0001611110-19-000047.txt : 20191114 0001611110-19-000047.hdr.sgml : 20191114 20191114162124 ACCESSION NUMBER: 0001611110-19-000047 CONFORMED SUBMISSION TYPE: 8-K PUBLIC DOCUMENT COUNT: 2 CONFORMED PERIOD OF REPORT: 20191114 ITEM INFORMATION: Results of Operations and Financial Condition ITEM INFORMATION: Financial Statements and Exhibits FILED AS OF DATE: 20191114 DATE AS OF CHANGE: 20191114 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: 191220564 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 a8kq32019.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): November 14, 2019
 
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 November 14, 2019, Medley Management Inc. (the “Company”) issued a press release announcing its financial results for its third quarter ended September 30, 2019. 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
 
 
99.1

 
 
 




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: November 14, 2019
 



 EX-99.1 2 mdlypressrelease-q32019.htm EXHIBIT 99.1 Exhibit


Exhibit 99.1 
MEDLEY MANAGEMENT INC. REPORTS THIRD QUARTER 2019 RESULTS 

NEW YORK, November 14, 2019 (GLOBE NEWSWIRE) -- Medley Management Inc. (NYSE: MDLY) today reported its financial results for its third quarter ended September 30, 2019.
Highlights 
•
Fee earning assets under management were $2.3 billion as of September 30, 2019
•
Total assets under management were $4.3 billion as of September 30, 2019
•
Total revenues were $11.5 million for the three months ended September 30, 2019 and $38.2 million for the nine months ended September 30, 2019
•
U.S. GAAP net loss per share attributable to Medley Management Inc. was $0.09 for Q3 2019
•
Core Net Loss Per Share was $0.02 for Q3 2019
•
The board of directors did not declare a dividend for this quarter

Results of Operations for the Three Months Ended September 30, 2019
Total revenues were $11.5 million for the three months ended September 30, 2019 compared to $14.4 million for the same period in 2018. The decrease was due primarily to lower base management fees from our permanent capital vehicles as a result of a decrease in fee earning assets under management, which was mainly driven by a reduction in leverage and decline in portfolio valuations.
Total expenses from operations were $12.5 million for each of the three months ended September 30, 2019 and 2018. Compensation and benefits increased by $0.8 million to $7.1 million for the three months ended September 30, 2019 as compared to the same period in 2018. This increase was offset by a decrease in professional fees and employee recruiting related expenses. Included in total expenses are costs associated with our pending merger of $2.1 million for each of the three months ended September 30, 2019 and 2018.
Total other income (expenses), net were $(0.9) million for the three months ended September 30, 2019 compared to $1.0 million for the same period in 2018. This unfavorable variance was due primarily to a $1.9 million unrealized gain on our investment in shares of MCC during the three months ended September 30, 2019 as compared to a $2.7 million unrealized gain recorded during the same period in 2018, as well as, an $0.8 million reduction in dividend income from our investment in shares of MCC during the three months ended September 30, 2019 as compared to the same period in 2018. Such unrealized gains were allocated to redeemable non-controlling interests in consolidated subsidiaries which did not have any impact on the income attributed to Medley Management Inc. and non-controlling interests in Medley LLC.
Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $3.3 million for the three months ended September 30, 2019 compared to a net loss $1.4 million for the same period in 2018. Medley Management Inc.’s net loss per share was $0.09 for the three months ended September 30, 2019 compared to net loss per share of $0.15 for the same period in 2018.
Pre-Tax Core Net Loss was $0.9 million for the three months ended September 30, 2019 compared to Pre-Tax Core Net Income of $2.7 million for the same period in 2018. Core Net Loss Per Share was $0.02 for the three months ended September 30, 2019, compared to Core Net Income Per Share of $0.06 for the same period in 2018. Core EBITDA was $2.1 million for the three months ended September 30, 2019 compared to $5.6 million for the same period in 2018.

