What changed in this filing

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Item 8. Financial Statements and Supplementary Data

2023-02-09 compared with 2022-02-10 · 578 added, 523 removed, 1939 unchanged (36% of the section changed)

21 unchanged sentences

The critical audit matter communicated below is a matter arising from the current period audit of the financial statements that was communicated or required to be communicated to the audit committee and that:

(1) relate to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

(1) relates to accounts or disclosures that are material to the financial statements and (2) involved our especially challenging, subjective or complex judgments.

The communication of the critical audit matter does not alter in any way our opinion on the consolidated financial statements, taken as a whole, and we are not, by communicating the critical audit matter below, providing a separate opinion on the critical audit matter or on the accounts or disclosures to which it relates.

Measurement of principal equity method investments, including accrued performance allocations

Description of the matter

At December 31, 2021, the carrying value of the Company’s investments totaled approximately $10.8 billion and included principal equity method investments in sponsored unconsolidated funds (collectively, the “funds” or each, a “fund”) of approximately $2.7 billion and accrued performance allocations of approximately $8.1 billion.

Description of the matter At December 31, 2022, the carrying value of the Company’s investments totaled approximately $10.8 billion and included principal equity method investments in sponsored unconsolidated funds (collectively, the “funds” or each, a “fund”) of approximately $3.7 billion and accrued performance allocations of approximately $7.1 billion.

As discussed in Notes 3 and 6 to the consolidated financial statements, a significant input to the measurement of the Company’s principal equity method investments in the funds, including accrued performance allocations, is management’s estimate of the fair value of the investments held by each fund.

Management estimates the fair value of the funds’ investments, including investments in the equity of private operating companies, real estate properties and certain debt positions, by applying the methodologies outlined in Notes 2 and 4 to the consolidated financial statements and using significant unobservable inputs and assumptions.

Management estimates the fair value of the funds’ investments, including investments in the equity of private operating companies, real estate properties and certain debt positions, by applying the methodologies outlined in Notes 3 and 6 and using significant unobservable inputs and assumptions.

Auditing management’s estimates of the fair value of the funds’ investments, valued using significant unobservable inputs and assumptions, was complex and highly judgmental because these investments exhibit higher estimation uncertainty.

How we addressed the matter in our audit

We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the funds’ investment valuation process.

How we addressed the matter in our audit We obtained an understanding, evaluated the design, and tested the operating effectiveness of controls over the funds’ investment valuation process.

This included management's review controls over the assessment of the methodologies, significant inputs and assumptions included in the fair value estimates, as well as management’s review around the completeness, accuracy and reasonableness of the data used in these estimates.

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For these selected investments, we also evaluated significant adjustments applied to the selected earnings before interest, taxes, depreciation and amortization (EBITDA) multiple or discount rate derived from the comparable companies by considering investee specific and relevant market information.

For some of the selected fund investments, we independently developed fair value estimates, with the support of valuation specialists, using investee and market information and compared them to the funds’ fair value estimates.

For a sample of investments that were sold during the year, we performed procedures to assess the historical reasonableness of management’s estimates.

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Restricted cash 0.8 5.6

Corporate treasury investments 20.0 —

Investments, including accrued performance allocations of $ 7,117.7 and $ 8,133.0 as of December 31, 2022 and 2021, respectively

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Net income attributable to non-controlling interests in consolidated entities 59.7 70.5 34.6

Net income attributable to Carlyle Holdings 2,974.7 348.2 1,147.8

Net income attributable to non-controlling interests in Carlyle Holdings — — 766.9

Net income attributable to The Carlyle Group Inc.

2,974.7 348.2 380.9

Net income attributable to Series A Preferred Unitholders — — 19.1

Series A Preferred Units redemption premium — — 16.5

Net income attributable to The Carlyle Group Inc.

Common Stockholders $ 1,225.0 $ 2,974.7 $ 348.2

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( 107.8 ) ( 56.3 ) 49.6

Unrealized gains (losses) on Fortitude available-for-sale securities, net of income tax (benefit) expense of $( 5.3 ) and $ 4.4 for the years ended December 31, 2020 and 2019, respectively

— ( 20.0 ) 16.8

Defined benefit plans

Unrealized losses on Fortitude available-for-sale securities, net of income tax benefit of $( 5.3 ) for the year ended December 31, 2020

Defined benefit plans, net

Unrealized net income (loss) for the period, net of income tax (benefit) expense of $ 4.6 , $ 2.9 and $( 2.3 ) for the years ended December 31, 2022, 2021 and 2020, respectively

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Comprehensive income attributable to non-controlling interests in consolidated entities 42.1 64.6 37.6

Comprehensive income attributable to Carlyle Holdings 2,935.9 367.6 1,158.4

Comprehensive income attributable to non-controlling interests in Carlyle Holdings — — 774.1

Comprehensive income attributable to The Carlyle Group Inc.

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(Dollars and shares in millions)

Units Common Shares Preferred Equity Partners’

Units Common Shares Partners’

Capital Common Stock Additional Paid-in Capital Retained Earnings (Deficit) Accumulated

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Balance at December 31, 2019 117.8 — $ 703.8 $ — $ — $ — $ ( 85.2 ) $ 333.5 $ 2,017.5 $ 2,969.6

Reallocation of ownership interests in Carlyle Holdings — — — 64.3 — — — ( 4.1 ) — ( 60.2 ) —

Exchange of Carlyle Holdings units for common units 1.7 — — 15.4 — — — ( 1.2 ) — ( 14.2 ) —

Units repurchased ( 1.6 ) — — ( 34.5 ) — — — — — — ( 34.5 )

Deferred tax effects resulting from acquisition of interests in Carlyle Holdings — — — 1.0 — — — — — — 1.0

Equity-based compensation — — — 46.8 — — — — — 97.1 143.9

Issuances of common units for equity-based awards 10.0 — — — — — — — — — —

Contributions — — — — — — — — 57.8 — 57.8

Distributions — — ( 17.7 ) ( 154.9 ) — — — — ( 84.8 ) ( 313.3 ) ( 570.7 )

Net income — — 35.6 345.3 — — — — 36.6 766.9 1,184.4

Redemption of Preferred Units (see Note 14) — — ( 405.4 ) — — — — — — — ( 405.4 )

Deconsolidation of a Consolidated Entity — — — — — — — — ( 11.2 ) — ( 11.2 )

Cumulative effect adjustment upon adoption of ASU 2016-2 — — — ( 0.2 ) — — — — — ( 0.5 ) ( 0.7 )

Currency translation adjustments — — — — — — — ( 0.1 ) 10.9 ( 0.4 ) 10.4

Unrealized gains on Fortitude available-for-sale securities — — — — — — — 5.5 — 11.3 16.8

Defined benefit plans, net — — — — — — — ( 2.0 ) — ( 3.7 ) ( 5.7 )

Deferred consideration for Carlyle Holdings Units, net of tax (see Note 10) — — — ( 252.8 ) — — — — — — ( 252.8 )

Balance at December 31, 2019 117.8 — $ — $ 703.8 $ — $ — $ — $ ( 85.2 ) $ 333.5 $ 2,017.5 $ 2,969.6

Reclassification resulting from Conversion - Partners' Capital ( 117.8 ) 117.8 ( 703.8 ) 1.2 702.6 — — — — —

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(Dollars and shares in millions)

Common Shares Common Stock Additional Paid-in-Capital Retained Earnings (Deficit) Accumulated

Common Shares Common

Stock Additional Paid-in Capital Retained Earnings (Deficit) Accumulated

Comprehensive

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Shares issued for equity-based awards 5.0 — — — — — —

Shares issued for carry distributed in shares program 0.1 — 4.8 — — — 4.8

Shares issued for performance allocations 0.1 — 4.8 — — — 4.8

Contributions — — — — — 216.2 216.2

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Balance at December 31, 2021 355.4 $ 3.6 $ 2,717.6 $ 2,805.3 $ ( 247.5 ) $ 427.2 $ 5,706.2

Shares repurchased ( 5.0 ) $ — $ — $ ( 185.6 ) $ — $ — $ ( 185.6 )

Equity-based compensation — — 162.5 — — — 162.5

Shares issued for equity-based awards 6.2 — — — — — —

Shares issued for performance allocations 0.9 — 38.9 — — — 38.9

Shares issued related to the acquisition of CBAM 4.2 — 194.5 — — — 194.5

Shares issued related to the acquisition of Abingworth 0.6 — 25.0 — — — 25.0

Contributions — — — — — 391.2 391.2

Distributions — — — ( 443.6 ) — ( 216.8 ) ( 660.4 )

Net income — — — 1,225.0 — 59.7 1,284.7

Deconsolidation of a Consolidated Entity — — — — — ( 47.6 ) ( 47.6 )

Non-controlling interests related to the acquisition of Abingworth — — — — — 4.2 4.2

Currency translation adjustments — — — — ( 90.2 ) ( 17.6 ) ( 107.8 )

Defined benefit plans, net — — — — 15.5 — 15.5

Balance at December 31, 2022 362.3 $ 3.6 $ 3,138.5 $ 3,401.1 $ ( 322.2 ) $ 600.3 $ 6,821.3

See accompanying notes.

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Equity-based compensation 154.0 163.1 105.0

Non-cash performance allocations and incentive fees ( 1,670.7 ) ( 631.8 ) ( 271.8 )

Non-cash performance allocations and incentive fees, net 393.6 ( 1,670.7 ) ( 631.8 )

Non-cash principal investment (income) loss ( 553.4 ) ( 618.5 ) 534.4

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Change in deferred revenue 4.5 35.1 16.2

Net cash provided by (used in) operating activities 1,791.0 ( 169.2 ) 358.6

Net cash (used in) provided by operating activities ( 379.3 ) 1,791.0 ( 169.2 )

Cash flows from investing activities

Purchases of corporate treasury investments ( 69.6 ) — —

Proceeds from corporate treasury investments 50.0 — —

Purchases of fixed assets, net ( 40.6 ) ( 41.4 ) ( 61.2 )

Purchase of Abingworth, net of cash acquired ( 150.2 ) — —

Purchase of CBAM intangibles and investments ( 618.4 ) — —

Proceeds from sale of MRE, net of cash sold — 5.9 —

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Repayments under credit facilities — ( 70.0 ) ( 329.9 )

Issuance of 3.500 % senior notes due 2029, net of financing costs

Issuance of 4.625 % subordinated notes due 2061, net of financing costs

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— ( 259.9 ) —

Repayment of term loan — — ( 25.0 )

Proceeds from debt obligations, net of financing costs 111.7 20.5 41.0

Payments on debt obligations ( 232.5 ) ( 3.8 ) ( 45.2 )

Proceeds from CLO borrowings, net of financing costs 73.2 111.7 20.5

Payments on CLO borrowings ( 16.7 ) ( 232.5 ) ( 3.8 )

Net borrowings on loans payable of Consolidated Funds 624.2 182.9 704.1

Payments of contingent consideration — ( 0.1 ) ( 0.3 )

Redemption of Preferred Units — — ( 405.4 )

Dividends to common stockholders ( 443.6 ) ( 355.8 ) ( 351.3 )

Distributions to preferred unitholders — — ( 17.7 )

Distributions to non-controlling interest holders in Carlyle Holdings — — ( 313.3 )

Payment of deferred consideration for Carlyle Holdings units ( 68.8 ) ( 68.8 ) ( 68.8 )

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Distributions to non-controlling interest holders ( 216.8 ) ( 94.6 ) ( 77.8 )

Common shares issued for carry distributed in shares program 4.8 — —

Common shares issued for performance allocations 38.9 4.8 —

Common shares repurchased ( 185.6 ) ( 161.8 ) ( 26.4 )

1 unchanged sentence

Change in due to/from affiliates and other receivables of Consolidated Funds — — ( 0.8 )

Net cash (used in) provided by financing activities ( 242.5 ) 370.3 ( 149.2 )

Net cash provided by (used in) financing activities 114.8 ( 242.5 ) 370.3

Effect of foreign exchange rate changes ( 20.3 ) ( 30.8 ) 21.7

Increase in cash, cash equivalents and restricted cash 1,485.5 161.6 189.7

(Decrease) increase in cash, cash equivalents and restricted cash ( 1,113.6 ) 1,485.5 161.6

Cash, cash equivalents and restricted cash, beginning of period 2,475.1 989.6 828.0

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Supplemental non-cash disclosures

Issuance of common shares related to the acquisition of CBAM and Abingworth $ 219.5 $ — $ —

Tax effects from the conversion to a Corporation recorded in equity $ — $ — $ 40.1

Net increase in partners’ capital and accumulated other comprehensive income related to reallocation of ownership interest in Carlyle Holdings $ — $ — $ 60.2

Net decrease to partners’ capital from deferred consideration for Carlyle Holdings units, net of tax (see Note 10) $ — $ — $ ( 252.8 )

Net asset impact of deconsolidation of Consolidated Funds $ ( 47.7 ) $ ( 34.4 ) $ ( 253.6 )

Non-cash distributions to non-controlling interest holders $ — $ — $ ( 22.4 )

Tax effect from acquisition of Carlyle Holdings partnership units:

Deferred tax asset $ — $ — $ 6.4

Tax receivable agreement liability $ — $ — $ 5.4

Total partners’ capital $ — $ — $ 1.0

Reconciliation of cash, cash equivalents and restricted cash, end of period:

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Organization and Basis of Presentation

Effective on January 1, 2020, The Carlyle Group L.P.

converted from a Delaware limited partnership to a Delaware corporation named The Carlyle Group Inc.

(the “Conversion”).

As a result of the Conversion, each common unit was converted into a share of common stock.

Under the laws of its incorporation, The Carlyle Group Inc.

is deemed to be the same entity as The Carlyle Group L.P.

(the “Partnership”).

Unless the context suggests otherwise, references to “Carlyle” or the “Company,” refer to (i) The Carlyle Group Inc.

and its consolidated subsidiaries following the Conversion and (ii) The Carlyle Group L.P.

and its consolidated subsidiaries prior to the Conversion.

Prior to the Conversion, the Company recorded significant non-controlling interests in Carlyle Holdings I L.P., Carlyle Holdings II L.P.

and Carlyle Holdings III L.P.

(collectively, “Carlyle Holdings”), the holdings partnerships through which the Company and senior Carlyle professionals and other holders of Carlyle Holdings partnership units owned their respective interests in the business.

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 the Conversion, the consolidated balance sheet and statement of operations of The Carlyle Group Inc.

does not reflect any non-controlling interests in Carlyle Holdings, and net income (loss) attributable to Carlyle Holdings refers to the net income (loss) of The Carlyle Group Inc.

and its consolidated subsidiaries, net of non-controlling interests in consolidated entities.

Additionally, at the time of the exchange, certain senior Carlyle professionals and certain of the other former limited partners of Carlyle Holdings who became holders of shares of common stock in connection with the Conversion were generally required to grant an irrevocable proxy to Carlyle Group Management L.L.C., which is wholly owned by the Company’s founders and other senior Carlyle professionals.

As a result, the Company was a “controlled company” and qualified for exceptions from certain corporate governance and other requirements of the rules of The Nasdaq Global Select Market (“Nasdaq”).

As of August 5, 2021, the Company no longer qualifies as a “controlled company” under the Nasdaq rules.

Carlyle is one of the world’s largest global investment firms that deploys private capital across its business through three reportable segments:

Global Private Equity, Global Credit and Global Investment Solutions (see Note 17).

In the Global Private Equity segment, Carlyle advises buyout, growth, real estate and natural resources funds.

The primary areas of focus for the Global Credit segment are liquid credit, illiquid credit, real assets credit, and other credit such as insurance solutions and loan syndication and capital markets.

The Global Investment Solutions segment provides investment opportunities and resources for investors and clients through fund of funds, secondary purchases of existing portfolios, and managed co-investment programs.

In the Global Private Equity segment, Carlyle advises buyout, growth, real estate, infrastructure and natural resources funds.

The primary areas of focus for the Global Credit segment are liquid credit, illiquid credit, real assets credit, and other credit such as insurance solutions, loan syndication and capital markets.

The Global Investment Solutions segment provides investment opportunities and resources for investors and clients through secondary purchases and financing of existing portfolios, managed co-investment programs and primary fund investments.

Carlyle typically serves as the general partner, investment manager or collateral manager, making day-to-day investment decisions concerning the assets of these products.

On April 1, 2021, the Company sold 100 % of its interest in Metropolitan Real Estate (“MRE”) and recorded a $ 5 million gain on the sale, which is included in other non-operating expenses (income) on the consolidated statements of operations.

This amount is excluded from the Company’s segment reporting.

The Company retained its existing investments in and commitments to the MRE funds, as well as its interest in the net accrued performance allocations in existing funds.

On August 31, 2021, the Company sold 100 % of its interest in its 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 Company recorded a loss on the sale and related transaction costs of $ 4.7 million, which is included in other non-operating expenses (income) on the consolidated statements of operations, as well as a foreign currency translation loss of $ 14.7 million related to amounts previously recorded in accumulated other comprehensive income, which is primarily included in general, administrative and other expenses on the consolidated statements of operations.

These amounts are excluded from the Company’s segment reporting.

Basis of Presentation

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The economic ownership interests of the other investors in the Consolidated Funds are reflected as non-controlling interests in consolidated entities in the accompanying consolidated financial statements (see Note 3).

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Recent Transactions

During the year ended December 31, 2022, the Company completed several transactions as outlined below.

Acquisition of Abingworth LLP (See Note 4)

On August 1, 2022, the Company acquired Abingworth LLP (“Abingworth”), a life sciences investment firm for a base purchase price of $ 186.2 million, of which $ 25.0 million was settled in newly-issued shares of the Company’s common stock.

Consideration for Abingworth also includes up to $ 130 million in future incentive payments on the achievement of certain performance targets.

The acquisition includes the rights to 15 % of performance allocations generated by Abingworth’s two most recent active investment funds, Abingworth Bioventures 8 LP and Abingworth Clinical Co-Development Fund 2 LP.

Fortitude Capital Raise and Strategic Advisory Services Agreement (See Note 6)

In March 2022, the Company raised $ 2.0 billion in third-party equity capital from certain investors in Carlyle FRL and T&D and committed $ 100 million from the Company to Carlyle FRL for additional equity capital in Fortitude.

