0001611110-18-000004.txt : 20180329 0001611110-18-000004.hdr.sgml : 20180329 20180329060827 ACCESSION NUMBER: 0001611110-18-000004 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20180329 ITEM INFORMATION: Results of Operations and Financial Condition FILED AS OF DATE: 20180329 DATE AS OF CHANGE: 20180329 FILER: COMPANY DATA: COMPANY CONFORMED NAME: MEDLEY MANAGEMENT INC. CENTRAL INDEX KEY: 0001611110 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 000000000 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 8-K SEC ACT: 1934 Act SEC FILE NUMBER: 001-36638 FILM NUMBER: 18720467 BUSINESS ADDRESS: STREET 1: 280 PARK AVENUE, 6TH FLOOR EAST CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 2127590777 MAIL ADDRESS: STREET 1: 280 PARK AVENUE, 6TH FLOOR EAST CITY: NEW YORK STATE: NY ZIP: 10017 8-K 1 a8kq42017.htm 8-K Document


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
_______________________________________ 

FORM 8-K 
_______________________________________
 
CURRENT REPORT
 
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
 
Date of Report (Date of Earliest Event Reported): March 29, 2018
 
Medley Management Inc.
(Exact name of registrant as specified in its charter)
 
Delaware
 
001-36638
 
47-1130638
(State or other jurisdiction of
 
(Commission File Number)
 
(IRS Employer
incorporation)
 
 
 
Identification No.)
 
280 Park Avenue, 6th Floor East, New York, NY 10017
(Address of principal executive offices) (Zip Code)
 
(212) 759-0777
(Registrant’s telephone number, including area code)
 
Not Applicable
(Former name or former address, if changed since last report)
 
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
 
☐
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
 
 
☐
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
 
 
☐
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
 
 
☐
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))
 
Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (17 CFR §230.405) or Rule 12b-2 of the Securities Exchange Act of 1934 (17 CFR §240.12b-2).

Emerging growth company ý

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ý






Item 2.02
Results of Operations and Financial Condition.
On March 29, 2018, Medley Management Inc. (the “Company”) issued a press release announcing its financial results for its fiscal fourth quarter and year ended December 31, 2017. The press release is furnished as Exhibit 99.1 to this Report.
As provided in General Instruction B.2 of Form 8-K, the information in this Item 2.02 and the exhibit attached hereto shall not be deemed to be “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall they be deemed to be incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.
Item 9.01
Financial Statements and Exhibits.
(d) Exhibits.
 
 
Exhibit No.
Description
 
 
 
 
 




SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
 
MEDLEY MANAGEMENT INC.
 
 
 
 
By:  
/s/ Richard T. Allorto, Jr.
 
 
 
Name:  
Richard T. Allorto, Jr.
 
 
 
Title:  
Chief Financial Officer
 
 
Date: March 29, 2018
 



 EX-99.1 2 mdlypressrelease-q42017.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1 
MEDLEY MANAGEMENT INC. REPORTS FOURTH QUARTER AND FULL YEAR 2017 RESULTS  

NEW YORK, March 29, 2018 (GLOBE NEWSWIRE) -- Medley Management Inc. (NYSE: MDLY) today reported its financial results for its fourth quarter and year ended December 31, 2017.
Highlights 
•
Fee earning assets under management were $3.2 billion as of December 31, 2017
•
Total assets under management were $5.2 billion as of December 31, 2017
•
U.S. GAAP net income (loss) per share attributable to Medley Management Inc. was $(0.11) for Q4 2017 and $0.07 for the year ended December 31, 2017
•
Core Net Income Per Share was $0.05 for Q4 2017 and $0.33 for the year ended December 31, 2017

