Och-Ziff Capital Management Group

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Och-Ziff Capital Management Group LLC Reports 2010 Third Quarter Results
2010 Third Quarter Dividend of $0.10 per Class A Share

NEW YORK, Nov. 2, 2010 /PRNewswire via COMTEX/ --

Och-Ziff Capital Management Group LLC (NYSE: OZM) (the "Company" or "Och-Ziff") today reported a GAAP Net Loss(1) of $93.5 million, or $1.04 per basic and $1.05 per diluted Class A Share, for the third quarter ended September 30, 2010. The Company also declared a $0.10 per share 2010 third quarter cash dividend on its Class A Shares.

Summary Highlights

  • Distributable Earnings of $52.1 million, or $0.13 per Adjusted Class A Share, for the 2010 third quarter increasing from $34.2 million, or $0.08 per Adjusted Class A Share, for the 2009 third quarter
  • Assets under management of $26.3 billion as of October 1, 2010, 4% higher than $25.3 billion as of July 1, 2010 and 19% higher than $22.1 billion as of October 1, 2009
  • Estimated assets under management of $27.2 billion as of November 1, 2010, reflecting an 18% year-to-date increase which was attributable to capital net inflows of $2.4 billion and performance-related appreciation of $1.7 billion
  • Year-to-date estimated net returns through October 31, 2010 of the OZ Master Fund of 6.7%, the OZ Europe Master Fund of 6.0%, the OZ Asia Master Fund of 9.0% and the OZ Global Special Investments Master Fund of 10.5%

"During the third quarter and in the month of October, we again generated positive, risk-adjusted returns," said Daniel S. Och, Chairman and Chief Executive Office of Och-Ziff. "Our consistent, disciplined approach to investing and managing risk, and the low volatility of our returns, has significant value to our fund investors. The investment environment has improved relative to the first half of 2010, and we saw new opportunities in many of our strategies to which we have deployed capital.

"We remain confident that capital allocations to alternative asset managers will be significant, but think that the environment has further reinforced the importance of manager selection. We believe that our year-to-date capital net inflows reflect a leading market share of those to the hedge fund industry and to absolute return managers in particular. We view our investment track record, transparency and infrastructure as the key drivers to furthering our competitive differentiation over time."

(1) References to the Company's GAAP Net Loss throughout this press release refer to the Company's GAAP net loss allocated to Class A shareholders.

GAAP NET LOSS ALLOCATED TO CLASS A SHAREHOLDERS

For the 2010 third quarter, Och-Ziff reported a GAAP Net Loss of $93.5 million, or $1.04 per basic and $1.05 per diluted Class A Share, compared to a GAAP Net Loss of $80.0 million, or $1.02 per basic and $1.06 per diluted Class A Share, for the 2009 third quarter. For the first nine months of 2010, Och-Ziff reported a GAAP Net Loss of $271.6million, or $3.16 per basic and diluted Class A Share, compared to a GAAP Net Loss of $250.2 million, or $3.23 per basic and $3.25 per diluted Class A Share, for the first nine months of 2009. The increase in the GAAP Net Loss for both periods was primarily driven by an increase in income tax expense, as well as an increase in the Company's interest in its principal operating subsidiaries (the "Och-Ziff Operating Group") due to the vesting of Class A Restricted Share Units ("RSUs") and the exchange of Och-Ziff Operating Group A Units ("Group A Units") for Class A Shares. As a result, a larger share of the losses of the Och-Ziff Operating Group was allocated to the Company. Offsetting these increases in the GAAP Net Loss was an increase in management fees as a result of higher assets under management and lower compensation and benefits expenses, as the accrual for estimated discretionary cash bonuses taken in the second and third quarters of 2009 did not recur in 2010. As it has done historically, the Company expects to record most of the discretionary cash bonus expense in the fourth quarter.

The GAAP Net Loss in the 2010 third quarter and first nine months primarily resulted from non-cash expenses of $411.8 million and $1.2 billion, respectively, associated with the Company's reorganization in connection with its initial public offering ("IPO") in November 2007. These expenses are related to the amortization of Group A Units, which represent equity interests in the Och-Ziff Operating Group that were issued to the Company's pre-IPO owners in exchange for their pre-IPO interests in those subsidiaries. The Group A Units generally vest annually over five years until November 2012. Accordingly, the amortization of these expenses is expected to result in a GAAP Net Loss on an annual basis through 2012. Once vested, the Group A Units may be exchanged on a one-to-one basis for Class A Shares.

Additionally, the GAAP Net Loss in the 2010 third quarter and first nine months were driven by non-cash expenses of $32.7 million and $92.0 million, respectively, for the amortization of equity-based compensation. This expense relates primarily to RSUs awarded to all of the Company's employees in connection with its IPO, which vest annually over four years until November 2011, and subsequent compensation-related grants. Each RSU represents the right to receive one Class A Share upon vesting.

Throughout this press release, the Company presents financial measures that are not prepared in accordance with GAAP. For a discussion of these non-GAAP measures, please see the discussion "Non-GAAP and Segment Financial Measures" at the end of this press release.

DISTRIBUTABLE EARNINGS (NON-GAAP)

The Company's Distributable Earnings for the 2010 third quarter were $52.1 million, or $0.13 per Adjusted Class A Share, compared to $34.2 million, or $0.08 per Adjusted Class A Share, in the 2009 third quarter. Distributable Earnings for the first nine months of 2010 were $158.3 million, or $0.39 per Adjusted Class A Share, compared to $73.9 million, or $0.18 per Adjusted Class A Share, in the first nine months of 2009. The year-over-year increase in both periods was primarily attributable to higher management fees as a result of higher assets under management and lower compensation and benefits expenses, as the accrual for estimated discretionary cash bonuses taken in the second and third quarters of 2009 did not recur in 2010. As it has done historically, the Company expects to record most of the discretionary cash bonus expense in the fourth quarter.

Distributable Earnings is a non-GAAP measure. For reconciliations of Distributable Earnings to the respective GAAP Net Losses for the periods described above, please see Exhibits 3 through 7 that accompany this press release. Additionally, please see the discussion of "Non-GAAP and Segment Financial Measures" at the end of this press release, including the definitions of Distributable Earnings and Adjusted Class A Shares.

ASSETS UNDER MANAGEMENT

Och-Ziff's assets under management were $26.5 billion as of September 30, 2010, compared with $25.5 billion in assets under management as of June 30, 2010 and $22.3 billion in assets under management as of September 30, 2009. The $4.2 billion year-over-year increase was driven by capital net inflows of $2.6 billion and performance-related appreciation of $1.6 billion. During the 2010 third quarter, the $978.4 million increase in assets under management was driven by performance-related appreciation of $756.8 million and capital net inflows of $221.6 million.

Assets under management by fund:








% Change (1)

(dollars in billions)

September 30,
2010


June 30,
2010


September 30,
2009


Sept. 2010 vs.
Jun. 2010


Sept. 2010 vs.
Sept. 2009











OZ Master Fund

18.6


18.4


14.8


1%


26%

OZ Europe Master Fund

3.0


2.9


3.0


2%


0%

OZ Asia Master Fund

1.4


1.3


1.3


7%


7%

OZ Global Special Investments
Master Fund

1.2


1.2


2.0


1%


-40%

Other (1) (2)

2.3


1.7


1.2


32%


85%

(1) Rounding differences may occur.

(2) Includes real estate funds, managed accounts and other funds not significant to the Company's assets under management.

Estimated assets under management as of November 1, 2010 were $27.2 billion, which reflected November 1, 2010 capital net inflows of approximately $300 million and October 2010 performance-related appreciation of approximately $600 million. For the period from December 31, 2009 through November 1, 2010, estimated assets under management increased $4.1 billion, or 18%, driven by estimated capital net inflows of approximately $2.4 billion and estimated performance-related appreciation of approximately $1.7 billion.

INVESTMENT PERFORMANCE

For the first nine months of 2010, performance-related appreciation was principally driven by credit-related strategies in the U.S. and Europe, long/short equities and convertible arbitrage in Asia and private investments in Europe and Asia.