In May 2022, Fortitude called $ 1.1 billion of the capital raise, with the remaining capital expected to be called in 2023.

In connection with the capital raise and subsequent funding, the Company’s indirect ownership of Fortitude decreased from 19.9 % to 13.5 % and is expected to further decrease to 10.5 % upon funding the remainder of the capital raise.

On April 1, 2022, the Company entered into a new strategic advisory services agreement with certain subsidiaries of Fortitude through a newly-formed investment advisor, Carlyle Insurance Solutions Management L.L.C.

Under the agreement, CISM provides Fortitude with certain services, including business development and growth, transaction origination and execution, and capital management services in exchange for a recurring management fee based on Fortitude’s general account assets, which adjusts within an agreed range based on Fortitude’s overall profitability.

Acquisition of CLO Management Contracts from CBAM Partners LLC (See Note 4)

On March 21, 2022, the Company acquired the management contracts related to a portfolio of assets primarily comprised of U.S.

and European CLOs as well as other assets across private credit from CBAM Partners LLC (“CBAM”) for a purchase price of $ 812.9 million, of which $ 194.5 million was settled in newly-issued shares of the Company’s common stock.

In connection with the acquisition of the CLO management contracts, the Company acquired CLO senior and subordinated notes of $ 175.9 million, a portion of which is financed through term loans and other financing arrangements.

Acquisition of iStar Triple Net Lease Portfolio (See Note 6)

In March 2022, Carlyle Net Leasing Income, L.P., a Carlyle-affiliated investment fund, acquired a diversified portfolio of triple net leases for an enterprise value of $ 3 billion, which was funded using $ 2 billion in debt and $ 1 billion in equity.

The investment fund is not consolidated by the Company and the debt is non-recourse to the Company.

Carlyle, as general partner of the investment fund, contributed $ 200 million as a minority interest balance sheet investment, which is included in the Company’s Global Credit principal equity method investments.

Summary of Significant Accounting Policies

12 unchanged sentences

As of December 31, 2022, assets and liabilities of the consolidated VIEs reflected in the consolidated balance sheets were $ 7.2 billion and $ 6.2 billion, respectively.

As of December 31, 2021, assets and liabilities of the consolidated VIEs reflected in the consolidated balance sheets were $ 6.9 billion and $ 6.6 billion, respectively.

Except to the extent of the consolidated assets of the VIEs, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company.

Substantially all of the Company’s Consolidated Funds are CLOs, which are VIEs that issue loans payable that are backed by diversified collateral asset portfolios consisting primarily of loans or structured debt.

The Company’s Consolidated Funds are primarily CLOs, which are VIEs that issue loans payable that are backed by diversified collateral asset portfolios consisting primarily of loans or structured debt.

In exchange for managing the collateral for the CLOs, the Company earns investment management fees, including in some cases subordinated management fees and contingent incentive fees.

In cases where the Company consolidates the CLOs (primarily because of a retained interest that is significant to the CLO), those management fees have been eliminated as intercompany transactions.

In cases where the Company consolidates the CLOs (primarily because of a retained interest that is significant to the CLO), those management fees and contingent incentive fees have been eliminated as intercompany transactions.

As of December 31, 2022, the Company held $ 110.6 million of investments in these CLOs which represents its maximum risk of loss.

1 unchanged sentence

Investors in the CLOs have no recourse against the Company for any losses sustained in the CLO structure.

The Company’s Consolidated Funds also include certain investment funds in our Global Private Equity segment that are actively fundraising and are accounted for as consolidated VIEs due to the Company providing financing to bridge investment purchases.

As of December 31, 2022, the Company held $ 374.6 million of notes receivable, including accrued interest, from these investment funds which represents its maximum risk of loss.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Entities that do not qualify as VIEs are generally assessed for consolidation as voting interest entities.

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Investments in Unconsolidated Variable Interest Entities

The Company holds variable interests in certain VIEs that are not consolidated because the Company is not the primary beneficiary, including its investments in certain CLOs, certain AlpInvest vehicles and strategic investment in NGP Management Company, L.L.C.

The Company holds variable interests in certain VIEs that are not consolidated because the Company is not the primary beneficiary, including its investments in certain CLOs and certain AlpInvest vehicles, as well as its strategic investment in NGP Management Company, L.L.C.

(“NGP Management” and, together with its affiliates, “NGP”).

Refer to Note 6 for information on the strategic investment in NGP.

The Company’s involvement with such entities is in the form of direct or indirect equity

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

interests and fee arrangements.

The Company’s involvement with such entities is in the form of direct or indirect equity interests and fee arrangements.

The maximum exposure to loss represents the loss of assets recognized by the Company relating to its variable interests in these unconsolidated entities.

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All of the investments held and notes issued by the Consolidated Funds are presented at their estimated fair values in the Company’s consolidated balance sheets.

Interest and other income of the Consolidated Funds as well as interest expense and other expenses of the Consolidated Funds are included in the Company’s consolidated statements of operations.

Interest and other income of the Consolidated Funds, interest expense and other expenses of the Consolidated Funds, and net investment gains (losses) of Consolidated Funds are included in the Company’s consolidated statements of operations.

Use of Estimates

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It also requires management to exercise judgment in the process of applying the Company’s accounting policies.

Assumptions and estimates regarding the valuation of investments and their resulting impact on performance allocations involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements and the resulting impact on performance allocations and incentive fees.

Assumptions and estimates regarding the valuation of investments and their resulting impact on performance allocations and incentive fees involve a higher degree of judgment and complexity and these assumptions and estimates may be significant to the consolidated financial statements and the resulting impact on performance allocations and incentive fees.

Actual results could differ from these estimates and such differences could be material.

1 unchanged sentence

The Company accounts for business combinations using the acquisition method of accounting, under which the purchase price of the acquisition is allocated to the assets acquired and liabilities assumed using the fair values determined by management as of the acquisition date.

Contingent consideration obligations that are elements of consideration transferred are recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business.

Contingent consideration obligations that are elements of consideration transferred are

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

recognized as of the acquisition date as part of the fair value transferred in exchange for the acquired business.

Acquisition-related costs incurred in connection with a business combination are expensed as incurred.

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(i) identify the contract(s) with a customer, which includes assessing the collectability of the consideration to which it will be entitled in exchange for the goods or services transferred to the customer, (ii) identify the performance obligations in the contract, (iii) determine the transaction price, (iv) allocate the transaction price to the performance obligations in the contract, and (v) recognize revenue when the entity satisfies a performance obligation.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The Company accounts for performance allocations that represent a performance-based capital allocation from fund limited partners to the Company (commonly known as “carried interest”, which comprises substantially all of the Company’s previously reported performance fee revenues) as earnings from financial assets within the scope of ASC 323, Investments – Equity Method and Joint Ventures , and therefore are not in the scope of ASC 606.

The Company accounts for performance allocations that represent a performance-based capital allocation from fund limited partners to the Company (commonly known as “carried interest”), as earnings from financial assets within the scope of ASC 323, Investments – Equity Method and Joint Ventures , and therefore are not in the scope of ASC 606.

In accordance with ASC 323, the Company records equity method income (losses) as a component of investment income based on the change in its proportionate claim on net assets of the investment fund, including performance allocations, assuming the investment fund was liquidated as of each reporting date pursuant to each fund’s governing agreements.

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Fund Management Fees

The Company provides management services to funds in which it holds a general partner interest or has a management agreement.

The Company provides management services to funds in which it holds a general partner interest or to funds or certain portfolio companies with which it has an investment advisory or investment management agreement.

The Company considers the performance obligations in its contracts with its funds to be the promise to provide (or to arrange for third parties to provide) investment management services related to the management, policies and operations of the funds.

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The Company will receive management fees during a specified period of time, which is generally ten years from the initial closing date, or, in some instances, from the final closing date, but such termination date may be earlier in certain limited circumstances or later if extended for successive one year periods, typically up to a maximum of two years .

Depending upon the contracted terms of investment advisory or investment management and related agreements, these fees are generally called semi-annually in advance and are recognized as earned over the subsequent six month period.

Depending upon the contracted terms of investment advisory or investment management and related agreements, these fees are generally called semi-annually in advance and are recognized as earned

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

over the subsequent six month period.

For certain longer-dated carry funds and certain other closed-end funds, management fees are called quarterly over the life of the funds.

Within the Global Credit segment, for CLOs and other structured products, management fees generally range from 0.4 % to 0.5 % based on the total par amount of assets or the aggregate principal amount of the notes in the CLO and are due quarterly based on the terms and recognized over the respective period.

Within the Global Credit segment, for CLOs and other structured products, management fees generally range from 0.4 % to 0.5 % based on the total par amount of assets or the aggregate principal amount of the notes in the CLO and are due quarterly in arrears based on the terms and recognized over the respective period.

Management fees for the CLOs and other structured products are governed by indentures and collateral management agreements.

The Company will receive management fees for the CLOs until redemption of the securities issued by the CLOs, which is generally five to ten years after issuance.

Management fees for the business development companies are due quarterly in arrears at annual rates that range from 1.25 % of invested capital to 1.5 % of gross assets, excluding cash and cash equivalents.

Management fees for the Interval Fund are due

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

monthly in arrears at the annual rate of 1.0 % of the month-end value of the Interval Fund’s net assets.

Management fees for the business development companies are due quarterly in arrears at annual rates that range from 1.0 % of capital under management to 1.5 % of gross assets, excluding cash and cash equivalents.

Management fees for the Interval Fund are due monthly in arrears at the annual rate of 1.0 % of the month-end value of the Interval Fund’s net assets.

Carlyle Aviation Partners’ funds have varying management fee arrangements depending on the strategy of the particular fund.

Management fees for the Company’s carry fund vehicles in the Global Investment Solutions segment generally range from 0.25 % to 1.0 % on the vehicle’s capital commitments during the commitment fee period of the relevant fund.

Following the expiration of the commitment fee period of such funds, the management fees generally range from 0.25 % to 1.0 % on (i) the net invested capital;

strategic advisory services agreement with Fortitude, the Company earns a recurring management fee based on Fortitude’s

general account assets, which adjusts within an agreed range based on Fortitude’s overall profitability and which is due

quarterly in arrears.

Management fees for the Company’s carry fund vehicles in the Global Investment Solutions segment generally range from 0.25 % to 1.0 % of the vehicle’s capital commitments during the commitment fee period of the relevant fund.

Following the expiration of the commitment fee period, the management fees generally range from 0.25 % to 1.0 % on (i) the net invested capital;

(ii) the lower of cost or net asset value of the capital invested, or (iii) the net asset value for unrealized investments.

Management fees for the Global Investment Solutions carry fund vehicles are generally due quarterly and recognized over the related quarter.

Management fees for the Global Investment Solutions carry fund vehicles are generally due quarterly in advance and recognized over the related quarter.

As of December 31, 2022 and 2021, management fee receivables, net of allowances for credit losses, were $ 236.9 million and $ 164.5 million, respectively, and are included in due from affiliates and other receivables, net, in the consolidated balance sheets.

1 unchanged sentence

The Company also recognizes underwriting fees from the Company’s loan syndication and capital markets business, Carlyle Global Capital Markets.

Fund management fees includes transaction and portfolio advisory fees and capital markets fees of $ 90.7 million, $ 50.8 million and $ 49.1 million for the years ended December 31, 2021, 2020 and 2019, respectively, net of any offsets as defined in the respective partnership agreements.

Fund management fees includes transaction and portfolio advisory fees, as well as capital markets fees, of $ 106.2 million, $ 90.7 million and $ 50.8 million for the years ended December 31, 2022, 2021 and 2020, respectively, net of any offsets as defined in the respective partnership agreements.

Fund management fees exclude the reimbursement of any partnership expenses paid by the Company on behalf of the Carlyle funds pursuant to the limited partnership agreements, including amounts related to the pursuit of actual, proposed, or unconsummated investments, professional fees, expenses associated with the acquisition, holding and disposition of investments, and other fund administrative expenses.

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In connection with management contracts from certain of its Global Credit funds, the Company is also entitled to receive performance-based incentive fees when the return on assets under management exceeds certain benchmark returns or other performance targets.

In such arrangements, incentive fees are recognized when the performance benchmark has been achieved.

In such arrangements, incentive fees are recognized when the performance benchmark has been

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Incentive fees are variable consideration because they are contingent upon the investment vehicle achieving stipulated investment return hurdles.

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Investment income (loss) represents the unrealized and realized gains and losses resulting from the Company’s equity method investments, including any associated general partner performance allocations, and other principal investments, including CLOs.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

General partner performance allocations consist of the allocation of profits from certain of the funds to which the Company is entitled (commonly known as carried interest).

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Interest income earned by the Company is included in interest and other income in the accompanying consolidated statements of operations.

Interest income of the Consolidated Funds was $ 231.3 million, $ 211.6 million and $ 192.3 million for the years ended December 31, 2021, 2020 and 2019, respectively, and is included in interest and other income of Consolidated Funds in the accompanying consolidated statements of operations.

Interest income of the Consolidated Funds was $ 282.3 million, $ 231.3 million and

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

$ 211.6 million for the years ended December 31, 2022, 2021 and 2020, respectively, and is included in interest and other income of Consolidated Funds in the accompanying consolidated statements of operations.

Credit Losses

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• Transaction fee receivables,

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

• Portfolio fee receivables, and

21 unchanged sentences

As of December 31, 2022 and 2021, the Company had recorded a liability of $ 3.6 billion and $ 4.1 billion, respectively, related to the portion of accrued performance allocations and incentive fees due to employees and advisors, respectively, which was included in accrued compensation and benefits in the accompanying consolidated balance sheets.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

In October 2021, the Company commenced a program under which, at the Company’s discretion, up to 20 % of the realized performance allocation related compensation over a threshold amount may be distributed in fully vested newly issued shares of the Company’s common stock.

These shares are accounted for as performance allocations and incentive fee related compensation and do not result in incremental compensation expense.

Shares issued under the program are accounted for as performance allocations and incentive fee related compensation and do not result in incremental compensation expense.

The Company has determined to pause the issuance of shares pursuant to this program.

The Carlyle Group Inc.

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federal, state, local and foreign taxing authorities.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

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.

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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 accounts for the valuation allowance assessment on its deferred tax assets and without regard to the Company’s potential future corporate alternative minimum tax (“CAMT”) status.

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.

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

Net income (loss) attributable to the common shares excludes net income (loss) and dividends attributable to any participating securities under the two-class method of ASC 260.

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.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Fair Value of Financial Instruments

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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

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

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.

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:

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Investments in Operating Companies and Real Assets – The fair values of private investments in operating companies and real assets are generally determined by reference to the income approach (including the discounted cash flow method and the income capitalization method) and the market approach (including the comparable publicly traded company method and the comparable transaction method).

Valuations under these approaches are typically derived by reference to investment-specific inputs (such as projected cash flows, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and net operating income) combined with market-based inputs (such as discount rates, EBITDA multiples and capitalization rates).

Valuations under these approaches are typically derived by

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

reference to investment-specific inputs (such as projected cash flows, earnings before interest, taxes, depreciation and amortization (“EBITDA”), and net operating income) combined with market-based inputs (such as discount rates, EBITDA multiples and capitalization rates).

In many cases the investment-specific inputs are unaudited at the time received.

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Such adjustments are made to align the investment to observable industry inputs for differences in size, profitability, projected growth rates, geography, capital structure, and other factors as applicable.

The adjustments are then reviewed with each subsequent valuation to assess how the investment has evolved relative

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

to the observable inputs.

The adjustments are then reviewed with each subsequent valuation to assess how the investment has evolved relative to the observable inputs.

Additionally, the investment may be subject to certain specific risks and/or development milestones which are also taken into account in the valuation assessment.

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The valuations are then reviewed and approved by the respective fund valuation subcommittees, which include the respective fund head(s), segment head, chief financial officer and chief accounting officer, as well as members of the valuation group.

The valuation group compiles the aggregate results and significant matters and presents them for review and approval by the global valuation committee, which includes the Company’s co-chairmen of the board, chairman emeritus, chief executive officer, chief risk officer, chief financial officer, chief accounting officer, and the business segment heads, and observed by the chief compliance officer, the director of internal audit, the Company’s audit committee and others.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

chief compliance officer, the director of internal audit, the Company’s audit committee and others.

Additionally, each quarter a sample of valuations are reviewed by external valuation firms.

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Investments, at Fair Value

Investments include (i) the Company’s ownership interests (typically general partner interests) in the Funds, (ii) strategic investments made by the Company (both of which are accounted for as equity method investments), (iii) the investments held by the Consolidated Funds (which are presented at fair value in the Company’s consolidated financial

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

statements), and (iv) certain credit-oriented investments, including investments in the CLOs and the preferred securities of TCG BDC, Inc.

(the “BDC Preferred Shares”) (which are accounted for as trading securities).

Investments include (i) the Company’s ownership interests (typically general partner interests) in the Funds, (ii) strategic investments in Fortitude and NGP made by the Company (both of which are accounted for as equity method investments), (iii) the investments held by the Consolidated Funds (which are presented at fair value in the Company’s consolidated financial statements), and (iv) certain credit-oriented investments, including investments in the CLOs and the preferred securities of Carlyle Secured Lending, Inc.

(“CSL,” formerly known as “TCG BDC, Inc.,” the preferred securities of which are referred to as the “BDC Preferred Shares”) (which are accounted for as trading securities).

Upon the sale of a security or other investment, the realized net gain or loss is computed on a weighted average cost basis, with the exception of the investments held by the CLOs, which compute the realized net gain or loss on a first in, first out basis.

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Restricted cash primarily represents cash held by the Company’s foreign subsidiaries due to certain government regulatory capital requirements as well as certain amounts held on behalf of Carlyle funds.

Corporate Treasury Investments

Corporate treasury 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.

These investments are accounted for as trading securities in which changes in the

fair value of each investment are recorded through investment income (loss).

Any interest earned on debt investments is

recorded through interest and other income.

Derivative Instruments

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As it relates to certain European CLOs sponsored by the Company, securities sold under agreements to repurchase (“repurchase agreements”) are accounted for as collateralized financing transactions.

The Company provides securities to counterparties to collateralize amounts borrowed under repurchase agreements on terms that permit the counterparties to repledge or resell the securities to others.

