NEW YORK, March 18, 2016 (GLOBE NEWSWIRE) -- Medley Management Inc. (NYSE:MDLY) today reported its financial results for its fourth quarter and year ended December 31, 2015.
Highlights
- Total assets under management were $4.8 billion as of December 31, 2015 and over $5 billion as of January 25, 2016
- Fee earning assets under management were $3.3 billion as of December 31, 2015
- Core Net Income Per Share was $0.14 for Q4 2015 and $0.61 for the year ended December 31, 2015
- U.S. GAAP net income attributable to Medley Management Inc. was $0.08 per share for Q4 2015 and $0.46 per share for the year ended December 31, 2015
“2015 was a strong growth year for Medley. AUM at the firm is now over $5 billion, and we have substantial dry powder to take advantage of opportunities in the market. Combined with our announced and intended product expansion, this positions us well as we look forward in 2016,” said Brook Taube, CEO of Medley.
Results of Operations for the Year Ended December 31, 2015
Management fees increased by 15%, or $9.9 million, to $75.7 million for the year ended December 31, 2015 compared to standalone management fees for the same period in 2014. This increase was offset by a reversal in performance fee revenue of our private funds of $15.7 million for the year ended December 31, 2015 as a result of a decrease in the asset values within their underlying portfolios. Total revenues decreased by 18%, or $15.1 million, to $67.4 million for the year ended December 31, 2015 compared to total standalone revenues for the same period in 2014. Exclusive of performance fees, total revenues would have increased by 11%, or $8.5 million, to $83.1 million compared to total standalone revenues for the same period in 2014.
Total expenses increased by 1% or, $0.5 million, to $35.6 million for the year ended December 31, 2015 compared to total standalone expenses for the same period in 2014. The variance was due primarily to an increase in compensation and benefits expenses, partly offset by a reversal in performance fee compensation. Exclusive of performance fee compensation, total expenses would have increased by 19%, or $7.0 million, to $43.6 million compared to total standalone expenses for the same period in 2014.
Total other expense, net increased by $2.5 million to $9.2 million for the year ended December 31, 2015 compared to total standalone other expense, net for the same period in 2014. The increase was due primarily to an increase in interest expense.
Pre-Tax Core Net Income decreased by 22%, or $9.2 million, to $32.8 million for the year ended December 31, 2015 compared to the same period in 2014. Core Net Income Per Share was $0.61 for the year ended December 31, 2015, compared to $0.79 for the same period in 2014. Exclusive of the impact of performance fees1, Pre-Tax Core Net Income would have increased by $3.1 million, to $37.2 million for the year ended December 31, 2015 compared to the same period in 2014, and Core Net Income Per Share would have been $0.70 for the year ended December 31, 2015, compared to $0.64 for the same period in 2014.
Core EBITDA decreased by $6.2 million to $41.7 million for the year ended December 31, 2015 compared to the same period in 2014. Exclusive of the impact of performance fees1, Core EBITDA would have increased by $6.1 million, to $46.2 million for the year ended December 31, 2015, compared to the same period in 2014.
Results of Operations for the Three Months Ended December 31, 2015
Management fees increased by 5%, or $0.8 million, to $19.1 million for the three months ended December 31, 2015 as compared to standalone management fees for the same period in 2014. This increase was offset by a reversal in performance fee revenue of our private funds of $5.1 million for the three months ended December 31, 2015 as a result of a decrease in the asset values within their underlying portfolios. Total revenues decreased by 2%, or $0.4 million, to $16.0 million for the three months ended December 31, 2015 compared to total standalone revenues for the same period in 2014. Exclusive of the impact of performance fees, total revenues would have increased by 6%, or $1.1 million, to $21.0 million compared to total standalone revenues for the same period in 2014.
Total expenses increased by $4.8 million, to $9.8 million for the three months ended December 31, 2015 compared to total standalone expenses for the same period in 2014. The increase was due primarily to an increase in general, administrative and other expenses as a result of higher expense support agreement expenses related to Sierra Income Corporation, one of our permanent capital vehicles. Exclusive of performance fee compensation, total expenses would have increased by 51%, or $4.5 million, to $13.3 million compared to total standalone expenses for the same period in 2014.
Total other expense, net increased by $0.2 million to $2.5 million for the three months ended December 31, 2015 compared to total standalone other expense, net for the same period in 2014.