Performance by fund(1):


2010


July


August


September


3Q


YTD Sept. 2010











OZ Master Fund

1.35%


0.19%


1.34%


2.90%


4.26%

OZ Europe Master Fund

0.94%


0.59%


1.78%


3.34%


4.92%

OZ Asia Master Fund

0.47%


0.17%


1.54%


2.19%


5.21%

OZ Global Special Investments Master Fund

1.25%


0.24%


2.07%


3.59%


7.33%

(1) Please see important disclosures on Exhibit 10 of the financial supplement accompanying this press release.

ECONOMIC INCOME FOR THE OCH-ZIFF FUNDS SEGMENT

The Company conducts substantially all of its business through the Och-Ziff Funds segment, which is currently the Company's only reportable segment under GAAP. This segment provides investment management and advisory services to the Company's hedge funds and separately managed accounts.

The measures discussed below are presented on an Economic Income basis. For reconciliations of these segment measures to the respective GAAP measures, please see Exhibits 3through 7 that accompany this press release. Additionally, please see the discussion of "Non-GAAP and Segment Financial Measures" at the end of this press release.

Total Revenues - Segment

Total revenues for the 2010 third quarter were $111.4 million, a 24% increase from total revenues for the 2009 third quarter of $89.6 million. Management fees were $105.5 million, 22% higher than management fees in the prior year period of $86.3 million.

Total revenues for the first nine months of 2010 were $324.5 million, a 21% increase from total revenues of $267.3 million in the first nine months of 2009. Management fees were $312.1 million, 19% higher than management fees in the prior year period of $263.2 million.

Total revenues increased year-over-year in both periods due primarily to higher management fees resulting from the growth in assets under management. This growth was driven by performance-related appreciation and capital net inflows.

Compensation and Benefits - Segment

Compensation and benefits for the 2010 third quarter totaled $18.6 million, 21% lower than compensation and benefits of $23.5 million for the 2009 third quarter. Compensation and benefits for the first nine months of 2010 totaled $53.4 million, 38% lower than compensation and benefits in the prior year period of $86.5 million.

The year-over-year decrease in both periods was principally attributable to the accrual for estimated discretionary cash bonuses taken in the second and third quarters of 2009 that did not recur in 2010. As it has done historically, the Company expects to record most of the discretionary cash bonus expense in the fourth quarter.

Non-Compensation Expenses - Segment

Non-compensation expenses for the 2010 third quarter were $20.3 million, a 9% decline from non-compensation expenses of $22.3 million for the 2009 third quarter. Non-compensation expenses for the first nine months of 2010 were $61.7 million, 10% lower than non-compensation expenses in the prior year period of $68.1 million.

In both periods, the decrease was primarily due to lower insurance costs and certain other expenses, partially offset by an increase in professional services fees. Also contributing to the year-to-date decline was lower interest expense on the Company's variable rate borrowings resulting from the decline in LIBOR rates and the early retirement of an aggregate of $105 million of the Company's term loan in 2009.

Economic Income - Segment

Economic Income for the Och-Ziff Funds segment for the 2010 third quarter was $72.4 million, a 65% increase from Economic Income of $43.8 million for the 2009 third quarter. Economic Income for the first nine months of 2010 was $209.1 million, an 86% increase from Economic Income of $112.6 million in the prior year period. The increase in both periods was driven primarily by a combination of higher management fees and lower compensation and benefits expenses, as described above.

ECONOMIC INCOME FOR THE COMPANY'S OTHER OPERATIONS (NON-GAAP)

The Company's Other Operations are comprised of its real estate business, which manages and provides advisory services to its real estate funds, and investments in new businesses established to expand certain of the Company's private investment platforms. The businesses within the Company's Other Operations are in their early development stages and are not included in the results of the Och-Ziff Funds segment.

Economic Income for the Company's Other Operations for the 2010 third quarter was a net loss of $2.9 million, compared to a net loss of $4.3 million for the 2009 third quarter. Economic Income for the Company's Other Operations for the first nine months of 2010 was a net loss of $10.1 million, compared to a net loss in the prior year period of $12.8 million. The decrease in the net loss for the three month period was principally the result of lower expenses related to the Company's Asia real estate business and increased management fees related to the launch of its new real estate fund. The decrease in net loss for the year-to-date period was the result of lower non-compensation expenses due to the reimbursement of organization expenses related to the Company's new real estate fund, which were primarily recorded in the second quarter of 2010, a decrease in the Company's share of the net losses of its African joint venture, as well as lower expenses related to the Company's Asia real estate business.

Economic Income for the Company's Other Operations is a non-GAAP measure. For reconciliations of Economic Income for the Company's Other Operations to the respective GAAP Net Losses for the periods described above, please see Exhibits 3 through 7 that accompany this press release. Additionally, please see the discussion of "Non-GAAP and Segment Financial Measures" at the end of this press release.

ECONOMIC INCOME FOR THE COMPANY (NON-GAAP)

Economic Income for the Company for the 2010 third quarter was $69.5 million, a 76% increase from Economic Income of $39.5 million for the 2009 third quarter. Economic Income for the Company for the first nine months of 2010 was $199.0 million, a nearly two-fold increase from Economic Income of $99.8 million in the prior year period. The increase for both periods was primarily attributable to higher management fees and lower compensation and benefits expenses in the Och-Ziff Funds segment.

Economic Income for the Company is a non-GAAP measure. For reconciliations of Economic Income for the Company to the respective GAAPNet Losses for the periods described above, please see Exhibits 3 through 7 that accompany this press release. Additionally, please see the discussion of "Non-GAAP and Segment Financial Measures" at the end of this press release.

CAPITAL

As of September 30, 2010, the number of Class A Shares outstanding was 90,525,165. For purposes of calculating Distributable Earnings per Share, the Company assumes that all interests of the partners and the Ziffs in the Och-Ziff Operating Group ("Partner Units") and RSUs outstanding during the period have been converted on a one-to-one basis into Class A Shares. For the third quarter and first nine months ended September 30, 2010, the total weighted-average Adjusted Class A Shares outstanding were 410,031,185 and 409,087,298, respectively.

DIVIDEND

The Board of Directors of Och-Ziff authorized a 2010 third quarter dividend of $0.10 per Class A Share. The dividend is payable on November 18, 2010 to holders of record as of the close of business on November 11, 2010. The ex-dividend date will be November 8, 2010.

For U.S. federal income tax purposes, the dividend will be treated as a partnership distribution. Based on the best information currently available, the Company estimates that when calculating withholding taxes, the entire amount of the 2010 third quarter dividend will be treated as U.S. source dividend income.

Non-U.S. holders of Class A Shares are generally subject to U.S. federal withholding tax at a rate of 30% (subject to reduction by applicable treaty or other exception) on their share of U.S. source dividends and certain other types of U.S. source income realized by the Company. With respect to interest, however, no withholding is generally required if proper certification (on an IRS Form W-8) of a beneficial owner's foreign status has been filed with the withholding agent. Non-U.S. holders must generally provide the withholding agent with a properly completed IRS Form W-8 to obtain any reduction in withholding.

* * * *

Och-Ziff will host a conference call today, November 2, 2010, at 8:30 a.m. Eastern Time to discuss the Company's 2010 third quarter results. The call will be open to the public and can be accessed by dialing (888) 680-0890 (callers inside the U.S.) or (617) 213-4857 (callers outside the U.S.). The number should be dialed at least ten minutes prior to the start of the call. The passcode for the call will be 35903544. A simultaneous webcast of the call will be available to the public on a listen-only basis on the For Shareholders page of the Company's website at www.ozcap.com.

For those unable to listen to the live broadcast, a replay will be available by dialing (888) 286-8010 (callers inside the U.S.) or (617) 801-6888 (callers outside the U.S.), passcode 38841451, beginning approximately two hours after the event for two weeks. A webcast replay of the event will also be available on the For Shareholders page of the Company's website.

