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Fortress Reports Second Quarter 2009 Financial Results

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--Second Quarter Highlights--- Assets under management of $31.0 billion--- Segment management fees of $110 million--- Fund management distributable earnings of $53 million--- Pre-tax distributable earnings (DE) of $59 million--- GAAP net income, excluding principals agreement compensation, of $66 million. GAAP net loss of $171 million. GAAP net loss attributable to Class A Shareholders of $45 million--- Successfully integrated the management of a large credit fund, renamed as Fortress Value Recovery Fund I--- Raised $219.5 million in net proceeds through issuance of 46 million Class A shares--- Began operations of a new Japanese investment fund--Subsequent Events in the Third Quarter--- Daniel H. Mudd, currently member of the Fortress board of directors, will become the firm's new CEO effective August 11, 2009--- George W. Wellde has been elected to Fortress's board of directors

NEW YORK, Aug 05, 2009 /PRNewswire-FirstCall via COMTEX/ -- Fortress Investment Group LLC (NYSE: FIG) today reported its results for the quarter ended June 30, 2009.

Second Quarter 2009

For the quarter ended June 30, 2009, our GAAP net loss was $171 million and our GAAP net loss attributable to Class A Shareholders was $45 million, or $0.41 per diluted share, as compared to a loss of $0.67 per diluted share for the quarter ended June 30, 2008. Excluding principals agreement compensation, second quarter GAAP net income was $66 million.

Fund management distributable earnings for the second quarter was $53 million versus $75 million in the second quarter of 2008.

Pre-tax DE for the second quarter was $59 million, or $0.12 per dividend paying share (DEPS), versus $58 million for the second quarter of 2008.

For reconciliations from pre-tax distributable earnings and fund management DE to GAAP net income (loss), from GAAP net income (loss) excluding principals agreement compensation to GAAP net income (loss), from segment revenues to GAAP revenues, from segment assets to GAAP assets and from Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average Dividend Paying Shares Outstanding (Used for DEPS) see "Reconciliation of Fund Management DE to Pre-tax Distributable Earnings and GAAP Net Income (Loss)", "Reconciliation of GAAP Net Income (Loss) Excluding Principals Agreement Compensation to GAAP Net Income (Loss)", "Reconciliation of Segment Revenues to GAAP Revenues" and "Reconciliation of Segment Assets to GAAP Assets" in this release. Distributable earnings is a supplemental measure of our operating performance that we believe provides a meaningful basis for comparison between present and future periods.

The Company's quarterly segment revenues and distributable earnings will fluctuate materially depending upon the performance of our funds and the realization events within our private equity business, as well as other factors. Accordingly, the revenues and profits in any particular quarter should not be expected to be indicative of future results.

The following discussion of our results is based on segment reporting as presented in our Quarterly Report on Form 10-Q. Our GAAP statement of operations and balance sheet are presented following this discussion. The following table is a summary presentation of our segment performance with supplemental data provided for informational purposes. For a reconciliation of our segment results to the corresponding GAAP data, see the reconciliation information included later in this release.

Due to the increased significance of the hybrid private equity funds segment, it has been disaggregated from the private equity fund segment in this period and for all periods presented. Hybrid private equity funds are comprised of a family of "credit opportunities" funds focused on investing in distressed and undervalued assets, a family of "long dated value" funds focused on investing in undervalued assets with limited current cash flows and long investment horizons, a family of "real assets" funds focused on investing in tangible and intangible assets in four principal categories (real estate, capital assets, natural resources and intellectual property), and an Asian fund.

Supplemental Data for Three Months:

    Three Months Ended June 30, 2009
    (in millions)                                          Hybrid Funds Princ-
                                   Private Equity  Liquid  ------------  ipal
                                   ---------------  Hedge   Hedge  PE  Invest-
                          Total    Funds   Castles  Funds   Funds Funds  ments
                          -----    -----   -------  -----   ----- -----  -----
    AUM
      AUM - April
       1, 2009           $26,538  $10,161  $3,078  $4,809  $6,451  $2,039  $-
        Capital
         raised (1)        3,373        -       -      99   3,140     134   -
        Increase in
         invested
         capital             327       10       -       -       2     315   -
        Redemptions         (736)       -       -    (585)   (151)      -   -
        Return of
         capital
         distributions      (168)     (88)      -       -      (1)    (79)  -
        Income (loss)
         and foreign
         exchange          1,707      519     115     248     477     348   -
        -------------      -----      ---     ---     ---     ---     --- ---
      AUM - Ending
       Balance           $31,041  $10,602  $3,193  $4,571  $9,918  $2,757  $-

    Third-Party
     Capital Raised       $3,373       $-      $-     $99  $3,140    $134  $-

    Segment Revenues
      Management fee        $110      $40     $12     $20     $30      $8  $-
      Incentive income         7        -       -       -       -       7   -
      ----------------       ---      ---     ---     ---     ---     --- ---
        Total                117       40      12      20      30      15   -