Pre-Tax Core Net Income decreased by $3.7 million, to $7.4 million for the three months ended December 31, 2015 compared to the same period in 2014. Core Net Income Per Share was $0.14 for the three months ended December 31, 2015, compared to $0.21 for the same period in 2014. Exclusive of the impact of performance fees1, Pre-Tax Core Net Income would have decreased by $1.7 million, to $8.7 million for the three months ended December 31, 2015 compared to the same period in 2014 and Core Net Income Per Share would have been $0.16 for the three months ended December 31, 2015, compared to $0.19 for the same period in 2014.
Core EBITDA decreased by $3.8 million, to $9.6 million for the three months ended December 31, 2015 compared to the same period in 2014. Exclusive of the impact of performance fees1, Core EBITDA would have decreased by $1.7 million, to $10.9 million for the three months ended December 31, 2015, compared to the same period in 2014.
Notes:
During fiscal year 2015, we adopted new accounting guidance which resulted in the deconsolidation of our Consolidated Funds, effective January 1, 2015. Accordingly, our results of operations for the three months and year ended December 31, 2015 represent our Consolidated Statements of Operations in accordance with U.S. GAAP. See Exhibit E for a reconciliation of our standalone results for the three months and year ended December 31, 2014, which have been adjusted to reverse the effect of consolidation of Consolidated Funds, to the results of operations for such periods.
The financial results prior to September 29, 2014 reflect those of our operating subsidiaries, Medley LLC and Medley GP Holdings LLC and their consolidated subsidiaries prior to our initial public offering (“IPO”) and the related reorganization.
Investor Contact
Sam Anderson
Medley Management Inc
212.759.0777
Media Contact
Liz Bruce
Fitzroy Communications
212.498.9197
1 The impact of performance fees on our income statement includes the impact of performance fee revenue, performance fee compensation and the portion of net income attributable to non-controlling interest in consolidated subsidiaries relating to performance fee revenue.
Key Performance Indicators:
| For the Three Months Ended | ||||||||||||||||||||
| December 31, | For the Years Ended | |||||||||||||||||||
| (unaudited) | December 31, | |||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | |||||||||||||||||
| (Amounts in thousands, except AUM, share and per share amounts) | ||||||||||||||||||||
| Consolidated Financial Data: | ||||||||||||||||||||
| Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC | $ | 3,356 | $ | 9,268 | $ | 21,517 | $ | 37,750 | ||||||||||||
| Non-GAAP Data: | ||||||||||||||||||||
| Pre-Tax Core Net Income (1) | $ | 7,364 | $ | 11,111 | $ | 32,798 | $ | 42,036 | ||||||||||||
| Core Net Income (1) | 6,870 | 11,024 | 29,747 | 40,882 | ||||||||||||||||
| Core EBITDA (2) | 9,611 | 13,363 | 41,721 | 47,957 | ||||||||||||||||
| Core Net Income Per Share (3) | $ | 0.14 | $ | 0.21 | $ | 0.61 | $ | 0.79 | ||||||||||||
| Core Net Income Margin (4) | 26.3 | % | 38.6 | % | 27.7 | % | 29.2 | % | ||||||||||||
| Pro-Forma Weighted Average Shares Outstanding (5) | 30,470,736 | 30,511,366 | 30,459,958 | 30,491,417 | ||||||||||||||||
| Other Data (at period end, in millions): | ||||||||||||||||||||
| AUM | $ | 4,779 | $ | 3,682 | $ | 4,779 | $ | 3,682 | ||||||||||||
| Fee Earning AUM | 3,302 | 3,058 | 3,302 | 3,058 | ||||||||||||||||
| (1) Pre-Tax Core Net Income is calculated as Core Net Income before income taxes. Core Net Income reflects net income attributable to Medley Management Inc. and net income attributed to non-controlling interests in Medley LLC adjusted to exclude reimbursable expenses associated with the launch of funds, certain one-time severance costs, stock-based compensation associated with restricted stock units that were granted in connection with our IPO and, for periods prior to 2015, adjustments to reverse the effect of the consolidation of Consolidated Funds. In addition, for the year ended December 31, 2014, Core Net Income includes the pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense, that, prior to our reorganization and IPO, were recorded as distributions from members’ capital. Please refer to the reconciliation of Core Net Income to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit B and Exhibit E for additional details. | ||||||||||||||||||||
