What changed in this filing

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Item 7. Management’s Discussion and Analysis

2022-02-10 compared with 2021-02-11 · 655 added, 638 removed, 1468 unchanged (47% of the section changed)

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We conduct our operations through three operating segments:

Global Private Equity, Global Credit, and Investment Solutions.

Global Private Equity, Global Credit, and Global Investment Solutions.

• Global Private Equity — Our Global Private Equity segment advises our 37 buyout and middle market and growth capital funds, our 12 U.S.

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As of December 31, 2021, our Global Private Equity segment had $162.1 billion in AUM and $104.3 billion in Fee-earning AUM.

• Global Credit — Our Global Credit segment advises a group of 71 funds that pursue investment strategies including loans and structured credit, direct lending, opportunistic credit, distressed credit, and aircraft financing and servicing.

• Global Credit — Our Global Credit segment advises a group of 87 funds 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, 2021, our Global Credit segment had $73.4 billion in AUM and $51.7 billion in Fee-earning AUM.

• Investment Solutions — Our Investment Solutions segment advises global private equity and real estate fund of funds programs and related co-investment and secondary activities across 283 fund vehicles.

As of December 31, 2020, our Investment Solutions segment had $58.1 billion in AUM and $36.4 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 across 303 fund vehicles.

As of December 31, 2021, our Global Investment Solutions segment had $65.5 billion in AUM and $37.4 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.

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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 and related advisory fees and other income, realized performance revenues (consisting of incentive fees and carried interest allocations), realized principal investment income, including realized gains on our investments in our funds and other trading securities, as well as interest income.

Accordingly, our segment revenues primarily consist of fund management and related transaction and portfolio advisory fees and other income, realized performance revenues (consisting of incentive fees and carried interest 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-related charges and amortization of intangibles and impairment.

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 15 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.

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Trends Affecting our Business

Aggregate economic activity continued to improve through the fourth quarter of 2020, and overall revenue growth among public companies was roughly flat, on average, for the year.

However, the pandemic’s sharply discrepant impact has increased the dispersion in performance across businesses and industries.

During 2020, more than 10% of public companies reported a peak-to-trough fall in revenues of more than 50%, roughly twice the number of businesses reporting losses of this magnitude over any 12-month period during 2008-2009.

On the other hand, over 5% of businesses also reported revenue gains in excess of 50%, as remote work and social distancing led businesses to make greater use of video communications technology and households substituted video streaming and durable goods purchases for travel, tourism and live events spending.

Overall, U.S.

business spending, led by software and services, averaged nearly 8% year-over-year growth in the fourth quarter of 2020, and our proprietary portfolio data continue to suggest that growth in certain industries such as healthcare and technology also remained robust.

In Europe, there was continued growth in the business services and industrials sectors, but a large resurgence in coronavirus cases drove some retrenchment in affected industries and geographies.

As has been the case since the onset of the pandemic, the travel, tourism, and hospitality sectors were particularly impacted.

hotel occupancy fell to 37% of capacity in December, the lowest rate since the spring, while new restrictions on movement and business activity in Europe resulted in a modest quarter-over-quarter economic contraction.

Commerce Department estimates that the U.S.

economy expanded at an annual rate of 4.0% in Q4 2020.

As a result, gross domestic product (GDP) finished the year 2.5% below year-end 2019 levels and when averaged over the entirety of 2020, GDP contracted by 3.5% relative to 2019.

In contrast, China continues to exhibit strong recovery, with economic output ending the fourth quarter 6.5% ahead of year-ago levels.

Global equity markets remained strong in 2020, driven by the sharp decline in interest rates, significant increases in fiscal support, and the sense among market participants that the COVID-19 pandemic reflects a temporary decline in the supply of certain experiences and services rather than an endogenous drop in consumer demand.

Over the past year, the S&P 500 rose by roughly 15%, with much larger gains in tech-heavy indexes like the Nasdaq whose constituents have tended to benefit from social distancing and remote work.

The global equity markets saw a particularly strong surge from November 6 onwards after the overwhelmingly positive results of COVID-19 vaccine trials were announced.

From September 30 through December 31, 2020, the S&P 500, MSCI ACWI, EuroStoxx 600, and Shanghai Composite rose 11.7%, 14.4%, 10.5%, and 7.9%, respectively.

Much of this performance, particularly in the U.S., was driven by a rebound in sectors where equity prices had been hardest hit by the pandemic, such as hospitality, financials, brick-and-mortar retail, and oil & gas.

In the U.S., analysts currently estimate fourth quarter earnings for companies in the S&P 500 declined 5% year-over-year, with the largest contractions still concentrated in the energy and industrials (including transportation) sectors.

While unexpected resilience in goods consumption, residential real estate markets, and business spending have led to better than expected 2020 global growth outcomes, and the recently enacted and proposed fiscal stimulus measures should help bolster household income, significant risks remain for 2021.

In December 2020, total U.S.

employment declined for the first time since April after seven consecutive months of gains.

The slower than anticipated global vaccination rollout, combined with uncertainties regarding new variants of the virus, will prolong the risk of continued disruption from the COVID-19 pandemic deeper into the year.

In Europe, the ongoing re-imposition of broad-based lockdown measures could stymie growth in the near-term, while underlying labor market fragility and debt accumulation pose a potential risk to the longer-term growth outlook for the region.

Direct state aid programs have artificially suppressed unemployment rates to date and 5% or more of the workforce is still supported by employment retention programs in some European economies.

While many of these policies have been extended through 2021, an eventual labor market shakeout remains a possibility.

Of particular note are risks to the outlook for the transportation industry where recovery in metrics such as discretionary air travel and public transit ridership lags other macro indicators, and the infrastructure sector, where the pandemic has materially altered revenue expectations and has led to severe projected budget shortfalls at the state and local level.

The potential for a sustained period of severely depressed commercial air travel may have significant implications not only for the airlines, but also for the myriad aviation related companies such as aircraft suppliers, their vendors and airport services firms that depend on the aviation industry for a substantial portion of their revenues.

The near-term outlook for oil and gas is expected to improve in 2021 as lockdowns are eased and fuel demand rebounds.

The long-term outlook for oil and gas will be more dependent on the pace of the broader shift to alternative energy sources.

For example, currently over 90% of surface, air and marine transportation is powered by oil-based fuels.

While growth in electric vehicle sales should cause this share to decline over time, electric vehicles account for less than 3% of new auto sales, and less than 0.5% of the cars on the road today are fully electric.

Additionally, ongoing concerns about climate change and carbon emissions may dampen investor interest in the oil and gas sector which could have a negative impact on our activities in the sector including raising capital, obtaining suitable or sufficient financing, exiting investments and achieving expected returns on new investments.

Global geopolitical tensions, already strained pre-pandemic, have been exacerbated by the widespread economic disruption.

U.S.-China relations, which had appeared to ease at the end of 2019, soured during 2020 amid harsh rhetoric, sanctions, and export restrictions.

While there is some optimism that tensions with China could ease under the new U.S.

Administration, the outlook remains highly uncertain.

The imposition of a national security law on Hong Kong has prompted backlash from various global players, thereby increasing overall uncertainty about risks associated with international trade with Hong Kong, the potential for increased taxation on Hong Kong-related transactions, and new regulatory restrictions and data protection concerns for businesses operating in Hong Kong, including our Hong Kong operations.

Disputes over digital services taxes and import tariffs on luxury goods imports reignited U.S.-European Union trade tensions, although early signals from the new U.S.

Administration suggest a desire to approach existing disagreements diplomatically.

Political instability and the potential for a broader pullback in global trade introduce risks to the economic growth of most economies, particularly those with significant export-dependence.

Domestically within the U.S., heightened unemployment and deep-seated political divisiveness continue to cause significant uncertainty.

Bond markets, while stable, shifted modestly in the fourth quarter.

The 10-year U.S.

Treasury yield rose more than 25 basis points over the quarter to its highest level since March on expectations of increased government spending under the new Administration and closely divided Congress.

High yield spreads tightened a further 150 basis points.

Futures markets continue to expect short-term rates to remain near zero through 2025 due to the Federal Reserve’s new policy framework, which appears to allow inflation to overshoot its 2% target for “some time.” Within corporate credit, businesses have taken advantage of low interest rates through massive debt issuance and restructurings, building large cash piles as liquidity buffers.

Our carry fund portfolio continued to build on the strong momentum started in the second half of the year, appreciating 8% in the fourth quarter and 10% for the year.

Within our Global Private Equity segment, our corporate private equity funds appreciated by 11% in the fourth quarter and 19% over the last twelve months, reflecting strong performance across the portfolio and our real estate funds appreciated by 3% during the fourth quarter and 8% over the last twelve months.

Our natural resources funds appreciated by 3% in the fourth quarter despite continued pressure, with depreciation of 16% over the last twelve months.

In our Global Credit segment, our carry funds (which represent approximately 14% of the total Global Credit remaining fair value) appreciated by 7% in the fourth quarter, as tightening spreads led to an increase in value for many of our positions, and depreciated 2% over the last twelve months.

Investment Solutions appreciation was 7% in the fourth quarter and 10% for the year, though the valuations of our primary and secondary funds of funds generally reflect investment fair values on a one-quarter lag.

With continued positive impact from valuations across the portfolio, net accrued performance revenues on our balance sheet increased to a record $2.3 billion at December 31, 2020, up 36% since last year.

Significant IPO activity in our portfolio during 2020 has increased the portion of our traditional carry funds attributable to publicly traded companies to 15% of fair value in the fourth quarter, compared to 6% at the end of 2019.

While these IPOs have performed well to date overall, this shift may result in an increasing correlation to public market performance and a significant concentration of investment gains in individual investments for certain funds.

To the extent that there is volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters.

Generally, the investment period of our funds enables us to be patient in deploying capital only in investments that meet our return criteria and the strategic objectives of our funds.

During the fourth quarter, our carry funds invested $8.7 billion in new or follow-on transactions and we invested $18.3 billion for the full year 2020.

We anticipate that increased market activity and opportunities for large buyouts will facilitate strong deployment activity as we move further into 2021.

We also expect volume to remain robust across both growth and buyout opportunities, particularly in the healthcare, technology, and consumer sectors.

However, challenges in specific industries could lead to a longer-term slowdown in certain sectors, such as traditional energy.

We generated $6.9 billion in realized proceeds from our carry funds in the fourth quarter and realized $21.0 billion in 2020.

We expect near-term exit activity in early 2021 to depend on the trajectory of multiple and varied macro environment factors, in addition to valuation multiples and access to capital markets.

However, we believe that our recent IPO activity and maturing portfolio position us well to deliver higher levels of both realized proceeds and realized performance revenue over the long term.

For example, during the fourth quarter we realized significant performance revenue for a second straight quarter from our sixth U.S.

Buyout fund, which reflects the value creation and advancing maturity profile of that flagship fund.

Fundraising has remained generally resilient since the onset of the pandemic.

Though we were not fundraising any of our flagship funds in Global Private Equity during 2020, we raised $27.5 billion in new capital in 2020, well exceeding our goal for the year, with particular fundraising strength in Investment Solutions and Global Credit.

At the beginning of the pandemic, many observers conflated a return to the office with a return to business as usual.

Instead, business volumes and productivity rose to pre-pandemic levels well in advance of full office reopening.

Since the start

of the pandemic, our employees have proven what they can accomplish while they are working remotely, and they remain well connected and engaged with each other and our stakeholders through our suite of teleconferencing and virtual meeting solutions.

While we have generally reopened our offices around the globe, most employees continue to work remotely and we continue to successfully operate our business and address the needs of our shareholders, fund investors and portfolio companies.

We are closely evaluating the financial and other proposals put forth by the new Administration and Congress and their potential impacts on our business.

The year 2021 was an economic recovery year as the pandemic lockdowns eased and the world economy exited the pandemic recession, with boosts in cyclical sectors like industrials, materials and energy, which were also bolstered by the resurgence of inflation.

Corporate earnings in 2021 exceeded expectations driven by large productivity gains stemming from investments in digitization and technology, which more than offset input price inflation and powered margin expansion.

Current estimates anticipate S&P 500 constituents’ 2021 full year earnings growth in excess of 45%.

This robust performance, coupled with fiscal stimulus and ultra-low interest rates, buoyed global equity markets in the aggregate in 2021.

The Dow Jones, S&P 500, and Nasdaq 100 rose 18.7%, 26.9%, and 26.6% respectively in 2021.

Globally, the MSCI ACWI, EuroStoxx 600 and Shanghai Composite rose 16.8%, 22.3%, and 4.8% respectively over the same period.

In contrast to corporate earnings, while overall economic activity was generally strong in 2021, top line growth was hampered by ongoing pandemic-related restrictions, supply chain bottlenecks, labor shortages, and slowing consumption.

In the fourth quarter of 2021, the prospect of earlier and more aggressive monetary policy tightening in response to rising inflation drove renewed interest rate volatility.

Thus far in 2022, 10-year Treasury yields have risen 44 basis points to 1.96% as of February 8, 2022, as higher than expected inflation in December 2021 increased the likelihood and anticipated frequency of increases to the federal funds rate.

Futures markets have now priced in more than five to six rate hikes in 2022 and two to three hikes in 2023.

Treasury market volatility, however, has not yet translated into corporate bond market distress and financing markets remain favorable and open.

Single B-rated and sub-investment grade U.S corporate spreads actually declined 13 and 5 basis points in the fourth quarter of 2021, respectively, and remain near historic lows.

Single B-rated yields are 300 to 375 basis points below long-term averages and leveraged loan prices are higher than they were before the pandemic.

Equity market volatility, on the other hand, has risen with Treasury market volatility, and returns year-to-date in 2022 are down significantly.

The NASDAQ 100 is officially in correction territory, while the S&P 500 is down 5% as of February 8, 2022.

The prices of companies in the NASDAQ most exposed to interest rate risk – namely, those with cash flows weighted far into the future – are down 14% year-to-date, and down 43% since their 2021 peak.

Labor market tightness persists across our portfolio, with a U.S.

labor force participation rate still 1.2 percentage points below its pre-pandemic peak and a shortfall of roughly 3 million eligible workers.

Both producer and consumer prices continue to climb driven by capacity constraints in physical supply chains and such price increases are now a key focus for central banks.

In the U.S., December 2021 CPI inflation reached 7% year-over-year, the highest level in four decades, while inflation in the UK and Canada hit 30-year highs.

Producer prices in the U.S.

and Japan are also rising at the fastest rate since the early 1980s.

In Europe, and Germany in particular, where an energy crisis is compounding supply chain-driven pressures, producer prices are rising at the fastest rate on record.

Overall, household spending is liquid in a way the underlying economy is not.

Money intended to be spent on services and live experiences has instead largely been spent on durable goods.

However, unused services capacity cannot be transformed frictionlessly into goods production.

Supply-side scope can only adjust over time through an increase in factories, equipment, trained workers, and logistics network capacity.

Many companies have been hesitant to make this investment, as demand for goods seems likely to be only temporarily boosted by pandemic-era restrictions and risk aversion.

This imbalance of demand and underlying capacity constraints has likely contributed to today’s inflation.

Price pressures seem unlikely to abate until spending patterns realign with supply-side dynamics.

Asia, including China, remains an important component of Carlyle’s investment platform.

The Chinese economy grew 4% year-over-year in the fourth quarter of 2021, down from 7.9% and 4.9% in the second and third quarters of 2021, respectively.

The slowdown is partially attributable to a sharp decline in real estate development activity and sales with housing prices in China falling at the fastest rate since mid-2015.

Carlyle’s current exposure to the real estate sector in China and its constituent businesses is insignificant.

Market adjustments to-date mainly reflect increases in the risk premium investors earn for China exposure rather than deterioration in company-specific fundamentals.

Our carry fund portfolio continued to build on the strong momentum we have generated throughout the year.

Within our Global Private Equity segment, our corporate private equity funds appreciated 6% in the fourth quarter and 41% for the year, reflecting strong performance across the portfolio and our real estate funds appreciated 11% during the fourth quarter and 39% for the year.

Our natural resources funds appreciated by 7% in the fourth quarter due to strong commodity pricing, with appreciation of 34% for the year.

In our Global Credit segment, our carry funds (which represent approximately 18% of the total Global Credit remaining fair value) appreciated 1% in the fourth quarter and 22% for the year.

Global Investment Solutions appreciation was 7% in the fourth quarter and 48% for the year, though the valuations of our primary and secondary funds of funds generally reflect investment fair values on a one-quarter lag.

While our publicly traded investments appreciated 30% during the year, they were flat in the fourth quarter and were lower in the early part of January 2022, reflecting the equity market sell-off in the first weeks of 2022.

We reached record levels of realized proceeds in 2021, generating $15.3 billion in realized proceeds from our carry funds in the fourth quarter and $44.3 billion for the year.

Alongside the robust portfolio appreciation in 2021, this contributed to

record realized net performance revenues as well as record realized investment income recognized in the quarter, surpassing records set in the third quarter of 2021, as well as for the year overall.

Driven by positive impact from valuations across the portfolio, net accrued performance revenues on our balance sheet increased to $3.9 billion at December 31, 2021, up 67% since December 31, 2020 despite record levels of realizations during 2021.

The portion of our traditional carry funds attributable to publicly traded companies is 11% of fair value as of December 31, 2021, compared to 15% of fair value as of December 31, 2020 and 6% as of December 31, 2019.

While the share of our total fair value in publicly traded investments has started to decline with realizations, it remains a meaningful component of our portfolio, and to the extent that there is continued volatility in public equity markets and/or the prices of our publicly-traded portfolio companies, there may be elevated volatility in our performance revenue accrual in the coming quarters.

Capital deployment was at record levels across the entire private equity industry during 2021.

During the fourth quarter, our carry funds invested $13.8 billion in new or follow-on transactions and we invested a record $33.8 billion for the full year 2021.

While high levels of industry dry powder and widely available financing are likely to foster an increasingly competitive market, we believe our investment platform will enable us to pivot quickly to pursue opportunities where we have identified dislocation, which positions us to continue to deploy capital throughout 2022.

During 2021, we raised $51.3 billion in new capital, which included the launch of two key U.S.

buyout and growth funds, CP VIII and CP Growth, and our ninth U.S.

real estate fund, CRP IX.

We also saw a record level of CLO issuances in our Global Credit segment, and continued strength in our Global Investment Solutions segment, particularly in separately managed accounts.

The pace of capital deployment has resulted in fund products coming back to market faster than ever before, and limited partners have an increasing array of investment opportunities to consider.

As a result, we anticipate the fundraising landscape to become increasingly competitive as limited partners balance allocation limits with more offerings.

We are closely evaluating the financial and other proposals put forth by the current Administration and Congress and their potential impacts on our business.

While there may be changes to current tax and regulatory regimes, additional fiscal stimulus packages could be followed by longer-term spending increases on infrastructure, climate, health care and education.

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Recent Transactions

In February 2022, our Global Credit platform agreed to acquire a diversified portfolio of triple net leases for an enterprise value of $3 billion through a Carlyle-affiliated investment fund as part of the expansion of our real estate credit strategy.

The investment fund’s acquisition of the portfolio will be funded using $2 billion in debt and $1 billion in equity.

The debt is non-recourse to us and Carlyle, as general partner of the investment fund, will contribute up to $200 million as a minority interest balance sheet investment.

The transaction is expected to close in the first quarter of 2022.

In February 2022, the Board of Directors declared a quarterly dividend of $0.25 per common share to common stockholders of record at the close of business on February 15, 2022, payable on February 23, 2022.

Conversion to a Corporation

On January 1, 2020, we completed our conversion from a Delaware limited partnership named The Carlyle Group L.P.

(the “Partnership”) into a Delaware corporation named The Carlyle Group Inc.

(the “Corporation”).

Pursuant to the Conversion, at the specified effective time on January 1, 2020, (i) each common unit of the Partnership outstanding immediately prior to the effective time converted into one issued and outstanding, fully paid and nonassessable share of common stock, (ii) each special voting unit of the Partnership outstanding immediately prior to the effective time was canceled for no consideration and the former holder(s) thereof ceased to have any rights with respect thereto and (iii) each general partner unit of the Partnership outstanding immediately prior to the effective time was canceled for no consideration and the former holder(s) thereof ceased to have any rights with respect thereto, in each case without any action required on the part of the Partnership, the Corporation, any holder of any Partnership interest or any other person.

In addition, holders of partnership units in Carlyle Holdings I L.P., Carlyle Holdings II L.P.

and Carlyle Holdings III L.P.

exchanged such units for an equivalent number of shares of common stock of the Corporation and certain other restructuring steps occurred (the conversion, together with such restructuring steps and related transactions, the “Conversion”).

The Conversion qualified for the non-recognition of gain or loss to our former common unitholders for U.S.

federal income tax purposes.

The application of the non-recognition rules to non-U.S.

common unitholders in the context of the Conversion is dependent on local tax requirements.

Following the Conversion, dividends are reported to stockholders on Form 1099-DIV and are 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.

Prior to the Conversion, we recorded significant non-controlling interests in Carlyle Holdings related to the ownership interests of the limited partners of the Carlyle Holdings partnerships.

The Company, through wholly-owned subsidiaries, was the sole general partner of Carlyle Holdings.