    Segment Expenses
      Profit sharing
       compensation
       expenses               (8)       -       -      (2)     (2)     (4)  -
      Operating expenses     (56)     (12)     (5)    (11)    (21)     (7)  -
      ------------------     ---      ---     ---     ---     ---     --- ---
        Total                (64)     (12)     (5)    (13)    (23)    (11)  -

    Fund Management DE        53       28       7       7       7       4   -
    ------------------       ---      ---     ---     ---     ---     --- ---

    Investment
     Income                   14                                           14
    Interest Expense          (8)                                          (8)
    --------------           ---      ---     ---     ---     ---     --- ---
    Pre-tax
     Distributable
     Earnings                $59      $28      $7      $7      $7      $4  $6
    --------------           ---      ---     ---     ---     ---     --- ---

    Weighted Average
     Dividend Paying
     Shares and Units
     Outstanding             482
    -----------------        ---



    Three Months Ended June 30, 2008
    (in millions)                                        Hybrid Funds Princ-
                                 Private Equity  Liquid  ------------  ipal
                                 --------------  Hedge   Hedge   PE   Invest-
                        Total    Funds  Castles  Funds   Funds  Funds  ments
                        -----    -----  -------  -----   -----  -----  -----
    AUM
      AUM - April
       1, 2008         $34,029  $12,382  $3,503  $9,254  $8,149  $741    $-
        Capital raised   1,772      745       -     924     103     -     -
        Increase in
         invested
         capital           292      118       -       -       2   172     -
        Redemptions       (311)       -       -    (310)     (1)    -     -
        Return of
         capital
         distributions     (56)     (46)      -       -      (3)   (7)    -
        Income (loss)
         and foreign
         exchange         (760)    (560)     (5)   (163)     16   (48)    -
        -------------     ----     ----     ---    ----     ---   ---   ---
      AUM - Ending
       Balance         $34,966  $12,639  $3,498  $9,705  $8,266  $858    $-


    Segment Revenues
      Management fee      $150      $40     $15     $57     $36    $2    $-
      Incentive income      15        -       -      14       1     -     -
      ----------------     ---      ---     ---     ---     ---   ---   ---
        Total              165       40      15      71      37     2     -

    Segment Expenses
      Profit sharing
       compensation
       expenses            (20)      (1)     (1)    (16)     (2)    -     -
      Operating expenses   (70)      (7)    (10)    (25)    (26)   (2)    -
      ------------------   ---      ---     ---     ---     ---   ---   ---
        Total              (90)      (8)    (11)    (41)    (28)   (2)    -

    Fund Management DE      75       32       4      30       9     -     -
    ------------------     ---      ---     ---     ---     ---   ---   ---

    Investment Income       (7)                                          (7)
    Interest Expense       (10)                                         (10)
    ----------------       ---      ---     ---     ---     ---   ---   ---
    Pre-tax
     Distributable
     Earnings              $58      $32      $4     $30      $9    $-  $(17)
    --------------         ---      ---     ---     ---     ---   ---  ----

    Weighted Average
     Dividend Paying
     Shares and Units
     Outstanding           456
    -----------------      ---

    (1) Includes $3.1 billion of capital under management due to Fortress's
        take over of management of the D.B. Zwirn funds and related
        investment vehicles.

Supplemental Data for Six Months:

    Six Months Ended June 30, 2009
    (in millions)                                         Hybrid Funds Princ-
                                 Private Equity  Liquid   ------------  ipal
                                 --------------  Hedge    Hedge   PE   Invest-
                        Total    Funds  Castles  Funds    Funds  Funds  ments
                        -----    -----  -------  -----    -----  -----  -----
    AUM
      AUM - January 1,
       2009            $29,454  $10,307  $3,182  $7,169  $6,494  $2,302    $-
        Capital
         raised (1)      3,382        -       -     108   3,140     134     -
        Increase in
         invested
         capital           763       70       -       -       2     691     -
        Redemptions     (3,382)       -       -  (3,079)   (303)      -     -
        Return of
         capital
         distributions    (745)     (93)      -       -      (8)   (644)    -
        Income (loss)
         and foreign
         exchange        1,569      318      11     373     593     274     -
        -------------    -----      ---     ---     ---     ---     ---   ---
      AUM - Ending
       Balance         $31,041  $10,602  $3,193  $4,571  $9,918  $2,757    $-

    Third-Party
     Capital Raised     $3,382       $-      $-    $108  $3,140    $134    $-

    Segment Revenues
      Management fee      $216      $77     $24     $43     $58     $14    $-
      Incentive income       8        -       -       -       1       7     -
      ----------------     ---      ---     ---     ---     ---     ---   ---
        Total              224       77      24      43      59      21     -