| (2) Core EBITDA is calculated as Core Net Income before interest expense, income taxes and depreciation. Please refer to the reconciliation of Core EBITDA to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit B and Exhibit E for additional details. | ||||||||||||||||||||
| (3) Core Net Income Per Share is calculated as Core Net Income, adjusted for the income tax effect of assuming that all of our pre-tax earnings were subject to federal, state and local corporate income taxes, divided by Pro-Forma Weighted Average Shares Outstanding (as defined below). We assumed an effective corporate tax rate of 43.0% for all periods presented. Please refer to the calculation of Core Net Income Per Share in Exhibit C and Exhibit E for additional details. | ||||||||||||||||||||
| (4) Core Net Income Margin equals Core Net Income Per Share divided by total revenue per share and, for periods prior to 2015, total standalone revenue per share. | ||||||||||||||||||||
| (5) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of 23,333,333 Medley LLC units for 23,333,333 shares of Class A common stock at the beginning of each period presented and, at the beginning of each period in 2014, the issuance of 6,000,000 shares of Class A common stock in connection with our IPO and the grant of 1,151,389 restricted stock units in connection with our IPO, adjusted for actual forfeitures, vesting and additional grants during the period. Please refer to Exhibit C for additional details. | ||||||||||||||||||||
Fee Earning AUM
The table below presents the quarter to date roll forward of our total fee earning AUM:
| % of AUM | ||||||||||||||||||||||
| Permanent | Long-dated | Permanent | Long-dated | |||||||||||||||||||
| Capital | Private Funds | Capital | Private Funds | |||||||||||||||||||
| Vehicles | and SMAs | Total | Vehicles | and SMAs | ||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||
| Beginning balance, September 30, 2015 | $ | 2,306 | $ | 1,095 | $ | 3,401 | 68 | % | 32 | % | ||||||||||||
| Commitments | 23 | 12 | 35 | |||||||||||||||||||
| Capital reduction | (1 | ) | - | (1 | ) | |||||||||||||||||
| Distributions | (33 | ) | (9 | ) | (42 | ) | ||||||||||||||||
| Change in fund value | (57 | ) | (34 | ) | (91 | ) | ||||||||||||||||
| Ending balance, December 31, 2015 | $ | 2,238 | $ | 1,064 | $ | 3,302 | 68 | % | 32 | % | ||||||||||||
Total fee earning AUM decreased by 3%, or $99 million, to $3.3 billion at December 31, 2015 compared to September 30, 2015. The permanent capital vehicles’ share of fee earning AUM remained comparable at 68% at December 31, 2015 compared to September 30, 2015.
The table below presents the year-to-date roll forward of our total fee earning AUM:
| % of AUM | ||||||||||||||||||||||
| Permanent | Long-dated | Permanent | Long-dated | |||||||||||||||||||
| Capital | Private Funds | Capital | Private Funds | |||||||||||||||||||
| Vehicles | and SMAs | Total | Vehicles | and SMAs | ||||||||||||||||||
| (Dollars in millions) | ||||||||||||||||||||||
| Ending balance, December 31, 2014 | $ | 2,047 | $ | 1,011 | $ | 3,058 | 67 | % | 33 | % | ||||||||||||
| Commitments | 383 | 221 | 604 | |||||||||||||||||||
| Capital reduction | (23 | ) | (17 | ) | (40 | ) | ||||||||||||||||
| Distributions | (137 | ) | (95 | ) | (232 | ) | ||||||||||||||||
| Change in fund value | (32 | ) | (56 | ) | (88 | ) | ||||||||||||||||
| Ending balance, December 31, 2015 | $ | 2,238 | $ | 1,064 | $ | 3,302 | 68 | % | 32 | % | ||||||||||||
Total fee earning AUM increased by 8%, or $243 million, to $3.3 billion at December 31, 2015 compared to December 31, 2014. The permanent capital vehicles’ share of fee earning AUM increased to 68% at December 31, 2015 compared to 67% at December 31, 2014.
Conference Call and Webcast Information
We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Friday, March 18, 2016 to discuss our fourth quarter and full year 2015 financial results.
All interested parties may participate in the conference call by dialing (877) 299-4454 approximately 5-10 minutes prior to the call. International callers should dial (617) 597-5447. Participants should reference Medley Management Inc. and the participant passcode of 77619245 when prompted. Following the call you may access a replay of the event via audio webcast. This conference call will also be broadcast live over the Internet and can be accessed by all interested parties through the Investor Relations section of our website, http://www.mdly.com. Presentation slides to be referred to on the conference call will also be available on the Investor Relations section of our website. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company's website.
