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Share Name | Share Symbol | Market | Type |
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Medley Management Inc | NYSE:MDLY | NYSE | Common Stock |
Price Change | % Change | Share Price | High Price | Low Price | Open Price | Shares Traded | Last Trade | |
---|---|---|---|---|---|---|---|---|
0.00 | 0.00% | 5.88 | 0 | 01:00:00 |
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ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
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Delaware
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47-1130638
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(State or other jurisdiction of
incorporation or organization)
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(I.R.S. Employer
Identification No.)
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(Title of each class)
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(Name of each exchange on which registered)
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Class A Common Stock, $0.01 par value per share
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New York Stock Exchange
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Large accelerated filer
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Accelerated filer
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Non-accelerated filer
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☐ (Do not check if a smaller reporting company)
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Smaller reporting company
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Page
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Part I.
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Item 1.
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Item 1A.
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Item 1B.
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Item 2.
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Item 3.
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Item 4.
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Part II.
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Item 5.
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Item 6.
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Item 7.
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Item 7A.
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Item 8.
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Item 9.
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Item 9A.
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Item 9B.
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Part III
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Item 10.
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Item 11.
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Item 12.
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Item 13.
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Item 14.
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Part IV.
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Item 15.
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Item 16
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difficult market and political conditions may adversely affect our business in many ways, including by reducing the value or hampering the performance of the investments made by our funds, each of which could materially and adversely affect our business, results of operations and financial condition;
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we derive a substantial portion of our revenues from funds managed pursuant to advisory agreements that may be terminated or fund partnership agreements that permit fund investors to remove us as the general partner;
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we may not be able to maintain our current fee structure as a result of industry pressure from fund investors to reduce fees, which could have an adverse effect on our profit margins and results of operations;
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a change of control of us could result in termination of our investment advisory agreements;
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the historical returns attributable to our funds should not be considered as indicative of the future results of our funds or of our future results or of any returns expected on an investment in our Class A common stock;
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if we are unable to consummate or successfully integrate development opportunities, acquisitions or joint ventures, we may not be able to implement our growth strategy successfully;
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we depend on third-party distribution sources to market our investment strategies;
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an investment strategy focused primarily on privately held companies presents certain challenges, including the lack of available information about these companies;
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our funds’ investments in investee companies may be risky, and our funds could lose all or part of their investments;
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prepayments of debt investments by our investee companies could adversely impact our results of operations;
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our funds’ investee companies may incur debt that ranks equally with, or senior to, our funds’ investments in such companies;
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subordinated liens on collateral securing loans that our funds make to their investee companies may be subject to control by senior creditors with first priority liens and, if there is a default, the value of the collateral may not be sufficient to repay in full both the first priority creditors and our funds;
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there may be circumstances where our funds’ debt investments could be subordinated to claims of other creditors or our funds could be subject to lender liability claims;
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our funds may not have the resources or ability to make additional investments in our investee companies;
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economic recessions or downturns could impair our investee companies and harm our operating results;
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a covenant breach by our investee companies may harm our operating results;
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the investment management business is competitive;
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our funds operate in a competitive market for lending that has recently intensified, and competition may limit our funds’ ability to originate or acquire desirable loans and investments and could also affect the yields of these assets and have a material adverse effect on our business, results of operations and financial condition;
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dependence on leverage by certain of our funds and by our funds’ investee companies subjects us to volatility and contractions in the debt financing markets and could adversely affect our ability to achieve attractive rates of return on those investments;
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some of our funds may invest in companies that are highly leveraged, which may increase the risk of loss associated with those investments;
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we generally do not control the business operations of our investee companies and, due to the illiquid nature of our investments, may not be able to dispose of such investments;
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a substantial portion of our investments may be recorded at fair value as determined in good faith by or under the direction of our respective funds’ boards of directors or similar bodies and, as a result, there may be uncertainty regarding the value of our funds’ investments;
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we may need to pay “clawback” obligations if and when they are triggered under the governing agreements with respect to certain of our funds and SMAs;
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our funds may face risks relating to undiversified investments;
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third-party investors in our private funds may not satisfy their contractual obligation to fund capital calls when requested, which could adversely affect a fund’s operations and performance;
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our funds may be forced to dispose of investments at a disadvantageous time;
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hedging strategies may adversely affect the returns on our funds’ investments;
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our business depends in large part on our ability to raise capital from investors. If we were unable to raise such capital, we would be unable to collect management fees or deploy such capital into investments, which would materially and adversely affect our business, results of operations and financial condition;
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we depend on our senior management team, senior investment professionals and other key personnel, and our ability to retain them and attract additional qualified personnel is critical to our success and our growth prospects;
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our failure to appropriately address conflicts of interest could damage our reputation and adversely affect our business;
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potential conflicts of interest may arise between our Class A common stockholders and our fund investors;
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rapid growth of our business may be difficult to sustain and may place significant demands on our administrative, operational and financial resources;
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we may enter into new lines of business and expand into new investment strategies, geographic markets and business, each of which may result in additional risks and uncertainties in our business;
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extensive regulation affects our activities, increases the cost of doing business and creates the potential for significant liabilities and penalties that could adversely affect our business and results of operations;
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failure to comply with “pay to play” regulations implemented by the SEC and certain states, and changes to the “pay to play” regulatory regimes, could adversely affect our business;
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new or changed laws or regulations governing our funds’ operations and changes in the interpretation thereof could adversely affect our business;
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present and future business development companies for which we serve as investment adviser are subject to regulatory complexities that limit the way in which they do business and may subject them to a higher level of regulatory scrutiny;
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we are subject to risks in using custodians, counterparties, administrators and other agents;
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a portion of our revenue and cash flow is variable, which may impact our ability to achieve steady earnings growth on a quarterly basis and may cause the price of our Class A common stock to decline;
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we may be subject to litigation risks and may face liabilities and damage to our professional reputation as a result;
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employee misconduct could harm us by impairing our ability to attract and retain investors and subjecting us to significant legal liability, regulatory scrutiny and reputational harm, and fraud and other deceptive practices or other misconduct at our investee companies could similarly subject us to liability and reputational damage and also harm our business;
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our substantial indebtedness could adversely affect our financial condition, our ability to pay our debts or raise additional capital to fund our operations, our ability to operate our business and our ability to react to changes in the economy or our industry and could divert our cash flow from operations for debt payments;
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our Revolving Credit Facility imposes significant operating and financial restrictions on us and our subsidiaries, which may prevent us from capitalizing on business opportunities;
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servicing our indebtedness will require a significant amount of cash. Our ability to generate sufficient cash depends on many factors, some of which are not within our control;
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despite our current level of indebtedness, we may be able to incur substantially more debt and enter into other transactions, which could further exacerbate the risks to our financial condition;
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operational risks may disrupt our business, result in losses or limit our growth;
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Medley Management Inc.’s only material asset is its interest in Medley LLC, and it is accordingly dependent upon distributions from Medley LLC to pay taxes, make payments under the tax receivable agreement or pay dividends;
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Medley Management Inc. is controlled by our pre-IPO owners, whose interests may differ from those of our public stockholders;
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Medley Management Inc. will be required to pay exchanging holders of LLC Units for most of the benefits relating to any additional tax depreciation or amortization deductions that we may claim as a result of the tax basis step-up we receive in connection with sales or exchanges of LLC Units and related transactions;
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in certain cases, payments under the tax receivable agreement may be accelerated and/or significantly exceed the actual benefits Medley Management Inc. realizes in respect of the tax attributes subject to the tax receivable agreement; and
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anti-takeover provisions in our organizational documents and Delaware law might discourage or delay acquisition attempts for us that you might consider favorable.
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“Aspect” refers to Aspect-Medley Investment Platform A LP;
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“AUM” refers to the assets of our funds, which represents the sum of the NAV of such funds, the drawn and undrawn debt (at the fund level, including amounts subject to restrictions) and uncalled committed capital (including commitments to funds that have yet to commence their investment periods);
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“base management fees” refers to fees we earn for advisory services provided to our funds, which are generally based on a defined percentage of fee earning AUM or, in certain cases, a percentage of originated assets in the case of certain of our SMAs;
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“BDC” refers to business development company;
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“Consolidated Funds” refers to, with respect to periods after December 31, 2013 and before January 1, 2015, MOF II and, with respect to periods prior to January 1, 2014, MOF I LP, MOF II and MOF III, subsequent to its formation;
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“fee earning AUM” refers to the assets under management on which we directly earn base management fees;
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“hurdle rates” refers to the rates above which we earn performance fees, as defined in the long-dated private funds’ and SMAs’ applicable investment management or partnership agreements.
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“investee company” refers to a company to which one of our funds lends money or in which one of our funds otherwise makes an investment;
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“long-dated private funds” refers to, with respect to the year ended December 31, 2016, MOF II, MOF III, MCOF, Aspect and any other private funds we may manage in the future, provided that with respect to the year ended December 31, 2015, “long-dated private funds” refers to MOF II and MOF III, provided that, with respect to periods prior to December 31, 2014, “long-dated private funds” refers to MOF I, MOF II and MOF III;
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“management fees” refers to base management fees and Part I incentive fees;
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“MCOF” refers to Medley Credit Opportunity Fund LP;
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“Medley LLC” refers to Medley LLC and its consolidated subsidiaries and, prior to our IPO and the related Reorganization, Medley LLC and Medley GP Holdings LLC and their consolidated subsidiaries;
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“MOF I” refers to, with respect to the periods prior to October 31, 2014, MOF I LP and MOF I Ltd. and, with respect to the periods subsequent to October 31, 2014, only MOF I LP;
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“MOF I LP” refers to Medley Opportunity Fund I LP;
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“MOF I Ltd.” refers to Medley Opportunity Fund I Ltd;
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“MOF II” refers to Medley Opportunity Fund II LP;
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“MOF III” refers to Medley Opportunity Fund III LP;
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“our funds” refers to the funds, alternative asset companies and other entities and accounts that are managed or co-managed by us and our affiliates;
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“our investors” refers to the investors in our permanent capital vehicles, our private funds and our SMAs;
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“Part I incentive fees” refers to fees that we receive from our permanent capital vehicles, which are paid in cash quarterly and are driven primarily by net interest income on senior secured loans subject to hurdle rates. With respect to periods subsequent to January 1, 2016, as it relates to Medley Capital Corporation (NYSE: MCC) (“MCC”), these fees are subject to netting against realized and unrealized losses;
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“Part II incentive fees” refers to fees related to realized capital gains in our permanent capital vehicles;
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“performance fees” refers to incentive allocations in our long-dated private funds and incentive fees from our SMAs, which are typically 15% to 20% of the total return after a hurdle rate, accrued quarterly, but paid after the return of all invested capital and in an amount sufficient to achieve the hurdle rate;
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“permanent capital” refers to capital of funds that do not have redemption provisions or a requirement to return capital to investors upon exiting the investments made with such capital, except as required by applicable law, which funds currently consist of MCC and Sierra Income Corporation (“SIC”). Such funds may be required, or elect, to return all or a portion of capital gains and investment income. In certain circumstances, the investment adviser of such a fund may be removed;
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“SMA” refers to a separately managed account; and
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“STRF” refers to Sierra Total Return Fund.
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The first component of the MCC incentive fee is the Part I incentive fee. Effective January 1, 2016, the incentive fee based on net investment income is reduced from 20.0% on pre-incentive fee net investment income over a fixed hurdle rate of 2.0% per quarter, to 17.5% on pre-incentive fee net investment income over a fixed hurdle rate of 1.5% per quarter. Moreover, the incentive fee based on net investment income is determined and paid quarterly in arrears at the end of each calendar quarter by reference to our aggregate net investment income, as adjusted, as described below (the “Reduced Incentive Fee on Net Investment Income”), from the calendar quarter then ending and the eleven preceding calendar quarters (or if shorter, the number of quarters that have occurred since January 1, 2016). We refer to such period as the “Trailing Twelve Quarters.” The hurdle amount for the Reduced Incentive Fee on Net Investment Income is determined on a quarterly basis, and is equal to 1.5% multiplied by MCC’s net assets at the beginning of each applicable calendar quarter comprising the relevant Trailing Twelve Quarters. The hurdle amount is calculated after making appropriate adjustments to MCC’s net assets, as determined as of the beginning of each applicable calendar quarter, in order to account for any capital raising or other capital actions as a result of any issuances by MCC of its common stock (including issuances pursuant to MCC’s dividend reinvestment plan), any
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No incentive fee based on net investment income is payable to MCC Advisors LLC for any calendar quarter for which there is no Excess Income Amount;
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100% of the Ordinary Income, if any, that exceeds the hurdle amount, but is less than or equal to an amount, which we refer to as the “Catch-up Amount,” determined as the sum of 1.8182% multiplied by MCC’s net assets at the beginning of each applicable calendar quarter, as adjusted as noted above, comprising the relevant Trailing Twelve Quarters is included in the calculation of the Reduced Incentive Fee on Net Investment Income; and
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17.5% of the Ordinary Income that exceeds the Catch-up Amount is included in the calculation of the Reduced Incentive Fee on Net Investment Income.
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The second component of the MCC incentive fee, the Part II incentive fee, is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment management agreement as of the termination date), and equals 20.0% of MCC’s cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to MCC Advisors LLC.
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The first, the Part I incentive fee (which is also referred to as a subordinated incentive fee), payable quarterly in arrears, is 20.0% of SIC’s pre-incentive fee net investment income for the immediately preceding calendar quarter subject to a 1.75% (which is 7.0% annualized) hurdle rate and a “catch-up” provision measured as of the end of each calendar quarter. Under the hurdle rate and catch-up provisions, in any calendar quarter, SIC Advisors LLC receives no incentive fee until SIC’s pre-incentive fee net investment income equals the hurdle rate of 1.75%, but then receive, as a “catch-up”, 100% of SIC’s pre-incentive fee net investment income with respect to that portion of such pre-incentive fee net investment income, if any, that exceeds the hurdle rate but is less than 2.1875%. The effect of this provision is that, if pre-incentive fee net investment income exceeds 2.1875% in any calendar quarter, SIC Advisors LLC will receive 20.0% of SIC’s pre-incentive fee net investment income as if the hurdle rate did not apply. For this
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The second, the Part II incentive fee, is determined and payable in arrears as of the end of each calendar year (or upon termination of the investment management agreement as of the termination date), and equals 20.0% of SIC’s cumulative aggregate realized capital gains less cumulative realized capital losses, unrealized capital depreciation (unrealized depreciation on a gross investment-by-investment basis at the end of each calendar year) and all capital gains upon which prior performance-based capital gains incentive fee payments were previously made to SIC Advisors LLC.
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MCC is our publicly traded vehicle. It offers retail and institutional investors liquid access to an otherwise illiquid asset class (middle market credit). In addition to equity capital, MCC also raises debt capital in the private and public markets which is an alternative source of capital in challenging operating environments.