    Segment Expenses
      Profit sharing
       compensation
       expenses            (12)       -       -      (5)     (3)     (4)    -
      Operating expenses  (115)     (20)    (13)    (25)    (46)    (11)    -
      ------------------  ----      ---     ---     ---     ---     ---   ---
        Total             (127)     (20)    (13)    (30)    (49)    (15)    -

    Fund Management DE      97       57      11      13      10       6     -
    ------------------     ---      ---     ---     ---     ---     ---   ---

    Investment  Income     (13)                                           (13)
    Interest Expense       (16)                                           (16)
    ----------------       ---      ---     ---     ---     ---     ---   ---
    Pre-tax
     Distributable
     Earnings              $68      $57     $11     $13     $10      $6  $(29)
    --------------         ---      ---     ---     ---     ---     ---  ----

    Weighted Average
     Dividend Paying
     Shares and Units
     Outstanding           472
    -----------------      ---



    Six Months Ended June 30, 2008
    (in millions)                                        Hybrid Funds Princ-
                                 Private Equity  Liquid  ------------  ipal
                                 --------------   Hedge  Hedge   PE   Invest-
                        Total    Funds  Castles   Funds  Funds  Funds  ments
                        -----    -----  -------   -----  -----  -----  -----
    AUM
      AUM - January
       1, 2008         $32,930  $12,642  $3,328  $8,128  $8,196  $636    $-
        Capital raised   3,926      745       -   2,211     837   133     -
        Increase in
         invested
         capital           981      760       -       -      26   195     -
        Redemptions       (894)       -       -    (421)   (473)    -     -
        Return of
         capital
         distributions    (236)    (174)      -       -      (4)  (58)    -
        Crystallized
         Incentive
         Income            (95)       -       -       -     (95)    -     -
        Income (loss)
         and foreign
         exchange       (1,646)  (1,334)    170    (213)   (221)  (48)    -
        -------------   ------   ------     ---    ----    ----   ---   ---
      AUM - Ending
       Balance         $34,966  $12,639  $3,498  $9,705  $8,266  $858    $-

    Segment Revenues
      Management fee      $295      $80     $28    $110     $73    $4    $-
      Incentive income      47       29       -      17       1     -     -
      ----------------     ---      ---     ---     ---     ---   ---   ---
        Total              342      109      28     127      74     4     -

    Segment Expenses
      Profit sharing
       compensation
       expenses            (52)     (13)     (2)    (33)     (4)    -     -
      Operating expenses  (144)     (14)    (18)    (49)    (59)   (4)    -
      ------------------  ----      ---     ---     ---     ---   ---   ---
        Total             (196)     (27)    (20)    (82)    (63)   (4)    -

    Fund Management DE     146       82       8      45      11     -     -
    ------------------     ---      ---     ---     ---     ---   ---   ---

    Investment Income      (10)                                         (10)
    Interest Expense       (20)                                         (20)
    ----------------       ---      ---     ---     ---     ---   ---   ---
    Pre-tax
     Distributable
     Earnings             $116      $82      $8     $45     $11    $-  $(30)
    --------------        ----      ---     ---     ---     ---   ---  ----

    Weighted Average
     Dividend Paying
     Shares and Units
     Outstanding           443
    --------------         ---

    (1) Includes $3.1 billion of capital under management due to Fortress's
        take over of management of the D.B. Zwirn funds and related
        investment vehicles.

Overview

We managed $31.0 billion of assets in private equity funds, liquid hedge funds and hybrid funds as of June 30, 2009. Fortress's revenues consist of (i) management fees, which are based on the size of our funds, (ii) incentive income, which is based on the performance of our funds, and (iii) investment income (loss), which is based on our principal investments.

In the second quarter of 2009, we generated fund management DE of $53 million. Including principal investments, Fortress generated pre-tax distributable earnings of $59 million.

For the quarter ended June 30, 2009, the private equity segments accounted for approximately 44% of total segment revenues, the liquid hedge funds segment accounted for approximately 17% of total segment revenues and the hybrid funds segments accounted for approximately 39% of total segment revenues.

For the quarter ended June 30, 2009, the private equity, liquid hedge funds and hybrid funds businesses accounted for approximately 66%, 13% and 21%, respectively, of total fund management DE.

Private Equity - Funds

For the quarter ended June 30, 2009, the Company's private equity funds had pre-tax DE of $28 million as compared to pre-tax DE of $32 million for the quarter ended June 30, 2008.

Assets under management for private equity funds was $10.6 billion at June 30, 2009 compared to $12.6 billion as of June 30, 2008.

As of June 30, 2009, our funds' private equity capital invested in non-public transactions totaled approximately $11.5 billion, and our private equity funds' unfunded commitments to investments were approximately $790 million.

Private Equity - Castles

For the quarter ended June 30, 2009, the Company's Castles generated pre-tax DE of $7 million as compared to $4 million for the quarter ended June 30, 2008.