* * * *

Non-GAAP and Segment Financial Measures

In addition to analyzing the Company's results on a GAAP basis, Och-Ziff's management also reviews the Company's results on an "Economic Income basis." Economic Income for the Company, the Och-Ziff Funds segment and Other Operations excludes the adjustments described below that are required for presentation of the Company's results on a GAAP basis, but that management does not consider when evaluating the operating performance of the Company in any given period. Management, therefore, uses Economic Income as the basis on which it evaluates the performance of the Company's business and makes resource allocation and other operating decisions. In addition, management believes that Economic Income provides a more comparable view of the Company's operating performance from period to period. Management considers it important that investors review the same operating information that it uses.

Economic Income is a measure of pre-tax operating performance that excludes the following from the Company's results on a GAAP basis:

  • Income allocations to the Company's partners and Ziff Brothers Investments (the "Ziffs") on their direct interests in the Och-Ziff Operating Group. Management reviews operating performance at the Och-Ziff Operating Group level, where substantially all of the Company's operations are performed, prior to making any income allocations;
  • Reorganization expenses related to the Company's IPO, equity-based compensation expenses and depreciation and amortization expenses, as management does not consider these non-cash expenses to be reflective of operating performance;
  • Changes in the tax receivable agreement liability and net gain on early retirement of debt, as management does not consider these items to be reflective of operating performance;
  • Net earnings on the deferred balances and net gains (losses) on investments in Och-Ziff funds, as these amounts primarily relate to amounts due to the Company's partners and the Ziffs for pre-IPO deferred incentive income, and amounts due to employees under deferred cash compensation arrangements, as management does not consider these items to be reflective of operating performance; and
  • Amounts related to the consolidated Och-Ziff funds, including the related eliminations of management fees and incentive income, as management reviews the total amount of management fees and incentive income earned from all of the Och-Ziff funds in relation to total assets under management and fund performance.

In addition, deferred cash compensation expense and expenses related to compensation arrangements indexed to annual investment performance is recognized in full on the date they are determined (generally in the fourth quarter of each year), as management determines the total amount of compensation based on the Company's performance in the year of the award.

Management evaluates Economic Income for the Och-Ziff Funds segment, the Company's only reportable segment under GAAP, and for the Company's Other Operations. Economic Income for Other Operations is a non-GAAP measure that is calculated on the same basis as the methodology that is used to calculate Economic Income for the Och-Ziff Funds segment. Management also evaluates Economic Income for the Company, which is a non-GAAP measure that equals the sum of Economic Income for the Och-Ziff Funds segment and for the Company's Other Operations.

As a result of the adjustments described above, management fees, compensation and benefits, non-compensation expenses and net loss (income) allocated to partners' and others' interests in consolidated subsidiaries are presented on an Economic Income basis for the Company's Other Operations and the Company, and are also non-GAAP measures. No adjustments to the GAAP basis have been made for incentive income, other revenues and net losses on joint ventures. For a full description of the adjustments made to the Company's non-GAAP measures and reconciliations of these non-GAAP measures to the respective GAAPmeasures, please see Exhibits 3 through 7 that accompany this press release.

Distributable Earnings is a non-GAAP measure of after-tax operating performance and equals Economic Income for the Company less Adjusted Income Taxes. Adjusted Income Taxes are estimated assuming the conversion of all outstanding Partner Units into Class A Shares, on a one-to-one basis. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the partners is treated as if it were allocated to Och-Ziff Capital Management Group LLC. Partner Units represent interests in the Och-Ziff Operating Group held by the partners and the Ziffs, including the Group A Units and other non-equity profit interests in the Och-Ziff Operating Group that may convert into Group A Units upon the occurrence of certain events. Distributable Earnings per Share is equal to Distributable Earnings divided by the weighted-average number of Adjusted Class A Shares. Adjusted Class A Shares are determined assuming all Partner Units and RSUs are converted on a one-to-one basis into Class A Shares. Management uses Distributable Earnings, among other financial data, to determine the earnings available to distribute as dividends to holders of the Company's Class A Shares and to the Company's partners and the Ziffs with respect to their Partner Units.

The Company's non-GAAP measures should not be considered as alternatives to the Company's GAAP Net Loss or cash flow from operations, or as indicative of liquidity or the cash available to fund operations. The Company's non-GAAP measures may not be comparable to similarly-titled measures used by other companies.

Reconciliations of these non-GAAP measures to the most directly comparable financial measures calculated and presented in accordance with GAAP are included in Exhibits 3 through 7 attached to this press release.

* * * *

Forward-Looking Statements

This press release may contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended, that reflect the Company's current views with respect to, among other things, future events and financial performance, strategies and expectations, including but not limited to statements regarding the Company's financial performance and results, including its ability to increase assets under management, generate positive returns, preserve capital and identify investment opportunities and enhance the Company's investment platforms. The Company generally identifies forward-looking statements by terminology such as "outlook," "believe," "expect," "potential," "continue," "may," "will," "should," "could," "seek," "approximately," "predict," "intend," "plan," "estimate," "anticipate," "opportunity," "pipeline," "comfortable," "assume," "remain," "maintain," "sustain," "achieve" or the negative version of those words or other comparable words.

Any forward-looking statements contained in this press release are based upon historical information and on the Company's current plans, estimates and expectations. The inclusion of this or any other forward-looking information should not be regarded as a representation by the Company or any other person that the future plans, estimates or expectations contemplated by the Company will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions, including but not limited to global economic, business and market conditions, the conditions impacting the hedge fund industry, the Company's ability to successfully compete for fund investors, professional investment talent and investment opportunities, its successful formulation and execution of business and growth strategies and its ability to appropriately manage conflicts of interest and tax and other regulatory factors relevant to the Company's business, as well as assumptions relating to the Company's operations, financial results, financial condition, business prospects, growth strategy and liquidity.

If one or more of these or other risks or uncertainties materialize, or if the Company's underlying assumptions prove to be incorrect, the Company's actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in the Company's filings with the Securities and Exchange Commission, including but not limited to the Company's Annual Report on Form 10-K for the year ended December 31, 2009 filed on March 4, 2010. There may be additional risks, uncertainties and factors that the Company does not currently view as material or that are not known. The forward-looking statements included in this document are made only as of the date of this document and the Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

This press release does not constitute an offer of any Och-Ziff fund.

* * * *

About Och-Ziff Capital Management Group LLC

Och-Ziff Capital Management Group LLC is one of the world's largest institutional alternative asset managers with offices in New York, London, Hong Kong, Mumbai and Beijing. Och-Ziff's funds seek to deliver consistent, positive, risk-adjusted returns throughout market cycles, with a strong focus on capital preservation. Och-Ziff's multi-strategy approach combines global investment strategies, including long/short equity special situations, convertible and derivative arbitrage, structured credit, other credit, private investments and merger arbitrage. As of November 1, 2010, Och-Ziff had approximately $27.2 billion in assets under management. For more information, please visit Och-Ziff's website at www.ozcap.com.