Results of Operations for the Nine Months Ended September 30, 2019
Total revenues were $38.2 million for the nine months ended September 30, 2019 compared to $43.9 million for the same period in 2018. This decrease was due primarily to lower base management fees from our permanent capital vehicles as a result of a decrease in fee earning assets under management, which was mainly driven by a reduction in leverage and decline in portfolio valuations, offset in part by an increase in investment income.
Total expenses from operations were $34.8 million for the nine months ended September 30, 2019 compared to $37.0 million for the same period in 2018. This decrease was due primarily to a decrease in professional fees and expenses associated with our consolidated fund, STRF. Included in total expenses are costs associated with our pending merger of $3.5 million and $3.9 million for the nine months ended September 30, 2019 and 2018, respectively.
Total other income (expenses), net were $(8.3) million for the nine months ended September 30, 2019 compared to $(15.8) million for the same period in 2018. This favorable variance was due primarily to unrealized losses of $0.5 million from our




investment in shares of MCC compared to $10.9 million in the comparable period in 2018. All of the $0.5 million in unrealized losses during the nine months ended September 30, 2019 and $7.3 million of the $10.9 million in unrealized losses during the same period in 2018 were allocated to redeemable non-controlling interests in consolidated subsidiaries which did not have any impact on the income attributed to Medley Management Inc. and non-controlling interests in Medley LLC.
Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC was $4.8 million for the nine months ended September 30, 2019 compared to a net loss of $6.6 million for the same period in 2018. Medley Management Inc.’s net loss per share was $0.13 for the nine months ended September 30, 2019 compared to net loss per share of $0.49 for the same period in 2018.
Pre-Tax Core Net Income was $0.7 million for the nine months ended September 30, 2019 compared to Pre-Tax Core Net Income of $7.2 million for the same period in 2018. Core Net Income Per Share was $0.01 for the nine months ended September 30, 2019, compared to Core Net Income Per Share of $0.16 for the same period in 2018. Core EBITDA was $9.8 million for the nine months ended September 30, 2019 compared to $15.9 million for the same period in 2018.



Investor Contact:

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

Media Contact:

Jonathan Gasthalter/Nathaniel Garnick
Gasthalter & Co. LP
212-257-4170









Key Performance Indicators:
 
For the Three Months Ended September 30,
(unaudited)
 
For the Nine Months Ended September 30, (unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
(dollars in thousands, except AUM, share and per share amounts)
Consolidated Financial Data:
 

 
 

 
 

 
 

Pre-Tax (Loss) Income
$
(1,881
)
 
$
2,868

 
$
(4,989
)
 
$
(8,847
)
Net loss attributable to Medley Management Inc. and non-controlling interests in Medley LLC
$
(3,312
)
 
$
(1,448
)
 
$
(4,848
)
 
$
(6,570
)
Net loss per Class A common stock
$
(0.09
)
 
$
(0.15
)
 
$
(0.13
)
 
$
(0.49
)
Net Income Margin (1)
(28.7
)%
 
(10.1
)%
 
(12.7
)%
 
(15.0
)%
Weighted average shares - Basic and Diluted
5,899,328

 
5,591,123

 
5,834,489

 
5,539,804

 
 
 
 
 
 
 
 
Non-GAAP Data:
 
 
 

 
 
 
 

Pre-Tax Core Net (Loss) Income (2)
$
(926
)
 
$
2,684

 
$
656

 
$
7,212

Core Net (Loss) Income (2)
$
(987
)
 
$
1,889

 
$
378

 
$
5,163

Core EBITDA (3)
$
2,123

 
$
5,582

 
$
9,830

 
$
15,941

Core Net (Loss) Income Per Share (4)
$
(0.02
)
 
$
0.06

 
$
0.01

 
$
0.16

Core Net Income Margin (5)
(5.4
)%
 
12.5
 %
 
1.2
 %
 
11.0
 %
Pro-Forma Weighted Average Shares Outstanding (6)
34,507,579

 
32,174,946

 
33,339,090

 
31,539,125

 
 
 
 
 
 
 
 
Other Data (at period end, in millions):
 
 
 

 
 
 
 