Accordingly, the Company consolidated the financial position and results of operations of Carlyle Holdings into its consolidated financial statements.

In the Conversion, the limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group Inc.

As a result, in periods following Conversion, the consolidated balance sheet of The Carlyle Group Inc.

will not reflect any non-controlling interests in Carlyle Holdings.

In addition, we expect that our provision for income taxes in periods following the Conversion will be greater than in periods prior to the Conversion because following the Conversion, all of our income before the provision for income taxes will be subject to U.S.

federal (and state and local) corporate income taxes.

Risk Factors—Following the Conversion, we expect to pay more corporate income taxes than we would have as a limited partnership.” For these reasons, our results in periods following the Conversion may not be comparable to our results in periods prior to the Conversion.

For additional information about the Conversion, see “Part 1.

Business–Organizational Structure,” “Part II.

Note 10–Related Party Transactions,” and “Part II.

Note 11–Income Taxes.”

In February 2022, the Board of Directors approved an increase in the anticipated common stock dividend to an annual rate of $1.30 per share ($0.325 per common share on a quarterly basis), anticipated to commence for the first quarter 2022 dividend, which is anticipated to be paid in May 2022.

Key Financial Measures

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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 with which we have an investment advisory or investment management agreement.

Additionally, management fees 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.

Approximately 90% of our fee revenue is in the form of management fees from traditional closed-end, long-dated funds, which are highly predictable and stable, and do not have significant exposure to the underlying fund valuations.

We earn management fees for advisory services we provide to funds in which we hold a general partner interest or with which

we have an investment advisory or investment management agreement.

Additionally, management fees 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.

Approximately 90% of

our fee revenue is in the form of management fees from traditional closed-end, long-dated funds, which are highly predictable

and stable, and do not have significant exposure to the underlying fund valuations.

More than 95% of our Fee-earning

AUM is in fund structures with contractual lives of generally ten years, and is not subject to redemption without cause.

Management fees attributable to Carlyle Partners VII, L.P.

(“CP VII”), our seventh U.S.

buyout fund with approximately $17.5 billion of Fee-earning AUM as of December 31, 2020, was 17% of total management fees recognized during the years ended December 31, 2020 and 2019 and 13% during the year ended December 31, 2018.

buyout fund with approximately $15.3 billion of Fee-earning AUM as of December 31, 2021, was 15% of total management fees recognized during the year ended December 31, 2021, and 17% during the years ended December 31, 2020 and 2019.

No other fund generated over 10% of total management fees in the periods presented.

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Transaction and Portfolio Advisory Fees.

Transaction and portfolio advisory fees are 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 when the service has been provided and collection is reasonably assured.

Transaction and portfolio advisory fees generally 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 required to offset our fund management fees earned by a percentage of the transaction and advisory fees earned, which we refer to as the “rebate offsets.” Historically, such rebate offset percentages generally approximated 80% of the fund’s portion of the transaction and advisory fees earned.

However, the percentage of transaction and portfolio advisory fees we share with our investors on our recent vintage funds has generally increased from 80% to 100% of the fund’s portion of the transaction and portfolio advisory fees earned, such that a larger share of the transaction fee revenue we retain is driven by co-investment activity.

In addition, GCM generates capital markets fees 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 with respect to our most recent vintages (but are subject to the rebate offsets set forth above for older funds).

However, the percentage of transaction and portfolio advisory fees we share with our investors on our recent vintage funds has generally increased, and as such the rebate offset percentages generally range from 80% to 100% of the fund’s portion of the transaction and advisory fees earned, such that a larger share of the transaction fee revenue we retain is driven by co-investment activity.

In addition, Carlyle Global Capital Markets (“GCM”) generates capital markets fees 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 with respect to our most recent vintages (but are subject to the rebate offsets set forth above for older funds).

Underwriting fees include gains, losses and fees arising from securities offerings in which we participate in the underwriter syndicate.

The recognition of transaction fees, portfolio advisory 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.

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.

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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.

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.

In addition to the performance allocations from our Global Private Equity funds and most of our closed-end carry funds in the Global Credit segment, we are also entitled to receive performance allocations from our Investment Solutions, Carlyle Aviation and NGP Carry Funds.

In addition to the performance allocations from our Global Private Equity funds and closed-end carry funds in the Global Credit segment, we are also entitled to receive performance allocations from our Global Investment Solutions, Carlyle Aviation and NGP Carry Funds.

We also retained our interest in the net accrued performance allocations of existing funds at the time of the sale of MRE.

The timing of performance allocations realizations for these funds is typically later than in our other carry funds based on the terms of such arrangements.

Our performance allocations are generated by a diverse set of funds with different vintages, geographic concentration, investment strategies and industry specialties.

For an explanation of the fund acronyms used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, see “Item 1.

For an explanation of the fund acronyms used throughout this Management’s Discussion and Analysis of Financial Condition and Results of Operations section, refer to “Item 1.

Business — Our Family of Funds.”

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CP VI $ 1,327.5 CP VI $ 1,124.3 CP VI $ 154.2

CAP IV 331.0 CRP V 154.9 CRP VII 131.8

Alpinvest Co - & Secondary Investments 2006-2008 83.5 CEP IV 77.9

CEP IV (119.0) CIEP I $ 74.5

CAP IV (245.7)

CP VII 717.8 CAP IV 331.0 CRP V 154.9

Alpinvest Co - & Secondary Investments 2006-2008 83.5

CEP IV (119.0)

No other fund generated over 10% of performance allocations in the periods presented above.

Performance allocations from CP VI during 2020 were driven by appreciation across the portfolio, with notable increases in the values of the publicly traded investments in the portfolio.

Performance allocations from CP VI during 2021 were driven by appreciation across the portfolio, with notable increases in the values of the publicly traded investments in the portfolio and sale transactions of privately held investments.

Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any carried interest in respect of the historical investments and commitments to our fund vehicles that existed as of July 1, 2011 (including any options to increase any such commitments exercised after such date).

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 and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties).

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, except in certain instances, and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties).

In certain instances, carried interest associated with the AlpInvest fund vehicles is subject to entity level income taxes in the Netherlands.

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Since fund return hurdles are cumulative, previously recognized performance allocations also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate.

For the years ended December 31, 2020, 2019 and 2018, the reversals of performance allocations were $401.5 million, $215.8 million and $364.4 million, respectively.

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.

For the years ended December 31, 2021, 2020 and 2019, the reversals of performance allocations were $48.2 million, $401.5 million and $215.8 million, respectively.

As of December 31, 2021, accrued performance allocations and accrued giveback obligations were approximately $8.1 billion and $30.2 million, respectively.

Each balance assumes a hypothetical liquidation of the funds’ investments at

December 31, 2020 at their then current fair values.

These assets and liabilities will continue to fluctuate in accordance with the fair values of the fund investments until they are realized.

As of December 31, 2020, approximately $10.6 million of the accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to Carlyle Holdings is $8.1 million.

Each balance assumes a hypothetical liquidation of the funds’ investments at December 31, 2021 at their then current fair values.

These assets and liabilities will continue to fluctuate in accordance with the fair values of the funds’ investments until they are realized.

As of December 31, 2021, $14.1 million of the accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to the Company is $16.1 million.

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 and excludes any net accrued performance allocations and incentive fees that have been realized but will be collected in subsequent periods.

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In addition, realized performance allocations may be reversed in future periods to the extent that such amounts become subject to a giveback obligation.

If at December 31, 2020, all investments held by our carry funds were deemed worthless, a possibility that management views as remote, the amount of realized and previously distributed performance allocations subject to potential giveback would be approximately $0.5 billion, on an after-tax basis where applicable.

See the related discussion of “Contingent Obligations (Giveback)” within “— Liquidity and Capital Resources.”

If at December 31, 2021, all investments held by our carry funds were deemed worthless, the

amount of realized and previously distributed performance allocations subject to potential giveback would be approximately $1.5 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 the related discussion of within “— Liquidity and Capital Resources—Contingent Obligations (Giveback).”

The following table summarizes the total amount of aggregate giveback obligations that we have realized since Carlyle’s inception.

Given various 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, the table below also summarizes the amount that was attributable to Carlyle:

Inception through December 31, 2021

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The funding for employee obligations and givebacks related to carry realized pre-IPO is primarily through a collection of employee receivables related to giveback obligations and from non-controlling interests for their portion of the obligation.

The realization of giveback obligations for the Company’s portion of such obligations reduces Distributable Earnings in the period realized.

The realization of giveback obligations for the Company’s portion of such obligations reduces Distributable Earnings in the period realized and negatively impacts earnings available for distributions to shareholders in the period realized.

Further, each individual 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.

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See “— Segment Analysis” for the realized performance revenues by segment and related discussion for each period.

Investment income also represents the unrealized and realized gains and losses on our principal investments, including our investments in Carlyle funds that are not consolidated, as well as any interest and other income.

Investment income (loss) also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee, as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee, as it relates to our investments in NGP.

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, as well as any interest and other income.

As it relates to our investments in NGP, investment income also includes the related amortization of the basis difference between the carrying value of our investment and our share of the underlying net assets of the investee, as well as the compensation expense associated with compensatory arrangements provided by us to employees of our equity method investee.

Principal investment income also included our proportionate share of U.S.

GAAP earnings from our strategic investment in Fortitude Re prior to the contribution

of our investment to a Carlyle-affiliated investment fund (see Note 5–Investments to the consolidated financial statements) .

GAAP earnings from our strategic investment in Fortitude prior to the contribution of our investment to a Carlyle-affiliated investment fund (see Note 4 to the consolidated financial statements in Part II, Item 8 of this Form 10-K).

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.

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The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the marketplace, including the existence and transparency of transactions between market participants.

Financial instruments with readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

Financial instruments with

readily available quoted prices, or for which fair value can be measured from quoted prices in active markets, will generally have a higher degree of market price observability and a lesser degree of judgment applied in determining fair value.

The table below summarizes the valuation of investments and other financial instruments included within our AUM, by segment and fair value hierarchy levels, as of December 31, 2021:

As of December 31, 2021

Equity Global Credit Investment

Equity Global Credit Global Investment

Solutions Total

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GAAP, ultimately we do not have recourse to such assets and such liabilities are generally non-recourse to us.

Therefore, a gain or loss from the Consolidated Funds generally does not impact the assets available to our equity holders.

Therefore, a gain or loss from the Consolidated Funds generally does not impact the assets available to our common stockholders.

Compensation and Benefits.

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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

The funds do not have a uniform allocation of performance allocations and incentive fees to our employees, senior Carlyle professionals and operating executives.

Therefore, for any given period, the ratio of performance allocations and incentive fee compensation to performance allocations and incentive fee revenue may vary based on the funds generating the performance allocations and incentive fee revenue for that period and their particular allocation percentages.

In addition, we have implemented various equity-based compensation arrangements that require senior Carlyle professionals and other employees to vest ownership of a portion of their equity interests over a service period of generally six months to four years, which under U.S.

GAAP will result in compensation charges over current and future periods.

Over the past two years, we have granted fewer equity awards to employees than we have previously.

For example, in 2018, 2019 and 2020, we granted approximately 13.3 million, 6.7 million and 3.5 million of restricted stock units and other awards, respectively.

In February 2021, we granted 6.6 million long-term strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years.

As a result, the number of restricted stock units granted in 2021 will be higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years.

During 2019 and 2020, we granted fewer equity awards than we have previously.

In 2021, we granted 7.1 million in long-term strategic restricted stock units to certain senior professionals.

The majority of these restricted stock units are subject to vesting based on the

achievement of annual performance targets over four years which align with our strategic plan announced at our investor day in February 2021, with a larger proportion of the awards vesting based on the 2024 performance year.

As a result, the number of restricted stock units granted in 2021 is higher than in 2020, which, combined with a higher share price than in prior periods, will result in higher equity-based compensation expense in the coming years.

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 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.

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 and expenses or insurance recoveries associated with litigation and contingencies.

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.

Additionally, we anticipate that general, administrative and other expenses will fluctuate from period to period due to the impact of foreign exchange.

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.

We also could incur additional expenses in the future related to our acquisitions including amortization of acquired intangibles and earn-outs to equity holders.

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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.

Following the Conversion on January 1, 2020, all of the income before provision for income taxes attributable to The Carlyle Group Inc.

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federal, state, and local corporate income taxes.

Prior to the Conversion, the Carlyle Holdings partnerships and their subsidiaries primarily operated as pass-through entities for U.S.

income tax purposes and recorded a provision for state and local income taxes for certain entities based on applicable laws and a provision for foreign income taxes for certain foreign entities.

In addition, Carlyle Holdings I GP Inc.

was subject to U.S.

income taxes on only a portion of our income or loss.

Prior to the Conversion, the Company was generally organized as a series of pass through entities pursuant to the United States Internal Revenue Code.

As such, the Company was not responsible for the tax liability due on certain income earned during the year.

Such income was taxed at the unitholder and non-controlling interest holder level, and any income tax was the responsibility of the unitholders and was paid at that level.

See Note 11 to the consolidated financial statements for more information regarding the impact of the Conversion.

Income taxes are accounted for using the asset and liability method of accounting.

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.

See Note 10 to the consolidated financial statements in Part II, Item 8 of this Form 10-K for more information regarding the impact of the Conversion.

In the normal course of business, we are subject to examination by federal and certain state, local and foreign tax regulators.

As of December 31, 2020, our U.S.

federal income tax returns for the years 2016 through 2019 are open under the normal three-year statute of limitations and therefore subject to examination.

With a few exceptions, as of December 31, 2021, our U.S.

federal income tax returns for the years 2018 through 2020 are open under the normal three-years statute of limitations and therefore subject to examination.

State and local tax returns are generally subject to audit from 2016 to 2020.

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Accordingly, the Company consolidated the financial position and results of operations of Carlyle Holdings into its financial statements, and the other ownership interests in Carlyle Holdings are reflected as a non-controlling interest in the Company’s financial statements.

The limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group Inc.

The limited partners of the Carlyle Holdings partnerships exchanged their Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group

as part of the Conversion.

As a result, following the Conversion the consolidated balance sheet of The Carlyle Group Inc.

does not reflect any non-controlling interests in Carlyle Holdings.

As a result, following the Conversion the consolidated financial statements of The Carlyle Group Inc.

do not reflect any non-controlling interests in Carlyle Holdings.

Earnings Per Common Share.

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We apply the treasury stock method to determine the dilutive weighted-average common shares represented by unvested restricted stock units.

Prior to the Conversion, we applied the “if-converted” method to the Carlyle Holdings partnership units to determine the dilutive weighted-average common units outstanding.

For certain equity-based compensation awards that contain performance or market conditions, the number of contingently issuable common shares is included in diluted earnings per common share based on the number of common shares, if any, that would be issuable under the terms of the awards if the end of the reporting period were the end of the contingency period, if the result is dilutive.

Prior to the Conversion, we applied the “if-converted” method to the Carlyle Holdings partnership units to determine the dilutive weighted-average common shares outstanding.

Subsequent to the Conversion, the Company has a single class of stock and therefore, the “if-converted” method is no longer applied in the computation of diluted earnings per share.

Non-GAAP Financial Measures

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Charges (credits) related to Carlyle corporate actions and non-recurring items include:

charges associated with acquisitions or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts 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 severance.

charges associated with acquisitions, dispositions or strategic investments, changes in the tax receivable agreement liability, corporate conversion costs, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts 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 severance.

We believe the inclusion or exclusion of these items provides investors with a meaningful indication of our core operating performance.

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(1) Reflects limited partner capital commitments where the original investment period, weighted-average investment period, or commitment fee period has not expired.

(2) Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Investment Solutions funds.

(2) Reflects limited partner invested capital at cost and includes amounts committed to or reserved for investments for certain Global Private Equity and Global Investment Solutions funds.

(3) Represents the amount of aggregate Fee-earning collateral balances and principal balances, at par, for our CLOs/structured products.

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Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

Inflows also includes $4.1 billion of fee-earning Carlyle Aviation Partners (formerly Apollo Aviation Group) assets which were acquired in a transaction that closed in December 2018.

(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.

Outflows also reflect the sale of Metropolitan on April 1, 2021, which had $2.3 billion of Fee-earning AUM as of March 31, 2021.

(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, as well as activity of funds with fees based on gross asset value.

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(d) 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.

We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone Holdings L.L.C.

(“Riverstone”) and the NGP Energy Funds that are advised by NGP.

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.

We include in our calculation of AUM and Fee-earning AUM certain energy and renewable resources funds that we jointly advise with Riverstone, the NGP Energy Funds that are advised by NGP, as well as capital raised from a strategic third-party investor which directly invests in Fortitude alongside a carry fund.

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.

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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 also includes $5.8 billion of Carlyle Aviation Partners (formerly Apollo Aviation Group) assets which were acquired in a transaction that closed in December 2018.

(2) Outflows includes distributions net of recallable or recyclable amounts in our carry funds, related co-investment vehicles, separately managed accounts and the NGP Predecessor Funds, gross redemptions in our open-end funds, runoff of CLO collateral balances and the expiration of available capital.

Outflows also reflect the sale of Metropolitan on April 1, 2021, which had $2.4 billion of Total AUM as of March 31, 2021.

(3) Market Activity & Other generally represents realized and unrealized gains (losses) on portfolio investments in our carry funds and related co-investment vehicles, the NGP Predecessor Funds 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 and other changes in AUM.

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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.

Portfolio Appreciation (Depreciation).

The overall portfolio appreciation of 10% in 2020 is comprised of 19% appreciation for carry funds within our Global Private Equity segment focusing on corporate private equity, 8% for funds focusing on real estate and (16)% for fund focusing on natural resources, (2)% appreciation for carry funds in the Global Credit segment and 10% for carry funds in the Investment Solutions segment.

The overall portfolio appreciation of 41% in 2021 is comprised of 41% appreciation for carry funds within our Global Private Equity segment focusing on corporate private equity, 39% for funds focusing on real estate and 34% for fund focusing on natural resources, 22% appreciation for carry funds in the Global Credit

segment and 48% appreciation for carry funds in the Global Investment Solutions segment.

While the publicly traded investments in our Global Private Equity and Global Credit segments were flat in the fourth quarter, they experienced appreciation of 30% for the year.

While there is no perfectly comparable market index benchmark for the overall portfolio or any of its segments or strategies, we would note that S&P 500 and MSCI ACWI appreciation for the year were 27% and 17%, respectively, while the FTSE NAREIT Composite appreciation was 36%, the S&P Oil and Gas Exploration & Production Index was 81%, and S&P Leveraged Loan Index appreciation was 1%.

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, which are collectively referred to as the Consolidated Funds in our consolidated financial statements.

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, 2021, our Consolidated Funds represent approximately 3% of our AUM;

2% of our fund management fees;

and less than 1% of our investment income for the year ended December 31, 2020.

1% of our management fees;

and less than 1% of our investment income or loss for the year ended December 31, 2021.

We are not required under the consolidation guidance to consolidate in our financial statements most of the investment funds we advise.

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GAAP, changes in fund terms and the creation and termination of funds.

As further described above, the consolidation of these funds primarily had the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment gains of Consolidated Funds in the year that the fund is initially consolidated.

As further described above, the consolidation of these funds primarily had the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds, and net investment gains (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.

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Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019.

Total revenues decreased $442.4 million, or 13%, for the year ended December 31, 2020 as compared to 2019 and increased $949.8 million, or 39%, for the year ended December 31, 2019 as compared to 2018.

Total revenues increased $5.8 billion, or 199%, for the year ended December 31, 2021 as compared to 2020 and decreased $442.4 million, or 13%, for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the changes in total revenues for the years ended December 31, 2021 and 2020:

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Increase in incentive fees 11.8 1.1

(Decrease) increase in investment income, including performance allocations (473.2) 759.2

Increase (decrease) in interest and other income of Consolidated Funds 27.6 (15.3)

Decrease in interest and other income (7.7) (4.0)

Total (decrease) increase (442.4) 949.8

Increase (decrease) in investment income, including performance allocations 5,626.7 (473.2)

Increase in interest and other income of Consolidated Funds 26.4 27.6

Increase (decrease) in interest and other income 1.1 (7.7)

Total increase (decrease) 5,847.5 (442.4)

Total Revenues, current year $ 8,782.1 $ 2,934.6

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Higher management fees from the commencement of the investment period for certain newly raised funds $ 183.0 $ 132.1

Lower management fees resulting from the change in basis for earning management fees from commitments to invested capital for certain funds and from changes in invested capital in funds whose management fees are based on assets under management (100.5) (127.6)

(Decrease) increase in catch-up management fees from subsequent closes of funds that are in the fundraising period (18.3) 10.5

Higher (lower) transaction and portfolio advisory fees 1.7 (1.4)

Lower management fees resulting from the change in basis for earning

management fees from commitments to invested capital for certain funds

and from net investment activity in funds whose management fees are based on invested capital (28.3) (100.5)

Decrease in catch-up management fees from subsequent closes of funds that are in the fundraising period (5.8) (18.3)

Higher transaction and portfolio advisory fees 39.9 1.7

Lower fund management fees due to sale of MRE on April 1, 2021 (15.9) —

All other changes 8.6 (5.2)

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Investment Income.