About Medley
Medley is an asset management firm offering yield solutions to retail and institutional investors. Medley's national direct origination franchise, with over 80 people, is a premier provider of capital to the middle market in the U.S. As of January 25, 2016, Medley had over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE:MCC) and Sierra Income Corporation, as well as private investment vehicles. Over the past 13 years, we have provided in excess of $6 billion of capital to over 300 companies across 35 industries in North America. For additional information, please visit Medley Management Inc. at www.mdly.com.
Forward-Looking Statements
Statements included herein may contain "forward-looking statements". Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission, including those described in the section “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2015. Except as required by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements made herein speak only as of the date of this press release.
Non-GAAP Financial Measures
We make reference to certain non-GAAP financial measures in this press release. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP is contained in the tables attached hereto.
Prior to our adoption of new accounting guidance on January 1, 2015, we were required to consolidate certain funds in our financial results. Information derived from our consolidated balance sheets and statements of operations for periods prior to 2015 have been adjusted to eliminate the consolidating effects of certain funds on our consolidated balance sheets and statements of operations and are referred to as “standalone financial information” or information presented on a “standalone basis.” During such periods, revenues from management fees, performance fees and investment income on a standalone basis were greater than those presented on a combined and consolidated basis in accordance with U.S. GAAP because certain revenues received from these consolidated funds were eliminated in consolidation. Furthermore, expenses on a standalone basis were lower than related amounts presented on a combined and consolidated basis in accordance with U.S. GAAP due to the exclusion of the expenses of the consolidated funds.
Non-GAAP measures used by management include Pre-Tax Core Net Income, Core Net Income, Core EBITDA, Core Net Income Per Share and Core Net Income Margin. Management uses these non-GAAP measures to assess the performance of our business and believes that these non-GAAP measures also provide investors with useful information to evaluate our performance. These non-GAAP measures supplement and should be considered in addition to and not in lieu of our consolidated results of operations calculated and presented in accordance with U.S. GAAP.
This press release does not constitute an offer for any Medley fund.
Available Information
Medley Management Inc.’s filings with the Securities and Exchange Commission, press releases, earnings releases and other financial information are available at www.mdly.com.
Exhibit A. Consolidated Statements of Operations of Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)
Our consolidated financial statements have been prepared on substantially the same basis for all historical periods presented; however, our Consolidated Funds are not the same entities in all periods shown due to the early adoption of ASU 2015-02, Consolidation – Principal versus Agent Analysis, which resulted in the deconsolidation of our Consolidated Funds effective January 1, 2015. For the periods in 2014, the consolidation of these funds had the impact of increasing interest and other income of Consolidated Funds, interest and other expenses of Consolidated Funds and net investment gains (losses) of Consolidated Funds, but had no net effect on the net income attributable to our consolidated results.
| For the Three Months Ended | |||||||||||||||||||
| December 31, | For the Years Ended | ||||||||||||||||||
| (unaudited) | December 31, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| (Amounts in thousands, except share and per share data) | |||||||||||||||||||
| Revenues | |||||||||||||||||||
| Management fees | $ | 19,097 | $ | 17,786 | $ | 75,675 | $ | 61,252 | |||||||||||
| Performance fees | (5,058 | ) | (1,287 | ) | (15,685 | ) | 2,050 | ||||||||||||