Results of Operations for the Three Months Ended December 31, 2017
Total revenues were $18.5 million for the three months ended December 31, 2017 compared to $18.3 million for the same period in 2016.
Total expenses from operations were $13.6 million for the three months ended December 31, 2017 compared to $9.2 million for the same period in 2016. The increase was due primarily to an increase in compensation and benefits, professional fees and expenses of our consolidated fund.
Total other expense, net was $1.8 million for the three months ended December 31, 2017 compared to $1.6 million for the same period in 2016. The increase was due primarily to a decrease in equity income from our investments due to unrealized losses, partly offset by an increase in dividend income.
Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $0.6 million for the three months ended December 31, 2017 compared to $5.3 million for the same period in 2016. Medley Management Inc.’s net loss per share was $0.11 for the three months ended December 31, 2017 compared to net income per share of $0.07 for the same period in 2016.
Pre-Tax Core Net Income was $2.5 million for the three months ended December 31, 2017 compared to $7.4 million for the same period in 2016. Core Net Income Per Share was $0.05 for the three months ended December 31, 2017, compared to $0.14 for the same period in 2016. Core EBITDA was $5.5 million for the three months ended December 31, 2017 compared to $9.8 million for the same period in 2016.
Results of Operations for the Year Ended December 31, 2017
Total revenues were $65.6 million for the year ended December 31, 2017 compared to $76.0 million in 2016. The decrease was due primarily to a decrease in performance and incentive fees, partly offset by an increase in other revenue and fees.
Total expenses from operations were $39.6 million for the year ended December 31, 2017 compared to $56.0 million in 2016. The decrease was due primarily to a reduction in expenses associated with our expense support agreement with SIC and a reduction in compensation and benefits expense, partly offset by an increase in general and administrative expenses.
Total other expense, net was $6.7 million for the year ended December 31, 2017 compared to $9.0 million in 2016. The decrease was due primarily to a decrease in expense associated with our revenue share payable and an increase in dividend income, partly offset by an increase in interest expense.
Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $10.6 million for the year ended December 31, 2017 compared to $7.4 million in 2016. Medley Management Inc.’s net income per share was $0.07 for the year ended December 31, 2017 compared to net income per share of $0.02 in 2016.
Pre-Tax Core Net Income was $17.6 million for the year ended December 31, 2017 compared to $29.0 million in 2016. Core Net Income Per Share was $0.33 for the year ended December 31, 2017, compared to $0.54 in 2016. Core EBITDA was $29.2 million for the year ended December 31, 2017 compared to $38.5 million in 2016.








Investor Contact:

Sam Anderson
Head of Capital Markets & Risk Management
Medley Management Inc.
212-759-0777

Media Contact:

Erin Clark
Teneo Strategy
646-214-8355








Key Performance Indicators:
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in thousands, except AUM, share and per share amounts)
Consolidated Financial Data:
 

 
 

 
 

 
 

Pre-Tax Income
$
3,077

 
$
7,472

 
$
19,265

 
$
11,015

Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
$
605

 
$
5,257

 
$
10,591

 
$
7,403

Net income (loss) per Class A common stock
$
(0.11
)
 
$
0.07

 
$
0.07

 
$
0.02

Net Income Margin (1)
3.3
%
 
28.8
%
 
16.2
%
 
9.7
%
Weighted average shares - Basic and Diluted
5,478,910

 
5,809,130

 
5,553,026

 
5,804,042

 
 
 
 
 
 
 
 
Non-GAAP Data:
 
 
 

 
 
 
 

Pre-Tax Core Net Income (2)
$
2,543

 
$
7,376

 
$
17,609

 
$
28,954

Core Net Income (2)
$
1,918

 
$
6,451

 
$
15,090

 
$
25,531

Core EBITDA (3)
$
5,488

 
$
9,843

 
$
29,226

 
$
38,481

Core Net Income Per Share (4)
$
0.05

 
$
0.14

 
$
0.33

 
$
0.54

Core Net Income Margin (5)
7.9
%
 
23.0
%
 
15.5
%
 
21.7
%
Pro-Forma Weighted Average Shares Outstanding (6)
30,640,996

 
30,800,512

 
30,851,882

 
30,689,412

 
 
 
 
 
 
 
 
Other Data (at period end, in millions):
 
 
 

 
 
 
 