Investment income decreased $473.2 million for the year ended December 31, 2020 as compared to 2019, and increased $759.2 million for the year ended December 31, 2019 as compared to 2018, primarily due to the following:

Investment income increased $5.6 billion for the year ended December 31, 2021 as compared to 2020, and decreased $473.2 million for the year ended December 31, 2020 as compared to 2019, primarily due to the following:

Year Ended December 31,

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Increase in performance allocations, excluding NGP $ 4,448.7 $ 836.8

Increase (decrease) in investment income from NGP, which includes performance allocations from the investments in NGP 125.0 (162.1)

Increase in investment income from our buyout and growth funds 53.6 8.2

Increase in investment income from NGP, which includes performance allocations from the investments in NGP 36.5 125.0

Increase in investment income from our corporate private equity funds 120.4 53.6

Decrease in gains on foreign currency hedges (6.2) (3.3)

(Decrease) increase in investment income from our real estate funds (8.7) 9.9

Decrease in investment income from our natural resources funds, excluding NGP (10.2) (2.6)

(Decrease) increase from settlement of CEREP I tax matter in 2019 (71.5) 71.5

Increase (decrease) in investment income from our distressed debt funds, energy mezzanine funds and opportunistic credit funds 14.3 (7.3)

Increase in investment income from our direct lending funds, interval funds and Carlyle Global Capital Markets 9.6 1.4

Decrease in investment income from Carlyle Aviation (2.3) —

Increase (decrease) in investment income from our CLOs 3.3 (2.6)

(Decrease) increase in income from Fortitude Re (1,414.8) 665.0

Increase (decrease) in investment income from our real estate funds 26.7 (8.7)

Increase (decrease) in investment income from our natural resources funds, excluding NGP 22.0 (10.2)

Decrease from the settlement of CEREP I tax matter in 2019 — (71.5)

Increase in investment income from our Global Credit carry funds 13.6 14.3

Increase in investment income from our direct lending funds and interval funds 8.9 9.6

Increase (decrease) in investment income from Carlyle Aviation 0.9 (2.3)

Increase in investment income from our CLOs 24.7 3.3

Increase (decrease) in income from Fortitude 852.9 (1,414.8)

Increase (decrease) in investment income from AlpInvest 15.7 (0.5)

All other changes (1)

Total (decrease) increase in investment income $ (473.2) $ 759.2

Prior to the Control Transaction which closed on June 2, 2020, as described in Note 5 to the consolidated financial statements, we accounted for our investment in Fortitude Re under the equity method of accounting by recognizing our pro rata share of Fortitude Holdings’ U.S.

Total increase (decrease) in investment income $ 5,626.7 $ (473.2)

(1) All other changes in 2021includes investment income of $49.8 million associated with the remeasurement of a corporate investment, which was previously carried at cost, resulting from an observable price change pursuant to ASC 321, Investments–Equity Securities .

Prior to the Control Transaction which closed on June 2, 2020, as described in Note 4 to the consolidated financial statements, we accounted for our investment in Fortitude under the equity method of accounting by recognizing our pro rata share of Fortitude’s U.S.

GAAP earnings, which is included in principal investment income (loss) in the consolidated statements of operations.

These amounts were inclusive of unrealized gains (losses) resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S.

These amounts were inclusive of unrealized gains (losses) resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude’s U.S.

GAAP financial statements.

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Modified Coinsurance Agreements and Debt Instruments That Incorporate Credit Risk Exposures That Are Unrelated or Only Partially Related to the Creditworthiness of the Obligor under Those Instruments (“DIG B36”).

As of December 31, 2019, our investment in Fortitude Holdings was $1,200.9 million, which reflected $628.2 million of cumulative unrealized gains related to the change in the fair value of embedded derivatives.

At the time we contributed our existing 19.9% interest in Fortitude Holdings to Carlyle FRL, a Carlyle-affiliated investment fund, we began accounting for our investment under the equity method based on our net asset value in the fund.

Our investment in Carlyle FRL, which is an investment company, reflects our investment in Fortitude Holdings at fair value.

Although the fair value reflected a 10% appreciation over our cost, this resulted in a loss in principal investment income (loss) of $620.7 million in the year ended December 31, 2020.

At the time we contributed our existing 19.9% interest in Fortitude to Carlyle FRL, a Carlyle-affiliated investment fund, we began accounting for our investment under the equity method based on our net asset value in the fund, which resulted in a loss in principal investment income (loss) of $620.7 million in the year ended December 31, 2020.

As of December 31, 2021, our investment in Carlyle FRL was $715.7 million, relative to our cost of $465.5 million.

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As of December 31, 2021, we continue to believe that our investment in NGP is not impaired.

We recorded an increase in investment income from CLOs during the year ended December 31, 2021 relative to the comparable period in 2020.

The fair value of the CLO investments held by the firm (before the effects of consolidation) decreased 4% in 2021, with our investments in subordinated notes depreciating 3% and our investments in the senior notes depreciating 5% during 2021.

Performance Allocations .

Performance allocations increased $836.8 million for the year ended December 31, 2020 compared to 2019 and increased $176.2 million for the year ended December 31, 2019 as compared to 2018.

Performance allocations increased $4.4 billion for the year ended December 31, 2021 compared to 2020 and increased $836.8 million for the year ended December 31, 2020 as compared to 2019.

Performance allocations by segment for the years ended December 31, 2021, 2020 and 2019 comprised the following:

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Global Credit 156.6 21.5 38.5

Investment Solutions (1)

Global Investment Solutions (1)

704.8 173.9 210.2

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Refer to “— Key Financial Measures” for a listing of the funds with performance allocations in excess of 10% of the total for the periods presented.

Our carry fund portfolio generally exhibited similar resiliency amidst the significant economic and market disruptions in 2020, with particular momentum in the latter half of the year.

Within our Global Private Equity segment, our corporate private equity funds appreciated by 11% in the fourth quarter and 19% over the last twelve months and our real estate funds appreciated by 3% during the fourth quarter and appreciated 8% over the last twelve months.

Our natural resources funds appreciated by 3% during the fourth quarter, but depreciated by 16% over the last twelve months, as our energy funds continue to recover from extreme volatility in the early stages of the pandemic.

Global Credit carry funds, which represent approximately 14% of the total Global Credit remaining fair value, were up 7% in the fourth quarter, with depreciation of 2% for the year.

Investment Solutions appreciation was 7% in the fourth quarter and 10% for the year, driven by strong investment performance in our AlpInvest funds, though the valuations of our primary and secondary funds of funds generally reflect investment values on a one-quarter lag.

Though significant risks remain for global markets and economic recovery into 2021, we believe our existing portfolio of assets is high-quality and well-diversified by fund, industry sector, asset class, and region.

In addition, we recorded incentive fees from Consolidated Funds of $1.1 million for the year ended December 31, 2018.

These fees eliminated upon consolidation.

There were no incentive fees from Consolidated Funds recorded during the years ended December 31, 2020 or 2019.

Despite the pandemic’s persistence, corporate earnings in 2021 exceeded expectations;

investments in digitization and technology drove large productivity gains which more than offset input price inflation and powered margin expansion.

Current estimates anticipate S&P 500 constituents’ 2021 full year earnings growth in excess of 45%.

This robust performance, coupled with fiscal stimulus and ultra-low interest rates, buoyed global equity markets in aggregate in 2021.

The Dow Jones, S&P 500, and Nasdaq 100 rose 18.7%, 26.9%, and 26.6% respectively in 2021.

Globally, the MSCI ACWI, EuroStoxx 600 and Shanghai Composite rose 16.8%, 22.3%, and 4.8% respectively over the same period.

Our carry fund portfolio exhibited similar momentum during 2021.

Within our Global Private Equity segment, our corporate private equity funds appreciated 6% in the fourth quarter and 41% for the year and our real estate funds appreciated 11% during the fourth quarter and appreciated 39% for the year.

Our natural resources funds appreciated 7% during the fourth quarter and appreciated 34% for the year.

Global Credit carry funds, which represent approximately 18% of the total Global Credit remaining fair value, were up 1% in the fourth quarter and up 22% for the year.

Interest and Other Income.

Interest and other income decreased $7.7 million for the year ended December 31, 2020 as compared to 2019 and decreased $4.0 million for the year ended December 31, 2019 as compared to 2018.

The decrease for the year ended December 31, 2020 was primarily as a result of decreases from the reimbursement of certain costs incurred on behalf of Carlyle funds and decreases in interest income from investments in CLO subordinated notes and interest income related to corporate treasury investments that matured in 2019.

The decrease in 2019 reflected a decrease in interest income related to corporate treasury investments, partially offset by the reimbursement of certain costs incurred on behalf of Carlyle funds.

Interest and other income increased $1.1 million for the year ended December 31, 2021 as compared to 2020 and decreased $7.7 million for the year ended December 31, 2020 as compared to 2019.

The increase for the year ended December 31, 2021 was primarily as a result of an increase in the reimbursement of certain costs incurred on behalf of Carlyle funds.

The decrease in 2020 was primarily as a result of decreases in the reimbursement of certain costs incurred on behalf of Carlyle funds and decreases in interest income from investments in CLO subordinated notes and interest income related to corporate treasury investments that matured in 2019.

Interest and Other Income of Consolidated Funds.

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 of Consolidated Funds is attributable to the related funds’ limited partners or CLO investors.

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.

Interest and other income of consolidated funds increased $27.6 million for the year ended December 31, 2020 as compared to 2019, and decreased $15.3 million for the year ended December 31, 2019 as compared to 2018.

Interest and other income of consolidated funds increased $26.4 million for the year ended December 31, 2021 as compared to 2020, and increased $27.6 million for the year ended December 31, 2020 as compared to 2019.

Substantially all of the variance in interest and other income of Consolidated Funds for both periods relates to interest income from CLOs.

Total expenses increased $213.6 million for the year ended December 31, 2020 as compared to 2019, and increased $48.2 million for the year ended December 31, 2019 as compared to 2018.

Total expenses increased $2.4 billion for the year ended December 31, 2021 as compared to 2020, and increased $213.6 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the changes in total expenses for the year ended December 31, 2021 and 2020:

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Increase in total compensation and benefits 2,298.4 323.6

(Decrease) increase in general, administrative and other expenses (145.1) 33.7

Increase (decrease) in interest 11.9 (0.1)

Increase (decrease) in interest and other expenses of Consolidated Funds 31.7 (32.8)

(Decrease) increase in other non-operating expense (8.5) 0.2

Increase (decrease) in general, administrative and other expenses 82.4 (145.1)

Increase in interest 19.3 11.9

Increase in interest and other expenses of Consolidated Funds 15.0 31.7

Increase (decrease) in other non-operating expense 8.7 (8.5)

Total increase 2,423.8 213.6

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Total Compensation and Benefits.

Total compensation and benefits increased $323.6 million for the year ended December 31, 2020 as compared to 2019, and increased $47.2 million for the year ended December 31, 2019 as compared to 2018, due to the following:

Total compensation and benefits increased $2.3 billion for the year ended December 31, 2021 as compared to 2020, and increased $323.6 million for the year ended December 31, 2020 as compared to 2019, due to the following:

Year Ended December 31,

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Increase in cash-based compensation and benefits $ 58.4 $ 16.2

Decrease in equity-based compensation (35.0) (99.9)

Increase (decrease) in equity-based compensation 58.1 (35.0)

Increase in performance allocations and incentive fee related compensation 2,181.9 342.4

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(Decrease) increase in compensation expense associated with contingent earn-out payments (1)

(22.6) (11.3)

Total increase in base compensation and benefits $ 58.4 $ 16.2

(1) The Carlyle Aviation Partners acquisition included an earn-out of up to $150.0 million.

See Note 3 to our consolidated financial statements for additional detail.

(1) T he Carlyle Aviation Partners acquisition included an earn-out of up to $150.0 million, under which we have paid $47.9 million through December 31, 2021.

For additional information, refer to “— Liquidity and Capital Resources—Contingent Cash Payments For Business Acquisitions and Strategic Investments .”

Equity-based compensation.

Equity-based compensation decreased $35.0 million, or 25%, for the year ended December 31, 2020 as compared to 2019.

Equity-based compensation, net of forfeitures, increased $58.1 million, or 55%, for the year ended December 31, 2021 as compared to 2020.

The increase in equity-based compensation from 2020 to 2021 was primarily due to the expanded use of equity-based compensation incentive programs as well as a forfeiture credit recorded in 2020 related to the retirement of one of our co-chief executive officers.

During the year ended December 31, 2021, we granted 7.1 million long-term strategic restricted stock units to certain senior professionals, the majority of which are subject to vesting based on the achievement of annual performance targets over four years, with a larger proportion of the awards vesting based

on the 2024 performance year.

The decrease in equity-based compensation from 2019 to 2020 was due primarily to the lower rate of ongoing grants of restricted stock units, as well as a forfeiture credit recorded in 2020 related to the retirement of one of our co-chief executive officers.

Equity-based compensation decreased $99.9 million, or 42%, for the year ended December 31, 2019 as compared to 2018.

The decrease in equity-based compensation from 2018 to 2019 was due primarily to the timing of the last vesting of awards in May 2018 related to our initial public offering in 2012 and lower rate of ongoing grants of restricted stock units.

Performance allocations and incentive fee related compensation expense.

Performance allocations and incentive fee related compensation expense increased $342.4 million for the year ended December 31, 2020 as compared to 2019 and increased $60.4 million for the year ended December 31, 2019 as compared to 2018.

Performance allocations and incentive fee related compensation expense as a percentage of performance allocations and incentive fee was 47%, 52%, and 58% for the years ended December 31, 2020, 2019 and 2018, respectively.

Performance allocations and incentive fee related compensation expense increased $2.2 billion for the year ended December 31, 2021 as compared to 2020 and increased $342.4 million for the year ended December 31, 2020 as compared to 2019.

Performance allocations and incentive fee related compensation as a percentage of performance allocations and incentive fee was 48%, 47%, and 52% for the years ended December 31, 2021, 2020 and 2019, respectively.

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 our largest segment, Global Private Equity, our performance allocations and incentive fee related compensation expense as a percentage of performance allocations is generally around 45%.

Performance allocations from our Investment Solutions segment pay a higher ratio of performance allocations as compensation, primarily as a result of the terms of our acquisition of AlpInvest.

Conversely, performance allocations from the Legacy Energy and NGP funds in our Global Private Equity segment are primarily allocated to Carlyle because the investment teams for the Legacy Energy and NGP funds are employed by Riverstone and NGP, respectively, and not Carlyle.

For our largest segment, Global Private Equity, our performance allocations and incentive fee related compensation expense as a percentage of performance allocations and incentive fees is generally around 45%.

Performance allocations from our Global Investment Solutions segment pay a higher ratio of performance allocations and incentive fees as compensation, primarily as a result of the terms of our acquisition of AlpInvest.

Conversely, performance allocations from the Legacy Energy funds in our Global Private Equity segment are primarily allocated to Carlyle because the investment teams for the Legacy Energy funds are employed by Riverstone not Carlyle.

General, Administrative and Other Expenses.

General, administrative and other expenses decreased $145.1 million for the year ended December 31, 2020 as compared to 2019, and increased $33.7 million for the year ended December 31, 2019 as compared to 2018, primarily due to:

General, administrative and other expenses increased $82.4 million for the year ended December 31, 2021 as compared to 2020, and decreased $145.1 million for the year ended December 31, 2020 as compared to 2019, primarily due to:

Year Ended December 31,

(Dollars in millions)

Decrease in net insurance proceeds recognized for certain legal matters — 31.5

Lease assignment and termination costs — (66.9)

CCC litigation cost recovery (1)

(Lower) higher intangible asset amortization (0.9) 5.5

(Lower) higher depreciation and amortization (12.6) 13.1

(Lower) higher professional fees, including corporate conversion costs (29.7) 41.4

(Lower) higher travel and conference costs (49.2) 4.9

Right-of-use asset impairment (1)

CCC litigation cost recovery in 2020 (2)

Lower intangible asset amortization (4.4) (0.9)

Higher (lower) depreciation and amortization 4.3 (12.6)

Lower professional fees, including corporate conversion costs (5.4) (29.7)

Lower travel and conference costs (2.9) (49.2)

Higher (lower) rent expense 7.7 (1.1)

Foreign exchange adjustments (3)

Higher (lower) external fundraising costs 4.2 (34.3)

Higher external fundraising costs 2.0 4.2

Other changes 2.5 3.9

Total (decrease) increase in general, administrative and other expenses $ (145.1) $ 33.7

(1) See Note 9 to our consolidated financial statements.

(2) For the years ended December 31, 2020 as compared to 2019 and December 31, 2019 as compared to 2018, foreign exchange adjustments are primarily driven by the revaluation in our European CLOs investments.

Total increase (decrease) in general, administrative and other expenses $ 82.4 $ (145.1)

(1) In connection with the April 1, 2021 sale of MRE, we entered into a sublease of certain office space in New York which resulted in a $26.8 million right-of-use asset impairment charge.

(2) General, administrative and other expenses in 2020 included the positive impact of a $29.9 million recovery of litigation costs.

See Note 8 to the consolidated financial statements in Item 8 of this Form 10-K.

(3) Foreign exchange adjustments for the year ended December 31, 2021 include a loss of $14.7 million from the sale of our local Brazilian management entity related to amounts previously recorded in accumulated other comprehensive income.

Foreign exchange adjustments for the years ended December 31, 2021 and 2020 are also driven by the revaluation on our European CLO investments.

Interest increased $19.3 million for the year ended December 31, 2021 as compared to 2020 primarily due to interest accrued on the Subordinated Notes issued in May 2021, as well as $10.1 million of interest expense recorded upon the early extinguishment of the 3.875% Senior Notes in November 2021.

Interest increased $11.9 million for the year ended December 31, 2020 as compared to 2019 primarily due to interest accrued on the 3.500% Senior Notes issued in September 2019.

See Note 7 to the consolidated financial statements for more information.

See Note 6 to the consolidated financial statements in Item 8 of this Form 10-K for more information.

Interest and Other Expenses of Consolidated Funds.

Interest and other expenses of Consolidated Funds increased $15.0 million for the year ended December 31, 2021 as compared to 2020 primarily due to higher interest expense on the

consolidated CLOs.

Interest and other expenses of Consolidated Funds increased $31.7 million for the year ended December 31, 2020 as compared to 2019, primarily due to higher interest expense on the consolidated CLOs.

Interest and other expenses of Consolidated Funds decreased $32.8 million for the year ended December 31, 2019 as compared to 2018, primarily due to lower 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.

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Other Non-operating Expenses (Income).

For the year ended December 31, 2021, this caption includes a loss on the sale of our local Brazilian management entity and related transaction costs of $4.7 million and a $5.0 million gain on the sale of our interest in MRE.

For the year ended December 31, 2020, this caption includes the impact of the Conversion on our tax receivable agreement liability, which was reduced by $9.3 million.

See Note 11 to the consolidated

financial statements for more information on the tax impacts of the Conversion.

For the years ended December 31, 2020, 2019 and 2018, this caption also represents the change in the fair value of contingent consideration associated with the Company’s acquisitions.

See Note 10 to the consolidated financial statements for more information on the tax impacts of the Conversion.

Net Investment Gains (Losses) of Consolidated Funds

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Total net investment (losses) gains of Consolidated Funds $ 2.5 $ (21.3) $ (23.9)

Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes was $982.3 million, $197.2 million and $49.0 million for the years ended December 31, 2021, 2020 and 2019, respectively, with effective tax rates of 24.4%, 34.0% and 4.0%, respectively.

The effective tax rate for the years ended December 31, 2021 and 2020 is primarily comprised of the 21% U.S.

federal corporate income tax rate plus U.S.

state and foreign corporate income taxes, partially offset by non-controlling interests and the impact of a tax benefit resulting from the vesting of restricted stock units.

The effective tax rate for the year ended December 31, 2020 also differs from the statutory rate due to the income tax expense resulting from the Conversion (see Note 10 to the accompanying consolidated financial statements for more information regarding the impact of the Conversion).

Excluding this impact from Conversion, our effective income tax rate would have been approximately 19% for the year ended December 31, 2020.

The effective tax rate for the year ended December 31, 2019 reflects our pre-Conversion status as a partnership.

As of December 31, 2021 and 2020, the Company had federal, state, local and foreign taxes payable of $93.3 million and $35.1 million, respectively, which is recorded as a component of accounts payable, accrued expenses and other liabilities on the accompanying consolidated balance sheet.

Net Income Attributable to Non-controlling Interests in Consolidated Entities

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The net income attributable to The Carlyle Group Inc.

common stockholders was $348.2 million, $345.3 million, and $92.9 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Prior to the Conversion, the Company was allocated a portion of the monthly net income (loss) attributable to Carlyle Holdings based on the Company’s ownership in Carlyle Holdings (which was approximately 34% and 32% as of December 31, 2019 and 2018, respectively).

Net income or loss attributable to the Company also included 100% of the net income or loss attributable to the Company’s wholly owned taxable subsidiary, Carlyle Holdings I GP Inc., which was $(4.5) million and $15.8 million for the years ended December 31, 2019 and 2018, respectively.