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SIC is our non-traded public vehicle. It offers retail and institutional investors access to an otherwise illiquid asset class (middle market credit) without exposure to public market trading volatility. It allows us to continue to raise capital continually during more challenging operating environments when publicly listed vehicles may be trading below net asset value (“NAV”), which we believe is valuable during times of market volatility. We believe this is a competitive advantage allowing us to make opportunistic investments, while peers may be more limited during times of market volatility.
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STRF is our non-traded interval vehicle. It offers retail and institutional investors investments in the debt and equity of fixed-income and fixed-income related securities. STRF is a continuously offered, non-diversified, closed-end investment management company that is operated as an interval fund.
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Long-dated private funds:
Our long-dated private funds offer institutional investors attractive risk-adjusted returns. We believe this channel is an important element of our capital raising efforts given institutional investors are more likely to remain engaged in higher yielding private credit assets during periods of market turbulence.
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Separately managed accounts:
Our SMAs provide investors with customized investment solutions. This is particularly attractive for liability driven investors such as insurance companies that invest over long time horizons.
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investment performance;
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investor perception of investment managers’ drive, focus and alignment of interest;
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quality of service provided to and duration of relationship with investors;
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business reputation; and
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the level of fees and expenses charged for services.
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market conditions during previous periods may have been significantly more favorable for generating positive performance than the market conditions we may experience in the future;
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our funds’ rates of returns, which are calculated on the basis of NAV of the funds’ investments, including unrealized gains, which may never be realized;
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our funds’ returns have previously benefited from investment opportunities and general market conditions that may not recur, and our funds may not be able to achieve the same returns or profitable investment opportunities or deploy capital as quickly;
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the historical returns that we present in this Form 10-K derive largely from the performance of our earlier funds, whereas future fund returns will depend increasingly on the performance of our newer funds or funds not yet formed, which may have little or no realized investment track record;
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you will not benefit from any value that was created in our funds prior to our becoming a public company if such value was previously realized;
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in recent years, there has been increased competition for investment opportunities resulting from the increased amount of capital invested in alternative funds and high liquidity in debt markets, and the increased competition for investments may reduce our returns in the future; and
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our newly established funds may generate lower returns during the period that they take to deploy their capital.
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have reduced access to the capital markets, resulting in diminished capital resources and ability to withstand financial distress;
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may have limited financial resources and may be unable to meet their obligations under debt that we hold, which may be accompanied by a deterioration in the value of any collateral and a reduction in the likelihood of us realizing any guarantees we may have obtained in connection with our investment;
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may have shorter operating histories, narrower product lines and smaller market shares than larger business, which tend to render them more vulnerable to competitors’ actions and changing market conditions, as well as general economic downturns;
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are more likely to depend on the management talents and efforts of a small group of persons; therefore, the death, disability, resignation or termination of one or more of these persons could have a material adverse impact on our investee company and, in turn, on us; and
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generally have less predictable operating results, may from time to time be parties to litigation, may be engaged in rapidly changing business with products subject to a substantial risk of obsolescence, and may require substantial additional capital to support their operations, finance expansion or maintain their competitive position. In addition, our executive officers, directors or employees may, in the ordinary course of business, be named as defendants in litigation arising from our funds’ investments in investee companies.
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a number of our competitors have greater financial, technical, marketing and other resources and more personnel than we do;
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some of our funds may not perform as well as competitors’ funds or other available investment products;
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several of our competitors have raised significant amounts of capital, and many of them have similar investment objectives to ours, which may create additional competition for investment opportunities and may reduce the size and duration of pricing inefficiencies that otherwise could be exploited;
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some of our competitors may have a lower cost of capital and access to funding sources that are not available to us, which may create competitive disadvantages for us with respect to our funds;
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some of our competitors may be subject to less regulation and, accordingly, may have more flexibility to undertake and execute certain business or investments than we do and/or bear less compliance expense than we do;
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some of our competitors may have more flexibility than we have in raising certain types of funds under the investment management contracts they have negotiated with their investors;
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some of our competitors may have better expertise or be regarded by investors as having better expertise in a specific asset class or geographic region than we do; and
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other industry participants may, from time to time, seek to recruit our investment professionals and other employees away from us.
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subject the entity to a number of restrictive covenants, terms and conditions, any violation of which could be viewed by creditors as an event of default and could materially impact our funds’ ability to realize value from the investment;
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allow even moderate reductions in operating cash flow to render the entity unable to service its indebtedness, leading to a bankruptcy or other reorganization of the entity and a loss of part or all of our funds’ equity investment in it;
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give rise to an obligation to make mandatory prepayments of debt using excess cash flow, which might limit the entity’s ability to respond to changing industry conditions if additional cash is needed for the response, to make unplanned but necessary capital expenditures or to take advantage of growth opportunities;
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limit the entity’s ability to adjust to changing market conditions, thereby placing it at a competitive disadvantage compared to its competitors that have relatively less debt;
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limit the entity’s ability to engage in strategic acquisitions that might be necessary to generate attractive returns or further growth; and
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limit the entity’s ability to obtain additional financing or increase the cost of obtaining such financing, including for capital expenditures, working capital or other general corporate purposes.
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in maintaining adequate financial, regulatory (legal, tax and compliance) and business controls;
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in implementing new or updated information and financial systems and procedures; and
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in training, managing and appropriately sizing our work force and other components of our business on a timely and cost-effective basis.
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the required investment of capital and other resources;
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the assumption of liabilities in any acquired business;
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the disruption of our ongoing business;
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entry into markets or lines of business in which we may have limited or no experience;
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increasing demands on our operational and management systems and controls;
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compliance with additional regulatory requirements;
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potential increase in investor concentration; and
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the broadening of our geographic footprint, increasing the risks associated with conducting operations in certain foreign jurisdictions where we currently have no presence.
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Changes in capital requirements may increase the cost of our financing
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The imposition of additional legal or regulatory requirements could make compliance more difficult and expensive, affect the manner in which we conduct our business and adversely affect our profitability
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The implementation of the Volcker Rule could have adverse implications on our ability to raise funds from certain entities
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Increased regulation on banks’ leveraged lending activities could negatively affect the terms and availability of credit to our funds and their investee companies
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New restrictions on compensation could limit our ability to recruit and retain investment professionals
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requiring a substantial portion of cash flow from operations to be dedicated to the payment of principal and interest on our indebtedness, thereby reducing our ability to use our cash flow to fund our operations and pursue future business opportunities;
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exposing us to increased interest expense, as our degree of leverage may cause the interest rates of any future indebtedness (whether fixed or floating rate interest) to be higher than they would be otherwise;
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exposing us to the risk of increased interest rates because certain of our indebtedness is at variable rates of interest;
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making it more difficult for us to satisfy our obligations with respect to our indebtedness, and any failure to comply with the obligations of any of our debt instruments, including restrictive covenants, could result in an event of default that accelerates our obligation to repay indebtedness;
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increasing our vulnerability to adverse economic, industry or competitive developments;
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restricting us from making strategic acquisitions or causing us to make non-strategic divestitures;
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limiting our ability to obtain additional financing for working capital, product development, satisfaction of debt service requirements, acquisitions and general corporate or other purposes; and
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limiting our flexibility in planning for, or reacting to, changes in our business or market conditions and placing us at a competitive disadvantage compared to our competitors who may be better positioned to take advantage of opportunities that our leverage prevents us from exploiting.
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incur additional indebtedness, make guarantees and enter into hedging arrangements;
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create liens on assets;
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enter into sale and leaseback transactions;
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engage in mergers or consolidations;
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sell assets;
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make fundamental changes;
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pay dividends and distributions or repurchase our capital stock;
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make investments, loans and advances, including acquisitions;
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engage in certain transactions with affiliates;
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make changes in the nature of our business; and
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make prepayments of junior debt.
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•
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authorize the issuance of undesignated preferred stock, the terms of which may be established and the shares of which may be issued without stockholder approval, and which may include super voting, special approval, dividend, or other rights or preferences superior to the rights of the holders of Class A common stock;
|
•
|
prohibit Class A common stockholders from acting by written consent unless such action is recommended by all directors then in office, but permit Class B common stockholders to act by written consent without requiring any such recommendation;
|
•
|
provide that the board of directors is expressly authorized to make, alter, or repeal our bylaws and that our stockholders may only amend our bylaws with the approval of 80% or more of all of the outstanding shares of our capital stock entitled to vote; and
|
•
|
establish advance notice requirements for nominations for elections to our board or for proposing matters that can be acted upon by stockholders at stockholder meetings.
|
•
|
are not required to have a board that is composed of a majority of “independent directors,” as defined under the rules of such exchange;
|
•
|
are not required to have a compensation committee that is composed entirely of independent directors; and
|
•
|
are not required to have a nominating and corporate governance committee that is composed entirely of independent directors.
|
Item 5.
|
Market For Registrant's Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
|
|
For the Years Ended December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(Amounts in thousands except share and per share amounts)
|
||||||||||||||||||
Statement of Operations Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||||||||
Management fees
|
$
|
65,496
|
|
|
$
|
75,675
|
|
|
$
|
61,252
|
|
|
$
|
36,446
|
|
|
$
|
25,325
|
|
Performance fees
|
2,421
|
|
|
(15,685
|
)
|
|
2,050
|
|
|
2,412
|
|
|
765
|
|
|||||
Other revenues and fees
|
8,111
|
|
|
7,436
|
|
|
8,871
|
|
|
5,011
|
|
|
2,152
|
|
|||||
Total revenues
|
76,028
|
|
|
67,426
|
|
|
72,173
|
|
|
43,869
|
|
|
28,242
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Compensation and benefits
|
27,800
|
|
|
26,768
|
|
|
20,322
|
|
|
13,712
|
|
|
11,477
|
|
Performance fee compensation
|
(319
|
)
|
|
(8,049
|
)
|
|
(1,543
|
)
|
|
7,192
|
|
|
5,148
|
|
|||||
Consolidated Funds expenses
|
—
|
|
|
—
|
|
|
1,670
|
|
|
1,225
|
|
|
1,653
|
|
|||||
General, administrative and other expenses
|
28,540
|
|
|
16,836
|
|
|
16,312
|
|
|
12,655
|
|
|
9,679
|
|
|||||
Total expenses
|
56,021
|
|
|
35,555
|
|
|
36,761
|
|
|
34,784
|
|
|
27,957
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Dividend income
|
1,304
|
|
|
886
|
|
|
886
|
|
|
886
|
|
|
245
|
|
|||||
Interest expense
|
(9,226
|
)
|
|
(8,469
|
)
|
|
(5,520
|
)
|
|
(1,479
|
)
|
|
(831
|
)
|
|||||
Other income (expenses), net
|
(1,070
|
)
|
|
(1,641
|
)
|
|
(1,773
|
)
|
|
(483
|
)
|
|
(552
|
)
|
|||||
Interest and other income of Consolidated Funds
|
—
|
|
|
—
|
|
|
71,468
|
|
|
52,550
|
|
|
39,001
|
|
|||||
Interest expense of Consolidated Funds
|
—
|
|
|
—
|
|
|
(9,951
|
)
|
|
(2,638
|
)
|
|
(2,666
|
)
|
|||||
Net realized gain (loss) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
789
|
|
|
(16,080
|
)
|
|
(1,600
|
)
|
|||||
Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
(20,557
|
)
|
|
(3,361
|
)
|
|
(10,103
|
)
|
|||||
Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds
|
—
|
|
|
—
|
|
|
1,174
|
|
|
(306
|
)
|
|
787
|
|
|||||
Total other income (expense), net
|
(8,992
|
)
|
|
(9,224
|
)
|
|
36,516
|
|
|
29,089
|
|
|
24,281
|
|
|||||
Income (loss) before income taxes
|
11,015
|
|
|
22,647
|
|
|
71,928
|
|
|
38,174
|
|
|
24,566
|
|
|||||
Provision for (benefit from) income taxes
|
1,063
|
|
|
2,015
|
|
|
2,528
|
|
|
1,639
|
|
|
1,087
|
|
|||||
Net income (loss)
|
9,952
|
|
|
20,632
|
|
|
69,400
|
|
|
36,535
|
|
|
23,479
|
|
|||||
Net income attributable to non-controlling interests in Consolidated Funds
|
—
|
|
|
—
|
|
|
29,717
|
|
|
12,898
|
|
|
11,561
|
|
|||||
Net income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
2,549
|
|
|
(885
|
)
|
|
1,933
|
|
|
—
|
|
|
—
|
|
|||||
Net income attributable to non-controlling interests in Medley LLC
|
6,406
|
|
|
18,406
|
|
|
36,055
|
|
|
$
|
23,637
|
|
|
$
|
11,918
|
|
|||
Net income attributable to Medley Management Inc.
|
$
|
997
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
|
|
|
|
|
|
||
|
|
|
|
|
|
|
|
|
|
||||||||||
Per common stock data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Dividends declared per Class A common stock
|
$
|
0.80
|
|
|
$
|
0.60
|
|
|
$
|
0.20
|
|
|
|
|
|
||||
Net income per Class A common stock - Basic and Diluted
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.24
|
|
(1)
|
|
|
|||||
Weighted average shares outstanding - Basic and Diluted
|
5,804,042
|
|
|
6,002,422
|
|
|
6,000,000
|
|
|
|
|
|
|
As of December 31,
|
||||||||||||||||||
|
2016
|
|
2015
|
|
2014
|
|
2013
|
|
2012
|
||||||||||
|
(Amounts in thousands)
|
||||||||||||||||||
Statement of Balance Sheet Data:
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Cash and cash equivalents
|
$
|
49,666
|
|
|
$
|
71,688
|
|
|
$
|
87,206
|
|
|
$
|
5,395
|
|
|
$
|
1,292
|
|
Restricted cash equivalents
|
4,897
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Investments, at fair value
|
31,904
|
|
|
16,360
|
|
|
9,901
|
|
|
10,173
|
|
|
9,929
|
|
|||||
Management fees receivable
|
12,630
|
|
|
16,172
|
|
|
15,173
|
|
|
8,921
|
|
|
4,672
|
|
|||||
Performance fees receivable
|
4,961
|
|
|
2,518
|
|
|
5,573
|
|
|
3,339
|
|
|
928
|
|
|||||
Other assets
|
18,311
|
|
|
13,015
|
|
|
7,058
|
|
|
5,021
|
|
|
3,530
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Assets of Consolidated Funds:
|
|
|
|
|
|
|
|
|
|
||||||||||
Cash and cash equivalents
|
—
|
|
|
—
|
|
|
38,111
|
|
|
60,355
|
|
|
74,133
|
|
|||||
Investments, at fair value
|
—
|
|
|
—
|
|
|
734,870
|
|
|
453,396
|
|
|
356,619
|
|
|||||
Interest and dividends receivable
|
—
|
|
|
—
|
|
|
6,654
|
|
|
2,969
|
|
|
3,100
|
|
|||||
Other assets
|
—
|
|
|
—
|
|
|
3,681
|
|
|
436
|
|
|
229
|
|
|||||
Total assets
|
$
|
122,369
|
|
|
$
|
119,753
|
|
|
$
|
908,227
|
|
|
$
|
550,005
|
|
|
$
|
454,432
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities and Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Loans payable
|
$
|
52,178
|
|
|
$
|
100,871
|
|
|
$
|
100,885
|
|
|
$
|
27,703
|
|
|
$
|
6,514
|
|
Senior unsecured debt
|
49,793
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
Accounts payable, accrued expenses and other liabilities
|
36,270
|
|
|
34,746
|
|
|
27,583
|
|
|
17,613
|
|
|
12,666
|
|
|||||
Performance fee compensation payable
|
985
|
|
|
1,823
|
|
|
11,807
|
|
|
16,225
|
|
|
10,858
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Liabilities of Consolidated Funds:
|
|
|
|
|
|
|
|
|
|
||||||||||
Accounts payable, accrued expenses and other liabilities
|
—
|
|
|
—
|
|
|
5,767
|
|
|
1,325
|
|
|
1,084
|
|
|||||
Secured borrowings
|
—
|
|
|
—
|
|
|
141,135
|
|
|
41,178
|
|
|
16,374
|
|
|||||
Total liabilities
|
139,226
|
|
|
137,440
|
|
|
287,177
|
|
|
104,044
|
|
|
47,496
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Redeemable Non-controlling Interests
|
30,805
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|||||
|
|
|
|
|
|
|
|
|
|
||||||||||
Equity
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Total stockholders' equity (deficit), Medley Management Inc.