Exhibit 1

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Consolidated Statements of Operations (Unaudited)

(dollars in thousands, except per share amounts)











Three Months Ended September 30,


Nine Months Ended September 30,


2010


2009


2010


2009









Revenues








Management fees

$ 110,035


$ 88,127


$ 321,991


$ 268,598

Incentive income

5,561


3,071


11,283


3,336

Other revenues

401


355


1,512


908

Income of consolidated Och-Ziff funds

6,473


10,127


21,043


21,629

Total Revenues

122,470


101,680


355,829


294,471









Expenses








Compensation and benefits

59,186


64,074


164,107


191,975

Allocations to non-equity partner interests

-


8,052


-


12,627

Reorganization expenses

411,828


417,486


1,248,423


1,262,171

Profit sharing

-


663


-


954

Interest expense

1,916


2,168


5,809


10,823

General, administrative and other

23,994


40,687


70,124


84,069

Expenses of consolidated Och-Ziff funds

1,540


880


6,919


2,776

Total Expenses

498,464


534,010


1,495,382


1,565,395









Other Income








Net earnings on deferred balances

-


20,840


-


24,270

Net gains (losses) on investments in Och-Ziff funds and joint ventures

453


730


(96)


1,036

Net gain on early retirement of debt

-


-


-


2,013

Net gains (losses) of consolidated Och-Ziff funds

4,767


(47)


27,109


(145)

Total Other Income

5,220


21,523


27,013


27,174









Loss before Income Taxes

(370,774)


(410,807)


(1,112,540)


(1,243,750)

Income taxes

7,054


(20,889)


23,597


(17,611)

Consolidated Net Loss

$ (377,828)


$ (389,918)


$ (1,136,137)


$ (1,226,139)









Net Loss Allocated to Partners' and Others' Interests in Consolidated Subsidiaries

$ (284,298)


$ (309,891)


$ (864,547)


$ (975,945)









Net Loss Allocated to Class A Shareholders

$ (93,530)


$ (80,027)


$ (271,590)


$ (250,194)









Net Loss per Class A Share








Basic

$ (1.04)


$ (1.02)


$ (3.16)


$ (3.23)

Diluted

$ (1.05)


$ (1.06)


$ (3.16)


$ (3.25)









Weighted-Average Class A Shares Outstanding (1)








Basic

89,862,493


78,818,314


86,027,375


77,398,416

Diluted

392,799,640


387,874,793


86,027,375


387,719,637









(1) Includes fully vested RSUs that have not been exchanged into Class A Shares as of the end of the period.



Exhibit 2

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Economic Income Summary (Unaudited)

(dollars in thousands)


























Three Months Ended September 30, 2010

Economic Income Basis

Och-Ziff
Funds Segment (1)


Other
Operations
(Non-GAAP) (2)


Total
Company
(Non-GAAP) (2)







Management fees

$ 105,538


$ 1,898


$ 107,436

Incentive income

5,561


-


5,561

Other revenues

298


103


401

Total Economic Income revenues

111,397


2,001


113,398







Compensation and benefits

18,634


3,926


22,560

Non-compensation expenses

20,317


638


20,955

Total Economic Income expenses

38,951


4,564


43,515







Net losses on joint ventures (3)

(68)


(21)


(89)

Net income allocated to partners' and others' interests in consolidated subsidiaries (4)

-


(283)


(283)

Economic Income

72,378


(2,867)


69,511














Three Months Ended September 30, 2009

Economic Income Basis

Och-Ziff
Funds Segment (1)


Other
Operations
(Non-GAAP) (2)


Total
Company
(Non-GAAP) (2)







Management fees

$ 86,262


$ 1,312


$ 87,574

Incentive income

3,071


-


3,071

Other revenues

268


87


355

Total Economic Income revenues

89,601


1,399


91,000







Compensation and benefits

23,539


4,578


28,117

Non-compensation expenses

22,255


811


23,066

Total Economic Income expenses

45,794


5,389


51,183







Net losses on joint ventures (3)

-


(244)


(244)

Net income allocated to partners' and others' interests in consolidated subsidiaries (4)

-


(47)


(47)

Economic Income

43,807


(4,281)


39,526














Nine Months Ended September 30, 2010

Economic Income Basis

Och-Ziff
Funds Segment (1)


Other
Operations
(Non-GAAP) (2)


Total
Company
(Non-GAAP) (2)







Management fees

$ 312,147


$ 3,774


$ 315,921

Incentive income

11,283


-


11,283

Other revenues

1,030


482


1,512

Total Economic Income revenues

324,460


4,256


328,716







Compensation and benefits

53,404


12,309


65,713

Non-compensation expenses

61,652


1,309


62,961

Total Economic Income expenses

115,056


13,618


128,674







Net losses on joint ventures (3)

(303)


(102)


(405)

Net income allocated to partners' and others' interests in consolidated subsidiaries (4)

-


(604)


(604)

Economic Income

209,101


(10,068)


199,033














Nine Months Ended September 30, 2009

Economic Income Basis

Och-Ziff
Funds Segment (1)


Other
Operations
(Non-GAAP) (2)


Total
Company
(Non-GAAP) (2)







Management fees

$ 263,209


$ 3,953


$ 267,162

Incentive income

3,336


-


3,336

Other revenues

713


195


908

Total Economic Income revenues

267,258


4,148


271,406







Compensation and benefits

86,502


12,995


99,497

Non-compensation expenses

68,149


2,717


70,866

Total Economic Income expenses

154,651


15,712


170,363







Net losses on joint ventures (3)

-


(1,236)


(1,236)

Net loss allocated to partners' and others' interests in consolidated subsidiaries (4)

-


28


28

Economic Income

112,607


(12,772)


99,835







(1) The Och-Ziff Funds segment is the Company's only reportable segment under U.S. GAAP. Management uses Economic Income to evaluate the financial performance of and to make operating decisions for the segment. For reconciliations of these segment measures to the nearest U.S. GAAP measures, see Exhibits 3 through 7.

(2) Each of the measures presented is a non-GAAP measure, with the exception of incentive income, other revenues and net losses on joint ventures, for which no adjustments to the U.S. GAAP basis have been made. Management calculates non-GAAP measures on an Economic Income basis for the Company's Other Operations and for the Company as a whole to assess the financial performance of the Company's entire business. For reconciliations of these non-GAAP measures to the nearest U.S. GAAP measures, see Exhibits 3 through 7.

(3) Represents the Company's losses in joint ventures established to expand certain of the Company's private investments platforms.

(4) Represents the residual interests in the domestic real estate management business not owned by the Company.

Exhibit 3

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Reconciliation of Non-GAAP and Segment Financial Measures to U.S. GAAP Measures (Unaudited)

(dollars in thousands, except per share amount)







































OCH-ZIFF FUNDS SEGMENT





Reconciling Adjustments (1)



Three Months Ended September 30, 2010


Economic
Income
Basis (2)


Funds
Consolidation


Other Adjustments


U.S. GAAP
Basis










Management fees


$ 105,538


$ (60)


$ 2,659

(a)

$ 108,137

Incentive income


5,561


-


-


5,561

Other revenues


298


-


-


298

Income of consolidated Och-Ziff funds


-


-


-


-

Total revenues


111,397


(60)


2,659


113,996










Compensation and benefits


18,634


-


31,364

(b) (c)

49,998

Allocations to non-equity partner interests


-


-


-


-

Reorganization expenses


-


-


411,828

(e)

411,828

Profit sharing


-


-


-


-

Interest expense


1,916


-


-


1,916

General, administrative and other


18,401


-


4,766

(a) (g)

23,167

Expenses of consolidated Och-Ziff funds


-


35


-


35

Total expenses


38,951


35


447,958


486,944










Net earnings on deferred balances


-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures


(68)


-


542

(h)

474

Net gain on early retirement of debt


-


-


-


-

Net gains of consolidated Och-Ziff funds


-


534


-


534










Income taxes


-


-


7,421

(g)

7,421










Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries


-


(439)


294,154

(i)

293,715










Net income (loss) allocated to
Class A shareholders


72,378


-


(158,024)


(85,646)












OTHER OPERATIONS





Reconciling Adjustments (1)



Three Months Ended September 30, 2010


Economic
Income
Basis
(Non-GAAP) (3)


Funds
Consolidation


Other
Adjustments


U.S. GAAP
Basis










Management fees


$ 1,898


$ -


$ -


$ 1,898

Incentive income


-


-


-


-

Other revenues


103


-


-


103

Income of consolidated Och-Ziff funds


-


6,473


-


6,473

Total revenues


2,001


6,473


-


8,474










Compensation and benefits


3,926


-


5,262

(c)

9,188

Allocations to non-equity partner interests


-


-


-


-

Reorganization expenses


-


-


-


-

Profit sharing


-


-


-


-

Interest expense


-


-


-


-

General, administrative and other


638


-


189

(g)

827

Expenses of consolidated Och-Ziff funds


-


1,505


-


1,505

Total expenses


4,564


1,505


5,451


11,520










Net earnings on deferred balances


-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures


(21)


(107)


