Earnings Release

Fortress Reports Third Quarter 2009 Financial Results

Company Release - 11/6/2009 7:00 AM EST

NEW YORK, Nov. 6 /PRNewswire-FirstCall/ --

Third Quarter Highlights

--  Assets under management of $32.0 billion
--  Segment management fees of $108 million and GAAP management fees of $107
million
--  Fund management distributable earnings of $51 million
--  Pre-tax distributable earnings (DE) of $57 million
--  GAAP net income, excluding principals agreement compensation, of $50
million.  GAAP net loss of $190 million.  GAAP net loss attributable to
Class A Shareholders of $59 million

Subsequent Events in the Fourth Quarter

--  Successfully completed RailAmerica, Inc.'s IPO on October 12, 2009

Fortress Investment Group LLC (NYSE: FIG) today reported its results for the quarter ended September 30, 2009.

Third Quarter 2009

For the quarter ended September 30, 2009, our GAAP net loss was $190 million and our GAAP net loss attributable to Class A Shareholders was $59 million, or $0.43 per diluted share, as compared to a loss of $0.66 per diluted share for the quarter ended September 30, 2008. Excluding principals agreement compensation, third quarter GAAP net income was $50 million.

For the third quarter, fund management distributable earnings was $51 million compared to $63 million in the third quarter of 2008.

Pre-tax DE for the third quarter was $57 million, or $0.11 per dividend paying share/unit, versus a loss of $20 million for the third quarter of 2008.

For reconciliations of non-GAAP measures, please see "Reconciliation of Fund Management DE to Pre-tax Distributable Earnings and GAAP Net Income (Loss)", "Reconciliation of Segment Revenues to GAAP Revenues", "Reconciliation of Segment Management Fees to GAAP Management Fees", "Reconciliation of GAAP Net Income (Loss) Excluding Principals Agreement Compensation to GAAP Net Income (Loss)" and "Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average Dividend Paying Shares and Units Outstanding (Used for DEPS)" at the end of 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.

Supplemental Data for Three Months :