| Other revenues and fees | 1,940 | 1,688 | 7,436 | 8,871 | |||||||||||||||
| Total revenues | 15,979 | 18,187 | 67,426 | 72,173 | |||||||||||||||
| Expenses | |||||||||||||||||||
| Compensation and benefits | 7,236 | 5,312 | 26,768 | 20,322 | |||||||||||||||
| Performance fee compensation | (3,471 | ) | (3,780 | ) | (8,049 | ) | (1,543 | ) | |||||||||||
| Consolidated Funds expenses | - | 541 | - | 1,670 | |||||||||||||||
| General, administrative and other expenses | 6,080 | 3,491 | 16,836 | 16,312 | |||||||||||||||
| Total expenses | 9,845 | 5,564 | 35,555 | 36,761 | |||||||||||||||
| Other income (expense) | |||||||||||||||||||
| Dividend income | 221 | 221 | 886 | 886 | |||||||||||||||
| Interest expense | (2,134 | ) | (2,140 | ) | (8,469 | ) | (5,520 | ) | |||||||||||
| Other expenses, net | (554 | ) | (187 | ) | (1,641 | ) | (1,773 | ) | |||||||||||
| Interest and other income of Consolidated Funds | - | 19,992 | - | 71,468 | |||||||||||||||
| Interest expense of Consolidated Funds | - | (4,365 | ) | - | (9,951 | ) | |||||||||||||
| Net realized gain (loss) on investments of Consolidated Funds | - | - | - | 789 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds | - | (11,017 | ) | - | (20,557 | ) | |||||||||||||
| Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds | - | 1,071 | - | 1,174 | |||||||||||||||
| Total other income, net | (2,467 | ) | 3,575 | (9,224 | ) | 36,516 | |||||||||||||
| Income before income taxes | 3,667 | 16,198 | 22,647 | 71,928 | |||||||||||||||
| Provision for (benefit from) income taxes | 62 | 354 | 2,015 | 2,528 | |||||||||||||||
| Net income | 3,605 | 15,844 | 20,632 | 69,400 | |||||||||||||||
| Net income attributable to non-controlling interests in Consolidated Funds | - | 6,815 | - | 29,717 | |||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidated subsidiaries | 249 | (239 | ) | (885 | ) | 1,933 | |||||||||||||
| Net income attributable to non-controlling interests in Medley LLC | 2,830 | 7,951 | 18,406 | 36,055 | |||||||||||||||
| Net income attributable to Medley Management Inc. | $ | 526 | $ | 1,317 | $ | 3,111 | $ | 1,695 | |||||||||||
| Net income per Class A common stock: | |||||||||||||||||||
| Basic | $ | 0.08 | $ | 0.19 | $ | 0.46 | $ | 0.24 | |||||||||||
| Diluted | $ | 0.08 | $ | 0.19 | $ | 0.46 | $ | 0.24 | |||||||||||
| Weighted average shares - Basic and Diluted | 6,009,400 | 6,000,000 | 6,002,422 | 6,000,000 | |||||||||||||||
Exhibit B. Reconciliation of Core Net Income and Core EBITDA to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
| For the Three Months Ended | |||||||||||||
| December 31, | For the Year Ended | ||||||||||||
| (unaudited) | December 31, | ||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||
| (Amounts in thousands) | |||||||||||||
| Net income attributable to Medley Management Inc. | $ | 526 | $ | 1,317 | $ | 3,111 | $ | 1,695 | |||||
| Net income attributable to non-controlling interests in Medley LLC | 2,830 | 7,951 | 18,406 | 36,055 | |||||||||
| Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC | 3,356 | 9,268 | 21,517 | 37,750 | |||||||||
| Reimbursable fund startup expenses (1) | 2,914 | 1,008 | 5,665 | 5,599 | |||||||||
| Severance expense (1) | 148 | - | 269 | (5 | ) | ||||||||
| IPO date award stock-based compensation (1) | 452 | 748 | 2,296 | 822 | |||||||||
| Adjustment for pre-IPO guaranteed payments to members (1)(2) | - | - | - | (3,284 | ) | ||||||||
| Core Net Income | $ | 6,870 | $ | 11,024 | $ | 29,747 | $ | 40,882 | |||||
| Interest expense | 2,134 | 2,140 | 8,469 | 5,520 | |||||||||
| Income taxes | 494 | 87 | 3,051 | 1,154 | |||||||||
| Depreciation and amortization | 113 | 112 | 454 | 401 | |||||||||
| Core EBITDA | $ | 9,611 | $ | 13,363 | $ | 41,721 | $ | 47,957 | |||||
| (1) Amounts are presented net of income taxes. | |||||||||||||
| (2) Represents a pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense, that, prior to our reorganization and IPO, were treated as distributions from members’ capital. | |||||||||||||
Exhibit C. Calculation of Core Net Income Per Share
| For the Three Months Ended | |||||||||||||||||||
| December 31, | For the Years Ended | ||||||||||||||||||
| (unaudited) | December 31, | ||||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||||