107

(h)

(21)

Net gain on early retirement of debt


-


-


-


-

Net gains of consolidated Och-Ziff funds


-


4,233


-


4,233










Income taxes


-


-


(367)

(g)

(367)










Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries


(283)


(9,094)


(40)

(i)

(9,417)










Net income (loss) allocated to
Class A shareholders


(2,867)


-


(5,017)


(7,884)












TOTAL COMPANY














Three Months Ended September 30, 2010


Economic
Income
Basis
(Non-GAAP) (3)


U.S. GAAP
Basis














Management fees


$ 107,436


$ 110,035





Incentive income


5,561


5,561





Other revenues


401


401





Income of consolidated Och-Ziff funds


-


6,473





Total revenues


113,398


122,470














Compensation and benefits


22,560


59,186





Allocations to non-equity partner interests


-


-





Reorganization expenses


-


411,828





Profit sharing


-


-





Interest expense


1,916


1,916





General, administrative and other


19,039


23,994





Expenses of consolidated Och-Ziff funds


-


1,540





Total expenses


43,515


498,464














Net earnings on deferred balances


-


-





Net gains (losses) on investments in Och-Ziff funds and joint ventures


(89)


453





Net gain on early retirement of debt


-


-





Net gains of consolidated Och-Ziff funds


-


4,767














Income taxes


-


7,054














Net loss (income) allocated to partners' and others' interests in consolidated subsidiaries


(283)


284,298














Net income (loss) allocated to Class A shareholders


69,511


(93,530)





Adjusted Income Taxes - Non-GAAP (4)


(17,417)







Distributable Earnings - Non-GAAP


$ 52,094
















Weighted-Average Class A Shares Outstanding


89,862,493







Weighted-Average Partner Units


305,857,502







Weighted-Average Class A Restricted Share Units (RSUs)


14,311,190







Weighted-Average Adjusted Class A Shares


410,031,185
















Distributable Earnings Per Adjusted Class A Share - Non-GAAP


$ 0.13

























(1) See Exhibit 7 for a description of the adjustments made to arrive at the Company's results on a U.S. GAAP basis.

(2) The Och-Ziff Funds segment is the Company's only reportable segment under U.S. GAAP. Management uses Economic Income to evaluate the financial performance of and to make operating decisions for the segment.

(3) Each of the measures presented is a non-GAAP measure, with the exception of incentive income, other revenues and net losses on joint ventures, for which no adjustments to the U.S. GAAP basis have been made. Management calculates non-GAAP measures on an Economic Income basis for the Company's Other Operations and for the Company as a whole to assess the financial performance of the Company's entire business.

(4) Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.

Exhibit 4

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Reconciliation of Non-GAAP and Segment Financial Measures to U.S. GAAP Measures (Unaudited)

(dollars in thousands, except per share amount)


































OCH-ZIFF FUNDS SEGMENT




Reconciling Adjustments (1)



Three Months Ended September 30, 2009

Economic
Income
Basis (2)


Funds
Consolidation


Other Adjustments


U.S. GAAP
Basis









Management fees

$ 86,262


$ (56)


$ 609

(a)

$ 86,815

Incentive income

3,071


-


-


3,071

Other revenues

268


-


-


268

Income of consolidated Och-Ziff funds

-


-


-


-

Total revenues

89,601


(56)


609


90,154









Compensation and benefits

23,539


-


29,197

(b) (c)

52,736

Allocations to non-equity partner interests

-


-


8,052

(d)

8,052

Reorganization expenses

-


-


417,486

(e)

417,486

Profit sharing

-


-


663

(f)

663

Interest expense

2,168


-


-


2,168

General, administrative and other

20,087


-


19,600

(a) (g)

39,687

Expenses of consolidated Och-Ziff funds

-


11


-


11

Total expenses

45,794


11


474,998


520,803









Net earnings on deferred balances

-


-


20,840

(h)

20,840

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

-


-


974

(h)

974

Net gain on early retirement of debt

-


-


-


-

Net gains (losses) of consolidated Och-Ziff funds

-


(57)


-


(57)









Income taxes

-


-


(21,077)

(g)

(21,077)









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

-


124


318,776

(i)

318,900









Net income (loss) allocated to
Class A shareholders

43,807


-


(112,722)


(68,915)










OTHER OPERATIONS




Reconciling Adjustments (1)



Three Months Ended September 30, 2009

Economic
Income
Basis
(Non-GAAP) (3)


Funds
Consolidation


Other
Adjustments


U.S. GAAP
Basis









Management fees

$ 1,312


$ -


$ -


$ 1,312

Incentive income

-


-


-


-

Other revenues

87


-


-


87

Income of consolidated Och-Ziff funds

-


10,127


-


10,127

Total revenues

1,399


10,127


-


11,526









Compensation and benefits

4,578


-


6,760

(c)

11,338

Allocations to non-equity partner interests

-


-


-


-

Reorganization expenses

-


-


-


-

Profit sharing

-


-


-


-

Interest expense

-


-


-


-

General, administrative and other

811


-


189

(g)

1,000

Expenses of consolidated Och-Ziff funds

-


869


-


869

Total expenses

5,389


869


6,949


13,207









Net earnings on deferred balances

-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

(244)


(99)


99

(h)

(244)

Net gain on early retirement of debt

-


-


-


-

Net gains (losses) of consolidated Och-Ziff funds

-


10


-


10









Income taxes

-


-


188

(g)

188









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

(47)


(9,169)


207

(i)

(9,009)









Net income (loss) allocated to
Class A shareholders

(4,281)


-


(6,831)


(11,112)










TOTAL COMPANY













Three Months Ended September 30, 2009

Economic
Income
Basis
(Non-GAAP) (3)


U.S. GAAP
Basis













Management fees

$ 87,574


$ 88,127





Incentive income

3,071


3,071





Other revenues

355


355





Income of consolidated Och-Ziff funds

-


10,127





Total revenues

91,000


101,680













Compensation and benefits

28,117


64,074





Allocations to non-equity partner interests

-


8,052





Reorganization expenses

-


417,486





Profit sharing

-


663





Interest expense

2,168


2,168





General, administrative and other

20,898


40,687





Expenses of consolidated Och-Ziff funds

-


880





Total expenses

51,183


534,010













Net earnings on deferred balances

-


20,840





Net gains (losses) on investments in Och-Ziff funds and joint ventures

(244)


730





Net gain on early retirement of debt

-


-





Net gains (losses) of consolidated Och-Ziff funds

-


(47)













Income taxes

-


(20,889)













Net loss (income) allocated to partners' and others' interests in consolidated subsidiaries

(47)


309,891













Net income (loss) allocated to Class A shareholders

39,526


(80,027)





Adjusted Income Taxes - Non-GAAP (4)

(5,357)







Distributable Earnings - Non-GAAP

$ 34,169















Weighted-Average Class A Shares Outstanding

78,818,314







Weighted-Average Partner Units

309,074,414







Weighted-Average Class A Restricted Share Units (RSUs)

15,701,304







Weighted-Average Adjusted Class A Shares

403,594,032















Distributable Earnings Per Adjusted Class A Share - Non-GAAP

$ 0.08























(1) See Exhibit 7 for a description of the adjustments made to arrive at the Company's results on a U.S. GAAP basis.



(2) The Och-Ziff Funds segment is the Company's only reportable segment under U.S. GAAP. Management uses Economic Income to evaluate the financial performance of and to make operating decisions for the segment.


(3) Each of the measures presented is a non-GAAP measure, with the exception of incentive income, other revenues and net losses on joint ventures, for which no adjustments to the U.S. GAAP basis have been made. Management calculates non-GAAP measures on an Economic Income basis for the Company's Other Operations and for the Company as a whole to assess the financial performance of the Company's entire business.


(4) Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.


