TCW Direct Lending 10-Q 2015 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, DC 20549

FORM 10-Q

(Mark One)

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended March 31, 2015

OR

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the transition period from                    to                    

Commission file number 814-01069

TCW DIRECT LENDING LLC

(Exact Name of Registrant as Specified in Its Charter)

Delaware	46-5327366
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)
200 Clarendon Street, Boston, MA	02116
(Address of Principal Executive Offices)	(Zip Code)

Registrant’s Telephone Number, Including Area Code: (617) 936-2275

Not applicable

Former Name, Former Address and Former Fiscal Year, If Changed Since Last Report.

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.    Yes  ¨    No  x

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).    Yes  ¨    No  ¨

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	¨	Accelerated filer	¨
Non-Accelerated filer	x  (Do not check if a smaller reporting company)	Smaller reporting company	¨

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Securities Exchange Act of 1934).    Yes  x    No  ¨

The number of the Registrant’s common units outstanding at May 15, 2015 was 20,134,698.

TCW DIRECT LENDING LLC

FORM 10-Q FOR THE QUARTER ENDED MARCH 31, 2015

Table of Contents

	INDEX	PAGE NO.
PART I.	FINANCIAL INFORMATION		2
Item 1.	Financial Statements		2
	Schedule of Investments as of March 31, 2015 (Unaudited) and December 31, 2014		2
	Statement of Assets and Liabilities as of March 31, 2015 (Unaudited) and December 31, 2014		4
	Statement of Operations for the three months ended March 31, 2015 (Unaudited)		5
	Statement of Changes in Members’ Capital for the three months ended March 31, 2015 (Unaudited)		6
	Statement of Cash Flows for the three months ended March 31, 2015 (Unaudited)		7
	Notes to Financial Statements (Unaudited)		8
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations		18
Item 3.	Quantitative and Qualitative Disclosures About Market Risk		24
Item 4.	Controls and Procedures		24
PART II.	OTHER INFORMATION		24
Item 1.	Legal Proceedings		24
Item 1A.	Risk Factors		24
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds		24
Item 3.	Defaults Upon Senior Securities		25
Item 4.	Mine Safety Disclosures		25
Item 5.	Other Information		25
Item 6.	Exhibits		25
SIGNATURES			25

1

PART I. FINANCIAL INFORMATION

Item 1. Financial Statements

TCW Direct Lending LLC

Schedule of Investments

As of March 31, 2015

(Unaudited)

Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments
Machinery
	Motor Coach Industries International, Inc.		11/12/14	First Lien Term Loan A - 8.00% (LIBOR + 7.50%, 0.50% Floor)		32.8	%		51,598,558		09/26/19		50,647,798		51,598,558
				First Lien Term Loan B - 8.00% (LIBOR + 7.50%, 0.50% Floor)		9.9	%		15,479,567		09/26/19		15,194,340		15,479,567
						42.7	%						65,842,138		67,078,125
Media
	Angie’s List, Inc.(1)		11/12/14	First Lien Term Loan - 7.25% (LIBOR + 6.75%, 0.50% Floor)		28.7	%		45,000,000		09/26/19		44,170,826		45,000,000
	Total Non-Controlled/Non-Affiliated Investments — 71.4%											$	110,012,964	$	112,078,125
	Cash Equivalents
	Blackrock Liquidity Funds, Yield 0.01%					42.5	%					$	66,814,453	$	66,814,453
	Total Investments — 113.9%											$	176,827,417	$	178,892,578
	Liabilities in Excess of Other Assets — (13.9%)														(21,834,851	)
	Net Assets — 100.0%													$	157,057,727

⁽¹⁾  Excluded from the investment above is a delayed draw term loan commitment in an amount not to exceed $18,750,000, an interest rate of LIBOR plus 6.75%, LIBOR Floor 0.50%, and a maturity of September 26, 2019. This investment is accruing an unused commitment fee of 0.75% per annum. The change in unrealized appreciation (depreciation) on this commitment is zero as of March 31, 2015.