Assets under management for the Castles was $3.2 billion at June 30, 2009 compared to $3.5 billion as of June 30, 2008.

Liquid Hedge Funds

For the quarter ended June 30, 2009, the Company's liquid hedge fund business generated pre-tax DE of $7 million as compared to $30 million for the quarter ended June 30, 2008.

Assets under management for the liquid hedge funds was $4.6 billion at June 30, 2009 compared to $9.7 billion as of June 30, 2008.

The following table shows our Assets Under Management by fund:


    (dollars in billions)        June 30,           December 31,    June 30,
                                   2009                 2008          2008
                                   ----                 ----          ----
    Macro Funds (2)                $3.7                 $6.1          $8.8
    Fortress Commodities Fund      $0.9                 $1.1          $0.9

    (2) Combined AUM for Fortress Macro Fund, Drawbridge Global Macro Fund
        Ltd, Drawbridge Global Macro Fund LP, DBGM Offshore Ltd, DBGM Onshore
        LP, DBGM Alpha V Ltd and Drawbridge Global Macro managed accounts.

The following table shows our gross and net returns by fund:(3)


                                         Three Months Ended   Six Months Ended
                                            June 30, 2009       June 30, 2009
                                         -------------------  ----------------
    Gross Returns
      Fortress Macro Funds L.P. Offshore (4)       4.3%               4.3%
      Drawbridge Global Macro Fund Ltd.            6.2%              12.3%
      Fortress Commodities Fund L.P.               2.3%               2.3%

    Net Returns
      Fortress Macro Funds L.P. Offshore (4)       3.2%               3.2%
      Drawbridge Global Macro Fund Ltd.            5.8%              11.3%
      Fortress Commodities Fund L.P.               1.8%               1.3%

    (3) The performance data contained herein reflects returns for a "new
        issue eligible," single investor class, net of expenses borne by the
        Fund (prior to any fees), as of the close of business on the last day
        of the relevant period. Specific performance may vary based on, among
        other things, whether fund investors are invested in one or more
        special investments.
    (4) Fortress Macro Offshore Fund L.P. returns reflect a new, class "A"
        investor from the May 1, 2009 date of inception of the fund.

Hybrid - Hedge Funds

For the quarter ended June 30, 2009, the Company's hybrid hedge fund business generated pre-tax DE of $7 million as compared to $9 million for the quarter ended June 30, 2008.

Assets under management for the hybrid hedge funds was $9.9 billion at June 30, 2009 compared to $8.3 billion as of June 30, 2008.

The following table shows our Assets Under Management by fund:


    (dollars in billions)                     June 30,  December 31,  June 30,
                                                2009        2008        2008
                                                ----        ----        ----
    Drawbridge Special Opportunities Funds (5)  $5.1        $5.0        $6.5
    Fortress Partners Funds (6)                 $1.7        $1.5        $1.8
    Fortress Value Recovery Funds (7)           $3.1        N.A.        N.A.

    (5) Combined AUM for Drawbridge Special Opportunities Fund Ltd.,
        Drawbridge Special Opportunities Fund LP and Drawbridge Special
        Opportunities Fund managed accounts.
    (6) Combined AUM for Fortress Partners Offshore Fund LP and Fortress
        Partners Fund LP.
    (7) Fortress will receive management fees from these funds equal to 1%
        of realized proceeds and up to 1% per annum on certain managed assets,
        and may receive limited incentive income if aggregate realizations
        exceed an agreed threshold.

The following table shows our gross and net returns by fund:(8)


                                      Three Months Ended   Six Months Ended
                                         June 30, 2009       June 30, 2009
                                      -------------------  -----------------
    Gross Returns
      Drawbridge Special Opportunities LP (9)     7.9%              11.8%
      Drawbridge Special Opportunities Ltd (9)    6.5%              10.8%
      Fortress Partners Fund LP                   8.8%               7.0%
      Fortress Partners Offshore Fund LP          9.5%               8.3%

    Net Returns
      Drawbridge Special Opportunities LP (9)     7.3%              10.7%
      Drawbridge Special Opportunities Ltd (9)    6.0%               9.7%
      Fortress Partners Fund LP                   8.5%               6.4%
      Fortress Partners Offshore Fund LP          9.2%               7.8%

    (8) The performance data contained herein reflects returns for a "new
        issue eligible," single investor class as of the close of business
        on the last day of the relevant period.  Gross returns reflect
        performance data prior to any fees borne by the Fund while net
        returns reflect performance data after taking into account any fees
        borne by the Fund.  Specific performance may vary based on, among
        other things, whether fund investors are invested in one or more
        special investments.
    (9) The returns for the Drawbridge Special Opportunities Funds reflect
        the performance of each fund excluding the performance of the
        redeeming capital accounts which relate to December 31, 2008
        redemptions.

Hybrid - Private Equity Funds

For the quarter ended June 30, 2009, the Company's hybrid private equity fund business generated pre-tax DE of $4 million as compared to a minimal gain for the quarter ended June 30, 2008.

