Illustrative financial statements - KPMG

Il ustrative financial statements

Private equity funds

November 2019

The information contained in these illustrative financial statements is of a general nature relating to private investment companies only and is not intended to address the circumstances of any particular entity. The form and content of financial statements are the responsibility of the specific entity's management. These illustrative financial statements: (a) are intended to provide general information on applying accounting principles generally accepted in the United States of America effective as of September 30, 2019, and do not include all possible disclosures that may be required for private investment companies; (b) are not intended to be a substitute for management's review of applicable law or accounting standards or for professional judgment as to the adequacy of disclosures and fairness of presentation; and (c) are being provided with the understanding that the information contained herein should not be construed as legal, accounting, tax, or other professional advice or services and that no one should act on any information contained herein without the appropriate professional advice provided in connection with the entity's particular situation. Although we endeavor to provide accurate and timely information, there can also be no guarantee that such information is accurate as of the date it is received or that it will continue to be accurate in the future. Certain information contained in these illustrative financial statements may be superseded as new guidance or interpretations are issued. Financial statement preparers and other users of these illustrative financial statements are therefore cautioned to stay informed of, and carefully evaluate, subsequent authoritative and interpretative guidance.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDP037968-2A

Contents

Private Equity, L.P.

1

Statement of assets and liabilities3

Schedule of investments.......................................................................................4

Statement of operations........................................................................................6

Statement of changes in partners' capital.............................................................7

Statement of cash flows.......................................................................................8

Notes to financial statements................................................................................9

Appendices

29

Appendix A: Investments in private investment companies...............................31

Appendix B: Alternative presentation..................................................................37

References to the relevant literature are included in the left-hand margin. The following abbreviations are used for technical references:

ASC ATQA AAG-INV CFTC

FASB Accounting Standards Codification AICPA Technical Questions and Answers AICPA Audit and Accounting Guide, Investment Companies Commodity Futures Trading Commission

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.NDP037968-2A

Private Equity, L.P.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDP037968-2A

Please refer to the conditions of use on the inside cover of this publication.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDP037968-2A

Illustrative financial statements 2

ASC 946-205-45-1

Private Equity, L.P.

Statement of assets and liabilities

December 31, 20XX

ASC 946-210-45-20 ASC 946-310-45-1 ASC 946-310-45-1

ASC 505-10-45-2

Assets Investments, at fair value (cost $649,396,000) Cash and cash equivalents Interest and dividends receivable Due from related parties Escrow proceeds receivable Capital contributions receivable(1) Other assets

Total assets

$780,640,000 8,215,000 500,000 57,000 85,000 900,000 118,000

790,515,000

ASC 946-405-45-1 ASC 480-10-45-1

ASC 946-20-50-14

Liabilities Management fee payable Capital distributions payable Notes payable Accrued expenses and other liabilities

Total liabilities

2,080,000 1,050,000

100,000 45,000

3,275,000

Partners' capital(2)

$787,240,000

(1) See guidance in ASC paragraph 505-10-45-2 to determine classification of capital contributions receivable as an asset or as a reduction of partners' capital.

(2) See Appendix B for an alternative presentation of partners' capital.

See accompanying notes to financial statements.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDP037968-2A

ASC 946-205-45-1 ASC 946-210-50-6

Private Equity, L.P.

Schedule of investments(3)

December 31, 20XX

Percentage of partners'

capital

Investments, at fair value

Private operating companies

United States

Consumer technology (44.2% of partners' capital)

Private Consumer Technology Company A

Preferred stock, 30,000,000 shares

22.9%

Common stock, 10,000,000 shares

4.2

Notes, X.X%, due 7/15/20XX,

principal $10,000,000

1.5

Private Consumer Technology Company B

Preferred stock, 10,000,000 shares

15.2

Warrants, expire 1/31/20XX

0.4

Healthcare (14.9% of partners' capital)

Private Healthcare Company A

Preferred stock, 7,500,000 shares

12.7

Common stock, 2,000,000 shares

2.2

Private Healthcare Company B

Contingent consideration(2)

0.0

Total United States

59.1

Cost

$150,000,000 10,000,000 10,000,000

170,000,000 100,100,000

596,000 100,696,000

80,000,000 25,000,000 105,000,000

50,000 375,746,000

Fair value

$180,290,000 33,000,000 12,000,000

225,290,000 120,000,000

3,000,000 123,000,000

100,000,000 17,500,000

117,500,000 100,000

465,890,000

China

Consumer technology (5.6% of partners' capital) Private Consumer Technology Company C(1)

Common stock, 15,000,000 shares

4.4

30,000,000

35,000,000

Notes, X.X%, due 8/30/20XX, principal $5,000,000

1.0

5,000,000

8,000,000

Warrants, expire 8/25/20XX

0.2

900,000

1,250,000

Total China

5.6

35,900,000

44,250,000

Total private operating companies

64.7

411,646,000

510,140,000

(1) Private Consumer Technology Company C is held by Subsidiary A, which is wholly owned by Private Equity, L.P.

(2) A determination should be made as to whether contractual rights to future payments under contingent consideration arrangements represent a financial asset measured at fair value.

(3) See Appendix A for a sample presentation of the schedule of investments for private investment companies and Appendix B for an alternative presentation of the schedule of investments.

See accompanying notes to financial statements.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International.NDP037968-2A

Illustrative financial statements 4

Private Equity, L.P.

Schedule of investments (continued)

December 31, 20XX

Percentage

of partners'

capital

Investments, at fair value

Marketable equity securities

United States

Consumer technology

Public Consumer Technology Company A

Common stock,

18.4%

44,000,000 shares

Public Consumer Technology Company B

Common stock,

15.9

32,000,000 shares

Total marketable equity securities

34.3

Cost

$125,000,000 112,750,000 237,750,000

Total investments, at fair value

99.0%

$649,396,000

The following table illustrates one way to present investments by type:

Investments by type, at fair value Total preferred stock Total common stock Total notes Total warrants Total contingent consideration

Percentage of partners' capital

50.8% 45.1

2.5 0.6 0.0

Cost $330,100,000

302,750,000 15,000,000 1,496,000 50,000

Total investments, at fair value

99.0%

$649,396,000

Fair value

$145,000,000

125,500,000 270,500,000 $780,640,000

Fair value $400,290,000 356,000,000 20,000,000 4,250,000 100,000 $780,640,000

See accompanying notes to financial statements.

? 2019 KPMG LLP, a Delaware limited liability partnership and the U.S. member firm of the KPMG network of independent member firms affiliated with KPMG International Cooperative ("KPMG International"), a Swiss entity. All rights reserved. The KPMG name and logo are registered trademarks or trademarks of KPMG International. NDP037968-2A

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