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

Geographic Breakdown of Portfolio
Midwest	100	%
United States	100	%

See notes to financial statements

2

TCW Direct Lending LLC

Schedule of Investments

As of December 31, 2014

Industry	Issuer	Acquisition Date		Investment	% of Net Assets			Par Amount		Maturity Date		Amortized Cost		Fair Value
	Non-Controlled/Non-Affiliated Investments
Machinery
	Motor Coach Industries International, Inc.		11/12/14	First Lien Term Loan A - 8.00% (LIBOR + 7.50%, 0.50% Floor)		80.5	%		51,923,077		09/26/19		50,913,802		51,923,077
				First Lien Term Loan B - 8.00% (LIBOR + 7.50%, 0.50% Floor)		24.1	%		15,576,923		09/26/19		15,274,141		15,576,923
						104.6	%						66,187,943		67,500,000
Media
	Angie’s List, Inc.(1)		11/12/14	First Lien Term Loan - 7.25% (LIBOR + 6.75%, 0.50% Floor)		69.7	%		45,000,000		09/26/19		44,125,295		45,000,000
	Total Non-Controlled/Non-Affiliated Investments (174.3%)											$	110,313,238	$	112,500,000
	Liabilities in Excess of Other Assets (-74.3%)														(47,971,826	)
	Net Assets (100.0%)													$	64,528,174

⁽¹⁾  Excluded from the investment above is a delayed draw term loan commitment in an amount not to exceed $18,750,000, an interest rate of LIBOR plus 6.75%, LIBOR Floor 0.50%, and a maturity of September 26, 2019. This investment is accruing an unused commitment fee of 0.75% per annum. The change in unrealized appreciation (depreciation) on this commitment is zero as of December 31, 2014.

LIBOR - London Interbank Offered Rate, generally 1-Month or 3-Month

Geographic Breakdown of Portfolio
Midwest	100	%
United States	100	%

See notes to financial statements

3

TCW Direct Lending LLC

Statements of Assets and Liabilities

(Dollar amounts in thousands, except unit data)

	As of March 31, 2015 (unaudited)			As of December 31, 2014
Assets
Portfolio of Investments at fair value (amortized cost of $110,013 and $110,313, respectively)	$	112,078		$	112,500
Cash and cash equivalents		164,455			6,967
Deferred financing costs		4,091			4,457
Capital call due from Members		2,600			100
Prepaid offering costs		—			663
Interest receivable		585			629
Receivable from Investment Adviser		—			311
Prepaid and other assets		58			—
Total Assets	$	283,867		$	125,627
Liabilities
Credit facility payable	$	110,000		$	55,000
Management fees payable		16,086			3,493
Initial organization expenses payable to affiliate		—			682
Offering costs payable to affiliate		—			663
Interest and credit facility expenses payable		413			656
Sub-administrator, transfer agent and custody fees payable		209			79
Insurance payable		—			185
Directors’ fees payable		58			160
Audit and tax service fees payable		39			82
Distribution due to Members		4			—
Other accrued expenses and liabilities		—			99
Total Liabilities	$	126,809		$	61,099
Commitments and Contingencies (Note 5)
Members’ Capital
Preferred units: (no units issued and outstanding)	$	—		$	—
Common unitholders commitment: (20,134,698 and 8,240,510 units issued and outstanding, respectively)		2,013,470			824,051
Common unitholders undrawn commitment: (20,134,698 and 8,240,510 units issued and outstanding, respectively)		(1,842,324	)		(758,200	)
Accumulated net realized gain		137			129
Accumulated net investment loss		(16,290	)		(3,639	)
Net unrealized appreciation (depreciation) on investments		2,065			2,187
Members’ Capital	$	157,058		$	64,528
Total Liabilities and Members’ Capital	$	283,867		$	125,627
Net Asset Value Per Unit (accrual base) (Note 9)	$	99.30		$	99.84

See notes to financial statements

4

TCW Direct Lending LLC

Statement of Operations

(Dollar amounts in thousands, except unit data)

	For the three months ended March 31, 2015 (unaudited)
Investment Income:
Interest income	$	2,310
Expenses:
Management fees		12,593
Interest and credit facility expenses		1,061
Sub-administrator, transfer agent and custody fees		131
Insurance expense		80
Directors’ fees		75
Audit fees		30
Valuation fees		11
Tax service fees		3
Other expenses		2
Total expenses		13,986
Expense recaptured by the Investment Adviser		312
Net expenses		14,298
Net investment loss	$	(11,988	)
Net realized and unrealized gain (loss) on investments
Net realized gain on investments		8
Net change in unrealized appreciation (depreciation) on investments		(122	)
Net realized and unrealized gain (loss) on investments	$	(114	)
Net decrease in Members’ Capital from operations	$	(12,102	)
Basic and diluted:
Loss per unit	$	(0.54	)

See notes to financial statements

5

TCW Direct Lending LLC

Statement of Changes in Members’ Capital

(Dollar amounts in thousands)