AUM
$
5,198

 
$
5,335

 
$
5,198

 
$
5,335

Fee Earning AUM
$
3,158

 
$
3,190

 
$
3,158

 
$
3,190

(1) 
Net Income Margin equals Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC divided by total revenue.
(2) 
Pre-Tax Core Net Income is calculated as Core Net Income before income taxes. Core Net Income reflects net income attributable to Medley Management Inc. and net income attributable to non-controlling interests in Medley LLC adjusted to exclude reimbursable expenses associated with the launch of funds, stock-based compensation associated with restricted stock units that were granted in connection with our IPO, other non-core items and the income tax expense associated with the foregoing adjustments. Please refer to the reconciliation of Core Net Income to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit C for additional details.
(3) 
Core EBITDA is calculated as Core Net Income before interest expense, income taxes, depreciation and amortization. Please refer to the reconciliation of Core EBITDA to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit C for additional details.
(4) 
Core Net Income Per Share is calculated as Core Net Income, adjusted for the income tax effect of assuming that all of our pre-tax earnings were subject to federal, state and local corporate income taxes, divided by Pro-Forma Weighted Average Shares Outstanding (as defined below). We assumed an effective corporate tax rate of 43.0% for all periods presented. Please refer to the calculation of Core Net Income Per Share in Exhibit D for additional details.
(5) 
Core Net Income Margin equals Core Net Income Per Share divided by total revenue per share.
(6) 
The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of 23,333,333 Medley LLC units for 23,333,333 shares of Class A common stock at the beginning of each period presented, as well as the vesting of the weighted average number of restricted stock units and, in 2017, the conversion of 320,000 restricted LLC units for an equal number of shares of Class A common stock.








Fee Earning AUM
The table below presents the quarter-to-date roll forward of our total fee earning AUM:
 
 
 
 
 
 
 
% 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)
 
 
 
 
Ending balance, September 30, 2017
$
2,191

 
$
1,050

 
$
3,241

 
68
%
 
32
%
Commitments
(39
)
 
78

 
39

 
 

 
 

Capital reduction
—

 
—

 
—

 
 

 
 

Distributions
(24
)
 
(30
)
 
(54
)
 
 

 
 

Change in fund value
(38
)
 
(30
)
 
(68
)
 
 

 
 

Ending balance, December 31, 2017
$
2,090

 
$
1,068

 
$
3,158

 
66
%
 
34
%
Total fee earning AUM decreased by $83 million, or 3% as of December 31, 2017 compared to total fee earning AUM as of September 30, 2017. The permanent capital vehicles’ share of fee earning AUM decreased to 66% as of December 31, 2017 compared to September 30, 2017.
The table below presents the year-to-date roll forward of our total fee earning AUM:
 
 
 
 
 
 
 
% 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)
 
 
 
 
Ending balance, December 31, 2016
$
2,207

 
$
983

 
$
3,190

 
69
%
 
31
%
Commitments
22

 
308

 
330

 
 

 
 

Capital reduction
—

 
—

 
—

 
 

 
 

Distributions
(100
)
 
(178
)
 
(278
)
 
 

 
 

Change in fund value
(39
)
 
(45
)
 
(84
)
 
 

 
 

Ending balance, December 31, 2017
$
2,090

 
$
1,068

 
$
3,158

 
66
%
 
34
%
Total fee earning AUM decreased by $32 million, or 1% as of December 31, 2017 compared to total fee earning AUM as of December 31, 2016. The permanent capital vehicles’ share of fee earning AUM decreased to 66% as of December 31, 2017 compared to December 31, 2016.
Conference Call and Webcast Information
We will host an earnings conference call and audio webcast at 10:00 a.m. (Eastern Time) on Thursday, March 29, 2018 to discuss our fourth quarter and year end financial results.
All interested parties may participate in the conference call by dialing (877) 524-5743 approximately 5-10 minutes prior to the call. International callers should dial (615) 247-0088. Participants should reference Medley Management Inc. and the conference ID of 8778928 when prompted. Following the call you may access a replay of the event via audio webcast. This conference call will be broadcast live over the Internet and can be accessed by all interested parties through the Company's website, http://www.mdly.com. To listen to the live call, please go to the Company's website at least 15 minutes prior to the start of the call to register and download any necessary audio software. For those who are not able to listen to the live broadcast, a replay will be available shortly after the call on the Company’s website. 
About Medley 
Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise, with over 85 people, is a premier provider of capital to the middle market in the U.S. Medley has over $5 billion of assets under management in two business development companies, Medley Capital Corporation (NYSE:MCC) (TASE:MCC) and Sierra Income Corporation, a credit interval fund, Sierra Total Return Fund (NASDAQ:SRNTX) and several




