MERGER TRANSACTION On December 16, 2013, the Company announced the signing of a definitive merger agreement pursuant to which KKR &amp; Co. had agreed to acquire all of the Company s outstanding common shares through an exchange of equity through which the Company s shareholders would receive 0.51 common units representing the limited partnership interests of KKR &amp; Co. for each common share of KFN. On April 30, 2014, the date of the Merger Transaction, the transaction was approved by the Company s common shareholders and the merger was completed, resulting in KFN becoming a subsidiary of KKR &amp; Co. The merger was a taxable transaction for the Company s common shareholders for U.S. federal income tax purposes. Pursuant to the merger agreement, on the date of the Merger Transaction, (i) each outstanding option to purchase a KFN common share was cancelled, as the exercise price per share applicable to all outstanding options exceeded the cash value of the number of KKR &amp; Co. common units that a holder of one KFN common share was entitled to in the merger, (ii) each outstanding restricted KFN common share (other than those held by the Manager) was converted into 0.51 KKR &amp; Co. common units having the same terms and conditions as applied immediately prior to the effective time, and (iii) each phantom share under KFN s Non-Employee Directors  Deferred Compensation and Share Award Plan was converted into a phantom share in respect of 0.51 KKR &amp; Co. common units and otherwise remains subject to the terms of the plan. The Merger Transaction was recorded under the acquisition method of accounting by KKR &amp; Co. and pushed down to the Company by allocating the total purchase consideration of $2.4 billion to the cost of the assets purchased and the liabilities assumed based on their estimated fair values at the date of the Merger Transaction. The excess of the total estimated fair values of the assets acquired and liabilities assumed over the purchase price and value of the preferred shares, which consti