AUM
$
4,271

 
$
4,796

 
$
4,271

 
$
4,796

Fee Earning AUM
$
2,320

 
$
2,891

 
$
2,320

 
$
2,891

(1) 
Net Income Margin equals Net income (loss) 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 (loss) attributable to Medley Management Inc. and 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, non-recurring expenses associated with strategic initiatives, such as our pending merger with Sierra, 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 (loss) attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit B 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 (loss) attributable to Medley Management Inc. and non-controlling interests in Medley LLC in Exhibit B 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 assume 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 33.0%. Please refer to the calculation of Core Net Income Per Share in Exhibit C 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 up to 26,316,642 vested and unvested LLC Units for 26,316,642 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 granted to employees and directors during each of the periods presented.
 







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, June 30, 2019
$
1,527

 
$
945

 
$
2,472

 
62
%
 
38
%
Commitments
(14
)
 
15

 
1

 
 
 
 
Capital reduction
—

 
—

 
—

 
 
 
 
Distributions
(16
)
 
(62
)
 
(78
)
 
 
 
 
Change in fund value
(53
)
 
(22
)
 
(75
)
 
 
 
 
Ending balance, September 30, 2019
$
1,444

 
$
876

 
$
2,320

 
62
%
 
38
%
Total fee earning AUM decreased by $152.0 million, or 6%, to $2.3 billion as of September 30, 2019 compared to June 30, 2019, due primarily to debt repayments representing capital reductions, distributions and changes in fund value.
The table below presents the roll forward of fee earning AUM for the nine months ended September 30, 2019:
 
 
 
 
 
 
 
% 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, 2018
$
1,743

 
$
1,042

 
$
2,785

 
63
%
 
37
%
Commitments
(6
)
 
96

 
90

 
 
 
 
Capital reduction
(135
)
 
—

 
(135
)
 
 
 
 
Distributions
(51
)
 
(193
)
 
(244
)
 
 
 
 
Change in fund value
(107
)
 
(69
)
 
(176
)
 
 
 
 
Ending balance, September 30, 2019
$
1,444

 
$
876

 
$
2,320

 
62
%
 
38
%
Total fee earning AUM decreased by $465.0 million, or 17%, to $2.3 billion as of September 30, 2019 compared to December 31, 2018, due primarily to distributions, debt repayments representing capital reductions and changes in fund value.
Dividend Declaration

Medley did not declare a dividend this quarter. Medley’s board of directors will continue to monitor the dividend policy on an ongoing basis.
About Medley 
Medley is an alternative asset management firm offering yield solutions to retail and institutional investors. Medley’s national direct origination franchise is a premier provider of capital to the middle market in the U.S. Medley has $4.3 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 17 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, 2018. 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 September 30, 2019.




Exhibit A. Consolidated Statements of Operations of Medley Management Inc.
 
For the Three Months Ended September 30,
(unaudited)
 
For the Nine Months Ended September 30, (unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
 (in thousands, except share and per share data)
Revenues
 

 
 

 
 
 
 

Management fees
$
9,607

 
$
12,336

 
$
30,728

 
$
36,386

Other revenues and fees
2,621

 
2,769

 
7,731

 
8,136

Investment income:
 
 
 
 
 
 
 
Carried interest
(142
)
 
(326
)
 
651

 
271

Other investment loss, net
(550
)
 
(382
)
 
(922
)
 
(849
)
Total Revenues
11,536

 
14,397

 
38,188

 
43,944

 
 
 
 
 
 
 
 
Expenses
 

 
 

 
 

 
 

Compensation and benefits
7,090

 
6,241

 
22,069

 
21,879

General, administrative and other expenses
5,403

 
6,244

 
12,763

 
15,095

Total Expenses
12,493

 
12,485

 
34,832

 
36,974

 
 
 
 
 
 
 
 
Other Income (Expense)
 

 
 

 
 

 
 

Dividend income
182

 
962

 
942

 
3,351

Interest expense
(2,874
)
 
(2,717
)
 
(8,646
)
 
(8,113
)
Other expenses, net
1,768

 
2,711

 
(641
)
 
(11,055
)
Total other expenses, net
(924
)
 