Three Months Ended September 30, 2009
(in millions)
Hybrid Funds
Private Equity   Liquid   --------------- Principal
----------------   Hedge   Hedge      PE    Invest-
Total    Funds    Castles   Funds   Funds     Funds   ments
-----    -----    -------   -----   -----     -----   -----
AUM
AUM -
July 1,
2009      $31,041   $10,602   $3,193   $4,571   $9,918   $2,757      $-
Capital
raised       630         -        -      187      170      273       -
Increase
in
invested
capital       82         -        -        1        -       81       -
Redemptions
(1)(2)      (766)        -        -     (637)    (129)       -       -
Return of
capital
distri-
butions     (148)      (24)       -        -       (8)    (116)      -
Equity
buyback        -         -        -        -        -        -       -
Reset Date      -         -        -        -        -        -       -
Crystallized
Incentive
Income         -         -        -        -        -        -       -
Income
(loss) and
foreign
exchange   1,161       479       86      361     (121)     356       -
-----       ---      ---      ---     ----      ---     ---
AUM -
Ending
Balance   $32,000   $11,057   $3,279   $4,483   $9,830   $3,351      $-
Third-Party
Capital
Raised        $630        $-       $-     $187     $170     $273      $-
Segment Revenues
Management
fee          $108       $32      $13      $18      $32      $13      $-
Incentive
income         10         -        -        9        -        1       -
---       ---      ---      ---      ---      ---     ---
Total       118        32       13       27       32       14       -
---       ---      ---      ---      ---      ---     ---
Segment Expenses
Operating
expenses      (58)       (7)      (8)     (14)     (24)      (5)      -
Profit
sharing
compensation
expenses       (9)        -        -       (7)      (2)       -       -
---       ---      ---      ---      ---      ---     ---
Total       (67)       (7)      (8)     (21)     (26)      (5)      -
---       ---      ---      ---      ---      ---     ---
Fund Management
DE              51        25        5        6        6        9       -
---       ---      ---      ---      ---      ---     ---
Investment
Income          10                                                    10
Interest
Expense         (4)                                                   (4)
---       ---      ---      ---      ---      ---     ---
Pre-tax
Distributable
Earnings       $57       $25       $5       $6       $6       $9      $6
---       ---      ---      ---      ---      ---     ---
Weighted
Average
Dividend
Paying
Shares
and Units
Outstanding    511
---       ---      ---      ---      ---      ---     ---
Three Months Ended September 30, 2008
(in millions)
Hybrid Funds
Private Equity   Liquid   --------------- Principal
----------------   Hedge   Hedge      PE    Invest-
Total    Funds    Castles   Funds   Funds     Funds   ments
-----    -----    -------   -----   -----     -----   -----
AUM
AUM -
July 1,
2008      $34,966   $12,639   $3,498   $9,705   $8,266     $858      $-
Capital
raised     1,170         -        -      600      536       34       -
Increase
in
invested
capital    1,548       258        -        -        -    1,290       -
Redemptions  (185)        -        -     (185)       -        -       -
Return of
capital
distri-
butions     (146)     (123)       -        -       (4)     (19)      -
Equity
buyback      (31)        -      (31)       -        -        -       -
Reset Date      -         -        -        -        -        -       -
Crystallized
Incentive
Income       (15)        -        -      (15)       -        -       -
Income
(loss) and
foreign
exchange  (3,018)   (1,079)    (240)  (1,001)    (577)    (121)      -
------    ------     ----   ------     ----     ----     ---
AUM -
Ending
Balance   $34,289   $11,695   $3,227   $9,104   $8,221   $2,042      $-
Segment Revenues
Management
fee         $156       $40      $13      $60      $39       $4      $-
Incentive
income        (3)      (16)       -        -       13        -       -
---       ---      ---      ---      ---      ---     ---
Total       153        24       13       60       52        4       -
---       ---      ---      ---      ---      ---     ---
Segment Expenses
Operating
expenses     (81)      (12)      (7)     (29)     (30)      (3)      -
Profit
sharing
compensation
expenses      (9)        5       (2)      (5)      (7)       -       -
---       ---      ---      ---      ---      ---     ---
Total       (90)       (7)      (9)     (34)     (37)      (3)      -
Fund Management
DE              63        17        4       26       15        1       -
---       ---      ---      ---      ---      ---     ---
Investment
Income         (73)                                                  (73)
---       ---      ---      ---      ---      ---     ---
Interest
Expense        (10)                                                  (10)
---       ---      ---      ---      ---      ---     ---
Pre-tax
Distributable
Earnings      $(20)      $17       $4      $26      $15       $1    $(83)
---       ---      ---      ---      ---      ---     ---
Weighted
Average
Dividend
Paying
Shares and
Units
Outstanding    462
---       ---      ---      ---      ---      ---     ---

Supplemental Data for Nine Months:

