","","TotalFairValue (9)","MOIC (4)","GrossIRR (6)(12)"],["Corporate Private Equity"],["CP VIII (Oct 2021 / Oct 2027)","","$14,797","$7,490","51%","$680","$8,229","1.2x","NM","NM","$1","","n/a","n/a","n/a"],["CP VII (May 2018 / Oct 2021)","","$18,510","$17,740","96%","$2,150","$22,495","1.4x","11%","8%","$45","","$1,632","1.2x","13%"],["CP VI (May 2013 / May 2018)","","$13,000","$13,140","101%","$23,982","$5,249","2.2x","18%","14%","$210","","$26,623","2.5x","22%"],["CP V (Jun 2007 / May 2013)","","$13,720","$13,238","96%","$28,073","$832","2.2x","18%","14%","$58","","$28,149","2.3x","20%"],["CEP V (Oct 2018 / Sep 2024)","","\u20ac6,416","\u20ac5,538","86%","\u20ac1,446","\u20ac6,141","1.4x","17%","9%","$85","","n/a","n/a","n/a"],["CEP IV (Sep 2014 / Oct 2018)","","\u20ac3,670","\u20ac3,797","103%","\u20ac6,188","\u20ac1,371","2.0x","18%","12%","$87","","\u20ac6,277","2.1x","20%"],["CEP III (Jul 2007 / Dec 2012)","","\u20ac5,295","\u20ac5,177","98%","\u20ac11,716","\u20ac110","2.3x","19%","14%","$9","","\u20ac11,654","2.3x","19%"],["CAP V (Jun 2018 / Jun 2024)","","$6,554","$5,713","87%","$1,499","$6,260","1.4x","18%","8%","$81","","$916","1.8x","142%"],["CAP IV (Jul 2013 / Jun 2018)","","$3,880","$4,146","107%","$6,400","$2,424","2.1x","18%","13%","$165","","$7,577","2.9x","26%"],["CJP IV (Oct 2020 / Oct 2026)","","\u00a5258,000","\u00a5180,016","70%","\u00a553,996","\u00a5237,248","1.6x","50%","29%","$45","","\u00a550,774","3.5x","155%"],["CJP III (Sep 2013 / Aug 2020)","","\u00a5119,505","\u00a591,192","76%","\u00a5214,998","\u00a539,358","2.8x","24%","17%","$17","","\u00a5203,055","3.4x","27%"],["CGFSP III (Dec 2017 / Dec 2023)","","$1,005","$942","94%","$383","$1,701","2.2x","30%","21%","$70","","$781","6.2x","50%"],["CGFSP II (Jun 2013 / Dec 2017)","","$1,000","$943","94%","$1,960","$538","2.7x","26%","20%","$30","","$1,956","2.4x","28%"],["CP Growth (Oct 2021 / Oct 2027)","","$1,283","$353","27%","$\u2014","$386","1.1x","NM","NM","$\u2014","","n/a","n/a","n/a"],["CEOF II (Nov 2015 / Mar 2020)","","$2,400","$2,361","98%","$3,095","$1,914","2.1x","21%","15%","$82","","$3,122","2.9x","37%"],["CETP V (Mar 2022 / Jun 2028)","","\u20ac3,180","\u20ac1,024","32%","\u20ac\u2014","\u20ac1,033","1.0x","NM","NM","$\u2014","","n/a","n/a","n/a"],["CETP IV (Jul 2019 / Jun 2022)","","\u20ac1,350","\u20ac1,177","87%","\u20ac813","\u20ac1,740","2.2x","39%","27%","$67","","\u20ac788","9.3x","122%"],["CETP III (Jul 2014 / Jul 2019)","","\u20ac657","\u20ac602","92%","\u20ac1,278","\u20ac736","3.3x","42%","29%","$46","","\u20ac1,288","3.4x","46%"],["CGP II (Dec 2020 / Jan 2025)","","$1,840","$984","53%","$16","$1,180","1.2x","11%","6%","$6","","n/a","n/a","n/a"],["CGP (Jan 2015 / Mar 2021)","","$3,588","$3,206","89%","$1,427","$3,011","1.4x","6%","5%","$31","","$1,688","2.1x","16%"],["CAGP IV (Aug 2008 / Dec 2014)","","$1,041","$954","92%","$1,141","$79","1.3x","6%","1%","$\u2014","","$1,131","1.3x","7%"],["CSABF (Dec 2009 / Dec 2016)","","$776","$773","100%","$541","$326","1.1x","2%","Neg","$\u2014","","$660","1.3x","5%"],["All Other Active Funds & Vehicles (10)","","","$20,535","n/a","$17,154","$15,493","1.6x","21%","14%","$35","","$17,146","2.1x","29%"],["Fully Realized Funds & Vehicles (11)(21)","","","$31,019","n/a","$74,477","$2","2.4x","28%","20%","$\u2014","","$74,479","2.4x","28%"],["TOTAL CORPORATE PRIVATE EQUITY (13)","$144,619","n/a","$188,611","$84,396","1.9x","25%","17%","$1,169","","$189,797","2.4x","26%"],["Real Estate"],["CRP IX ( Oct 2021 / Oct 2026 )","","$7,987","$3,573","45%","$\u2014","$3,726","1.0x","NM","NM","$\u2014","","$35","1.2x","NM"],["CRP VIII (Aug 2017 / Oct 2021)","","$5,505","$5,160","94%","$4,674","$4,171","1.7x","39%","24%","$109","","$4,718","2.1x","54%"],["CRP VII (Jun 2014 / Dec 2017)","","$4,162","$3,843","92%","$4,912","$1,426","1.6x","17%","11%","$38","","$4,874","1.8x","22%"],["CRP VI (Mar 2011 / Jun 2014)","","$2,340","$2,179","93%","$3,790","$147","1.8x","27%","18%","$3","","$3,709","1.9x","29%"],["CPI (May 2016 / n/a)","","$7,534","$7,852","104%","$2,442","$7,666","1.3x","14%","12%","n/a*","","$1,376","1.7x","10%"],["All Other Active Funds & Vehicles (14)","","","$3,131","n/a","$1,258","$2,974","1.4x","9%","8%","$9","","$876","1.7x","20%"],["Fully Realized Funds & Vehicles (15)(21)","","","$13,011","n/a","$19,611","$14","1.5x","10%","6%","$\u2014","","$19,624","1.5x","10%"],["TOTAL REAL ESTATE (13)","$38,749","n/a","$36,687","$20,125","1.5x","12%","8%","$158","","$35,213","1.7x","13%"],["Infrastructure & Natural Resources"],["CIEP II (Apr 2019 / Apr 2025)","","$2,286","$1,008","44%","$707","$927","1.6x","32%","14%","$25","","$644","2.7x","NM**"],["CIEP I (Sep 2013 / Jun 2019)","","$2,500","$2,409","96%","$2,310","$2,198","1.9x","16%","10%","$102","","$3,392","2.7x","24%"],["CPP II (Sep 2014 / Apr 2021)","","$1,527","$1,583","104%","$1,220","$1,728","1.9x","16%","10%","$80","","$1,633","3.2x","30%"],["CGIOF (Dec 2018 / Sep 2023)","","$2,201","$1,871","85%","$447","$2,347","1.5x","22%","12%","$47","","$416","1.5x","25%"],["CRSEF II (Nov 2022 / Aug 2027)","","$1,004","$265","26%","$\u2014","$340","1.3x","NM","NM","$2","","n/a","n/a","n/a"],["NGP XIII (Feb 2023 / Feb 2028)","","$1,628","$140","9%","$\u2014","$142","1.0x","NM","NM","$\u2014","","n/a","n/a","n/a"],["NGP XII (Jul 2017 / Jul 2022)","","$4,304","$3,014","70%","$3,527","$2,683","2.1x","22%","16%","$41","","$3,537","3.5x","41%"],["NGP XI (Oct 2014 / Jul 2017)","","$5,325","$5,034","95%","$5,796","$3,848","1.9x","14%","10%","$136","","$6,837","2.1x","24%"],["NGP X (Jan 2012 / Dec 2014)","","$3,586","$3,351","93%","$3,414","$292","1.1x","3%","Neg","$\u2014","","$3,261","1.2x","5%"],["All Other Active Funds & Vehicles (17)","","","$4,855","n/a","$3,031","$4,325","1.5x","14%","12%","$20","","$3,229","2.3x","24%"],["Fully Realized Funds & Vehicles (18)","","","$1,190","n/a","$1,435","$\u2014","1.2x","3%","1%","$\u2014","","$1,435","1.2x","3%"],["TOTAL INFRASTRUCTURE & NATURAL RESOURCES","$24,720","n/a","$21,887","$18,830","1.6x","12%","8%","$452","","$24,384","2.1x","16%"],["Legacy Energy Funds (16)","","","$16,741","n/a","$24,001","$33","1.4x","12%","6%","$(1)","","$23,568","1.5x","14%"]] [[/GREPCENT_TABLE]] 137 *Net accrued fee related performance revenues for CPI of $5 million are excluded from Net Accrued Performance Revenues. These amounts will be reflected as Fee related performance revenues when realized, and included in Fund level fee revenues in our segment results. **The IRR is incalculable, which occurs in instances when a distribution occurs prior to a Limited Partner capital contribution due to the use of fund-level credit facilities.    (1)    Represents the original cost of investments since inception of the fund. (2)Represents all realized proceeds since inception of the fund. (3)Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments. (4)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. (5)An investment is considered realized when the investment fund has completely exited, and ceases to own an interest in, the investment. An investment is considered partially realized when the total amount of proceeds received in respect of such investment, including dividends, interest or other distributions and/or return of capital, represents at least 85% of invested capital and such investment is not yet fully realized. Because part of our value creation strategy involves pursuing best exit alternatives, we believe information regarding Realized/Partially Realized MOIC and Gross IRR, when considered together with the other investment performance metrics presented, provides investors with meaningful information regarding our investment performance by removing the impact of investments where significant realization activity has not yet occurred. Realized/Partially Realized MOIC and Gross IRR have limitations as measures of investment performance, and should not be considered in isolation. Such limitations include the fact that these measures do not include the performance of earlier stage and other investments that do not satisfy the criteria provided above. The exclusion of such investments will have a positive impact on Realized/Partially Realized MOIC and Gross IRR in instances when the MOIC and Gross IRR in respect of such investments are less than the aggregate MOIC and Gross IRR. Our measurements of Realized/Partially Realized MOIC and Gross IRR may not be comparable to those of other companies that use similarly titled measures. (6)Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.  (7)Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.  (8)Represents the net accrued performance revenue balance/(giveback obligation) as of the current quarter end. (9)Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. (10)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: MENA, CCI, CSSAF I, CPF I, CAP Growth I, CAP Growth II, CBPF II, CEP II, ABV 8 and ACCD 2. (11)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CP I, CP II, CP III, CP IV, CEP I, CAP I, CAP II, CAP III, CBPF I, CJP I, CJP II, CMG, CVP I, CVP II, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III, CEOF I and Mexico. (12)For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end. (13)For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate. 138 (14)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: CCR, CER I and CER II. (15)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CRP I, CRP II, CRP III, CRP IV, CRP V, CRCP I, CAREP I, CAREP II, CEREP I, CEREP II and CEREP III. (16)Aggregate includes the following Legacy Energy funds and related co-investments: Energy I, Energy II, Energy III, Energy IV, Renew I, and Renew II. (17)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: NGP GAP, NGP RP I, NGP RP II, NGP ETP IV, CPOCP and CRSEF. (18)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CIP. (19)The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds on which the fee basis stepdown has not yet occurred. Funds without a listed Fee Initiation Date and Stepdown Date have not yet initiated fees. (20)All amounts shown represent total capital commitments as of December 31, 2023. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change. (21)  Funds are included when all investments have been realized. There may be remaining fair value and net accrued carry where there are outstanding escrow balances or undistributed proceeds. 139 Global Credit The following table presents our results of operations for our Global Credit segment: [[GREPCENT_TABLE]] [["","Year Ended December 31,","","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Segment Revenues"],["Fund level fee revenues"],["Fund management fees","$512.2","","$473.1","","$39.1","","8%"],["Portfolio advisory and transaction fees, net and other","62.0","","81.6","","(19.6)","","(24)%"],["Fee related performance revenues","89.1","","59.9","","29.2","","49%"],["Total fund level fee revenues","663.3","","614.6","","48.7","","8%"],["Realized performance revenues","43.5","","131.5","","(88.0)","","(67)%"],["Realized principal investment income","37.1","","38.1","","(1.0)","","(3)%"],["Interest income","34.7","","15.3","","19.4","","NM"],["Total revenues","778.6","","799.5","","(20.9)","","(3)%"],["Segment Expenses"],["Compensation and benefits"],["Cash-based compensation and benefits","324.5","","284.2","","40.3","","14%"],["Realized performance revenues related compensation","20.3","","61.3","","(41.0)","","(67)%"],["Total compensation and benefits","344.8","","345.5","","(0.7)","","\u2014%"],["General, administrative, and other indirect expenses","106.8","","97.7","","9.1","","9%"],["Depreciation and amortization expense","7.6","","8.2","","(0.6)","","(7)%"],["Interest expense","45.0","","32.6","","12.4","","38%"],["Total expenses","504.2","","484.0","","20.2","","4%"],["(=) Distributable Earnings","$274.4","","$315.5","","$(41.1)","","(13)%"],["(-) Realized Net Performance Revenues","23.2","","70.2","","(47.0)","","(67)%"],["(-) Realized Principal Investment Income","37.1","","38.1","","(1.0)","","(3)%"],["(+) Net Interest","10.3","","17.3","","(7.0)","","(40)%"],["(=) Fee Related Earnings","$224.4","","$224.5","","$(0.1)","","\u2014%"]] [[/GREPCENT_TABLE]] 140 Distributable Earnings Distributable Earnings decreased $41.1 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the changes in Distributable Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Distributable Earnings, December 31, 2022","$315.5"],["Decrease in fee related earnings","(0.1)"],["Decrease in realized net performance revenues","(47.0)"],["Decrease in realized principal investment income","(1.0)"],["Decrease in net interest","7.0"],["Total decrease","(41.1)"],["Distributable Earnings, December 31, 2023","$274.4"]] [[/GREPCENT_TABLE]] Realized Net Performance Revenues. Realized net performance revenues decreased $47.0 million for the year ended December 31, 2023 as compared to 2022, primarily due to a decrease in realized net performance revenues generated by our structured credit fund and CCOF I, partially offset by realized net performance revenues generated by CSP II in 2023. We realized net giveback obligations of $1.7 million and $5.9 million for CSP III during the years ended December 31, 2023 and 2022, respectively. Realized Principal Investment Income. Realized principal investment income decreased $1.0 million for the year ended December 31, 2023 as compared to 2022, primarily driven by lower realized principal investment income from our Europe CLOs, partially offset by higher realized principal investment income from our direct lending strategy. Fee Related Earnings Fee Related Earnings decreased $0.1 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the change in Fee Related Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Fee Related Earnings, December 31, 2022","$224.5"],["Increase in fee revenues","48.7"],["Increase in cash-based compensation and benefits","(40.3)"],["Increase in general, administrative and other indirect expenses","(9.1)"],["All other changes","0.6"],["Total decrease","(0.1)"],["Fee Related Earnings, December 31, 2023","$224.4"]] [[/GREPCENT_TABLE]] 141 Fee Revenues. Fee revenues increased $48.7 million for the