	For the three months ended March 31, 2015 (unaudited)
Net Increase (Decrease) in Members’ Capital Resulting from Operations
Net investment loss	$	(11,988	)
Net realized gain on investments		8
Net change in unrealized appreciation (depreciation) on investments		(122	)
Net Increase (Decrease) in Members’ Capital Resulting from Operations	$	(12,102	)
Increase (Decrease) in Members’ Capital Resulting from Capital Activity
Contributions		105,295
Offering costs		(663	)
Total Increase (Decrease) in Members’ Capital Resulting from Capital Activity		104,632
Total Increase in Members’ Capital	$	92,530
Members’ Capital, beginning of period		64,528
Members’ Capital, end of period	$	157,058
Accumulated net investment loss	$	(16,290	)

See notes to financial statements

6

TCW Direct Lending LLC

Statement of Cash Flows

(Dollar amounts in thousands)

	For the three months ended March 31, 2015 (unaudited)
Cash Flows from Operating Activities
Net increase (decrease) in net assets resulting from operations	$	(12,102	)
Adjustments to reconcile the net increase (decrease) in net assets resulting from operations to net cash used in operating activities:
Proceeds from sales and paydowns of investments		422
Net realized (gain) loss on investments		(8	)
Net change in unrealized (appreciation) depreciation on investments		122
Amortization of premium and accretion of discount, net		(114	)
Amortization of deferred financing costs		391
Increase (decrease) in operating assets and liabilities:
(Increase) decrease in prepaid offering costs		663
(Increase) decrease in interest receivable		44
(Increase) decrease in receivable from Investment Adviser		311
(Increase) decrease in prepaid and other assets		(58	)
Increase (decrease) in management fees payable		12,593
Increase (decrease) in initial organizational expense payable to affiliate		(682	)
Increase (decrease) in offering costs payable to affiliate		(663	)
Increase (decrease) in interest and credit facility payable, net		371
Increase (decrease) in insurance payable		(185	)
Increase (decrease) in directors’ fees payable		(102	)
Increase (decrease) in audit and tax service fees payable		(43	)
Increase (decrease) in sub-administrator, transfer agent and custody fees payable		130
Increase (decrease) in other accrued expenses and liabilities		(99	)
Net cash used in operating activities	$	991
Cash Flows from Financing Activities
Contributions from Members		105,295
Capital call due from Members, net		(2,496	)
Offering costs paid		(663	)
Deferred financing costs paid		(639	)
Proceeds from credit facility		55,000
Net cash provided by financing activities	$	156,497
Net increase in cash	$	157,488
Cash, beginning of period	$	6,967
Cash, end of period	$	164,455
Supplemental and non-cash financing activities
Interest expense paid	$	260

See notes to financial statements

7

TCW DIRECT LENDING LLC

Notes to Financial Statements (Unaudited)

(dollar amount in thousands, except for unit data)

March 31, 2015

1. Organization and Basis of Presentation

Organization:TCW Direct Lending LLC (the “Company” and “our”), was formed as a Delaware corporation on March 20, 2014 and converted to a Delaware limited liability company on April 1, 2014. We conducted a private offering of our limited liability company units (the “Common Units”) to investors in reliance on exemptions from the registration requirements of the U.S. Securities Act of 1933, as amended (the “Securities Act”). The Company has engaged TCW Asset Management Company (“TAMCO”), an affiliate of The TCW Group, Inc. (“TCW”) to be its adviser (the “Adviser”). On May 13, 2014 (“Inception Date”), the Company sold and issued 10 Common Units at an aggregate purchase price of $1 to TAMCO.

The Company has elected to be regulated as a business development company (“BDC”) under the Investment Company Act of 1940, as amended (the “1940 Act”). We also intend to elect to be treated for U.S. federal income tax purposes as a regulated investment company (a “RIC”) under Subchapter M of the U.S Internal Revenue Code of 1986, as amended (the “Code”) for the first taxable year in which we anticipate having significant net taxable income, and expect to meet the minimum distribution and other requirements for RIC qualification. As a BDC and a RIC, we are required to comply with certain regulatory requirements.

Capital Commitments:On September 19, 2014 (the “Initial Closing Date”), the Company began accepting subscription agreements from investors for the private sale of its Common Units. On March 19, 2015 the Company completed its final private placement of its Common Units and as of March 31, 2015, subscription agreements with commitments (“Commitments”) from investors totaling $2,013,470 for the purchase of Common Units were accepted. Each Common Unitholder is obligated to contribute capital equal to their Commitment and each Unit’s Commitment obligation is $100.00 per unit. The amount of capital that remains to be drawn down and contributed is referred to as an “Undrawn Commitment”.