956

 
(8,345
)
 
(15,817
)
Loss before income taxes
(1,881
)
 
2,868

 
(4,989
)
 
(8,847
)
(Benefit from) provision for income taxes
(188
)
 
450

 
(281
)
 
835

Net Loss
(1,693
)
 
2,418

 
(4,708
)
 
(9,682
)
Net loss attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries
1,619

 
3,866

 
140

 
(3,112
)
Net (loss) income attributable to non-controlling interests in Medley LLC
(2,796
)
 
(963
)
 
(4,078
)
 
(4,729
)
Net Loss Attributable to Medley Management Inc.
$
(516
)
 
$
(485
)
 
$
(770
)
 
$
(1,841
)
 
 
 
 
 
 
 
 
Net Loss Per Share of Class A Common Stock:
 
 
 

 
 

 
 

Basic
$
(0.09
)
 
$
(0.15
)
 
$
(0.13
)
 
$
(0.49
)
Diluted
$
(0.09
)
 
$
(0.15
)
 
$
(0.13
)
 
$
(0.49
)
Weighted average shares outstanding - Basic and Diluted
5,899,328

 
5,591,123

 
5,834,489

 
5,539,804










Exhibit B. Reconciliation of Core Net Income and Core EBITDA to Net income (loss) attributable to Medley Management Inc. and non-controlling interests in Medley LLC
 
For the Three Months Ended September 30,
(unaudited)
 
For the Nine Months Ended September 30, (unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
 
(in thousands)
Net loss attributable to Medley Management Inc.
$
(516
)
 
$
(485
)
 
$
(770
)
 
$
(1,841
)
Net (loss) income attributable to non-controlling interests in Medley LLC
(2,796
)
 
(963
)
 
(4,078
)
 
(4,729
)
Net (loss) income attributable to Medley Management Inc. and non-controlling interests in Medley LLC
$
(3,312
)
 
$
(1,448
)
 
$
(4,848
)
 
$
(6,570
)
Reimbursable fund startup expenses
22

 
240

 
283

 
1,304

IPO date award stock-based compensation
282

 
444

 
555

 
1,018

Expenses associated with strategic initiatives
2,070

 
2,067

 
3,486

 
3,858

Other non-core items:
 
 
 
 
 
 
 
Unrealized losses on shares of MCC
—

 
—

 
—

 
3,543

Severance expense
200

 
39

 
1,462

 
2,263

Other
—

 
892

 
—

 
961

Income tax expense on adjustments
(249
)
 
(345
)
 
(560
)
 
(1,214
)
Core Net Income
$
(987
)
 
$
1,889

 
$
378

 
$
5,163

Interest expense
2,874

 
2,717

 
8,647

 
8,113

Income taxes
61

 
795

 
278

 
2,049

Depreciation and amortization
175

 
181

 
527

 
616

Core EBITDA
$
2,123

 
$
5,582

 
$
9,830

 
$
15,941









Exhibit C. Calculation of Core Net Income Per Share
 
For the Three Months Ended September 30,
(unaudited)
 
For the Nine Months Ended September 30, (unaudited)
  
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
  
(in thousands, except share and per share amounts)
Numerator
 
 
  

 
  

 
  

Core Net Income
$
(987
)
 
$
1,889

 
$
378

 
$
5,163

Add: Income taxes
61

 
795

 
278

 
2,049

Pre-Tax Core Net Income
$
(926
)
 
$
2,684

 
$
656

 
$
7,212

 
 
 
 
 
 
 
 
Denominator
  

 
  

 
  

 
  

Class A common stock
5,899,328

 
5,591,123

 
5,834,489

 
5,539,804

Conversion of LLC Units and restricted LLC Units to Class A common stock
26,316,642

 
24,215,302

 
25,389,742

 
24,008,815

Restricted Stock Units
2,291,609

 
2,368,521

 
2,114,859

 
1,990,506

Pro-Forma Weighted Average Shares Outstanding (1)
34,507,579

 
32,174,946

 
33,339,090

 
31,539,125

Pre-Tax Core Net Income Per Share
$
(0.03
)
 