The Company provides securities to counterparties to collateralize amounts borrowed under repurchase agreements on terms that permit the counterparties to

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

repledge or resell the securities to others.

As of December 31, 2022, $ 284.4 million of securities were transferred to counterparties under repurchase agreements and are included within investments in the consolidated balance sheets.

Cash received under repurchase agreements is recognized as a liability within debt obligations in the consolidated balance sheets.

Interest expense is recognized on an effective yield basis and is included within interest expense in the consolidated statements of operations.

See Note 8 for additional information.

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The Company accounts for its leases in accordance with ASU 2016-2, Leases (Topic 842) , and recognizes a lease liability and right-of-use asset in the consolidated balance sheet for contracts that it determines are leases or contain a lease.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Company’s leases primarily consist of operating leases for office space in various countries around the world.

The Company’s leases primarily consist of operating leases for office space in various countries around the world.

The Company also has operating leases for office equipment and vehicles, which are not significant.

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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.

Finite-lived intangible assets are amortized over their estimated useful lives, which range from four to eight years , and are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

Goodwill represents the excess of cost over the identifiable net assets of businesses acquired and is recorded in the functional currency of the acquired entity.

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Deferred revenue represents management fees and other revenue received prior to the balance sheet date, which has not yet been earned.

The increase in the deferred revenue balance for the year ended December 31, 2021 was primarily driven by cash payments received in advance of the Company satisfying its performance obligations, partially offset by revenues that were included in the deferred revenue balance at the beginning of the period.

Deferred revenue also includes transaction and portfolio advisory fees received by the Company that are

required to offset fund management fees pursuant to the related fund agreements.

As of December 31, 2022 and 2021, the balance was primarily comprised of transaction and portfolio advisory fees required to offset fund management fees.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Accumulated Other Comprehensive Income (Loss)

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Total $ ( 322.2 ) $ ( 247.5 )

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Pursuant to the Conversion and the limited partners of the Carlyle Holdings partnerships exchange of all Carlyle Holdings partnership units for an equivalent number of shares of common stock of The Carlyle Group Inc., the accumulated other comprehensive loss previously attributable to non-controlling interests in Carlyle Holdings is included in the Company’s accumulated other comprehensive loss in the consolidated balance sheet and consolidated statements of changes in equity.

Foreign Currency Translation

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ASUs not listed below were assessed and either determined to be not applicable or expected to have minimal impact on the Company’s consolidated financial statements.

Recently Issued Accounting Standards Adopted as of January 1, 2021

In December 2019, the FASB issued ASU 2019-12, Income Taxes (Topic 740):

Simplifying the Accounting for Income Taxes .

ASU 2019-12, among other changes, (i) removes certain exceptions to the general principles in Topic 740, (ii) provides a policy election to not allocate consolidated income taxes when a member of a consolidated tax return is not subject to income tax and (iii) provides guidance to evaluate whether a step-up in tax basis of goodwill relates to a business combination in which book goodwill was recognized or a separate transaction.

The guidance was adopted by the Company on January 1, 2021 and the impact was not material.

In March 2020, the FASB issued ASU 2020-04, Reference Rate Reform (Topic 848):

Facilitation of the Effects of Reference Rate Reform on Financial Reporting .

The amendments in this update provide optional expedients and exceptions for applying generally accepted accounting principles to contracts, hedging relationships, and other transactions affected by reference rate reform if certain criteria are met.

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In January 2021, the FASB issued ASU No.

2021-01, Reference Rate Reform (Topic 848) , to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

2021-01, Reference Rate Reform (Topic 848):

Scope , to clarify that certain optional expedients and exceptions in Topic 848 for contract modifications and hedge accounting apply to derivative instruments that use an interest rate for margining, discounting, or contract price alignment that is modified as a result of reference rate reform.

An entity may elect to adopt the amendments in ASU 2020-04 and ASU 2021-01 at any time after March 12, 2020 but no later than December 31, 2022.

The expedients and exceptions provided by the amendments do not apply to contract modifications and hedging relationships entered into or evaluated after December 31, 2022, except for hedging transactions as of December 31, 2022, that an entity has elected certain optional expedients for and that are retained through the end of the hedging relationship.

The Company is currently evaluating the impact of this guidance on its consolidated financial statements.

The Company does not expect this guidance to impact its consolidated financial statements.

In October 2021, the FASB issued ASU 2021-08, Business Combinations (Topic 805):

Accounting for Contract Assets and Contract Liabilities from Contracts with Customers , which modifies ASC 805 to require an acquiring entity in a business combination to recognize and measure contract assets and contract liabilities acquired in a business combination in accordance with Topic 606.

At the acquisition date, an acquirer should account for the related revenue contracts in accordance with Topic 606 as if it had originated the contracts.

Under current GAAP, an acquirer generally recognizes such items at fair value on the acquisition date.

This guidance is effective for annual and interim periods beginning after December 15, 2022, with early adoption permitted.

The Company adopted this guidance on July 1, 2022, and applied the guidance prospectively to business combinations that occurred after this date.

The adoption of this guidance did not have a material effect on the Company’s consolidated financial statements.

In June 2022, the FASB issued ASU 2022-03, Fair Value Measurement (Topic 820):

Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions .

The amendments in this update clarify the guidance in Topic 820 when measuring the fair value of an equity security subject to contractual sale restrictions and introduce new disclosure requirements related to such equity securities.

The amendments are effective for fiscal years beginning after December 15, 2023, with early adoption permitted.

The Company does not expect the impact of this guidance to be material to its consolidated financial statements.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Abingworth Acquisition

On August 1, 2022, the Company acquired 100 % of the equity interests in Abingworth, a London-based life sciences investment firm.

Abingworth has $ 2 billion in assets under management and is included in the Company’s Global Private Equity business segment.

The purchase price consisted of $ 161.2 million in cash and approximately 0.6 million newly issued, fully vested common shares ($ 25.0 million based on the value of the shares at closing).

The transaction also included an earn-out of up to $ 130.0 million that is payable upon the achievement of certain revenue and earnings performance targets during 2023 through 2028, which will be accounted for as compensation expense.

The Company consolidated the financial position and results of operations of Abingworth effective August 1, 2022 and accounted for this transaction as a business combination.

In connection with this transaction, the Company incurred approximately $ 7.7 million of acquisition costs that are reflected in general, administrative and other expenses in the consolidated statements of operations for the year ended December 31, 2022.

The acquisition-date fair value of the consideration transferred and the estimated fair values of the assets acquired and liabilities assumed at the acquisition date are as follows (Dollars in millions):

Acquisition-date fair value of consideration transferred

Shares of common stock (see Note 15) 25.0

Total consideration transferred $ 186.2

Estimated fair value of assets acquired and liabilities assumed

Cash and receivables $ 11.0

Investments in Abingworth funds 3.8

Lease right-of-use assets, fixed assets, and other assets, net 3.7

Deferred tax assets 6.4

Finite-lived intangible assets 88.0

Goodwill 91.1

Lease liabilities ( 2.7 )

Accrued expenses, accrued compensation and benefits, and other liabilities ( 10.9 )

Non-controlling interests in Abingworth entities (1)

Total $ 186.2

(1) Represents assets held by Abingworth entities which are consolidated VIEs.

These assets are attributable to employees and are therefore reflected as non-controlling interests, and include investments in funds in which the Company did not acquire direct economic interests, which are presented as investments in Abingworth funds above.

The finite-lived intangible assets, which related to management contracts and customer relationships, are amortized using the straight-line method over a period ranging from five to eight years .

The amount of revenue and earnings of Abingworth since the acquisition date and the pro forma impact to the Company’s consolidated financial results for the year ended December 31, 2021 as if the acquisition had been consummated as of January 1, 2021, was not significant.

Acquisition of CLO Management Contracts from CBAM Partners LLC

On March 21, 2022, the Company acquired the management contracts related to a portfolio of assets primarily comprised of U.S.

and European CLOs as well as other assets across private credit from CBAM Partners LLC (“CBAM”).

The purchase price of $ 812.9 million consisted of a combination of $ 618.4 million in cash, including approximately $ 3.4 million of acquisition costs incurred by the Company in connection with the transaction, and approximately 4.2 million newly issued, fully vested common shares ($ 194.5 million based on the value of the shares at closing).

In connection with the acquisition of the CLO management contracts, the Company acquired CLO senior and subordinated notes of $ 175.9 million.

A portion of these CLO investments is financed through term loans and other financing arrangements with financial institutions, which 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 (see Note 8).

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

This transaction was accounted for as an asset acquisition and the acquired contractual rights of $ 794.3 million are finite-lived intangible assets.

The finite-lived intangible assets are amortized using the straight-line method over a period of primarily seven years , which reflects the Company’s assumptions regarding resets of the CLOs and extension of the CLO management contracts.

The acquisition-date fair value of the consideration transferred and the allocation of cost to the assets acquired and liabilities assumed at the acquisition date are as follows (Dollars in millions):

Acquisition-date fair value of consideration transferred

Shares of common stock (see Note 15) 194.5

Total consideration transferred $ 812.9

Allocation of cost to assets acquired and liabilities assumed

Acquired contractual rights $ 794.3

Acquired CLO senior and subordinated notes 175.9

Assumed CLO borrowings outstanding (see Note 8) ( 157.3 )

Total cost of assets acquired, net of liabilities assumed $ 812.9

Fair Value Measurement

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the above fair value hierarchy levels as of December 31, 2021:

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the fair value hierarchy levels disclosed in Note 3 as of December 31, 2022:

Level I Level II Level III Total

2 unchanged sentences

Equity securities (1)

$ — $ — $ 430.6 $ 430.6

Bonds — — 594.9 594.9

1 unchanged sentence

— — 6,378.4 6,378.4

Investments in CLOs and other (1)

Investments in CLOs — — 526.1 526.1

Other investments (2)

1.6 41.6 79.4 122.6

Corporate treasury investments:

Commercial paper and other — 20.0 — 20.0

— 20.0 — 20.0

Foreign currency forward contracts — 2.2 — 2.2

6 unchanged sentences

$ — $ 3.2 $ 5,491.6 $ 5,494.8

(1) The Level III balance excludes a corporate investment in equity securities which the Company has elected to account for under the measurement alternative for equity securities without readily determinable fair values pursuant to ASC 321, Investments – Equity Securities .

In December 2021, the Company remeasured this investment to a fair value of $ 54.9 million due to an observable price change.

(1) This balance includes $ 377.4 million related to investments that have been bridged by the Company to investment funds that are actively fundraising and are accounted for as consolidated VIEs as of December 31, 2022.

(2) The Level III balance excludes $ 58.2 million related to two corporate investments in equity securities which the Company has elected to account for under the measurement alternative for equity securities without readily determinable fair values pursuant to ASC 321, Investments – Equity Securities .

As a non-recurring fair value measurement, the fair value of these equity securities is excluded from the tabular Level III rollforward disclosures.

(3) Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days, of which $ 516.0 million relates to investments of Consolidated Funds.

(3) Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interest held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

(4) Total liabilities balance excludes a $ 79.0 million revolving credit balance related to loans payable of consolidated funds.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

(4) Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interest held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

(5) Total liabilities balance excludes $ 235.6 million of senior notes measured at amortized cost and a $ 178.0 million revolving credit balance, both related to loans payable of Consolidated Funds.

The following table summarizes the Company’s assets and liabilities measured at fair value on a recurring basis by the above fair value hierarchy levels as of December 31, 2021:

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— — 6,515.5 6,515.5

Investments in CLOs and other — — 570.8 570.8

Investments in CLOs — — 361.1 361.1

Other investments (1)

1.5 45.6 78.7 125.8

Foreign currency forward contracts — 1.4 — 1.4

5 unchanged sentences

Foreign currency forward contracts — 0.7 — 0.7

Total $ — $ 0.4 $ 5,563.0 $ 5,563.4

(1) Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days.

$ — $ 0.7 $ 5,811.0 $ 5,811.7

In December 2021, the Company remeasured this investment to a fair value of $ 54.9 million due to an observable price change.

As a non-recurring fair value measurement, the fair value of these equity securities is excluded from the tabular Level III rollforward disclosures.

(2) Balance represents Fund Investments that the Company reports based on the most recent available information which typically has a lag of up to 90 days, of which $ 145.5 million relates to investments of Consolidated Funds.

(3) Senior and subordinated notes issued by CLO vehicles are valued based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

(4) Total liabilities balance excludes a $ 79.0 million revolving credit balance related to loans payable of Consolidated Funds.

The Carlyle Group Inc.

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Financial Assets Year Ended December 31, 2022

Investments of Consolidated Funds Investments in CLOs and other Total

securities Bonds Loans

Investments of Consolidated Funds Investments in CLOs Total

securities Bonds Loans Other investments

Balance, beginning of period $ 17.9 $ 599.5 $ 5,898.1 $ 361.1 $ 78.7 $ 6,955.3

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Financial Assets Year Ended December 31, 2021

Investments of Consolidated Funds Investments in CLOs and other Total

securities Bonds Loans

Investments of Consolidated Funds Investments in CLOs Total

securities Bonds Loans Other investments

Balance, beginning of period $ 9.4 $ 550.4 $ 5,497.1 $ 489.4 $ 81.4 $ 6,627.7

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Changes in unrealized gains (losses) included in other comprehensive income related to financial assets still held at the reporting date $ ( 0.4 ) $ ( 13.9 ) $ ( 155.7 ) $ ( 2.1 ) $ — $ ( 172.1 )

(1) As a result of the consolidation of two CLOs during the year ended December 31, 2021, the investments that the Company held in these CLOs are now eliminated in consolidation and no longer included in investments in CLOs and other.

As a result of the deconsolidation of one CLO during the year ended December 31, 2021, the investment that the Company held in that CLO is no longer eliminated in consolidation and is now included in investments in CLOs and other.

(2) As a result of the deconsolidation of one CLO during the year ended December 31, 2020, the investment that the Company held in this fund is no longer eliminated in consolidation and is now included in investments in CLOs and other.

Additionally, a renewable energy fund was deconsolidated during the year ended December 31, 2020.

(1) As a result of the deconsolidation of one fund during the year ended December 31, 2022.

(2) As a result of the consolidation of two CLOs during the year ended December 31, 2021, the investments that the Company held in these CLOs are now eliminated in consolidation and no longer included in investments in CLOs.

The Carlyle Group Inc.

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Equity securities $ 3.1 Consensus Pricing Indicative Quotes ($ per share) 0.00 - 4.73 ( 0.18 )

363.5 Discounted Cash Flow Discount Rates 10 % - 10 % ( 10 %)

Terminal Growth Rate 0 % - 7 % (( 5 %))

Comparable Multiple EBITDA Multiple 12.7 x - 12.7 x ( 12.7 x)

TCF Multiple 23.8 x - 23.8 x ( 23.8 x)

64.0 Other (1)

Bonds 594.9 Consensus Pricing Indicative Quotes (% of Par) 46 - 105 ( 88 )

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11.8 Discounted Cash Flow Discount Rates 0 % - 9 % ( 1 %)

67.0 Market Yield Analysis Market Yields 3 % - 8 % ( 5 %)

248.7 Discounted Cash Flow Discount Rates 7 % - 10 % ( 8 %)

37.4 Consensus Pricing Indicative Quotes (% of Par) 97 % - 98 % ( 97 %)

11.1 Consensus Pricing Indicative Quotes (% of Par) 91 % - 91 % ( 91 %)

0.5 Other (1)

Investments in CLOs and other

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Recovery Rates 50 % - 70 % ( 60 %)

Other investments:

BDC preferred shares 76.9 Market Yield Analysis Market Yields 11 % - 11 % ( 11 %)

8 unchanged sentences

Total $ 5,491.6

(1) Fair value approximates transaction price that was in close proximity to the reporting date.

(2) Senior and subordinated notes issued by CLO vehicles are classified based on the more observable fair value of the CLO financial assets, less (i) the fair value of any beneficial interests held by the Company and (ii) the carrying value of any beneficial interests that represent compensation for services.

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Loans 5,766.0 Consensus Pricing Indicative Quotes (% of Par) 35 - 106 ( 98 )

65.1 Discounted Cash Flow Discount Rates 4 % - 8 % ( 5 %)

67.0 Market Yield Analysis Market Yields 3 % - 8 % ( 5 %)

Investments in CLOs and other

Senior secured notes 437.0 Discounted Cash Flow with Consensus Pricing Discount Margins (Basis Points) 85 - 1,725 ( 227 )

Senior secured notes 289.7 Discounted Cash Flow with Consensus Pricing Indicative Quotes (% of Par) 86 - 101 ( 99 )

Discount Margins (Basis Points) 50 - 1,330 ( 245 )

Default Rates 1 % - 2 % ( 1 %)

Recovery Rates 50 % - 70 % ( 60 %)

Indicative Quotes (% of Par) 71 - 100 ( 98 )

Subordinated notes and preferred shares 52.5 Discounted Cash Flow with Consensus Pricing Discount Rates 16 % - 30 % ( 23 %)

Subordinated notes and preferred shares 71.5 Discounted Cash Flow with Consensus Pricing Indicative Quotes (% of Par) 46 - 97 ( 63 )

Discount Rates 14 % - 22 % ( 19 %)

Default Rates 1 % - 2 % ( 1 %)

Recovery Rates 50 % - 70 % ( 60 %)

Indicative Quotes (% of Par) 31 - 90 ( 46 )

BDC preferred shares 72.5 Market Yield Analysis Market Yields 7 % - 7 % ( 7 %)

Aviation subordinated notes 6.1 Discounted Cash Flow Discount Rates 18 % - 18 % ( 18 %)

Loans 14.1 Consensus Pricing Indicative Quotes (% of Par) 98 - 100 ( 100 )

Total $ 6,955.3

1 unchanged sentence

Senior secured notes $ 5,561.1 Other (1)

Subordinated notes and preferred shares 204.1 Discounted Cash Flow with Consensus Pricing Discount Rates 16 % - 30 % ( 22 %)

Subordinated notes and preferred shares 249.9 Discounted Cash Flow with Consensus Pricing Indicative Quotes (% of Par) 40 - 97 ( 61 )

Discount Rates 14 % - 22 % ( 19 %)

Default Rates 1 % - 2 % ( 1 %)

Recovery Rates 50 % - 70 % ( 60 %)

Indicative Quotes (% of Par) 30 - 91 ( 50 )

Total $ 5,811.0

3 unchanged sentences

The significant unobservable inputs used in the fair value measurement of the Company’s investments in CLOs and other investments include indicative quotes, discount margins, discount rates, default rates, and recovery rates.