|
(1,853
|
)
|
|
(39
|
)
|
|
(2,052
|
)
|
|
—
|
|
|
—
|
|
|||||
Non-controlling interests in Consolidated Funds
|
—
|
|
|
—
|
|
|
625,548
|
|
|
464,475
|
|
|
407,353
|
|
|||||
Non-controlling interests in consolidated subsidiaries
|
(1,717
|
)
|
|
(459
|
)
|
|
1,526
|
|
|
40
|
|
|
40
|
|
|||||
Non-controlling interests in Medley LLC
|
(44,092
|
)
|
|
(17,189
|
)
|
|
(3,972
|
)
|
|
—
|
|
|
—
|
|
|||||
Medley LLC members' deficit prior to reorganization
|
—
|
|
|
—
|
|
|
—
|
|
|
(18,554
|
)
|
|
(457
|
)
|
|||||
Total equity (deficit)
|
(47,662
|
)
|
|
(17,687
|
)
|
|
621,050
|
|
|
445,961
|
|
|
406,936
|
|
|||||
Total liabilities, redeemable non-controlling interests and equity
|
$
|
122,369
|
|
|
$
|
119,753
|
|
|
$
|
908,227
|
|
|
$
|
550,005
|
|
|
$
|
454,432
|
|
•
|
Permanent capital vehicles: MCC and SIC, have a total AUM of
$2.5 billion
as of
December 31, 2016
.
|
•
|
Long-dated private funds and SMAs: MOF II, MOF III, MCOF, Aspect and SMAs, have a total AUM of
$2.8 billion
as of
December 31, 2016
.
|
(1)
|
The Class B common stock provides Medley Group LLC with a number of votes that is equal to 10 times the aggregate number of LLC Units held by all non-managing members of Medley LLC. From and after the time that the Substantial Ownership Requirement is no longer satisfied, the Class B common stock will provide Medley Group LLC with a number of votes that is equal to the aggregate number of LLC Units held by all non-managing members of Medley LLC that do not themselves hold shares of Class B common stock.
|
(2)
|
If our pre-IPO owners exchanged all of their LLC Units for shares of Class A common stock, they would hold
80.07%
of the outstanding shares of Class A common stock, entitling them to an equivalent percentage of economic interests and voting power in Medley Management Inc., Medley Group LLC would hold no voting power or economic interests in Medley Management Inc. and Medley Management Inc. would hold 100% of outstanding LLC Units and 100% of the voting power in Medley LLC.
|
(3)
|
Strategic Capital Advisory Services, LLC owns 20% of SIC Advisors LLC and is entitled to receive distributions of up to 20% of the gross cash proceeds received by SIC Advisors LLC from the management and incentive fees payable by Sierra
|
(4)
|
Medley LLC holds 96.5% of the Class B economic interests in each of MCOF Management LLC, and Medley (Aspect) Management LLC.
|
(5)
|
Pursuant to the Master Investment Agreement among Medley LLC, Medley Seed Funding I LLC, Medley Seed Funding II LLC, Medley Seed Funding III LLC, DB MED Investor I LLC and DB MED Investor II LLC, dated June 3, 2016, Medley LLC holds 100% of the outstanding Common Interest and DB MED Investor I LLC holds 100% of the outstanding Preferred Interest in this entity.
|
(6)
|
As of March 1, 2017, certain employees, former employees and former members of Medley LLC hold approximately 40% of the limited liability company interests in MOF II GP LLC, the entity that serves as general partner of MOF II, entitling the holders to share the performance fees earned from MOF II.
|
(7)
|
Medley GP Holdings LLC holds 96.5% of the Class B economic interests in each of MCOF GP LLC, and Medley (Aspect) GP LLC.
|
•
|
The extent to which investors favor directly originated private credit investments.
Our ability to attract additional capital is dependent on investors’ views of directly originated private credit investments relative to traditional assets. We believe fundraising efforts will continue to be impacted by certain fundamental asset management trends that include: (i) the increasing importance of directly originated private credit investment strategies for institutional investors; (ii) increasing demand for directly originated private credit investments from retail investors; (iii) recognition by the consultant channel, which serves endowment and pension fund investors, that directly originated private credit is an important component of asset allocation; (iv) increasing demand from insurance companies seeking alternatives to investing in the liquid credit markets; and (v) de-leveraging of the global banking system, bank consolidation and increased bank regulatory requirements.
|
•
|
Our ability to generate strong, stable returns and retain investor capital throughout market cycles.
The capital we are able to attract and retain drives the growth of our AUM, fee earning AUM and management fees. We believe we are well positioned to invest through market cycles given our AUM is in either permanent capital vehicles or long-dated private funds and SMAs.
|
•
|
Our ability to source investments with attractive risk-adjusted returns.
Our ability to grow our revenue is dependent on our continued ability to source attractive investments and deploy the capital that we have raised. We believe that the current economic environment provides attractive investment opportunities. Our ability to identify attractive investments and execute on those investments is dependent on a number of factors, including the general macroeconomic environment, valuation, size and the liquidity of these investment opportunities. A significant decrease in the quality or quantity of investment opportunities in the directly originated private credit market, a substantial increase in corporate default rates, an increase in competition from new entrants providing capital to the private debt market and a decrease in recovery rates of directly originated private credit could adversely affect our ability to source investments with attractive risk-adjusted returns.
|
•
|
The attractiveness of our product offering to investors.
We believe defined contribution plans, retail investors, public institutional investors, pension funds, endowments, sovereign wealth funds and insurance companies are increasing exposure to directly originated private credit investment products to seek differentiated returns and current yield. Our permanent capital vehicles and long-dated private funds and SMAs benefit from this demand by offering
|
•
|
The strength of our investment process, operating platform and client servicing capabilities.
Following the most recent financial crisis, investors in alternative investments, including those managed by us, have heightened their focus on matters such as manager due diligence, reporting transparency and compliance infrastructure. Since inception, we have invested heavily in our investment monitoring systems, compliance and enterprise risk management systems to proactively address investor expectations and the evolving regulatory landscape. We believe these investments in operating infrastructure will continue to support our growth in AUM.
|
•
|
Base Management Fees.
Base management fees are generally based on a defined percentage of (i) average or total gross assets, including assets acquired with leverage, (ii) total commitments, (iii) net invested capital, (iv) NAV or (v) lower of cost or market value of a fund’s portfolio investments. These fees are calculated quarterly and are paid in cash in advance or in arrears depending on each specific fund. Base management fees are recognized as revenue in the period advisory services are rendered, subject to our assessment of collectability.
|
•
|
Part I Incentive Fees.
We also include Part I incentive fees that we receive from our permanent capital vehicles and certain of our long-dated private funds in management fees. Part I incentive fees are paid quarterly, in cash, and are driven primarily by net interest income on senior secured loans. Effective January 1, 2016, as it relates to MCC, these fees are subject to netting against realized and unrealized losses. We are primarily an asset manager of yield-oriented products and our incentive fees are primarily derived from spread income rather than trading or capital gains. In addition, we also carefully manage interest rate risk. We are generally positioned to benefit from a raising rate environment, which should benefit fees paid to us from our vehicles and funds.
|
•
|
Part II Incentive Fees
. For our permanent capital vehicles and certain of our long-dated private funds, Part II incentive fees generally represent 20.0% of each fund’s cumulative realized capital gains (net of realized capital losses and unrealized capital depreciation). We have not received these fees historically, and do not expect such fees to be material in the future given our focus on senior secured lending.
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
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
|
|
$
|
7,403
|
|
|
$
|
21,517
|
|
|
$
|
37,750
|
|
Net income per Class A common stock
(1)
|
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.24
|
|
Net Income Margin
(2)
|
|
9.7
|
%
|
|
31.9
|
%
|
|
45.7
|
%
|
|||
Weighted average shares - Basic and Diluted
|
|
5,804,042
|
|
|
6,002,422
|
|
|
6,000,000
|
|
|||
|
|
|
|
|
|
|
||||||
Non-GAAP Data:
|
|
|
|
|
|
|
|
|||||
Core Net Income
(3)
|
|
$
|
25,531
|
|
|
$
|
29,747
|
|
|
$
|
40,882
|
|
Core EBITDA
|
|
38,481
|
|
|
41,721
|
|
|
47,957
|
|
|||
Core Net Income Per Share
|
|
$
|
0.54
|
|
|
$
|
0.61
|
|
|
$
|
0.79
|
|
Core Net Income Margin
|
|
21.7
|
%
|
|
27.7
|
%
|
|
29.2
|
%
|
|||
Pro-Forma Weighted Average Shares Outstanding
|
|
30,689,412
|
|
|
30,459,958
|
|
|
30,491,417
|
|
|||
|
|
|
|
|
|
|
||||||
Other Data (at period end, in millions):
|
|
|
|
|
|
|
|
|||||
AUM
|
|
$
|
5,335
|
|
|
$
|
4,779
|
|
|
$
|
3,682
|
|
Fee Earning AUM
|
|
3,190
|
|
|
3,302
|
|
|
3,058
|
|
(1)
|
With respect to the year ended December 31, 2014, Net income per Class A common stock is based on net income attributable to Medley Management Inc. for the period September 29, 2014 through December 31, 2014.
|
(2)
|
Net Income Margin equals Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC divided by total revenue and, for periods prior to January 1, 2015, total standalone revenue.
|
(3)
|
With respect to the year ended December 31, 2014, Core Net Income includes a pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense. Prior to the Company's Reorganization and IPO these payments were recorded as distributions from members' capital.
|
•
|
Gross asset values or NAV of such funds;
|
•
|
the drawn and undrawn debt (at the fund-level, including amounts subject to restrictions); and
|
•
|
uncalled committed capital (including commitments to funds that have yet to commence their investment periods).
|
|
|
|
|
|
|
|
% of AUM
|
||||||||||
|
Permanent
Capital
Vehicles
|
|
Long-dated
Private Funds
and SMAs
|
|
Total
|
|
Permanent
Capital
Vehicles
|
|
Long-dated
Private Funds
and SMAs
|
||||||||
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Beginning balance, December 31, 2013
|
$
|
1,279
|
|
|
$
|
1,004
|
|
|
$
|
2,283
|
|
|
56
|
%
|
|
44
|
%
|
Commitments
(1)
|
1,037
|
|
|
704
|
|
|
1,741
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
—
|
|
|
(185
|
)
|
|
(185
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
(109
|
)
|
|
(33
|
)
|
|
(142
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
46
|
|
|
(61
|
)
|
|
(15
|
)
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2014
|
$
|
2,253
|
|
|
$
|
1,429
|
|
|
$
|
3,682
|
|
|
61
|
%
|
|
39
|
%
|
Commitments
(1)
|
485
|
|
|
874
|
|
|
1,359
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
(23
|
)
|
|
(17
|
)
|
|
(40
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
(137
|
)
|
|
(75
|
)
|
|
(212
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
(32
|
)
|
|
22
|
|
|
(10
|
)
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2015
|
$
|
2,546
|
|
|
$
|
2,233
|
|
|
$
|
4,779
|
|
|
53
|
%
|
|
47
|
%
|
Commitments
(1)
|
33
|
|
|
858
|
|
|
891
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
(125
|
)
|
|
(315
|
)
|
|
(440
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
85
|
|
|
32
|
|
|
117
|
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2016
|
$
|
2,527
|
|
|
$
|
2,808
|
|
|
$
|
5,335
|
|
|
47
|
%
|
|
53
|
%
|
(1)
|
With respect to permanent capital vehicles, represents increases during the period through equity and debt offerings, subject to restrictions, as well as any increases in available undrawn borrowings or capital commitments. With respect to long-dated private funds and SMAs, represents new commitments or gross inflows, respectively, as well as any increases in available undrawn borrowings.
|
(2)
|
Represents the permanent reduction in equity or leverage during the period.
|
(3)
|
With respect to permanent capital vehicles, represents distributions of income. With respect to long-dated private funds and SMAs, represents return of capital, given our funds’ stage in their respective life cycle and the prioritization of capital distributions.
|
(4)
|
Includes interest income, realized and unrealized gains (losses), fees and/or expenses.
|
•
|
for our permanent capital vehicles, the average or total gross asset value, including assets acquired with the proceeds of leverage (see “Fee earning AUM based on gross asset value” in the “Components of Fee Earning AUM” table below for the amount of this component of fee earning AUM as of each period);
|
•
|
for certain funds within the investment period in the long-dated private funds, the amount of limited partner capital commitments (see “Fee earning AUM based on capital commitments” in the “Components of Fee Earning AUM” table below for the amount of this component of fee earning AUM as of each period); and
|
•
|
for the aforementioned funds beyond the investment period and certain managed accounts within their investment period, the amount of limited partner invested capital or the NAV of the fund (see “Fee earning AUM based on invested capital or NAV” in the “Components of Fee Earning AUM” table below for the amount of this component of fee earning AUM as of each period).