As a result, prior to the Conversion, the total net income or loss attributable to the Company has varied as a percentage of the net income or loss attributable to Carlyle Holdings.

common stockholders was $3.0 billion, $348.2 million, and $345.3 million for the years ended December 31, 2021, 2020 and 2019, respectively.

In addition, net income attributable to The Carlyle Group L.P.

common unitholders for the year ended December 31, 2019 was reduced by the Series A preferred units (“Preferred Units”) redemption premium.

During the year ended December 31, 2020, we recorded approximately $86 million as a provision for income taxes as a result of a reduction in our net deferred tax asset related to the Conversion.

Excluding this impact from Conversion, our effective income tax rate would have been approximately 19%.

Net income attributable to The Carlyle Group Inc.

common stockholders per basic common share was $0.99, $3.05, and $0.89 for the years ended December 31, 2020, 2019 and 2018, respectively.

Net income (loss) attributable to The Carlyle Group Inc.

common unitholders per diluted common share was $0.97, $2.82, and $0.82 for the years ended December 31, 2020, 2019 and 2018, respectively.

Non-GAAP Financial Measures

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These non-GAAP financial measures are presented for the years ended December 31, 2021, 2020 and 2019.

Our Non-GAAP financial measures exclude the effects of unrealized performance allocations net of related compensation expense, unrealized principal investment income, consolidated funds, acquisition-related items including amortization and any impairment charges of acquired intangible assets and contingent consideration taking the form of earn-outs, charges associated with equity-based compensation, changes in the tax receivable agreement liability, corporate actions and infrequently occurring or unusual events.

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 lease right-of-use assets or acquired intangible assets and contingent consideration taking the form of earn-outs, 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 Distributable Earnings, or “DE”, and Fee Related Earnings, or “FRE”, for the years ended December 31, 2021, 2020 and 2019.

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Total Segment Expenses $ 2,706.4 $ 1,527.4 $ 1,463.5

Income before provision for income taxes is the GAAP financial measure most comparable to Distributable Earnings and Fee Related Earnings.

Income 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 before provision for income taxes to Distributable Earnings and to Fee Related Earnings.

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(351.8) 556.2 (590.9)

Adjusted unrealized principal investment (income) loss from investment in Fortitude Re (2)

Adjusted unrealized principal investment (income) loss from investment in Fortitude (2)

— 104.4 (140.9)

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Acquisition related charges, including amortization of intangibles and impairment 37.7 38.1 52.0

Other non-operating (income) expense (7.2) 1.3 1.1

Tax expense associated with certain foreign performance fee revenues (7.9) (14.3) (1.5)

Tax expense associated with certain foreign performance revenues (17.1) (7.9) (14.3)

Net income attributable to non-controlling interests in consolidated entities (70.5) (34.6) (36.6)

Lease assignment and termination costs

Right-of-use asset impairment 26.8 — —

Debt extinguishment costs 10.2 — 0.1

Corporate conversion costs, severance and other adjustments

15.2 33.3 9.1

Other adjustments including severance and Conversion costs in 2020 and 2019 14.2 8.0 34.6

Distributable Earnings 2,243.7 762.1 646.6

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Fee Related Earnings $ 598.1 $ 519.7 $ 452.8

(1) Adjustments to unrealized principal investment income (loss) during the year ended December 31, 2020 are inclusive of $211.8 million of unrealized gains resulting from changes in the fair value of embedded derivatives related to certain reinsurance contracts included in Fortitude Re’s U.S.

GAAP financial statements prior to the contribution of our investment in Fortitude Holdings to Carlyle FRL on June 2, 2020.

At the time of the contribution of our investment to Carlyle FRL, we began accounting for our investment under the equity method based on our net asset value in the fund, which is an investment company that accounts for its investment in Fortitude Holdings at fair value.

GAAP financial statements prior to the contribution of our investment in Fortitude to Carlyle FRL on June 2, 2020.

This resulted in an unrealized loss in principal investment income (loss) of $620.7 million during the year ended December 31, 2020.

Adjustments to unrealized principal investment income (loss) during the years ended December 31, 2019 and 2018 are inclusive of $582.0 million and $46.2 million of unrealized gains, respectively, on embedded derivatives.

(2) Adjusted unrealized principal investment income (loss) from the investment in Fortitude Re represents 19.9% of Fortitude Holdings’ estimated net income (loss) for the respective periods through June 2, 2020, excluding the unrealized gains (losses) related to embedded derivatives.

Adjustments to unrealized principal investment income (loss) during the year ended December 31, 2019 are inclusive of $582.0 million of unrealized gains on embedded derivatives.

(2) Adjusted unrealized principal investment income (loss) from the investment in Fortitude represents 19.9% of Fortitude’s estimated net income (loss), excluding the unrealized gains (losses) related to embedded derivatives, prior to the contribution of our investment in Fortitude to Carlyle FRL on June 2, 2020.

(3) Equity-based compensation for the years ended December 31, 2021, 2020 and 2019 includes amounts presented in principal investment income and general, administrative and other expenses in our U.S.

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Principal investment income (loss) $ 769.3 $ (682.3) $ 87.0

(5) 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 certain incentive fees from business development companies, which are included in fund management fees in the Non-GAAP results, and (vi) the reclassification of certain tax expenses associated with 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, and the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the Non-GAAP results (see Note 5 to our consolidated financial statements).

GAAP consolidation but are included in the Non-GAAP results, (iii) amounts attributable to non-controlling interests in consolidated entities, which are 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 certain incentive fees from business development companies, which are included in fund management fees in the Non-GAAP results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues.

Distributable Earnings for our reportable segments is as follows:

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Global Credit 119.7 116.2 48.4

Investment Solutions 41.4 18.8 38.9

Global Investment Solutions 102.1 41.4 18.8

Total $ 2,243.7 $ 762.1 $ 646.6

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Our segment information is reflected in the manner used by our senior management to make operating and compensation decisions, assess performance and allocate resources.

Historically, we have conducted our operations through four reportable segments:

Corporate Private Equity, Real Assets, Global Credit, and Investment Solutions.

In the fourth quarter of 2020, in connection with our transition to a sole chief executive officer on October 1, 2020, our senior management began re-evaluating our operating structure.

As a result, we revised our operating segments by combining Corporate Private Equity and Real Assets into a single segment called Global Private Equity to reflect how senior management manages and assesses the performance of the business and allocates resources.

Effective with the three months ended December 31, 2020, we have modified the presentation of our segment financial information to reflect this change, with retrospective application to all prior periods presented.

Consequently, information for the years ended December 31, 2019 and 2018 will be different from the historical segment financial results we previously reported in our reports filed with the SEC.

There was no impact to the Global Credit and Investment Solutions segments as a result of this change.

For segment reporting purposes, revenues and expenses are presented on a basis that deconsolidates our Consolidated Funds.

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(=) Fee Related Earnings $ 402.3 $ 383.0 $ 387.6

(1) On August 31, 2021, we sold 100% of our interest in our local Brazilian management entity and entered into a sub-advisory agreement with the acquiring company, which will provide advisory services with respect to Carlyle’s Brazilian portfolio.

The loss on the sale and related transaction costs of $4.7 million and foreign currency translation loss of $14.7 million are not included in DE or FRE.

See “Non-GAAP Financial Measures” for the reconciliation of Total DE and FRE to the U.S.

GAAP financial statements.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Distributable Earnings

Distributable earnings increased $25.1 million for the year ended December 31, 2020 as compared to 2019, and increased $21.9 million for the year ended December 31, 2019 as compared to 2018.

Distributable earnings increased $1.4 billion for the year ended December 31, 2021 as compared to 2020, and increased $25.1 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the changes in distributable earnings for the years ended December 31, 2021 and 2020:

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Increases (decreases):

(Decrease) increase in fee related earnings (4.6) 143.0

Increase (decrease) in realized net performance revenues 64.9 (147.7)

(Decrease) increase in realized principal investment income (21.3) 33.2

Increase (decrease) in fee related earnings 19.3 (4.6)

Increase in realized net performance revenues 1,292.7 64.9

Increase (decrease) in realized principal investment income 115.8 (21.3)

Increase in net interest (10.4) (13.9)

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Realized Net Performance Revenues.

Realized net performance revenues increased $64.9 million for the year ended December 31, 2020 as compared to 2019, and decreased $147.7 million for the year ended December 31, 2019 as compared to 2018.

Realized net performance revenues increased in 2020 as we began realizing carry from CP VI during the year, and we generated higher performance revenue realizations from our financial services and Europe real estate funds.

Realized net performance revenues in 2019 were also impacted by the realized clawback on one of the Legacy Energy funds.

The decrease in realized net performance revenues for the year ended December 31, 2019 as compared to 2018 was primarily due to to lower performance revenue realizations from our U.S., Europe and Asia buyout funds in carry, as well as $19.0 million of realized clawback on Riverstone Legacy Energy Fund IV in 2019, partially offset by higher realizations on our U.S.

Realized net performance revenues increased $1.3 billion for the year ended December 31, 2021 as compared to 2020, and increased $64.9 million for the year ended December 31, 2020 as compared to 2019.

Realized net performance revenues increased in 2021 primarily driven by realization activity in our U.S., Europe and Asia buyout funds, as well as our U.S.

real estate funds.

During the year ended December 31, 2021 we realized performance revenues for the first time on our eighth U.S.

real estate fund, our fourth Asia buyout fund, and our third Japan buyout fund.

Realized net performance revenues for the year ended December 31, 2020 increased compared to 2019 as we began realizing carry from CP VI during the year, and we generated higher performance revenue realizations from our financial services and Europe real estate funds.

Realized net performance revenues in 2019 were also impacted by the realized clawback on one of the Legacy Energy funds.

Realized net performance revenues were primarily generated by the following funds for the years ended December 31, 2021, 2020 and 2019, respectively:

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2021 2020 2019

CP IV CETP III CP V

CP V CAP III CEP III

CP VI CGFSP II CAP III

CETP III CETP II CETP III

CGFSP I CP V CRP VII

CRP VII CPI CRP III

CERF Energy IV (clawback) CRP VI

CEREP III CRP III

CGFSP II CRP VII

CRP III CRP V

CP V CP IV CETP III

CP VI CP V CAP III

CEP III CP VI CGFSP II

CAP III CETP III CETP II

CAP IV CGFSP I CP V

CETP III CRP VII CRP VII

CRP V CERF CRP V

CRP VII CEREP III CPI

CRP VIII CPI Energy IV (clawback)

CJP III CGFSP II CRP III

CGFSP II CRP III CRP VI

Realized Principal Investment Income.

Realized principal investment income decreased $21.3 million for the year ended December 31, 2020 as compared to 2019 and increased $33.2 million for the year ended December 31, 2019 as compared

The decrease in realized principal investment income for the year ended December 31, 2020 as compared to 2019 was primarily due to the recovery of $71.5 million from the final resolution of French tax litigation concerning a European real estate fund in 2019, partially offset by higher realized gains in 2020 from CP VI, CEP IV and CAP IV.

The increase in realized principal investment income for the year ended December 31, 2019 as compared to 2018 primarily relates to the aforementioned $71.5 million French tax matter recovery, which reversed a portion of an investment loss recognized in 2015 (see Note 9 of our consolidated financial statements for more information on this matter), partially offset by realized losses in 2019 from CP VI and CEP IV compared to realized gains in 2018 from CP VI, CEP III and CAP IV.

Realized principal investment income increased $115.8 million for the year ended December 31, 2021 as compared to 2020 and decreased $21.3 million for the year ended December 31, 2020 as

compared to 2019.

The increase in realized principal investment income for the year ended December 31, 2021 as compared to 2020 was primarily driven by increases in realized principal investment income from our U.S.

buyout and U.S.

real estate funds, as well as our Europe buyout and U.S.

growth funds.

The decrease in realized principal investment income for the year ended December 31, 2020 as compared to 2019 was primarily due to the recovery of $71.5 million from the final resolution of French tax litigation concerning a European real estate fund in 2019 (see Note 8 of our consolidated financial statements for more information on this matter), partially offset by higher realized gains in 2020 from our U.S., Asia and Europe buyout funds.

Fee Related Earnings

Fee related earnings decreased $4.6 million for the year ended December 31, 2020 as compared to 2019, and increased $143.0 million for the year ended December 31, 2019 as compared to 2018.

Fee related earnings increased $19.3 million for the year ended December 31, 2021 as compared to 2020, and decreased $4.6 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

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Increases (decreases):

(Decrease) increase in fee revenues (80.7) 136.8

Decrease (increase) in cash-based compensation 8.7 (2.3)

Decrease in general, administrative and other indirect expenses 57.3 16.5

Increase (decrease) in fee revenues 81.3 (80.7)

(Increase) decrease in cash-based compensation (44.3) 8.7

(Increase) decrease in general, administrative and other indirect expenses (14.6) 57.3

All other changes (3.1) 10.1

Total (decrease) increase (4.6) 143.0

Total increase (decrease) 19.3 (4.6)

Fee related earnings, current year $ 402.3 $ 383.0

Fee Revenues.

Total fee revenues decreased $80.7 million for the year ended December 31, 2020 as compared to 2019 and increased $136.8 million for the year ended December 31, 2019 as compared to 2018, due to the following:

Total fee revenues increased $81.3 million for the year ended December 31, 2021 as compared to 2020 and decreased $80.7 million for the year ended December 31, 2020 as compared to 2019, due to the following:

Year Ended December 31,

(Dollars in millions)

(Lower) higher fund management fees $ (64.6) $ 154.6

Lower portfolio advisory and transaction fees, net and other (16.1) (17.8)

Total (decrease) increase in fee revenues $ (80.7) $ 136.8

Higher (lower) fund management fees $ 69.8 $ (64.6)

Higher (lower) portfolio advisory and transaction fees, net and other 11.5 (16.1)

Total increase (decrease) in fee revenues $ 81.3 $ (80.7)

The increase in fund management fees for the year ended December 31, 2021 as compared to 2020 was primarily due to activation of management fees on CP VIII, CRP IX, CAP Growth II and CP Growth during the year, as well as higher management fees from CJP IV, CPI, and our Renewables fund (CRSEF) which included $3.2 million in catch-up management fees.

These increases were partially offset by basis step-downs in CJP III and CEOF II, as well as lower management fees on CP VI and CEP IV, on which management fees are based on invested capital and which have had realizations over the last twelve months.

CIEP II also had a decrease in management fees, driven by catch-up management fees of $6.6 million in 2020.

The decrease in fund management fees for the year ended December 31, 2020 as compared to 2019 was primarily due to lower management fees from CGIOF, including $20.4 million in catch-up management fees for subsequent closes in 2019, and lower management fees from NGP X, NGP XI and NGP XII.

These decreases were partially offset by higher management fees from CIEP II, including catch-up management fees of $6.6 million in 2020, activation of management fees in 2020 on our fourth Japan buyout fund (“CJP IV”), and higher management fees from CETP IV.

The increase in fund management fees for the year ended December 31, 2019 as compared to 2018 was primarily due to the activation of management fees during 2018 on our seventh U.S.

buyout fund (“CP VII”), our fifth Asia buyout fund (“CAP V”) and our fifth Europe buyout fund (“CEP V”), and on our fourth Europe technology fund (“CETP IV”) during the third quarter of 2019.

We also had increased management fees from CGIOF, CIEP II, CPI and NGP XII, partially offset by lower management fees from CRP VII, CIEP I, CEREP III and CRP V.

Management fees also increased as a result of $26.4 million in catch-up management fees for subsequent closes in 2019 for CGIOF and NGP XII.

These increases were partially offset by lower fee rates and a lower basis for CP VI, CAP IV, CEP IV, and CETP III as they exited the investment period.

These decreases were partially offset by higher management fees from CIEP II, including catch-up management fees of $6.6 million in 2020, activation of management fees in 2020 from CJP IV, and higher management fees from CETP IV.

The weighted average management fee rate slightly increased to 1.26% at December 31, 2021 from 1.25% at December 31, 2020.

Fee-earning AUM was $104.3 billion and $91.6 billion as of December 31, 2021 and 2020, respectively, reflecting an increase of $12.7 billion.

The weighted average management fee rate decreased slightly from 1.26% at December 31, 2019 to 1.25% at December 31, 2020.

Fee-earning AUM was $91.6 billion and $94.8 billion as of December 31, 2020 and 2019, respectively, reflecting a decrease of $3.2 billion.

The weighted average management fee rate increased from 1.23% at December 31, 2018 to 1.26% at December 31, 2019.

The increase in the weighted average management fee rate was driven by additional fundraising and fee activation in funds with higher effective fee rates than the segment weighted average.

Fee-earning AUM was $94.8 billion and $95.3 billion as of December 31, 2019 and 2018, respectively, reflecting a decrease of $0.5 billion

The decrease in transaction fees for the year ended December 31, 2020 as compared to 2019 resulted primarily from transaction fees related to investments in CP VII, CIEP and CJP III in 2019, partially offset by transaction fees related to investments in CGFSP II, CGFSP III and CIEP II in 2020.

The decrease in transaction fees for the year ended December 31, 2019 as compared to 2018 resulted primarily from transaction fees related to significant investments in CP VII and one significant investment in CAP IV in 2018, partially offset by transaction fees in CIEP and CJP III in 2019.

Portfolio advisory and transaction fees increased for the year ended December 31, 2021 as compared to 2020 and resulted primarily from transaction fees related to investments in our Japan buyout, Europe buyout and Global Partners funds.

Portfolio advisory and transaction fees decreased for the year ended December 31, 2020 as compared to 2019 and resulted primarily from transaction fees related to investments in our financial services and international energy funds.

Cash-based compensation and benefits expense.

Cash-based compensation and benefits expense decreased $8.7 million, or 2%, for the year ended December 31, 2020 as compared to 2019, primarily due to lower cash bonuses as a result of decreased headcount.

Cash-based compensation and benefits expense increased $2.3 million for the year ended December 31, 2019 as compared to 2018, primarily due to higher cash bonuses in 2019.

Cash-based compensation and benefits expense increased $44.3 million, or 9%, for the year ended December 31, 2021 as compared to 2020, primarily due to higher year-end bonuses.

Cash-based compensation and benefits expense decreased $8.7 million for the year ended December 31, 2020 as compared to 2019, primarily due to lower cash bonuses as a result of decreased headcount.

General, administrative and other indirect expenses.

General, administrative and other indirect expenses decreased $5.7 million, excluding the impact of litigation cost recoveries in 2020, for the year ended December 31, 2021 as compared to 2020, primarily due to lower professional fees.

General, administrative and other indirect expenses decreased $57.3 million for the year ended December 31, 2020 as compared to 2019 primarily due to the allocated portion of the cost recovery associated with the CCC matter of $20.3 million (see Note 8 to the consolidated financial statements for more information), lower professional fees and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

General, administrative and other indirect expenses decreased $16.5 million for the year ended December 31, 2019 as compared to 2018 primarily due to lower external costs associated with fundraising activities.

Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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Ending balances are translated at the spot rate as of the period end.

Fee-earning AUM was $104.3 billion at December 31, 2021, an increase of $12.7 billion, or 14%, compared to $91.6 billion at December 31, 2020.

This was driven by inflows of $24.6 billion primarily related to the activation of management fees in CP VIII, CRP IX, and CP Growth, as well as capital invested in CPI.

Partially offsetting the increase were outflows of $10.9 billion from the step-down of management fees in CP VII and CRP VIII and distributions in other funds outside of their investment period.

Negative foreign exchange activity of $1.3 billion resulted from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

Investment and distribution activity by funds still in the investment period does not impact Fee-earning AUM as these funds are based on commitments.

Fee-earning AUM was $91.6 billion at December 31, 2020, a decrease of $3.2 billion, or 3%, compared to $94.8 billion at December 31, 2019.

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Buyout, NGP Energy, and Legacy Energy funds, as well as distributions in other funds outside of their investment period.

Partially offsetting this were inflows of $5.4 billion primarily related to the activation of management fees in CJP IV, subscriptions in CPI, and new fee-paying commitments raised in various other funds.

This was offset by inflows of $5.4 billion primarily related to the activation of management fees in CJP IV, subscriptions in CPI, and new fee-paying commitments raised in various other funds.

Also offsetting the decrease was positive foreign exchange activity of $1.2 billion from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

Investment and distribution activity by funds still in the investment period does not impact Fee-earning AUM as these funds are based on commitments.

Fee-earning AUM was $94.8 billion at December 31, 2019, a decrease of $0.5 billion, or 1%, compared to $95.3 billion at December 31, 2018.

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This was offset by inflows of $8.3 billion primarily related to the activation of management fees in CIEP II and CETP IV, as well as new fee-paying commitments raised in various other funds.

Fee-earning AUM was $95.3 billion at December 31, 2018, an increase of $28.2 billion, or 42%, compared to $67.2 billion at December 31, 2017.

This was driven by inflows of $35.9 billion principally from the activation of management fees in CP VII, CEP V, and CAP V.

This was partially offset by outflows of $7.2 billion which were principally the result of fee basis stepdowns in CP VI, CEP IV and CAP IV, as well as distributions in other funds outside of their investment period.