Assets under management for the hybrid private equity funds was $2.8 billion at June 30, 2009 compared to $0.9 billion as of June 30, 2008.

Principal Investments

At June 30, 2009, we had $0.8 billion of assets (excluding cash and cash equivalents) in our principal investments segment, compared to $1.1 billion (excluding cash and cash equivalents) at June 30, 2008. During the three months ended June 30, 2009, we increased commitments to our principal investments by $4 million and funded $6 million of our commitments. We had $131 million of unfunded commitments to our principal investments as of June 30, 2009.

Our principal investments segment generated a gain of $6 million for the three months ended June 30, 2009, due primarily to a $14 million gain from the earnings on our equity investments in our hedge funds and $8 million of net interest expense.

Segment Expenses

Segment expenses were $64 million in the second quarter of 2009, down from $90 million for the second quarter of 2008. Segment expenses for the second quarters of 2009 and 2008 included $8 million and $20 million of profit sharing compensation, respectively, which is a function of revenues received from our various funds.

The Company had $289 million of share-based compensation expense (primarily relating to expense recorded in connection with the principals agreement, the issuance of restricted stock units to Fortress employees, and the issuance of restricted partnership units) for the quarter ended June 30, 2009, which contributed to our reporting a GAAP net loss per share. Share-based compensation expense is not included in segment expenses or in the calculation of distributable earnings.

Corporate Credit Agreement

As previously disclosed, in June 2009, we amended the terms of our credit agreement, agreeing to make additional amortization payments in association with any follow-on equity offerings. Accordingly, during the second quarter we applied a portion of the net proceeds from our second quarter equity offering to pay down the credit facility by $110 million. In addition, we also paid down $54 million on our revolving credit facility. As a result of these payments, we now have $440 million of debt outstanding as of June 30, 2009 and have capacity available of $59 million under our revolving credit facility.

Non-GAAP Information

Fortress discloses certain non-GAAP financial information, which management believes provides a meaningful basis for comparison among present and future periods. The following are non-GAAP measures used in the accompanying financial information:

    --  Pre-tax distributable earnings (DE) and pre-tax distributable earnings
        per dividend paying share
    --  Fund management DE
    --  Segment revenues
    --  Segment management fees
    --  GAAP net income excluding principals agreement compensation

    --  Segment assets

We urge you to read the reconciliation of such data to the related GAAP measures appearing later in this release.

Conference Call

Management will host a conference call today, Wednesday, August 5, 2009 at 8:00 A.M. Eastern Time. A copy of the earnings release is posted to the Investor Relations section of Fortress's website, www.fortress.com.

All interested parties are welcome to participate on the live call. The conference call may be accessed by dialing 1-877-252-8576 (from within the U.S.) or 1-706-679-1521 (from outside of the U.S.) ten minutes prior to the scheduled start of the call; please reference "Fortress Second Quarter Earnings Call."

A simultaneous webcast of the conference call will be available to the public on a listen-only basis at www.fortress.com. Please allow extra time prior to the call to visit the site and download the necessary software required to listen to the internet broadcast.

A telephonic replay of the conference call will also be available until 11:59 P.M. Eastern Time on Wednesday, August 12, 2009 by dialing 1-800-642-1687 (from within the U.S.) or 1-706-645-9291 (from outside of the U.S.); please reference access code "21490515."

About Fortress

Fortress is a leading global alternative asset manager with approximately $31.0 billion in assets under management as of June 30, 2009. Fortress manages private equity funds and hedge funds. Fortress was founded in 1998. For more information regarding Fortress Investment Group LLC or to be added to our e-mail distribution list, please visit www.fortress.com.

Cautionary Note Regarding Forward-Looking Statements -- Certain statements in this press release may constitute "forward-looking statements" within the meaning of the Private Securities Litigation Reform Act of 1995, including statements regarding our sources of management fees, incentive income and investment income (loss), estimated fund performance, the amount and source of expected capital commitments, amount of redemptions and our effective tax rate. These statements are not historical facts, but instead represent only the Company's beliefs regarding future events, many of which, by their nature, are inherently uncertain and outside of the Company's control. It is possible that the sources and amounts of management fees, incentive income and investment income, the amount and source of expected capital commitments for any new fund, redemption amounts or our effective tax rate may differ, possibly materially, from these forward-looking statements, and any such differences could cause our actual results to differ materially from the results expressed or implied by these forward-looking statements. For a discussion of some of the risks and important factors that could affect such forward-looking statements, see the sections entitled "Risk Factors" and "Management's Discussion and Analysis of Financial Condition and Results of Operations" in the Company's Annual Report on Form 10-K and Quarterly Report on Form 10-Q, which is, or will be, available on the Company's website (www.fortress.com). In addition, new risks and uncertainties emerge from time to time, and it is not possible for the Company to predict or assess the impact of every factor that may cause its actual results to differ from those contained in any forward-looking statements. Accordingly, you should not place undue reliance on any forward-looking statements contained in this press release. The Company can give no assurance that the expectations of any forward-looking statement will be obtained. Such forward-looking statements speak only as of the date of this press release. The Company expressly disclaims any obligation to release publicly any updates or revisions to any forward-looking statements contained herein to reflect any change in the Company's expectations with regard thereto or any change in events, conditions or circumstances on which any statement is based.