| (Amounts in thousands, except share and per share amounts) | |||||||||||||||||||
| Numerator | |||||||||||||||||||
| Core Net Income | $ | 6,870 | $ | 11,024 | $ | 29,747 | $ | 40,882 | |||||||||||
| Add: Income taxes | 494 | 87 | 3,051 | 1,154 | |||||||||||||||
| Pre-Tax Core Net Income | 7,364 | 11,111 | 32,798 | 42,036 | |||||||||||||||
| Denominator | |||||||||||||||||||
| Class A shares | 6,009,400 | 6,000,000 | 6,002,422 | 6,000,000 | |||||||||||||||
| Conversion of LLC Units to Class A shares | 23,333,333 | 23,333,333 | 23,333,333 | 23,333,333 | |||||||||||||||
| Restricted stock units (1) | 1,128,003 | 1,178,033 | 1,124,203 | 1,158,084 | |||||||||||||||
| Pro-Forma Weighted Average Shares Outstanding (1) | 30,470,736 | 30,511,366 | 30,459,958 | 30,491,417 | |||||||||||||||
| Pre-Tax Core Net Income Per Share | $ | 0.24 | $ | 0.37 | $ | 1.08 | $ | 1.38 | |||||||||||
| Less: corporate income taxes per share (2) | (0.10 | ) | (0.16 | ) | (0.47 | ) | (0.59 | ) | |||||||||||
| Core Net Income Per Share | $ | 0.14 | $ | 0.21 | $ | 0.61 | $ | 0.79 | |||||||||||
| (1) The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of 23,333,333 Medley LLC units for 23,333,333 shares of Class A common stock at the beginning of each period presented and, at the beginning of each period in 2014, the issuance of 6,000,000 shares of Class A common stock in connection with our IPO and the grant of 1,151,389 restricted stock units in connection with our IPO, adjusted for actual forfeitures, vesting and additional grants during the period. | |||||||||||||||||||
| (2) Represents a per share adjustment for income taxes assuming that all of our pre-tax earnings were subject to federal, state and local income taxes. We assumed an effective corporate tax rate of 43.0% for all periods presented. | |||||||||||||||||||
Exhibit D. Consolidated Balance Sheets of Medley Management Inc.
| As of December 31, | |||||||||
| 2015 | 2014 | ||||||||
| (Amounts in thousands) | |||||||||
| Assets | |||||||||
| Cash and cash equivalents | $ | 71,688 | $ | 87,206 | |||||
| Investments, at fair value | 16,360 | 9,901 | |||||||
| Management fees receivable | 16,172 | 15,173 | |||||||
| Performance fees receivable | 2,518 | 5,573 | |||||||
| Other assets | 14,727 | 9,230 | |||||||
| Assets of Consolidated Funds: | |||||||||
| Cash and cash equivalents | - | 38,111 | |||||||
| Investments, at fair value | - | 734,870 | |||||||
| Interest and dividends receivable | - | 6,654 | |||||||
| Other assets | - | 3,681 | |||||||
| Total assets | $ | 121,465 | $ | 910,399 | |||||
| Liabilities and Equity | |||||||||
| Loans payable | $ | 102,583 | $ | 103,057 | |||||
| Accounts payable, accrued expenses and other liabilities | 34,746 | 27,583 | |||||||
| Performance fee compensation payable | 1,823 | 11,807 | |||||||
| Liabilities of Consolidated Funds: | |||||||||
| Accounts payable, accrued expenses and other liabilities | - | 5,767 | |||||||
| Secured borrowings | - | 141,135 | |||||||
| Total liabilities | 139,152 | 289,349 | |||||||
| Equity | |||||||||
| Class A Common Stock | 60 | 60 | |||||||
| Class B Common Stock | - | - | |||||||
| Additional paid in capital (capital deficit) | 631 | (2,384 | ) | ||||||
| Retained earnings (accumulated deficit) | (730 | ) | 272 | ||||||
| Total stockholders' equity (deficit), Medley Management Inc. | (39 | ) | (2,052 | ) | |||||
| Non-controlling interests in Consolidated Funds | - | 625,548 | |||||||
| Non-controlling interests in consolidated subsidiaries | (459 | ) | 1,526 | ||||||
| Non-controlling interests in Medley LLC | (17,189 | ) | (3,972 | ) | |||||
| Total equity (deficit) | (17,687 | ) | 621,050 | ||||||
| Total liabilities and equity | $ | 121,465 | $ | 910,399 | |||||
Exhibit E. Consolidating Statements of Operations and Consolidated Balance Sheet of Medley Management Inc. (Prior to September 29, 2014, Medley LLC and Medley GP Holdings LLC)
The following financial information illustrates the consolidating effects of the Consolidated Funds on our financial position as of December 31, 2014, and on our results from operations for the three months and year ended December 31, 2014. The financial position and results of operations for Medley Management Inc., adjusted to eliminate the consolidating effects of the Consolidated Funds, are presented in the tables under the “Standalone” column.