year ended December 31, 2023 as compared to 2022, due to the following: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Higher fund management fees","$39.1"],["Lower portfolio advisory and transaction fees, net and other","(19.6)"],["Higher fee related performance revenues","29.2"],["Total increase in fee revenues","$48.7"]] [[/GREPCENT_TABLE]] The increase in fund management fees for the year ended December 31, 2023 as compared to 2022 was primarily driven by an increase of $42.0 million in our private credit and liquid credit strategies, partially offset by a decrease of $14.2 million in our insurance and real assets credit strategies. The increase in private credit was primarily driven by investment activity in CCOF II, partially offset by the impact of investment realizations in CCOF I. The increase in liquid credit was primarily driven by the impact of U.S. and Europe CLO issuances in 2022, as well as the full-year impact of the CBAM transaction in March 2022. The decrease in our insurance and real estate credit strategies was primarily driven by investment realizations in CEMOF II as well as the impact of changes in the rate and base under the strategic advisory services agreement with Fortitude. The increase in fee related performance revenues for the year ended December 31, 2023 as compared to 2022 was primarily driven by higher fee related performance revenues from CTAC and our direct lending products. See “—Fee-earning AUM” below for additional details regarding changes in the Fee-earning AUM for the segment during the year ended December 31, 2023. The decrease in portfolio advisory and transaction fees, net, and other fees for the year ended December 31, 2023 as compared to 2022 were primarily driven by transaction fees in our insurance and real assets credit strategies in 2022. The recognition of transaction fees and capital markets fees can be volatile as they are primarily generated by investment activity. Cash-based compensation and benefits expense. Cash-based compensation and benefits expense increased $40.3 million for the year ended December 31, 2023 as compared to 2022, reflecting an increase in headcount as well as a $10.6 million increase in compensation associated with fee related performance revenues. General, administrative and other indirect expenses. General, administrative and other indirect expenses increased $9.1 million for the year ended December 31, 2023 as compared to 2022, primarily driven by higher costs incurred on behalf certain funds while in fundraising as well as increased technology costs, partially offset by lower professional fees. 142 Fee-earning AUM  Fee-earning AUM is presented below for each period together with the components of change during each respective period. The table below breaks out Fee-earning AUM by its respective components at each period. [[GREPCENT_TABLE]] [["","As of December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Credit"],["Components of Fee-earning AUM(1)"],["Fee-earning AUM based on capital commitments","$2,260","","$6,240"],["Fee-earning AUM based on invested capital","16,388","","13,446"],["Fee-earning AUM based on collateral balances, at par","49,999","","46,173"],["Fee-earning AUM based on net asset value","2,130","","2,008"],["Fee-earning AUM based on fair value and other(2)","84,461","","53,362"],["Total Fee-earning AUM","$155,238","","$121,229"],["Annualized Management Fee Rate(3)","0.39%","","0.50%"]] [[/GREPCENT_TABLE]] (1)For additional information concerning the components of Fee-earning AUM, see “—Key Financial Measures—Operating Metrics.” (2)Includes the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement and funds with fees based on gross asset value. (3)Represents Fund Management Fees divided by the average of the beginning of year and each quarter end’s Fee-earning AUM in the reporting period. The table below provides the period to period rollforward of Fee-earning AUM. [[GREPCENT_TABLE]] [["","Year Ended Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Credit"],["Fee-earning AUM Rollforward"],["Balance, Beginning of Period","$121,229","","$51,718"],["Inflows(1)","35,568","","78,057"],["Outflows (including realizations)(2)","(4,705)","","(6,845)"],["Market Activity & Other(3)","2,793","","(1,103)"],["Foreign Exchange(4)","353","","(598)"],["Balance, End of Period","$155,238","","$121,229"]] [[/GREPCENT_TABLE]] (1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period, the fee-earning commitments invested in vehicles for which management fees are based on invested capital, the fee-earning collateral balance of new CLO issuances, as well as gross subscriptions in our vehicles for which management fees are based on net asset value. Inflows for the year ended December 31, 2023 include $26 billion of Fee-earning AUM related to closed reinsurance transactions at Fortitude. Inflows for the year ended December 31, 2022 include $48 billion of Fee-earning AUM associated with the strategic advisory services agreement with Fortitude that was effective April 1, 2022 and $14 billion of Fee- earning AUM acquired in the CBAM transaction in March 2022. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM. (2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, reductions for funds that are no longer calling for fees, gross redemptions in our open-ended funds, and runoff of CLO collateral balances. Realizations for funds earning management fees based on commitments during the period do not affect Fee- earning AUM. (3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in funds or vehicles based on the lower of cost or fair value or net asset value, activity of funds with fees based on gross asset value, and changes in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement. 143 (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Fee-earning AUM was $155.2 billion at December 31, 2023, an increase of $34.0 billion, or 28%, compared to $121.2 billion at December 31, 2022. The increase was driven $35.6 billion of inflows primarily from $26 billion of closed reinsurance transactions at Fortitude, investment activity in our opportunistic credit and credit strategic solutions funds, and the closing of our five latest vintage U.S. CLOs. Also contributing to the increase was positive market activity of $2.8 billion primarily from an increase in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement. This increase was minimally offset by outflows of $4.7 billion primarily due to reductions for funds that are no longer calling for management fees, realizations in funds with fees tied to invested capital, and runoff of our CLO collateral balances. Distributions from carry funds still in the investment period do not impact Fee-earning AUM as these funds are based on commitments and not invested capital. Total AUM The table below provides the period to period rollforward of Total AUM. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Credit"],["Total AUM Rollforward"],["Balance, Beginning of Period","$146,302","","$73,384"],["Inflows(1)","41,975","","78,277"],["Outflows (including realizations)(2)","(5,613)","","(5,741)"],["Market Activity & Other(3)","4,789","","991"],["Foreign Exchange(4)","373","","(609)"],["Balance, End of Period","$187,826","","$146,302"]] [[/GREPCENT_TABLE]] (1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing. Inflows for the year ended December 31, 2023 include $26 billion of AUM related to closed reinsurance transactions at Fortitude. Inflows for the year ended December 31, 2022 include $48 billion of AUM associated with the strategic advisory services agreement with Fortitude which was effective April 1, 2022, as well as $15 billion of AUM acquired in the CBAM transaction in March 2022. (2)Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, and separately managed accounts, gross redemptions in our open-ended funds, runoff of CLO collateral balances, and the expiration of available capital. (3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles, and separately managed accounts, as well as the impact of fees, expenses and non-investment income, change in gross asset value for our business development companies, changes in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement, and other changes in AUM. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Total AUM was $187.8 billion at December 31, 2023, an increase of $41.5 billion, or 28%, compared to $146.3 billion at December 31, 2022. The increase was driven by $42.0 billion of inflows primarily from $26 billion of closed reinsurance transactions at Fortitude as well as funds raised in our credit strategic solutions and opportunistic credit funds and the closing of our five latest vintage U.S. CLOs Also driving the increase was $4.8 billion of positive market activity related to an increase in the fair value of Fortitude’s general account assets covered by the strategic advisory services agreement and appreciation in our opportunistic credit funds. The increase was minimally offset by outflows of $5.6 billion due to runoff of CLO and other collateral balances, as well as distributions and the expiration of dry powder in our infrastructure credit and opportunistic credit funds. Fund Performance Metrics Fund performance information for certain of our Global Credit funds is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. The fund return information 144 reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See Part I, Item 1A “Risk Factors—Risks Related to Our Business Operations—Risks Related to the Assets We Manage—The historical returns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.” The following table reflects the performance of carry funds in our Global Credit business. These tables separately present carry funds that, as of the periods presented, had at least $1.0 billion in capital commitments, cumulative equity invested or total equity value. See Part I, Item 1 “Business—Our Global Investment Offerings” for a legend of the fund acronyms listed below. [[GREPCENT_TABLE]] [["(Dollars in millions)","","","","","TOTAL INVESTMENTS"],["","","","","","As of December 31, 2023"],["Fund (Fee Initiation Date/Stepdown Date) (11)","","Committed Capital (12)","Cumulative Invested Capital (1)","Percent Invested","RealizedValue (2)","Remaining Fair Value (3)","MOIC (4)","Gross IRR (5)(8)","Net IRR (6)(8)","Net Accrued Carry/(Giveback) (7)"],["CCOF III (Feb 2023 / Jun 2028)","","$2,273","$896","39%","$14","$949","1.1x","NM","NM","$1"],["CCOF II (Nov 2020 / Oct 2025)","","$4,430","$5,148","116%","$1,073","$5,228","1.2x","16%","11%","$65"],["CCOF I (Nov 2017 / Sep 2022)","","$2,373","$3,471","146%","$3,005","$1,740","1.4x","17%","12%","$27"],["CSP IV (Apr 2016 / Dec 2020)","","$2,500","$2,500","100%","$948","$2,319","1.3x","11%","5%","$\u2014"],["CSP III (Dec 2011 / Aug 2015)","","$703","$703","100%","$931","$31","1.4x","18%","8%","$\u2014"],["CEMOF II (Dec 2015 / Jun 2019)","","$1,692","$1,713","101%","$1,841","$333","1.3x","7%","3%","$\u2014"],["SASOF III (Nov 2014 / n/a)","","$833","$991","119%","$1,197","$63","1.3x","18%","10%","$5"],["All Other Active Funds & Vehicles (9)","","","$9,828","n/a","$2,208","$8,256","1.1x","4%","3%","$20"],["Fully Realized Funds & Vehicles (10)(13)","","","$6,625","n/a","$8,190","$\u2014","1.2x","9%","3%","$\u2014"],["TOTAL GLOBAL CREDIT CARRY FUNDS","","","$31,875","n/a","$19,406","$18,918","1.2x","10%","5%","$118"]] [[/GREPCENT_TABLE]] (1)Represents the original cost of investments since the inception of the fund. For CSP III and CSP IV, reflects amounts net of investment level recallable proceeds which is adjusted to reflect recyclability of invested capital for the purpose of calculating the fund MOIC. (2)Represents all realized proceeds since inception of the fund. (3)Represents remaining fair value, before management fees, expenses and carried interest, and may include remaining escrow values for realized investments. (4)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. (5)Gross Internal Rate of Return (“Gross IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, before the impact of management fees, partnership expenses and carried interest. For fund vintages 2017 and after, Gross IRR includes the impact of interest expense related to the funding of investments on fund lines of credit. Gross IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Subtotal Gross IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.  (6)Net Internal Rate of Return (“Net IRR”) represents an annualized time-weighted return on Limited Partner invested capital, based on contributions, distributions and unrealized fair value as of the reporting date, after the impact of all management fees, partnership expenses and carried interest, including current accruals. Net IRR is calculated based on the timing of Limited Partner cash flows, which may differ to varying degrees from the timing of actual investment cash flows for the fund. Fund level IRRs are based on aggregate Limited Partner cash flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. Subtotal Net IRR aggregations for multiple funds are calculated based on actual cash flow dates for each fund and represent a theoretical time-weighted return for a Limited Partner who invested sequentially in each fund.  (7)Represents the net accrued performance revenue balance/(giveback obligation) as of the current quarter end. (8)For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end. (9)Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us: SASOF IV, SASOF V, CALF, and CICF. 145 (10)Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMAs), and certain other stand-alone investments arranged by us: CSP I, CSP II, CEMOF I, CSC, CMP I, CMP II, SASOF II, and CASCOF. (11)The fund stepdown date represents the contractual stepdown date under the respective fund agreements for funds on which the fee basis stepdown has not yet occurred. Funds without a listed Fee Initiation Date and Stepdown Date have not yet initiated fees. (12)All amounts shown represent total capital commitments as of December 31, 2023. Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change. Committed Capital for CEMOF II reflects original committed capital of $2.8 billion, less $1.1 billion in commitments that were extinguished following a Key Person Event. Committed capital for CCOF II excludes $150 million in capital committed by a CCOF II investor to a side vehicle. (13)Funds are included when all investments have been realized. There may be remaining fair value and net accrued carry where there are outstanding escrow balances or undistributed proceeds. Global Investment Solutions The following table presents our results of operations for our Global Investment Solutions segment: [[GREPCENT_TABLE]] [["","Year Ended December 31,","","Change"],["","2023","","2022","","$","","%"],["","(Dollars in millions)"],["Segment Revenues"],["Fund level fee revenues"],["Fund management fees","$242.4","","$222.9","","$19.5","","9%"],["Fee related performance revenues","3.6","","\u2014","","3.6","","N/A"],["Total fund level fee revenues","246.0","","222.9","","23.1","","10%"],["Realized performance revenues","89.7","","192.6","","(102.9)","","(53)%"],["Realized principal investment income","6.4","","3.8","","2.6","","68%"],["Interest income","5.9","","2.6","","3.3","","NM"],["Total revenues","348.0","","421.9","","(73.9)","","(18)%"],["Segment Expenses"],["Compensation and benefits"],["Cash-based compensation and benefits","123.6","","111.7","","11.9","","11%"],["Realized performance revenues related compensation","78.9","","169.4","","(90.5)","","(53)%"],["Total compensation and benefits","202.5","","281.1","","(78.6)","","(28)%"],["General, administrative, and other indirect expenses","47.8","","36.8","","11.0","","30%"],["Depreciation and amortization expense","4.4","","5.1","","(0.7)","","(14)%"],["Interest expense","9.0","","11.0","","(2.0)","","(18)%"],["Total expenses","263.7","","334.0","","(70.3)","","(21)%"],["(=) Distributable Earnings","$84.3","","$87.9","","$(3.6)","","(4)%"],["(-) Realized Net Performance Revenues","10.8","","23.2","","(12.4)","","(53)%"],["(-) Realized Principal Investment Income","6.4","","3.8","","2.6","","68%"],["(+) Net Interest","3.1","","8.4","","(5.3)","","(63)%"],["(=) Fee Related Earnings","$70.2","","$69.3","","$0.9","","1%"]] [[/GREPCENT_TABLE]] 146 Distributable Earnings Distributable Earnings decreased $3.6 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the changes in Distributable Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Distributable Earnings, December 31, 2022","$87.9"],["Increase in fee related earnings","0.9"],["Decrease in realized net performance revenues","(12.4)"],["Increase in realized principal investment income","2.6"],["Decrease in net interest","5.3"],["Total decrease","(3.6)"],["Distributable Earnings, December 31, 2023","$84.3"]] [[/GREPCENT_TABLE]] Realized Net Performance Revenues. Global Investment Solutions had realized performance revenues of $89.7 million and $192.6 million for the years ended December 31, 2023 and 2022, respectively. However, most of these realizations are from AlpInvest fund vehicles in which we generally do not retain any carried interest; therefore, our net realized performance revenues were $10.8 million and $23.2 million for the years ended December 31, 2023 and 2022, respectively. Realized Principal Investment Income. Realized principal investment income increased $2.6 million for the year ended December 31, 2023 as compared to 2022, primarily due to higher realized gains on investments in our secondary funds. Fee Related Earnings Fee Related Earnings increased $0.9 million for the year ended December 31, 2023 as compared to 2022. The following table provides the components of the changes in Fee Related Earnings for the year ended December 31, 2023: [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023 v. 2022"],["","(Dollars in millions)"],["Fee Related Earnings, December 31, 2022","$69.3"],["Increase in fee revenues","23.1"],["Increase in cash-based compensation","(11.9)"],["Increase in general, administrative and other indirect expenses","(11.0)"],["All other changes","0.7"],["Total increase","0.9"],["Fee Related Earnings, December 31, 2023","$70.2"]] [[/GREPCENT_TABLE]] Fee Revenues. Total fee revenues increased $23.1 million for the year ended December 31, 2023 as compared to 2022, primarily due to the activation of fees in our secondaries and co-investment strategies during 2023, net investment activity in funds that charge fees on invested capital, and fee related performance revenues from CAPM, a newly-launched closed-end tender offer fund. Cash-based compensation and benefits expense. Cash-based compensation and benefits expense increased $11.9 million for the year ended December 31, 2023 as compared to 2022, including an increase in compensation associated with fee related performance revenues. General, administrative and other indirect expenses. General, administrative and other indirect expenses increased $11.0 million for the year ended December 31, 2023 as compared to 2022, primarily due to higher external costs associated with fundraising activities. 147 Fee-earning AUM Fee-earning AUM is presented below for each period together with the components of change during each respective period. The table below breaks out Fee-earning AUM by its respective components during the period. [[GREPCENT_TABLE]] [["","As of December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Investment Solutions"],["Components of Fee-earning AUM(1)"],["Fee-earning AUM based on capital commitments","$17,488","","$19,590"],["Fee-earning AUM based on invested capital(2)","8,459","","4,985"],["Fee-earning AUM based on net asset value","10,530","","3,783"],["Fee-earning AUM based on lower of cost or fair market value","9,052","","9,189"],["Total Fee-earning AUM","$45,529","","$37,547"],["Annualized Management Fee Rate(3)","0.60%","","0.60%"]] [[/GREPCENT_TABLE]] (1)For additional information concerning the components of Fee-earning AUM, see “—Key Financial Measures—Operating Metrics.” (2)Includes amounts committed to or reserved for certain AlpInvest funds. (3)Represents Fund Management Fees divided by the average of the beginning of year and each quarter end’s Fee-earning AUM in the reporting period. The table below provides the period to period rollforward of Fee-earning AUM. [[GREPCENT_TABLE]] [["","Year Ended Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Investment Solutions"],["Fee-earning AUM Rollforward"],["Balance, Beginning of Period","$37,547","","$37,449"],["Inflows(1)","13,100","","4,494"],["Outflows (including realizations)(2)","(5,707)","","(3,280)"],["Market Activity & Other(3)","493","","537"],["Foreign Exchange(4)","96","","(1,653)"],["Balance, End of Period","$45,529","","$37,547"]] [[/GREPCENT_TABLE]] (1)Inflows represents limited partner capital raised by our carry funds or separately managed accounts for which management fees based on commitments were activated during the period and the fee-earning commitments invested in vehicles for which management fees are based on invested capital. Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM. (2)Outflows represents the impact of realizations from vehicles with management fees based on remaining invested capital at cost or fair value, changes in basis for funds where the investment period, weighted-average investment period or commitment fee period has expired during the period, and reductions for funds that are no longer calling for fees. Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM. (3)Market Activity & Other represents realized and unrealized gains (losses) on portfolio investments in our carry funds based on the lower of cost or fair value and net asset value. During the years ended December 31, 2023 and December 31, 2022, this included the negative and positive impacts, respectively, of foreign exchange resulting from the translation of our USD investments within our EUR- denominated AlpInvest funds. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Fee-earning AUM was $45.5 billion at December 31, 2023, an increase of $8.0 billion, or 21%, compared to $37.5 billion at December 31, 2022. Driving the increase were inflows of $13.1 billion primarily attributable to fundraising, 148 specifically in ASF VIII and ACF IX, and capital deployed in our funds which charge fees based on invested capital, as well as market appreciation of $0.5 billion. This was partially offset by outflows of $5.7 billion primarily attributable to distributions and step-downs in fee bases. Distributions from funds still in the commitment or weighted-average investment period do not impact Fee-earning AUM as these funds are based on commitments and not invested capital. Total AUM The table below provides the period to period rollforward of Total AUM. [[GREPCENT_TABLE]] [["","Year Ended Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Global Investment Solutions"],["Total AUM Rollforward"],["Balance, Beginning of Period","$63,291","","$65,456"],["Inflows(1)","12,732","","4,156"],["Outflows (including realizations)(2)","(5,892)","","(7,838)"],["Market Activity & Other(3)","5,701","","4,564"],["Foreign Exchange(4)","1,028","","(3,047)"],["Balance, End of Period","$76,860","","$63,291"]] [[/GREPCENT_TABLE]] (1)Inflows reflects the impact of gross fundraising during the period. For funds or vehicles denominated in foreign currencies, this reflects translation at the average quarterly rate, while the separately reported Fundraising metric is translated at the spot rate for each individual closing. (2)Outflows includes distributions in our carry funds, related co-investment vehicles and separately managed accounts, as well as the expiration of available capital. (3)Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds, related co-investment vehicles and separately managed accounts, the net impact of fees, expenses and non-investment income, as well as other changes in AUM. (4)Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S. dollar denominated funds. Activity during the period is translated at the average rate for the period. Ending balances are translated at the spot rate as of the period end. Total AUM was $76.9 billion as of December 31, 2023, an increase of $13.6 billion, or 21%, compared to $63.3 billion as of December 31, 2022. Driving the increase were $12.7 billion of inflows from fundraising, particularly in ASF VIII and ACF IX, market appreciation of $5.7 billion reflecting 10% appreciation for the year, and $1.0 billion of positive foreign exchange activity. The increase was partially offset by $5.9 billion of outflows due to distributions in our AlpInvest funds. Fund Performance Metrics Fund performance information for our Global Investment Solutions funds that have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of December 31, 2023, which we refer to as our “significant funds” is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented. We also present fund performance information for portfolios of investments held by separately managed accounts, generally aggregated either as invested alongside the relevant commingled fund or over a specified time period.The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc. and is also not necessarily indicative of the future performance of any particular fund. An investment in The Carlyle Group Inc. is not an investment in any of our funds. There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns. See Part I, Item 1A “Risk Factors—Risks Related to Our Business Operations—Risks Related to the Assets We Manage—The historical returns attributable to our funds, including those presented in this report, should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our common stock.” 149 The following tables reflect the performance of our significant funds in our Global Investment Solutions business. [[GREPCENT_TABLE]] [["","","","","TOTAL INVESTMENTS"],["","","","","As of December 31, 2023"],["Global Investment Solutions (1)(8)","Vintage Year","Fund Size","CumulativeInvestedCapital (2)(3)","Realized Value (3)","Remaining Fair Value (3)","Total FairValue (3)(4)","MOIC (5)","GrossIRR (6)(10)","NetIRR (7)(10)","Net Accrued Carry/(Giveback) (12)"],["","","","","(Reported in Local Currency, in Millions)"],["Secondaries and Portfolio Finance","ASF VIII","2023","$5,546","$792","$13","$1,065","$1,078","1.4x","NM","NM","$12"],["ASF VII","2020","$6,769","$5,160","$939","$6,096","$7,035","1.4x","25%","19%","$76"],["ASF VII - SMAs","2020","\u20ac2,016","\u20ac1,539","\u20ac340","\u20ac1,844","\u20ac2,184","1.4x","25%","21%","$29"],["ASF VI","2017","$3,333","$3,147","$2,885","$1,983","$4,868","1.5x","17%","14%","$57"],["ASF VI - SMAs","2017","\u20ac2,817","\u20ac2,671","\u20ac2,052","\u20ac2,208","\u20ac4,260","1.6x","16%","14%","$45"],["ASF V","2012","$756","$658","$998","$198","$1,195","1.8x","18%","15%","$8"],["ASF V - SMAs","2012","\u20ac3,916","\u20ac4,063","\u20ac6,787","\u20ac809","\u20ac7,596","1.9x","21%","20%","$15"],["SMAs 2009-2011","2010","\u20ac1,859","\u20ac2,000","\u20ac3,404","\u20ac53","\u20ac3,457","1.7x","19%","18%","$\u2014"],["All Other Active Funds & Vehicles (9)","Various","","$1,244","$516","$1,162","$1,678","1.3x","23%","21%","$15"],["Fully Realized Funds & Vehicles","Various","","\u20ac4,240","\u20ac6,955","\u20ac35","\u20ac6,990","1.6x","19%","18%","$\u2014"],["Co-Investments","ACF IX","2023","$2,327","$269","$\u2014","$268","$268","1.0x","NM","NM","$\u2014"],["ACF VIII","2021","$3,614","$3,043","$37","$3,598","$3,635","1.2x","12%","9%","$17"],["ACF VIII - SMAs","2021","$1,069","$796","$20","$942","$962","1.2x","13%","11%","$5"],["ACF VII","2017","$1,688","$1,633","$764","$2,365","$3,129","1.9x","18%","15%","$54"],["ACF VII - SMAs","2017","\u20ac1,452","\u20ac1,415","\u20ac548","\u20ac1,966","\u20ac2,515","1.8x","17%","15%","$43"],["SMAs 2014-2016","2014","\u20ac1,274","\u20ac1,114","\u20ac2,135","\u20ac789","\u20ac2,925","2.6x","25%","23%","$14"],["SMAs 2012-2013","2012","\u20ac1,124","\u20ac1,061","\u20ac2,724","\u20ac293","\u20ac3,018","2.8x","28%","26%","$2"],["SMAs 2009-2010","2010","\u20ac1,475","\u20ac1,377","\u20ac3,483","\u20ac572","\u20ac4,056","2.9x","23%","22%","$\u2014"],["Strategic SMAs","Various","","$3,528","$1,028","$4,834","$5,861","1.7x","20%","18%","$58"],["All Other Active Funds & Vehicles (9)","Various","","\u20ac442","\u20ac583","\u20ac105","\u20ac687","1.6x","16%","14%","$2"],["Fully Realized Funds & Vehicles","Various","","\u20ac5,710","\u20ac9,834","\u20ac1","\u20ac9,835","1.7x","14%","13%","$\u2014"],["Primary Investments","SMAs 2021-2023","2021","\u20ac4,349","\u20ac631","\u20ac12","\u20ac696","\u20ac708","1.1x","NM","NM","$\u2014"],["SMAs 2018-2020","2018","$3,101","$1,999","$275","$2,454","$2,729","1.4x","17%","16%","$1"],["SMAs 2015-2017","2015","\u20ac2,501","\u20ac2,411","\u20ac2,074","\u20ac2,588","\u20ac4,662","1.9x","22%","21%","$10"],["SMAs 2012-2014","2012","\u20ac5,080","\u20ac5,869","\u20ac8,386","\u20ac4,548","\u20ac12,934","2.2x","19%","18%","$16"],["SMAs 2009-2011","2009","\u20ac4,877","\u20ac5,709","\u20ac9,817","\u20ac2,530","\u20ac12,347","2.2x","17%","17%","$1"],["SMAs 2006-2008","2005","\u20ac11,500","\u20ac13,384","\u20ac21,730","\u20ac1,512","\u20ac23,242","1.7x","10%","10%","$\u2014"],["SMAs 2003-2005","2003","\u20ac4,628","\u20ac5,063","\u20ac7,988","\u20ac202","\u20ac8,190","1.6x","10%","9%","$\u2014"],["All Other Active Funds & Vehicles (9)","Various","","\u20ac1,816","\u20ac1,740","\u20ac323","\u20ac2,063","1.1x","3%","2%","$\u2014"],["Fully Realized Funds & Vehicles","Various","","\u20ac4,942","\u20ac8,042","\u20ac40","\u20ac8,082","1.6x","12%","11%","$\u2014"],["TOTAL GLOBAL INVESTMENT SOLUTIONS (USD) (11)","$94,695","$116,606","$48,328","$164,934","1.7x","14%","13%","$481"]] [[/GREPCENT_TABLE]] (1)Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by AlpInvest. Excluded from the performance information shown are: (a) investments that were not originated by AlpInvest (i.e., AlpInvest did not make the original investment decision or recommendation); (b) Direct Investments, which was spun off from AlpInvest in 2005; (c) Carlyle AlpInvest Private Markets Fund; and (d) LP co- investment vehicles managed by AlpInvest. As of December 31, 2023, these excluded portfolios amounted to approximately $4.9 billion of AUM in the aggregate.  (2)Represents the original cost of investments since inception of the fund. (3)To exclude the impact of FX, all foreign currency cash flows have been converted to the currency representing a majority of the capital committed to the relevant fund at the reporting period spot rate. (4)Represents all realized proceeds combined with remaining fair value, before management fees, expenses and carried interest. (5)Multiple of invested capital (“MOIC”) represents total fair value, before management fees, expenses and carried interest, divided by cumulative invested capital. (6)Gross Internal Rate of Return (“Gross IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on investment contributions, distributions and unrealized value of the underlying investments, before management fees, expenses and carried interest at the AlpInvest level. (7)Net Internal Rate of Return (“Net IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on investment contributions, distributions and unrealized value of the underlying investments, after management fees, expenses and carried interest. Fund level IRRs are based on aggregate Limited Partner cash 150 flows, and this blended return may differ from that of individual Limited Partners. As a result, certain funds may generate accrued performance revenues with a blended Net IRR that is below the preferred return hurdle for that fund. (8)“ASF” stands for AlpInvest Secondaries Fund, “ACF” stands forAlpInvest Co-Investment Fund, and “SMAs” are Separately Managed Accounts. “ASF - SMAs” and “ACF - SMAs” reflect the aggregated portfolios of investments held by SMAs within the relevant strategy, which invest alongside the relevant ASF or ACF (as applicable). Strategic SMAs reflect the aggregated portfolios of co-investments made by SMAs sourced from the SMA investor’s own private equity fund investment portfolio. Other SMAs reflect the aggregated portfolios of investments within the relevant strategy that began making investments in the corresponding time periods. Co-Investments SMAs 2014-2016 does not include two SMAs that started in 2016 but invested a substantial majority alongside ACF VII. These two SMAs have instead been grouped with ACF VII - SMAs. An SMA may pursue multiple investment strategies and make commitments over multiple years. (9)Includes AlpInvest Atom Fund, all mezzanine investment portfolios, all ‘clean technology’ private equity investment portfolios, all strategic portfolio finance portfolios, ASF VIII - SMAs, ACF IX - SMAs, and any state-focused investment mandate portfolios. (10)For funds marked “NM,” IRR may be positive or negative, but is not considered meaningful because of the limited time since initial investment and early stage of capital deployment. For funds marked “Neg,” IRR is considered meaningful but is negative as of reporting period end. (11)For purposes of aggregation, funds that report in foreign currency have been converted to U.S. dollars at the reporting period spot rate. (12)Represents the net accrued performance revenue balance/(giveback obligation) as of the current quarter end. Total Net Accrued Carry excludes $2 million of net accrued carry as of December 31, 2023, which was retained as part of the sale of MRE on April 1, 2021. Liquidity and Capital Resources Historical Liquidity and Capital Resources We have historically required limited capital resources to support the working capital and operating needs of our business. Our management fees have largely covered our operating costs and all realized performance allocations, after covering the related compensation, are available for distribution to stockholders. Approximately 95% – 97% of all capital commitments to our funds are provided by our fund investors, with the remaining amount typically funded by Carlyle, our senior Carlyle professionals, advisors and other professionals. We may elect to invest additional amounts in funds focused on new investment areas. Our Sources of Liquidity We have multiple sources of liquidity to meet our capital needs, including cash on hand, annual cash flows, accumulated earnings and funds from our senior revolving credit facility, which has $1.0 billion of available capacity as of December 31, 2023. We believe these sources will be sufficient to fund our capital needs for at least the next twelve months. We believe we will meet longer-term expected future cash requirements and obligations through a combination of existing cash and cash equivalent balances, cash flow from operations, accumulated earnings, and amounts available for borrowing from our senior revolving credit facility or other financings. Cash and Cash Equivalents. Cash and cash equivalents were approximately $1.4 billion at December 31, 2023. However, a portion of this cash is allocated for specific business purposes, including, but not limited to: (i) performance allocations and incentive fee related cash that has been received but not yet distributed as performance allocations and incentive fee related compensation and amounts owed to non-controlling interests; (ii) proceeds received from realized investments that are allocable to non-controlling interests; and (iii) regulatory capital. After deducting cash amounts allocated to the specific requirements mentioned above, the remaining cash, cash equivalents is approximately $1.3 billion as of December 31, 2023. This remaining amount will be used towards our primary liquidity needs, as outlined in the next section. This amount does not take into consideration ordinary course of business payables and reserves for specific business purposes. Senior Revolving Credit Facility. The capacity under the revolving credit facility is $1.0 billion and the facility is scheduled to mature on April 29, 2027. The Company’s borrowing capacity is subject to the ability of the financial institutions in the banking syndicate to fulfill their respective obligations under the revolving credit facility. Principal amounts outstanding under the amended and restated revolving credit facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 0.50% per annum, or (b) at SOFR (or similar benchmark rate for non-U.S. 151 dollar borrowings) plus a 0.10% adjustment and an applicable margin not to exceed 1.50% per annum (6.45% at December 31, 2023). As of December 31, 2023, there were no amounts outstanding under the senior revolving credit facility. The senior revolving credit facility is unsecured. We are required to maintain management fee earning assets (as defined in the amended and restated senior revolving credit facility) of at least $126.6 billion and a total leverage ratio of less than 4.0 to 1.0, in each case, tested on a quarterly basis. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default under the senior revolving credit facility. An event of default resulting from a breach of certain financial or non-financial covenants may result, at the option of the lenders, in an acceleration of the principal and interest outstanding, and a termination of the senior revolving credit facility. The senior credit facility also contains other customary events of default, including defaults based on events of bankruptcy and insolvency, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties. Global Credit Revolving Credit Facility. Certain subsidiaries of the Company are parties to a revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment. In August 2023, certain subsidiaries of the Company entered into an amendment to the Global Credit Revolving Credit Facility to increase the capacity of the existing revolving line of credit from $250 million to $300 million (the “2027 Tranche Revolving Loans”) and extend the maturity date to occur in September 2027. This amendment also provides for a new tranche of revolving loans with a capacity of $200 million maturing in August 2024 (the “2024 Tranche Revolving Loans,” together with the 2027 Tranche Revolving Loans, the “Global Credit Revolving Credit Facility”). The Company’s borrowing capacity is subject to the ability of the financial institutions in the banking syndicate to fulfill their respective obligations under the Global Credit Revolving Credit Facility. Principal amounts outstanding accrue interest at applicable SOFR or Eurocurrency rates plus an applicable margin of 2.00% or an alternate base rate plus an applicable margin of 1.00%. The Company made no borrowings under the Global Credit Revolving Credit Facility during the year ended December 31, 2023 and there was no balance outstanding as of December 31, 2023. CLO Borrowings. For certain of our CLOs, the Company finances a portion of its investment in the CLOs through the proceeds received from term loans and other financing arrangements with financial institutions or other financing arrangements. The Company’s CLO borrowings were $431.7 million and $421.7 million at December 31, 2023 and 2022, respectively. The CLO borrowings are secured by the Company’s investments in the respective CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and generally do not have recourse to any other Carlyle entity. As of December 31, 2023, $408.8 million of these borrowings are secured by investments attributable to The Carlyle Group Inc. See Note 7 of our financial statements for more information on our CLO borrowings. Senior Notes. Certain indirect finance subsidiaries of the Company have issued senior notes, on which interest is payable semi-annually, as discussed below. The senior notes are unsecured and unsubordinated obligations of the respective subsidiary and are fully and unconditionally guaranteed, jointly and severally, by the Company and each of the Carlyle Holdings partnerships. The indentures governing each of the senior notes contain customary covenants that, among other things, limit the issuers’ and the guarantors’ ability, subject to certain exceptions, to incur indebtedness secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease assets. The notes also contain customary events of default. All or a portion of the notes may be redeemed at our option, in whole or in part, at any time and from time to time, prior to their stated maturity, at the make-whole redemption price set forth in the notes. If a change of control repurchase event occurs, the notes are subject to repurchase at the repurchase price as set forth in the notes. 3.500% Senior Notes. In September 2019, Carlyle Finance Subsidiary L.L.C. issued $425.0 million of 3.500% senior notes due September 19, 2029 at 99.841% of par. 5.625% Senior Notes. In March 2013, Carlyle Holdings II Finance L.L.C. issued $400.0 million of 5.625% senior notes due March 30, 2043 at 99.583% of par. In March 2014, an additional $200.0 million of these notes were issued at 104.315% of par and are treated as a single class with the already outstanding $400.0 million aggregate principal amount of these notes. 