Total AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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Total AUM was $162.1 billion at December 31, 2021, an increase of $30.3 billion, or 23%, compared to $131.8 billion at December 31, 2020.

This increase was driven by $27.2 billion of inflows primarily due to fundraising in CP VIII, CRP IX, CPI, and CP Growth, as well as market appreciation of $32.7 billion.

The carry funds driving appreciation for the period included $7.3 billion attributable to CP VI, $3.7 billion attributable to CP VII, $1.9 billion attributable to CEP IV, and $1.7 billion attributable to CRP VIII.

The increase was partially offset by $27.8 billion of outflows primarily from distributions and the expiration of dry powder in our U.S.

real estate, and Europe buyout funds, and $(1.8) billion in foreign exchange activity primarily from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

Total AUM was $131.8 billion at December 31, 2020, an increase of $2.0 billion, or 2%, compared to $129.8 billion at December 31, 2019.

This increase was driven by $3.6 billion of inflows primarily due to fundraising in CPI, CIEP II, and CJP IV.

Also contributing to this increase was market appreciation of $6.4 billion.

The carry funds driving appreciation for the period included $6.1 billion attributable to CP VI, $1.3 billion attributable to CAP IV, and $0.8 billion attributable to CP VII, offset by $(1.0) billion attributable to NGP XI and $(0.5) billion attributable to CIEP.

The increase of $1.6 billion in foreign exchange activity was primarily from the translation of our Europe buyout, growth, and real estate AUM from EUR to USD.

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buyout funds.

Total AUM was $126.4 billion at December 31, 2018, an increase of $11.0 billion, or 9%, compared to $115.4 billion at December 31, 2017.

This increase was driven by $22.6 billion of inflows primarily due to fundraising in CEP IV, CP VII, and CAP V.

Also contributing to this increase was market appreciation and other activity of $3.3 billion.

The carry funds driving appreciation for the period included $1.0 billion attributable to CP VI, $0.5 billion attributable to CEP IV, and $0.4 billion attributable to CP V.

Partially offsetting this increase were $14.1 billion of outflows driven primarily by distributions in our U.S.

Buyout, Asia Buyout and U.S.

Real Estate funds.

Fund Performance Metrics

is included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented.

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, 2021, 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.

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Corporate Private Equity

CP VII (May 2018 / May 2024) $ 18,510 $ 11,622 63% $ 516 $ 12,252 1.1x NM NM $ — $ 1,029 2.9x 75%

CP VIII (Oct 2021 / Oct 2027) $ 11,452 $ 2,746 24% $ — $ 2,737 1.0x NM NM $ — n/a n/a n/a

CP VII (May 2018 / Oct 2021) $ 18,510 $ 16,374 88% $ 579 $ 20,985 1.3x 23% 13% $ 387 $ 695 2.0x 37%

CP VI (May 2013 / May 2018) $ 13,000 $ 13,108 101% $ 18,517 $ 14,417 2.5x 23% 18% $ 1,053 $ 21,784 2.9x 31%

CP V (Jun 2007 / May 2013) $ 13,720 $ 13,238 96% $ 27,107 $ 1,353 2.1x 18% 14% $ 118 $ 27,216 2.5x 24%

CEP V (Oct 2018 / Oct 2024) € 6,416 € 1,821 28% € 12 € 1,735 1.0x NM NM $ — n/a n/a n/a

CEP V (Oct 2018 / Sep 2024) € 6,436 € 3,341 52% € 185 € 4,086 1.3x 24% 10% $ 61 n/a n/a n/a

CEP IV (Sep 2014 / Oct 2018) € 3,752 € 3,766 100% € 3,417 € 3,332 1.8x 17% 11% $ 294 € 3,217 2.4x 27%

CEP III (Jul 2007 / Dec 2012) € 5,295 € 5,177 98% € 11,707 € 53 2.3x 19% 14% $ 6 € 11,642 2.3x 19%

CEP II (Sep 2003 / Jul 2007) € 1,805 € 2,048 113% € 4,113 € 25 2.0x 36% 20% $ 4 € 4,123 2.2x 43%

CAP V (Jun 2018 / Jun 2024) $ 6,554 $ 2,335 36% $ 280 $ 2,836 1.3x 48% 20% $ 43 n/a n/a n/a

CEP II (Sep 2003 / Sep 2007) € 1,805 € 2,048 113% € 4,152 € 8 2.0x 36% 20% $ 2 € 4,124 2.2x 43%

CAP V (Jun 2018 / Jun 2024) $ 6,554 $ 4,157 63% $ 1,028 $ 4,731 1.4x 41% 21% $ 113 $ 935 1.9x 152%

CAP IV (Jul 2013 / Jun 2018) $ 3,880 $ 4,044 104% $ 4,574 $ 3,478 2.0x 19% 13% $ 292 $ 4,838 3.4x 35%

CAP III (Jun 2008 / Jul 2013) $ 2,552 $ 2,543 100% $ 4,890 $ 226 2.0x 17% 12% $ 23 $ 4,890 2.0x 18%

CJP IV (Oct 2020 / Oct 2026) ¥ 258,000 ¥ — 0% ¥ — ¥ — n/a n/a n/a $ — n/a n/a n/a

CJP IV (Oct 2020 / Oct 2026) ¥ 258,000 ¥ 78,946 31% ¥ — ¥ 91,696 1.2x NM NM $ 3 n/a n/a n/a

CJP III (Sep 2013 / Aug 2020) ¥ 119,505 ¥ 91,192 76% ¥ 97,354 ¥ 114,632 2.3x 22% 15% $ 77 ¥ 126,540 3.3x 33%

CJP II (Oct 2006 / Jul 2013) ¥ 165,600 ¥ 141,867 86% ¥ 205,301 ¥ 1,080 1.5x 7% 3% $ — ¥ 203,831 1.5x 7%

CGFSP III (Dec 2017 / Dec 2023) $ 1,005 $ 715 71% $ 4 $ 841 1.2x 21% 9% $ 4 n/a n/a n/a

CGFSP III (Dec 2017 / Dec 2023) $ 1,005 $ 870 87% $ 336 $ 1,380 2.0x 48% 34% $ 73 $ 644 5.2x 58%

CGFSP II (Jun 2013 / Dec 2017) $ 1,000 $ 943 94% $ 1,602 $ 610 2.3x 26% 19% $ 47 $ 1,600 2.3x 28%

CP Growth (Oct 2021 / Oct 2027) $ 1,062 $ 291 27% $ — $ 290 1.0x NM NM $ — n/a n/a n/a

CEOF II (Nov 2015 / Mar 2020) $ 2,400 $ 2,249 94% $ 1,669 $ 2,298 1.8x 19% 13% $ 139 $ 1,824 3.9x 56%

CEOF I (Sep 2011 / Nov 2015) $ 1,119 $ 1,175 105% $ 1,505 $ 312 1.5x 12% 8% $ 40 $ 1,363 1.8x 23%

CETP IV (Jul 2019 / Jul 2025) € 1,350 € 461 34% € — € 469 1.0x NM NM $ — n/a n/a n/a

CETP IV (Jul 2019 / Jul 2025) € 1,350 € 1,109 82% € — € 1,727 1.6x 63% 41% $ 58 n/a n/a n/a

CETP III (Jul 2014 / Jul 2019) € 657 € 602 92% € 1,180 € 677 3.1x 45% 32% $ 52 € 1,181 4.4x 51%

CGP II (Dec 2020 / Jan 2025) $ 1,840 $ 488 27% $ — $ 497 1.0x NM NM $ — n/a n/a n/a

CGP (Jan 2015 / Mar 2021) $ 3,588 $ 2,933 82% $ 248 $ 2,991 1.1x 3% 2% $ — n/a n/a n/a

CGP (Jan 2015 / Mar 2021) $ 3,588 $ 2,933 82% $ 438 $ 3,551 1.4x 7% 6% $ 53 $ 476 3.2x 63%

CAGP IV (Aug 2008 / Dec 2014) $ 1,041 $ 954 92% $ 1,123 $ 122 1.3x 7% 2% $ — $ 1,122 1.3x 7%

CSABF (Dec 2009 / Dec 2016) $ 776 $ 736 95% $ 483 $ 422 1.2x 4% 1% $ — $ 698 1.4x 3%

All Other Active Funds & Vehicles(10) $ 17,975 n/a $ 17,244 $ 12,456 1.7x 13% 11% $ 79 $ 17,718 2.2x 17%

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TOTAL CORPORATE PRIVATE EQUITY(13) $ 129,392 n/a $ 167,277 $ 82,909 1.9x 26% 18% $ 2,980 $ 171,692 2.5x 27%

CRP VIII (Aug 2017 / May 2022) $ 5,505 $ 2,955 54% $ 639 $ 2,964 1.2x NM NM $ 33 $ 651 1.9x 62%

CRP IX ( Oct 2021 / Oct 2026 ) $ 7,987 $ 269 3% $ — $ 258 1.0x NM NM $ — n/a n/a n/a

CRP VIII (Aug 2017 / Oct 2021) $ 5,505 $ 4,295 78% $ 2,853 $ 3,927 1.6x 50% 30% $ 140 $ 2,906 1.9x 50%

CRP VII (Jun 2014 / Dec 2017) $ 4,162 $ 3,760 90% $ 4,581 $ 1,734 1.7x 19% 12% $ 78 $ 4,566 1.8x 23%

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CEREP III (Jun 2007 / May 2012) € 2,230 € 2,053 92% € 2,451 € 43 1.2x 4% 1% $ — € 2,445 1.2x 4%

TOTAL INVESTMENTS REALIZED/PARTIALLY REALIZED INVESTMENTS(5)

As of December 31, 2021 As of December 31, 2021

Fund (Fee Initiation Date/Stepdown Date) (19) Committed

Capital (20) Cumulative

Capital(1) Percent Invested Realized

Value(2) Remaining Fair Value(3) MOIC

(4) Gross IRR

(6)(12) Net IRR

(7)(12) Net Accrued Carry/(Clawback)

Value(9) MOIC

All Other Active Funds & Vehicles(14) $ 3,492 n/a $ 3,018 $ 2,391 1.5x 10% 8% $ 7 $ 2,732 1.7x 11%

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Natural Resources

CIEP II (Apr 2019 / Apr 2025) $ 2,286 $ 602 26% $ 7 $ 558 0.9x NM NM $ — n/a n/a n/a

CIEP II (Apr 2019 / Apr 2025) $ 2,286 $ 841 37% $ 364 $ 809 1.4x NM NM $ 17 $ 501 2.1x NM

CIEP I (Sep 2013 / Jun 2019) $ 2,500 $ 2,341 94% $ 1,265 $ 2,559 1.6x 17% 9% $ 109 $ 1,584 2.4x 23%

CPP II (Sep 2014 / Apr 2021) $ 1,527 $ 1,229 81% $ 324 $ 1,262 1.3x 11% 5% $ — n/a n/a n/a

CPP II (Sep 2014 / Apr 2021) $ 1,527 $ 1,504 99% $ 697 $ 1,418 1.4x 12% 8% $ 2 $ 365 4.1x 77%

CGIOF (Dec 2018 / Sep 2023) $ 2,201 $ 1,242 56% $ 98 $ 1,254 1.1x NM NM $ — $ 42 1.8x NM

NGP XII (Jul 2017 / Jul 2022) $ 4,278 $ 2,186 51% $ 13 $ 2,285 1.1x NM NM $ — n/a n/a n/a

NGP XI (Oct 2014 / Jul 2017) $ 5,325 $ 4,930 93% $ 1,703 $ 3,498 1.1x 2% Neg $ — $ 1,591 1.1x 33%

NGP XII (Jul 2017 / Jul 2022) $ 4,278 $ 2,547 60% $ 379 $ 2,957 1.3x 12% 8% $ — n/a n/a n/a

NGP XI (Oct 2014 / Jul 2017) $ 5,325 $ 4,964 93% $ 2,505 $ 4,057 1.3x 8% 6% $ — $ 1,972 1.2x 18%

NGP X (Jan 2012 / Dec 2014) $ 3,586 $ 3,346 93% $ 3,197 $ 395 1.1x 2% Neg $ — $ 3,095 1.2x 6%

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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.

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 fee 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 (SMA's), and stand-alone investments arranged by us:

CVP II, MENA, CCI, CSSAF I, CSABF, CPF, CAP Growth I, and CBPF II.

(11) Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMA's), and certain other stand-alone investments arranged by us:

CP I, CP II, CP III, CP IV, CEP I, CAP I, CAP II, CBPF I, CJP I, CMG, CVP I, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III and Mexico.

(10) Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMAs), and stand-alone investments arranged by us:

CVP II, MENA, CCI, CSSAF I, CPF, CAP Growth I, CAP Growth II and CBPF II.

(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, CBPF I, CJP I, CJP II, CMG, CVP I, CUSGF III, CGFSP I, CEVP I, CETP I, CETP II, CAVP I, CAVP II, CAGP III 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.

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dollars at the reporting period spot rate.

(14) Aggregate includes the following funds, as well as all active co-investments, separately managed accounts (SMA's), and stand-alone investments arranged by us:

(15) Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMA's), and certain other stand-alone investments arranged by us:

(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, CRCP I, CAREP I, CAREP II, CEREP I, and CEREP II.

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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 (SMA's), and stand-alone investments arranged by us:

NGP GAP, CPOCP, CRSEF, and NGP RP.

(18) Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMA's), and certain other stand-alone investments arranged by us:

(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, CPOCP, CRSEF, and NGP Minerals.

(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:

(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, 2021.

Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change.

Global Credit

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Distributable Earnings

Distributable earnings increased $67.8 million for the year ended December 31, 2020 as compared to 2019, and decreased $29.1 million for the year ended December 31, 2019 as compared to 2018.

Distributable earnings increased $3.5 million for the year ended December 31, 2021 as compared to 2020, and increased $67.8 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the changes in distributable earnings for the years ended December 31, 2021 and 2020:

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Increases (decreases):

Increase (decrease) in fee related earnings 51.6 (24.1)

Increase (decrease) in realized net performance revenues 12.9 (3.9)

Increase in fee related earnings 12.2 51.6

(Decrease) increase in realized net performance revenues (17.6) 12.9

Increase in realized principal investment income 13.2 6.7

Increase in net interest (4.3) (3.4)

Total increase (decrease) 67.8 (29.1)

Total increase 3.5 67.8

Distributable earnings, current year $ 119.7 $ 116.2

Realized Net Performance Revenues.

Realized net performance revenues decreased $17.6 million for the year ended December 31, 2021 as compared to 2020 primarily due to realization of a $6.5 million net giveback obligation for CSP III in 2021 and performance revenue realizations generated from Carlyle Aviation Partners for the year ended December 31, 2020.

Realized net performance revenues increased $12.9 million for the year ended December 31, 2020 as compared to 2019 primarily driven by Carlyle Aviation Partners in 2020.

Realized net performance revenues decreased $3.9 million for the year ended December 31, 2019 as compared to 2018.

The majority of realized net performance revenues was generated by our distressed debt carry funds and our business development companies in 2018.

Realized Principal Investment Income.

Realized principal investment income increased $13.2 million for the year ended December 31, 2021 as compared to 2020 and increased $6.7 million for the year ended December 31, 2020 as compared to 2019.

The increase in realized principal investment income for the year ended December 31, 2021 as compared to 2020 was primarily due to higher gains on investments in our U.S.

CLOs and distressed credit carry funds.

The increase in realized principal investment income for the year ended December 31, 2020 as compared to 2019 was primarily due to realized losses in one of our energy mezzanine funds in 2019 and higher realized gains on investments in our business development companies.

The increase in realized principal investment income for the year ended December 31, 2019 as compared to 2018 was primarily due to higher dividends from our Interval Fund in 2019.

Fee Related Earnings

Fee related earnings increased $51.6 million for the year ended December 31, 2020 as compared to 2019, and decreased $24.1 million for the year ended December 31, 2019 as compared to 2018.

Fee related earnings increased $12.2 million for the year ended December 31, 2021 as compared to 2020, and increased $51.6 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

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Increase in cash-based compensation (31.0) (20.9)

Decrease (increase) in general, administrative and other indirect expenses 33.2 (48.4)

(Increase) decrease in general, administrative and other indirect expenses (17.4) 33.2

All other changes (1.0) 2.9

Total increase (decrease) 51.6 (24.1)

Total increase 12.2 51.6

Fee related earnings, current year $ 111.6 $ 99.4

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Total increase in fee revenues $ 61.6 $ 36.4

The increase in fund management fees for the year ended December 31, 2020 as compared to 2019 was primarily driven by increased management fees from our structured credit funds, opportunistic credit carry fund, direct lending platform, Carlyle FRL and Carlyle Aviation Partners, partially offset by lower management fees from our energy mezzanine carry funds.

The increase in fund management fees for the year ended December 31, 2019 as compared to 2018 was primarily driven by management fees from Carlyle Aviation Partners, which was acquired in December 2018, management fees from CLOs that originated in 2018 and 2019, as well as increased management fees from our direct lending platform.

The increase in fund management fees for the year ended December 31, 2021 as compared to 2020 was primarily driven by increased management fees from CCOF I, which earns fees based on AUM, CCOF II, which activated management fees in October 2020, record CLO origination activity, our Interval Fund and the activation of fees on newly-raised SMAs.

These increases were partially offset by lower management fees from CSP IV due to the step-down of the fee rate and basis in January 2021.

The increase in fund management fees for the year ended December 31, 2020 as compared to 2019 was primarily driven by increased management fees from our CLOs, opportunistic credit carry fund, direct lending platform, Carlyle FRL and Carlyle Aviation Partners, partially offset by lower management fees from our energy mezzanine carry funds.

The weighted average management fee rate on our carry funds slightly decreased from 1.22% at December 31, 2020 to 1.21% at December 31, 2021.

The weighted average management fee rate on our carry funds increased from 1.20% at December 31, 2019 to 1.22% at December 31, 2020 primarily due to fundraising in Carlyle Aviation Partners.

The weighted average management fee rate on our carry funds decreased from 1.23% at December 31, 2018 to 1.20% at December 31, 2019 primarily due to the step-down of the fee rate and basis in CEMOF II.

The increase in portfolio advisory and transaction fees, net, and other fees for the years ended December 31, 2020 and 2019 as compared to the respective periods resulted primarily from transaction fees associated with Carlyle FRL in 2020 (see Note 5 of our consolidated financial statements for more information) and increased underwriting fees related to Carlyle Global Capital Markets.

The increase in portfolio advisory and transaction fees, net, and other fees for the years ended December 31, 2019 and 2018 as compared to the respective periods resulted primarily from increased underwriting fees related to Carlyle Global Capital Markets.

The increase in portfolio advisory and transaction fees, net, and other fees for the years ended December 31, 2021 and 2020 to their comparable prior periods resulted primarily from increased underwriting fees related to Carlyle Global Capital Markets.

Portfolio advisory and transaction fees, net, and other fees for the year ended December 31, 2020 also reflects transaction fees associated with Carlyle FRL.

Cash-based compensation and benefits expense.

Cash-based compensation and benefits expense increased $20.9 million for the year ended December 31, 2020 as compared to 2019 primarily due to increased headcount and higher cash bonuses.

Cash-based compensation and benefits expense increased $44.8 million for the year ended December 31, 2019 as compared to 2018 primarily due to the Carlyle Aviation Partners acquisition, as well as increased headcount and higher cash bonuses.

The increase in cash-based compensation and benefits expense for the years ended December 31, 2021 and 2020 relative to their comparable periods was primarily due to increased headcount and higher cash bonuses as we continue to invest in the growth of our platform and launch new strategies.

General, administrative and other indirect expenses.

General, administrative and other indirect expenses decreased $33.2 million for the year ended December 31, 2020 as compared to 2019 primarily due the allocated portion of the cost recovery associated with the CCC matter of $6.3 million during the three months ended March 31, 2020 (see Note 9 to the consolidated financial statements for more information), as well as lower professional fees, due in part to expense recoveries from Carlyle FRL, and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

General, administrative and other indirect expenses increased $48.4 million for the year ended December 31, 2019 as compared to 2018 primarily due to $31.5 million of insurance proceeds related to commodities received in 2018 as well as increases related to our acquisition of Carlyle Aviation Partners in December 2018.

General, administrative and other indirect expenses increased $11.1 million for the year ended December 31, 2021 as compared to 2020, excluding the impact of litigation cost recoveries in 2020, primarily due to increases in professional fees, rent, other general expenses.

General, administrative and other indirect expenses for the year ended December 31, 2020 also reflects expense recoveries from Carlyle FRL.

General, administrative and other indirect expenses decreased $33.2 million for the year ended December 31, 2020 as compared to 2019 primarily due to the allocated portion of the cost recovery associated with the CCC matter of $6.3 million (see Note 8 to the consolidated financial statements for more information), as well as lower professional fees, due in part to expense recoveries from Carlyle FRL, and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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Inflows exclude fundraising amounts during the period for which fees have not yet been activated, which are referenced as Pending Fee-earning AUM.

This also includes $4.1 billion of fee-earning Carlyle Aviation Partners (formerly Apollo Aviation Group) assets which were acquired in a transaction that closed in December 2018.