                        Fortress Investment Group LLC
              Consolidated Statements of Operations (Unaudited)
                  (dollars in thousands, except share data)

                                Three Months Ended        Six Months Ended
                                    June 30,                  June 30,
                                ------------------        -----------------
                                2009         2008         2009         2008
                                ----         ----         ----         ----
    Revenues
      Management fees
       from affiliates        $108,425     $149,605     $214,077     $293,662
      Incentive income
       from affiliates           6,958       18,300        6,958       55,444
      Expense reimbursements
       from affiliates          20,661       15,950       33,708       30,221
      Other revenues             3,043        4,241        6,640        9,649
                                 -----        -----        -----        -----
                               139,087      188,096      261,383      388,976
                               -------      -------      -------      -------
    Expenses
      Interest expense           7,605        9,888       15,791       20,224
      Compensation and
       benefits                113,456      137,460      222,692      264,479
      Principals agreement
       compensation            237,367      237,367      472,126      474,734
      General, administrative
       and other                21,034       19,746       38,219       36,316
      Depreciation and
       amortization              2,761        2,436        5,402        4,872
                                 -----        -----        -----        -----
                               382,223      406,897      754,230      800,625
                               -------      -------      -------      -------
    Other Income (Loss)
      Gains (losses) from
       investments
         Net realized
          gains (losses)          (376)          61         (772)       1,674
         Net realized
          gains (losses) from
          affiliate investments    234          (92)         (14)         155
         Net unrealized
          gains (losses)             -            -            -            -
         Net unrealized
          gains (losses)
          from affiliate
          investments           19,583       (6,584)      17,754      (36,401)
      Tax receivable
       agreement liability
        reduction                    -            -          (55)           -
       Earnings (losses)
        from equity
        method investees        51,057      (26,500)      16,208      (75,629)
                                ------      -------       ------      -------
                                70,498      (33,115)      33,121     (110,201)
                                ------      -------       ------     --------
    Income (Loss)
     Before Income Taxes      (172,638)    (251,916)    (459,726)    (521,850)
      Income tax
       benefit (expense)         1,308        1,949        1,715       (5,303)
                                 -----        -----        -----       ------
    Net Income (Loss)        $(171,330)   $(249,967)   $(458,011)   $(527,153)
                             =========    =========    =========    =========
    Principals' and
     Others' Interests
     in Income (Loss)
     of Consolidated
     Subsidiaries            $(126,738)   $(194,411)   $(346,260)   $(402,680)
                             =========    =========    =========    =========
    Net Income (Loss)
     Attributable
     to Class A
     Shareholders             $(44,592)    $(55,556)   $(111,751)   $(124,473)
                              ========     ========    =========    =========
    Dividends declared per
     Class A share                  $-       $0.225           $-       $0.450
                                   ===       ======          ===       ======

    Earnings Per Class A
     share - Fortress
     Investment Group
    --------------------
    Net income loss) per
     Class A share, basic       $(0.40)      $(0.62)      $(1.10)      $(1.36)
                                ======       ======       ======       ======
    Net income (loss) per
     Class A share, diluted     $(0.41)      $(0.67)      $(1.10)      $(1.37)
                                ======       ======       ======       ======
    Weighted average
     number of Class A
     shares outstanding,
     basic                 115,547,744   94,913,677  105,447,324   94,904,157
                           ===========   ==========  ===========   ==========
    Weighted average
     number of Class A
     shares outstanding,
     diluted               427,619,294  406,985,227  417,518,874  406,975,707
                           ===========  ===========  ===========  ===========



                          Fortress Investment Group LLC
                           Consolidated Balance Sheets
                    (dollars in thousands, except share data)

                                                 June 30,     December 31,
                                                   2009          2008
                                               (Unaudited)
                                               -----------    -----------
    Assets
      Cash and cash equivalents                    $90,506      $263,337
      Due from affiliates                           70,709        38,504
      Investments
        Equity method investees                    818,147       774,382
        Options in affiliates                          116            39
      Deferred tax asset                           429,794       408,066
      Other assets                                  86,028        93,407
                                                    ------        ------
                                                $1,495,300    $1,577,735
                                                ==========    ==========
    Liabilities and Shareholders' Equity