private investment vehicles. Over the past 15 years, Medley has provided capital to over 400 companies across 35 industries in North America.(1) 
Medley LLC, the operating company of Medley Management Inc., has outstanding bonds which trade on the NYSE under the symbols (NYSE:MDLX) and (NYSE:MDLQ). Medley Capital Corporation is dual-listed on the New York Stock Exchange (NYSE:MCC) and the Tel Aviv Stock Exchange (TASE: MCC) and has outstanding bonds which trade on both the New York Stock Exchange under the symbols (NYSE:MCV), (NYSE:MCX) and the Tel Aviv Stock Exchange under the symbol (TASE: MCC.B1).
Forward-Looking Statements 
Statements included herein may contain "forward-looking statements." Statements other than statements of historical facts included in this press release may constitute forward-looking statements and are not guarantees of future performance or results and involve a number of assumptions, risks and uncertainties, which change over time. Actual results may differ materially from those anticipated in any forward-looking statements as a result of a number of factors, including those described from time to time in filings by the Company with the Securities and Exchange Commission, including those described in the section “Risk Factors” in the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2017. Except as required by law, the Company undertakes no duty to update any forward-looking statement made herein. All forward-looking statements made herein speak only as of the date of this press release.
Non-GAAP Financial Measures
We make reference to certain non-GAAP financial measures in this press release. A reconciliation of these non-GAAP financial measures to the most directly comparable financial measures calculated and presented in accordance with U.S. GAAP is contained in the tables attached hereto. 
Non-GAAP measures used by management include Pre-Tax Core Net Income, Core Net Income, Core EBITDA, Core Net Income Per Share and Core Net Income Margin. Management believes that these measures provide analysts, investors and management with helpful information regarding our underlying operating performance and our business, as they remove the impact of items management believes are not reflective of underlying operating performance. These non-GAAP measures are also used by management for planning purposes, including the preparation of internal budgets; and for evaluating the effectiveness of operational strategies. Additionally, we believe these non-GAAP measures provide another tool for investors to use in comparing our results with other companies in our industry, many of whom use similar non-GAAP measures. There are limitations associated with the use of non-GAAP financial measures as compared to the use of the most directly comparable U.S. GAAP financial measure and these measures supplement and should be considered in addition to and not in lieu of the results of operations discussed below. Furthermore, such measures may be inconsistent with measures presented by other companies. 
This press release does not constitute an offer for any Medley fund. 
Available Information
Medley Management Inc.’s filings with the Securities and Exchange Commission, press releases, earnings releases and other financial information are available at www.mdly.com.










(1) Medley Management Inc. is the parent company of Medley LLC and several registered investment advisors (collectively, "Medley”). Assets under management refers to assets of our funds, which represents the sum of the net asset value 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). Assets under management are as of December 31, 2017.




Exhibit A. Consolidated Statements of Operations of Medley Management Inc.
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
 (Amounts in thousands, except share and per share data)
Revenues
 

 
 

 
 
 
 

Management fees (includes Part I incentive fees of $2,936, $2,262, $4,874 and $14,209, respectively)
$
16,170

 
$
15,276

 
$
58,104

 
$
65,496

Performance fees
102

 
715

 
(1,744
)
 
2,421

Other revenues and fees
2,197

 
2,260

 
9,201

 
8,111

Total Revenues
18,469

 
18,251

 
65,561

 
76,028

 
 
 
 
 
 
 
 
Expenses
 

 
 

 
 

 
 

Compensation and benefits
9,551

 
6,404

 
27,432

 
27,800

Performance fee compensation
(29
)
 
(81
)
 
(874
)
 
(319
)
General, administrative and other expenses
4,113

 
2,861

 
13,045

 
28,540

Total Expenses
13,635

 
9,184

 
39,603

 
56,021

 
 
 
 
 
 
 
 
Other Income (Expense)
 

 
 

 
 

 
 

Dividend income
1,431

 
549

 
4,327

 
1,304

Interest expense
(2,724
)
 
(2,633
)
 
(11,855
)
 
(9,226
)
Other income (expenses), net
(464
)
 
489

 
835

 
(1,070
)
Total Other Expense, Net
(1,757
)
 
(1,595
)
 
(6,693
)
 
(8,992
)
Income before income taxes
3,077

 
7,472

 
19,265

 
11,015

Provision for income taxes
463

 
772

 
1,956

 
1,063

Net Income
2,614

 
6,700

 
17,309

 
9,952

Net income attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
2,009

 
1,443

 
6,718

 
2,549

Net income attributable to non-controlling interests in Medley LLC
1,107

 
4,632

 
9,664

 
6,406

Net Income (Loss) Attributable to Medley Management Inc.
$
(502
)
 