5.650% Senior Notes. In September 2018, Carlyle Finance L.L.C. issued $350.0 million of 5.650% senior notes due September 15, 2048 at 99.914% of par. Subordinated Notes. In May and June 2021, Carlyle Finance L.L.C. issued $500.0 million aggregate principal amount of 4.625% subordinated notes due May 15, 2061. The subordinated notes are unsecured and subordinated obligations of the issuer and are fully and unconditionally guaranteed, jointly and severally, on a subordinated basis, by the Company, each of the Carlyle Holdings partnerships, and CG Subsidiary Holdings L.L.C., an indirect subsidiary of the Company. The indentures 152 governing the subordinated notes contain customary covenants that, among other things, limit the issuers’ and the guarantors’ ability, subject to certain exceptions, to incur indebtedness ranking on a parity with the subordinated notes or indebtedness ranking junior to the subordinated notes secured by liens on voting stock or profit participating equity interests of their subsidiaries or merge, consolidate or sell, transfer or lease all or substantially all of their assets. The subordinated notes also contain customary events of default. All or a portion of the notes may be redeemed at our option, in whole or in part, at any time and from time to time on or after June 15, 2026, prior to their stated maturity, at a redemption price equal to their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption. If interest due on the Subordinated Notes is deemed to no longer be deductible in the U.S., a “Tax Redemption Event,” the subordinated notes may be redeemed, in whole, but not in part, within 120 days of the occurrence of such event at a redemption price equal to their principal amount plus accrued and unpaid interest to, but excluding, the date of redemption. In addition, the subordinated notes may be redeemed, in whole, but not in part, at any time prior to May 15, 2026, within 90 days of the rating agencies determining that the Subordinated Notes should no longer receive partial equity treatment pursuant to the rating agency’s criteria, a “rating agency event,” at a redemption price equal to 102% of their principal amount plus any accrued and unpaid interest to, but excluding, the date of redemption. Obligations of CLOs. Loans payable of the Consolidated Funds primarily comprise amounts due to holders of debt securities issued by the CLOs. We are not liable for any loans payable of the CLOs. Loans payable of the CLOs are collateralized by the assets held by the CLOs and the assets of one CLO may not be used to satisfy the liabilities of another. This collateral consists of cash and cash equivalents, corporate loans, corporate bonds and other securities. Realized Performance Allocation Revenues. Another source of liquidity we may use to meet our capital needs is the realized performance allocation revenues generated by our investment funds. Performance allocations are generally realized when an underlying investment is profitably disposed of and the fund’s cumulative returns are in excess of the preferred return. For certain funds, performance allocations are realized once all invested capital and expenses have been returned to the fund’s investors and the fund’s cumulative returns are in excess of the preferred return. Incentive fees earned on our CLO vehicles generally are paid upon the dissolution of such vehicles. Our accrued performance allocations by segment as of December 31, 2023, gross and net of accrued giveback obligations, are set forth below: [[GREPCENT_TABLE]] [["","AccruedPerformanceAllocations","","AccruedGivebackObligation","","Net AccruedPerformanceRevenues"],["","(Dollars in millions)"],["Global Private Equity","$4,310.7","","$(18.4)","","$4,292.3"],["Global Credit","323.4","","(25.6)","","297.8"],["Global Investment Solutions","1,535.8","","\u2014","","1,535.8"],["Total","$6,169.9","","$(44.0)","","$6,125.9"],["Plus: Accrued performance allocations from NGP Carry Funds","","","","","484.4"],["Less: Net accrued performance allocations presented as fee related performance revenues","","(5.2)"],["Less: Accrued performance allocation-related compensation","","(4,255.8)"],["Plus: Receivable for giveback obligations from current and former employees","","11.5"],["Less: Deferred taxes on certain foreign accrued performance allocations","","(27.1)"],["Less/Plus: Net accrued performance allocations/giveback obligations attributable to non-controlling interests in consolidated entities","","7.4"],["Plus: Net accrued performance allocations attributable to Consolidated Funds, eliminated in consolidation","","9.1"],["Net accrued performance revenues before timing differences","","2,350.2"],["Less/Plus: Timing differences between the period when accrued performance allocations/giveback obligations are realized and the period they are collected/distributed","","28.6"],["Net accrued performance revenues attributable to The Carlyle Group Inc.","","$2,378.8"]] [[/GREPCENT_TABLE]] 153 The net accrued performance revenues attributable to The Carlyle Group Inc., excluding realized amounts, related to our carry funds and our other vehicles as of December 31, 2023, as well as the carry fund appreciation (depreciation), is set forth below by segment (Dollars in millions): [[GREPCENT_TABLE]] [["","","Carry Fund Appreciation/(Depreciation)(1)","","Net AccruedPerformance Revenues"],["","","FY 2021","","FY 2022","","FY 2023"],["Overall Carry Fund Appreciation/(Depreciation)","","41%","","11%","","7%"],["Global Private Equity(2)","","","","","","","","$1,777.5"],["Corporate Private Equity","","41%","","6%","","5%","","1,168.5"],["Real Estate","","39%","","16%","","(1)%","","158.4"],["Infrastructure & Natural Resources","","34%","","48%","","8%","","451.6"],["Global Credit Carry Funds","","22%","","3%","","12%","","117.9"],["Global Investment Solutions Carry Funds","","48%","","6%","","10%","","483.4"],["Net Accrued Performance Revenues","","","","","","","","$2,378.8"]] [[/GREPCENT_TABLE]] (1)  Appreciation/(Depreciation) represents unrealized gain/(loss) for the period on a total return basis before fees and expenses. The percentage of return is calculated as: ending remaining investment fair market value plus net investment outflow (sales proceeds minus net purchases) minus beginning remaining investment fair market value divided by beginning remaining investment fair market value. Amounts are fund only, and do not include coinvestments. (2)  Includes $1.0 million of net accrued clawback from our Legacy Energy funds. Realized Principal Investment Income. Another source of liquidity we may use to meet our capital needs is the realized principal investment income generated by our equity method investments and other principal investments. Principal investment income is realized when we redeem all or a portion of our investment or when we receive or are due cash income, such as dividends or distributions. Certain of the investments attributable to The Carlyle Group Inc. (excluding certain general partner interests, certain strategic investments, and investments in certain CLOs) may be sold at our discretion as a source of liquidity. Investments as of December 31, 2023 consist of the following: [[GREPCENT_TABLE]] [["","Investments in Carlyle Funds","","Investments in NGP(1)","","Total"],["","(Dollars in millions)"],["Investments, excluding performance allocations","$2,930.7","","$854.7","","$3,785.4"],["Less: Amounts attributable to non-controlling interests in consolidated entities","(173.9)","","\u2014","","(173.9)"],["Plus: Investments in Consolidated Funds, eliminated in consolidation","140.1","","\u2014","","140.1"],["Less: Strategic equity method investments in NGP Management","\u2014","","(370.3)","","(370.3)"],["Less: Investment in NGP general partners - accrued performance allocations","\u2014","","(484.4)","","(484.4)"],["Total investments attributable to The Carlyle Group Inc.","$2,896.9","","$\u2014","","$2,896.9"]] [[/GREPCENT_TABLE]] (1) See Note 5 to the consolidated financial statements. Our investments as of December 31, 2023 can be further attributed as follows (Dollars in millions): [[GREPCENT_TABLE]] [["Investments in Carlyle Funds, excluding CLOs:"],["Global Private Equity funds(1)","$892.1"],["Global Credit funds(2)","1,069.7"],["Global Investment Solutions funds","240.8"],["Total investments in Carlyle Funds, excluding CLOs","2,202.6"],["Investments in CLOs","559.2"],["Other investments","135.1"],["Total investments attributable to The Carlyle Group Inc.","2,896.9"],["CLO loans and other borrowings collateralized by investments attributable to The Carlyle Group Inc.(3)","(408.8)"],["Total investments attributable to The Carlyle Group Inc., net of CLO loans and other borrowings","$2,488.1"]] [[/GREPCENT_TABLE]] (1)  Excludes our strategic equity method investment in NGP Management and investments in NGP general partners - accrued performance allocations. 154 (2)  Includes the Company’s indirect investment in Fortitude through Carlyle FRL, a Carlyle-affiliated investment fund, as discussed in Note 5 to the consolidated financial statements. This investment has a carrying value of $595.4 million as of December 31, 2023. (3)  Of the $431.7 million in total CLO borrowings as of December 31, 2023 and as disclosed in Note 7 to the consolidated financial statements, $408.8 million are collateralized by investments attributable to The Carlyle Group Inc. The remaining $22.9 million in total CLO borrowings are collateralized by investments attributable to non-controlling interests. Our Liquidity Needs We generally use our working capital and cash flows to invest in growth initiatives, service our debt, fund the working capital needs of our business and investment funds and return capital to our common stockholders in the form of dividends or stock repurchases. In the future, we expect that our primary liquidity needs will be to: •provide capital to facilitate the growth of our existing business lines; •provide capital to facilitate our expansion into new, complementary business lines, including acquisitions; •pay operating expenses, including compensation and compliance costs and other obligations as they arise; •fund costs of litigation and contingencies, including related legal costs; •fund the capital investments of Carlyle in our funds; •fund capital expenditures; •repay borrowings and related interest costs and expenses; •pay earn-outs and contingent cash consideration associated with our acquisitions and strategic investments; •pay income taxes, including corporate income taxes; •pay dividends to our common stockholders in accordance with our dividend policy; •make installment payments under the deferred obligation to former holders of Carlyle Holdings partnership units, which were exchanged in the Conversion; •repurchase our common stock and pay any associated taxes, and; •settle tax withholding obligations in connection with net share settlements of equity-based awards. Common Stockholder Dividends. Under our dividend policy for our common stock, our intention is to pay dividends to holders of our common stock in an amount of $0.35 per common share on a quarterly basis ($1.40 annually), commencing with the first quarter 2023 dividend paid in May 2023. Prior to the first quarter 2023 dividend, we paid dividends to holders of our common stock in an amount of $0.325 per share of common stock ($1.30 annually). For U.S. federal income tax purposes, any dividends we pay generally will be treated as qualified dividend income (generally taxable to U.S. individual stockholders at capital gain rates) paid by a domestic corporation to the extent paid out of our current or accumulated earnings and profits, as determined for U.S. federal income tax purposes, with any excess dividends treated as return of capital to the extent of the stockholder’s basis. The declaration and payment of dividends to holders of our common stock will be at the sole discretion of our Board of Directors and in compliance with applicable law, and our dividend policy may be changed at any time. With respect to dividend year 2023, the Board of Directors declared a dividend to common stockholders totaling approximately $506.0 million, or $1.40 per share, consisting of the following: [[GREPCENT_TABLE]] [["Common Stock Dividends - Dividend Year 2023"],["Quarter","Dividend per Common Share","Dividend to Common Stockholders","Record Date","Payment Date"],["(Dollars in millions, except per share data)"],["Q1 2023","$0.35","$126.7","May 16, 2023","May 23, 2023"],["Q2 2023","0.35","126.3","August 15, 2023","August 23, 2023"],["Q3 2023","0.35","126.3","November 21, 2023","November 29, 2023"],["Q4 2023","0.35","126.7","February 23, 2024","March 1, 2024"],["Total","$1.40","$506.0"]] [[/GREPCENT_TABLE]] 155 With respect to dividend year 2022, the Board of Directors declared cumulative dividends to common stockholders totaling approximately $472.5 million to common stockholders, consisting of the following: [[GREPCENT_TABLE]] [["Common Stock Dividends - Dividend Year 2022"],["Quarter","Dividend per Common Share","Dividend to Common Stockholders","Record Date","Payment Date"],["(Dollars in millions, except per share data)"],["Q1 2022","$0.325","$117.6","May 10, 2022","May 17, 2022"],["Q2 2022","0.325","118.3","August 9, 2022","August 16, 2022"],["Q3 2022","0.325","118.2","November 18, 2022","November 25, 2022"],["Q4 2022","0.325","118.4","February 22, 2023","March 1, 2023"],["Total","$1.30","$472.5"]] [[/GREPCENT_TABLE]] Dividends to common stockholders paid during the year ended December 31, 2023 totaled $497.7 million, including the amount paid in March 2023 of $0.325 per common share in respect of the fourth quarter of 2022. Dividends to common stockholders paid during the year ended December 31, 2022 totaled $443.6 million, including the amount paid in February 2022 of $0.25 per common share in respect of the fourth quarter of 2021. Fund Commitments. Generally, Carlyle commits to fund approximately 0.75% of the capital commitments to our future carry funds, although we may elect to invest additional amounts in funds focused on new investment areas. We may, from time to time, exercise our right to purchase additional interests in our investment funds that become available in the ordinary course of their operations. We expect our senior Carlyle professionals and employees to continue to make significant capital contributions to our funds based on their existing commitments, and to make capital commitments to future funds consistent with the level of their historical commitments. We also intend to make investments in our open-end funds and our CLO vehicles. Our investments in our European CLO vehicles will comply with the risk retention rules as discussed in “Risk Retention Rules” later in this section. Since our inception through December 31, 2023, we and our senior Carlyle professionals, operating executives and other professionals have invested or committed to invest in or alongside our funds. Approximately 3% to 5% of all capital commitments to our funds are funded collectively by us and our senior Carlyle professionals, operating executives and other professionals. A substantial majority of the remaining commitments are expected to be funded by senior Carlyle professionals, operating executives, and other professionals through our internal co-investment program. Of the $3.7 billion of unfunded commitments, approximately $3.1 billion is subscribed individually by senior Carlyle professionals, operating executives, and other professionals, with the balance funded directly by the Company. Over 80% of the $3.7 billion of unfunded commitments relate to investment funds in our Global Private Equity segment. Under the Carlyle Global Capital Markets platform, certain of our subsidiaries may act as an underwriter, syndicator, or placement agent for security offerings and loan originations. We earn fees in connection with these activities and bear the risk of the sale of such securities and placement of such loans, which may be longer dated. As of December 31, 2023, we had no commitments related to the origination and syndication of loans and securities under the Carlyle Global Capital Markets platform. Repurchase Program. In October 2021, our Board of Directors authorized the repurchase of up to $400 million of common stock, which replaced a repurchase authorization provided in February 2021, effective January 1, 2022. In February 2023, the Board of Directors replenished the repurchase program and expanded the limit to $500 million of common stock in aggregate, effective March 31, 2023. This program authorizes the repurchase of shares of common stock from time to time in open market transactions, in privately negotiated transactions or otherwise, including through Rule 10b5-1 plans. For the year ended December 31, 2023, we paid an aggregate of $203.5 million to repurchase and retire approximately 6.5 million shares of common stock with all of the repurchases done via open market and brokered transactions. As of December 31, 2023, $396.8 million of repurchase capacity remained under the program. Our Board of Directors reset the total repurchase authorization to $1.4 billion in shares of our common stock, effective as of February 6, 2024. 