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Driving the increase were inflows of $13.0 billion primarily attributable to new fee-paying capital raised in our U.S.

and Europe CLOs, fee-paying third-party capital raised in our insurance business, and investment activity in CCOF, as well as $1.2 billion in foreign exchange activity related to the translation of our EUR-denominated CLOs to USD.

Partially offsetting the increase were $3.9 billion of outflows primarily related to a fee basis step-down in CEMOF II and runoff of our CLO collateral balances.

and Europe CLOs and investment activity in our opportunistic credit funds, as well as $1.5 billion of market and other activity.

Partially offsetting the increase were $4.3 billion of outflows primarily related to run-off of our CLO collateral balances and dispositions from funds which charge fees on invested capital.

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.

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Driving the increase were inflows of $6.4 billion primarily attributable to new fee-paying capital raised in our U.S.

and Europe CLO’s and follow-on closes in CCOF, as well as $1.1 billion of market and other activity primarily related to increases in gross asset value in our BDCs and securitization vehicles.

Partially offsetting the increase were $2.7 billion of outflows primarily related to a fee basis step-down in CEMOF II and runoff of our CLO collateral balances.

and Europe CLOs, fee-paying third-party capital raised in our insurance business, and investment activity in CCOF I, as well as $1.2 billion in foreign exchange activity related to the translation of our EUR-denominated CLOs to USD.

Partially offsetting the increase were $3.9 billion of outflows primarily related to a fee basis step-down in CEMOF II and run-off of our CLO collateral balances.

Fee-earning AUM was $37.9 billion at December 31, 2019, an increase of $2.7 billion, or 8%, compared to $35.2 billion at December 31, 2018.

Driving the increase were inflows of $9.2 billion primarily attributable to the acquisition of Carlyle Aviation Partners and new fee-paying capital raised in our U.S.

and Europe CLO's.

Partially offsetting the increase were $1.2 billion of outflows primarily related to runoff of our CLO collateral balances as well as distributions from carry funds outside the investment period.

Driving the increase were inflows of $4.4 billion primarily attributable to new fee-paying capital raised in our U.S.

and Europe CLO’s and follow-on closes in CCOF I, as well as $1.1 billion of market and other activity primarily related to increases in gross asset value in our BDCs and securitization vehicles.

Partially offsetting the increase were $2.7 billion of outflows primarily related to a fee basis step-down in CEMOF II and run-off of our CLO collateral balances.

Total AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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Inflows also includes $5.8 billion of Carlyle Aviation Partners (formerly Apollo Aviation Group) assets which were acquired in a transaction that closed in December 2018.

(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.

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This was driven by $16.9 billion of inflows primarily due to new U.S.

and Europe CLO issuances, as well as fundraising in CCOF II and various platform accounts.

Also driving the increase was $5.4 billion of market and other activity

attributable to 22% appreciation in our carry funds and increases in the gross asset value of our BDCs and securitization vehicles.

Partially offsetting the increase were outflows of $4.2 billion primarily related to run-off of our CLO collateral balances and distributions in our Distressed Credit and Energy Credit funds.

Total AUM was $55.9 billion at December 31, 2020, an increase of $6.5 billion, or 13%, compared to $49.4 billion at December 31, 2019.

This was driven by $9.5 billion of inflows primarily due to new U.S.

and Europe CLO issuances, fundraising in CCOF II, and closings in various platform accounts.

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This was driven by $6.3 billion of inflows primarily due to new U.S.

and Europe CLO issuances, as well as additional closes in CCOF.

and Europe CLO issuances, as well as additional closes in CCOF I.

Also driving the increase was market and other activity of $1.2 billion, the majority of which was attributable to increases in the gross asset value of our BDC’s and securitization vehicles.

Partially offsetting the increase were outflows of $2.4 billion primarily related to distributions in our Energy Credit and Aviation funds, as well as CLO run-off.

Total AUM was $44.4 billion at December 31, 2018, an increase of $11.1 billion, or 33%, compared to $33.3 billion at December 31, 2017.

This was driven by $12.1 billion of inflows primarily due to the acquisition of Carlyle Aviation Partners, as well as new U.S.

and Europe CLO issuances and additional closes in our second BDC.

Partially offsetting the increase were outflows of $1.1 billion primarily related to CLO run-off and distributions in our Global Credit carry funds.

Fund Performance Metrics

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There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.

See “Item 1A.

“Risk Factors—Risks Related to Our Business Operations—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.”

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These tables separately present funds that, as of the periods presented, had at least $1.0 billion in capital commitments, cumulative equity invested or total equity value.

See “Business — Our Family of Funds” for a legend of the fund acronyms listed below.

“Business — Our Family of Funds” for a legend of the fund acronyms listed below.

(Dollars in millions) TOTAL INVESTMENTS

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CCOF I (Nov 2017 / Sep 2022) $ 2,373 $ 3,383 143% $ 1,437 $ 2,749 1.2x 21% 15% $ 63

CEMOF II (Dec 2015 / Jun 2019) $ 2,819 $ 1,696 60% $ 718 $ 952 1.0x Neg Neg $ —

CEMOF II (Dec 2015 / Jun 2019) $ 2,819 $ 1,702 60% $ 861 $ 1,163 1.2x 7% 2% $ —

CEMOF I (Dec 2010 / Dec 2015) $ 1,383 $ 1,606 116% $ 936 $ 153 0.7x Neg Neg $ —

CSC (Mar 2017/ n/a) $ 838 $ 1,303 155% $ 1,150 $ 512 1.3x 18% 14% $ 34

All Other Active Funds & Vehicles(9) $ 3,355 n/a $ 2,869 $ 873 1.1x 6% 1% $ 17

SASOF III (Nov 2014 / n/a) $ 833 $ 991 119% $ 1,187 $ 137 1.3x 21% 13% $ 16

All Other Active Funds & Vehicles(9) $ 3,036 n/a $ 1,126 $ 1,777 1.0x NM NM $ 6

Fully Realized Funds & Vehicles(10) $ 1,944 n/a $ 2,783 $ 1 1.4x 13% 8% $ —

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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 (SMA's), and stand-alone investments arranged by us:

SASOF II, SASOF III, and SASOF IV.

(10) Aggregate includes the following funds, as well as related co-investments, separately managed accounts (SMA's), and certain other stand-alone investments arranged by us:

CSP I, CMP I, CMP II, and CASCOF.

Investment Solutions

The following table presents our results of operations for our Investment Solutions segment:

(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.

(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, 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, 2021.

Certain of our recent vintage funds are currently in fundraising and total capital commitments are subject to change.

Global Investment Solutions

The following table presents our results of operations for our Global Investment Solutions (1) segment:

Year Ended December 31,

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(=) Fee Related Earnings $ 84.2 $ 37.3 $ 17.4

(1) On April 1, 2021, we closed on the sale of our interest in Metropolitan Real Estate (“MRE”).

Distributable Earnings and Fee Related Earnings attributable to MRE in periods prior to the sale were immaterial to the Global Investment Solutions segment.

The $5.0 million gain on the sale and the $26.8 million right-of-use asset impairment, as a result of the sublease transaction (see Note 8 to the consolidated financial statements in Item 8 of this Form 10-K), are not included in DE or FRE.

See “Non-GAAP Financial Measures” for the reconciliation of Total DE and FRE to the U.S.

GAAP financial statements.

Year Ended December 31, 2021 Compared to Year Ended December 31, 2020 and Year Ended December 31, 2020 Compared to Year Ended December 31, 2019

Distributable Earnings

Distributable earnings increased $22.6 million for the year ended December 31, 2020 as compared to 2019, and decreased $20.1 million for the year ended December 31, 2019 as compared to 2018.

Distributable earnings increased $60.7 million for the year ended December 31, 2021 as compared to 2020, and increased $22.6 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the change in distributable earnings for the years ended December 31, 2021 and 2020:

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Increases (decreases):

Increase (decrease) in fee related earnings 19.9 (16.5)

Increase (decrease) in realized net performance revenues 4.4 (4.0)

Increase in fee related earnings 46.9 19.9

Increase in realized net performance revenues 8.2 4.4

Increase in realized principal investment income 7.5 0.6

Increase in net interest (1.9) (2.3)

Total increase (decrease) 22.6 (20.1)

Total increase 60.7 22.6

Distributable earnings, current year $ 102.1 $ 41.4

Realized Net Performance Revenues.

Realized net performance revenues increased $4.4 million for the year ended December 31, 2020 as compared to 2019, and decreased $4.0 million for the year ended December 31, 2019 as compared to 2018.

Substantially all of the realized net performance revenues were generated from AlpInvest carry fund vehicles for the years ended December 31, 2020, 2019 and 2018.

Performance revenues from our Investment Solutions segment pay a higher ratio of performance revenues as compensation, primarily as a result of the terms of our acquisition of AlpInvest.

Realized net performance revenues increased $8.2 million for the year ended December 31, 2021 as compared to 2020, and increased $4.4 million for the year ended December 31, 2020 as compared to 2019.

Substantially all of the realized net performance revenues were generated from AlpInvest secondary and co-investment carry fund vehicles for the years ended December 31, 2021, 2020 and 2019.

Performance revenues from our Global Investment Solutions segment pay a higher ratio of performance revenues as compensation, primarily as a result of the terms of our acquisition of AlpInvest.

Under our arrangements with the historical owners and management team of AlpInvest, we generally do not retain any carried interest with respect to the historical investments and commitments to our AlpInvest fund vehicles that existed as of July 1, 2011 (including any options to increase any such commitments exercised after such date).

We are entitled to 15% of the carried interest with respect to commitments from the historical owners of AlpInvest for the period between 2011 and 2020, except in certain instances, and 40% of the carried interest in respect of all other commitments (including all future commitments from third parties).

As funds that have launched since our acquisition of AlpInvest in 2011 begin to realize performance revenues, an increasing share of net realized performance revenues will be for our benefit.

As funds that have launched since our acquisition of AlpInvest in 2011 begin to realize performance revenues, which will not occur until all capital contributions for investments and expenses and the preferred return hurdle have been returned, an increasing share of net realized performance revenues will be for our benefit.

Fee Related Earnings

Fee related earnings increased $19.9 million for the year ended December 31, 2020 as compared to 2019, and decreased $16.5 million for the year ended December 31, 2019 as compared to 2018.

Fee related earnings increased $46.9 million for the year ended December 31, 2021 as compared to 2020, and increased $19.9 million for the year ended December 31, 2020 as compared to 2019.

The following table provides the components of the change in fee related earnings for the years ended December 31, 2021 and 2020:

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Increases (decreases):

Increase (decrease) in fee revenues 36.0 (10.1)

Increase in cash-based compensation (17.2) (4.3)

Increase in general, administrative and other indirect expenses (0.6) (0.6)

Increase in fee revenues 35.8 36.0

Decrease (increase) in cash-based compensation 5.3 (17.2)

Decrease (increase) in general, administrative and other indirect expenses 5.8 (0.6)

All other changes — 1.7

Total increase (decrease) 19.9 (16.5)

Total increase 46.9 19.9

Fee related earnings, current year $ 84.2 $ 37.3

Fee Revenues.

Total fee revenues increased $36.0 million for the year ended December 31, 2020 as compared to 2019, primarily due to increased management fees from our private equity fund vehicles driven by the activation of management fees on our latest secondaries fund and higher catch-up management fees on our real estate fund-of-fund vehicles.

Total fee revenues decreased $10.1 million for the year ended December 31, 2019 as compared to 2018, primarily due to decreased management fees from our private equity fund vehicles and lower catch-up management fees on our real estate fund-of-fund vehicles.

In addition, realizations outpaced new fundraising, leading to lower Fee-earning AUM.

Total fee revenues increased $35.8 million for the year ended December 31, 2021 as compared to 2020, primarily due to increased management fees driven by the activation of management fees on our latest secondaries fund in the second quarter of 2020 and our latest coinvestment fund in the second quarter of 2021, as well as $4.4 million in catch-up fees.

These increases were partially offset by the impact of the sale of MRE on April 1, 2021, which resulted in a $15.9 million decrease in management fees.

Cash-based compensation and benefits expense.

Cash-based compensation and benefits expense decreased $5.3 million for the year ended December 31, 2021 as compared to 2020, primarily as a result of the MRE sale on April 1, 2021, partially offset by an increase in cash bonuses.

Cash-based compensation and benefits expense increased $17.2 million for the year ended December 31, 2020 as compared to 2019, primarily due to an increase in 2020 cash bonuses.

Cash-based compensation and benefits expense increased $4.3 million for the year ended December 31, 2019 as compared to 2018, primarily due to an increase in headcount and 2019 cash bonuses.

General, administrative and other indirect expenses.

General, administrative and other indirect expenses increased $0.6 million for the year ended December 31, 2020 as compared to 2019, primarily due to increased professional fees, partially offset by the allocated portion of the cost recovery associated with the CCC matter of $3.3 million during the three months ended March 31, 2020 (see Note 9 to the consolidated financial statements for more information.) and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

General, administrative and other indirect expenses decreased $9.1 million for the year ended December 31, 2021 as compared to 2020, excluding the impact of litigation cost recoveries in 2020, primarily due to the sale of MRE.

General, administrative and other indirect expenses increased $0.6 million for the year ended December 31, 2020 as compared to 2019 , primarily due to increased professional fees, partially offset by the allocated portion of the cost recovery associated with the CCC matter of $3.3 million (see Note 8 to the consolidated financial statements for more information) and lower travel and entertainment expenses as a result of travel restrictions during the COVID-19 pandemic.

Fee-earning AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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(Dollars in millions)

Investment Solutions

Global Investment Solutions

Components of Fee-earning AUM (1)

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(Dollars in millions)

Investment Solutions

Global Investment Solutions

Fee-earning AUM Rollforward

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Balance, End of Period $ 37,449 $ 36,398 $ 28,384

(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.

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Distributions for funds earning management fees based on commitments during the period do not affect Fee-earning AUM.

Outflows during the year ended December 31, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.3 billion of Fee-Earning AUM as of March 31, 2021.

(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.

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Fee-earning AUM was $37.4 billion at December 31, 2021, an increase of $1.0 billion, or 3%, compared to $36.4 billion at December 31, 2020.

This increase was driven by inflows of $8.6 billion primarily attributable to fundraising, capital deployed in our funds which charge fees based on invested capital, and $2.1 billion of market appreciation.

Partially offsetting this increase were outflows of $8.1 billion primarily attributable to distributions in our AlpInvest funds, as well as the sale of MRE.

Foreign exchange activity related to the translation of our AlpInvest Fee-earning AUM from EUR to USD resulted in a decrease in Fee-earning AUM of $1.5 billion.

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.

Increases in fair value may have an impact on Fee-earning AUM for Global Investment Solutions as the management fees for many fully committed funds are based on fair value or on the lower of cost or fair value of the underlying investments.

Fee-earning AUM was $36.4 billion at December 31, 2020, an increase of $8.0 billion, or 28%, compared to $28.4 billion at December 31, 2019.

This increase was driven by inflows of $10.7 billion primarily attributable to fundraising in our AlpInvest funds as well as capital deployed in our AlpInvest funds which charge fees based on invested capital.

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Partially offsetting this increase were outflows of $3.7 billion primarily attributable to distributions in our AlpInvest funds.

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.

Increases in fair value may have an impact on Fee-earning AUM for Investment Solutions as the management fees for many fully committed funds are based on fair value or on the lower of cost or fair value of the underlying investments.

Fee-earning AUM was $28.4 billion at December 31, 2019, a decrease of $0.7 billion, or 2%, compared to $29.1 billion at December 31, 2018.

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Partially offsetting this decrease were inflows of $3.7 billion primarily attributable to fundraising in our AlpInvest funds as well as capital deployed in our AlpInvest funds which charge fees based on invested capital.

Fee-earning AUM was $29.1 billion at December 31, 2018, a decrease of $1.1 billion, or 4%, compared to $30.2 billion at December 31, 2017.

This decrease was driven by outflows of $5.0 billion primarily attributable to distributions in our AlpInvest funds as well as $1.1 billion of foreign exchange activity related to the translation of our AlpInvest Fee-earning AUM from EUR to USD.

Partially offsetting this decrease were inflows of $5.1 billion primarily attributable to fundraising in our AlpInvest and MRE funds.

Total AUM as of and for each of the Three Years in the Period Ended December 31, 2021

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(Dollars in millions)

Investment Solutions

Global Investment Solutions

Total AUM Rollforward

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(2) Outflows includes distributions in our carry funds, related co-investment vehicles and separately managed accounts, as well as the expiration of available capital.

Outflows during the year ended December 31, 2021 also reflect the sale of MRE on April 1, 2021, which had $2.4 billion in Total AUM as of March 31, 2021.

(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.

The fair market values for our Investment Solutions primary and secondary carry funds are based on the latest available valuations of the underlying limited partnership interests as provided by their general partners which typically has a lag of up to 90 days, plus the net cash flows since the latest valuation, up to December 31, 2020.

The fair market values for our Global Investment Solutions primary and secondary carry funds are based on the latest available valuations of the underlying limited partnership interests as provided by their general partners which typically has a lag of up to 90 days, plus the net cash flows since the latest valuation, up to December 31, 2021.

(4) Foreign Exchange represents the impact of foreign exchange rate fluctuations on the translation of our non-U.S.

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Total AUM was $65.5 billion as of December 31, 2021, an increase of $7.4 billion, or 13%, compared to $58.1 billion as of December 31, 2020.

Driving this increase were $7.1 billion of inflows principally from new commitments raised in our secondaries and coinvestment programs and $19.0 billion of market appreciation, reflecting appreciation of 48% for the year.

Offsetting the increase were $15.5 billion of outflows primarily due to distributions in our AlpInvest funds and the sale of MRE, and $3.3 billion of negative foreign exchange activity related to the translation of our AlpInvest AUM from EUR to USD.

Total AUM was $58.1 billion as of December 31, 2020, an increase of $12.9 billion, or 29%, compared to $45.2 billion as of December 31, 2019.

Driving this increase were $13.9 billion of inflows principally from new commitments raised in our AlpInvest secondaries and coinvestment programs, $3.6 billion of market and other activity, and $3.2 billion of foreign exchange gains related to the translation of our AlpInvest AUM from EUR to USD.

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Market appreciation was driven by 15% appreciation in our AlpInvest funds and 3% appreciation in our MRE funds.

Total AUM was $45.7 billion as of December 31, 2018, a decrease of $0.6 billion, or 1%, compared to $46.3 billion as of December 31, 2017.

Driving this decrease were $9.5 billion of outflows primarily due to distributions in our AlpInvest funds and $1.7 billion of foreign exchange losses related to the translation of our AlpInvest AUM from EUR to USD.

Offsetting the decrease were $4.1 billion of inflows from new commitments raised in our AlpInvest and MRE funds, and $6.5 billion of market and other activity.

Market appreciation was driven by 19% appreciation in our AlpInvest funds and 8% appreciation in our MRE funds.

Fund Performance Metrics

Fund performance information for our investment funds that have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of December 31, 2020, which we refer to as our “significant funds,” is generally included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods presented.

Fund performance information for our investment funds that have at least $1.0 billion in capital commitments, cumulative equity invested or total value as of December 31, 2021, which we refer to as our “significant funds,” is generally included throughout this discussion and analysis to facilitate an understanding of our results of operations for the periods

The fund return information reflected in this discussion and analysis is not indicative of the performance of The Carlyle Group Inc.

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There can be no assurance that any of our funds or our other existing and future funds will achieve similar returns.

See “Item 1A.

“Risk Factors—Risks Related to Our Business Operations—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 Investment Solutions business.

The following tables reflect the performance of our significant funds in our Global Investment Solutions business.

TOTAL INVESTMENTS

As of December 31, 2021

Investment Solutions (1)(8) Vintage Year Fund Size Cumulative

Global Investment Solutions (1)(8) Vintage Year Fund Size Cumulative

(2)(3) Realized Value (3) Remaining Fair Value(3) Total Fair

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Main Fund V - Secondary Investments 2011 € 4,273 € 4,292 € 6,512 € 1,272 € 7,785 1.8x 21% 20% $ 31

AlpInvest Secondaries Fund V 2012 $ 756 $ 653 $ 856 $ 254 $ 1,110 1.7x 18% 14% $ 16

Main Fund IV - Secondary Investments 2010 € 1,859 € 1,969 € 3,300 € 107 € 3,407 1.7x 19% 18% $ —

Main Fund III - Secondary Investments 2006 € 2,250 € 2,395 € 3,639 € 49 € 3,688 1.5x 11% 10% $ —

Main Fund II - Secondary Investments 2003 € 998 € 972 € 1,763 € 15 € 1,779 1.8x 27% 26% $ —

Main Fund VIII - Co-Investments 2021 $ 4,012 $ 1,090 $ — $ 1,091 $ 1,092 1.0x NM NM $ —

AlpInvest Co-Investment Fund VIII 2021 $ 3,614 $ 1,030 $ — $ 1,032 $ 1,032 1.0x NM NM $ —

Main Fund VII - Co-Investments 2017 $ 2,842 $ 2,692 $ 582 $ 4,033 $ 4,615 1.7x 25% 21% $ 68

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TOTAL ALPINVEST (USD)(11) $ 82,885 $ 105,616 $ 41,905 $ 147,521 1.8x 14% 13% $ 317

Metropolitan Real Estate

MRE Secondaries Fund II 2017 $ 1,092 $ 315 $ 79 $ 274 $ 352 1.1x 8% Neg $ 0

All Other Active Funds & Vehicles Various $ 2,821 $ 2,791 $ 782 $ 3,573 1.3x 6% 4% $ 1

Fully Realized Funds & Vehicles Various $ 597 $ 721 $ — $ 722 1.2x 4% 2% $ —

TOTAL METROPOLITAN REAL ESTATE $ 3,734 $ 3,591 $ 1,056 $ 4,647 1.2x 6% 3% $ 1

(1) Includes private equity and mezzanine primary fund investments, secondary fund investments and co-investments originated by the AlpInvest team, as well as real estate primary fund investments, secondary fund investments and co-investments originated by the Metropolitan Real Estate team.