Significant decreases in recovery rates or indicative quotes in isolation would result in a significantly lower fair value measurement.

Significant increases in discount margins, discount rates or default rates in isolation would result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s loans payable of Consolidated Funds are discount rates, default rates, recovery rates and indicative quotes.

Significant increases in discount rates

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

or default rates in isolation would result in a significantly lower fair value measurement.

decreases in recovery rates or indicative quotes in isolation would result in a significantly lower fair value measurement.

Significant increases in discount margins, discount rates or default rates in isolation would result in a significantly lower fair value measurement.

The significant unobservable inputs used in the fair value measurement of the Company’s loans payable of Consolidated Funds are discount rates, default rates, recovery rates and indicative quotes.

Significant increases in discount rates or default rates in isolation would result in a significantly lower fair value measurement.

Significant decreases in recovery rates or indicative quotes in isolation would result in a significantly lower fair value measurement.

4 unchanged sentences

Principal equity method investments, excluding performance allocations 2,922.0 2,128.6

Principal investments in CLOs and other 570.4 601.5

Principal investments in CLOs 526.1 361.1

Other investments 202.1 209.3

Total investments $ 10,767.9 $ 10,832.0

10 unchanged sentences

As a result, amounts presented may not include the impact of economic activity in the current quarter.

Approximately 25 % and 41 % of accrued performance allocations at December 31, 2021 and 2020, respectively, are related to Carlyle Partners VI, L.P., one of the Company’s Global Private Equity funds.

Approximately 13 % of accrued performance allocations at December 31, 2022 are related to Carlyle Partners VI, L.P., one of the Company’s Global Private Equity funds.

Approximately 25 % of accrued performance allocations at December 31, 2021 are related to Carlyle Partners VI, L.P., one of the Company’s Global Private Equity funds.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Accrued performance allocations are shown gross of the Company’s accrued performance allocations and incentive fee-related compensation (see Note 9), and accrued giveback obligations, which are separately presented in the consolidated balance sheets.

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Total $ ( 40.9 ) $ ( 30.2 )

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Principal Equity-Method Investments, Excluding Performance Allocations

The Company’s equity method investments (excluding performance allocations) include its fund investments in Global Private Equity, Global Credit, and Global Investment Solutions typically as general partner interests, and its strategic investments in Fortitude (included within Global Credit) and NGP (included within Global Private Equity), which are not consolidated.

The Company’s principal equity method investments (excluding performance allocations) include its fund investments in Global Private Equity, Global Credit, and Global Investment Solutions typically as general partner interests, and its strategic investments in Fortitude and iStar through Carlyle-affiliated funds (included within Global Credit) and NGP (included within Global Private Equity), which are not consolidated.

Principal investments are related to the following segments:

2 unchanged sentences

Global Private Equity (1)

$ 1,853.5 $ 1,231.2

Global Credit (2)

1 unchanged sentence

Total $ 2,922.0 $ 2,128.6

(1) The balance includes $ 1,015.7 million and $ 436.9 million as of December 31, 2022 and 2021, respectively, related to the Company’s equity method investments in NGP.

(2) As of December 31, 2022, the balance includes $ 646.0 million and $ 176.6 million related to the Company’s strategic investments in Fortitude and iStar, respectively, through Carlyle-affiliated investment funds.

As of December 31, 2021, the balance includes $ 715.7 million related to the Company’s strategic investment in Fortitude.

The summarized financial information of the Company’s equity method investees from the date of initial investment is as follows (Dollars in millions):

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Net income (loss) $ 11,621.2 $ 27,100.3 $ 6,839.9 $ 1,210.2 $ 2,470.1 $ 89.0 $ 1,852.1 $ 9,176.0 $ 3,125.0 $ 14,683.5 $ 38,746.4 $ 10,053.9

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Private Equity Global Credit Global Investment Solutions Aggregate Totals

13 unchanged sentences

The Company paid $ 381 million in cash at closing of the Minority Transaction (the “Initial Purchase Price”) and expects to pay up to $ 95 million in additional deferred consideration following December 31, 2023.

In May 2020, the Initial Purchase Price was adjusted upward by $ 99.5 million in accordance with the 2018 MIPA as Fortitude Holdings chose not to

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

distribute a planned non-pro rata dividend to AIG prior to May 13, 2020.

In May 2020, the Initial Purchase Price was adjusted upward by $ 99.5 million in accordance with the 2018 MIPA as Fortitude Holdings chose not to distribute a planned non-pro rata dividend to AIG prior to May 13, 2020.

The Company paid $ 79.6 million of such adjustment in May 2020 and will pay the remaining $ 19.9 million following December 31, 2023.

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For periods subsequent to the Restructuring, references to “Fortitude” refer to FGH Parent.

Additionally, AIG agreed to a post-closing purchase price adjustment in the event of certain adverse reserve developments in the Fortitude Re property and casualty insurance business.

Effective June 30, 2021, Fortitude Re and AIG entered into an agreement resulting in the termination of any obligations of AIG to Fortitude Re related to such adverse reserve development.

The Company has a strategic asset management relationship with Fortitude Holdings pursuant to which Fortitude Holdings committed to allocate assets in asset management strategies and vehicles of the Company and its affiliates.

As of December 31, 2021, Fortitude Holdings and AIG have committed approximately $ 7.0 billion of capital to-date to various Carlyle strategies.

Prior to the Control Transaction, the Company’s investment was accounted for under the equity method of accounting by recognizing its pro rata share of Fortitude’s U.S.

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

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

GAAP financial statements.

Modified coinsurance is subject to the general accounting principles for hedging, specifically the guidance originally issued as Derivatives Implementation Group Issue No.

Embedded Derivatives:

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, the Company’s investment in Fortitude 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 the Company contributed its existing 19.9 % stake in Fortitude to Carlyle FRL, the Company’s investment became an ownership interest in the fund.

Accordingly, the Company began accounting for its investment under the equity method based on its net asset value in Carlyle FRL, which is an investment company that accounts for its investment in Fortitude at fair value.

The contribution of the Company’s 19.9 % interest to Carlyle FRL resulted in a loss in principal investment income (loss) of $ 620.7 million during the year ended December 31, 2020.

As of December 31, 2021, the Company’s investment in Carlyle FRL was $ 715.7 million, relative to its cost of $ 465.5 million.

Following the contribution, the Company no longer records its pro rata share of the U.S.

GAAP earnings of Fortitude.

Refer to Note 3 in the Company’s Quarterly Report on Form 10-Q for the period ended June 30, 2020 and the Company’s Annual Report on Form 10-K for the year ended December 31, 2019 for summarized financial information of Fortitude as of and for the periods then ended.

In March 2022, the Company raised $ 2.0 billion in third-party equity capital from certain investors in Carlyle FRL and T&D, and committed $ 100 million from the Company for additional equity capital in Fortitude.

In May 2022, Fortitude called $ 1.1 billion of the capital raise, with the remaining capital expected to be called in 2023.

In connection with the capital raise and subsequent funding, the Company’s indirect ownership of Fortitude decreased from 19.9 % to 13.5 %.

As a result of the dilution, the Company recorded a reduction in the carrying value of its equity method investment and corresponding loss of $ 176.9 million.

At the time the remaining capital is called by Fortitude, the Company’s indirect ownership is expected to further decrease to 10.5 %, and the Company expects to record an additional reduction in the carrying value of its equity method investment and corresponding loss of approximately $ 121 million, based on the carrying value as of December 31, 2022, subject to change based on the timing of the dilution and changes in the carrying value of the investment.

As of December 31, 2022, the carrying value of the Company’s investment in Carlyle FRL, which is an investment company that accounts for its investment in Fortitude at fair value, was $ 646.0 million, relative to its cost of $ 389.4 million.

The Company has a strategic asset management relationship with Fortitude pursuant to which Fortitude committed to allocate assets in asset management strategies and vehicles of the Company and its affiliates.

As of December 31, 2022, Fortitude Holdings and certain Fortitude reinsurance counterparties have committed approximately $ 9.2 billion of capital to-date to various Carlyle strategies.

On April 1, 2022, the Company entered into a new strategic advisory services agreement with

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

certain subsidiaries of Fortitude through a newly-formed investment advisor, Carlyle Insurance Solutions Management L.L.C.

Under the agreement, CISM provides Fortitude with certain services, including business development and growth,

transaction origination and execution, and capital management services in exchange for a recurring management fee based on

Fortitude’s general account assets, which adjusts within an agreed range based on Fortitude’s overall profitability.

investors who participated in the March 2022 capital raise also made a minority investment in CISM, which is reflected as a

non-controlling interest in consolidated entities in the condensed consolidated financial statements.

Strategic Investment in NGP

1 unchanged sentence

(“NGP Management”), the general partners of certain carry funds advised by NGP, and principal investments in certain NGP funds.

The Company accounts for its investments in NGP under the equity method of accounting, and includes these investments in the Global Private Equity segment.

The Company does not control NGP and accounts for its investments in NGP under the equity method of accounting, and includes these investments in the Global Private Equity segment.

These interests entitle the Company to an allocation of income equal to 55.0 % of the management fee-related revenues of NGP Management which serves as the investment advisor to certain NGP funds as well as 47.5 % of the performance allocations received by certain current and future NGP fund general partners.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The Company’s investments in NGP as of December 31, 2022 and 2021 are as follows:

18 unchanged sentences

Net investment income from NGP Management $ 58.1 $ 59.2 $ 58.6

The difference between the Company’s remaining carrying value of its investment and its share of the underlying net assets of the investee was $ 1.4 million, $ 4.2 million and $ 8.5 million as of December 31, 2021, 2020 and 2019, respectively;

these differences are amortized over a period of 10 years from the initial investment date.

The Company assesses the remaining carrying value of its equity method investment for impairment whenever events or circumstances indicate that the carrying value may not be recoverable, and considers factors including, but not limited to, expected cash flows from its interest in future management fees and NGP’s ability to raise new funds.

The difference between the Company’s remaining carrying value of its investment and its share of the underlying net assets of the investee was $ 1.4 million and $ 4.2 million as of December 31, 2021 and 2020, respectively;

these differences were amortized over a period of 10 years from the initial investment date and were fully amortized as of December 31, 2022.

The Company assesses the remaining carrying value of its equity method investment for impairment whenever events or

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

circumstances indicate that the carrying value may not be recoverable, and considers factors including, but not limited to, expected cash flows from its interest in future management fees and NGP’s ability to raise new funds.

Investment in the General Partners of NGP Carry Funds.

6 unchanged sentences

The Company recognized net investment earnings (losses) related to principal investment income in its consolidated statements of operations of $ 44.5 million, $ 20.1 million and $( 12.0 ) million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Principal Investments in CLOs and Other Investments

Principal investments in CLOs and other investments as of December 31, 2021 and 2020 primarily consisted of $ 570.4 million and $ 601.5 million, respectively, of investments in CLO senior and subordinated notes.

A portion of these investments is collateral to CLO term loans (see Note 6).

As of December 31, 2021, principal investments in CLOs and other investments also includes the Company’s investment in the BDC Preferred Shares at fair value of $ 72.5 million (see Note 9).

Principal investments in CLOs as of December 31, 2022 and 2021were $ 526.1 million and $ 361.1 million, respectively, and consisted of investments in CLO senior and subordinated notes.

In connection with the acquisition of the CBAM CLO management contracts in March 2022, the Company acquired investments in CLO senior and subordinated notes of $ 175.9 million (see Note 4).

A portion of the Company’s principal investments in CLOs is collateral to CLO term loans (see Note 8).

As of December 31, 2022 and December 31, 2021, other investments includes the Company’s investment in the BDC Preferred Shares at fair value of $ 76.9 million and $ 72.5 million, respectively (see Note 11).

Investment Income (Loss)

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( 54.0 ) 78.4 2.8

( 49.0 ) 80.3 3.1

Total $ 1,898.0 $ 6,721.9 $ 1,095.2

1 unchanged sentence

The performance allocations included in revenues are derived from the following segments:

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Year Ended December 31,

6 unchanged sentences

Approximately 19 %, or $ 245.8 million, of performance allocations for the year ended December 31, 2022 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

• Carlyle Partners VI, L.P.

• Carlyle Realty Partners VIII, L.P.

(Global Private Equity segment) – $ 260.8 million,

• Carlyle Partners VII, L.P.

• Carlyle Europe Partners V, L.P.

(Global Private Equity segment) – $ 259.3 million,

• Carlyle Power Partners II, L.P.

(Global Private Equity segment) – $ 203.3 million,

• Carlyle Europe Technology Partners IV, L.P.

(Global Private Equity segment) – $ 179.8 million,

• Carlyle Partners VI, L.P.

(Global Private Equity segment) – $( 436.9 ) million

Approximately 34 %, or $ 2,045.3 million, of performance allocations for the year ended December 31, 2021 are related to the following funds along with total revenue recognized (total revenue includes performance allocations, fund management fees, and principal investment income):

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

• Carlyle Partners VI, L.P.

(Global Private Equity segment) – $ 1,453.1 million,

• Carlyle Asia Partners IV, L.P.

• Carlyle Partners VII, L.P.

(Global Private Equity segment) – $ 988.4 million

2 unchanged sentences

(Global Private Equity segment) – $ 1,251.5 million,

• Carlyle Realty Partners V, L.P.

(Global Private Equity segment) – $ 158.5 million,

• AlpInvest Co- & Sec Investments 2006-2008 (Global Investment Solutions segment) – $ 83.5 million, and

• Carlyle Europe Partners IV, L.P.

• Carlyle Asia Partners IV, L.P.

(Global Private Equity segment) – $ 374.1 million

Additionally, $( 110.9 ) million in total revenue was recognized from the Company’s investment in NGP XI for the year ended December 31, 2019.

Carlyle’s principal investment income (loss) from its equity-method investments consists of:

Carlyle’s investment income (loss) from its principal equity method investments consists of:

Year Ended December 31,

5 unchanged sentences

Total $ 619.5 $ 557.0 $ ( 543.8 )

(1) The year ended December 31, 2020 includes a loss of $ 620.7 million related to the contribution of the Company’s investment in Fortitude Holdings to Carlyle FRL, as discussed above in “Strategic Investment in Fortitude”.

Principal investment loss for Global Credit for the year ended December 31, 2022 includes an investment loss of $ 176.9 million on the Company’s equity method investment in Carlyle FRL related to the dilution of the Company’s indirect ownership in Fortitude from 19.9 % to 13.5 %.

Principal investment loss for Global Credit for the year ended December 31, 2020 includes a loss of $ 620.7 million related to the contribution of the Company’s investment in Fortitude Holdings to Carlyle FRL, as discussed above in “Strategic Investment in Fortitude.”

Investments of Consolidated Funds

The Company consolidates the financial positions and results of operations of certain CLOs in which it is the primary beneficiary.

During the year ended December 31, 2021, the Company consolidated two CLOs for which the Company is the primary beneficiary.

The Company also deconsolidated one CLO during the year ended December 31, 2021.

During the year ended December 31, 2022, the Company did not form any new CLOs for which the Company is the primary beneficiary.

Investments in Consolidated Funds as of December 31, 2022 also include $ 377.4 million related to

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

investments that have been bridged by the Company to investment funds that are actively fundraising and are accounted for as consolidated VIEs.

During the fourth quarter of 2022, the Company purchased $ 61.0 million of certain third-party interests in a Global Investment Solutions fund.

The fund is consolidated in the Company’s consolidated financial statements as of December 31, 2022.

The following table presents a summary of the investments held by the Consolidated Funds.

6 unchanged sentences

United States

Equity securities:

Infrastructure $ 413.4 — 6.00 % — %

Other 13.9 — 0.20 % — %

Total equity securities (cost of $ 436.0 and $ — at December 31, 2022 and 2021, respectively)

427.3 — 6.20 % — %

Partnership and LLC interests:

4 unchanged sentences

Aerospace & Defense $ 10.9 $ 79.8 0.16 % 1.20 %

Collateralized Debt Obligation 11.6 — 0.17 % — %

Environmental Industries 0.9 0.9 0.01 % 0.01 %

1 unchanged sentence

Other — 25.0 — % 0.38 %

Total loans (cost of $ 157.1 and $ — at

December 31, 2021 and 2020, respectively)

Total loans (cost of $ 26.4 and $ 157.1 at December 31, 2022 and 2021, respectively)

23.4 157.0 0.34 % 2.36 %

24 unchanged sentences

$ 6,894.4 $ 6,661.0 100.00 % 100.00 %

There were no individual investments with a fair value greater than five percent of the Company’s total assets for any period presented.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

There were no individual investments with a fair value greater than five percent of the Company’s total assets for any period presented.

Interest and Other Income of Consolidated Funds

27 unchanged sentences

Acquired contractual rights $ 920.2 $ 48.0

Acquired trademarks — 1.2

Accumulated amortization ( 126.3 ) ( 26.4 )

2 unchanged sentences

Intangible assets, net $ 897.8 $ 34.9

Acquired contractual rights and trademarks associated with the Company’s Global Investment Solutions segment became fully amortized during the year ended December 31, 2021 and were removed from the accompanying balance sheets as of December 31, 2021.

As of both December 31, 2021 and 2020, goodwill consisted of $ 5.5 million, associated with the Company’s Global Credit segment in connection with the Company’s acquisition of Carlyle Aviation Partners.

The remaining

As of December 31, 2022, goodwill included $ 91.1 million related to the Company’s Global Private Equity segment in connection with the acquisition of Abingworth.

The remaining balance as of December 31, 2022 and 2021 consisted of $ 5.5

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

$ 7.8 million and $ 11.3 million, respectively, of goodwill is associated with the Company’s Global Investment Solutions segment and decreased in 2021 due to the sale of our interest in Metropolitan Real Estate (“MRE”).

million and $ 5.5 million associated with the Company’s Global Credit segment, respectively, and $ 7.3 million and $ 7.8 million associated with the Company’s Global Investment Solutions segment, respectively.

As discussed in Note 3, the Company reviews its intangible assets for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable.