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in millions)
|
||||||
Fee earning AUM based on gross asset value
|
$
|
2,207
|
|
|
$
|
2,238
|
|
Fee earning AUM based on capital commitments
|
113
|
|
|
113
|
|
||
Fee earning AUM based on invested capital or NAV
|
870
|
|
|
951
|
|
||
Total fee earning AUM
|
$
|
3,190
|
|
|
$
|
3,302
|
|
|
|
|
|
|
|
|
|
% of Fee Earning AUM
|
||||||||||
|
|
Permanent
Capital Vehicles |
|
Long-dated
Private Funds and SMAs |
|
Total
|
|
Permanent
Capital Vehicles |
|
Long-dated
Private Funds and SMAs |
||||||||
|
|
(Dollars in millions)
|
|
|
|
|
||||||||||||
Beginning balance, December 31, 2013
|
|
$
|
1,072
|
|
|
$
|
934
|
|
|
$
|
2,006
|
|
|
53
|
%
|
|
47
|
%
|
Commitments
(1)
|
|
1,036
|
|
|
439
|
|
|
1,475
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
|
—
|
|
|
(253
|
)
|
|
(253
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
|
(107
|
)
|
|
(49
|
)
|
|
(156
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
|
46
|
|
|
(60
|
)
|
|
(14
|
)
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2014
|
|
$
|
2,047
|
|
|
$
|
1,011
|
|
|
$
|
3,058
|
|
|
67
|
%
|
|
33
|
%
|
Commitments
(1)
|
|
383
|
|
|
221
|
|
|
604
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
|
(23
|
)
|
|
(17
|
)
|
|
(40
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
|
(137
|
)
|
|
(95
|
)
|
|
(232
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
|
(32
|
)
|
|
(56
|
)
|
|
(88
|
)
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2015
|
|
$
|
2,238
|
|
|
$
|
1,064
|
|
|
$
|
3,302
|
|
|
68
|
%
|
|
32
|
%
|
Commitments
(1)
|
|
22
|
|
|
194
|
|
|
216
|
|
|
|
|
|
|
|
|||
Capital reduction
(2)
|
|
(12
|
)
|
|
—
|
|
|
(12
|
)
|
|
|
|
|
|
|
|||
Distributions
(3)
|
|
(126
|
)
|
|
(285
|
)
|
|
(411
|
)
|
|
|
|
|
|
|
|||
Change in fund value
(4)
|
|
85
|
|
|
10
|
|
|
95
|
|
|
|
|
|
|
|
|||
Ending balance, December 31, 2016
|
|
$
|
2,207
|
|
|
$
|
983
|
|
|
$
|
3,190
|
|
|
69
|
%
|
|
31
|
%
|
(1)
|
With respect to permanent capital vehicles, represents increases or temporary reductions during the period through equity and debt offerings, as well as any increases in capital commitments. With respect to long-dated private funds and SMAs, represents new commitments or gross inflows, respectively.
|
(2)
|
Represents the permanent reduction in equity or leverage during the period.
|
(3)
|
Represents distributions of income, return of capital and return of portfolio investment capital to the fund.
|
(4)
|
Includes interest income, realized and unrealized gains (losses), fees and/or expenses.
|
Annualized Net Total Return
(1)
:
|
6.6
|
%
|
Annualized Realized Losses on Invested Capital:
|
0.6
|
%
|
Average Recovery:
|
75.6
|
%
|
Annualized Net Total Return
(2)
:
|
6.7
|
%
|
Annualized Realized Losses on Invested Capital:
|
1.3
|
%
|
Average Recovery
(3)
:
|
NM
|
|
Gross Portfolio Internal Rate of Return
(4)
:
|
14.0
|
%
|
Net Investor Internal Rate of Return
(5)
:
|
16.0
|
%
|
Annualized Realized Losses on Invested Capital:
|
0.0%
|
|
Average Recovery:
|
N/A
|
|
Gross Portfolio Internal Rate of Return
(4)
:
|
11.6
|
%
|
Net Investor Internal Rate of Return
(6)
:
|
7.0
|
%
|
Annualized Realized Losses on Invested Capital:
|
1.7
|
%
|
Average Recovery
(3)
:
|
NM
|
|
Gross Portfolio Internal Rate of Return
(4)
:
|
9.7
|
%
|
Net Investor Internal Rate of Return
(7)
:
|
7.7
|
%
|
Annualized Realized Losses on Invested Capital:
|
0.2
|
%
|
Average Recovery
(3)
:
|
NM
|
|
(1)
|
Annualized Net Total Return for SIC represents the annualized return assuming an investment at the initial public offering price, reinvestments of all dividends and distributions at prices obtained under SIC’s dividend reinvestment plan and selling at the NAV as of the measurement date.
|
(2)
|
Annualized Net Total Return for MCC, including Medley SBIC, represents the annualized return assuming an investment at the initial public offering price, reinvestments of all dividends and distributions at prices obtained under MCC's dividend reinvestment plan and selling at NAV as of the measurement date.
|
(3)
|
Average Recovery includes only those realized investments in which we experience a loss of principal on a cumulative cash flow basis and is calculated by dividing the total actual cash inflows for each respective investment, including all interest, principal and fee note repayments, dividends and transactions fees, if applicable, by the total actual cash outflows for each respective investment. For MCC, MOF II and the SMAs, we have presented the Average Recovery as “NM” or “Not Meaningful” because we believe the number of realized losses for each respective vehicle is not sufficient to provide an accurate representation of the expected Average Recovery for each vehicle.
|
(4)
|
For MOF II, SMAs and Medley SBIC, the Gross Portfolio Internal Rate of Return represents the cumulative investment performance from inception of each respective fund through
December 31, 2016
. The Gross Portfolio Internal Rate of Return includes both realized and unrealized investments and excludes the impact of base management fees, incentive fees and other fund related expenses. For realized investments, the investment returns were calculated based on the actual cash outflows and inflows for each respective investment and include all interest, principal and fee note repayments, dividends and transactions fees, if applicable. For unrealized investments, the investment returns were calculated based on the actual cash outflows and inflows for each respective investment and include all interest, principal and fee note repayments, dividends and transactions fees, if applicable. The investment return assumes that the remaining unrealized portion of the investment is realized at the investment’s most recent fair value, as calculated in accordance with U.S. GAAP. There can be no assurance that the investments will be realized at these fair values and actual results may differ significantly.
|
(5)
|
Earnings from Medley SBIC are paid to MCC. The Net Internal Rate of Return for Medley SBIC was calculated based upon i) the actual cash contribution and distributions to/from MCC and Medley SBIC ii) an allocable portion of MCC’s management and incentive fees and general fund related expenses and iii) assumes the NAV as of the measurement date is distributed to MCC. As of
December 31, 2016
, Medley SBIC Net Internal Rate of Return as described above assuming only the inclusion of management fees was 21.0%.
|
(6)
|
Net Investor Internal Rate of Return for MOF II was calculated net of all management fees and carried interest allocation since inception and was computed based on the actual dates of capital contributions and the ending aggregate partners’ capital at the end of the period.
|
(7)
|
Net Investor Internal Rate of Return for our SMAs was calculated using the Gross Portfolio Internal Rate of Return, as described in note 4, and includes the actual management fees, incentive fees and general fund related expenses.
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
|
(Amounts in thousands, except AUM data)
|
|
|||||||||
Revenues
|
|
|
|
|
|
|
|
|
|
||||
Management fees
|
|
|
$
|
65,496
|
|
|
$
|
75,675
|
|
|
61,252
|
|
|
Performance fees
|
|
|
2,421
|
|
|
(15,685
|
)
|
|
2,050
|
|
|||
Other revenues and fees
|
|
|
8,111
|
|
|
7,436
|
|
|
8,871
|
|
|||
Total revenues
|
|
|
76,028
|
|
|
67,426
|
|
|
72,173
|
|
|||
|
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
|
|
27,800
|
|
|
26,768
|
|
|
20,322
|
|
|||
Performance fee compensation
|
|
|
(319
|
)
|
|
(8,049
|
)
|
|
(1,543
|
)
|
|||
Consolidated Funds expenses
|
|
|
—
|
|
|
—
|
|
|
1,670
|
|
|||
General, administrative and other expenses
|
|
|
28,540
|
|
|
16,836
|
|
|
16,312
|
|
|||
Total expenses
|
|
|
56,021
|
|
|
35,555
|
|
|
36,761
|
|
|||
|
|
|
|
|
|
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|||||
Dividend income
|
|
|
1,304
|
|
|
886
|
|
|
886
|
|
|||
Interest expense
|
|
|
(9,226
|
)
|
|
(8,469
|
)
|
|
(5,520
|
)
|
|||
Other income (expenses), net
|
|
|
(1,070
|
)
|
|
(1,641
|
)
|
|
(1,773
|
)
|
|||
Interest and other income of Consolidated Funds
|
|
|
—
|
|
|
—
|
|
|
71,468
|
|
|||
Interest expense of Consolidated Funds
|
|
|
—
|
|
|
—
|
|
|
(9,951
|
)
|
|||
Net realized gain (loss) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
789
|
|
|||||
Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
(20,557
|
)
|
|||||
Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds
|
—
|
|
|
—
|
|
|
1,174
|
|
|||||
Total other income (expense), net
|
|
|
(8,992
|
)
|
|
(9,224
|
)
|
|
36,516
|
|
|||
Income (loss) before income taxes
|
|
|
11,015
|
|
|
22,647
|
|
|
71,928
|
|
|||
Provision for (benefit from) income taxes
|
|
|
1,063
|
|
|
2,015
|
|
|
2,528
|
|
|||
Net income (loss)
|
|
|
9,952
|
|
|
20,632
|
|
|
69,400
|
|
|||
Net income attributable to non-controlling interests in Consolidated Funds
|
—
|
|
|
—
|
|
|
29,717
|
|
|||||
Net income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
2,549
|
|
|
(885
|
)
|
|
1,933
|
|
|||||
Net income attributable to non-controlling interests in Medley LLC
|
6,406
|
|
|
18,406
|
|
|
36,055
|
|
|||||
Net income attributable to Medley Management Inc.
|
$
|
997
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
||
|
|
|
|
|
|
|
|
||||||
Other data (at period end, in millions):
|
|
|
|
|
|
|
|
||||||
AUM
|
|
|
$
|
5,335
|
|
|
$
|
4,779
|
|
|
$
|
3,682
|
|
Fee earning AUM
|
|
|
$
|
3,190
|
|
|
$
|
3,302
|
|
|
$
|
3,058
|
|
|
|
Standalone
|
|
Consolidation and Reconciling Items
|
|
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
|
|
—
|
|
|
1,670
|
|
|
1,670
|
|
|||
General, administrative and other expenses
|
|
16,312
|
|
|
—
|
|
|
16,312
|
|
|||
Total expenses
|
|
35,091
|
|
|
1,670
|
|
|
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 expense, net
|
|
(6,731
|
)
|
|
43,247
|
|
|
36,516
|
|
|||
Income (loss) before income taxes
|
|
40,698
|
|
|
31,230
|
|
|
71,928
|
|
|||
Provision for (benefit from) income taxes
|
|
1,015
|
|
|
1,513
|
|
|
2,528
|
|
|||
Net income (loss)
|
|
39,683
|
|
|
29,717
|
|
|
69,400
|
|
|||
Net income attributable to non-controlling interests in Consolidated Funds
|
—
|
|
|
29,717
|
|
|
29,717
|
|
||||
Net income (loss) attributable to redeemable non-controlling interests and 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
|
|
|
$
|
—
|
|
|
$
|
1,695
|
|
•
|
Our management fees from permanent capital vehicles decreased by $8.1 million for the year ended
December 31, 2016
compared to the same period in 2015. Management fees from SIC increased by $7.6 million due to an increase in Part I incentive fees and an
16%
increase in average fee earning AUM for the year ended
December 31, 2016
compared to the same period in 2015. Management fees from MCC decreased by $15.7 million due to a decrease in Part I incentive fees and a
14%
decrease in average fee earning AUM for the year ended
December 31, 2016
compared to the same period in 2015.
|
•
|
Our management fees from long-dated private funds and SMAs decreased by $2.1 million for the year ended
December 31, 2016
, compared to the same period in 2015. The decrease was primarily due to a decrease in origination fees, partly offset by an increase in base management fees.
|
•
|
Our permanent capital vehicles generated an additional $12.4 million in management fees for the year ended December 31, 2015 compared to the same period in 2014. Management fees from SIC increased $12.7 million due to a 43% increase in fee earning AUM over that period and due to an increase in Part I incentive fees. Management fees from MCC decreased $0.2 million due to a decrease in Part I incentive fees, partially offset by a $2.2 million increase in base management fees over that period.
|
•
|
Our management fees from long-dated private funds and SMAs increased by $2.0 million for the year ended December 31, 2015 compared to the same period in 2014. As previously discussed, the adoption of new consolidation guidance led to the deconsolidation of our Consolidated Funds effective January 1, 2015. As a result of the deconsolidation, management fees increased by $4.5 million compared to the same period in 2014. This increase was partially offset by a decrease in origination fees.
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Amounts in thousands, except share and per share amounts)
|
||||||||||
Net income attributable to Medley Management Inc.
|
|
$
|
997
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
Net income attributable to non-controlling interests in
Medley LLC
|
|
6,406
|
|
|
18,406
|
|
|
36,055
|
|
|||
Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
|
|
7,403
|
|
|
21,517
|
|
|
37,750
|
|
|||
Reimbursable fund startup expenses
|
|
16,329
|
|
|
6,378
|
|
|
5,811
|
|
|||
IPO date award stock-based compensation
|
|
2,811
|
|
|
2,585
|
|
|
845
|
|
|||
Adjustment for pre-IPO guaranteed payments to members
(1)
|
—
|
|
|
—
|
|
|
(3,380
|
)
|
||||
Other non-core items
(2)
|
|
1,348
|
|
|
303
|
|
|
(5
|
)
|
|||
Income tax benefit (expense) on adjustments
|
|
(2,360
|
)
|
|
(1,036
|
)
|
|
(139
|
)
|
|||
Core Net Income
|
|
$
|
25,531
|
|
|
$
|
29,747
|
|
|
$
|
40,882
|
|
Interest expense
|
|
8,614
|
|
|
8,469
|
|
|
5,520
|
|
|||
Income taxes
|
|
3,423
|
|
|
3,051
|
|
|
1,154
|
|
|||
Depreciation and amortization
|
|
913
|
|
|
454
|
|
|
401
|
|
|||
Core EBITDA
|
|
$
|
38,481
|
|
|
$
|
41,721
|
|
|
$
|
47,957
|
|
|
|
|
|
|
|
|
||||||
Core Net Income Per Share
|
|
$
|
0.54
|
|
|
$
|
0.61
|
|
|
$
|
0.79
|
|
|
|
|
|
|
|
|
||||||
Pro-Forma Weighted Average Shares Outstanding
(3)
|
|
30,689,412
|
|
|
30,459,958
|
|
|
30,491,417
|
|
(1)
|
Represents a pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense. Prior to the Company's Reorganization and IPO, these payments were recorded as distributions from members' capital.
|
(2)
|
For year ended December 31, 2016, other non-core items consist of a $0.6 million acceleration of amortization of debt issuance costs and discount relating to prepayments made on our Term Loan Facility as a result of the refinancing of our indebtedness from the issuance of senior unsecured debt, a $0.5 million impairment loss on our investment in CK Pearl Fund and a $0.2 million severance cost to former employees. For the years ended December 31, 2015 and 2014, other non-core items consist of severance costs to former employees.
|
(3)
|
Assumes
the conversion by the pre-IPO holders of 23,333,333 LLC Units for 23,333,333 shares of Class A common stock at the beginning of each period presented, the vesting of the weighted average number of restricted stock units during each of the periods presented and, at the beginning of the year ended December 31, 2014, the issuance of 6,000,000 shares of Class A common stock in connection with our IPO.