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(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 funds, before management fees, expenses and carried interest at the AlpInvest/Metropolitan Real Estate level.

(7) Net Internal Rate of Return (“Net IRR”) represents the annualized IRR for the period indicated on Limited Partner invested capital based on contributions, distributions and unrealized value after management fees, expenses and carried interest.

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Mezzanine Main Funds include mezzanine investments across all strategies (i.e., Primary Funds, Secondaries, and Co-Investments).

(9) Aggregate includes Main Fund VII - Fund Investments, Main Fund VIII - Fund Investments, Main Fund IX - Fund Investments, Main Fund X - Fund Investments, Main Fund XI - Fund Investments, Main Fund IV - Mezzanine Investments, Main Fund V - Mezzanine Investments, all ‘clean technology’ private equity investments, all strategic co-investment mandates that invest in co-investment opportunities arising out of an investor’s own separate private equity relationships and invitations, all strategic capital mandates, any state-focused investment mandates, and all other investors whose investments are not reflected in a Main Fund.

(9) Aggregate includes Main Fund VII - Fund Investments, Main Fund VIII - Fund Investments, Main Fund IX - Fund Investments, Main Fund X - Fund Investments, Main Fund XI - Fund Investments, Main Fund XII - Fund Investments, Main Fund XIII - Fund Investments, Main Fund IV - Mezzanine Investments, Main Fund V - Mezzanine Investments, all ‘clean technology’ private equity investments, all strategic co-investment mandates that invest in co-investment opportunities arising out of an investor’s own separate private equity relationships and invitations, all strategic capital mandates, any state-focused investment mandates, and all other investors whose investments are not reflected in a Main Fund.

(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.

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(12) Represents the net accrued performance fee balance/(giveback obligation) as of the current quarter end.

Total Net Accrued Carry for Global Investment Solutions excludes approximately $1.9 million of net accrued carry as of December 31, 2021, which was retained as part of the sale of Metropolitan Real Estate on April 1, 2021.

(13) “Main Fund” entries represent a combination of a commingled fund and SMA vehicles which together comprise a “program” vintage.

Indented lines shown for AlpInvest Secondaries Funds VII, VI and AlpInvest Co-Investment Fund VII reflect a breakout of the commingled fund, which is part of the larger program vintage.

Indented lines shown for AlpInvest Secondaries Funds VII, VI, V and AlpInvest Co-Investment Funds VII and VIII reflect a breakout of the commingled fund, which is part of the larger program vintage.

Liquidity and Capital Resources

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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 $775.0 million of available capacity as of December 31, 2021.

We believe these sources will be sufficient to fund our capital needs for at least the next twelve months.

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 $987.6 million at December 31, 2020.

Cash and cash equivalents were approximately $2.5 billion at December 31, 2021.

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;

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and (iii) regulatory capital.

Corporate Treasury Investments.

These investments represent investments in U.S.

Treasury and government agency obligations, commercial paper, certificates of deposit, other investment grade securities and other investments with original

maturities of greater than three months when purchased.

There were no corporate treasury investments as of December 31, 2020.

After deducting cash amounts allocated to the specific requirements mentioned above, the remaining cash and cash equivalents is approximately $880 million as of December 31, 2020.

After deducting cash amounts allocated to the specific requirements mentioned above, the remaining cash and cash equivalents is approximately $2.2 billion as of December 31, 2021.

This remaining amount will be used towards our primary liquidity needs, as outlined in the next section.

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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 LIBOR plus an applicable margin not to exceed 1.50% per annum (1.35% at December 31, 2021).

As of December 31, 2021, there was no balance outstanding under the senior revolving credit facility.

The senior revolving credit facility is unsecured.

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Global Credit Revolving Credit Facility.

In December 2018, certain subsidiaries of the Company established a $250.0 million revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment.

The credit facility includes a $125.0 million line of credit with a one-year team, which was amended in December 2020 to extend its maturity to December 2021, and a $125.0 million line of credit with a three-year term.

In December 2018, certain subsidiaries of the Company established a revolving line of credit, primarily intended to support certain lending activities within the Global Credit segment.

The credit facility, which was amended in December 2020 and September 2021, is scheduled to mature in September 2024, and has a capacity of $250.0 million.

Principal amounts outstanding under the facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus applicable margin not to exceed 1.00%, or (b) at the Eurocurrency rate plus an applicable margin not to exceed 2.00%.

As of December 31, 2020, there was no outstanding balance under this facility.

During the year ended December 31, 2021, the Company borrowed $70.0 million and repaid $70.0 million under the credit facility, and there was no borrowing outstanding under this facility as of December 31, 2021.

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 with financial institutions.

The Company’s outstanding CLO term loans were $356.1 million and $324.9 million at December 31, 2020 and 2019, respectively.

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 outstanding CLO borrowings were $222.6 million and $356.1 million at December 31, 2021 and 2020, respectively.

The CLO term loans 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, 2020, $336.5 million of these loans are secured by investments attributable to The Carlyle Group Inc.

See Note 7 of our financial statements for more information on our CLO term loans.

As of December 31, 2021, $204.4 million of these borrowings are secured by investments attributable to The Carlyle Group Inc.

See Note 6 of our financial statements for more information on our CLO borrowings.

Senior Notes .

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issued $500.0 million of 3.875% senior notes due February 1, 2023 at 99.966% of par.

In September 2018, we completed a tender offer to purchase $250.0 million in aggregate principal amount of these notes.

As of December 31, 2020, $250.0 million of these notes remain outstanding.

In September 2018, we completed a tender offer to purchase $250.0 million in aggregate principal amount of these notes and in November 2021, we completed the redemption of the remaining $250.0 million at the make-whole redemption price set forth in the notes.

5.625% Senior Notes .

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These promissory notes matured on July 15, 2019 and were fully repaid as of that date.

Subordinated Notes.

In May 2021, Carlyle Finance L.L.C.

issued $435.0 million aggregate principal amount of 4.625% subordinated notes due May 15, 2061.

In June 2021, an additional $65.0 million aggregate principal amount of these subordinated notes were issued and are treated as a single series with the already outstanding $435.0 million aggregate principal amount.

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 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.

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Global Credit 300.3 (11.8) 288.5

Investment Solutions (1)

Global Investment Solutions (1)

1,419.9 — 1,419.9

Total $ 8,133.0 $ (30.2) $ 8,102.8

Accrued performance allocations from NGP Carry Funds 3.8

Accrued performance allocation-related compensation (4,087.8)

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Global Credit Carry Funds 1% (2)% 22% 160.9

Investment Solutions Carry Funds (3)

Global Investment Solutions Carry Funds (3)

15% 10% 48% 318.9

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(2) Includes $3.7 million of net accrued clawback from our Legacy Energy funds.

(3) Our primary and secondary investments in external funds are generally valued based on the proportionate share of the net assets provided by third party general partners of the underlying fund partnership based on the most recent available information which typically has a lag of up to 90 days.

(3) The Company’s primary and secondary investments in external funds are generally valued based on its proportionate share of the net assets provided by the third party general partners of the underlying fund partnerships based on the most recent available information which typically has a lag of up to 90 days.

As a result, amounts presented may not include the impact of economic activity in the current quarter.

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(excluding certain general partner interests, strategic investments, and investments in certain CLOs) may be sold at our discretion as a source of liquidity.

During the year ended December 31, 2021, we sold approximately $150.4 million of investments in U.S.

CLOs and used the proceeds to repay outstanding CLO borrowings (see Note 6 to the consolidated financial statements).

Investments as of December 31, 2021 consist of the following:

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Strategic equity method investments in NGP Management — (371.8) (371.8)

Investment in NGP general partners - accrued performance allocations — (3.8) (3.8)

Total investments attributable to The Carlyle Group Inc., exclusive of NGP Management $ 2,293.7 $ — $ 2,293.7

(1) See Note 4 to our consolidated financial statements.

Our investments as of December 31, 2020 can be further attributed as follows:

Our investments as of December 31, 2021 can be further attributed as follows (Dollars in millions):

Investments in Carlyle Funds, excluding CLOs:

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Global Credit funds (2)

Investment Solutions funds (3)

Global Investment Solutions funds (3)

Total investments in Carlyle Funds, excluding CLOs 1,790.5

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Total investments attributable to The Carlyle Group Inc.

CLO loans and other borrowings attributable to The Carlyle Group Inc.

CLO loans and other borrowings collateralized by investments attributable to The Carlyle Group Inc.

Total investments attributable to The Carlyle Group Inc., net of CLO loans and other borrowings $ 2,089.3

(1) Excludes our strategic equity method investment in NGP Management and investments in NGP general partners - accrued performance allocations.

(2) Includes the Company’s investment in Fortitude Re, which was contributed to Carlyle FRL, a Carlyle-affiliated investment fund, in June 2020 as discussed in Note 5 to the consolidated financial statements.

(2) Includes the Company’s investment in Fortitude, which was contributed to Carlyle FRL, a Carlyle-affiliated investment fund, in June 2020 as discussed in Note 4 to the consolidated financial statements.

This investment has a carrying value of $715.7 million as of December 31, 2021.

As a result, amounts presented may not include the impact of economic activity in the current quarter.

(4) Of the $356.1 million in total CLO term loans outstanding as of December 31, 2020 and as disclosed in Note 7 to the consolidated financial statements, $336.5 million are collateralized by investments attributable to The Carlyle Group Inc.

(4) Of the $222.6 million in total CLO borrowings outstanding as of December 31, 2021 and as disclosed in Note 6 to the consolidated financial statements, $204.4 million are collateralized by investments attributable to The Carlyle Group Inc.

The remaining $18.2 million in total CLO borrowings outstanding are collateralized by investments attributable to non-controlling interests.

Our Liquidity Needs

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• 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, and;

• 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.

Preferred Unit Distributions and Redemption.

With respect to distribution year 2019, the Board of Directors declared a distribution to preferred unitholders totaling approximately $19.1 million.

In October 2019, we completed the redemption of our preferred units for $25.339757 per unit, which is equal to $25.25 per Preferred Unit plus declared and unpaid distributions to, but excluding, the redemption date.

Common Stockholder Dividends.

Our intention is to pay dividends to holders of our common stock in an amount of $0.25 per share of common stock ($1.00 per share annually), subject to the discretion of our Board of Directors and compliance with applicable law.

The declaration and payment of any dividends to holders of our common stock is subject to the discretion of our Board of Directors and compliance with applicable law.

Under our dividend policy for our common stock that we adopted in connection with the Conversion, we have paid dividends to holders of our common stock in an amount of $0.25 per share of common stock ($1.00 per share annually).

In February 2022, our Board of Directors approved an increase in the anticipated common stock dividend to an annual rate of $1.30 per share ($0.325 per common share on a quarterly basis), anticipated to commence for the first quarter 2022 dividend anticipated to be paid in May 2022.

federal income tax purposes, any dividends we pay following the Conversion generally will be treated as qualified dividend income (generally taxable to U.S.

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The declaration and payment of dividends to holders of our common stock will be at the sole discretion of our Board of Directors, and our dividend policy may be changed at any time.

In 2020, our Board of Directors has declared cumulative dividends to common stockholders totaling approximately $352.6 million, or $1.00 per common share, consisting of the following:

With respect to distribution year 2021, the Board of Directors declared dividends to common stockholders totaling approximately $356.6 million, or $1.00 per common share, consisting of the following:

Common Stock Dividends - Dividend Year 2021

Quarter Dividend per Common Share Dividend to Common Stockholders (1)

Record Date Payment Date

Quarter Dividend per Common Share Dividend to Common Stockholders Record Date Payment Date

Q1 2021 $ 0.25 $ 88.7 May 11, 2021 May 19, 2021

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Total $ 1.00 $ 356.6

In 2019, our Board of Directors declared a dividend of approximately $194.8 million to common stockholders, consisting of the following:

With respect to distribution year 2020, the Board of Directors declared dividends to common stockholders totaling approximately $352.6 million, or $1.00 per common share, to common stockholders, consisting of the following:

Common Stock Dividends - Dividend Year 2020

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Total $ 1.00 $ 352.6

(1) The dividend to common stockholders for Q4 2019 reflects the exchange of all Carlyle Holdings partnership

units to shares of common stock in The Carlyle Group Inc.

in connection with the Conversion on January 1, 2020.

In 2018, our Board of Directors declared a dividend of approximately $144.1 million to common stockholders, consisting of the following:

With respect to distribution year 2019, the Board of Directors declared dividends to common stockholders totaling approximately $194.8 million, or $1.18 per common share, to common stockholders, consisting of the following:

Common Stock Dividends - Dividend Year 2019

Quarter Dividend per Common Share Dividend to Common Stockholders Record Date Payment Date

Quarter Dividend per Common Share Dividend to Common Stockholders (1)

Record Date Payment Date

Q1 2019 $ 0.19 $ 21.0 May 13, 2019 May 20, 2019

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Total $ 1.18 $ 194.8

(1) The dividend to common stockholders for Q4 2019 reflects the exchange of all Carlyle Holdings partnership units to shares of common stock in The Carlyle Group Inc.

in connection with the Conversion on January 1, 2020.

Dividends to common stockholders paid during the year ended December 31, 2021 totaled $355.8 million, including the amount paid in February 2021 of $0.25 per common share in respect of the fourth quarter of 2020.

Dividends to common stockholders paid during the year ended December 31, 2020 totaled $351.3 million, including the amount paid in February 2020 of $0.25 per common share in respect of the fourth quarter of 2019.

Dividends to common stockholders paid during the year ended December 31, 2019 totaled $154.9 million, including the amount paid in February 2019 of $0.43 per common share in respect of the fourth quarter of 2018.

Preferred Unit Distributions and Redemption.

With respect to distribution year 2019, the Board of Directors declared a distribution to preferred unitholders totaling approximately $19.1 million.

Fund Commitments.

Generally, we intend to have Carlyle commit 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.

For example, in February 2022, our Global Credit platform agreed to acquire a diversified portfolio of triple net leases through a Carlyle-affiliated investment fund as part of the expansion of our real estate credit strategy.

The investment fund’s acquisition of the portfolio will be funded using $2 billion in debt and $1 billion in equity.

The debt is non-recourse to us and Carlyle, as general partner of the investment fund, will contribute up to $200 million as a minority interest balance sheet investment.

The transaction is expected to close in the first quarter of 2022.

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.

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Global Credit 307.1

Investment Solutions 313.3

Global Investment Solutions 256.7

Total $ 4,130.9

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 $3.5 billion of unfunded commitments, approximately $3.0 billion is subscribed individually by senior Carlyle professionals, operating executives and other professionals, with the balance funded directly by the Company.

Of the $4.1 billion of unfunded

commitments, approximately $3.5 billion is subscribed individually by senior Carlyle professionals, operating executives and other professionals, with the balance funded directly by the Company.

Repurchase Program.

In December 2018, our Board of Directors authorized the repurchase of up to $200 million of common stock and/or Carlyle Holdings units.

In January 2020 our Board of Directors re-authorized the repurchase program with regard or common stock.

In December 2018, our Board of Directors authorized the repurchase of up to $200 million of common units and/or Carlyle Holdings units.

In connection with the Conversion, in January 2020 our Board of Directors re-authorized the repurchase program with regard to our common stock.

In February 2021, the Board of Directors replenished the repurchase program to its limit of $200 million of common stock in the aggregate from its maximum remaining purchase amount of $139.1 million.

This program authorizes the repurchase of shares of common stock from time to time in open market transactions, in privately negotiated transactions or otherwise.

For the year ended December 31, 2020, we paid an aggregate of $26.4 million to repurchase and retire approximately 1.1 million shares with all of the repurchases done via open market brokered transactions.

For the year ended December 31, 2021, we paid an aggregate of $161.8 million to repurchase and retire approximately 3.2 million shares of common stock with all of the repurchases done via open market and brokered transactions.

As of December 31, 2021, $38.2 million of repurchase capacity remained under the program.

In February 2021, our Board of Directors replenished the repurchase program to its limit of $200 million of common stock.

In October 2021, our Board of Directors authorized the repurchase of up to $400.0 million of common stock, effective January 1, 2022, which replaced the authorization provided in February 2021.

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.

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Statements of Cash Flows Data

Net cash (used in) provided by operating activities, including investments in Carlyle funds and Fortitude Re $ (169.2) $ 358.6 $ (343.5)

Net cash provided by (used in) operating activities, including investments in Carlyle funds $ 1,791.0 $ (169.2) $ 358.6

Net cash used in investing activities (32.2) (61.2) (27.8)

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Net change in cash, cash equivalents and restricted cash $ 1,485.5 $ 161.6 $ 189.7

Net Cash Used in Operating Activities.

Net cash used in 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 principal investment income, 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, 2020, 2019 and 2018, excluding the activities of our Consolidated Funds, were $716.8 million, $591.3 million and $461.2 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.

Net Cash Provided by (Used In) Operating Activities.

Net cash provided by (used in) operating activities includes the investment activity of our Consolidated Funds.

Excluding this activity, net cash 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, 2021, 2020 and 2019, excluding the activities of our Consolidated Funds, were $2.1 billion, $716.8 million and $591.3 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, income taxes, interest, and general, administrative and other expenses.

During the years ended December 31, 2021, 2020 and 2019, net cash provided by operating activities primarily includes the receipt of management fees and realized performance allocations and incentive fees, totaling approximately $4.7 billion, $2.1 billion, and $1.9 billion, respectively.

These inflows were partially offset by payments for compensation and general, administrative, and other expenses of approximately $1.6 billion, $1.6 billion, and $1.7 billion for the years ended December 31, 2020, 2019 and 2018, respectively.

Cash used to purchase investments as well as the proceeds from the sale of such investments are reflected in our cash flows from operating activities as this investment activity is a normal part of our operations.

During the year ended December 31, 2020, investment proceeds were $307.5 million while investment purchases were $350.9 million, including $79.6 million related to a purchase price adjustment on our strategic investment in Fortitude Re.

These inflows were partially offset by payments for compensation, income taxes, interest, and general, administrative and other expenses of approximately $2.9 billion, $1.6 billion, and $1.6 billion for the years ended December 31, 2021, 2020 and 2019, respectively.

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, 2021, investment proceeds were $668.4 million while investment purchases were $276.7 million.

During the year ended December 31, 2020, investment proceeds were $307.5 million while investment purchases were $271.3 million, including $79.6 million related to a purchase price adjustment on our strategic investment in Fortitude.

During the year ended December 31, 2019, investment proceeds were $389.2 million while investment purchases were $312.4 million.

Investment proceeds in 2019 also included $71.5 million received from the resolution of French tax litigation.

During the year ended December 31, 2018, investment proceeds were $893.4 million while investment purchases were $867.4 million, which included cash outflows of $393.8 million related to our investment in Fortitude Re.

The net cash used in operating activities for the year ended December 31, 2020 also reflects the investment activity of our Consolidated Funds.

For the year ended December 31, 2020, proceeds from the sales and settlements of investments by the Consolidated Funds were $2.0 billion, while purchases of investments by the Consolidated Funds were $3.1 billion.

The net cash provided by operating activities for the year ended December 31, 2021 also reflects the investment activity of our Consolidated Funds.

For the year ended December 31, 2021, proceeds from the sales and settlements of investments by the Consolidated Funds were $4.9 billion, while purchases of investments by the Consolidated Funds were $5.4

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Net Cash Used In Investing Activities.

Our investing activities generally reflect cash used for acquisitions and fixed assets and software for internal use.

Our investing activities generally reflect cash used for acquisitions, fixed assets and software for internal use, and cash received from dispositions.

For the year ended December 31, 2021, cash used in investing activities principally reflects purchases of fixed assets, partially offset by proceeds received from the sales of MRE and our Brazil management entity of $5.9 million and $3.3 million, respectively.

Purchases of fixed assets were $41.4 million, $61.2 million and $27.8 million for the years ended December 31, 2021, 2020 and 2019, respectively.

During the year ended December 31, 2018, cash used in investing activities principally reflects the acquisition of Carlyle Aviation Partners.

Net Cash Provided by Financing Activities.

Net Cash Provided by (Used in) Financing Activities.

In 2021, we received net proceeds of $484.1 million from the issuance of $500.0 million of 4.625% subordinated notes, and made $120.8 million of net repayments on borrowings used to finance a portion of our investments in the CLOs.