Nine Months Ended September 30, 2009
(in millions)
Hybrid Funds
Private Equity   Liquid   --------------- Principal
----------------   Hedge   Hedge      PE    Invest-
Total    Funds    Castles   Funds   Funds     Funds   ments
-----    -----    -------   -----   -----     -----   -----
AUM
AUM -
Jan. 1,
2009    $29,454  $10,307     $3,182  $7,169  $6,494    $2,302      $-
Capital
raised
(3)      4,012        -          -     295   3,310       407       -
Increase
in
invested
capital    845       70          -       1       2       772       -
Redemp-
tions
(1)(2)  (4,148)       -          -  (3,716)   (432)        -       -
Return
of
capital
distri-
butions   (893)    (117)         -       -     (16)   (760)        -
Equity
buyback      -        -          -       -       -       -         -
Reset
Date         -        -          -       -       -       -         -
Crystal-
lized
Incentive
Income       -        -          -       -       -       -         -
Income
(loss)
and
foreign
exchange 2,730      797         97     734     472     630         -
-----      ---        ---     ---     ---     ---       ---
AUM -
Ending
Balance  $32,000  $11,057     $3,279  $4,483  $9,830  $3,351        $-
Third-Party
Capital
Raised     $4,012       $-         $-    $295  $3,310    $407        $-
Segment
Revenues
Management
fee         $324     $109        $37     $61     $90     $27        $-
Incentive
income        18        -          -       9       1       8         -
---      ---        ---     ---     ---     ---       ---
Total      342      109         37      70      91      35         -
Segment
Expenses
Operating
expenses    (173)     (27)       (21)    (39)    (70)    (16)       -
Profit
sharing
compen-
sation
expenses     (21)       -          -     (12)     (5)     (4)       -
---      ---        ---     ---     ---     ---      ---
Total     (194)     (27)       (21)    (51)    (75)    (20)       -
---      ---        ---     ---     ---     ---      ---
Fund
Management
DE            148       82         16      19      16      15        -
---      ---        ---     ---     ---     ---      ---
Investment
Income         (3)                                                  (3)
Interest
Expense       (20)                                                 (20)
---      ---        ---     ---     ---     ---      ---
Pre-tax
Distribut-
able
Earnings     $125      $82        $16     $19     $16     $15     $(23)
---      ---        ---     ---     ---     ---      ---
Weighted
Average
Dividend
Paying
Shares and
Units
Outstanding   485
---      ---        ---     ---     ---     ---      ---
Nine Months Ended September 30, 2008
(in millions)
Hybrid Funds
Private Equity   Liquid   --------------- Principal
----------------   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     5,096       745        -    2,811    1,373      167       -
Increase
in
invested
capital    2,529     1,018        -        -       26    1,485       -
Redemptions(1,079)        -        -     (606)    (473)       -       -
Return of
capital
distri-
butions     (382)     (297)       -        -       (8)     (77)      -
Equity
buyback      (31)        -      (31)       -        -        -       -
Reset Date      -         -        -        -        -        -       -
Crystallized
Incentive
Income      (110)        -        -      (15)     (95)       -       -
Income
(loss) and
foreign
exchange  (4,664)   (2,413)     (70)  (1,214)    (798)    (169)      -
------    ------      ---   ------     ----     ----     ---
AUM -
Ending
Balance   $34,289   $11,695   $3,227   $9,104   $8,221   $2,042      $-
Segment Revenues
Management
fee         $451      $120      $41     $170     $112       $8      $-
Incentive
income        44        13        -       17       14        -       -
---       ---      ---      ---      ---      ---     ---
Total       495       133       41      187      126        8       -
Segment Expenses
Operating
expenses    (225)      (26)     (25)     (78)     (89)      (7)      -
Profit
sharing
compensation
expenses     (61)       (8)      (4)     (38)     (11)       -       -
---       ---      ---      ---      ---      ---     ---
Total      (286)      (34)     (29)    (116)    (100)      (7)      -
Fund Management
DE             209        99       12       71       26        1       -
---       ---      ---      ---      ---      ---     ---
Investment
Income         (83)                                                  (83)
Interest
Expense        (30)                                                  (30)
---       ---      ---      ---      ---      ---     ---
Pre-tax
Distributable
Earnings       $96       $99      $12      $71      $26       $1   $(113)
---       ---      ---      ---      ---      ---   -----
Weighted
Average
Dividend
Paying
Shares and
Units
Outstanding    450
---       ---      ---      ---      ---      ---     ---

(1) Subsequent to quarter end, the liquid hedge funds had redemption payouts of approximately $0.7 billion in October 2009. Approximately $0.4 billion of this amount consisted of distributions from Macro Funds' SPVs.

(2)The hybrid hedge funds, which have an annual notice date for redemptions, have received redemption notices effective December 31, 2009 of approximately $1.5 billion, using September 30, 2009 values. This amount is subject to change based on performance and rescissions of redemption notices. For primarily all of these funds, redemptions will be paid out over time as the underlying investments are liquidated, in accordance with the governing documents of the applicable funds.

(3)Includes $3.3 billion of capital under management due to Fortress's takeover of management of the D.B. Zwirn funds and related investment vehicles.