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Amounts in thousands, except share and per share amounts)
|
||||||||||
Numerator
|
|
|
|
|
|
|
|
|
||||
Core Net Income
|
|
$
|
25,531
|
|
|
$
|
29,747
|
|
|
$
|
40,882
|
|
Add: Income taxes
|
|
3,423
|
|
|
3,051
|
|
|
1,154
|
|
|||
Pre-Tax Core Net Income
|
|
$
|
28,954
|
|
|
$
|
32,798
|
|
|
$
|
42,036
|
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
|
|
|
||||
Class A common stock
|
|
5,804,042
|
|
|
6,002,422
|
|
|
6,000,000
|
|
|||
Conversion of LLC Units to Class A common stock
|
|
23,333,333
|
|
|
23,333,333
|
|
|
23,333,333
|
|
|||
Restricted stock units
|
|
1,552,037
|
|
|
1,124,203
|
|
|
1,158,084
|
|
|||
Pro-Forma Weighted Average Shares Outstanding
|
|
30,689,412
|
|
|
30,459,958
|
|
|
30,491,417
|
|
|||
Pre-Tax Core Net Income Per Share
|
|
$
|
0.94
|
|
|
$
|
1.08
|
|
|
$
|
1.38
|
|
Less: corporate income taxes per share
(1)
|
|
(0.40
|
)
|
|
(0.47
|
)
|
|
(0.59
|
)
|
|||
Core Net Income Per Share
|
|
$
|
0.54
|
|
|
$
|
0.61
|
|
|
$
|
0.79
|
|
(1)
|
Assumes that all of our pre-tax earnings are subject to federal, state and local corporate income taxes. In determining corporate income taxes, we used a combined effective corporate tax rate of 43.0%.
|
|
|
For the Years Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
|
|
|
|
|
|
|
|||
Net Income Margin
|
|
9.7
|
%
|
|
31.9
|
%
|
|
45.7
|
%
|
Reimbursable fund startup expenses
(1)
|
|
21.5
|
%
|
|
9.5
|
%
|
|
7.0
|
%
|
IPO date award stock-based compensation
(1)
|
|
3.7
|
%
|
|
3.8
|
%
|
|
1.0
|
%
|
Adjustment for pre-IPO guaranteed payments to members
(1)(2)
|
—
|
%
|
|
—
|
%
|
|
(4.0
|
)%
|
|
Other non-core items
(1)(3)
|
|
1.8
|
%
|
|
0.4
|
%
|
|
0.0
|
%
|
Provision for income taxes
(1)
|
|
1.4
|
%
|
|
3.0
|
%
|
|
1.3
|
%
|
Corporate income taxes
(4)
|
|
(16.4
|
)%
|
|
(20.9
|
)%
|
|
(21.8
|
)%
|
Core Net Income Margin
|
|
21.7
|
%
|
|
27.7
|
%
|
|
29.2
|
%
|
(1)
|
Adjustments to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC to calculate Core Net Income are presented as a percentage of total revenue, and, for the year ended December 31, 2014, total standalone revenue.
|
(2)
|
Represents a pro-forma adjustment to reflect guaranteed payments to Medley LLC members as compensation expense. Prior to the Company's Reorganization and IPO, these payments were recorded as distributions from members' capital.
|
(3)
|
For year ended December 31, 2016, other non-core items consist of a $0.6 million acceleration of amortization of debt issuance costs and discount relating to prepayments made on our Term Loan Facility as a result of the refinancing of our indebtedness from the issuance of senior unsecured debt, a $0.5 million impairment loss on our investment in CK Pearl Fund and a $0.2 million severance cost to former employees. For the years ended December 31, 2015 and 2014, other non-core items consist of severance costs to former employees.
|
(4)
|
Assumes that all our pre-tax earnings, including adjustments above, are subject to federal, state and local corporate income taxes. In determining corporate income taxes, we used a combined effective corporate tax rate of 43.0% and presented the calculation as a percentage of total revenue.
|
•
|
incur additional indebtedness, make guarantees and enter into hedging arrangements;
|
•
|
create liens on assets;
|
•
|
enter into sale and leaseback transactions;
|
•
|
engage in mergers or consolidations;
|
•
|
make fundamental changes;
|
•
|
pay dividends and distributions or repurchase our capital stock;
|
•
|
make investments, loans and advances, including acquisitions;
|
•
|
engage in certain transactions with affiliates;
|
•
|
make changes in the nature of their business; and
|
•
|
make prepayments of junior debt.
|
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
|
(Amounts in thousands)
|
||||||||||
Statements of cash flows data
|
|
|
|
|
|
|
|
||||
Net cash provided by (used in) operating activities
|
$
|
14,420
|
|
|
$
|
24,063
|
|
|
$
|
(196,426
|
)
|
Net cash provided by (used in) investing activities
|
(17,072
|
)
|
|
(299
|
)
|
|
(521
|
)
|
|||
Net cash provided by (used in) financing activities
|
(14,473
|
)
|
|
(39,282
|
)
|
|
278,758
|
|
|||
Net increase (decrease) in cash and cash equivalents
|
$
|
(17,125
|
)
|
|
$
|
(15,518
|
)
|
|
$
|
81,811
|
|
|
Less than
1 year
|
|
1 - 3
years
|
|
4 - 5
years
|
|
More than
5 years
|
|
Total
|
||||||||||
|
(Amounts in thousands)
|
||||||||||||||||||
Medley Obligations
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|||||
Operating lease obligations
(1)
|
$
|
2,683
|
|
|
$
|
5,414
|
|
|
$
|
5,263
|
|
|
$
|
4,254
|
|
|
$
|
17,614
|
|
Loans payable
(2)
|
—
|
|
|
54,800
|
|
|
—
|
|
|
—
|
|
|
54,800
|
|
|||||
Senior unsecured debt
(3)
|
—
|
|
|
—
|
|
|
—
|
|
|
53,595
|
|
|
53,595
|
|
|||||
Interest obligations on debt
(4)
|
6,637
|
|
|
11,664
|
|
|
7,369
|
|
|
17,042
|
|
|
42,712
|
|
|||||
Revenue share payable
|
1,168
|
|
|
2,478
|
|
|
2,044
|
|
|
439
|
|
|
6,129
|
|
|||||
Capital commitments to funds
(5)
|
525
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
525
|
|
|||||
Total
|
$
|
11,013
|
|
|
$
|
74,356
|
|
|
$
|
14,676
|
|
|
$
|
75,330
|
|
|
$
|
175,375
|
|
(1)
|
We lease office space in New York and San Francisco under non-cancelable lease agreements. In August 2015, the Company signed a new lease for its office space in New York City. The Company’s obligations under the current terms of these leases extend through September 2023. The amounts in this table represent the minimum lease payments required over the term of the lease, and include operating leases for office equipment.
|
(2)
|
We have included all loans described in Note 6, “Loans Payable,” to our consolidated financial statements included in this Form 10-K. The amounts in this table include $44.8 million relating to our Term Loan Facility which was repaid in full in February 2017 using the proceeds from the issuance of additional senior unsecured debt.
|
(3)
|
We have included all loans described in Note 7, “Senior Unsecured Debt,” to our consolidated financial statements included in this Form 10-K.
|
(3)
|
Our future interest obligations on debt outstanding assume an interest rate of 6.5% on our Term Loan balance and an interest of 6.875% on our senior unsecured debt balance.
|
(4)
|
Represents equity commitments by us to certain long-dated private funds managed by us. These amounts are generally due on demand and are therefore presented in the less than one year category.
|
•
|
we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;
|
•
|
to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and
|
•
|
we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital.
|
|
|
Page
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
Assets
|
|
|
|
|
|
||
Cash and cash equivalents
|
$
|
49,666
|
|
|
$
|
71,688
|
|
Restricted cash equivalents
|
4,897
|
|
|
—
|
|
||
Investments, at fair value
|
31,904
|
|
|
16,360
|
|
||
Management fees receivable
|
12,630
|
|
|
16,172
|
|
||
Performance fees receivable
|
4,961
|
|
|
2,518
|
|
||
Other assets
|
18,311
|
|
|
13,015
|
|
||
Total assets
|
$
|
122,369
|
|
|
$
|
119,753
|
|
|
|
|
|
|
|
||
Liabilities and Equity
|
|
|
|
|
|
||
Loans payable
|
$
|
52,178
|
|
|
$
|
100,871
|
|
Senior unsecured debt
|
49,793
|
|
|
—
|
|
||
Accounts payable, accrued expenses and other liabilities
|
36,270
|
|
|
34,746
|
|
||
Performance fee compensation payable
|
985
|
|
|
1,823
|
|
||
Total liabilities
|
139,226
|
|
|
137,440
|
|
||
|
|
|
|
|
|
||
Commitments and contingencies (Note 9)
|
|
|
|
|
|
||
|
|
|
|
|
|
||
Redeemable Non-controlling Interests
|
30,805
|
|
|
—
|
|
||
|
|
|
|
|
|
||
Equity
|
|
|
|
|
|
||
Class A common stock, $0.01 par value, 3,000,000,000 shares authorized; 6,042,050 and 6,010,646 issued as of December 31, 2016 and 2015, respectively; 5,809,130 and 5,993,941 outstanding as of December 31, 2016 and 2015, respectively
|
58
|
|
|
60
|
|
||
Class B common stock, $0.01 par value, 1,000,000 shares authorized; 100 shares issued and outstanding
|
—
|
|
|
—
|
|
||
Additional paid in capital (capital deficit)
|
3,310
|
|
|
631
|
|
||
Accumulated other comprehensive income (loss)
|
33
|
|
|
—
|
|
||
Retained earnings (accumulated deficit)
|
(5,254
|
)
|
|
(730
|
)
|
||
Total stockholders' equity (deficit), Medley Management Inc.
|
(1,853
|
)
|
|
(39
|
)
|
||
Non-controlling interests in consolidated subsidiaries
|
(1,717
|
)
|
|
(459
|
)
|
||
Non-controlling interests in Medley LLC
|
(44,092
|
)
|
|
(17,189
|
)
|
||
Total equity (deficit)
|
(47,662
|
)
|
|
(17,687
|
)
|
||
Total liabilities, redeemable non-controlling interests and equity
|
$
|
122,369
|
|
|
$
|
119,753
|
|
|
|
For the Years Ended December 31,
|
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
|
||||||
Revenues
|
|
|
|
|
|
|
|
|
|
|
|||
Management fees (includes Part I incentive fees of $14,209, $21,487 and $19,507, respectively)
|
|
$
|
65,496
|
|
|
$
|
75,675
|
|
|
61,252
|
|
|
|
Performance fees
|
|
2,421
|
|
|
(15,685
|
)
|
|
2,050
|
|
|
|||
Other revenues and fees
|
|
8,111
|
|
|
7,436
|
|
|
8,871
|
|
|
|||
Total revenues
|
|
76,028
|
|
|
67,426
|
|
|
72,173
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Expenses
|
|
|
|
|
|
|
|
|
|
||||
Compensation and benefits
|
|
27,800
|
|
|
26,768
|
|
|
20,322
|
|
|
|||
Performance fee compensation
|
|
(319
|
)
|
|
(8,049
|
)
|
|
(1,543
|
)
|
|
|||
Consolidated Funds expenses
|
|
—
|
|
|
—
|
|
|
1,670
|
|
|
|||
General, administrative and other expenses
|
|
28,540
|
|
|
16,836
|
|
|
16,312
|
|
|
|||
Total expenses
|
|
56,021
|
|
|
35,555
|
|
|
36,761
|
|
|
|||
|
|
|
|
|
|
|
|
||||||
Other income (expense)
|
|
|
|
|
|
|
|
|
|
||||
Dividend income
|
|
1,304
|
|
|
886
|
|
|
886
|
|
|
|||
Interest expense
|
|
(9,226
|
)
|
|
(8,469
|
)
|
|
(5,520
|
)
|
|
|||
Other income (expenses), net
|
|
(1,070
|
)
|
|
(1,641
|
)
|
|
(1,773
|
)
|
|
|||
Interest and other income of Consolidated Funds
|
|
—
|
|
|
—
|
|
|
71,468
|
|
|
|||
Interest expense of Consolidated Funds
|
|
—
|
|
|
—
|
|
|
(9,951
|
)
|
|
|||
Net realized gain (loss) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
789
|
|
|
||||
Net change in unrealized appreciation (depreciation) on investments of Consolidated Funds
|
—
|
|
|
—
|
|
|
(20,557
|
)
|
|
||||
Net change in unrealized depreciation (appreciation) on secured borrowings of Consolidated Funds
|
—
|
|
|
—
|
|
|
1,174
|
|
|
||||
Total other income (expense), net
|
|
(8,992
|
)
|
|
(9,224
|
)
|
|
36,516
|
|
|
|||
Income (loss) before income taxes
|
|
11,015
|
|
|
22,647
|
|
|
71,928
|
|
|
|||
Provision for (benefit from) income taxes
|
|
1,063
|
|
|
2,015
|
|
|
2,528
|
|
|
|||
Net income (loss)
|
|
9,952
|
|
|
20,632
|
|
|
69,400
|
|
|
|||
Net income attributable to non-controlling interests in Consolidated Funds
|
—
|
|
|
—
|
|
|
29,717
|
|
|
||||
Net income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
2,549
|
|
|
(885
|
)
|
|
1,933
|
|
|
||||
Net income attributable to non-controlling interests in Medley LLC
|
6,406
|
|
|
18,406
|
|
|
36,055
|
|
|
||||
Net income attributable to Medley Management Inc.
|
$
|
997
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
|
|
Dividends declared per Class A common stock
|
|
$
|
0.80
|
|
|
$
|
0.60
|
|
|
$
|
0.20
|
|
|
|
|
|
|
|
|
|
|
||||||
Net income per Class A common stock:
|
|
|
|
|
|
|
|
|
|
|
|||
Basic (Note 11)
|
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.24
|
|
(1)
|
Diluted (Note 11)
|
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.24
|
|
(1)
|
Weighted average shares outstanding - Basic and Diluted
|
|
5,804,042
|
|
|
6,002,422
|
|
|
6,000,000
|
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
Net income (loss)
|
|
$
|
9,952
|
|
|
$
|
20,632
|
|
|
$
|
69,400
|
|
Other comprehensive income (loss):
|
|
|
|
|
|
|
|
|
|
|||
Change in fair value of available-for-sale securities
|
|
194
|
|
|
—
|
|
|
—
|
|
|||
Total comprehensive income (loss)
|
|
10,146
|
|
|
20,632
|
|
|
69,400
|
|
|||
Comprehensive income (loss) attributable to non-controlling interests in Consolidated Funds
|
—
|
|
|
—
|
|
|
29,717
|
|
||||
Comprehensive income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
2,577
|
|
|
(885
|
)
|
|
1,933
|
|
||||
Comprehensive income attributable to Medley LLC
|
|
6,539
|
|
|
18,406
|
|
|
36,055
|
|
|||
Comprehensive income attributable to Medley Management Inc.