During the year ended December 31, 2022, the Company recorded an impairment charge of $ 4.0 million on certain acquired contractual rights related to Carlyle Aviation Partners as a result of impaired income streams from aircraft under lease in Russia.

No impairment losses were recorded during the years ended December 31, 2021 and 2020.

1 unchanged sentence

The following table summarizes the expected amortization expense for 2023 through 2027 and thereafter (Dollars in millions):

Thereafter 148.1

The Company borrows and enters into credit agreements for its general operating and investment purposes.

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425.0 422.0 425.0 421.6

3.500 % Senior Notes Due 9/19/2029

425.0 421.6 425.0 421.1

4.625 % Subordinated Notes Due 5/15/2061

2 unchanged sentences

Senior Credit Facility

As of December 31, 2021, the senior credit facility included $ 775.0 million in a revolving credit facility.

The revolving credit facility is scheduled to mature on February 11, 2024, and principal amounts outstanding under the 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 %, or (b) at LIBOR plus an applicable margin not to exceed 1.50 % (at December 31, 2021, the interest rate was 1.35 %).

As of December 31, 2022, the senior credit facility, which was amended on April 29, 2022, included $ 1.0 billion in a revolving credit facility.

The revolving credit facility is scheduled to mature on April 29, 2027, and principal amounts outstanding under the 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 %, or (b) at SOFR (or similar benchmark for non-U.S.

dollar borrowings) plus a 0.10 % adjustment and an applicable margin not to exceed 1.50 % (at December 31, 2022, the interest rate was 5.46 %).

Prior to the April 2022 amendment, the size of the revolving credit facility was $ 775.0 million, which was scheduled to mature February 11, 2024, and accrued interest either (a) at an alternate base rate plus an applicable margin not to exceed 0.50 %, or (b) at LIBOR plus an applicable margin not to exceed 1.50 %.

There was no amount outstanding under the revolving credit facility as of December 31, 2022.

The Company made no borrowings under the revolving credit facility during the years ended December 31, 2022 and 2021.

During the year ended December 31, 2020, the Company borrowed and repaid in full $ 250.0 million under the revolving credit facility.

Interest expense under the senior credit facility was no t significant for the years ended December 31, 2021, 2020 and 2019.

Prior to its amendment and restatement on February 11, 2019, the senior credit facility included $ 25.0 million in a term loan which was repaid in connection with the amendment and restatement.

During the year ended December 31, 2020, the Company borrowed and repaid in full

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

$ 250.0 million under the revolving credit facility.

Interest expense under the senior credit facility was no t significant for the years ended December 31, 2022, 2021 and 2020.

Global Credit Revolving Credit Facility

2 unchanged sentences

Principal amounts outstanding under the facility accrue interest, at the option of the borrowers, either (a) at an alternate base rate plus an applicable margin not to exceed 1.00 %, or (b) at the Eurocurrency rate plus an applicable margin, not to exceed 2.00 %.

During the year ended December 31, 2022, the Company made no borrowings under the credit facility and there was no balance outstanding as of December 31, 2022.

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.

During the year ended December 31, 2020, the Company borrowed $ 44.1 million and repaid $ 79.9 million under the credit facility, and there was no borrowing outstanding under this facility as of December 31, 2020.

During the year ended December 31, 2019, the company borrowed $ 92.7 million and repaid $ 56.9 million under the credit facility, and there was $ 35.8 million outstanding under this facility as of December 31, 2019.

Interest expense was no t significant for the years ended December 31, 2022, 2021 and 2020.

3 unchanged sentences

Formation Date Borrowing

December 31, 2021 Borrowing Outstanding December 31, 2020 Maturity Date (1) Interest Rate as of December 31, 2021

December 31, 2022

Borrowing Outstanding December 31, 2021

Maturity Date (1)

Interest Rate as of December 31, 2022

February 28, 2017 $ 38.7 $ 51.3 November 17, 2031 2.40 % (2)

April 19, 2017 — 22.7 April 22, 2031 N/A (3) (14)

June 28, 2017 — 22.9 July 22, 2031 N/A (4) (14)

August 2, 2017 — 22.7 July 23, 2029 N/A (5) (14)

August 2, 2017 — 21.3 August 3, 2022 N/A (6)

August 14, 2017 — 22.4 August 15, 2030 N/A (7) (14)

November 30, 2017 — 22.7 January 16, 2030 N/A (8) (14) (15)

December 6, 2017 — 19.0 October 16, 2030 N/A (9) (14) (15)

December 7, 2017 — 20.8 January 19, 2029 N/A (10) (14) (15)

January 30, 2018 — 19.2 January 23, 2030 N/A (11) (14) (15)

March 1, 2018 — 15.2 January 16, 2031 N/A (12) (14) (15)

June 29, 2017 54.8 — July 20, 2030 5.89 % (4),(6)

December 6, 2017 43.8 — January 15, 2031 5.45 % (5),(6)

March 15, 2019 1.8 1.9 March 15, 2032 10.15 % (3)

8 unchanged sentences

June 10, 2021 1.3 1.4 November 17, 2031 4.65 % (3)

July 15, 2021 15.0 — July 15, 2034 3.67 % (3),(6)

July 20, 2021 20.0 — July 20, 2031 3.73 % (3),(6)

August 4, 2021 16.2 17.2 August 15, 2032 3.54 % (3)

October 27, 2021 23.3 24.8 October 15, 2035 3.78 % (3)

November 5, 2021 13.8 — January 14, 2034 3.46 % (3),(6)

January 6, 2022 20.1 — February 15, 2035 4.18 % (3)

February 22, 2022 20.1 — November 10, 2035 4.24 % (3)

July 13, 2022 16.9 — January 13, 2035 3.61 % (3)

October 25, 2022 17.5 — October 25, 2035 5.62 % (3)

$ 421.7 $ 222.6

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

(1) Maturity date is earlier of date indicated or the date that the CLO is dissolved.

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incurs interest at EURIBOR plus applicable margins as defined in the agreement.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

(3) Incurs interest at LIBOR plus 1.932 %.

This term loan was fully repaid in April 2021.

(4) Incurs interest at LIBOR plus 1.923 %.

This term loan was fully repaid in April 2021.

(5) Incurs interest at LIBOR plus 1.808 %.

This term loan was fully repaid in February 2021.

(6) Original borrowing of € 17.4 million;

incurs interest at EURIBOR plus 1.75 % and has full recourse to the Company.This term loan was fully repaid in March 2021.

(7) Incurs interest at LIBOR plus 1.848 %.

This term loan was fully repaid in March 2021.

(8) Incurs interest at LIBOR plus 1.731 %.

This term loan was fully repaid in April 2021.

(9) Incurs interest at LIBOR plus 1.647 %.

This term loan was fully repaid in May 2021.

(10) Incurs interest at LIBOR plus 1.365 %.

This term loan was fully repaid in May 2021.

(3) Incurs interest at the average effective interest rate of each class of purchased securities plus 0.50 % spread percentage.

(4) Incurs interest at LIBOR plus 1.65 %.

This term loan was fully repaid in April 2021.

(5) Incurs interest at LIBOR plus 1.37 %.

This term loan was fully repaid in May 2021.

(13) Incurs interest at the average effective interest rate of each class of purchased securities plus 0.50 % spread percentage.

(14) Term loan issued under master credit agreement.

(15) CLO Indentures for the respective CLO borrowings entered on November 30, 2017 and after provide for an alternative rate framework determined at the Company’s discretion upon a trigger event of LIBOR.

(6) The respective CLO assets were purchased in connection with the asset acquisition from CBAM in March 2022 (see Note 4).

The formation date listed is the original formation date of the related CLO.

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.

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In January 2017, the Company entered into a master credit agreement with a financial institution under which the financial institution provided term loans to the Company for the purchase of eligible interests in CLOs.

Term loans issued under this master credit agreement are secured by the Company’s investment in the respective CLO as well as any senior management fee and subordinated management fee payable by each CLO.

Term loans issued under this master credit agreement were secured by the Company’s investment in the respective CLO as well as any senior management fee and subordinated management fee payable by each CLO.

Term loans bear interest at LIBOR plus a weighted average spread over LIBOR on the CLO notes and an applicable margin, which is due quarterly.

CLO Indentures for the respective CLO borrowings entered on November 30, 2017 and after provide for an alternative rate framework determined at the Company’s discretion upon a trigger event of LIBOR.

This agreement terminated in January 2020 and as of December 31, 2021, all outstanding CLO term loans under this agreement have been fully repaid.

This agreement terminated in January 2020.

All outstanding CLO term loans under this agreement were fully repaid in 2021.

The Company assumed liabilities under master credit agreements previously entered into by CBAM under which a financial institution provided term loans to CBAM for the purchase of eligible interests in CLOs (see Note 4).

Term loans issued under these master credit agreements are secured by the Company’s investment in the respective CLO as well as any senior management fee and subordinated management fee payable by each CLO.

Term loans bear interest at LIBOR plus a weighted average spread over LIBOR on the CLO notes, which is due quarterly.

As of December 31, 2022, term loans under these agreements had $ 98.6 million outstanding.

The master credit agreements mature in July 2030 and January 2031, respectively.

CLO Repurchase Agreements

On February 5, 2019, the Company entered into a master credit facility agreement (the “CLO Financing Facility”) to finance a portion of the risk retention investments in certain European CLOs managed by the Company.

The maximum facility amount is € 100.0 million, but may be expanded on such terms agreed upon by the Company and the counterparty subject to the terms and conditions of the CLO Financing Facility.

Each transaction entered into under the CLO Financing Facility will bear interest at a rate based on the weighted average effective interest rate of each class of securities that have been sold plus a spread to be agreed upon by the parties.

As of December 31, 2021, € 150.4 million was outstanding under the CLO Financing Facility.

On February 5, 2019, the Company entered into a master credit facility agreement (the “Carlyle CLO Financing Facility”) to finance a portion of the risk retention investments in certain European CLOs managed by the Company.

The initial maximum facility amount is € 100.0 million, which has been, and may further be, expanded on such terms agreed upon by the Company and the counterparty subject to the terms and conditions of the Carlyle CLO Financing Facility.

Each transaction entered into under the Carlyle CLO Financing Facility will bear interest at a rate based on the weighted average effective interest rate of each class of securities that have been sold plus a spread to be agreed upon by the parties.

As of December 31, 2022, € 203.6 million ($ 218.0 million) was outstanding under the Carlyle CLO Financing Facility.

The Company assumed liabilities under a master credit facility agreement previously entered into by CBAM (the “CBAM CLO Financing Facility,” together with the Carlyle CLO Financing Facility, the “CLO Financing Facilities”) to finance a portion of the risk retention investments in certain European CLOs managed by CBAM (see Note 4).

The maximum facility amount is € 100.0 million, but may be expanded on such terms agreed upon by the Company and the counterparty subject to the terms and conditions of the CBAM CLO Financing Facility.

Each transaction entered into under the CBAM CLO Financing Facility will bear interest at a rate based on the weighted average effective interest rate of each class of securities that

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

have been sold plus a spread to be agreed upon by the parties.

As of December 31, 2022, € 61.9 million ($ 66.3 million) was outstanding under the CBAM CLO Financing Facility.

Each transaction entered into under the CLO Financing Facility provides for payment netting and, in the case of a default or similar event with respect to the counterparty to the CLO Financing Facility, provides for netting across transactions.

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provided, however, that in the case of certain defaults, the Company may only be able to terminate and offset solely with respect to the transaction affected by the default.

During the term of a

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

transaction entered into under the CLO Financing Facility, the Company will deliver cash or additional securities acceptable to the counterparty if the securities sold are in default.

During the term of a transaction entered into under the CLO Financing Facility, the Company will deliver cash or additional securities acceptable to the counterparty if the securities sold are in default.

Upon termination of a transaction, the Company will repurchase the previously sold securities from the counterparty at a previously determined repurchase price.

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(2) Issued in January 2013 at 99.966 % of par.

In November 2021, the Company completed the redemption of these notes, as discussed below.

(3) Issued $ 400.0 million in aggregate principal at 99.583 % of par in March 2013.

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(5) Issued in September 2019 at 99.841 % of par.

(6) In November 2021, the Company completed the redemption of $ 250.0 million in aggregate principal amount of the 3.875 % senior notes, as discussed below.

Interest expense for the year ended December 31, 2021 excludes amounts related to the early extinguishment of debt.

The issuers may redeem the senior notes, in whole at any time or in part from time to time, at a price equal to the greater of (i) 100 % of the principal amount of the notes being redeemed and (ii) the sum of the present values of the remaining scheduled payments of principal and interest on any notes being redeemed discounted to the redemption date on a semiannual basis at the Treasury Rate plus 40 basis points ( 30 basis points in the case of the 3.875 % and 3.500 % senior notes), plus in each case accrued and unpaid interest on the principal amounts being redeemed.

In November 2021, the Company redeemed the 3.875 % senior notes in whole, and recognized $ 10.1 million of costs in interest expense upon early extinguishment of the debt.

In November 2021, the Company redeemed the remaining aggregate principal amount of $ 250.0 million in 3.875 % Senior Notes at the make-whole redemption price as set forth in the notes, and recognized $ 10.1 million of costs in interest expense upon early extinguishment of the debt.

The Carlyle Group Inc.

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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.

As of December 31, 2021, the fair value of the Subordinated Notes was $ 506.0 million.

As of December 31, 2022 and December 31, 2021, the fair value of the Subordinated Notes was $ 323.8 million and $ 506.0 million, respectively.

Fair value is based on active market quotes and the notes are classified as Level I within the fair value hierarchy.

For the year ended December 31, 2022, the Company incurred $ 23.5 million of interest expense on the Subordinated Notes.

For the period from May 11, 2021 through December 31, 2021, the Company incurred $ 14.8 million of interest expense on the Subordinated Notes.

Promissory Notes

Promissory Notes Due July 15, 2019

In June 2017, as part of a settlement with investors in two commodities investment vehicles managed by an affiliate of the Company, the Company issued a series of promissory notes, aggregating to $ 53.9 million, to the investors of these commodities investment vehicles.

Interest on these promissory notes accrued at the three month LIBOR plus 2 %.

These promissory notes matured on July 15, 2019 and were fully repaid as of that date.

Interest expense on these promissory notes was no t significant for the year ended December 31, 2019.

Debt Covenants

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Loans payable of Consolidated Funds primarily represent amounts due to holders of debt securities issued by the CLOs.

Several of the CLOs issued preferred shares representing the most subordinated interest, however these tranches are mandatorily redeemable upon the maturity dates of the senior secured loans payable, and as a result have been classified as liabilities and are included in loans payable of Consolidated Funds in the consolidated balance sheets.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

As of December 31, 2021 and 2020, the following borrowings were outstanding, which includes preferred shares classified as liabilities (Dollars in millions):

As of December 31, 2022 and 2021, the following borrowings were outstanding (Dollars in millions):

As of December 31, 2022

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Senior secured notes (1)

Subordinated notes, preferred shares, and other 317.6 249.9 N/A (1) 10.41

$ 5,849.2 $ 5,303.3 3.97 % 9.48

Subordinated notes 234.0 188.3 N/A (2) 9.69

Total $ 6,083.2 $ 5,491.6

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Senior secured notes $ 5,585.4 $ 5,561.1 1.68 % 10.25

Subordinated notes, preferred shares, and other 164.2 204.1 N/A (1) 10.49

Subordinated notes 317.6 249.9 N/A (2) 10.41

Total $ 5,903.0 $ 5,811.0

(1) The subordinated notes and preferred shares do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

(1) Borrowing Outstanding as of December 31, 2022 includes $ 235.6 million of senior secured notes that are carried at par value.

The fair value of these senior secured notes at December 31, 2022 approximated par value based on current market rates for similar debt instruments.

These senior secured notes are classified as Level III within the fair value hierarchy.

(2) The subordinated notes do not have contractual interest rates, but instead receive distributions from the excess cash flows of the CLOs.

Loans payable of the CLOs are collateralized by the assets held by the CLOs and the assets of one CLO may not be used to satisfy the liabilities of another.

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See Note 3 to the consolidated financial statements included in the Company’s 2018 Annual Report on Form 10-K for additional information on the Carlyle Aviation Partners acquisition.

(2) Includes $ 207.0 million and $ 31.5 million of realized performance allocations and incentive fee-related compensation not yet paid to participants as of December 31, 2021 and December 31, 2020, respectively.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The Abingworth acquisition included an earn-out of up to $ 130.0 million.

See Note 4 for additional information.

(2) Includes $ 26.7 million and $ 207.0 million of realized performance allocations and incentive fee-related compensation not yet paid to participants as of December 31, 2022 and 2021, respectively.

The following table presents realized and unrealized performance allocations and incentive fee related compensation:

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No other employees of the Company are covered by defined benefit pension plans.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Commitments and Contingencies

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The Company earns fees in connection with these activities and bears the risk of the sale of such securities and placement of such loans, which may be longer dated.

As of December 31, 2021, there were no unfunded commitments related to the origination and syndication of loans and securities under the Carlyle Global Capital Markets platform.

As of December 31, 2022, certain subsidiaries of the Company had € 20.0 million ($ 21.4 million) in commitments related to the origination and syndication of loans and securities under the Carlyle Global Capital Markets platform, which were extinguished in January 2023.

Guaranteed Loans

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The outstanding balances are secured by uncalled capital commitments from the underlying funds and the Company believes the likelihood of any material funding under this guarantee to be remote.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

On September 3, 2019, the Company entered into an agreement with a financial institution pursuant to which the Company is the guarantor on loans made to eligible employees investing in Carlyle sponsored funds (the “Program”).

The amount outstanding and guaranteed under the Program was immaterial as of December 31, 2021.

Contingent Obligations (Giveback)

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However, the ultimate giveback obligation, if any, generally is not paid until the end of a fund’s life or earlier if the giveback becomes fixed and early payment is agreed upon by the fund’s partners (see Note 3).

The Company has no unbilled receivables from former and current employees and senior Carlyle professionals as of December 31, 2021 and 2020 related to giveback obligations.

Any such receivables would be collateralized by investments made by individual senior Carlyle professionals and employees in Carlyle-sponsored funds.

The Company has $ 10.4 million unbilled receivables from former and current employees and senior Carlyle professionals as of December 31, 2022 related to giveback obligations.

There were no such amounts receivable as of December 31, 2021.