    Liabilities
      Accrued compensation and benefits            $63,268      $158,033
      Due to affiliates                            330,194       346,265
      Deferred incentive income                    163,635       163,635
      Debt obligations payable                     439,750       729,041
      Other liabilities                             23,484        26,741
                                                    ------        ------
                                                 1,020,331     1,423,715
                                                 ---------     ---------
    Commitments and Contingencies

    Equity
       Class A shares, no par value,
        1,000,000,000 shares authorized,
        140,651,044 and 94,609,525 shares
        issued and outstanding at June 30,
        2009 and December 31, 2008,
        respectively.                                    -             -
       Class B shares, no par value,
        750,000,000 shares authorized,
        312,071,550 shares issued and
        outstanding                                      -             -
       Paid-in capital                             830,447       596,803
       Retained earnings (accumulated deficit)    (625,130)     (513,379)
       Accumulated other comprehensive
        income (loss)                               (1,135)         (866)
                                                    ------          ----
       Total Fortress shareholders' equity         204,182        82,558
                                                   -------        ------
       Principals' and others' interests in
        equity of consolidated subsidiaries        270,787        71,462
                                                   -------        ------
        Total equity                               474,969       154,020
                                                   -------       -------
                                                $1,495,300    $1,577,735
                                                ==========    ==========



                         Fortress Investment Group LLC
         Reconciliation of Fund Management DE to Pre-tax Distributable
                      Earnings and GAAP Net Income (Loss)
                            (dollars in millions)

                                                   Three Months Ended
                                                   ------------------
                                              June 30, 2009   June 30, 2008
                                              -------------   -------------

    Fund Management DE                               $53            $75
    ------------------                               ---            ---
      Investment Income (Loss)                        14             (7)
      Interest Expense                                (8)           (10)
                                                     ---            ---
    Pre-tax Distributable Earnings                    59             58
    ------------------------------                   ---            ---
      Private equity incentive income                  -              3
      Earnings from equity method investees           38            (26)
      Gains/losses on options                          -             (3)
      Gains/losses on other Investments               20             (3)
      Impairment of investments                        -             10
      Employee equity-based compensation             (52)           (53)
      Principal compensation                        (237)          (238)
      Employee portion of incentive income             -              -
      Taxes                                            1              2
                                                     ---            ---
    GAAP Net Income (Loss)                         $(171)         $(250)
    ----------------------                         -----          -----


                                                     Six Months Ended
                                                     ----------------
                                              June 30, 2009   June 30, 2008
                                              -------------   -------------

    Fund Management DE                               $97           $146
    ------------------                               ---           ----
      Investment Income (Loss)                       (13)           (10)
      Interest Expense                               (16)           (20)
                                                     ---            ---
    Pre-tax Distributable Earnings                    68            116
    ------------------------------                   ---            ---
      Private equity incentive income                  -              9
      Earnings from equity method investees           (1)           (67)
      Gains/losses on options                          -            (15)
      Gains/losses on other Investments               18            (21)
      Impairment of investments                       32             10
      Employee equity-based compensation            (105)           (89)
      Principal compensation                        (472)          (475)
      Employee portion of incentive income             -             10
      Taxes                                            2             (5)
                                                     ---            ---
    GAAP Net Income (Loss)                         $(458)         $(527)
    ----------------------                         -----          -----



                      Fortress Investment Group LLC
            Reconciliation of Segment Revenues to GAAP Revenues
                          (dollars in millions)

                                               Three Months Ended
                                               ------------------
                                          June 30, 2009  June 30, 2008
                                          -------------  -------------

    Segment Revenues                            $117          $165
      Adjust incentive income                      1             3
      Adjust income from the receipt of options    -             -
      Other revenues                              21            20
      Consolidation and elimination                -             -
                                                 ---           ---
    GAAP Revenues                               $139          $188
    -------------                               ----          ----


                                                 Six Months Ended
                                                 ----------------
                                           June 30, 2009   June 30, 2008
                                           -------------   -------------

    Segment Revenues                              $224          $342
      Adjust incentive income                        -             9
      Adjust income from the receipt of options      -             -
      Other revenues                                37            38
      Consolidation and elimination                  -             -
                                                   ---           ---
    GAAP Revenues                                 $261          $389
    -------------                                 ----          ----



                      Fortress Investment Group LLC
              Reconciliation of Segment Assets to GAAP Assets
                           (dollars in millions)

                                                      Assets as of
                                                      ------------
                                              June 30, 2009   June 30, 2008
                                              -------------   -------------

    Segment Assets                                 $1,445        $1,993
      Adjust equity investments from fair value         -             -
      Adjust equity investments from cost              20           (93)
      Adjust investments gross of employee portion     30            43
      Adjust option investments to
       intrinsic value                                  -             1
                                                      ---           ---
    GAAP Assets                                    $1,495        $1,944
    -----------                                    ------        ------