$
0.08

 
$
0.02

 
$
0.23

Less: corporate income taxes per share (2)
0.01

 
(0.02
)
 
(0.01
)
 
(0.07
)
Core Net Income Per Share
$
(0.02
)
 
$
0.06

 
$
0.01

 
$
0.16

(1) 
The calculation of Pro-Forma Weighted Average Shares Outstanding assumes the conversion by the pre-IPO holders of up to 26,316,642 vested and unvested LLC Units for 26,316,642 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 granted to employees and directors during each of the periods presented.
(2) 
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 33.0%.





Exhibit D. Reconciliation of Net Income Margin to Core Net Income Margin
 
For the Three Months Ended September 30,
(unaudited)
 
For the Nine Months Ended September 30, (unaudited)
 
2019
 
2018
 
2019
 
2018
 
 
 
 
 
 
 
 
Net Income Margin
(28.7
)%
 
(10.1
)%
 
(12.7
)%
 
(15.0
)%
Reimbursable fund startup expenses (1)
0.2
 %
 
1.7
 %
 
0.7
 %
 
3.0
 %
IPO date award stock-based compensation (1)
2.4
 %
 
3.1
 %
 
1.5
 %
 
2.3
 %
Expenses associated with strategic initiatives (1)
17.9
 %
 
14.4
 %
 
9.1
 %
 
8.8
 %
 
 
 
 
 
 
 
 
Other non-core items:(1)
 
 
 
 
 
 
 
Unrealized losses on shares of MCC
—
 %
 
—
 %
 
—
 %
 
8.1
 %
Severance expense
1.7
 %
 
0.3
 %
 
3.8
 %
 
5.1
 %
Other

—
 %
 
6.2
 %
 
—
 %
 
2.2
 %
Provision for income taxes (1)
(1.6
)%
 
3.1
 %
 
(0.7
)%
 
1.9
 %
Corporate income taxes (2)
2.7
 %
 
(6.2
)%
 
(0.6
)%
 
(5.4
)%
Core Net Income Margin
(5.4
)%
 
12.5
 %
 
1.2
 %
 
11.0
 %
(1) 
Adjustments to Net income (loss) 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 are subject to federal, state and local corporate income taxes. In determining corporate income taxes, we used a combined effective corporate tax rate of 33.0%





Exhibit E. Consolidated Balance Sheets of Medley Management Inc.
 
As of
 
September 30, 2019 (unaudited)
 
December 31, 2018
 
 
 
 
 
(in thousands)
Assets
 

 
 

Cash and cash equivalents
$
11,125

 
$
17,219

Investments, at fair value
34,331

 
36,425

Management fees receivable
8,526

 
10,274

Right-of-use assets under operating leases

6,996

 
—

Other assets
14,444

 
14,298

Total Assets
$
75,422

 
$
78,216

 
 
 
 
Liabilities, Redeemable Non-controlling Interests and Equity
 
 
 
Liabilities
 

 
 

Senior unsecured debt, net
$
118,190

 
$
117,618

Loans payable, net
10,000

 
9,892

Due to former minority interest holder, net
8,735

 
11,402

Operating lease liabilities

8,772

 
—

Accounts payable, accrued expenses and other liabilities
20,371

 
26,739

Total Liabilities
166,068

 
165,651

 
 
 
 
Redeemable Non-controlling Interests
20,503

 
23,186

 
 
 
 
Equity
 

 
 

Class A common stock
60

 
57

Class B common stock
—

 
—

Additional paid in capital
12,242

 
7,529

Accumulated deficit
(20,290
)
 
(19,618
)
Total stockholders' deficit, Medley Management Inc.
(7,988
)
 
(12,032
)
Non-controlling interests in consolidated subsidiaries
(509
)
 
(747
)
Non-controlling interests in Medley LLC
(102,652
)
 
(97,842
)
Total Deficit
(111,149
)
 
(110,621
)
Total Liabilities, Redeemable Non-controlling Interests and Equity
$
75,422

 
$
78,216