Overview

We managed $32.0 billion of assets in private equity funds, liquid hedge funds and hybrid funds as of September 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 third quarter of 2009, we generated fund management DE of $51 million. Including principal investments, Fortress generated pre-tax distributable earnings of $57 million.

For the quarter ended September 30, 2009, the private equity segments accounted for approximately 38% of total segment revenues, the liquid hedge funds segment accounted for approximately 23% of total segment revenues and the hybrid funds segments accounted for approximately 39% of total segment revenues.

For the quarter ended September 30, 2009, the private equity, liquid hedge funds and hybrid funds businesses accounted for approximately 59%, 12% and 29%, respectively, of total fund management DE.

Private Equity - Funds

For the quarter ended September 30, 2009, the Company's private equity funds had pre-tax DE of $25 million compared to pre-tax DE of $17 million for the quarter ended September 30, 2008.

Assets under management for private equity funds was $11.1 billion at September 30, 2009 compared to $11.7 billion as of September 30, 2008.

As of September 30, 2009, our funds' private equity capital invested in non-public transactions totaled approximately $12.1 billion, and our private equity funds' unfunded commitments to investments were approximately $641 million.

Private Equity - Castles

For the quarter ended September 30, 2009, the Company's Castles generated pre-tax DE of $5 million compared to $4 million for the quarter ended September 30, 2008.

Assets under management for the Castles was $3.3 billion at September 30, 2009 compared to $3.2 billion as of September 30, 2008.

Liquid Hedge Funds

For the quarter ended September 30, 2009, the Company's liquid hedge fund business generated pre-tax DE of $6 million compared to $26 million for the quarter ended September 30, 2008.

Assets under management for the liquid hedge funds was $4.5 billion at September 30, 2009 compared to $9.1 billion as of September 30, 2008. Subsequent to quarter end, the liquid hedge funds had redemption payouts of approximately $0.7 billion in October 2009. Approximately $0.4 billion of this amount consisted of distributions from Macro Funds' SPVs.

The following table shows our Assets Under Management by fund:

September 30,    December, 31   September 30,
(dollars in billions)          2009            2008           2008
----            ----           ----
Macro Funds (4)              $3.6            $6.1           $8.0
Fortress Commodities Fund    $0.9            $1.1           $1.1

The following table shows our gross and net returns by fund: (5)

Estimated
Three Months  Nine Months  Ten Months
Ended        Ended       Ended
Sept. 30,   Sept. 30,    Oct. 31,
Gross Returns                           2009        2009        2009
----        ----        ----
Fortress Macro Offshore Fund
L.P. (6)                              4.9%        9.4%       11.8%
Drawbridge Global Macro Fund Ltd      7.9%       21.1%       24.0%
Fortress Commodities Fund L.P.        5.2%        7.6%       10.0%
Net Returns
Fortress Macro Offshore Fund
L.P. (6)                             3.6%        6.9%        8.6%
Drawbridge Global Macro Fund Ltd      7.4%       19.5%       22.2%
Fortress Commodities Fund L.P.        3.9%        5.2%        7.0%

(4) Combined AUM for Fortress Macro Master Fund L.P., Drawbridge Global Macro Fund L.P., Drawbridge Global Macro Intermediate Fund L.P., Drawbridge Global Macro Alpha Intermediate Fund L.P., DBGM Offshore Ltd, DBGM Onshore LP, DBGM Alpha V Ltd and Drawbridge Global Macro managed accounts.

(5) 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 management fees borne by the Fund and incentive allocations while net returns reflect performance data after taking into account management fees borne by the Fund and incentive allocations.

(6) Fortress Macro Offshore Fund L.P. returns reflect a "new issue eligible" class "A" investor that made a new investment on May 1, 2009, the date of inception of the Fund.

Hybrid - Hedge Funds

For the quarter ended September 30, 2009, the Company's hybrid hedge fund business generated pre-tax DE of $6 million compared to $15 million for the quarter ended September 30, 2008.