|
$
|
1,030
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
|
Medley LLC and Medley GP Holdings LLC
|
|
Medley Management Inc.
|
|
|
|
||||||||||||||||||||||||||||||||||||||||||||
|
Non-controlling Interests in Consolidated Funds
|
|
Non-controlling Interests in Consolidated Subsidiaries
|
|
Members' Equity (Deficit)
|
|
Class A
Common Stock
|
|
Class B
Common Stock
|
|
Additional
Paid in
Capital
(Capital
Deficit)
|
|
Accumulated
Other
Comprehensive
Income (Loss)
|
|
Retained
Earnings
(Accumulated
Deficit)
|
|
Non-
controlling
Interests in
Medley
LLC
|
|
Total
Equity
|
|
|
Redeemable
Non-
controlling
Interests
|
||||||||||||||||||||||||||||
|
|
|
|
Shares
|
|
Dollars
|
|
Shares
|
|
Dollars
|
|
|
|
|
|
|
|
|||||||||||||||||||||||||||||||||
Balance at January 1, 2014
|
$
|
464,475
|
|
|
$
|
40
|
|
|
$
|
(18,554
|
)
|
|
—
|
|
|
$
|
—
|
|
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
445,961
|
|
|
|
$
|
—
|
|
Contributions
|
120,318
|
|
|
928
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
121,246
|
|
|
|
—
|
|
|||||||||||
Distributions
|
(22,688
|
)
|
|
—
|
|
|
(120,621
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(143,309
|
)
|
|
|
—
|
|
|||||||||||
Net income
|
22,902
|
|
|
2,055
|
|
|
26,753
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
51,710
|
|
|
|
—
|
|
||||||||||||
Balance prior to September 29, 2014
|
585,007
|
|
|
3,023
|
|
|
(112,422
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
475,608
|
|
|
|
—
|
|
|||||||||||
Effects of Reorganization and Offering
|
—
|
|
|
—
|
|
|
112,422
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
|
(112,422
|
)
|
|
—
|
|
|
|
—
|
|
|||||||||||||
Balance at September 29, 2014
|
585,007
|
|
|
3,023
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(112,422
|
)
|
|
475,608
|
|
|
|
—
|
|
|||||||||||
Net income subsequent to September 29, 2014
|
6,815
|
|
|
(122
|
)
|
|
—
|
|
|
—
|
|
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,695
|
|
|
9,302
|
|
|
17,690
|
|
|
|
—
|
|
||||||||||||
Issuance of Class A shares in Initial Public Offering, net of underwriters discount
|
—
|
|
|
—
|
|
|
—
|
|
|
6,000,000
|
|
|
60
|
|
|
—
|
|
|
—
|
|
|
100,380
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100,440
|
|
|
|
—
|
|
|||||||||||
Issuance of Class B shares
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
100
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||||||
Initial Public Offering costs
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3,715
|
)
|
|
(3,715
|
)
|
|
|
—
|
|
|||||||||||
Dilution assumed with Initial Public Offering
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(103,658
|
)
|
|
—
|
|
|
—
|
|
|
103,658
|
|
|
—
|
|
|
|
—
|
|
|||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
894
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
894
|
|
|
|
—
|
|
|||||||||||
Dividends declared on Class A common stock ($0.20 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,423
|
)
|
|
—
|
|
|
(1,423
|
)
|
|
|
—
|
|
|||||||||||
Contributions
|
33,726
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33,726
|
|
|
|
—
|
|
|||||||||||
Distributions
|
—
|
|
|
(1,375
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(795
|
)
|
|
(2,170
|
)
|
|
|
—
|
|
|||||||||||
Balance at December 31, 2014
|
625,548
|
|
|
1,526
|
|
|
—
|
|
|
6,000,000
|
|
|
60
|
|
|
100
|
|
|
—
|
|
|
(2,384
|
)
|
|
—
|
|
|
272
|
|
|
(3,972
|
)
|
|
621,050
|
|
|
|
—
|
|
|||||||||||
Deconsolidation of MOF I LP
|
(15,321
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(15,321
|
)
|
|
|
—
|
|
|||||||||||
Deconsolidation of MOF II LP
|
(610,227
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(610,227
|
)
|
|
|
—
|
|
|||||||||||
Net income
|
—
|
|
|
(885
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,111
|
|
|
18,406
|
|
|
20,632
|
|
|
|
—
|
|
|||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,052
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,052
|
|
|
|
—
|
|
|||||||||||
Dividends on Class A common stock ($0.60 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(4,113
|
)
|
|
—
|
|
|
(4,113
|
)
|
|
|
—
|
|
|||||||||||
Excess tax benefit from dividends paid to RSU holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
21
|
|
|
85
|
|
|
|
—
|
|
|||||||||||
Issuance of Class A common stock related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
10,646
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||||||
Repurchases of Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(16,705
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(101
|
)
|
|
|
—
|
|
|||||||||||
Contributions
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||||||
Distributions
|
—
|
|
|
(1,100
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(31,644
|
)
|
|
(32,744
|
)
|
|
|
—
|
|
|||||||||||
Balance at December 31, 2015
|
—
|
|
|
(459
|
)
|
|
—
|
|
|
5,993,941
|
|
|
60
|
|
|
100
|
|
|
—
|
|
|
631
|
|
|
—
|
|
|
(730
|
)
|
|
(17,189
|
)
|
|
(17,687
|
)
|
|
|
—
|
|
|||||||||||
Net income (loss)
|
—
|
|
|
(16
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
997
|
|
|
6,406
|
|
|
7,387
|
|
|
|
2,565
|
|
|||||||||||
Change in fair value of available-for-sale securities
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
33
|
|
|
—
|
|
|
133
|
|
|
166
|
|
|
|
28
|
|
|||||||||||
Stock-based compensation
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,811
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,811
|
|
|
|
—
|
|
|||||||||||
Dividends on Class A common stock ($0.80 per share)
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5,521
|
)
|
|
—
|
|
|
(5,521
|
)
|
|
|
—
|
|
|||||||||||
Excess tax benefit from dividends paid to RSU holders
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
64
|
|
|
—
|
|
|
—
|
|
|
20
|
|
|
84
|
|
|
|
—
|
|
|||||||||||
Issuance of Class A common stock related to vesting of restricted stock units
|
—
|
|
|
—
|
|
|
—
|
|
|
31,404
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
|
—
|
|
|||||||||||
Repurchases of Class A common stock
|
—
|
|
|
—
|
|
|
—
|
|
|
(216,215
|
)
|
|
(2
|
)
|
|
—
|
|
|
—
|
|
|
(1,196
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(1,198
|
)
|
|
|
—
|
|
|||||||||||
Contributions
|
—
|
|
|
12
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
12
|
|
|
|
17,010
|
|
|||||||||||
Distributions
|
—
|
|
|
(1,547
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(21,115
|
)
|
|
(22,662
|
)
|
|
|
(994
|
)
|
|||||||||||
Reclassification of redeemable non-controlling interest
|
—
|
|
|
(41
|
)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(12,155
|
)
|
|
(12,196
|
)
|
|
|
12,196
|
|
|||||||||||
Issuance of non-controlling interests, at fair value
|
—
|
|
|
334
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(192
|
)
|
|
142
|
|
|
|
—
|
|
|||||||||||
Balance at December 31, 2016
|
$
|
—
|
|
|
$
|
(1,717
|
)
|
|
$
|
—
|
|
|
5,809,130
|
|
|
$
|
58
|
|
|
100
|
|
|
$
|
—
|
|
|
$
|
3,310
|
|
|
$
|
33
|
|
|
$
|
(5,254
|
)
|
|
$
|
(44,092
|
)
|
|
$
|
(47,662
|
)
|
|
|
$
|
30,805
|
|
Consolidated Statements of Cash Flows
(Amounts in thousands)
|
|||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from operating activities
|
|
|
|
|
|
|
|
||||
Net income (loss)
|
$
|
9,952
|
|
|
$
|
20,632
|
|
|
69,400
|
|
|
Adjustments to reconcile net income to net cash provided by (used in) operating activities:
|
|
|
|
|
|
|
|
||||
Non-cash stock-based compensation
|
3,811
|
|
|
3,052
|
|
|
894
|
|
|||
Amortization of debt issuance costs
|
1,018
|
|
|
545
|
|
|
752
|
|
|||
Accretion of debt discount
|
958
|
|
|
776
|
|
|
604
|
|
|||
Provision for (benefit from) deferred taxes
|
(267
|
)
|
|
(904
|
)
|
|
(483
|
)
|
|||
Depreciation and amortization
|
913
|
|
|
454
|
|
|
401
|
|
|||
Net change in unrealized depreciation (appreciation) on investments
|
(27
|
)
|
|
885
|
|
|
272
|
|
|||
Loss (income) from equity method investments
|
93
|
|
|
12,578
|
|
|
—
|
|
|||
Other non-cash amounts
|
169
|
|
|
—
|
|
|
—
|
|
|||
Operating adjustments related to Consolidated Funds:
|
|
|
|
|
|
||||||
Provision for (benefit from) deferred taxes
|
—
|
|
|
—
|
|
|
(243
|
)
|
|||
Interest income paid-in-kind
|
—
|
|
|
—
|
|
|
(5,264
|
)
|
|||
Accretion of original issue discount
|
—
|
|
|
—
|
|
|
(1,760
|
)
|
|||
Net realized (gain) loss on investments
|
—
|
|
|
—
|
|
|
(789
|
)
|
|||
Net change in unrealized depreciation (appreciation) on investments
|
—
|
|
|
—
|
|
|
20,556
|
|
|||
Net change in unrealized appreciation (depreciation) on secured borrowings of Consolidated Funds
|
—
|
|
|
—
|
|
|
(1,174
|
)
|
|||
Changes in operating assets and liabilities:
|
|
|
|
|
|
|
|
||||
Management fees receivable
|
3,542
|
|
|
(999
|
)
|
|
(6,252
|
)
|
|||
Performance fees receivable
|
(2,443
|
)
|
|
3,055
|
|
|
(2,234
|
)
|
|||
Other assets
|
(1,617
|
)
|
|
(4,915
|
)
|
|
(1,671
|
)
|
|||
Accounts payable, accrued expenses and other liabilities
|
(844
|
)
|
|
(1,112
|
)
|
|
8,693
|
|
|||
Performance fee compensation payable
|
(838
|
)
|
|
(9,984
|
)
|
|
(4,418
|
)
|
|||
Changes in operating assets and liabilities of Consolidated Funds:
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
—
|
|
|
—
|
|
|
22,244
|
|
|||
Cost of investments purchased
|
—
|
|
|
—
|
|
|
(448,258
|
)
|
|||
Proceeds from sales and repayments of investments
|
—
|
|
|
—
|
|
|
154,549
|
|
|||
Other assets
|
—
|
|
|
—
|
|
|
(6,784
|
)
|
|||
Accounts payable, accrued expenses and other liabilities
|
—
|
|
|
—
|
|
|
4,539
|
|
|||
Net cash provided by (used in) operating activities
|
14,420
|
|
|
24,063
|
|
|
(196,426
|
)
|
|||
Cash flows from investing activities
|
|
|
|
|
|
|
|
||||
Purchases of fixed assets
|
(1,935
|
)
|
|
(795
|
)
|
|
(521
|
)
|
|||
Distributions received from equity method investments
|
1,678
|
|
|
496
|
|
|
—
|
|
|||
Purchases of available-for-sale securities
|
(16,815
|
)
|
|
—
|
|
|
—
|
|
|||
Net cash provided by (used in) investing activities
|
(17,072
|
)
|
|
(299
|
)
|
|
(521
|
)
|
|||
|
|
|
|
|
|
Consolidated Statements of Cash Flows
(Amounts in thousands)
|
|||||||||||
|
For the Years Ended December 31,
|
||||||||||
|
2016
|
|
2015
|
|
2014
|
||||||
Cash flows from financing activities
|
|
|
|
|
|
|
|
||||
Repayment of debt obligations
|
(50,513
|
)
|
|
(1,250
|
)
|
|
(51,937
|
)
|
|||
Proceeds from issuance of debt obligations
|
52,588
|
|
|
—
|
|
|
123,900
|
|
|||
Proceeds from Initial Public Offering
|
—
|
|
|
—
|
|
|
100,440
|
|
|||
Initial Public Offering costs
|
—
|
|
|
—
|
|
|
(3,715
|
)
|
|||
Capital contributions from non-controlling interests in consolidated subsidiaries and redeemable non-controlling interests
|
17,022
|
|
|
—
|
|
|
—
|
|
|||
Distributions to members and redeemable non-controlling interests
|
(23,656
|
)
|
|
(32,744
|
)
|
|
(119,363
|
)
|
|||
Debt issuance costs
|
(2,916
|
)
|
|
—
|
|
|
(2,546
|
)
|
|||
Dividends paid
|
(5,521
|
)
|
|
(4,113
|
)
|
|
—
|
|
|||
Repurchases of Class A common stock
|
(1,198
|
)
|
|
(101
|
)
|
|
—
|
|
|||
Capital contributions to equity method investments
|
(279
|
)
|
|
(1,074
|
)
|
|
—
|
|
|||
Financing activities of Consolidated Funds
|
|
|
|
|
|
||||||
Contributions from non-controlling interest holders
|
—
|
|
|
—
|
|
|
154,044
|
|
|||
Distributions to non-controlling interest holders
|
—
|
|
|
—
|
|
|
(22,688
|
)
|
|||
Proceeds from secured borrowings
|
—
|
|
|
—
|
|
|
115,439
|
|
|||
Repayments on secured borrowings
|
—
|
|
|
—
|
|
|
(14,816
|
)
|
|||
Net cash provided by (used in) financing activities
|
(14,473
|
)
|
|
(39,282
|
)
|
|
278,758
|
|
|||
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents
|
(17,125
|
)
|
|
(15,518
|
)
|
|
81,811
|
|
|||
Cash, cash equivalents and restricted cash equivalents, beginning of period
|
71,688
|
|
|
87,206
|
|
|
5,395
|
|
|||
Cash, cash equivalents and restricted cash equivalents, end of period
|
$
|
54,563
|
|
|
$
|
71,688
|
|
|
$
|
87,206
|
|
|
|
|
|
|
|
||||||
Reconciliation of cash, cash equivalents, and restricted cash equivalents reported on the consolidated balance sheets to the total of such amounts reported on the consolidated statements of cash flows
|
|
|
|
|
|
||||||
Cash and cash equivalents
|
$
|
49,666
|
|
|
$
|
71,688
|
|
|
$
|
87,206
|
|
Restricted cash equivalents
|
4,897
|
|
|
—
|
|
|
—
|
|
|||
Total cash, cash equivalents and restricted cash equivalents
|
$
|
54,563
|
|
|
$
|
71,688
|
|
|
$
|
87,206
|
|
|
|
|
|
|
|
||||||
Supplemental cash flow information
|
|
|
|
|
|
||||||
Interest paid
|
$
|
7,992
|
|
|
$
|
6,576
|
|
|
$
|
3,900
|
|
Income taxes paid
|
2,085
|
|
|
4,982
|
|
|
2,411
|
|
|||
Supplemental disclosure of non-cash investing activities
|
|
|
|
|
|
||||||
Investment in MOF I LP attributed to deconsolidation
|
$
|
—
|
|
|
$
|
1,768
|
|
|
$
|
—
|
|
Investment in MOF II LP attributed to deconsolidation
|
—
|
|
|
10,474
|
|
|
—
|
|
|||
Fixed assets
|
2,293
|
|
|
—
|
|
|
—
|
|
|||
Supplemental disclosure of non-cash financing activities
|
|
|
|
|
|
|
|
||||
Issuance of non-controlling interest, at fair value
|
$
|
192
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Reclassification of redeemable non-controlling interest
|
12,155
|
|
|
—
|
|
|
—
|
|
|||
Non-cash distribution to members
|
—
|
|
|
—
|
|
|
3,428
|
|
|||
Non-cash debt
|
—
|
|
|
—
|
|
|
2,500
|
|
|||
Dividends declared but not paid
|
—
|
|
|
—
|
|
|
1,423
|
|
|||
Transfer of membership interests to non-controlling interests in consolidated subsidiaries
|
—
|
|
|
—
|
|
|
928
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Equity method investments, at fair value
|
$
|
14,895
|
|
|
$
|
16,360
|
|
Available-for-sale securities
|
17,009
|
|
|
—
|
|
||
Total investments, at fair value
|
$
|
31,904
|
|
|
$
|
16,360
|
|
•
|
Level I – Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date.
|
•
|
Level II – Valuations based on inputs other than quoted prices in active markets included in Level I, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in non-active markets including bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities.
|
•
|
Level III – Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets and liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level III information, assuming no additional corroborating evidence.