Any such receivables are collateralized by investments made by individual senior Carlyle professionals and employees in Carlyle-sponsored funds.

In addition, $ 135.9 million and $ 153.3 million have been withheld from distributions of carried interest to senior Carlyle professionals and employees for potential giveback obligations as of December 31, 2022 and 2021, respectively.

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As of December 31, 2022, approximately $ 18.9 million of the Company’s accrued giveback obligation is the responsibility of various current and former senior Carlyle professionals and other former limited partners of the Carlyle Holdings partnerships, and the net accrued giveback obligation attributable to the Company is $ 22.0 million.

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, of which approximately $ 0.7 billion would be the responsibility of current and former senior Carlyle professionals.

The Company’s leases primarily consist of operating leases for office space in various countries around the world, including its headquarters in Washington, D.C.

The Company relocated one of its New York City offices in December 2020 to new office space in Midtown New York.

If, at December 31, 2022, 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

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

$ 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.

The Company’s leases primarily consist of operating leases for office space in various countries around the world, including its largest offices in Washington, D.C., New York City, London and Hong Kong.

These leases have remaining lease terms of one year to 14 years, some of which include options to extend for up to 5 years and some of which include an option to terminate the leases within one year .

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The impairment charge is included in general, administrative, and other expenses in the consolidated statements of operations.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The following table summarizes the Company’s lease cost, cash flows and other supplemental information related to its operating leases (Dollars in millions):

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Total lease payments $ 649.6

Less payments for leases that have not yet commenced ( 28.4 )

Less imputed interest ( 118.3 )

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The Company does not believe it is probable that the outcome of any existing litigation, investigations, disputes or other potential claims will materially affect the Company or these financial statements in excess of amounts accrued.

The Company believes that the matters described below are without merit.

Along with many other companies and individuals in the financial sector, the Company and Carlyle Mezzanine Partners, L.P.

(“CMP”) are named as defendants in Foy v.

Austin Capital , a case filed in June 2009 in state court in New Mexico, which purports to be a qui tam suit on behalf of the State of New Mexico under the state Fraud Against Taxpayers Act (“FATA”).

The suit alleges that investment decisions by New Mexico public investment funds were improperly influenced by campaign contributions and payments to politically connected placement agents.

The plaintiffs seek, among other things, actual damages for lost income, rescission of the investment transactions described in the complaint and disgorgement of all fees received.

In September 2017, the Court dismissed the lawsuit and the plaintiffs then filed an appeal seeking to reverse that decision.

In June 2020, the Court of Appeals affirmed the decision dismissing the case.

On June 24, 2020, plaintiffs filed a motion for rehearing with the Court of Appeals.

On June 30, 2020, the Court of Appeals denied that motion.

Plaintiffs filed an appeal to the New Mexico Supreme Court.

On October 9, 2020, the New Mexico Supreme Court denied Foy’s petition for certiorari.

On October 27, 2020, Foy filed two motions for rehearing with the New Mexico Supreme Court.

On May 26, 2021, certain other defendants in the actions filed in the New Mexico Supreme Court a motion to dismiss due to the deaths of the two qui tam plaintiffs.

Carlyle Capital Corporation Limited (“CCC”) was a fund sponsored by the Company that invested in AAA-rated residential mortgage backed securities on a highly leveraged basis.

It filed for insolvency protection in Guernsey in 2008 during the financial crisis.

The Guernsey liquidators who took control of CCC in March 2008 pursued litigation against the Company, certain of its affiliates and the former directors of CCC (collectively, the “Carlyle Defendants”) in the Royal Court of Guernsey.

The Carlyle Defendants prevailed in the litigation and also prevailed in the liquidator’s appeal of the trial court decision.

On April 21, 2020, the parties executed a definitive settlement agreement to end further appeals.

The liquidators paid the Company approximately £ 24.2 million to reimburse legal fees and expenses to defend the claims and the Company recognized $ 29.9 million as a reduction to general, administrative and other expenses in the accompanying consolidated statements of operations during the year ended December 31, 2020.

A Luxembourg subsidiary of CEREP I, a real estate fund, was involved in a tax dispute with the French authorities beginning in 2010 relating to whether gain from the sale of an investment was taxable in France.

In April 2015, the French tax court issued an opinion in this matter adverse to CEREP I, holding the Luxembourg subsidiary of CEREP I liable for approximately € 105 million (including interest accrued since the beginning of the tax dispute).

CEREP I paid approximately € 30 million of the tax obligations and the Company paid the remaining approximately € 75 million in its capacity as a guarantor.

After an appeals process, in July 2019, the parties agreed to settle this matter by reducing the tax claim to € 37.1 million of French tax and interest.

The remaining € 80.5 million will be retained by the Company and CEREP I.

Accordingly, the Company recognized $ 71.5 million in principal investment income during the year ended December 31, 2019.

The Company believes that the claims alleged against it in the matters described below are without merit.

The Authentix Matter

Authentix, Inc.

(“Authentix”) was a majority-owned portfolio company in one of the Company’s investment funds, Carlyle U.S.

Growth Fund III, L.P.

When Authentix was owned by CGF III, two of the Company’s employees served on Authentix’s board of directors.

After a lengthy sale process, Authentix was sold for an aggregate sale price of $ 87.5 million.

On August 7, 2020, certain of the former minority shareholders in Authentix filed suit in Delaware Chancery Court, alleging that the Authentix board of directors, CGF III, and the Company breached various fiduciary duties by agreeing to a sale of Authentix at an inopportune time and at a price that was too low.

Plaintiffs seek damages for a portion of the lost profits from the sale—the difference between the actual sale price and the purported maximum amount for which Authentix could have sold, multiplied by Plaintiff’s ownership percentage.

Plaintiffs also seek disgorgement of any profits received by the Company stemming from the sale.

A trial is scheduled to begin in Delaware in October 2023.

The former directors of Authentix are covered by indemnification from Authentix and an Authentix insurance policy.

The defendants intend to contest the claims vigorously.

The Tax Receivable Agreement Matter

The Company came into existence on January 1, 2020, when its predecessor, The Carlyle Group, L.P.

(the “PTP”), converted from a partnership into a corporation (the “Conversion”).

On July 29, 2022, an alleged stockholder of the Company, the City of Pittsburgh Comprehensive Municipal Trust Fund (the “Plaintiff”), filed suit in the Delaware Court of Chancery, alleging a direct claim against the Company for breach of its certificate of incorporation and a derivative claim on behalf of the Company against certain current and former officers and directors of the Company.

Plaintiff challenges the receipt, by certain officers of the PTP and certain directors of the general partner of the PTP, of a right to cash payments associated with the elimination of a tax receivable agreement in connection with the Conversion.

Plaintiff is seeking monetary damages, restitution, and an injunction preventing the Company from making any future cash payments for the elimination of the tax receivable agreement in connection with the Conversion.

By virtue of the derivative nature of the primary claims (i.e., that the claims are aimed primarily at certain officers and directors), it is remote that the Company itself will pay material damage awards based on the Plaintiff’s claims, although the Company is expected to incur legal defense fees to the extent not covered by insurance.

The defendants filed a motion to dismiss the complaint on October 28, 2022.

The Plaintiff amended its complaint on January 31, 2023.

The officer and director defendants intend to contest the claims vigorously.

SEC Investigation

As part of a sweep investigation of financial services and investment advisory firms, in October 2022, the Company received from the SEC a request for information related to the preservation of certain types of electronic business communications (e.g., text messages and messages on WhatsApp, WeChat, and similar applications).

The Company intends to cooperate fully with the SEC’s inquiry.

The Company currently is and expects to continue to be, from time to time, subject to examinations, formal and informal inquiries and investigations by various U.S.

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Based on information known by management, management does not believe that as of the date of this filing the final resolutions of the matters above will have a material effect upon the Company’s consolidated financial statements.

However, given the potentially large and/or indeterminate amounts of damages sought in certain of these matters and the inherent unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s financial results in any particular period.

However, given the potentially large and/or indeterminate amounts of damages sought in certain of these matters and the inherent

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

unpredictability of investigations and litigations, it is possible that an adverse outcome in certain matters could, from time to time, have a material effect on the Company’s financial results in any particular period.

The Company accrues an estimated loss contingency liability when it is probable that such a liability has been incurred and the amount of the loss can be reasonably estimated.

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Credit risk is the risk of default by a counterparty in the Company’s investments in debt securities, loans, leases and derivatives that result from a borrower’s, lessee’s or derivative counterparty’s inability or unwillingness to make required or expected payments.

The Company considers cash, cash equivalents, securities, receivables, principal equity method investments, accounts payable, accrued expenses, other liabilities, loans, senior notes, assets and liabilities of Consolidated Funds and contingent and other consideration for acquisitions to be its financial instruments.

Except for the senior notes and subordinated notes, the

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

carrying amounts reported in the consolidated balance sheets for these financial instruments equal or closely approximate their fair values.

Except for the senior notes and subordinated notes, the carrying amounts reported in the consolidated balance sheets for these financial instruments equal or closely approximate their fair values.

The fair value of the senior and subordinated notes is disclosed in Note 8.

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Accrued incentive fees $ 16.4 $ 12.2

Unbilled receivable for giveback obligations from current and former employees 10.4 —

Notes receivable and accrued interest from affiliates 41.5 25.3

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Notes receivable includes loans that the Company has provided to certain unconsolidated funds to meet short-term obligations to purchase investments.

Notes receivable as of December 31, 2021 also include interest-bearing loans of $ 18.2 million to certain eligible Carlyle employees, which excludes Section 16 officers and other members of senior management, to finance their investments in certain Carlyle sponsored funds.

These advances accrue interest at the WSJ Prime Rate minus 1.00 % floating with a floor rate of 3.50 % (versus an actual rate of 2.25 % as of December 31, 2021) and are collateralized by each borrower’s interest in the Carlyle sponsored funds.

Notes receivable as of December 31, 2022 and December 31, 2021 also include interest-bearing loans of $ 23.2 million and $ 18.2 million, respectively, to certain eligible Carlyle employees, which excludes Section 16 officers and other members of senior management, to finance their investments in certain Carlyle sponsored funds.

These advances accrue interest at the WSJ Prime Rate minus 1.00 % floating with a floor rate of 3.50 % ( 6.50 % as of December 31, 2022) and are collateralized by each borrower’s interest in the Carlyle sponsored funds.

These receivables are assessed regularly for collectability and amounts determined to be uncollectible are charged directly to general, administrative and other expenses in the consolidated statements of operations.

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(Dollars in millions)

Due to affiliates of Consolidated Funds $ 16.4 $ —

Due to non-consolidated affiliates 87.1 60.5

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Total $ 362.5 $ 388.1

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The Company has recorded obligations for amounts due to certain of its affiliates.

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Deferred consideration for Carlyle Holdings units relates to the remaining obligation to the holders of Carlyle Holdings partnership units who will receive cash payments aggregating to $ 1.50 per Carlyle Holdings partnership unit exchanged in connection with the Conversion, payable in five annual installments of $ 0.30 .

The first three annual installment

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

payments occurred in January 2020, January 2021, and January 2022.

The first four annual installment payments occurred in January in each of 2020, 2021, 2022 and 2023.

The obligation was initially recorded at fair value, net of a discount of $ 11.3 million and measured using Level III inputs in the fair value hierarchy.

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The senior Carlyle professionals paid for their purchases of the aircraft and bear all operating, personnel and maintenance costs associated with their operation for personal use.

Payment by the Company for the business use of these aircraft by senior Carlyle professionals and other employees is made at market rates throughout the year based on budgeted business usage.

When actual business use exceeds budgeted aircraft use, the Company makes additional payments to the aircraft owner and/or the aircraft management company, as appropriate.

Similarly, when the aggregate amount paid for budgeted aircraft use exceeds the calculated costs of actual business use, or results in rates which exceed market aircraft charter rates, the Company receives reimbursement of such excess payments from the aircraft owner and/or the aircraft management company, as appropriate.

These adjustments are calculated annually and payments or reimbursements are generally made after year-end.

During the year ended December 31, 2021, the Company received net reimbursements of $ 1.1 million, and during the years ended December 31, 2020 and 2019, the Company made payments totaling $ 4.8 million and $ 8.1 million, respectively.

Additionally, as of December 31, 2021, the Company recorded a receivable for other adjustments of $ 1.5 million from certain of the aircraft owners, which was subsequently received in January 2022.

Payment by the Company for the business use of these aircraft by senior Carlyle professionals and other employees was made at market rates throughout the year based on budgeted business usage.

When actual business use exceeded budgeted aircraft use, the Company made additional payments to the aircraft owner and/or the aircraft management company, as appropriate.

Similarly, when the aggregate amount paid for budgeted aircraft use exceeded the calculated costs of actual business use, or results in rates which exceed market aircraft charter rates, the Company receives reimbursement of such excess payments from the aircraft owner and/or the aircraft management company, as appropriate.

These adjustments were calculated annually and payments or reimbursements were generally made after year-end.

During the years ended December 31, 2022, 2021 and 2020 the Company made net payments of $ 0.7 million, received net reimbursements of $ 1.1 million and made net payments of $ 4.8 million, respectively, related to these aircraft lease agreements.

The accrual of aircraft fees is included in general, administrative, and other expenses in the consolidated statements of operations.

On May 5, 2020, the Company purchased 2,000,000 of the BDC Preferred Shares from TCG BDC in a private placement at a price of $ 25 per share.

Dividends are payable on a quarterly basis in an initial amount equal to 7.0 % per annum payable in cash, or, at TCG BDC’s option, 9.0 % per annual payable in additional BDC Preferred Shares.

During the year ended December 31, 2021 and 2020, the Company recorded $ 3.5 million and $ 2.3 million, respectively, for the cash dividends declared by TCG BDC, which is included in interest and other income in the consolidated statements of operations.

During the year ended December 31, 2022, the Company terminated its remaining aircraft lease agreement, and as of December 31, 2022, the Company had no active aircraft lease agreements.

As of December 31, 2022, the Company had a reimbursement receivable of $ 0.4 million related to actual business usage and market rate adjustments, which was received in January 2023.

On May 5, 2020, the Company purchased 2,000,000 of the BDC Preferred Shares from CSL in a private placement at a price of $ 25 per share.

Dividends are payable on a quarterly basis in an initial amount equal to 7.0 % per annum payable in cash, or, at CSL’s option, 9.0 % per annual payable in additional BDC Preferred Shares.

The BDC Preferred Shares are convertible at the Company’s option, in whole or in part, into the number of shares of common stock equal to $ 25 per share plus any accumulated but unpaid dividends divided by an initial conversion price of $ 9.50 per share, subject to certain adjustments.

At any time after May 5, 2023 and with the approval of its board of directors, CSL will have the option to redeem the BDC Preferred Shares, in whole or in part.

In such case, the Company has the right to convert its shares, in whole or in part, prior to the date of redemption.

The Company recorded dividend income of $ 3.5 million and $ 3.5 million, respectively, during the twelve months ended December 31, 2022 and 2021.

Dividend income from the BDC Preferred Shares is included in interest and other income in the consolidated statements of operations.

The Company’s investment in the BDC Preferred Shares, which is recorded at fair value, is $ 76.9 million and $ 72.5 million as of December 31, 2022 and 2021, respectively, and included in investments, including accrued performance allocations, in the consolidated balance sheets.

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Carried interest income from certain funds can be distributed to senior Carlyle professionals and employees on a current basis, but is subject to repayment by the subsidiary of the Company that acts as general partner of the fund in the event that certain specified return thresholds are not ultimately achieved.

The senior Carlyle professionals and certain other investment professionals have personally guaranteed, subject to certain limitations, the obligation of these subsidiaries in respect of this general partner obligation.

The senior Carlyle professionals and certain other

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

investment professionals have personally guaranteed, subject to certain limitations, the obligation of these subsidiaries in respect of this general partner obligation.

Such guarantees are several and not joint and are limited to a particular individual’s distributions received.

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Substantially all revenue is earned from affiliates of Carlyle.

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

is subject to U.S.

federal, state, and local corporate income taxes.

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

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Company was not responsible for the tax liability due on certain income earned prior to the Conversion.

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

Results through December 31, 2019 reflect the Company’s pre-Conversion status as a partnership.

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.

The Company recorded an estimated net deferred tax asset of $ 262.1 million related 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.

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.

Of the $ 126.0 million net reduction in the net deferred tax asset of the Company resulting from the Conversion, $ 85.9 million of expense was recorded in the provision for income taxes and $ 40.1 million was recorded directly as a reduction to equity in the year ended December 31, 2020.

Refer to Note 11 in the Company’s Annual Report on Form 10-K for the year ended December 31, 2020 for more information on the tax impacts of the Conversion.

The income before provision for income taxes consists of the following:

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Effective income tax rate 18.30 % 24.39 % 34.00 %

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The effective tax rate is impacted by a variety of factors, including, but not limited to, changes in the sources of income or loss during the period and whether such income or loss is taxable to the Company and its subsidiaries.

1 unchanged sentence

federal statutory tax rate:

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Year Ended December 31,

2 unchanged sentences

federal income tax rate 21.00 % 21.00 % 21.00 %

State and local income taxes 0.83 % 2.35 % 2.08 %

Foreign income taxes (1)

( 1.75 ) % 0.64 % 4.76 %

Income passed through to common unitholders and non-controlling interest holders (2)

1 unchanged sentence

Equity-based compensation ( 0.67 ) % ( 0.60 ) % ( 3.09 ) %

Foreign income taxes (2)

0.64 % 4.76 % 2.29 %

State and local income taxes 2.35 % 2.08 % 1.46 %

Valuation allowance 0.30 % 0.79 % ( 2.25 ) %

Impact of change in tax status due to Conversion (3)

— % — % 14.59 %

Unrecognized tax benefits 0.01 % 0.02 % 1.64 %

2 unchanged sentences

Effective income tax rate 18.30 % 24.39 % 34.00 %

(1) 2022 includes a tax benefit due to restructuring the ownership of its foreign Global Investment Solutions business and the impact of amending the Company's 2020 tax return to claim a foreign tax credit rather than the original filing position claiming a foreign tax deduction.

In addition, 2022 and 2021 include the impact of claiming foreign tax credits while 2020 includes the deduction of foreign taxes.