Assets under management for the hybrid hedge funds was $9.8 billion at September 30, 2009 compared to $8.2 billion as of September 30, 2008. The hybrid hedge funds, which have an annual notice date for redemptions, have received redemption notices effective December 31, 2009 of approximately $1.5 billion, using September 30, 2009 values. This amount is subject to change based on performance and rescissions of redemption notices. For primarily all of these funds, redemptions will be paid out over time as the underlying investments are liquidated, in accordance with the governing documents of the applicable funds. During this period, such amounts continue to be subject to management fees and, as applicable, incentive income.

The following table shows our Assets Under Management by fund:

September 30,  December 31, September 30,
(dollars in billions)               2009          2008         2008
----          ----         ----
Drawbridge Special Opportunities
Funds (7)                        $5.2          $5.0         $6.4
Fortress Partners Funds (8)       $1.8          $1.5         $1.8
Fortress Value Recovery
Funds (9)                        $2.8           N.A.         N.A.

(7) Combined AUM for Drawbridge Special Opportunities Fund Ltd, Drawbridge Special Opportunities Fund LP and Drawbridge Special Opportunities Fund managed accounts.

(8) Combined AUM for Fortress Partners Offshore Fund LP and Fortress Partners Fund LP.

(9) Fortress will receive management fees from these funds equal to 1% of cash receipts and up to 1% per annum on certain managed assets, subject to collectability, and may receive limited incentive income if aggregate realizations exceed an agreed threshold.

The following table shows our gross and net returns by fund: (10)

Three Months     Nine Months
Ended            Ended
September 30,   September 30,
Gross Returns                                 2009              2009
Drawbridge Special Opportunities           ----              ----
LP (11)                                    7.4%             20.0%
Drawbridge Special Opportunities
Ltd (11)                                  10.8%             22.8%
Fortress Partners Fund LP                   4.9%             12.3%
Fortress Partners Offshore Fund LP          4.6%             13.3%
Net Returns
Drawbridge Special Opportunities
LP (11)                                    6.8%             18.2%
Drawbridge Special Opportunities
Ltd (11)                                  10.3%             21.0%
Fortress Partners Fund LP                  4.7%             11.4%
Fortress Partners Offshore Fund LP         4.4%             12.5%

(10) 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 management fees borne by the Fund and incentive allocations while net returns reflect performance data after taking into account management fees borne by the Fund and incentive allocations. Specific performance may vary based on, among other things, whether fund investors are invested in one or more special investments.

(11) 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 September 30, 2009, the Company's hybrid private equity fund business generated pre-tax DE of $9 million as compared to $1 million for the quarter ended September 30, 2008.

Assets under management for the hybrid private equity funds was $3.4 billion at September 30, 2009 compared to $2.0 billion as of September 30, 2008.

Principal Investments

At September 30, 2009, we had $0.8 billion of assets (excluding cash and cash equivalents) in our principal investments segment, compared to $1.0 billion (excluding cash and cash equivalents) at September 30, 2008. During the three months ended September 30, 2009, we increased commitments to our principal investments by $2 million and funded $5 million of our commitments. We had $130 million of unfunded commitments to our principal investments as of September 30, 2009.

Our principal investments segment generated a gain of $6 million for the three months ended September 30, 2009, due primarily to $10 million of earnings on our equity investments in our hedge funds and $4 million of net interest expense.

Segment Expenses

Segment expenses were $67 million in the third quarter of 2009, down from $90 million for the third quarter of 2008. Segment expenses for the third quarters of 2009 and 2008 both included $9 million profit sharing compensation, which is a function of revenues received from our various funds.

The Company had $301 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 September 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

During the third quarter, we paid down the credit facility by $28 million. As of September 30, 2009, we have $412 million of debt outstanding and have capacity available of approximately $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
--  Weighted Average Dividend Paying Shares and Units Outstanding (Used for
DEPS)

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, Friday, November 6, 2009 at 8:30 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 Third 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 Friday, November 13, 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 "36221424."