156 Cash Flows The significant captions and amounts from our consolidated statements of cash flows which include the effects of our Consolidated Funds and CLOs in accordance with U.S. GAAP are summarized below. [[GREPCENT_TABLE]] [["","Year Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Statements of Cash Flows Data"],["Net cash provided by (used in) operating activities","$204.9","","$(379.3)"],["Net cash used in investing activities","(43.6)","","(828.8)"],["Net cash (used in) provided by financing activities","(99.6)","","114.8"],["Effect of foreign exchange rate changes","18.9","","(20.3)"],["Net change in cash, cash equivalents and restricted cash","$80.6","","$(1,113.6)"]] [[/GREPCENT_TABLE]] Net cash provided by (used in) operating activities. Net cash (used in) provided by operating activities includes the investment activity of our Consolidated Funds. Excluding this activity, net cash (used in) provided by operating activities was primarily driven by our earnings in the respective periods after adjusting for significant non-cash activity, including non-cash performance allocations and incentive fees, the related non-cash performance allocations and incentive fee related compensation, non-cash equity-based compensation, and depreciation, amortization and impairments, all of which are included in earnings. Cash flows from operating activities for the years ended December 31, 2023 and 2022, excluding the activities of our Consolidated Funds, were $955.7 million and $860.7 million, respectively. Operating cash inflows primarily include the receipt of management fees and realized performance allocations and incentive fees, while operating cash outflows primarily include payments for operating expenses, including compensation, and general, administrative and other expenses. During the years ended December 31, 2023 and 2022, net cash provided by operating activities primarily included the receipt of management fees, and realized performance allocations and incentive fees, totaling approximately $3.0 billion and $4.1 billion, respectively. These inflows were partially offset by payments for compensation, income taxes, interest, and general, administrative and other expenses of approximately $2.4 billion and $3.1 billion for the years ended December 31, 2023 and 2022, respectively. Operating outflows during the year ended December 31, 2023 also included a $68.6 million payment relating to the Carlyle Aviation Partners earn-out and a $20.3 million payment to the former Carlyle Holdings unitholders related to amounts owed under the tax receivable agreement. Cash used to purchase investments as well as the proceeds from the sale of such investments are also reflected in our operating activities as investments are a normal part of our operating activities. During the year ended December 31, 2023, investment proceeds were $472.2 million while investment purchases were $301.2 million, which included our $50 million follow-on investment in Carlyle FRL and our $40 million investment in Carlyle Capital Income Fund (“CCIF”), an NYSE listed closed-end fund that primarily invests in equity and junior debt tranches of CLOs. During the year ended December 31, 2022, investment proceeds were $474.9 million while investment purchases were $629.9 million, which included our $200 million investment in iStar through our real estate credit fund and our $49 million follow-on investment in Carlyle FRL. The net cash provided by operating activities for the year ended December 31, 2023 also reflects the investment activity of our Consolidated Funds. For the year ended December 31, 2023, proceeds from the sales and settlements of investments by the Consolidated Funds were $2.3 billion, while purchases of investments by the Consolidated Funds were $3.1 billion. For the year ended December 31, 2022, proceeds from the sales and settlements of investments by the Consolidated Funds were $2.9 billion, while purchases of investments by the Consolidated Funds were $3.8 billion. Net cash used in investing activities. Our investing activities generally reflect cash used for acquisitions, fixed assets, software for internal use, and corporate treasury investments. For the year ended December 31, 2023, cash used in investing activities principally reflects purchases of corporate treasury investments of $187.3 million and net purchases of fixed assets of $66.6 million, partially offset by proceeds from corporate treasury investments of $210.3 million. For the year ended December 31, 2022, cash used in investing activities principally reflects purchases of intangible assets and net CLO investments from the CBAM transaction of $618.4 million, the purchase of Abingworth of $150.2 million, and purchases of corporate treasury investments of $69.6 million, as well as net purchases of fixed assets of $40.6 million. Net cash (used in) provided by financing activities. Net cash provided by (used in) financing activities during the years ended December 31, 2023 and 2022, excluding the activities of our Consolidated Funds, was $(0.8) billion and $(1.1) billion, respectively. Dividends paid to our common stockholders were $497.7 million and $443.6 million for the years ended 157 December 31, 2023 and 2022, respectively, and we paid $203.5 million and $185.6 million, respectively, to repurchase and retire 6.5 million and 5.0 million, respectively, of shares of common stock. We also paid $68.8 million in each of January 2023 and January 2022, representing the fourth and third annual installments of the deferred consideration payable to former Carlyle Holdings unitholders in connection with the Conversion. Net cash used in financing activities for the year ended December 31, 2022 (prior to the effects of consolidation) also includes $456.2 million primarily related to amounts funded to bridge investment activity in consolidated funds that are actively fundraising in our Global Private Equity segment. This investment activity is reflected as purchases of investment in our consolidated statements of cash flows. The net borrowings on loans payable by our Consolidated Funds during the years ended December 31, 2023 and 2022 were $700.6 million and $624.2 million, respectively. For the years ended December 31, 2023 and 2022, contributions from non-controlling interest holders were $177.0 million and $391.2 million, respectively, which relate primarily to contributions from the non-controlling interest holders in Consolidated Funds. For the years ended December 31, 2023 and 2022, distributions to non-controlling interest holders were $139.7 million and $216.8 million, respectively, which relate primarily to distributions to the non-controlling interest holders in Consolidated Funds. Our Balance Sheet Total assets were $21.2 billion at December 31, 2023, a decrease of $0.2 billion from December 31, 2022. The decrease in total assets was primarily attributable to a decrease in Investments, including performance allocations of $0.8 billion, partially offset by an increase in Investments in Consolidated Funds of $0.4 billion and an increase in Cash and cash equivalents held by Consolidated Funds of $0.1 billion. The decrease in Investments, including performance allocations was primarily due to a decrease in accrued performance allocations, reflecting realizations as well as performance allocation reversals in certain funds, which more than offset the impact of 7% appreciation in our carry funds in 2023. Total liabilities were $15.4 billion at December 31, 2023, an increase of $0.8 billion from December 31, 2022. The increase in liabilities was primarily attributable to an increase in Accrued compensation and benefits of $0.6 billion and an increase in Loans payable of Consolidated Funds of $0.6 billion, partially offset by a decrease in Deferred tax liabilities of $0.4 billion. The increase in Accrued compensation and benefits was primarily due to a $1.1 billion increase in accrued performance allocations and incentive fee related compensation as a result of our updated employee compensation program effective December 31, 2023 (see “—Recent Developments—Updates to Compensation Strategy”). This increase was partially offset by reversals of accrued compensation related to a decrease in performance allocations and the Carlyle Aviation Partners earn-out payment. The decrease in Deferred tax liabilities was primarily driven by the decrease in accrued performance allocations. The assets and liabilities of the Consolidated Funds are generally held within separate legal entities and, as a result, the assets of the Consolidated Funds are not available to meet our liquidity requirements and similarly the liabilities of the Consolidated Funds are non-recourse to us. In addition, as previously discussed, the CLO term loans generally are secured by the Company’s investment in the CLO, have a general unsecured interest in the Carlyle entity that manages the CLO, and do not have recourse to any other Carlyle entity. Our balance sheet without the effect of the Consolidated Funds can be seen in Note 18 to the consolidated financial statements included in this Annual Report on Form 10-K. At December 31, 2023, our total assets without the effect of the Consolidated Funds were $13.9 billion, including cash and cash equivalents of $1.4 billion and net accrued performance revenues of $2.4 billion. Unconsolidated Entities Certain of our funds have entered into lines of credit secured by their investors’ unpaid capital commitments or by a pledge of the equity of the underlying investment. These lines of credit are used primarily to reduce the overall number of capital calls to investors or for working capital needs. In certain instances, however, they may be used for other investment related activities, including serving as bridge financing for investments. The degree of leverage employed varies among our funds. In March 2022, Carlyle Net Leasing Income, L.P., a Carlyle-affiliated investment fund, acquired a diversified portfolio of triple net leases from iStar, Inc. for an enterprise value of $3 billion, which was funded using $2 billion in debt and $1 billion in equity. The investment fund is not consolidated by us, and the debt is non-recourse to us. As general partner of the investment fund, we contributed $200 million as a minority interest balance sheet investment, which is included in our Global Credit principal equity method investments (see Note 6 to the consolidated financial statements included in the Annual Report on Form 10-K for the year ended December 31, 2022). 