(2) Includes income that is not taxable to the Company and its subsidiaries.

(2) Includes the impact of foreign tax credits in 2021 and foreign tax deductions in 2020 and 2019.

(3) Includes ( 2.64 )% related to the disposal of certain foreign subsidiaries in 2020, which resulted in the recognition of long-term capital losses.

(3) Refer to Note 11 in the Company's Annual Report on Form 10-K for the year ended December 31, 2020 for more information on the tax impacts of the Company's Corporate Conversion completed January 1, 2020.

(4) 2020 includes a benefit of ( 2.64 )% related to the disposal of certain foreign subsidiaries, which resulted in the recognition of long-term capital losses.

Deferred income taxes reflect the net tax effects of temporary differences that may exist between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes using enacted tax rates in effect for the year in which the differences are expected to reverse.

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Federal foreign tax credit carryforward $ 37.3 $ 22.0

Federal net operating loss carryforward — 22.0

State net operating loss carryforwards 5.9 5.9

2 unchanged sentences

Deferred restricted stock unit compensation 24.7 31.4

Deferred consideration for Carlyle Holdings units (see Note 9)

Lease liabilities 119.0 113.4

8 unchanged sentences

Lease right-of-use assets 89.2 85.0

Basis difference in investments 47.9 —

Other 28.9 43.1

1 unchanged sentence

Net deferred tax assets (liabilities) $ ( 386.9 ) $ ( 472.6 )

(1) As of December 31, 2021, $ 1,445.9 million of deferred tax assets were offset and presented as a single deferred tax liability amount on the Company’s consolidated balance sheet as these deferred tax assets and liabilities relate to the same jurisdiction.

As of December 31, 2020, $ 1,128.6 million of deferred tax liabilities were offset and presented as a single deferred tax asset amount on the Company’s consolidated balance sheet as these deferred tax assets and liabilities relate to the same jurisdiction.

(1) As of December 31, 2022 and 2021, $ 1,321.3 million and $ 1,445.9 million, respectively, of deferred tax assets were offset and presented as a single deferred tax liability amount on the Company’s consolidated balance sheet as these deferred tax assets and liabilities relate to the same jurisdiction.

The Company had $ 15.8 million and $ 14.5 million in deferred tax assets as of December 31, 2022 and 2021, respectively, which are offset with deferred tax liabilities where those assets and liabilities relate to the same tax jurisdiction.

In 2021, the deferred tax assets resulted primarily from the carryforward of federal and state tax attributes, offset by a valuation allowance, and temporary differences between the financial statement and tax bases of assets and liabilities at the Company’s foreign sub-advisor entities.

In 2020, these deferred tax assets resulted primarily from step-up in tax basis resulting from Conversion and future amortization of tax basis intangible assets generated from exchanges covered by the Tax Receivable Agreement (see Note 2), and reduced by temporary differences between the financial statement and tax bases of accrued performance allocations, net of related compensation.

In both years, the deferred tax assets resulted primarily from the carryforward of federal and state tax attributes, offset by a valuation allowance, and temporary differences between the financial statement and tax bases of assets and liabilities at the Company’s foreign sub-advisor entities.

The realization of the deferred tax assets is dependent on the Company’s future taxable income before deductions related to the establishment of its deferred tax assets.

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The Company continues to maintain a valuation allowance on certain state net operating losses for a corporate subsidiary with entity level state net operating losses that cannot be utilized by other group members.

In addition, the Company continues to maintain a valuation allowance on the FTC carryforward earned in 2013 and forward and other deferred tax assets created in 2021 that are not expected to be realized due to federal limitations on its utilization.

As of December 31, 2021 and 2020, the Company established a valuation allowance of $ 46.8 million and $ 15.0 million, respectively, with the net increase primarily due to the FTC carryforward and related deferred tax assets created offset by a release of the valuation allowance on

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

tax attribute carryforwards that were utilized or written off in 2021.

In addition, the Company continues to maintain a valuation allowance on the FTC carryforward generated in 2014 and forward and other unused FTCs in 2022 that are not expected to be realized due to federal limitations on its utilization.

As of December 31, 2022 and 2021, the Company established a valuation allowance of $ 56.7 million and $ 46.8 million, respectively, with the net increase primarily due to the FTC carryforward and related deferred tax assets offset by a release of the valuation allowance on tax attribute carryforwards that were utilized or written off in 2022 as well as certain foreign net operating losses that are not expected to be realized.

For all other deferred tax assets, the Company has concluded it is more likely than not that they will be realized and that a valuation allowance is not needed at December 31, 2022.

The Company has deferred tax liabilities of $ 402.7 million and $ 487.1 million as of December 31, 2022 and 2021, respectively, which are offset with deferred tax assets where those assets and liabilities relate to the same tax jurisdiction.

These deferred tax liabilities primarily resulted from temporary differences between the financial statement and tax bases of accrued performance allocations.

In 2021, these deferred tax liabilities were net of related compensation and offset by step-up in tax basis resulting from Conversion and future amortization of tax basis intangible assets generated from exchanges covered by the Tax Receivable Agreement (see Note 2).

The Company adjusted its deferred tax assets and deferred tax liabilities for enacted changes in the tax rate in foreign jurisdictions, but the amount was not material to the consolidated financial statements.

As of December 31, 2021, the Company has cumulative state pre-tax net operating loss carryforwards of approximately $ 25.2 million, which will be available to offset future taxable income.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

deferred tax liabilities primarily resulted from temporary differences between the financial statement and tax bases of accrued performance allocations.

These deferred tax liabilities are net of related compensation and offset by step-up in tax basis resulting from Conversion and future amortization of tax basis intangible assets generated from exchanges covered by the Tax Receivable Agreement (see Note 3).

As of December 31, 2022, the Company has cumulative state pre-tax net operating loss carryforwards of approximately $ 69.6 million ($ 5.8 million tax-effected), which will be available to offset future taxable income.

If unused, a portion of the state carryforwards will begin to expire in 2023.

Therefore, the Company recorded a valuation allowance on $ 2.1 million of the state net operating loss carryforwards.

In addition, the Company has an FTC carryforward of $ 22.0 million, which relates to taxes paid in foreign jurisdictions.

The Company recorded a valuation allowance on $ 2.1 million of the state tax-effected net operating loss carryforwards which it believes will not be realized.

In addition, the Company has a FTC carryforward of $ 37.3 million, which relates to taxes paid in foreign jurisdictions.

If unused, a portion will expire in 2024 and years forward.

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The Company has recorded unrecognized tax benefits of $ 39.3 million and $ 30.4 million as of December 31, 2022 and 2021, respectively, which is reflected in accounts payable, accrued expenses and other liabilities in the accompanying consolidated balance sheets.

These balances include $ 9.8 million and $ 6.8 million as of December 31, 2021 and 2020, related to interest and penalties associated with uncertain tax positions.

These balances include $ 13.1 million and $ 9.8 million as of December 31, 2022 and 2021, respectively, related to interest and penalties associated with uncertain tax positions.

If recognized, $ 27.1 million of uncertain tax positions would be recorded as a reduction in the provision for income taxes.

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The Company does not believe that it has any tax positions for which it is reasonably possible that the total amounts of unrecognized tax benefits will significantly increase or decrease within the next twelve months.

On August 16, 2022, the Inflation Reduction Act of 2022 (“IRA”) was signed into law.

The IRA enacted a 15% alternative minimum tax on the “adjusted financial statement income” of certain large corporations and a 1% excise tax on certain actual and deemed stock repurchases, both of which become effective in 2023.

While the IRA has no effect on the 2022 financial statements, the Company is continuing to evaluate the impact of the IRA on its financial statements as further information becomes available.

The Carlyle Group Inc.

33 unchanged sentences

Also included in the determination of dilutive weighted-average common shares are issuable common shares associated with the Company’s acquisitions, strategic investment in NGP, performance-vesting restricted stock units and issuable common shares associated with a program under which the Company may distribute realized performance allocation related compensation in fully vested, newly issued shares (see Note 15 to the consolidated financial statements).

Prior to the Conversion, the Company also included contingently issuable Carlyle Holdings partnership units in the determination of dilutive weighted-average common shares.

The Company applied the “if-converted” method to the vested

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Carlyle Holdings partnership units to determine the dilutive weighted-average common shares outstanding.

The Company applied the treasury stock method to the unvested Carlyle Holdings partnership units and the “if-converted” method on the resulting number of additional Carlyle Holdings partnership units to determine the dilutive weighted-average common shares represented by the unvested Carlyle Holdings partnership units.

In computing the dilutive effect that the exchange of Carlyle Holdings partnership units would have on earnings per common share in 2019, the Company considered that net income available to holders of common shares would increase due to the elimination of non-controlling interests in Carlyle Holdings (including any tax impact).

Based on these calculations, 230,213,627 of vested Carlyle Holdings partnership units and 3,565 of unvested Carlyle Holdings partnership units for the year ended December 31, 2019 were antidilutive, and therefore have been excluded.

Preferred Unit Issuance and Redemption

On September 13, 2017, the Company issued 16,000,000 of 5.875 % Series A Preferred Units (the “Preferred Units”) for gross proceeds of $ 400.0 million, or $ 387.5 million, net of issuance costs and expenses.

Distributions on the Preferred Units were payable quarterly on March 15, June 15, September 15, and December 15 of each year, beginning on December 15, 2017, when, as and if declared by the Board of Directors, at a rate per annum of 5.875 %.

Distributions on the Preferred Units were discretionary and non-cumulative.

On October 7, 2019, the Company redeemed the Preferred Units in full pursuant to the tax redemption provisions of the Preferred Units at a price of $ 25.339757 per unit, which is equal to $ 25.25 per Preferred Unit plus declared and unpaid distributions to, but excluding, the redemption date.

Carry Distributed in Shares Program

Shares Issued for Performance Allocation Related Compensation

In October 2021, the Company commenced a program under which, at the Company’s discretion, up to 20 % of realized performance allocations and incentive fee related compensation over a certain threshold amount may be distributed in fully vested, newly issued shares of the Company’s common stock.

During the period from October 1, 2021 through December 31, 2021, the Company distributed 86,317 fully vested, newly issued common shares, related to previously accrued performance allocations and incentive fee related compensation of $ 4.8 million.

The Company will distribute an additional $ 31.3 million in fully vested, newly issued shares subsequent to December 31, 2021 related to realized performance allocations and incentive fee compensation recognized during the period from October 1, 2021 through December 31, 2021.

During the year ended December 31, 2022 and the period from October 1, 2021 through December 31, 2021, the Company distributed 850,110 and 86,317 , fully vested, newly issued common shares, respectively, related to previously accrued performance allocations and incentive fee related compensation of $ 38.9 million and $ 4.8 million, respectively.

The Company has determined to pause the issuance of shares pursuant to this program.

Stock Repurchase Program

In December 2018, the Board of Directors of the Company authorized the repurchase of up to $ 200 million of common units and/or Carlyle Holdings units, which was reauthorized in January 2020 by the Board of Directors with regard to the Company’s common stock in connection with the Conversion.

In February 2021, the Board of Directors replenished the repurchase program to its limit of $ 200 million of common stock from its maximum remaining purchase amount of $ 139.1 million.

In October 2021, the Board of Directors of the Company authorized the repurchase of up to $ 400 million of common stock, which replaced an authorization provided in February 2021 effective January 1, 2022.

Under this repurchase program, shares of common stock may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise, including through Rule 10b5-1 plans.

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As of December 31, 2022, $ 214.3 million of repurchase capacity remained under the program.

In October 2021, the Board of Directors authorized the repurchase of up to $ 400 million of common stock, which will replace the authorization provided in February 2021 effective January 1, 2022.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

In February 2023, the Board of Directors replenished the repurchase program and expanded the limit to $ 500 million of common stock in aggregate, effective March 31, 2023.

Shares Issued in Connection with Acquisitions

In August 2022, the Company issued 0.6 million shares of common stock, which represented $ 25.0 million of the purchase price paid in the acquisition of Abingworth.

In March 2022, the Company issued 4.2 million shares of common stock, which represented $ 194.5 million of the purchase price paid in the acquisition of management contracts related to a portfolio of assets from CBAM.

See Note 4 to the unaudited condensed consolidated financial statements for a further description of these acquisitions.

The table below presents information regarding the quarterly dividends on the common shares, which were made at the sole discretion of the Board of Directors of the Company.

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November 18, 2022 November 25, 2022 0.325 118.2

February 15, 2022 February 23, 2022 0.25 89.5

February 22, 2023 March 1, 2023 0.325 118.4

Total 2022 Dividend Year $ 1.30 $ 472.5

The Board of Directors will take into account general economic and business conditions, as well as the Company’s strategic plans and prospects, business and investment opportunities, financial condition and obligations, legal, tax and regulatory restrictions, other constraints on the payment of dividends by the Company to its common stockholders or by subsidiaries to the Company, and other such factors as the Board of Directors may deem relevant.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

subsidiaries to the Company, and other such factors as the Board of Directors may deem relevant.

In addition, the terms of the Company’s credit facility provide certain limits on the Company’s ability to pay dividends.

4 unchanged sentences

Prior to June 1, 2021, the Equity Incentive Plan contained a provision which automatically increased the number of the Company’s common shares available for grant based on a pre-determined formula;

this increase occurs annually on January 1.

this increase occurred annually on January 1.

As of January 1, 2021, pursuant to the formula, the total number of the Company’s common shares available for grant under the Equity Incentive Plan was 35,352,057 .

On June 1, 2021, the shareholders of the Company approved an amended and restated Equity Incentive Plan that removed the provision providing for the automatic increase and reset the total number of shares of common stock available for grant to 16,000,000 for awards granted under the plan after June 1, 2021.

An increase in the number of shares available for grant under the plan would require shareholder approval.

As of December 31, 2022, the total number of the Company’s common shares available for grant under the amended and restated Equity Incentive Plan was 12,861,371 .

This amount does not include restricted stock units granted in February 2022 or the issuance of common shares in January and February 2022 related to the carry distributed in shares program (see Note 13).

This amount does not reflect 9.9 million restricted stock units granted under the amended and restated Equity Incentive Plan in February 2023.

Common Shares

2 unchanged sentences

During the years ended December 31, 2022, 2021 and 2020, the Company recognized $ 8.4 million, $ 9.2 million and $ 8.8 million, respectively, as a reduction to principal investment income related to these shares.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Carlyle Holdings Partnership Units

Unvested Carlyle Holdings partnership units were held by senior Carlyle professionals and other individuals engaged in Carlyle’s business and generally vested ratably over a six-year period.

The unvested Carlyle Holdings partnership units were accounted for as equity-based compensation in accordance with ASC 718.

The grant-date fair value of the unvested Carlyle Holdings partnership units were charged to equity-based compensation expense on a straight-line basis over the required service period.

The Company recorded equity-based compensation expense associated with these awards of $ 0.2 million for the year ended December 31, 2019.

No tax benefits were recorded related to the unvested Carlyle Holdings partnership units, as the vesting of these units did not result in a tax deduction to the corporate taxpayers.

As of December 31, 2019, all of these awards were vested.

Restricted Stock Units

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The net impact of the addition/(reduction) in deferred tax assets due to the equity-based compensation expense recorded during the period less the tax deduction for units that vested was $( 3.2 ) million, $ 10.0 million and $( 4.8 ) million for the years ended December 31, 2022, 2021 and 2020, respectively.

In addition, the deferred tax asset related to equity-based compensation increased by $ 15.5 million during the year ended December 31, 2020 as a result of the exchange of Carlyle Holdings units in the Conversion, as equity-based compensation previously attributable to non-controlling interests is now attributable to the Company (see Note 11 to the consolidated financial statements in the Annual Report on Form 10-K for the year ended December 31, 2020 for information regarding the impact of the Conversion).

As of December 31, 2022, the total unrecognized equity-based compensation expense related to unvested deferred restricted stock units is $ 238.0 million, which is expected to be recognized over a weighted-average term of 2.0 years.

The expense associated with the deferred restricted stock units granted to NGP personnel are recognized as a reduction of the Company’s investment income in NGP Management.

Equity-based awards issued to non-employees, including non-employee directors and consultants, are recognized as general, administrative and other expenses.

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The expense for equity-based awards issued to non-employees was $ 5.0 million, $ 5.2 million and $ 6.0 million for the years ended December 31, 2022, 2021 and 2020, respectively.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

The vesting of deferred restricted stock units creates taxable income for the Company’s employees in certain jurisdictions.

Accordingly, the employees may elect to engage the Company’s equity plan service provider to sell sufficient common shares and generate proceeds to cover their minimum tax obligations.

During 2021, the Company 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 across a number of the Company’s employees.

During 2021, the Company granted 7.1 million long-term, strategic restricted stock units to certain senior professionals, the majority of which are eligible to vest based on the achievement of annual performance targets over four years across a number of the Company’s employees.

Compensation cost will be recognized over the requisite service period if it is probable that the performance condition will be satisfied.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

A summary of the status of the Company’s non-vested equity-based awards as of December 31, 2022 and a summary of changes from December 31, 2019 through December 31, 2022, are presented below:

Carlyle Holdings The Carlyle Group, Inc.

The Carlyle Group, Inc.

Equity Settled Awards

Unvested Shares Partnership

Units Weighted-

Fair Value Restricted

Unvested Shares Restricted

Units Weighted-

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Balance, December 31, 2020 8,523,082 $ 21.70 748,344 $ 25.39

Granted — $ — 3,450,355 $ 29.40 299,401 $ 33.40

11,207,062 $ 31.64 291,396 $ 32.93

Vested 4,625,457 $ 22.64 404,310 $ 24.73

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Balance, December 31, 2021 14,775,651 $ 30.70 635,430 $ 29.27

— $ — 11,207,062 $ 31.64 291,396 $ 32.93

Granted 4,216,827 $ 40.35 188,223 $ 49.06

Vested 5,805,437 $ 28.15 370,773 $ 26.54

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(1) Includes shares issued in connection with the Company’s strategic investment in NGP.

(2) Includes 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 across a number of the Company’s employees.

(2) Includes 7.1 million long-term, strategic restricted stock units to certain senior professionals, the majority of which are eligible to vest based on the achievement of annual performance targets over four years across a number of the Company’s employees.