| For the Year Ended December 31, 2014 | |||||||||||||||||||
| Consolidated | |||||||||||||||||||
| Standalone | Funds | Eliminations | Consolidated | ||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| Revenues: | |||||||||||||||||||
| Management fees | $ | 65,765 | $ | - | $ | (4,513 | ) | $ | 61,252 | ||||||||||
| Performance fees | 7,884 | - | (5,834 | ) | 2,050 | ||||||||||||||
| Other revenues and fees | 8,871 | - | - | 8,871 | |||||||||||||||
| Total revenues | 82,520 | - | (10,347 | ) | 72,173 | ||||||||||||||
| Expenses: | |||||||||||||||||||
| Compensation and benefits | 20,322 | - | - | 20,322 | |||||||||||||||
| Performance fee compensation | (1,543 | ) | - | - | (1,543 | ) | |||||||||||||
| Consolidated Funds expenses | - | 6,183 | (4,513 | ) | 1,670 | ||||||||||||||
| General, administrative and other expenses | 16,312 | - | - | 16,312 | |||||||||||||||
| Total expenses | 35,091 | 6,183 | (4,513 | ) | 36,761 | ||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Dividend income | 886 | - | - | 886 | |||||||||||||||
| Interest expense | (5,520 | ) | - | - | (5,520 | ) | |||||||||||||
| Other income (expenses), net | (2,097 | ) | - | 324 | (1,773 | ) | |||||||||||||
| Interest and other income of Consolidated Funds | - | 71,468 | - | 71,468 | |||||||||||||||
| Interest expense of Consolidated Funds | - | (9,951 | ) | - | (9,951 | ) | |||||||||||||
| Net realized gain (loss) on investments of Consolidated Funds | - | 789 | - | 789 | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds | - | (20,557 | ) | - | (20,557 | ) | |||||||||||||
| Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds | - | 1,174 | - | 1,174 | |||||||||||||||
| Total other income (expense), net | (6,731 | ) | 42,923 | 324 | 36,516 | ||||||||||||||
| Income (loss) before income taxes | 40,698 | 36,740 | (5,510 | ) | 71,928 | ||||||||||||||
| Provision for (benefit from) income taxes | 1,015 | 1,513 | - | 2,528 | |||||||||||||||
| Net income (loss) | 39,683 | 35,227 | (5,510 | ) | 69,400 | ||||||||||||||
| Net income attributable to non-controlling interests in Consolidated Funds | - | - | 29,717 | 29,717 | |||||||||||||||
| Net income (loss) attributable to non-controlling interests in consolidated subsidiaries | 1,933 | - | - | 1,933 | |||||||||||||||
| Net income attributable to non-controlling interests in Medley LLC | 36,055 | - | - | 36,055 | |||||||||||||||
| Net income attributable to Medley Management Inc. | $ | 1,695 | $ | 35,227 | $ | (35,227 | ) | $ | 1,695 | ||||||||||
| As of December 31, 2014 | |||||||||||||||||||
| Consolidated | |||||||||||||||||||
| Standalone | Funds | Eliminations | Consolidated | ||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| Assets | |||||||||||||||||||
| Cash and cash equivalents | $ | 87,206 | $ | - | $ | - | $ | 87,206 | |||||||||||
| Investments, at fair value | 22,143 | - | (12,242 | ) | 9,901 | ||||||||||||||
| Management fees receivable | 15,173 | - | - | 15,173 | |||||||||||||||
| Performance fees receivable | 5,573 | - | - | 5,573 | |||||||||||||||
| Other assets | 9,230 | - | - | 9,230 | |||||||||||||||
| Assets of Consolidated Funds: | |||||||||||||||||||
| Cash and cash equivalents | - | 38,111 | - | 38,111 | |||||||||||||||
| Investments, at fair value | - | 734,870 | - | 734,870 | |||||||||||||||
| Interest and dividends receivable | - | 6,654 | - | 6,654 | |||||||||||||||
| Other assets | - | 5,057 | (1,376 | ) | 3,681 | ||||||||||||||
| Total assets | $ | 139,325 | $ | 784,692 | $ | (13,618 | ) | $ | 910,399 | ||||||||||
| Liabilities and equity | |||||||||||||||||||
| Loans payable | $ | 103,057 | $ | - | $ | - | $ | 103,057 | |||||||||||
| Accounts payable, accrued expenses and other liabilities | 28,959 | - | (1,376 | ) | 27,583 | ||||||||||||||