''Distributable earnings'' is our supplemental measure of operating performance. It reflects the value created which management considers available for distribution during any period. As compared to generally accepted accounting principles (''GAAP'') net income, distributable earnings excludes the effects of unrealized gains (or losses) on illiquid investments, reflects contingent revenue which has been received as income to the extent it is not expected to be reversed, and disregards expenses which do not require an outlay of assets, whether currently or on an accrued basis. Distributable earnings is reflected on an unconsolidated and pre-tax basis, and, therefore, the interests in consolidated subsidiaries related to Fortress Operating Group units (held by the principals) and income tax expense are added back in its calculation. Distributable earnings is not a measure of cash generated by operations which is available for distribution nor should it be considered in isolation or as an alternative to cash flow or net income and it is not necessarily indicative of liquidity or cash available to fund our operations. For a complete discussion of distributable earnings and its reconciliation to GAAP, as well as an explanation of the calculation of distributable earnings impairment, see note 10 to our financial statements included in our Quarterly Report on Form 10-Q for the quarter ended June 30, 2009.

Our management uses distributable earnings:

    --  in its determination of periodic distributions to equity holders;
    --  in making operating decisions and assessing the performance of each of
        our core businesses;
    --  for planning purposes, including the preparation of our annual operating
        budgets; and

    --  as a valuation measure in strategic analyses in connection with the
        performance of our funds and the performance of our employees.

Growing distributable earnings is a key component to our business strategy and distributable earnings is the supplemental measure used by our management to evaluate the economic profitability of each of our businesses and our total operations. Therefore, we believe that it provides useful information to our investors in evaluating our operating performance. Our definition of distributable earnings is not based on any definition contained in our amended and restated operating agreement.


                          Fortress Investment Group LLC
     Reconciliation of GAAP Net Income (Loss) Excluding Principals Agreement
                     Compensation to GAAP Net Income (Loss)
                             (dollars in thousands)

                                       Three months ended  Six months ended
                                          June 30, 2009      June 30, 2009
                                       ------------------  ----------------

    GAAP net loss                            $(171,330)        $(458,011)
    Principals agreement compensation          237,367           472,126
                                               -------           -------
    GAAP net income excluding
     principals agreement compensation         $66,037           $14,115
                                               =======           =======



                          Fortress Investment Group LLC
         Reconciliation of Weighted Average Class A Shares Outstanding
        (Used for Basic EPS) to Weighted Average Dividend Paying Shares
                            Outstanding (Used for DEPS)

                                              Three Months Ended June 30,
                                              ---------------------------
                                                    2009          2008
                                                    ----          ----
    Weighted Average Class A Shares
     Outstanding (Used for Basic EPS)           115,547,744   94,913,677
    ---------------------------------           -----------   ----------

      Weighted average fully vested restricted
       Class A share units with dividend
       equivalent rights                           (631,260)    (394,286)
      Weighted average fully vested
       restricted Class A shares                   (105,728)     (19,040)

    Weighted average Class A shares
     outstanding                                114,810,756   94,500,351
    -------------------------------             -----------   ----------

      Weighted average restricted Class A
       shares (10)                                  138,160      104,219
      Weighted average fully vested restricted
       Class A share units which are entitled
       to dividend equivalent payments              631,260      394,286
      Weighted average nonvested restricted
       Class A share units which are entitled
       to dividend equivalent payments           22,955,132   23,652,206
      Weighted average Fortress Operating
       Group units                              312,071,550  312,071,550
      Weighted average Fortress Operating
       Group RPUs                                31,000,000   25,208,791

    Weighted Average Dividend Paying Shares
     Outstanding (Used for DEPS)                481,606,858  455,931,403
    ---------------------------------------     -----------  -----------


                                                Six Months Ended June 30,
                                                -------------------------
                                                    2009         2008
                                                    ----         ----
    Weighted Average Class A Shares
     Outstanding (Used for Basic EPS)           105,447,324   94,904,157
    ---------------------------------           -----------   ----------

      Weighted average fully vested restricted
       Class A share units with dividend
       equivalent rights                           (631,260)    (394,286)
      Weighted average fully vested
       restricted Class A shares                   (104,404)      (9,520)

    Weighted average Class A shares
     outstanding                                104,711,660   94,500,351
    -------------------------------             -----------   ----------

      Weighted average restricted Class A
       shares (10)                                  136,836      100,757
      Weighted average fully vested restricted
       Class A share units which are entitled
       to dividend equivalent payments              631,260      394,286
      Weighted average nonvested restricted
       Class A share units which are entitled
       to dividend equivalent payments           22,955,132   23,708,849
      Weighted average Fortress Operating
       Group units                              312,071,550  312,071,550
      Weighted average Fortress Operating
       Group RPUs                                31,000,000   12,604,396

    Weighted Average Dividend Paying Shares
     Outstanding (Used for DEPS)                471,506,438  443,380,189
    ---------------------------------------     -----------  -----------

    (10) Includes both fully vested and nonvested weighted average
         restricted class A shares.

SOURCE
Fortress Investment Group LLC

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