Exhibit 5

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Reconciliation of Non-GAAP and Segment Financial Measures to U.S. GAAP Measures (Unaudited)

(dollars in thousands, except per share amount)


































OCH-ZIFF FUNDS SEGMENT




Reconciling Adjustments (1)



Nine Months Ended September 30, 2010

Economic
Income
Basis (2)


Funds
Consolidation


Other Adjustments


U.S. GAAP
Basis









Management fees

$ 312,147


$ (180)


$ 6,250

(a)

$ 318,217

Incentive income

11,283


-


-


11,283

Other revenues

1,030


-


-


1,030

Income of consolidated Och-Ziff funds

-


-


-


-

Total revenues

324,460


(180)


6,250


330,530









Compensation and benefits

53,404


-


85,517

(b) (c)

138,921

Allocations to non-equity partner interests

-


-


-


-

Reorganization expenses

-


-


1,248,423

(e)

1,248,423

Profit sharing

-


-


-


-

Interest expense

5,809


-


-


5,809

General, administrative and other

55,843


-


12,412

(a) (g)

68,255

Expenses of consolidated Och-Ziff funds

-


66


-


66

Total expenses

115,056


66


1,346,352


1,461,474









Net earnings on deferred balances

-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

(303)


-


309

(h)

6

Net gain on early retirement of debt

-


-


-


-

Net gains of consolidated Och-Ziff funds

-


693


-


693









Income taxes

-


-


21,547

(g)

21,547









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

-


(447)


905,883

(i)

905,436









Net income (loss) allocated to
Class A shareholders

209,101


-


(455,457)


(246,356)










OTHER OPERATIONS




Reconciling Adjustments (1)



Nine Months Ended September 30, 2010

Economic
Income
Basis
(Non-GAAP) (3)


Funds
Consolidation


Other
Adjustments


U.S. GAAP
Basis









Management fees

$ 3,774


$ -


$ -


$ 3,774

Incentive income

-


-


-


-

Other revenues

482


-


-


482

Income of consolidated Och-Ziff funds

-


21,043


-


21,043

Total revenues

4,256


21,043


-


25,299









Compensation and benefits

12,309


-


12,877

(c)

25,186

Allocations to non-equity partner interests

-


-


-


-

Reorganization expenses

-


-


-


-

Profit sharing

-


-


-


-

Interest expense

-


-


-


-

General, administrative and other

1,309


-


560

(g)

1,869

Expenses of consolidated Och-Ziff funds

-


6,853


-


6,853

Total expenses

13,618


6,853


13,437


33,908









Net earnings on deferred balances

-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

(102)


(422)


422

(h)

(102)

Net gain on early retirement of debt

-


-


-


-

Net gains of consolidated Och-Ziff funds

-


26,416


-


26,416









Income taxes

-


-


2,050

(g)

2,050









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

(604)


(40,184)


(101)

(i)

(40,889)









Net income (loss) allocated to
Class A shareholders

(10,068)


-


(15,166)


(25,234)










TOTAL COMPANY













Nine Months Ended September 30, 2010

Economic
Income
Basis
(Non-GAAP) (3)


U.S. GAAP
Basis













Management fees

$ 315,921


$ 321,991





Incentive income

11,283


11,283





Other revenues

1,512


1,512





Income of consolidated Och-Ziff funds

-


21,043





Total revenues

328,716


355,829













Compensation and benefits

65,713


164,107





Allocations to non-equity partner interests

-


-





Reorganization expenses

-


1,248,423





Profit sharing

-


-





Interest expense

5,809


5,809





General, administrative and other

57,152


70,124





Expenses of consolidated Och-Ziff funds

-


6,919





Total expenses

128,674


1,495,382













Net earnings on deferred balances

-


-





Net gains (losses) on investments in Och-Ziff funds and joint ventures

(405)


(96)





Net gain on early retirement of debt

-


-





Net gains of consolidated Och-Ziff funds

-


27,109













Income taxes

-


23,597













Net loss (income) allocated to partners' and others' interests in consolidated subsidiaries

(604)


864,547













Net income (loss) allocated to Class A shareholders

199,033


(271,590)





Adjusted Income Taxes - Non-GAAP (4)

(40,711)







Distributable Earnings - Non-GAAP

$ 158,322















Weighted-Average Class A Shares Outstanding

86,027,375







Weighted-Average Partner Units

308,732,819







Weighted-Average Class A Restricted Share Units (RSUs)

14,327,104







Weighted-Average Adjusted Class A Shares

409,087,298















Distributable Earnings Per Adjusted Class A Share - Non-GAAP

$ 0.39























(1) See Exhibit 7 for a description of the adjustments made to arrive at the Company's results on a U.S. GAAP basis.



(2) The Och-Ziff Funds segment is the Company's only reportable segment under U.S. GAAP. Management uses Economic Income to evaluate the financial performance of and to make operating decisions for the segment.


(3) Each of the measures presented is a non-GAAP measure, with the exception of incentive income, other revenues and net losses on joint ventures, for which no adjustments to the U.S. GAAP basis have been made. Management calculates non-GAAP measures on an Economic Income basis for the Company's Other Operations and for the Company as a whole to assess the financial performance of the Company's entire business.


(4) Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.


Exhibit 6

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Reconciliation of Non-GAAP and Segment Financial Measures to U.S. GAAP Measures (Unaudited)

(dollars in thousands, except per share amount)


































OCH-ZIFF FUNDS SEGMENT




Reconciling Adjustments (1)



Nine Months Ended September 30, 2009

Economic
Income
Basis (2)


Funds
Consolidation


Other Adjustments


U.S. GAAP
Basis









Management fees

$ 263,209


$ (167)


$ 1,622

(a)

$ 264,664

Incentive income

3,336


-


-


3,336

Other revenues

713


-


-


713

Income of consolidated Och-Ziff funds

-


-


-


-

Total revenues

267,258


(167)


1,622


268,713









Compensation and benefits

86,502


-


74,665

(b) (c)

161,167

Allocations to non-equity partner interests

-


-


12,627

(d)

12,627

Reorganization expenses

-


-


1,262,171

(e)

1,262,171

Profit sharing

-


-


954

(f)

954

Interest expense

10,823


-


-


10,823

General, administrative and other

57,326


-


23,466

(a) (g)

80,792

Expenses of consolidated Och-Ziff funds

-


19


-


19

Total expenses

154,651


19


1,373,883


1,528,553









Net earnings on deferred balances

-


-


24,270

(h)

24,270

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

-


-


2,272

(h)

2,272

Net gain on early retirement of debt

-


-


2,013

(g)

2,013

Net gains (losses) of consolidated Och-Ziff funds

-


(1,744)


-


(1,744)









Income taxes

-


-


(17,902)

(g)

(17,902)









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

-


1,930


994,260

(i)

996,190









Net income (loss) allocated to
Class A shareholders

112,607


-


(331,544)


(218,937)










OTHER OPERATIONS




Reconciling Adjustments (1)



Nine Months Ended September 30, 2009

Economic
Income
Basis
(Non-GAAP) (3)


Funds
Consolidation


Other
Adjustments


U.S. GAAP
Basis









Management fees

$ 3,953


$ (19)


$ -


$ 3,934

Incentive income

-


-


-


-

Other revenues

195


-


-


195

Income of consolidated Och-Ziff funds

-


21,629


-


21,629

Total revenues

4,148


21,610


-


25,758









Compensation and benefits

12,995


-


17,813

(c)

30,808

Allocations to non-equity partner interests

-


-


-


-

Reorganization expenses

-


-


-


-

Profit sharing

-


-


-


-

Interest expense

-


-


-


-

General, administrative and other

2,717


-


560

(g)

3,277

Expenses of consolidated Och-Ziff funds

-


2,757


-


2,757

Total expenses

15,712


2,757


18,373


36,842









Net earnings on deferred balances

-


-


-


-

Net gains (losses) on investments in
Och-Ziff funds and joint ventures

(1,236)


(216)


216

(h)

(1,236)

Net gain on early retirement of debt

-


-


-


-

Net gains (losses) of consolidated Och-Ziff funds

-


1,599


-


1,599









Income taxes

-


-


291

(g)

291









Net loss (income) allocated to partners' and
others' interests in consolidated subsidiaries