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Fixed assets, net of accumulated depreciation of $1,816 and $1,667, respectively
|
$
|
4,998
|
|
|
$
|
1,708
|
|
Security deposits
|
1,975
|
|
|
3,034
|
|
||
Administrative fees receivable (Note 10)
|
2,068
|
|
|
1,654
|
|
||
Deferred tax assets (Note 12)
|
2,001
|
|
|
1,658
|
|
||
Due from affiliates (Note 10)
|
2,133
|
|
|
1,486
|
|
||
Prepaid expenses and taxes
|
3,078
|
|
|
2,293
|
|
||
Other
|
2,058
|
|
|
1,182
|
|
||
Total other assets
|
$
|
18,311
|
|
|
$
|
13,015
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Term loans under the Credit Suisse Term Loan Facility, net of unamortized discount and debt issuance costs of $1,207 and $2,489, respectively
|
$
|
43,593
|
|
|
$
|
92,511
|
|
Non-recourse promissory notes, net of unamortized discount and debt issuance costs of $1,415 and $1,953, respectively
|
8,585
|
|
|
8,360
|
|
||
Total loans payable
|
$
|
52,178
|
|
|
$
|
100,871
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Accrued compensation and benefits
|
$
|
7,978
|
|
|
$
|
9,107
|
|
Due to affiliates (Note 10)
|
15,043
|
|
|
13,634
|
|
||
Revenue share payable (Note 9)
|
6,472
|
|
|
6,774
|
|
||
Accrued interest
|
558
|
|
|
1,304
|
|
||
Professional fees
|
858
|
|
|
614
|
|
||
Deferred rent
|
2,833
|
|
|
285
|
|
||
Deferred tax liabilities (Note 12)
|
202
|
|
|
127
|
|
||
Accounts payable and other accrued expenses
|
2,326
|
|
|
2,901
|
|
||
Total accounts payable, accrued expenses and other liabilities
|
$
|
36,270
|
|
|
$
|
34,746
|
|
2017
|
$
|
2,683
|
|
2018
|
2,704
|
|
|
2019
|
2,710
|
|
|
2020
|
2,833
|
|
|
2021
|
2,430
|
|
|
Thereafter
|
4,254
|
|
|
Total future minimum lease payments
|
$
|
17,614
|
|
|
|
For the Year Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Amounts in thousands, except share and per share amounts)
|
||||||||||
Basic and diluted net income per share:
|
|
|
|
|
|
|
|
|
|
|||
Numerator
|
|
|
|
|
|
|
|
|
|
|||
Net income attributable to Medley Management Inc.
|
|
$
|
997
|
|
|
$
|
3,111
|
|
|
$
|
1,695
|
|
Less: Allocation to participating securities
|
|
(892
|
)
|
|
(353
|
)
|
|
(267
|
)
|
|||
Net income (loss) available to Class A common stockholders
|
|
$
|
105
|
|
|
$
|
2,758
|
|
|
$
|
1,428
|
|
|
|
|
|
|
|
|
||||||
Denominator
|
|
|
|
|
|
|
|
|
|
|||
Weighted average shares of Class A common stock outstanding
|
|
5,804,042
|
|
|
6,002,422
|
|
|
6,000,000
|
|
|||
Net income (loss) per Class A share
|
|
$
|
0.02
|
|
|
$
|
0.46
|
|
|
$
|
0.24
|
|
|
|
For the Years Ended December 31,
|
||||||||||
|
|
2016
|
|
2015
|
|
2014
|
||||||
|
|
(Amounts in thousands, except share and per share amounts)
|
||||||||||
Current
|
|
|
|
|
|
|
|
|
|
|||
Federal
|
|
$
|
272
|
|
|
$
|
1,546
|
|
|
$
|
486
|
|
State
|
|
1,058
|
|
|
1,373
|
|
|
2,768
|
|
|||
Total current provision
|
|
1,330
|
|
|
2,919
|
|
|
3,254
|
|
|||
|
|
|
|
|
|
|
||||||
Deferred
|
|
|
|
|
|
|
||||||
Federal
|
|
158
|
|
|
(454
|
)
|
|
2
|
|
|||
State and local
|
|
(425
|
)
|
|
(450
|
)
|
|
(728
|
)
|
|||
Total deferred provision
|
|
(267
|
)
|
|
(904
|
)
|
|
(726
|
)
|
|||
Provision for Income Taxes
|
|
$
|
1,063
|
|
|
$
|
2,015
|
|
|
$
|
2,528
|
|
|
As of December 31,
|
||||||
|
2016
|
|
2015
|
||||
|
(Amounts in thousands)
|
||||||
Deferred tax assets
|
|
|
|
||||
Tax goodwill
|
$
|
605
|
|
|
$
|
597
|
|
Basis difference in partnership interest
|
417
|
|
|
630
|
|
||
Unrealized losses
|
44
|
|
|
55
|
|
||
Stock-based compensation
|
216
|
|
|
101
|
|
||
Accrued expenses not currently deductible for tax purposes
|
7
|
|
|
86
|
|
||
New York City unincorporated business tax credit carryforward
|
512
|
|
|
—
|
|
||
Other liabilities
|
200
|
|
|
189
|
|
||
Total deferred tax assets
|
$
|
2,001
|
|
|
$
|
1,658
|
|
Deferred tax liabilities
|
|
|
|
||||
Accrued fee income
|
$
|
147
|
|
|
$
|
68
|
|
Other
|
55
|
|
|
59
|
|
||
Total deferred tax liabilities
|
202
|
|
|
127
|
|
||
Net deferred tax assets
|
$
|
1,799
|
|
|
$
|
1,531
|
|
|
|
For the Years Ended December 31,
|
|||||||
|
|
2016
|
|
2015
|
|
2014
|
|||
Federal statutory rate
|
|
34.0
|
%
|
|
34.0
|
%
|
|
34.0
|
%
|
Income allocated to non-controlling interests
|
|
(28.9
|
)%
|
|
(26.8
|
)%
|
|
(32.9
|
)%
|
State and local corporate income taxes
|
|
1.2
|
%
|
|
1.0
|
%
|
|
0.2
|
%
|
Partnership unincorporated business tax
|
|
4.2
|
%
|
|
1.7
|
%
|
|
2.6
|
%
|
Permanent differences
|
|
—
|
%
|
|
(2.9
|
)%
|
|
(0.4
|
)%
|
Other
|
|
(0.8
|
)%
|
|
1.9
|
%
|
|
—
|
%
|
Effective tax rate
|
|
9.7
|
%
|
|
8.9
|
%
|
|
3.5
|
%
|
|
Number of RSUs
|
|
Weighted
Average Grant
Date Fair Value
|
|||
Balance at December 31, 2013
|
—
|
|
|
$
|
—
|
|
Granted
|
1,203,515
|
|
|
17.91
|
|
|
Forfeited
|
(5,600
|
)
|
|
18.00
|
|
|
Vested
|
—
|
|
|
—
|
|
|
Balance at December 31, 2014
|
1,197,915
|
|
|
$
|
17.91
|
|
Granted
|
188,404
|
|
|
9.96
|
|
|
Forfeited
|
(244,868
|
)
|
|
17.99
|
|
|
Vested
|
(10,647
|
)
|
|
18.00
|
|
|
Balance at December 31, 2015
|
1,130,804
|
|
|
$
|
16.56
|
|
Granted
|
597,283
|
|
|
5.89
|
|
|
Forfeited
|
(44,200
|
)
|
|
17.24
|
|
|
Vested
|
(31,404
|
)
|
|
6.05
|
|
|
Balance at December 31, 2016
|
1,652,483
|
|
|
$
|
12.88
|
|
|
|
For the Three Months Ended
(unaudited) |
||||||||||||||
|
|
December 31, 2016
|
|
September 30, 2016
|
|
June 30, 2016
|
|
March 31, 2016
|
||||||||
|
|
(Amounts in thousands)
|
||||||||||||||
Revenues
|
|
$
|
18,251
|
|
|
$
|
18,880
|
|
|
$
|
21,326
|
|
|
$
|
17,571
|
|
Expenses
|
|
9,184
|
|
|
15,553
|
|
|
17,508
|
|
|
13,776
|
|
||||
Total other income (expense), net
|
|
(1,595
|
)
|
|
(2,036
|
)
|
|
(2,714
|
)
|
|
(2,647
|
)
|
||||
Income (loss) before income taxes
|
|
7,472
|
|
|
1,291
|
|
|
1,104
|
|
|
1,148
|
|
||||
Net income (loss)
|
|
6,700
|
|
|
1,214
|
|
|
1,002
|
|
|
1,036
|
|
||||
Net income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
1,443
|
|
|
438
|
|
|
405
|
|
|
263
|
|
|||||
Net income attributable to non-controlling interests in Medley LLC
|
4,632
|
|
|
556
|
|
|
539
|
|
|
679
|
|
|||||
Net income attributable to Medley Management Inc.
|
$
|
625
|
|
|
$
|
220
|
|
|
$
|
58
|
|
|
$
|
94
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income (loss) per Class A common stock:
|
|
|
|
|
|
|
|
|||||||||
Basic
|
|
$
|
0.07
|
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
Diluted
|
|
$
|
0.07
|
|
|
$
|
—
|
|
|
$
|
(0.03
|
)
|
|
$
|
(0.01
|
)
|
Weighted average shares - Basic and Diluted
|
5,809,130
|
|
|
5,778,409
|
|
|
5,777,726
|
|
|
5,851,129
|
|
|
|
For the Three Months Ended
(unaudited)
|
||||||||||||||
|
|
December 31, 2015
|
|
September 30, 2015
|
|
June 30, 2015
|
|
March 31, 2015
|
||||||||
|
|
(Amounts in thousands)
|
||||||||||||||
Revenues
|
|
$
|
15,979
|
|
|
$
|
5,431
|
|
|
$
|
20,536
|
|
|
$
|
25,480
|
|
Expenses
|
|
9,845
|
|
|
3,880
|
|
|
9,990
|
|
|
11,840
|
|
||||
Total other income (expense), net
|
|
(2,467
|
)
|
|
(2,757
|
)
|
|
(1,875
|
)
|
|
(2,125
|
)
|
||||
Income (loss) before income taxes
|
|
3,667
|
|
|
(1,206
|
)
|
|
8,671
|
|
|
11,515
|
|
||||
Net income (loss)
|
|
3,605
|
|
|
(1,093
|
)
|
|
7,753
|
|
|
10,367
|
|
||||
Net income (loss) attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
|
249
|
|
|
(2,150
|
)
|
|
(274
|
)
|
|
1,290
|
|
|||||
Net income attributable to non-controlling interests in Medley LLC
|
2,830
|
|
|
785
|
|
|
6,988
|
|
|
7,803
|
|
|||||
Net income attributable to Medley Management Inc.
|
$
|
526
|
|
|
$
|
272
|
|
|
$
|
1,039
|
|
|
$
|
1,274
|
|
|
|
|
|
|
|
|
|
|
|
||||||||
Net income per Class A common stock:
|
|
|
|
|
|
|
|
|||||||||
Basic
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
Diluted
|
|
$
|
0.08
|
|
|
$
|
0.04
|
|
|
$
|
0.14
|
|
|
$
|
0.19
|
|
Weighted average shares - Basic and Diluted
|
6,009,400
|
|
|
6,000,211
|
|
|
6,000,000
|
|
|
6,000,000
|
|
•
|
Brook Taube, Co-Chief Executive Officer;
|
•
|
Seth Taube, Co-Chief Executive Officer;
|
•
|
Jeffrey Tonkel, President;
|
•
|
Richard T. Allorto, Jr., Chief Financial Officer; and
|
•
|
John D. Fredericks, General Counsel and Secretary.
|
Name and Principal Position
|
|
Year
|
|
Salary ($)
(1)
|
|
Bonus ($)
|
|
Stock Awards ($)
(2)
|
|
Option Awards ($)
|
|
Non-Equity Incentive Plan Compensation ($)
|
|
Change in Pension Value and Nonqualified Deferred Compensation Earnings ($)
|
|
All Other Compensation ($)
(3)
|
|
Total ($)
|
||||||||||||
Brook Taube
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
43,136
|
|
|
$
|
43,136
|
|
||
Co-Chief Executive Officer
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
40,884
|
|
|
$
|
40,884
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Seth Taube
|
|
2016
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
48,625
|
|
|
$
|
48,625
|
|
||
Co-Chief Executive Officer
|
|
2015
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
46,376
|
|
|
$
|
46,376
|
|
||
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Jeffrey Tonkel
|
|
2016
|
|
$
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
41,120
|
|
|
$
|
341,120
|
|
|
President
|
|
2015
|
|
$
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
38,872
|
|
|
$
|
338,872
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
Richard T. Allorto, Jr.
|
|
2016
|
|
$
|
300,000
|
|
|
—
|
|
|
$
|
293,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
43,824
|
|
|
$
|
636,824
|
|
Chief Financial Officer
|
|
2015
|
|
$
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
41,715
|
|
|
$
|
341,715
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
||||||||||||
John D. Fredericks
|
|
2016
|
|
$
|
300,000
|
|
|
—
|
|
|
$
|
293,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
44,842
|
|
|
$
|
637,842
|
|
General Counsel and Secretary
|
|
2015
|
|
$
|
300,000
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
$
|
43,114
|
|
|
$
|
343,114
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1)
|
Amounts reported under Salary include guaranteed cash distributions made on membership interests in Medley LLC owned directly or indirectly by the Company's named executive officers. During the years ended December 31, 2016 and 2015, neither of Messrs. Brook and Seth Taube received any guaranteed payments.
|
(2)
|
Amounts reported under Stock Awards consist of RSUs granted in March 2016 for services rendered in 2015. The RSUs are included at their grant date fair market value which was computed in accordance with FASB ASC Topic 718. Subsequently, in February 2017, these RSU grants were canceled and in return the holders thereof were granted 50,000 LLC Units under the Incentive Plan, which had the equivalent grant date fair market value.
|
(3)
|
Amounts reported under All Other Compensation include Company-paid executive health insurance, Company matching 401(k) contributions, Company-paid life insurance premiums, Company-reimbursed commuting expenses and Company-paid professional dues.
|
|
Option awards
|
|
Stock awards
(1)
|
||||||||||||||||||||||||
Name
|
Number of securities underlying unexercised options (#) exercisable
|
|
Number of securities underlying unexercised options (#) unexercisable
|
|
Equity incentive plan awards: number of securities underlying unexercised unearned options (#)
|
|
Option exercise price ($)
|
|
Option exercise date
|
|
Number of shares or units of stock that have not vested (#)
|
|
Market value of shares or units of stock that have not vested ($)
|
|
Equity incentive plan awards: number of unearned shares, units or other rights that have not vested (#)
|
|
Equity incentive plan awards: market payout value of unearned shares, units or other rights that have not vested ($)
|
||||||||||
Brook Taube
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Seth Taube
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Jeffrey Tonkel
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
Richard T. Allorto, Jr.