About Fortress

Fortress is a leading global alternative asset manager with approximately $32.0 billion in assets under management as of September 30, 2009. Fortress manages private equity funds, liquid hedge funds and hybrid 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        Nine Months Ended
September 30,             September 30,
---------------------    ----------------------
2009         2008         2009         2008
Revenues                  --------     --------     --------     --------
Management fees from
affiliates             $106,926     $154,266     $321,003     $447,928
Incentive income from
affiliates                7,638          718       14,596       56,162
Expense reimbursements
from affiliates          24,952       12,501       58,660       42,722
Other revenues             4,167       17,651       10,807       27,300
--------     --------     --------     --------
143,683      185,136      405,066      574,112
Expenses                  --------     --------     --------     --------
Interest expense           4,451        9,481       20,242       29,705
Compensation and
benefits                132,033      134,774      354,725      399,253
Principals agreement
compensation            239,975      239,976      712,101      714,710
General, administrative
and other                18,461       23,536       56,680       59,852
Depreciation and
amortization              2,719        2,437        8,121        7,309
--------     --------     --------    ---------
397,639      410,204    1,151,869    1,210,829
Other Income (Loss)       --------     --------     --------    ---------
Gains (losses) from
investments
Net realized gains
(losses)                (408)      (2,477)      (1,180)        (803)
Net realized gains
(losses) from
affiliate
investments              315         (671)         301         (516)
Net unrealized
gains (losses)           -            -            -            -
Net unrealized
gains (losses)
from affiliate
investments           20,282       (6,951)      38,036      (43,352)
Tax receivable
agreement liability
reduction                  -            -            (55)         -
Earnings (losses)
from equity method
investees                40,345      (37,921)      56,553     (113,550)
--------     --------     --------     --------
60,534      (48,020)      93,655     (158,221)
Income (Loss) Before      --------     --------     --------     --------
Income Taxes             (193,422)    (273,088)    (653,148)    (794,938)
Income tax benefit
(expense)                   3,116        5,636        4,831          333
--------     --------     --------     --------
Net Income (Loss)        $(190,306)   $(267,452)   $(648,317)   $(794,605)
Principals' and           ========     ========     ========     ========
Others' Interests in
Income (Loss) of
Consolidated
Subsidiaries          $(131,704)   $(210,012)   $(477,964)   $(612,692)
Net Income (Loss)         ========     ========     ========     ========
Attributable to Class
A Shareholders           $(58,602)    $(57,440)   $(170,353)   $(181,913)
Dividends declared per    ========     ========     ========     ========
Class A share               $-           $-           $-          $0.450
========     ========     ========     ========
Earnings Per Class A
share - Fortress
Investment Group
Net income (loss) per
Class A share, basic       $(0.41)      $(0.61)      $(1.50)      $(1.96)
Net income (loss) per     ========     ========     ========     ========
Class A share,
diluted                    $(0.43)      $(0.66)      $(1.53)      $(1.97)
Weighted average          ========     ========     ========     ========
number of Class A
shares outstanding,
basic                 143,627,823   94,938,434  118,638,707   94,915,666
Weighted average       ===========   ==========  ===========   ==========
number of Class A
shares outstanding,
diluted               454,064,379  407,009,984  430,159,270  406,987,216
===========  ===========     ========  ===========

Fortress Investment Group LLC

Consolidated Balance Sheets

(dollars in thousands, except share data)