158 Off-balance Sheet Arrangements In the normal course of business, we enter into various off-balance sheet arrangements including sponsoring and owning limited or general partner interests in consolidated and non-consolidated funds, entering into derivative transactions, and entering into guarantee arrangements. We also have ongoing capital commitment arrangements with certain of our consolidated and non-consolidated funds. We do not have any other off-balance sheet arrangements that would require us to fund losses or guarantee target returns to investors in any of our other investment funds. For further information regarding our off-balance sheet arrangements, see Note 2 and Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K. Contractual Obligations The following table sets forth information relating to our contractual obligations as of December 31, 2023 on a consolidated basis and on a basis excluding the obligations of the Consolidated Funds: [[GREPCENT_TABLE]] [["","2024","","2025-2026","","2027-2028","","Thereafter","","Total"],["","(Dollars in millions)"],["Debt obligations(1)","$\u2014","","$71.0","","$95.4","","$2,140.3","","$2,306.7"],["Interest payable(2)","117.9","","221.7","","118.0","","1,736.6","","2,194.2"],["Other consideration(3)","185.5","","37.0","","30.3","","\u2014","","252.8"],["Operating lease obligations(4)","66.9","","124.1","","121.4","","286.5","","598.9"],["Capital commitments to Carlyle funds(5)","3,742.8","","\u2014","","\u2014","","\u2014","","3,742.8"],["Tax receivable agreement payments(6)","3.1","","11.9","","13.1","","51.2","","79.3"],["Loans payable of Consolidated Funds(7)","392.1","","782.0","","783.1","","7,971.3","","9,928.5"],["Unfunded commitments of the CLOs(8)","1.2","","\u2014","","\u2014","","\u2014","","1.2"],["Consolidated contractual obligations","4,509.5","","1,247.7","","1,161.3","","12,185.9","","19,104.4"],["Loans payable of Consolidated Funds(7)","(392.1)","","(782.0)","","(783.1)","","(7,971.3)","","(9,928.5)"],["Capital commitments to Carlyle funds(5)","(3,065.7)","","\u2014","","\u2014","","\u2014","","(3,065.7)"],["Unfunded commitments of the CLOs(8)","(1.2)","","\u2014","","\u2014","","\u2014","","(1.2)"],["Carlyle Operating Entities contractual obligations","$1,050.5","","$465.7","","$378.2","","$4,214.6","","$6,109.0"]] [[/GREPCENT_TABLE]] (1)The table above assumes that no prepayments are made on the senior and subordinated notes and that the outstanding balances, if any, on the senior credit facility and Global Credit Revolving Credit Facility are repaid on the maturity dates of credit facilities. The CLO term loans are included in the table above based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved. See Note 7 to the consolidated financial statements for the various maturity dates of our borrowings. (2)The interest rates on the debt obligations as of December 31, 2023 consist of: 3.500% on $425.0 million of senior notes, 5.650% on $350.0 million of senior notes, 5.625% on $600.0 million of senior notes, 4.625% on $500.0 million of subordinated notes, and a range of approximately 5.37% to 12.03% for our CLO term loans. Interest payments assume that no prepayments are made and loans are held until maturity with the exception of the CLO term loans, which are based on the earlier of the stated maturity date or the date the CLO is expected to be dissolved. (3)These obligations represent our estimate of amounts to be paid on the contingent cash obligations associated with our acquisitions of Carlyle Aviation Partners and Abingworth, deferred consideration related to our strategic investment in Fortitude, and other obligations. These obligations also include the deferred payment obligations to former holders of the Carlyle Holdings partnership units described below. In connection with the Conversion, former holders of Carlyle Holdings partnership units will receive cash payments aggregating to approximately $344 million, which is equivalent to $1.50 per Carlyle Holdings partnership unit exchanged in the Conversion, payable in five annual installments of $0.30, the fourth of which occurred during the first quarter of 2023. The payment obligations are unsecured obligations of the Company or a subsidiary thereof, subordinated in right of payment to indebtedness of the Company and its subsidiaries, and do not bear interest. (4)We lease office space in various countries around the world, including our largest offices in Washington, D.C., New York City, London, Amsterdam and Hong Kong, which have non-cancelable lease agreements expiring in various years through 2036. The amounts in this table represent the minimum lease payments required over the term of the lease. (5)These obligations generally represent commitments by us to fund a portion of the purchase price paid for each investment made by our funds. These amounts are generally due on demand and are therefore presented in the less than one year category. A substantial majority of these investments is expected to be funded by senior Carlyle professionals and other professionals through our internal co-investment program. Of the $3.7 billion of unfunded commitments to the funds, approximately $3.1 billion is subscribed individually by senior Carlyle professionals, advisors and other professionals, with the balance funded directly by the Company. (6)In connection with our initial public offering, we entered into a tax receivable agreement with the limited partners of the Carlyle Holdings partnerships whereby we agreed to pay such limited partners 85% of the amount of cash tax savings, if any, in U.S. federal, state and local income tax realized as a result of increases in tax basis resulting from exchanges of Carlyle Holdings partnership units for common units of The Carlyle Group L.P. From and after the consummation of the Conversion, former holders of Carlyle Holdings partnership units do not have any rights to payments under the tax receivable agreement except for payment obligations pre-existing at the time of the Conversion with respect to exchanges that occurred prior to the Conversion. These obligations are more than offset by the future cash tax savings that we are expected to realize. 159 (7)These obligations represent amounts due to holders of debt securities issued by the consolidated CLO vehicles. These obligations include interest to be paid on debt securities issued by the consolidated CLO vehicles. Interest payments assume that no prepayments are made and loans are held until maturity. For debt securities with rights only to the residual value of the CLO and no stated interest, no interest payments were included in this calculation. Interest payments on variable-rate debt securities are based on interest rates in effect as of December 31, 2023, at spreads to market rates pursuant to the debt agreements, and range from 1.15% to 14.28%. (8)These obligations represent commitments of the CLOs to fund certain investments. These amounts are generally due on demand and are therefore presented in the less than one year category. Excluded from the table above are liabilities for uncertain tax positions of $42.3 million at December 31, 2023 as we are unable to estimate when such amounts may be paid. Contingent Cash Payments For Business Acquisitions and Strategic Investments We have certain contingent cash obligations associated with our acquisition of Abingworth, which are accounted for as compensation expense, and are accrued over the service period. If earned, payments are made in the year following the performance year to which the payments relate. For our acquisition of Abingworth, the contingent cash obligations relate to future incentive payments of up to $130.0 million that are payable upon the achievement of certain performance targets during 2023 through 2028, which is the maximum amount that could be paid from contingent cash obligations associated with the acquisition of Abingworth as of December 31, 2023. There are no material amounts recognized on the balance sheet related to these contingent cash obligations as of December 31, 2023. In connection with our acquisition of Carlyle Aviation Partners, we had contingent cash payments related to an earn- out of up to $150.0 million that were payable upon the achievement of certain revenue and earnings performance targets during 2020 through 2025. Through December 31, 2022, we paid $53.6 million related to this earn-out. During the first quarter of 2023, we entered into a termination and settlement agreement with respect to the earn-out, pursuant to which we paid $68.6 million, and will pay an aggregate $2.4 million in installments in 2024 and 2025. Risk Retention Rules We will continue to comply with the risk retention rules governing CLOs issued in Europe for which we are a sponsor, which require a combination of capital from our balance sheet, commitments from senior Carlyle professionals, and/or third party financing. For additional information related to the U.S. Risk Retention Rules, see Part I, Item 1A “Risk Factors—Risks Related to Regulation and Litigation—Financial regulations and changes thereto in the United States could adversely affect our business and the possibility of increased regulatory focus could result in additional burdens and expenses on our business.” Guarantees See Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K for information related to all of our material guarantees. Indemnifications In many of our service contracts, we agree to indemnify the third-party service provider under certain circumstances. The terms of the indemnities vary from contract to contract, and the amount of indemnification liability, if any, cannot be determined and has not been included in the table above or recorded in our consolidated financial statements as of December 31, 2023. See Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K for information related to indemnifications. Contingent Obligations (Giveback) Carried interest is ultimately realized when: (1) an underlying investment is profitably disposed of, (2) certain costs borne by the limited partner investors have been reimbursed, (3) the fund’s cumulative returns are in excess of the preferred return and (4) we have decided to collect carry rather than return additional capital to limited partner investors. Realized carried interest may be required to be returned by us in future periods if the fund’s investment values decline below certain levels. When the fair value of a fund’s investments remains constant or falls below certain return hurdles, previously recognized performance allocations are reversed. See Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K for additional information related to our contingent obligations (giveback). 160 Other Contingencies In the ordinary course of business, we are a party to litigation, investigations, inquiries, employment-related matters, disputes and other potential claims. We discuss certain of these matters in Note 9 to the consolidated financial statements included in this Annual Report on Form 10-K. Carlyle Common Stock A rollforward of our common stock outstanding for the years ended December 31, 2023 and 2022 are as follows: [[GREPCENT_TABLE]] [["","Year Ended Ended December 31,"],["","2023","","2022"],["","(Dollars in millions)"],["Balance, beginning of period","362,298,650","","355,367,876"],["Shares issued","5,532,559","","11,857,133"],["Shares repurchased/retired","(6,505,037)","","(4,926,359)"],["Balance, end of period","361,326,172","","362,298,650"]] [[/GREPCENT_TABLE]] Shares of The Carlyle Group Inc. common stock issued during the period presented in the tables above relate to the vesting of the Company’s restricted stock units, shares issued pursuant to a program under which we may distribute realized performance allocation related compensation in fully vested, newly issued shares (see Note 14 to the accompanying consolidated financial statements), 4.2 million and 0.6 million shares issued as part of the purchase price consideration in the CBAM and Abingworth transactions during the year ended December 31, 2022 (see Note 3 to the accompanying consolidated financial statements), and shares issued and delivered in connection with our equity method investment in NGP during the years ended December 31, 2023 and 2022. The Carlyle Group Inc. common stock repurchased during the period presented in the tables above relate to shares repurchased during the years ended December 31, 2023 and 2022 and subsequently retired as part of our stock repurchase programs. The total shares as of December 31, 2023 as shown above exclude approximately 0.7 million net common shares in connection with the vesting of restricted stock units subsequent to December 31, 2023 that will participate in the common shareholder dividend that will be paid on March 1, 2024. Critical Accounting Policies and Estimates The preparation of our consolidated financial statements in conformity with U.S. GAAP requires our management to make estimates and judgments that affect the reported amounts of assets and liabilities, revenues and expenses, and related disclosures of contingent assets and liabilities. These estimates and judgments are based on historical information, information currently available to us and on various other assumptions management believes to be reasonable under the circumstances. Actual results could vary from those estimates and we may change our estimates and assumptions in future evaluations. Changes in these estimates and assumptions may have a material effect on our results of operations and financial condition. We believe the critical accounting policies discussed below affect our more significant judgments and estimates used in the preparation of our consolidated financial statements and should be read in conjunction with our consolidated financial statements and related notes included in this report. Basis of Accounting. The Company’s financial statements are prepared in accordance with U.S. GAAP. Management has determined that the Company’s Funds are investment companies under U.S. GAAP for the purposes of financial reporting. U.S. GAAP for an investment company requires investments to be recorded at estimated fair value and the unrealized gains and/or losses in an investment’s fair value are recognized on a current basis in the statements of operations. Additionally, the Funds do not consolidate their majority-owned and controlled investments (the “Portfolio Companies”). In the preparation of its consolidated financial statements, the Company has retained the specialized accounting for the Funds. Principles of Consolidation. The Company consolidates all entities that it controls either through a majority voting interest or as the primary beneficiary of variable interest entities (“VIEs”). The Company describes the policies and procedures it uses in evaluating whether an entity is consolidated in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K. As part of its consolidation procedures, the Company evaluates: (1) whether it holds a variable interest in an entity, (2) whether the entity is a VIE, and (3) whether the Company’s involvement would make it the primary beneficiary. •In evaluating whether the Company holds a variable interest, fees (including management fees, incentive fees and performance allocations) that are customary and commensurate with the level of services provided, and where the 161 Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, are not considered variable interests. The Company considers all economic interests, including indirect interests, to determine if a fee is considered a variable interest. •For those entities where the Company holds a variable interest, the Company determines whether each of these entities qualifies as a VIE and, if so, whether or not the Company is the primary beneficiary. The assessment of whether the entity is a VIE is generally performed qualitatively, which requires judgment. These judgments include: (a) determining whether the equity investment at risk is sufficient to permit the entity to finance its activities without additional subordinated financial support, (b) evaluating whether the equity holders, as a group, can make decisions that have a significant effect on the economic performance of the entity, (c) determining whether two or more parties’ equity interests should be aggregated, and (d) determining whether the equity investors have proportionate voting rights to their obligations to absorb losses or rights to receive returns from an entity. •For entities that are determined to be VIEs, the Company consolidates those entities where it has concluded it is the primary beneficiary. The primary beneficiary is defined as the variable interest holder with (a) the power to direct the activities of a VIE that most significantly impact the entity’s economic performance and (b) the obligation to absorb losses of the entity or the right to receive benefits from the entity that could potentially be significant to the VIE. In evaluating whether the Company is the primary beneficiary, the Company evaluates its economic interests in the entity held either directly or indirectly by the Company. Changes to these judgments could result in a change in the consolidation conclusion for a legal entity. Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities. Under the voting interest entity model, the Company consolidates those entities it controls through a majority voting interest. Performance Allocations. As of December 31, 2023, we had performance allocations of $6.2 billion. Performance allocations consist principally of the performance-based allocation of profits from certain of the funds to which the Company is entitled (commonly referred to as carried interest). The Company is generally entitled to a 20% allocation (which can vary by fund) of the net realized income or gain as a carried interest after returning the invested capital, the allocation of preferred returns and return of certain fund costs (generally subject to catch-up provisions as set forth in the fund limited partnership agreement). Carried interest is ultimately realized when: (i) an underlying investment is profitably disposed of, (ii) certain costs borne by the limited partner investors have been reimbursed, (iii) the fund’s cumulative returns are in excess of the preferred return and (iv) the Company has decided to collect carry rather than return additional capital to limited partner investors. Carried interest is recognized upon appreciation of the funds’ investment values above certain return hurdles set forth in each respective partnership agreement, the Company recognizes revenues attributable to performance allocations based upon the amount that would be due pursuant to the fund partnership agreement at each period end as if the funds were terminated at that date. Accordingly, the amount recognized as investment income related to performance allocations reflects the Company’s share of the gains and losses of the associated funds’ underlying investments measured at their then-current fair values relative to the fair values as of the end of the prior period. Because of the inherent uncertainty in measuring the fair value of investments in the absence of observable market prices as discussed below, these estimated values may differ significantly from the values that would have been used had a ready market for the investments existed, and it is reasonably possible that the difference could be material. If, at December 31, 2023, all of the investments held by the Company’s funds were deemed worthless, a possibility that management views as remote, the amount of realized and distributed carried interest subject to potential giveback would be $1.6 billion, on an after-tax basis where applicable, of which approximately $0.7 billion would be the responsibility of current and former senior Carlyle professionals. See Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K for information related to performance allocations for various fund types, preferred return hurdle rates, the timing of performance allocation recognition in investment income, and the potential for performance allocation income reversal. Performance Allocation Related Compensation. As of December 31, 2023, we had accrued performance allocations and incentive fee related compensation of $4.3 billion. A portion of the performance allocations earned is due to employees and advisers of the Company. These amounts are accounted for as compensation expense in conjunction with the recognition of the related performance allocation revenue and, until paid, are recognized as a component of the accrued compensation and benefits liability. Accordingly, upon a reversal of performance allocation revenue, the related compensation expense, if any, is also reversed. Income Taxes. The Carlyle Group Inc.is a corporation for U.S. federal income tax purposes and thus is subject to U.S. federal (and state and local) corporate income taxes. Based on applicable federal, foreign, state and local tax laws, the Company records a provision for income taxes for certain entities. Tax positions taken by the Company are subject to periodic audit by U.S. federal, state, local and foreign taxing authorities. 162 As of December 31, 2023, we had gross deferred tax assets of $1.5 billion. The Company accounts for income taxes using the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future consequences of events that have been included in the financial statements or tax returns. A valuation allowance is recorded on the Company’s gross deferred tax assets when it is “more likely than not” that such asset will not be realized. When evaluating the realizability of the Company’s deferred tax assets, all evidence, both positive and negative, is evaluated. As of December 31, 2023, we recorded a valuation allowance of $62.8 million on our gross deferred tax assets. Items considered in this analysis include the ability to carry back losses, the reversal of temporary differences, tax planning strategies, and expectations of future earnings. Lastly, the Company accounts for the tax on global intangible low-taxed income (“GILTI”) as incurred and therefore has not recorded deferred taxes related to GILTI on its foreign subsidiaries. Changes in judgment as it relates to the realizability of these assets, as well as potential changes in corporate tax rates would have the effect of significantly reducing the value of the deferred tax assets. Under U.S. GAAP for income taxes, the amount of tax benefit to be recognized is the amount of benefit that is “more likely than not” to be sustained upon examination. The Company analyzes its tax filing positions in all of the U.S. federal, state, local and foreign tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established, which is included in accounts payable, accrued expenses and other liabilities in the consolidated financial statements. The Company recognizes accrued interest and penalties related to unrecognized tax positions in the provision for income taxes. If recognized, the entire amount of unrecognized tax positions would be recorded as a reduction in the provision for income taxes. As of December 31, 2023, we had unrecognized tax benefits of $42.3 million, which if recognized would result in a reduction in the provision for income taxes of $31.2 million. Fair Value Measurement. In the absence of observable market prices, the Company values its investments and its funds’ investments using valuation methodologies applied on a consistent basis. For some investments little market activity may exist. Management’s determination of fair value is then based on the best information available in the circumstances and may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration a combination of internal and external factors, including the appropriate risk adjustments for non-performance and liquidity risks. Investments for which market prices are not observable include private investments in the equity of operating companies and real estate properties, and certain debt positions. The valuation technique for each of these investments is described in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K. Valuations of the funds’ investments are used in the calculation of accrued performance allocations, discussed above. The valuation methodologies can involve subjective judgments, and the fair value of assets established pursuant to such methodologies may be incorrect, which could result in the misstatement of fund performance and accrued performance allocations. Because there is significant uncertainty in the valuation of, or in the stability of the value of, illiquid investments, the fair values of such investments as reflected in an investment fund’s net asset value do not necessarily reflect the prices that would be obtained by us on behalf of the investment fund when such investments are realized. Realizations at values significantly lower than the values at which investments have been reflected in prior fund net asset values would result in reduced earnings or losses for the applicable fund, the loss of potential performance allocations and incentive fees. Changes in values attributed to investments from quarter to quarter may result in volatility in the net asset values and results of operations that we report from period to period. Also, a situation where asset values turn out to be materially different than values reflected in prior fund net asset values could cause investors to lose confidence in us, which could in turn result in difficulty in raising additional funds. See Part I, Item 1A “Risk Factors—Risks Related to Our Business Operations—Risks Related to the Assets We Manage—Valuation methodologies for certain assets in our funds can involve subjective judgments, and the fair value of assets established pursuant to such methodologies may be incorrect, which could result in the misstatement of fund performance and accrued performance allocations.” Principal Equity-Method Investments. The Company accounts for all investments in which it has or is otherwise presumed to have significant influence, including investments in the unconsolidated funds and strategic investments, using the equity method of accounting. The carrying value of equity-method investments is determined based on amounts invested by the Company, adjusted for the equity in earnings or losses of the investee allocated based on the respective partnership or other agreement, less distributions received. The Company evaluates its equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Our equity-method investment in NGP entitles us to 55% of the management fee related revenue of the NGP entities that serve as advisors to the NGP Energy Funds and is subject to impairment under the U.S. GAAP accounting for equity method investments. We evaluate our equity method investment in NGP for impairment whenever events or changes in circumstances indicate that the carrying amount of the investment may not be recoverable, but no less than quarterly. For example, challenges with fundraising or lower future management fees could cause an impairment of our investment in NGP in the future. As of December 31, 2023, we continue to believe that our investment in NGP is not impaired. 163 Equity-based Compensation. During the year ended December 31, 2023, we recognized $249.1 million in equity-based compensation expense. Compensation expense relating to the issuance of equity-based awards to Carlyle employees is measured at fair value on the grant date. In determining the aggregate fair value of any award grants, we make judgments as to the grant-date fair value, particularly the discount related to awards that do not participate in dividends during the vesting period. A decrease in the discount would result in an increase in equity-based compensation expense. Intangible Assets and Goodwill. The Company’s intangible assets consist of acquired contractual rights to earn future fee income, including management and advisory fees, customer relationships, and acquired trademarks. We allocate the fair value of purchase consideration to the tangible assets acquired, liabilities assumed, and intangible assets acquired based on their estimated fair values. The excess of the fair value of purchase consideration over the fair value of these identifiable assets and liabilities is recorded as goodwill. These valuations require management to make significant judgements, assumptions and estimates. The allocation of purchase consideration to identifiable assets and liabilities affects our amortization expense, as acquired finite-lived intangible assets are amortized over their estimated useful lives, whereas goodwill is not amortized. As of December 31, 2023, we had intangible assets, net of accumulated amortization, of $766.1 million, including $104.0 million of goodwill. Our finite-lived intangible assets have estimated useful lives which range from four to eight years, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. Goodwill represents the excess of cost over the identifiable net assets of businesses acquired and is recorded in the functional currency of the acquired entity. Goodwill is recognized as an asset and is reviewed for impairment annually as of October 1 and between annual tests when events and circumstances indicate that impairment may have occurred. Impairment testing requires the assessment of both qualitative and quantitative factors, including, but not limited to whether there has been a significant or adverse change in the business climate that could affect the value of an asset and/or significant or adverse changes in cash flow projections or earnings forecasts. These assessments require management to make judgements, assumptions and estimates. As of December 31, 2023, we continue to believe our intangible assets and goodwill are not impaired. Recent Accounting Pronouncements We discuss recent accounting pronouncements in Note 2 to the consolidated financial statements included in this Annual Report on Form 10-K.