Segment Reporting

Carlyle conducts its operations through three reportable segments:

Global Private Equity – The Global Private Equity segment is comprised of the Company’s operations that advise a diverse group of funds that invest in buyout, middle market and growth capital, real estate and natural resources transactions.

Global Credit – The Global Credit segment advises a group of funds that pursue investment opportunities across various types of credit, including loans and structured credit, direct lending, opportunistic credit, energy credit, distressed credit, aircraft financing and servicing, and capital solutions.

Global Investment Solutions – The Global Investment Solutions segment advises global private equity fund of funds programs and related co-investment and secondary activities through AlpInvest.

This segment also included Metropolitan Real Estate, a global manager of real estate fund of funds and related co-investment and secondary activities, prior to its sale on April 1, 2021.

Global Credit – The Global Credit segment advises products that pursue investment opportunities across various types of credit, including loans and structured credit, direct lending, opportunistic credit, aircraft finance, infrastructure debt, insurance solutions and global capital markets solutions.

Global Investment Solutions – The Global Investment Solutions segment advises global private equity fund of funds programs and related co-investment, secondary and portfolio finance investments activities through AlpInvest.

This segment also included Metropolitan Real Estate (“MRE”), a global manager of real estate fund of funds and related co-investment and secondary activities, prior to its sale on April 1, 2021.

The Company’s reportable business segments are differentiated by their various investment focuses and strategies.

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The Company’s earnings from its investment in NGP are presented in the respective operating captions within the Global Private Equity segment.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Distributable Earnings .

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DE is derived from the Company’s segment reported results and is used to assess performance.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

Distributable Earnings differs from income (loss) before provision for income taxes computed in accordance with U.S.

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

charges (credits) 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 considerations 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 (credits) associated with acquisitions, dispositions or strategic investments, changes in the tax receivable agreement liability, amortization and any impairment charges associated with acquired intangible assets, transaction costs associated with acquisitions and dispositions, charges associated with earnouts and contingent consideration including gains and losses associated with the estimated fair value of contingent considerations 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.

Management believes the inclusion or exclusion of these items provides investors with a meaningful indication of the Company’s core operating performance.

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GAAP in that it adjusts for the items included in the calculation of DE and also adjusts DE to exclude net realized performance revenues, realized principal investment income, net interest (interest income less interest expense), and certain general, administrative and other expenses when the timing of any future payment is uncertain.

In 2022, the Company began to disclose fee related performance revenues as a separate line item in its segment results.

Fee related performance revenues are the realized portion of performance revenues that are measured and received on a recurring basis, are not dependent on the disposition of investments, and which are not at risk of giveback.

Previously, these amounts were included as a component of fund management fees.

Beginning in 2022, the Company’s Core plus real estate fund, CPI, began to realize recurring performance revenues.

Realized net performance revenues for CPI were immaterial in prior periods.

The Carlyle Group Inc.

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Portfolio advisory and transaction fees, net and other 29.5 81.6 — 111.1

Fee related performance revenues 69.4 59.9 — 129.3

Total fund level fee revenues 1,399.8 614.6 222.9 2,237.3

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December 31, 2021 and the Year Then Ended

Equity Global

Credit Global

Solutions Total

Solutions (2)

(Dollars in millions)

3 unchanged sentences

Portfolio advisory and transaction fees, net and other 34.3 62.2 0.5 97.0

Fee related performance revenues — 43.2 — 43.2

Total fund level fee revenues 1,146.1 419.8 228.9 1,794.8

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Segment assets as of December 31, 2021 $ 10,282.4 $ 2,206.6 $ 2,009.2 $ 14,498.2

(1) On August 31, 2021, the Company sold 100 % of its interest in its 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.

These amounts are excluded from the Company’s segment reporting.

(2) On April 1, 2021, the Company sold 100 % of its interest in Metropolitan Real Estate (“MRE”) and recorded a $ 5 million gain on the sale, which is included in other non-operating expenses (income) on the consolidated statements of operations.

This amount is excluded from the Company’s segment reporting.

The Company retained its existing investments in and commitments to the MRE funds, as well as its interest in the net accrued performance allocations in existing funds.

The Carlyle Group Inc.

10 unchanged sentences

Portfolio advisory and transaction fees, net and other 22.8 34.0 0.1 56.9

Fee related performance revenues — 35.9 — 35.9

Total fund level fee revenues 1,064.8 358.2 193.1 1,616.1

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Expenses $ 2,492.4 $ 255.3 $ 77.0 (b) $ 2,824.7

Other income $ — $ 2.5 $ — (c) $ 2.5

Other loss $ — $ ( 41.5 ) $ — (c) $ ( 41.5 )

Distributable earnings $ 1,909.0 $ 14.2 $ ( 350.7 ) (d) $ 1,572.5

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Expenses $ 1,527.4 $ 206.2 $ 599.7 (b) $ 2,333.3

Other income $ — $ ( 23.9 ) $ — (c) $ ( 23.9 )

Other loss $ — $ ( 21.3 ) $ — (c) $ ( 21.3 )

Distributable earnings $ 762.1 $ ( 0.7 ) $ ( 181.4 ) (d) $ 580.0

(a) The Revenues adjustment principally represents unrealized performance revenues, unrealized principal investment income (loss) (including Fortitude), revenues earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management and its affiliates that are included in operating captions or are excluded from the segment results, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, and the inclusion of tax expenses associated with certain foreign performance revenues, as detailed below:

(a) The Revenues adjustment principally represents unrealized performance revenues, unrealized principal investment income (loss) (including Fortitude), the principal investment loss from dilution of the indirect investment in Fortitude, revenues earned from the Consolidated Funds which were eliminated in consolidation to arrive at the Company’s total revenues, adjustments for amounts attributable to non-controlling interests in consolidated entities, adjustments related to expenses associated with the investments in NGP Management and its affiliates that are included in operating captions or are excluded from the segment results, adjustments to reflect the reimbursement of certain costs incurred on behalf of Carlyle funds on a net basis, and the inclusion of tax expenses associated with certain foreign performance revenues, as detailed below:

The Carlyle Group Inc.

5 unchanged sentences

Unrealized principal investment income ( 38.3 ) 351.8 ( 556.2 )

Adjusted unrealized principal investment income from investment in Fortitude — ( 104.4 ) 140.9

Principal investment loss from dilution of indirect investment in Fortitude ( 176.9 ) — —

Adjusted unrealized principal investment income from direct investment in Fortitude — — ( 104.4 )

Adjustments related to expenses associated with investments in NGP Management and its affiliates ( 12.9 ) ( 13.7 ) ( 15.3 )

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(1) Adjustments represent the reclassification of NGP management fees from principal investment income, the

reclassification of certain incentive fees from business development companies and other credit products, management fees earned from consolidated CLOs which were eliminated in consolidation to arrive at the Company’s fund management fees, and the reclassification of certain amounts included in portfolio advisory fees, net and other in the segment results that are included in interest and other income in the U.S.

reclassification of fee related performance revenues from business development companies and other products, management fees earned from consolidated CLOs which were eliminated in consolidation to arrive at the Company’s fund management fees, the reclassification of a $ 12.7 million loss related to the purchase of investor interests in a Global Investment Solutions product from fund management fees to principal investment income (loss), and the reclassification of certain amounts included in portfolio advisory fees, net and other in the segment results that are included in interest and other income in the U.S.

GAAP results.

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(Dollars in millions)

Unrealized performance revenues related compensation $ 1,549.4 $ 432.3 $ 225.5

Unrealized performance and fee related performance revenue related compensation expense $ ( 326.2 ) $ 1,549.4 $ 432.3

Equity-based compensation 161.9 172.9 116.6

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

Acquisition or disposition-related charges and amortization of intangibles and impairment 187.4 37.7 38.1

Tax expense associated with certain foreign performance revenues related compensation 2.9 ( 17.3 ) ( 8.4 )

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Other adjustments, including severance and C-Corp.

conversion costs in 2020 and 2019 14.2 8.0 34.6

conversion costs in 2020 12.4 14.2 8.0

Elimination of expenses of Consolidated Funds ( 44.1 ) ( 39.5 ) ( 42.7 )

6 unchanged sentences

Income before provision for income taxes $ 1,572.5 $ 4,027.5 $ 580.0

Net unrealized performance revenues ( 1,606.2 ) ( 598.7 ) ( 42.3 )

Net unrealized performance and fee related performance revenues ( 183.7 ) ( 1,606.2 ) ( 598.7 )

Unrealized principal investment (income) loss (1)

38.3 ( 351.8 ) 556.2

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

— 104.4 ( 140.9 )

Principal investment loss from dilution of indirect investment in Fortitude 176.9 — —

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

Equity-based compensation (3)

161.9 172.9 116.6

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

Acquisition or disposition-related charges, including amortization of intangibles and impairment 187.4 37.7 38.1

Net income attributable to non-controlling interests in consolidated entities ( 59.7 ) ( 70.5 ) ( 34.6 )

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Other adjustments including severance and C-Corp.

conversion costs in 2020 and

2019 14.2 8.0 34.6

conversion costs in 2020 12.4 14.2 8.0

Distributable Earnings $ 1,909.0 $ 2,243.7 $ 762.1

10 unchanged sentences

Notes to the Consolidated Financial Statements

(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 the Company’s investment in Fortitude to Carlyle FRL on June 2, 2020.

(2) Adjusted unrealized principal investment income (loss) from the direct 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 the Company’s investment in Fortitude to Carlyle FRL on June 2, 2020.

(3) Equity-based compensation for the years ended December 31, 2022, 2021 and 2020 includes amounts that are presented in principal investment income and general, administrative and other expenses in the Company’s U.S.

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GAAP consolidation but were included in the segment results, (iii) amounts attributable to non-controlling interests in consolidated entities, which were excluded from the segment results, (iv) the reclassification of NGP performance revenues, which are included in principal 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 segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues.

Adjustments to principal investment income (loss) also include the reclassification of earnings for the investments in NGP Management and its affiliates to the appropriate operating captions for the segment results, and the exclusion of charges associated with the investment in NGP Management and its affiliates that are excluded from the segment results.

GAAP financial statements, (v) the reclassification of fee related performance revenues, which are included in fund level fee revenues in the segment results, and (vi) the reclassification of tax expenses associated with certain foreign performance revenues.

(e) The Total Assets adjustment represents the addition of the assets of the Consolidated Funds that were eliminated in consolidation to arrive at the Company’s total assets.

The Carlyle Group Inc.

Notes to the Consolidated Financial Statements

(e) The Total Assets adjustment represents the addition of the assets of the Consolidated Funds that were eliminated in consolidation to arrive at the Company’s total assets.

Information by Geographic Location

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Subsequent Events

In February 2022, the Board of Directors declared a 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.

In February 2022, the Company’s 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.

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 the Company 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 2023, the Board of Directors declared a dividend of $ 0.325 per common share to common stockholders of record at the close of business on February 22, 2023, payable on March 1, 2023.

On February 6, 2023, the Company announced that the Board of Directors of the Company has appointed Harvey M.

Schwartz as Chief Executive Officer of the Company and a member of the Board of Directors, effective February 15, 2023 (the “Commencement Date”).

On the Commencement Date, Mr.

Schwartz will receive inducement equity awards with a combined grant date value of $ 180 million, of which $ 108 million will be granted in the form of performance-based restricted stock units which will be eligible to vest in five equal tranches and $ 72 million will be granted in the form of time-based restricted stock units which will be eligible to vest ratably in four equal installments.

The number of shares of common stock underlying the performance-based award will be determined by dividing the $ 108 million grant value by the per share accounting fair value on the Commencement Date, while the number of shares of common stock underlying the time-based award will be determined by dividing the $ 72 million grant value by the per share closing stock price on the Commencement Date.

The Carlyle Group Inc.

10 unchanged sentences

Restricted cash 0.8 — — 0.8

Corporate treasury investments 20.0 — — 20.0

Accrued performance fees — — — —

Investments, including performance allocations of $ 7,117.7

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Total expenses 2,613.5 255.3 ( 44.1 ) 2,824.7

Net investment gains of Consolidated Funds — 2.5 — 2.5

Other income (loss)

Net investment losses of Consolidated Funds — ( 41.5 ) — ( 41.5 )

Income before provision for income taxes 1,536.4 14.2 21.9 1,572.5

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Performance allocations 6,084.6 — — 6,084.6

Principal investment loss ( 546.4 ) — 5.7 ( 540.7 )

Principal investment income 666.0 — ( 28.7 ) 637.3

Total investment income 6,750.6 — ( 28.7 ) 6,721.9

10 unchanged sentences

Interest and other expenses of Consolidated Funds — 217.8 ( 39.3 ) 178.5

Other non-operating income ( 7.2 ) — — ( 7.2 )

Other non-operating expenses 1.5 — — 1.5

Total expenses 4,578.8 217.8 ( 39.5 ) 4,757.1

Other income (loss)

Net investment losses of Consolidated Funds — ( 21.3 ) — ( 21.3 )

Income (loss) before provision for income taxes 571.9 ( 0.7 ) 8.8 580.0

Net investment gains of Consolidated Funds — 2.5 — 2.5

Income before provision for income taxes 4,024.8 37.9 ( 35.2 ) 4,027.5

Provision for income taxes 982.3 — — 982.3

Net income (loss) 374.7 ( 0.7 ) 8.8 382.8

Net income 3,042.5 37.9 ( 35.2 ) 3,045.2

Net income attributable to non-controlling interests in consolidated entities 67.8 — 2.7 70.5

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

Net income attributable to The Carlyle Group Inc.

2,974.7 37.9 ( 37.9 ) 2,974.7

7 unchanged sentences

Performance allocations 1,635.9 — — 1,635.9

Principal investment income 755.0 — 14.3 769.3

Principal investment loss ( 546.4 ) — 5.7 ( 540.7 )

Total investment income 1,089.5 — 5.7 1,095.2

10 unchanged sentences

Interest and other expenses of Consolidated Funds — 206.2 ( 42.7 ) 163.5

Other non-operating expenses 1.3 — — 1.3

Other non-operating income ( 7.2 ) — — ( 7.2 )

Total expenses 2,169.8 206.2 ( 42.7 ) 2,333.3

1 unchanged sentence

Net investment losses of Consolidated Funds — ( 21.3 ) — ( 21.3 )

Income before provision for income taxes 1,223.4 9.7 0.3 1,233.4

Income (loss) before provision for income taxes 571.9 ( 0.7 ) 8.8 580.0

Provision for income taxes 197.2 — — 197.2

Net income 1,174.4 9.7 0.3 1,184.4

Net income (loss) 374.7 ( 0.7 ) 8.8 382.8

Net income attributable to non-controlling interests in consolidated entities 26.5 — 8.1 34.6

Net income attributable to Carlyle Holdings 1,147.8 9.7 ( 9.7 ) 1,147.8

Net loss attributable to non-controlling interests in Carlyle Holdings 766.9 — — 766.9

Net income attributable to The Carlyle Group L.P.

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

348.2 ( 0.7 ) 0.7 348.2

Net income attributable to Series A Preferred Unitholders 19.1 — — 19.1

Series A Preferred Units redemption premium 16.5 — — 16.5

Net income attributable to The Carlyle Group L.P.

Common Unitholders $ 345.3 $ 9.7 $ ( 9.7 ) $ 345.3

Year Ended December 31,

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Right-of-use asset impairment, net of broker fees — 24.8 —

Non-cash performance allocations and incentive fees ( 1,670.7 ) ( 631.8 ) ( 271.8 )

Non-cash performance allocations and incentive fees, net 387.5 ( 1,670.7 ) ( 631.8 )

Non-cash principal investment income ( 501.5 ) ( 628.9 ) 568.0

13 unchanged sentences

Cash flows from investing activities

Purchases of corporate treasury investments ( 69.6 ) — —

Proceeds from corporate treasury investments 50.0 — —

Purchases of fixed assets, net ( 40.6 ) ( 41.4 ) ( 61.2 )

Purchase of Abingworth, net of cash acquired ( 150.2 ) — —

Purchase of CBAM intangibles and investments ( 618.4 ) — —

Proceeds from sale of MRE, net of cash sold — 5.9 —

4 unchanged sentences

Repayments under credit facilities — ( 70.0 ) ( 329.9 )

Issuance of 3.500 % senior notes due 2029, net of financing costs

Issuance of 4.625 % subordinated notes due 2061, net of financing costs

1 unchanged sentence

— ( 259.9 ) —

Repayment of term loan — — ( 25.0 )

Proceeds from debt obligations 111.7 20.5 41.0

Payments on debt obligations ( 232.5 ) ( 3.8 ) ( 45.2 )

Proceeds from CLO borrowings, net of financing costs 73.2 111.7 20.5

Payments on CLO borrowings ( 16.7 ) ( 232.5 ) ( 3.8 )

Payments of contingent consideration — ( 0.1 ) ( 0.3 )

Redemption of preferred units — — ( 405.4 )

Dividends to common stockholders ( 443.6 ) ( 355.8 ) ( 351.3 )

Distributions to preferred unitholders — — ( 17.6 )

Distributions to non-controlling interest holders in Carlyle Holdings — — ( 313.4 )

Payment of deferred consideration for Carlyle Holdings units ( 68.8 ) ( 68.8 ) ( 68.8 )

1 unchanged sentence

Distributions to non-controlling interest holders ( 78.7 ) ( 74.5 ) ( 76.8 )

Common shares issued for carry distributed in shares program 4.8 — —

Common shares issued for performance allocations 38.9 4.8 —

Common shares repurchased ( 185.6 ) ( 161.8 ) ( 26.4 )

2 unchanged sentences

Effect of foreign exchange rate changes ( 17.2 ) ( 23.2 ) 17.0

Increase in cash, cash equivalents and restricted cash 1,485.5 161.6 189.7

(Decrease) Increase in cash, cash equivalents and restricted cash ( 1,113.6 ) 1,485.5 161.6

Cash, cash equivalents and restricted cash, beginning of period 2,475.1 989.6 828.0

Cash, cash equivalents and restricted cash, end of period $ 1,361.5 $ 2,475.1 $ 989.6

Supplemental non-cash disclosure

Issuance of common shares related to the acquisition of CBAM and Abingworth $ 219.5 $ — $ —

Reconciliation of cash, cash equivalents and restricted cash, end of period:

4 unchanged sentences

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 8. Financial Statements and Supplementary Data