We borrowed and repaid $70.0 million in borrowings under the Global Credit revolving credit facility, and paid $259.9 million to redeem the 3.875% Senior Notes.

We also paid $68.8 million in January 2021 for the second installment of the deferred consideration payable to former Carlyle Holdings unitholders in connection with the Conversion, and paid $161.8 million to repurchase and retire 3.2 million shares of common stock.

In 2020, we received net proceeds of $294.1 million from borrowings under the revolving credit facilities, and repaid $329.9 million, and paid $68.8 million in January 2020 for the first installment of the deferred consideration payable to former Carlyle Holdings unitholders in connection with the Conversion.

We also paid $26.4 million to repurchase and retire 1.1 million shares of common stock.

In 2019, we received net proceeds of $420.6 million from the issuance of $425.0 million of 3.500% senior notes, and $41.0 million from the issuance of various CLO borrowings, paid $405.4 million to repurchase our outstanding Preferred Units, paid $34.5 million to repurchase 1.6 million units under our repurchase program and paid off a $25.0 million term loan.

In 2018, we received net proceeds of $345.7 million from the issuance of $350.0 million of 5.650% senior notes, paid $255.1 million to repurchase $250.0 million of 3.875% senior notes, and paid $108.8 million to prepay the remaining balance outstanding under a promissory note to BNRI.

Dividends to our common stockholders were $351.3 million, $154.9 million, and $129.8 million for the years ended December 31, 2020, 2019 and 2018, respectively.

Distributions to the non-controlling interest holders in Carlyle Holdings were $313.3 million and $288.8 million the years ended December 31, 2019 and 2018, respectively.

Dividends paid to our common stockholders were $355.8 million, $351.3 million, and $154.9 million for the years ended December 31, 2021, 2020 and 2019, respectively.

Distributions to the non-controlling interest holders in Carlyle Holdings were $313.3 million the year ended December 31, 2019.

The net (payments) borrowings on loans payable by our Consolidated Funds during the years ended December 31, 2021, 2020 and 2019 were $182.9 million, $704.1 million, and $224.8 million, respectively.

For the years ended December 31, 2021, 2020 and 2019, contributions from non-controlling interest holders were $216.2 million, $210.0 million, and $57.8 million, respectively, which relate primarily to contributions from the non-controlling interest holders in Consolidated Funds.

For the years ended December 31, 2020, 2019 and 2018, distributions to non-controlling interest holders were $77.8 million, $62.4 million, and $105.2 million, respectively, which relate primarily to distributions to the non-controlling interest holders in Consolidated Funds.

For the years ended December 31, 2021, 2020 and 2019, distributions to non-controlling interest holders were $94.6 million, $77.8 million, and $62.4 million, respectively, which relate primarily to distributions to the non-Carlyle interests in majority-owned in majority-owned subsidiaries.

Our Balance Sheet

Total assets were $21.3 billion at December 31, 2021, an increase of $5.6 billion from December 31, 2020.

The increase in total assets was primarily attributable to increases in Investments of consolidated funds of $1.0 billion due to the formation of two CLOs during the year ended December 31, 2020, partially offset by the deconsolidation of the Renewable Energy fund.

The increase in total assets was also driven by a $576.5 million increase in investments, including accrued performance allocations, as well as a $157.3 million increase in our lease right-of-use assets, net resulting from the start of our lease of our new New York office space in December 2020.

Total liabilities were $12.7 billion at December 31, 2020, an increase of $1,875.4 million from December 31, 2019.

The increase in liabilities was primarily attributable to an increase in accrued compensation and benefits of $726.1 million primarily due to an increase in accrued performance allocations-related compensation and loans payable of Consolidated Funds of $856.3 million from December 31, 2019 to 2020, driven by the formation of two CLOs during the year ended December 31, 2020.

The increase in total assets was primarily attributable to a $3.5 billion increase in investments, including performance allocations, an increase in cash and cash equivalents of $1.5 billion and increases in Investments of consolidated funds of $604.1 million.

The increase in investments, including performance allocations, was largely driven by appreciation across our portfolio.

The increase in cash was primarily due to the issuance of $500 million in subordinated notes and the receipt of management fees and realized performance revenues, partially offset by the redemption of the 3.875% Senior Notes, the payment of deferred consideration related to our acquisition of Carlyle Aviation Partners, payment of the second installment of deferred consideration to the former Carlyle Holdings unitholders, and payments for bonuses and payroll, dividends and income taxes.

The increase in Investments of consolidated funds was primarily due to the consolidation of two CLOs, partially offset by the deconsolidation of one CLO during the year ended December 31, 2021.

Cash and cash equivalents were approximately $2.5 billion and $1.0 billion at December 31, 2021 and December 31, 2020, respectively.

Total liabilities were $15.5 billion at December 31, 2021, an increase of $2.8 billion from December 31, 2020.

The increase in liabilities was primarily attributable to an increase in accrued compensation and benefits of $1.7 billion due to the corresponding increase in accrued performance allocations, as well as an increase in deferred tax liabilities of $429.3 million from December 31, 2020 to 2021.

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.

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Our balance sheet without the effect of the Consolidated Funds can be seen in Note 17 to the consolidated financial statements included in this Annual Report on Form 10-K.

At December 31, 2020, our total assets were $9.5 billion, including cash and cash equivalents totaling $987.6 million and net accrued performance revenues of $2.3 billion.

At December 31, 2021, our total assets without the effect of the Consolidated Funds were $14.5 billion, including cash and cash equivalents totaling $2.5 billion and net accrued performance revenues of $3.9 billion.

Unconsolidated Entities

Certain of our global private equity 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.

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 portfolio companies.

The degree of leverage employed varies among our funds.

Off-balance Sheet Arrangements

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(Dollars in millions)

Debt obligations (including senior notes) (a)

$ — $ 271.3 $ 84.8 $ 1,624.7 $ 1,980.8

Interest payable (b)

86.9 163.5 145.6 1,087.5 1,483.5

Other consideration (c)

121.0 223.7 68.8 — 413.5

Lease obligations (d)

47.8 116.3 101.6 397.4 663.1

Capital commitments to Carlyle funds (e)

3,501.4 — 114.9 — 3,616.3

Tax receivable agreement payments (f)

— 22.1 6.2 69.8 98.1

Loans payable of Consolidated Funds (g)

95.1 190.3 190.5 6,126.4 6,602.3

Unfunded commitments of the CLOs (h)

5.1 — — — 5.1

Debt obligations (1) $ — $ 20.3 $ 68.7 $ 2,008.6 $ 2,097.6

Interest payable (2) 97.9 194.7 191.9 1,821.5 2,306.0

Other consideration (3) 114.0 343.2 — — 457.2

Operating lease obligations (4) 65.2 120.9 109.6 381.6 677.3

Capital commitments to Carlyle funds (5) 4,330.9 — — — 4,330.9

Tax receivable agreement payments (6) — 27.7 6.5 67.7 101.9

Loans payable of Consolidated Funds (7) 93.3 186.8 186.5 6,325.3 6,791.9

Unfunded commitments of the CLOs (8) 7.7 — — — 7.7

Consolidated contractual obligations 4,709.0 893.6 563.2 10,604.7 16,770.5

Loans payable of Consolidated Funds (g)

(95.1) (190.3) (190.5) (6,126.4) (6,602.3)

Capital commitments to Carlyle funds (e)

(2,959.8) — — — (2,959.8)

Unfunded commitments of the CLOs (h)

(5.1) — — — (5.1)

Loans payable of Consolidated Funds (7) (93.3) (186.8) (186.5) (6,325.3) (6,791.9)

Capital commitments to Carlyle funds (5) (3,519.6) — — — (3,519.6)

Unfunded commitments of the CLOs (8) (7.7) — — — (7.7)

Carlyle Operating Entities contractual obligations $ 1,088.4 $ 706.8 $ 376.7 $ 4,279.4 $ 6,451.3

(a) The table above assumes that no prepayments are made on the senior notes.

The CLO terms 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 the CLO term loans and senior notes.

(b) The interest rates on the debt obligations as of December 31, 2020 consist of:

3.500% on $425.0 million of senior notes, 5.650% on $350 million of senior notes, 3.875% on $250.0 million of senior notes, 5.625% on $600.0 million of senior notes, and a range of approximately 1.58% to 2.63% for our CLO term loans.

(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, which are February 2024 and September 2024, respectively.

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 6 to the consolidated financial statements for the various maturity dates of the CLO term loans, senior notes and subordinated notes.

(2) The interest rates on the debt obligations as of December 31, 2021 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 1.36% to 8.11% 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.

(c) These obligations represent our estimate of amounts to be paid on the contingent cash and other obligations associated with our acquisition of Carlyle Aviation Partners (see Note 3) and other obligations, as well as the deferred payment obligations 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 first of which occurred during the first quarter of 2020.

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.

(d) We lease office space in various countries around the world and maintain our headquarters in Washington, D.C., where we have a non-cancelable lease agreement expiring on March 31, 2030.

We entered into a non-cancelable lease agreement expiring in 2036 for new office space in New York City that commenced in 2020.

(3) These obligations represent our estimate of amounts to be paid on the contingent cash obligations associated with our acquisition of Carlyle Aviation Partners, our estimate of amounts to be paid pursuant to two letter agreements entered into with our agent pursuant to our 10b5-1 plan which expire in February 2022 totaling approximately $41.1 million, deferred consideration related to our strategic investment in Fortitude, and other obligations, as well as the deferred payment obligations 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 second of which occurred during the first quarter of 2021.

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 and maintain our headquarters in Washington, D.C., where we entered into an amended non-cancelable lease agreement expiring on March 31, 2030.

We entered into a new non-cancelable lease agreement expiring in 2036 for new office space in New York City.

Our office leases in other locations expire in various years through 2032.

The amounts in this table represent the minimum lease payments required over the term of the lease.

(e) These obligations generally represent commitments by us to fund a portion of the purchase price paid for each investment made by our funds.

Commitments to the funds are generally due on demand and are therefore presented in the less than one year category.

(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 $4.3 billion of unfunded commitments to the funds, approximately $3.5 billion is subscribed individually by senior Carlyle professionals, advisors and other professionals, with the balance funded directly by the Company.

(f) 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.

These amounts are inclusive of a $200 million commitment made by Carlyle to a Carlyle-affiliated investment fund in February 2022 related to the announced acquisition of a diversified portfolio of triple net leases, which is expected to close in the first quarter of 2022.

(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, 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.

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.

(g) These obligations represent amounts due to holders of debt securities issued by the consolidated CLO vehicles.

(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.

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Interest payments on variable-rate debt securities are based on interest rates in effect as of December 31, 2021, at spreads to market rates pursuant to the debt agreements, and range from 0.30% to 8.89%.

(h) These obligations represent commitments of the CLOs to fund certain investments.

(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.

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Contingent Cash Payments For Business Acquisitions and Strategic Investments

We have certain contingent cash obligations associated with our acquisition of Carlyle Aviation Partners and our strategic investment in Fortitude Re.

For our acquisition of Carlyle Aviation Partners, the contingent cash payments relate to an earn-out of up to $150.0 million that is payable upon the achievement of certain revenue and earnings performance targets during 2020 through 2025, which will be accounted for as compensation expense.

We have certain contingent cash obligations associated with our acquisition of Carlyle Aviation Partners, which relate to an earn-out of up to $150.0 million that is payable upon the achievement of certain revenue and earnings performance targets during 2020 through 2025, and which is accounted for as compensation expense.

We accrue the compensation liability over the service period.

For our strategic investment in Fortitude Re, the contingent cash payment relates to performance-based contingent cash consideration payable to Carlyle FRL for further payment to AIG following December 31, 2023.

Based on the terms of the underlying contracts, the maximum amount that could be paid from contingent cash obligations associated with the acquisition of Carlyle Aviation Partners and the strategic investment in Fortitude Re as of December 31, 2020 is $245.0 million versus amounts recognized on the balance sheet of $145.6 million.

If earned, payments are made in the year following the performance year to which the payments relate.

In 2021, we paid $47.9 million related to the Carlyle Aviation Partners earn-out for the performance period ended December 31, 2020.

Based on the terms of the underlying contract, the maximum amount that could be paid from contingent cash obligations associated with the acquisition of Carlyle Aviation Partners as of December 31, 2021 is $102.1 million versus amounts recognized on the balance sheet of $2.6 million.

Risk Retention Rules

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For additional information related to the U.S.

Risk Retention Rules, see “—Financial regulatory changes 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” within Item 1A.

Risk Retention Rules, see Part I.

“Risk Factors—Risk Related to Our Company—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.”

See Note 8 to the consolidated financial statements included in this Annual Report on Form 10-K for information related to our material guarantees.

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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 estimate above or recorded in our consolidated financial statements as of December 31, 2020.

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, 2021.

See Note 8 to the consolidated financial statements included in this Annual Report on Form 10-K for information related to indemnifications.

Contingent Obligations (Giveback)

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Realized carried interest may be required to be returned by us in future periods if the fund’s investment values decline below certain levels.

For example, during the year ended December 31, 2021, we realized a giveback obligation of $11.8 million related to carried interest previously realized in Carlyle Strategic Partners III, of which $6.5 million is attributable to the Company.

When the fair value of a fund’s investments remains constant or falls below certain return hurdles, previously recognized performance allocations are reversed.

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Shares as of December 31, 2020 Shares

Issued Shares

Forfeited Shares

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common shares 353,520,576 5,114,394 — — (3,267,094) 355,367,876

Carlyle Holdings partnership units 229,318,248 — — (229,318,248) — —

Total 347,158,899 7,452,114 — — (1,090,437) 353,520,576

Shares as of December 31, 2019 Shares

Issued Shares

Forfeited Shares

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Total 347,158,899 7,452,114 — — (1,090,437) 353,520,576

(1) Units issued include restricted common units and units issued and delivered in connection with our equity method investment in NGP.

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 and shares issued and delivered in connection with our equity method investment in NGP during the years ended December 31, 2020 and 2019.

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 13 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, 2021 and 2020.

The Carlyle Holdings partnership units exchanged during the year ended December 31, 2020 relate to the exchange of Carlyle Holdings partnership units for an equivalent number of shares of common stock of the Company on January 1, 2020 pursuant to the Conversion.

The Carlyle Holdings partnership units exchanged during the year ended December 31, 2019 relate to the exchange of Carlyle Holdings partnership units held by NGP and certain limited partners for shares of common stock on a one-for-one basis.

Beginning with the second quarter of 2017, senior Carlyle professionals were able to exchange their Carlyle Holdings partnership units for shares of common stock on a quarterly basis, subject to the terms of the Exchange Agreement.

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, 2021 and 2020 and subsequently retired as part of our stock repurchase programs.

The total shares as of December 31, 2020 as shown above exclude approximately 1.3 million shares of common stock in connection with the vesting of restricted stock units subsequent to December 31, 2020 that will participate in the common stockholder dividend that will be paid.

Critical Accounting Policies

The total shares as of December 31, 2021 as shown above exclude approximately 2.7 million net shares of common stock in connection with the vesting of restricted stock units and shares issued pursuant to the carry distributed in shares program subsequent to December 31, 2021 that will participate in the common stockholder dividend that will be paid on February 23, 2022.

The total shares as of December 31, 2021 as shown above also exclude approximately 0.3 million shares of common stock issued pursuant to the carry distributed in shares program subsequent to December 31, 2021 that will not participate in the common stockholder dividend that will be paid on February 23, 2022.

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.

Management has determined that the Company’s Funds are investment companies under U.S.

GAAP for the purposes of financial reporting.

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.

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Performance Allocations.

Performance allocations consist principally of the allocation of profits from certain of the funds to which the Company is entitled (commonly known as carried interest).

As of December 31, 2021, we had performance allocations of $8.1 billion.

Performance allocations consist of the allocation of profits from certain of the funds to which the Company is entitled (commonly known 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:

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.

While 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 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, 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.

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, 2021, 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 $1.5 billion, on an after-tax basis where applicable.

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Performance Allocation Related Compensation.

As of December 31, 2021, we had accrued performance allocations and incentive fee-related compensation of $4.1 billion.

A portion of the performance allocations earned is due to employees and advisers of the Company.

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federal, state, local and foreign taxing authorities.

As of December 31, 2021, 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.

Under this method, deferred tax assets and liabilities are determined based on the difference between the financial statement reporting and the tax basis of assets and liabilities using enacted tax rates in effect for the period in which the difference is expected to reverse.

The effect of a change in tax rates on deferred tax assets and liabilities is recognized in the period of the change in the provision for income taxes.

Further, deferred tax assets are recognized for the expected realization of available net operating loss and tax credit carry forwards.

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, 2021, we recorded a valuation allowance of $46.8 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.

The Company has approximately $97 million of deferred tax assets as of December 31, 2020.

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.

The Conversion resulted in a step-up in the tax basis of certain assets that will be recovered as those assets are sold or the basis is amortized.

We recorded an estimated net deferred tax asset of $262.1 million relating to this step-up in tax basis.

The Conversion and subsequent exchange of Carlyle Holdings units for an equivalent number of shares of common stock of the Company also resulted in an estimated net reduction of the deferred tax asset of $388.1 million.

This amount was generated by:

(1) deferred tax liabilities on investments and accrued performance revenue allocations, net of related compensation, which were not previously subject to U.S.

corporate income tax, (2) an increase in the historical net deferred tax assets reflecting deferred tax amounts previously allocated to private unitholders, and (3) a decrease in the historical net deferred tax assets reflecting the impact of reducing our effective state tax rate under the corporate structure.

Together with the estimated step-up in tax basis, the Conversion resulted in an estimated net reduction to the Company’s net deferred tax asset of $126.0 million due to the Conversion.

See Note 11 to the consolidated financial statements included in this Annual Report on Form 10-K for more information regarding the Conversion.

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.

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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, 2021, we had unrecognized tax benefits of $30.4 million, which if recognized would result in a reduction in the provision for income taxes of $26.8 million.

Fair Value Measurement.

GAAP establishes a hierarchical disclosure framework which ranks the observability of market price inputs used in measuring financial instruments at fair value.

The observability of inputs is impacted by a number of factors, including the type of financial instrument, the characteristics specific to the financial instrument and the state of the

marketplace, including the existence and transparency of transactions between market participants.

Financial instruments measured and reported at fair value are classified and disclosed based on the observability of inputs used in the determination of fair values, as follows:

Level I — inputs to the valuation methodology are quoted prices available in active markets for identical instruments as of the reporting date.

The type of financial instruments included in Level I include unrestricted securities, including equities and derivatives, listed in active markets.

The Company does not adjust the quoted price for these instruments, even in situations where the Company holds a large position and a sale could reasonably impact the quoted price.

Level II — inputs to the valuation methodology are other than quoted prices in active markets, which are either directly or indirectly observable as of the reporting date.

The type of financial instruments in this category includes less liquid and restricted securities listed in active markets, securities traded in other than active markets, government and agency securities, and certain over-the-counter derivatives where the fair value is based on observable inputs.

Level III — inputs to the valuation methodology are unobservable and significant to overall fair value measurement.

The inputs into the determination of fair value require significant management judgment or estimation.

Financial instruments that are included in this category include investments in privately-held entities, non-investment grade residual interests in securitizations, collateralized loan obligations, and certain over-the-counter derivatives where the fair value is based on unobservable inputs.

In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy.

In such cases, the determination of which category within the fair value hierarchy is appropriate for any given financial instrument is based on the lowest level of input that is significant to the fair value measurement.

The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the financial instrument.

In the absence of observable market prices, the Company values its investments using valuation methodologies applied on a consistent basis.

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.

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.

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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 “Risk Factors — Risks Related to Our Company — 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.”

“Risk Factors — Risks Related to Our Company — 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.

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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.

The earnings or losses of our unconsolidated investment funds are primarily driven by 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.

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Equity-based Compensation.

During the year ended December 31, 2021, we recognized $163.1 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.

The compensation expense for awards that vest over a future service period is recognized over the relevant service period on a straight-line basis.

The compensation expense for awards that do not require future service is recognized immediately.

Cash settled equity-based awards are classified as liabilities and are re-measured at the end of each reporting period.

The compensation expense for awards that contain performance conditions is recognized when it is probable that the performance conditions will be achieved;

in certain instances, such compensation expense may be recognized prior to the grant date of the award.

The compensation expense for awards that contain market conditions is based on a grant-date fair value that factors in the probability that the market conditions will be achieved and is recognized over the requisite service period on a straight-line basis.

The Company recognizes equity-based award forfeitures in the period they occur as a reversal of previously recognized compensation expense.

Equity-based awards issued to non-employees are recognized as general, administrative and other expenses, except to the extent they are recognized as a part of equity method earnings because they are issued to employees of the Company’s equity method investees.

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 distributions 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 primarily consist of acquired contractual rights to earn future fee income, including management and advisory fees.

As of December 31, 2021, we had intangible assets, net of accumulated amortization, of $34.9 million, including $13.3 million of 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.

Finite-lived intangible assets are amortized over their estimated useful lives, which range from four to ten years, and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

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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, 2021, we continue to believe our intangible assets and goodwill are not impaired.

Recent Accounting Pronouncements

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-K

Item 7. Management’s Discussion and Analysis