September 30,      December 31,
2009              2008
(Unaudited)
Assets                                  ----------        ----------
Cash and cash equivalents               $106,986          $263,337
Due from affiliates                      105,518            38,504
Investments
Equity method investees                881,768           774,382
Options in affiliates                    1,417                39
Deferred tax asset                       444,316           408,066
Other assets                              91,763            93,407
----------        ----------
$1,631,768        $1,577,735
==========        ==========
Liabilities and Shareholders' Equity
Liabilities
Accrued compensation and benefits        $92,950          $158,033
Due to affiliates                        333,320           346,265
Deferred incentive income                163,635           163,635
Debt obligations payable                 411,800           729,041
Other liabilities                         53,194            26,741
----------        ----------
1,054,899         1,423,715
----------        ----------
Commitments and Contingencies
Equity
Class A shares, no par value,
1,000,000,000 shares authorized,
145,511,736 and 94,609,525 shares
issued and outstanding at September
30, 2009 and December 31, 2008,
respectively                               -                 -
Class B shares, no par value,
750,000,000 shares authorized,
307,773,852 and 312,071,550 shares
issued and outstanding at September 30,
2009 and December 31, 2008,
respectively                               -                 -
Paid-in capital                         932,709           596,803
Retained earnings (accumulated
deficit)                              (683,732)         (513,379)
Accumulated other comprehensive
income (loss)                             (597)             (866)
Total Fortress shareholders'         ----------        ----------
equity                                 248,380            82,558
Principals' and others' interests
in equity of consolidated
subsidiaries                           328,489            71,462
----------        ----------
Total equity                          576,869           154,020
----------        ----------
$1,631,768        $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
-------------------------------
September 30,      September 30,
2009               2008
------------       ------------
Fund Management DE                             $51                $63
------------       ------------
Investment Income (Loss)                      10                (73)
Interest Expense                              (4)               (10)
------------       ------------
Pre-tax Distributable Earnings                  57                (20)
------------       ------------
Private Equity incentive income                -                  1
Hedge Fund incentive income                   (2)                 -
Reserve for clawback                           -                 16
Earnings (losses) from equity
method investees                             29                (13)
Gains (losses) on options                      1                 (1)
Gains (losses) on other
Investments                                  19                 (6)
Impairment of investments                      2                 50
Employee equity-based compensation           (61)               (57)
Principal compensation                      (240)              (240)
Principals' Interests in Income
(Losses) of Consolidated
Subsidiaries                                133                208
Taxes                                          3                  5
------------       ------------
GAAP Net Income (Loss) Attributable
to Class A Shareholders                      $(59)              $(57)
Principals' and Others' Interests   ------------       ------------
in Income (Losses) of
Consolidated Subsidiaries                  (131)              (210)
------------       ------------
GAAP Net Income (Loss)                       $(190)             $(267)
------------       ------------
Nine Months Ended
-------------------------------
September 30,      September 30,
2009               2008
------------       ------------
Fund Management DE                            $148               $209
------------       ------------
Investment Income (Loss)                      (3)               (83)
Interest Expense                             (20)               (30)
------------       ------------
Pre-tax Distributable Earnings                 125                 96
------------       ------------
Private Equity incentive income                -                 10
Hedge Fund incentive income                   (2)                 -
Reserve for clawback                           -                 16
Earnings (losses) from equity
method investees                             27                (81)
Gains (losses) on options                      1                (16)
Gains (losses) on other
Investments                                  37                (27)
Impairment of investments                     34                 59
Employee equity-based compensation          (167)              (146)
Principal compensation                      (712)              (715)
Employee portion of incentive
income                                        -                 10
Principals' Interests in Income
(Losses) of Consolidated
Subsidiaries                                482                612
Taxes                                          5                  -
------------       ------------
GAAP Net Income (Loss) Attributable
to Class A Shareholders                     $(170)             $(182)
Principals' and Others' Interests    ------------       ------------
in Income (Losses) of
Consolidated Subsidiaries                    (478)              (613)
------------       ------------
GAAP Net Income (Loss)                       $(648)             $(795)
------------       ------------

Fortress Investment Group LLC

Reconciliation of Segment Revenues to GAAP Revenues

(dollars in millions)

Three Months Ended
-------------------------------
September 30,      September 30,
2009                2008
------------       ------------
Segment Revenues                              $118                $153
Adjust management fees                      (1)                 (2)
Adjust incentive income                     (2)                  4
Other revenues                              29                  30
------------       ------------
GAAP Revenues                                 $144                $185
------------       ------------
Nine Months Ended
--------------------------------
September 30,       September 30,
2009                2008
------------       ------------
Segment Revenues                              $342                $495
Adjust management fees                      (3)                 (3)
Adjust incentive income                     (3)                 12
Other revenues                              69                  70
------------       ------------
GAAP Revenues                                 $405                $574
------------       ------------

