TPG Results Presentation Deck
Pro Forma GAAP Statements of Operations Notes
Notes to the Unaudited Pro Forma Condensed Consolidated Statement of Operations and Other Data
1) This adjustment relates to Excluded Assets and is made up of the following components:
2)
Impact of changes in economics of certain TPG general partner interests in TPG Funds:
The TPG Operating Group transferred to RemainCo certain performance allocation economic entitlements from certain of the TPG general partner entities that are defined as Excluded
Assets, as well as certain cash and amounts due to affiliates of the TPG Operating Group that relate to these TPG general partner entities' economic entitlements. We continue to
consolidate these TPG general partner entities because we maintain control and have an implicit variable interest.
Transfer of other investments:
The TPG Operating Group also transferred the economic entitlements associated with certain other investments, including our investment in our former affiliate. This does not include
certain of our strategic equity method investments, including Harlem Capital Partners, Vamos Ventures and LandSpire Group, as the economics of these investments continue to be part
of the TPG Operating Group after the Reorganization.
5)
Deconsolidation of consolidated TPG Funds:
We transferred the TPG Operating Group's co-investment interests in certain TPG Funds to Remain Co. These TPG Funds were historically consolidated and as a result of the transfer to
RemainCo, are deconsolidated because we no longer hold a more than insignificant economic interest.
This adjustment relates to the changes in economic entitlements that the holders of TPG Operating Group Common Units retain, and the associated reallocation of interests after the
Reorganization. Specified Company Assets include certain TPG general partner entities to which the TPG Operating Group retained an economic entitlement and that are consolidated
both before and after the Reorganization. As part of the Reorganization, the sharing percentage of the associated performance allocation income was reallocated between controlling and
non-controlling interests. Subject to certain exceptions, RemainCo is entitled to between 10% and 15% of these Specified Company Assets' related performance allocations, which we
treat as non-controlling interests, and to allocate generally between 65% and 70% indirectly to our partners and professionals through performance allocation vehicles and Promote Units,
with the remaining 20% available for distribution to the TPG Operating Group Common Unit holders. RemainCo's entitlement to performance allocations associated with future funds will
step down over time. In conjunction with allocating between 65% and 70% of performance allocations associated with the Specified Company Assets to our partners and professionals,
we have reduced the amount of cash-based bonuses historically paid to these individuals as further described in Note 5 below. The primary impact of this is a reallocation from income
attributable to controlling interests to income attributable to non-controlling interests.
3)
This amount reflects an administrative services fee that we receive for managing the Excluded Assets transferred to RemainCo that are not part of the TPG Operating Group. The fee is
based on 1% of the net asset value of Remain Co.
4)
This adjustment reflects incremental interest expense related to additional financing the TPG Operating Group used to declare a distribution of $200 million to our controlling and non-
controlling interest holders prior to the Reorganization and the IPO. The distribution was made with $200 million of proceeds from the senior unsecured term loan issuance. The Senior
Unsecured Term Loan carries an interest rate of LIBOR plus 1.00% and matures in December 2024.
Reflects the reclassification of performance allocation amounts owed to senior professionals from other non-controlling interests to performance allocation compensation. Following the
IPO, we account for partnership distributions to our partners and professionals as performance allocation compensation expense. As described in Note 2 above, we have adjusted our
performance allocation sharing percentage and in conjunction with allocating between 65% and 70% of performance allocations associated with the Specified Company Assets to certain
of our people, we are reducing the amounts of cash-based bonuses and increasing the performance allocation compensation expense.
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