| Performance fee compensation payable | 11,807 | - | - | 11,807 | |||||||||||||||
| Liabilities of Consolidated Funds: | |||||||||||||||||||
| Accounts payable, accrued expenses and other liabilities | - | 5,767 | - | 5,767 | |||||||||||||||
| Secured borrowings | - | 141,135 | - | 141,135 | |||||||||||||||
| Total liabilities | 143,823 | 146,902 | (1,376 | ) | 289,349 | ||||||||||||||
| Equity | |||||||||||||||||||
| Class A Common Stock | 60 | - | - | 60 | |||||||||||||||
| Class B Common Stock | - | - | - | - | |||||||||||||||
| Capital deficit | (2,384 | ) | - | - | (2,384 | ) | |||||||||||||
| Retained earnings | 272 | - | - | 272 | |||||||||||||||
| Total stockholders' equity (deficit), Medley Management Inc. | (2,052 | ) | - | - | (2,052 | ) | |||||||||||||
| Non-controlling interests in Consolidated Funds | - | - | 625,548 | 625,548 | |||||||||||||||
| Non-controlling interests in consolidated subsidiaries | 1,526 | - | - | 1,526 | |||||||||||||||
| Non-controlling interests in Medley LLC | (3,972 | ) | - | - | (3,972 | ) | |||||||||||||
| Members' equity of consolidated funds | - | 637,790 | (637,790 | ) | - | ||||||||||||||
| Total (deficit) equity | (4,498 | ) | 637,790 | (12,242 | ) | 621,050 | |||||||||||||
| Total liabilities and equity | $ | 139,325 | $ | 784,692 | $ | (13,618 | ) | $ | 910,399 | ||||||||||
| For the Three Months Ended December 31, 2014 | |||||||||||||||||||
| (unaudited) | |||||||||||||||||||
| Consolidated | |||||||||||||||||||
| Standalone | Funds | Eliminations | Consolidated | ||||||||||||||||
| (Amounts in thousands) | |||||||||||||||||||
| Revenues: | |||||||||||||||||||
| Management fees | $ | 18,249 | $ | - | $ | (463 | ) | $ | 17,786 | ||||||||||
| Performance fees | (3,587 | ) | - | 2,300 | (1,287 | ) | |||||||||||||
| Other revenues and fees | 1,688 | - | - | 1,688 | |||||||||||||||
| Total revenues | 16,350 | - | 1,837 | 18,187 | |||||||||||||||
| Expenses: | |||||||||||||||||||
| Compensation and benefits | 5,312 | - | - | 5,312 | |||||||||||||||
| Performance fee compensation | (3,780 | ) | - | - | (3,780 | ) | |||||||||||||
| Consolidated Funds expenses | - | 1,004 | (463 | ) | 541 | ||||||||||||||
| General, administrative and other expenses | 3,491 | - | - | 3,491 | |||||||||||||||
| Total expenses | 5,023 | 1,004 | (463 | ) | 5,564 | ||||||||||||||
| Other income (expense): | |||||||||||||||||||
| Dividend income | 221 | - | - | 221 | |||||||||||||||
| Interest expense | (2,140 | ) | - | - | (2,140 | ) | |||||||||||||
| Other income (expenses), net | (390 | ) | - | 203 | (187 | ) | |||||||||||||
| Interest and other income of Consolidated Funds | - | 19,992 | - | 19,992 | |||||||||||||||
| Interest expense of Consolidated Funds | - | (4,365 | ) | - | (4,365 | ) | |||||||||||||
| Net realized gain (loss) on investments of Consolidated Funds | - | - | - | - | |||||||||||||||
| Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds | - | (11,017 | ) | - | (11,017 | ) | |||||||||||||
| Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds | - | 1,071 | - | 1,071 | |||||||||||||||
| Total other income (expense), net | (2,309 | ) | 5,681 | 203 | 3,575 | ||||||||||||||
| Income before income taxes | 9,018 | 4,677 | 2,503 | 16,198 | |||||||||||||||
| Provision for income taxes | (11 | ) | 365 | - | 354 | ||||||||||||||
| Net income | 9,029 | 4,312 | 2,503 | 15,844 | |||||||||||||||
| Net income attributable to non-controlling interests in Consolidated Funds | - | - | 6,815 | 6,815 | |||||||||||||||
| Net income attributable to non-controlling interests in consolidated subsidiaries | (239 | ) | - | - | (239 | ) | |||||||||||||
| Net income attributable to non-controlling interests in Medley LLC | 7,951 | - | - | 7,951 | |||||||||||||||
| Net income attributable to Medley LLC | $ | 1,317 | $ | 4,312 | $ | (4,312 | ) | $ | 1,317 | ||||||||||