Fortress Investment Group LLC

Reconciliation of Segment Management Fees to GAAP Management Fees

(dollars in thousands)

Three Months Ended
--------------------------------
September 30,       September 30,
2009                2008
------------        ------------
Segment Management Fees                       $108                $156
Adjust expense reimbursements                -                   -
Adjust management fees from non-
affiliates                                 (1)                 (2)
------------        ------------
GAAP Management Fees                          $107                $154
------------        ------------
Nine Months Ended
-------------------------------
September 30,      September 30,
2009              2008
------------       ------------
Segment Management Fees                        $324              $451
Adjust expense reimbursements                 1                 1
Adjust management fees from non-
affiliates                                  (4)               (4)
------------       ------------
GAAP Management Fees                           $321              $448
------------       ------------

''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 September 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     Nine Months
Ended            Ended
September 30,     September 30,
2009              2009
------------      ------------
GAAP net loss                             $(190,306)        $(648,317)
Principals agreement compensation           239,975           712,101
GAAP net income excluding principals     ------------      ------------
agreement compensation                     $49,669           $63,784
------------      ------------

Fortress Investment Group LLC

Reconciliation of Weighted Average Class A Shares Outstanding (Used for Basic EPS) to Weighted Average Dividend Paying Shares and Units Outstanding (Used for DEPS)

Three Months Ended
September 30,
------------------------------
2009               2008
Weighted Average Class A Shares          -----------        -----------
Outstanding (Used for Basic EPS)        143,627,823         94,938,434
-----------        -----------
Weighted average fully vested
restricted Class A share units
with dividend equivalent rights     (1,158,673)          (394,286)
Weighted average fully vested
restricted Class A shares              (99,520)           (43,797)
-----------        -----------
Weighted Average Class A Shares
Outstanding                            142,369,630         94,500,351
-----------        -----------
Weighted average restricted
Class A shares (12)                    183,173            108,661
Weighted average fully vested
restricted Class A share units
which are entitled to dividend
equivalent payments                  1,158,673            394,286
Weighted average nonvested
restricted Class A share units
which are entitled to dividend
equivalent payments                 25,480,488         24,101,891
Weighted average Fortress
Operating Group units              310,436,556        312,071,550
Weighted average Fortress Operating
Group RPUs                          31,000,000         31,000,000
-----------        -----------
Weighted Average Dividend Paying
Shares and Units Outstanding
(Used for DEPS)                       510,628,520        462,176,739
-----------        -----------
Nine Months Ended
September 30,
------------------------------
2009               2008
-----------        -----------
Weighted Average Class A Shares
Outstanding (Used for Basic EPS)       118,638,707         94,915,666
Weighted average fully vested       -----------        -----------
restricted Class A share units
with dividend equivalent rights     (1,137,275)          (394,286)
Weighted average fully vested
restricted Class A shares              (92,890)           (21,029)
-----------        -----------
Weighted Average Class A Shares
Outstanding                            117,408,542         94,500,351
Weighted average restricted Class A
shares (12)                            138,999            103,411
Weighted average fully vested
restricted Class A share units which
are entitled
to dividend equivalent payments       1,137,275            394,286
Weighted average nonvested restricted
Class A share units which are
entitled
to dividend equivalent payments      23,794,771         23,840,819
Weighted average Fortress Operating
Group units                        311,520,563        312,071,550
Weighted average Fortress Operating
Group RPUs                          31,000,000         18,781,022
-----------        -----------
Weighted Average Dividend Paying
Shares and Units Outstanding
(Used for DEPS)                        485,000,150        449,691,439
-----------        -----------

(12) Includes both fully vested and nonvested weighted average restricted Class A shares.

CONTACT:
Lilly H. Donohue
212-798-6118

SOURCE Fortress Investment Group LLC

Contact: Lilly H. Donohue, +1-212-798-6118