$
625

 
$
927

 
$
997

 
 
 
 
 
 
 
 
Net Income (Loss) Per Share of Class A Common Stock:
 
 
 

 
 

 
 

Basic
$
(0.11
)
 
$
0.07

 
$
0.07

 
$
0.02

Diluted
$
(0.11
)
 
$
0.07

 
$
0.07

 
$
0.02

Weighted average shares outstanding - Basic and Diluted
5,478,910

 
5,809,130

 
5,553,026

 
5,804,042












Exhibit B. Consolidated Statements of Comprehensive Income 
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in thousands)
Net Income
$
2,614

 
$
6,700

 
$
17,309

 
$
9,952

Other Comprehensive Income:
 

 
 

 
 

 
 

Change in fair value of available-for-sale securities (net of income tax benefit of $0.4 million and $0.9 million for Medley Management Inc. for the three months and year ended December 31, 2017, respectively, and $0.2 million and $0.3 million for Non-controlling interests in Medley LLC for the three months and year ended December 31, 2017, respectively)
(5,225
)
 
(74
)
 
(10,305
)
 
194

Total Comprehensive Income (Loss)
(2,611
)
 
6,626

 
7,004

 
10,146

Comprehensive income attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
2,009

 
1,440

 
6,690

 
2,577

Comprehensive income (loss) attributable to non-controlling interests in Medley LLC
(3,441
)
 
4,575

 
721

 
6,539

Comprehensive (Loss) Income Attributable to Medley Management Inc.
$
(1,179
)
 
$
611

 
$
(407
)
 
$
1,030







Exhibit C. Reconciliation of Core Net Income and Core EBITDA to Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
(Amounts in thousands)
Net income attributable to Medley Management Inc.
$
(502
)
 
$
625

 
$
927

 
$
997

Net income attributable to non-controlling interests in Medley LLC
1,107

 
4,632

 
9,664

 
6,406

Net income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
$
605

 
$
5,257

 
$
10,591

 
$
7,403

Reimbursable fund startup expenses
664

 
(62
)
 
1,510

 
16,329

IPO date award stock-based compensation
272

 
793

 
461

 
2,811

Other non-core items:
 
 
 
 
 
 
 
Severance expense
—

 
215

 
1,184

 
218

Acceleration of debt issuance costs (1)
—

 
401

 
1,150

 
612

Other (2)
539

 
—

 
757

 
518

Income tax expense on adjustments
(162
)
 
(153
)
 
(563
)
 
(2,360
)
Core Net Income
$
1,918

 
$
6,451

 
$
15,090

 
$
25,531

Interest expense
2,723

 
2,232

 
10,705

 
8,614

Income taxes
625

 
925

 
2,519

 
3,423

Depreciation and amortization
222

 
235

 
912

 
913

Core EBITDA
$
5,488

 
$
9,843

 
$
29,226

 
$
38,481

(1) 
Amounts relate to additional interest expense associated with the 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.
(2) 
For the three months ended December 31, 2017, other non-core items consist of $0.5 million of expenses related to non-core business development activities. For the year ended December 31, 2017, other items consist of an additional $0.2 million of expenses related to non-core business development activities and other expenses. For the year ended December 31, 2016, other non-core items consists of a $0.5 million impairment loss on our investment in CK Pearl Fund.





Exhibit D. Calculation of Core Net Income Per Share
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
  
2017
 
2016
 
2017
 
2016
  
(Amounts in thousands, except share and per share amounts)
Numerator
 
 
  

 
  

 
  

Core Net Income
$
1,918

 
$
6,451

 
$
15,090

 
$
25,531

Add: Income taxes
625

 
925

 
2,519

 
3,423

Pre-Tax Core Net Income
$
2,543

 
$
7,376

 
$
17,609

 
$
28,954

 
 
 
 
 
 
 
 
Denominator
  

 
  

 
  

 
  

Class A common stock
5,478,910

 
5,809,130

 
5,553,026

 
5,804,042

Conversion of LLC Units and restricted LLC Units to Class A common stock
23,653,333