28


(20,236)


(37)

(i)

(20,245)









Net income (loss) allocated to
Class A shareholders

(12,772)


-


(18,485)


(31,257)










TOTAL COMPANY













Nine Months Ended September 30, 2009

Economic
Income
Basis
(Non-GAAP) (3)


U.S. GAAP
Basis













Management fees

$ 267,162


$ 268,598





Incentive income

3,336


3,336





Other revenues

908


908





Income of consolidated Och-Ziff funds

-


21,629





Total revenues

271,406


294,471













Compensation and benefits

99,497


191,975





Allocations to non-equity partner interests

-


12,627





Reorganization expenses

-


1,262,171





Profit sharing

-


954





Interest expense

10,823


10,823





General, administrative and other

60,043


84,069





Expenses of consolidated Och-Ziff funds

-


2,776





Total expenses

170,363


1,565,395













Net earnings on deferred balances

-


24,270





Net gains (losses) on investments in Och-Ziff funds and joint ventures

(1,236)


1,036





Net gain on early retirement of debt

-


2,013





Net gains (losses) of consolidated Och-Ziff funds

-


(145)













Income taxes

-


(17,611)













Net loss (income) allocated to partners' and others' interests in consolidated subsidiaries

28


975,945













Net income (loss) allocated to Class A shareholders

99,835


(250,194)





Adjusted Income Taxes - Non-GAAP (4)

(25,898)







Distributable Earnings - Non-GAAP

$ 73,937















Weighted-Average Class A Shares Outstanding

77,398,416







Weighted-Average Partner Units

310,327,265







Weighted-Average Class A Restricted Share Units (RSUs)

15,510,264







Weighted-Average Adjusted Class A Shares

403,235,945















Distributable Earnings Per Adjusted Class A Share - Non-GAAP

$ 0.18























(1) See Exhibit 7 for a description of the adjustments made to arrive at the Company's results on a U.S. GAAP basis.


(2) The Och-Ziff Funds segment is the Company's only reportable segment under U.S. GAAP. Management uses Economic Income to evaluate the financial performance of and to make operating decisions for the segment.

(3) Each of the measures presented is a non-GAAP measure, with the exception of incentive income, other revenues and net losses on joint ventures, for which no adjustments to the U.S. GAAP basis have been made. Management calculates non-GAAP measures on an Economic Income basis for the Company's Other Operations and for the Company as a whole to assess the financial performance of the Company's entire business.

(4) Presents an estimate of income tax expense by assuming the conversion of all Partner Units into Class A Shares, on a one-to-one basis. Therefore, all income (loss) of the Och-Ziff Operating Group allocated to the Partner Units is treated as if it were allocated to Och-Ziff Capital Management Group LLC.

Exhibit 7

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Description of Adjustments Made to Reconcile Economic Income (Unaudited)
to the Company's Results on a U.S. GAAP Basis






Funds Consolidation


Economic Income excludes the impacts of the consolidated Och-Ziff funds, including the related eliminations.



Other Adjustments

(a)

Economic Income presents management fees net of recurring placement and related service fees on assets under management,
as management considers these fees a reduction in management fees, not an expense.

(b)

Economic Income recognizes the full amount of deferred cash compensation and expenses related to compensation arrangements
indexed to annual investment performance on the date it is determined (generally in the fourth quarter of each year), as management
determines the total amount of compensation based on the Company's performance in the year of the award.

(c)

Economic Income excludes equity-based compensation expenses, as management does not consider these non-cash expenses
to be reflective of the operating performance of the Company. The Company includes the number of shares granted in its
Adjusted Class A Share count when determining Distributable Earnings Per Share.

(d)

Economic Income excludes allocations to non-equity partner interests. Management reviewed the performance of the Company
before it made any allocations to the Company's non-equity partners for periods prior to the Reorganization. For these periods,
allocations to the partners, other than Mr. Och, were treated as expenses for U.S. GAAP purposes. Following the Reorganization,
only allocations to the partners, other than Mr. Och, that are related to earnings on deferred balances are incurred and these
allocations are excluded from Economic Income.

(e)

Economic Income excludes Reorganization expenses, which are non-cash expenses directly attributable to the reclassification of
interests held by the partners and the Ziffs prior to the Reorganization as Och-Ziff Operating Group A Units and any subsequent
reallocations of such units.

(f)

Economic Income excludes the profit sharing expenses related to the Ziffs' interest in the Company. Management reviewed the
performance of the Company before it made any allocations to the Ziffs for periods prior to the Reorganization. Following the
Reorganization, only profit sharing expenses related to the allocations of earnings on deferred balances are incurred and these
allocations are excluded from Economic Income.

(g)

Economic Income excludes depreciation and amortization, changes in the tax receivable agreement liability and net gain on early
retirement of debt, as management does not consider these items to be reflective of the operating performance of the Company.
Economic Income also excludes income taxes as it is a measure of pre-tax performance.

(h)

Economic Income excludes the net earnings on the deferred balances and net gains (losses) on investments in Och-Ziff funds,
as these amounts primarily relate to amounts due to the partners and the Ziffs for deferred balances, and amounts due to
employees under deferred cash compensation arrangements that are indexed to the returns of certain funds.

(i)

Economic Income excludes amounts allocated to the partners and the Ziffs on their interests in the Och-Ziff Operating Group, as
management reviews the performance of the Company at the Och-Ziff Operating Group level. The Company conducts
substantially all of its activities through the Och-Ziff Operating Group.









Exhibit 8

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Financial Supplement (Unaudited)

(dollars in millions)














Three Months
Ended September 30,


Nine Months
Ended September 30,






2010


2010









Total Assets Under Management (1)








Beginning of period balance





$ 25,497


$ 23,080

Net flows





221


2,282

Appreciation (depreciation) (2)





757


1,113

End of period balance





$ 26,475


$ 26,475









Total Assets Under Management by Fund








OZ Master Fund







$ 18,612

OZ Europe Master Fund







2,958

OZ Asia Master Fund







1,418

OZ Global Special Investments Master Fund







1,198









Och-Ziff Funds - Net Returns (3)








OZ Master Fund





2.9%


4.3%

OZ Europe Master Fund





3.3%


4.9%

OZ Asia Master Fund





2.2%


5.2%

OZ Global Special Investments Master Fund





3.6%


7.3%










Year Ended December 31,


2009


2008


2007


2006









Total Assets Under Management (1)








Beginning of period balance

$ 26,955


$ 33,387


$ 22,621


$ 15,627

Net flows

(8,053)


(722)


7,591


4,135

Appreciation (depreciation) (2)

4,178


(5,710)


3,175


2,859

End of period balance

$ 23,080


$ 26,955


$ 33,387


$ 22,621









Total Assets Under Management by Fund








OZ Master Fund

$ 15,577


$ 16,396


$ 19,771


$ 15,449

OZ Europe Master Fund

2,957


5,084


6,416


3,481

OZ Asia Master Fund

1,246


2,439


3,852


2,332

OZ Global Special Investments Master Fund

1,999


1,910


2,082


195









Och-Ziff Funds - Net Returns (3)








OZ Master Fund

23.1%


-15.9%


11.5%


14.8%

OZ Europe Master Fund

16.4%


-17.4%


14.8%


22.3%

OZ Asia Master Fund

34.0%


-30.9%


12.2%


14.0%

OZ Global Special Investments Master Fund

8.4%


-8.3%


17.2%


13.9%









(1) Includes the deferred incentive income receivable from the offshore funds and amounts invested by the Company, its partners and certain other affiliated parties for which the Company charged no management fees and received no incentive income for the periods presented. Amounts presented in this table are not the amounts used to calculate management fees and incentive income for the respective periods.

(2) Appreciation (depreciation) reflects the aggregate net capital appreciation (depreciation) for the entire period and is presented on a total return basis, net of all fees and expenses (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and includes the reinvestment of all dividends and income. Management fees and incentive income vary by product. Past performance is no indication or guarantee of future results.