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
$
|
495,000
|
|
|
—
|
|
|
—
|
|
John D. Fredericks
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
—
|
|
|
50,000
|
|
|
$
|
495,000
|
|
|
—
|
|
|
—
|
|
(1)
|
Stock awards consist of RSUs granted on March 17, 2016. The RSUs vest in three equal annual installments on each of the third, fourth and fifth anniversaries of the grant date, subject to the executive's continued employment on the applicable vesting date. The market value of the RSUs was computed using Medley Management Inc.'s closing price of $9.90 per share as of December 30, 2016. Subsequent to December 31, 2016, these RSU grants were canceled and in return the holders thereof were granted 50,000 LLC Units under the Incentive Plan, which vest in three annual installments commencing March 16, 2019 and have the equivalent market value.
|
•
|
An annual cash retainer in the amount of $35,000, payable in quarterly installments;
|
•
|
restricted stock units (“RSUs”) having a fair market value on the date of grant of $35,000; provided, however, that each non-employee director has the option to elect to receive 100% of his annual compensation in RSUs, having a fair market value on the date of grant of $70,000 and subject to vesting terms as set forth in the applicable award agreement; and
|
•
|
as to the chairperson of the Audit Committee, an additional annual RSU award having a fair market value on the date of grant of $15,000.
|
Name
|
|
Fees Earned or Paid in
Cash ($)
(1)
|
|
Stock
Awards ($)
(2)
|
|
All Other Compensation ($)
|
|
Total ($)
|
|
Total Number of Outstanding Unvested Equity Awards (#)
(3)
|
||||||||
Jeffrey T. Leeds
|
|
—
|
|
|
$
|
70,000
|
|
|
—
|
|
|
$
|
70,000
|
|
|
8,578
|
|
|
Guy Rounsaville, Jr.
|
|
$
|
35,000
|
|
|
$
|
35,000
|
|
|
—
|
|
|
$
|
70,000
|
|
|
4,289
|
|
Philip K. Ryan
(4)
|
|
—
|
|
|
$
|
85,000
|
|
|
—
|
|
|
$
|
85,000
|
|
|
10,416
|
|
(1)
|
Represents the annual cash retainer earned for services rendered in
2016
.
|
(2)
|
Represents the aggregate grant date fair value of the RSU awards computed in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) Topic 718.
|
(3)
|
Represents the aggregate number of unvested RSUs held by each non-employee director as of the fiscal year end.
|
(4)
|
Mr. Ryan resigned from our Board effective March 17, 2017.
|
|
Number of securities to be issued upon exercise of outstanding
|
Weighted-average exercise price of outstanding options, warrants and rights
(2)
|
Number of securities remaining available for future issuance
|
|||
Equity compensation plans approved by stockholders
(1)
|
1,652,483
|
|
—
|
|
2,805,467
|
|
Equity compensation plans not approved by stockholders
|
—
|
|
—
|
|
—
|
|
•
|
the timing of exchanges
— for instance, the increase in any tax deductions will vary depending on the fair market value, which may fluctuate over time, of the depreciable or amortizable assets of Medley LLC at the time of each exchange;
|
•
|
the price of shares of the Company's Class A common stock at the time of the exchange
— the increase in any tax deductions, as well as the tax basis increase in other assets, of Medley LLC, is directly proportional to the price of shares of Medley Management Inc.'s Class A common stock at the time of the exchange;
|
•
|
|
•
|
the extent to which such exchanges are taxable
— if an exchange is not taxable for any reason, increased deductions will not be available; and
|
•
|
the amount and timing of our income
— Medley Management Inc. will be required to pay 85% of the cash tax savings as and when realized, if any. If Medley Management Inc. does not have taxable income, Medley Management Inc. is not required (absent circumstances requiring an early termination payment) to make payments under the tax receivable agreement for that taxable year because no cash tax savings will have been realized. However, any cash tax savings that do not result in realized benefits in a given tax year will likely generate tax attributes that may be utilized to generate benefits in previous or future tax years. The utilization of such tax attributes will result in payments under the tax receivables agreement.
|
•
|
we will record an increase in deferred tax assets for the estimated income tax effects of the increases in tax basis based on enacted federal and state tax rates at the date of the exchange;
|
•
|
to the extent we estimate that we will not realize the full benefit represented by the deferred tax asset, based on an analysis that will consider, among other things, our expectation of future earnings, we will reduce the deferred tax asset with a valuation allowance; and
|
•
|
we will record 85% of the estimated realizable tax benefit (which is the recorded deferred tax asset less any recorded valuation allowance) as an increase to the liability due under the tax receivable agreement and the remaining 15% of the estimated realizable tax benefit as an increase to additional paid-in capital.
|
|
|
2016
|
|
2015
|
||||
Audit fees
(1)
|
|
$
|
668,141
|
|
|
$
|
470,000
|
|
Audit-related fees
(2)
|
|
177,230
|
|
|
—
|
|
||
Tax fees
(3)
|
|
—
|
|
|
18,500
|
|
||
All other fees
(4)
|
|
—
|
|
|
—
|
|
||
Total
|
|
$
|
845,371
|
|
|
$
|
488,500
|
|
(1)
|
Amounts reported under Audit fees include professional services rendered for the audits of our annual financial statements and reviews of our quarterly financial statements.
For the year ended December 31, 2016, audit fees include fees relating to the audits of Medley Management Inc. and Medley LLC as the audit work was performed concurrently.
|
(2)
|
Amounts reported under Audit-related fees include reviews of registration statements filed with the SEC for Medley LLC in 2016.
|
(3)
|
Amounts reported under Tax fees include professional services rendered for tax return compliance, including review of partner capital accounts, and consultations related to technical interpretations, applicable laws and regulations and tax accounting.
|
(4)
|
All other fees encompasses any services provided by the independent registered public accounting firm other than services reported in the other above categories. There were no such fees in 2016 and 2015.
|
|
MEDLEY MANAGEMENT INC.
|
|
|
(Registrant)
|
|
|
|
|
Date: March 16, 2017
|
By:
|
/s/ Richard T. Allorto, Jr.
|
|
|
Richard T. Allorto Jr.
|
|
|
Chief Financial Officer
|
|
|
(Principal Financial Officer and Authorized Signatory)
|
Signature
|
|
Title
|
|
|
|
/s/ Brook Taube
|
|
Co-Chief Executive Officer, Chief Investment Officer and Co-Chairman
|
Brook Taube
|
|
(Co-Principal Executive Officer)
|
|
|
|
/s/ Seth Taube
|
|
Co-Chief Executive Officer and Co-Chairman
|
Seth Taube
|
|
(Co-Principal Executive Officer)
|
|
|
|
/s/ Richard T. Allorto, Jr.
|
|
Chief Financial Officer
|
Richard T. Allorto, Jr.
|
|
(Principal Financial Officer and Principal Accounting
|
|
|
Officer)
|
|
|
|
/s/ Jeffrey Tonkel
|
|
President and Director
|
Jeffrey Tonkel
|
|
|
|
|
|
/s/ Jeffrey T. Leeds
|
|
Director
|
Jeffrey T. Leeds
|
|
|
|
|
|
/s/ Guy Rounsaville, Jr.
|
|
Director
|
Guy Rounsaville, Jr.
|
|
|
|
|
|
/s/ Philip K. Ryan
|
|
Director
|
Philip K. Ryan
|
|
|
10.8
†
|
|
Medley Management Inc. 2014 Omnibus Incentive Plan (incorporated by reference to Exhibit 10.5 to the Registrant’s Current Report on Form 8-K (File No. 001-36638) filed on September 29, 2014).
|
|
|
|
10.9
†
|
|
Form of Employee Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.5.2 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-198212) filed on September 3, 2014).
|
|
|
|
10.10
†
|
|
Form of Director Restricted Stock Unit Award Agreement (incorporated by reference to Exhibit 10.5.3 to the Registrant’s Registration Statement on Form S-1/A (File No. 333-198212) filed on September 3, 2014).
|
|
|
|
10.11
†
|
|
Medley LLC Unit Award Agreement to Jeffrey Tonkel, dated as of January 7, 2013 (incorporated by reference to Exhibit 10.6 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198212) filed on August 18, 2014).
|
|
|
|
10.12
†
|
|
Amendment to Medley LLC Unit Award Agreement to Jeffrey Tonkel, dated as of May 29, 2014 (incorporated by reference to Exhibit 10.7 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198212) filed on August 18, 2014).
|
|
|
|
10.13
†
|
|
Medley LLC Unit Award Agreement to Richard Allorto, dated as of January 7, 2013 (incorporated by reference to Exhibit 10.8 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198212) filed on August 18, 2014).
|
|
|
|
10.14
†
|
|
Amendment to Medley LLC Unit Award Agreement to Richard Allorto, dated as of May 29, 2014 (incorporated by reference to Exhibit 10.9 to the Registrant’s Registration Statement on Form S-1 (File No. 333-198212) filed on August 18, 2014).
|
|
|
|
10.15†
|
|
Second Amendment to Award Agreement of Jeffrey Tonkel, dated September 23, 2014 (incorporated by reference to Exhibit 10.1 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.16†
|
|
Second Amendment to Award Agreement of Richard T. Allorto, Jr., dated September 23, 2014 (incorporated by reference to Exhibit 10.2 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.17†
|
|
Award Agreement of John D. Fredericks, dated June 1, 2013 (incorporated by reference to Exhibit 10.3 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.18†
|
|
Amendment to Award Agreement of John D. Fredericks, dated May 29, 2014 (incorporated by reference to Exhibit 10.4 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.19†
|
|
Second Amendment to Award Agreement of Richard T. Allorto, Jr., dated September 23, 2014 (incorporated by reference to Exhibit 10.5 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.20†
|
|
Form of Restrictive Covenant Agreement (incorporated by reference to Exhibit 10.6 to the Registrant's Quarterly Report on Form 10-Q (File Np. 001-36638) filed on May 14, 2015).
|
|
|
|
10.21†
|
|
Letter Agreement, dated October 27, 2010, with Messrs. Brook and Seth Taube (incorporated by reference to Exhibit 10.7 to the Registrant's Quarterly Report on Form 10-Q (File No. 001-36638) filed on May 14, 2015).
|
|
|
|
10.22†
|
|
Form of Letter Agreement, dated March 17, 2016, entered into with John D. Fredericks and Richard T. Allorto, Jr. (incorporated by reference to Exhibit 10.1 to the Registrant’s quarterly report on Form 10-Q for the quarter ended March 31, 2016, filed on May 12, 2016).
|
|
|
|
10.23
|
|
Master Investment Agreement, dated as of June 3, 2016, among Medley LLC, Medley Seed Funding I LLC, Medley Seed Funding II LLC, Medley Seed Funding III LLC, DB MED Investor I LLC and DB MED Investor II LLC (incorporated by reference to Exhibit 10.11 to Medley LLC’s Amendment No. 1 to Form S-1 (File No. 333-212514) filed on July 28, 2016).
|
|
|
|
10.24
|
|
First Amendment dated as of May 3, 2016 to the Credit Agreement, dated as of August 14, 2014, among Medley LLC, the lenders party thereto and Credit Suisse AG, Cayman Islands Branch (incorporated by reference to Exhibit 10.2 to the Registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2016, filed on August 11, 2016).
|
|
|
|
10.25
|
|
Amendment Number One and Consent dated as of August 12, 2015 to the Credit Agreement, dated as of August 19, 2014, among Medley LLC, the lenders party thereto and City National Bank (incorporated by reference to Exhibit 10.3 to the Registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2016, filed on August 11, 2016).
|
|
|
|
10.26
|
|
Amendment Number Two dated as of May 3, 2016 to the Credit Agreement, dated as of August 19, 2014, among Medley LLC, the lenders party thereto and City National Bank. (incorporated by reference to Exhibit 10.4 to the Registrant’s quarterly report on Form 10-Q for the quarter ended June 30, 2016, filed on August 11, 2016).
|
|
|
|
21.1*
|
|
Subsidiaries of Medley Management Inc.
|
|
|
|
23.1*
|
|
Consent of RSM US LLP
|
|
|
|
31.1*
|
|
Certification by Co-Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.2*
|
|
Certification by Co-Chief Executive Officer under Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
31.3*
|
|
Certification by Chief Financial Officer under Section 302 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.1*
|
|
Certification of Co-Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.2*
|
|
Certification of Co-Chief Executive Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
32.3*
|
|
Certification of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350 as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
|
|
|
|
101.INS*
|
|
XBRL Instance Document
|
|
|
|
101.SCH*
|
|
XBRL Taxonomy Extension Schema Document
|
|
|
|
101.CAL*
|
|
XBRL Taxonomy Extension Calculation Linkbase Document
|
|
|
|
101.DEF*
|
|
XBRL Taxonomy Extension Definition Linkbase Document
|
|
|
|
101.LAB*
|
|
XBRL Taxonomy Extension Label Linkbase Document
|
|
|
|
101.PRE*
|
|
XBRL Taxonomy Extension Presentation Linkbase Document
|
1 Year Medley Management Chart |
1 Month Medley Management Chart |
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