 
23,333,333

 
23,607,744

 
23,333,333

Restricted Stock Units
1,508,753

 
1,658,049

 
1,691,112

 
1,552,037

Pro-Forma Weighted Average Shares Outstanding (1)
30,640,996

 
30,800,512

 
30,851,882

 
30,689,412

Pre-Tax Core Net Income Per Share
$
0.08

 
$
0.24

 
$
0.57

 
$
0.94

Less: corporate income taxes per share (2)
(0.03
)
 
(0.10
)
 
(0.25
)
 
(0.40
)
Core Net Income Per Share
$
0.05

 
$
0.14

 
$
0.33

 
$
0.54

(1) 
The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of 23,333,333 Medley LLC units for 23,333,333 shares of Class A common stock at the beginning of each period presented, as well as the vesting of the weighted average number of restricted stock units and, in 2017, 320,000 restricted LLC units during each of the periods presented and conversion of such restricted LLC units for an equal number of shares of Class A common stock.
(2) 
Represents a per share adjustment for income taxes assuming that all of our pre-tax earnings were subject to federal, state and local income taxes. We assumed an effective corporate tax rate of 43.0% for all periods presented.





Exhibit E. Reconciliation of Net Income Margin to Core Net Income Margin
 
For the Three Months Ended December 31,
(unaudited)
 
For the Years Ended December 31,
 
2017
 
2016
 
2017
 
2016
 
 
 
 
 
 
 
 
Net Income Margin
3.3
 %
 
28.8
 %
 
16.2
 %
 
9.7
 %
Reimbursable fund startup expenses (1)
3.6
 %
 
(0.3
)%
 
2.3
 %
 
21.5
 %
IPO date award stock-based compensation (1)
1.5
 %
 
4.3
 %
 
0.7
 %
 
3.7
 %
Other non-core items:(1)
 
 
 
 
 
 
 
Severance expense
—
 %
 
1.2
 %
 
1.8
 %
 
0.3
 %
Acceleration of debt issuance costs
—
 %
 
2.2
 %
 
1.8
 %
 
0.8
 %
Other

2.9
 %
 
—
 %
 
1.2
 %
 
0.7
 %
Provision for income taxes (1)
2.5
 %
 
4.2
 %
 
3.0
 %
 
1.4
 %
Corporate income taxes (2)
(5.9
)%
 
(17.4
)%
 
(11.5
)%
 
(16.4
)%
Core Net Income Margin
7.9
 %
 
23.0
 %
 
15.5
 %
 
21.7
 %
(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.
(2) 
Assumes that all of our pre-tax earnings, including adjustments above, are subject to federal, state and local 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.





Exhibit F. Consolidated Balance Sheets of Medley Management Inc.
 
As of December 31,
 
2017
 
2016
 
(Amounts in thousands)
Assets
 

 
 

Cash and cash equivalents
$
36,163

 
$
49,666

Cash and cash equivalents of consolidated fund
164

 
—

Restricted cash equivalents
—

 
4,897

Investments, at fair value
56,399

 
31,904

Management fees receivable
14,714

 
12,630

Performance fees receivable
3,220

 
4,961

Other assets
17,262

 
18,311

Total assets
$
127,922

 
$
122,369

 
 
 
 
Liabilities, Redeemable Non-controlling Interests and Equity
 
 
 
Liabilities
 

 
 

Senior unsecured debt
$
116,892

 
$
49,793

Loans payable
9,233

 
52,178

Accounts payable, accrued expenses and other liabilities
25,130

 
37,255

Total Liabilities
151,255

 
139,226

 
 
 
 
Redeemable Non-controlling Interests
53,741

 
30,805

 
 
 
 
Equity
 

 
 

Class A common stock
55

 
58

Class B common stock
—

 
—

Additional paid in capital
2,820

 
3,310

Accumulated other comprehensive income (loss)
(1,301
)
 
33

Accumulated deficit
(9,545
)
 
(5,254
)
Total stockholders' deficit, Medley Management Inc.
(7,971
)
 
(1,853
)
Non-controlling interests in consolidated subsidiaries
(1,702
)
 
(1,717
)
Non-controlling interests in Medley LLC
(67,401
)
 
(44,092
)
Total deficit
(77,074
)
 
(47,662
)
Total Liabilities, Redeemable Non-controlling Interests and Equity
$
127,922

 
$
122,369