(3) Reflects a composite of the monthly return and year-to-date return for the feeder funds comprising each of the Company's most significant master funds and is presented on a total return basis, net of all fees and expenses of the relevant fund (except incentive income on certain unrealized private investments that could reduce returns at the time of realization), and includes the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the funds. Investors that do not participate in such investments, or that pay different fees, may experience materially different returns. Past performance is no indication or guarantee of future results.

Exhibit 9

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

(Unaudited)


Returns of OZ Master Fund During Negative



Return Months of S&P 500 Index








Number of

Total Return of S&P 500

Total Return of OZ Master Fund


Months of Negative

During Negative

During Negative

Year

Returns of S&P 500

Return Months

Return Months of S&P 500

1994

3

-8.5%

1.7%

1995

1

-0.4%

0.1%

1996

2

-6.4%

3.9%

1997

3

-13.1%

4.0%

1998

3

-17.2%

-2.7%

1999

5

-11.8%

6.2%

2000

8

-27.1%

12.0%

2001

6

-33.2%

0.4%

2002

8

-41.8%

-5.0%

2003

3

-5.2%

4.6%

2004

3

-6.4%

1.1%

2005

5

-8.7%

0.7%

2006

1

-2.9%

0.5%

2007

5

-11.6%

1.4%

2008

8

-51.8%

-16.3%

2009

3

-20.9%

4.1%

YTD Sept. 2010

4

-21.3%

-1.0%





Distribution of Net Monthly Returns since April 1, 1994







Net Monthly Return
of OZ Master Fund

Number of
Months



less than -3%

5



-2% to -3%

2



-1% to -2%

4



0% to -1%

18



0% to 1%

66



1% to 2%

51



2% to 3%

31



3% to 4%

13



4% to 5%

5



greater than 5%

3






Total net return for the OZ Master Fund (the "Fund") represents a composite of the average return of the feeder funds that comprise the Fund. Returns are presented on a total return basis, net of all fees and expenses (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and include the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the Fund. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no indication or guarantee of future results.


For the period from 1994 through 1997, performance represents the performance of Och-Ziff Capital Management, L.P., a Delaware limited partnership that was managed by Daniel Och following an investment strategy that is substantially similar to that of the Fund. In addition, during this period, performance was calculated by deducting management fees on a quarterly basis and incentive income on a monthly basis. Beginning January 1998, performance has been calculated by deducting both management fees and incentive income on a monthly basis from the composite returns of the Fund.


Readers should not assume that there is any material overlap between those securities in the portfolio of the Fund and those that comprise the S&P 500 Index. It is not possible to invest directly in the S&P 500 Index. Returns of the S&P 500 Index have not been reduced by fees and expenses associated with investing in securities and include the reinvestment of dividends. The S&P 500 Index is an equity index owned and maintained by Standard & Poor's, a division of McGraw-Hill, whose value is calculated as the free float-weighted average of the share prices of 500 large-capitalization corporations listed on the NYSE and Nasdaq. The comparison of S&P 500 Index performance relative to the Fund's performance during months in which the S&P 500 Index declined is for the limited purpose of illustrating how the Fund has performed during periods of declines in the broad equity market. It should not be considered an indication of how the Fund will perform relative to the S&P 500 Index in the future.


Please note that the Fund's investment objective is not to beat the S&P 500 Index. Furthermore, the Fund's performance has frequently trailed that of the S&P 500 Index in periods of positive performance.

Exhibit 10

OCH-ZIFF CAPITAL MANAGEMENT GROUP LLC

Fund Performance of Certain Och-Ziff Funds (Unaudited) (1)













2009


January


February


March


April


May











Och-Ziff Funds - Net Returns










OZ Master Fund

3.09%


0.35%


0.88%


1.86%


3.42%

OZ Europe Master Fund

0.98%


-1.09%


-0.04%


2.48%


3.32%

OZ Asia Master Fund

2.70%


1.22%


0.38%


3.09%


4.62%

OZ Global Special Investments Master Fund

0.84%


-0.49%


0.35%


0.00%


1.97%











S&P 500 Index - Total Return (2)

-8.43%


-10.65%


8.76%


9.57%


5.59%












2009


June


July


August


September


October











Och-Ziff Funds - Net Returns










OZ Master Fund

2.14%


3.26%


1.37%


2.51%


0.68%

OZ Europe Master Fund

1.24%


2.36%


2.06%


3.28%


0.09%

OZ Asia Master Fund

0.58%


9.50%


0.24%


1.53%


1.16%

OZ Global Special Investments Master Fund

0.88%


1.55%


0.33%


1.47%


0.02%











S&P 500 Index - Total Return (2)

0.20%


7.56%


3.61%


3.73%


-1.86%












2009






November


December


FY2009















Och-Ziff Funds - Net Returns










OZ Master Fund

0.34%


1.14%


23.11%





OZ Europe Master Fund

0.31%


0.43%


16.43%





OZ Asia Master Fund

2.98%


1.94%


33.96%





OZ Global Special Investments Master Fund

0.19%


1.03%


8.42%















S&P 500 Index - Total Return (2)

6.00%


1.93%


26.46%
















2010


January


February


March


1Q


April











Och-Ziff Funds - Net Returns










OZ Master Fund

1.09%


0.40%


1.21%


2.72%


0.88%

OZ Europe Master Fund

2.47%


0.95%


0.93%


4.41%


0.64%

OZ Asia Master Fund

0.74%


0.43%


3.80%


5.02%


1.15%

OZ Global Special Investments Master Fund

1.61%


0.98%


1.18%


3.82%


1.11%











S&P 500 Index - Total Return (2)

-3.60%


3.10%


6.03%


5.39%


1.58%












2010


May


June


2Q


July


August











Och-Ziff Funds - Net Returns










OZ Master Fund

-1.71%


-0.53%


-1.37%


1.35%


0.19%

OZ Europe Master Fund

-2.50%


-0.90%


-2.76%


0.94%


0.59%

OZ Asia Master Fund

-3.11%


0.03%


-1.97%


0.47%


0.17%

OZ Global Special Investments Master Fund

-1.39%


0.09%


-0.21%


1.25%


0.24%











S&P 500 Index - Total Return (2)

-7.99%


-5.23%


-11.43%


7.01%


-4.51%












2010






September


3Q


YTD Sept. 2010















Och-Ziff Funds - Net Returns










OZ Master Fund

1.34%


2.90%


4.26%





OZ Europe Master Fund

1.78%


3.34%


4.92%





OZ Asia Master Fund

1.54%


2.19%


5.21%





OZ Global Special Investments Master Fund

2.07%


3.59%


7.33%















S&P 500 Index - Total Return (2)

8.92%


11.29%


3.89%















(1) Fund performance reflects a composite of the return for the feeder funds comprising each of the Company's most significant master funds and is presented on a total return basis, net of all fees and expenses of the relevant fund (except incentive income on certain unrealized private investments that could reduce returns on these investments at the time of realization), and includes the reinvestment of all dividends and income. Performance includes realized and unrealized gains and losses attributable to certain private and initial public offering investments that are not allocated to all investors in the funds. Investors that do not participate in such investments or that pay different fees may experience materially different returns. Past performance is no indication or guarantee of future results.


(2) Readers should not assume that there is any material overlap between those securities in the portfolios of the funds and those that comprise the S&P 500 Index. It is not possible to invest directly in the S&P 500 Index. Returns of the S&P 500 Index have not been reduced by fees and expenses associated with investing in securities and include the reinvestment of dividends. The S&P 500 Index is an equity index owned and maintained by Standard & Poor's, a division of McGraw-Hill, whose value is calculated as the free float-weighted average of the share prices of 500 large-capitalization corporations listed on the NYSE and Nasdaq. The comparison of S&P 500 Index performance relative to the funds' performance should not be considered an indication of how the fund will perform relative to the S&P 500 Index in the future. Please note that the funds' investment objective is not to beat the S&P 500 Index. Furthermore, the funds' performance has frequently trailed that of the S&P 500 Index in periods of positive performance.

SOURCE Och-Ziff Capital Management Group LLC

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