As of March 31, 2015, aggregate Commitments, Undrawn Commitments and subscribed for Units of the Company follow:

	Commitments		Unfunded Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	1,842,324		8	%		20,134,698

Recallable Amounts:A Common Unitholder may be required to re-contribute amounts previously distributed equal to:

(a) 75% of the lesser of the principal amount or the cost portion of any Portfolio Investment that is fully repaid to or otherwise fully recouped by the Company in the form of cash proceeds, within one year of the Company’s investment, and

(b) Distributions of amounts that were contributed in anticipation of a potential Portfolio Investment that the Company did not consummate within 90 days of the contribution date.

The amount recallable as of March 31, 2015 is zero.

Loan Purchase Agreement (a Related Party Transaction):The Company entered into an agreement, dated September 25, 2014 to acquire loan assets for a purchase price equal to the principal amount of the loans funded by the seller (net of any original issue discount (“OID”) and closing fees), plus all accrued and unpaid interest on the loans as of November 12, 2014 (the “Transfer Date”). The seller of the loan assets was TCW DL Bridge, LLC (“TCW Bridge”), an affiliate of the Advisor. For the period during which TCW Bridge held the loans, TCW Bridge was entitled to retain all interest payments received on the loans, but paid all costs associated with holding the loans. There was no change in the value of loan assets from September 25, 2014 through the Transfer Date.

8

On November 12, 2014, the Company acquired the following loan assets from TCW Bridge.

Issuer	Investment	Par Amount			Purchase Price		Counterparty
Angie’s List, Inc.	Term Loan 7.25% (LIBOR + 6.75%, 0.50% Floor, due 09/26/19)	$	60,000	(1)	$	58,800		TCW Bridge
Motor Coach Industries International, Inc.	Term Loan 8.00 % (LIBOR + 7.50%, 0.50% Floor, due 09/26/19)	$	100,000		$	98,000		TCW Bridge
	Term Loan 8.00% (LIBOR + 7.50%, 0.50% Floor, due 09/26/19)	$	30,000		$	29,400		TCW Bridge

LIBOR – London Interbank Offered Rate, generally 1-Month or 3-Month

⁽¹⁾ The Company had commitments of $18,750 to fund additional investments in the portfolio company pursuant to the Loan Purchase Agreement between TCW Bridge and the Company. The change in unrealized appreciation (depreciation) on this commitment was zero as of the Transfer Date.

2. Significant Accounting Policies

Basis of Presentation:The accompanying financial statements are prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). In the opinion of management, all adjustments, consisting solely of accruals considered necessary for the fair presentation of financial statements have been included.

Use of Estimates:The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements. Actual results could differ materially from those estimates.

Investments: Investments in senior loans generate a fixed spread over floating base rates such as LIBOR or the U.S. Prime Rate. These floating base rates generally reset either monthly or quarterly.

Transactions: The Company records investment transactions on the trade date. The Company considers trade date for investments not traded on a recognizable exchange, or traded in the over-the-counter markets, to be the date on which the Company receives legal or contractual title to the asset and bears the risk of loss.

Income Recognition: Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. The Company typically receives a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, as reported in the Statement of Operations, and reflected in the amortized cost basis of the investment. Discounts associated with a revolver are treated as a discount to the issuers’ term loan. In the event, there is a fee associated with a delayed draw that remains unfunded; the Company will recognize the fee as fee income immediately. Ongoing facility, commitment or other additional fees including, prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

Deferred Financing Costs: Through March 31, 2015, financing costs in the amount of $4,691 were incurred by the Company in connection with the revolving credit facility. Included in these costs are arrangement fees, upfront fees and legal fees. The Company is amortizing the financing costs on a straight-line basis over the term of the $500,000 revolving credit facility described in Note 7.

Organization and Offering Costs:Costs incurred to organize the Company will be expensed as incurred. Offering costs totaling $663 were accumulated and charged directly to Members’ Capital at the end of the period during which Common Units are being offered (the “Closing Period”). However, the Company will not bear more than an amount equal to 10 basis points of the aggregate capital commitments to us through the Commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period.

Cash and Cash Equivalents:The Company considers all investments with a maturity of three months or less at the time of acquisition to be cash equivalents. At March 31, 2015 cash and cash equivalents is comprised of demand deposits and highly liquid investments with maturities of three months or less.

9

Income Taxes: The Company was a C Corporation for the period-ended December 31, 2014, and has elected to be treated as a RIC under the Code for the taxable year ending December 31, 2015. So long as the Company maintains its status as a RIC, it generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that it distributes at least annually to its stockholders as dividends. Rather, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s investors and will not be reflected in the financial statements of the Company.

The Company generated a net loss in 2014 for tax purposes.

Recent Accounting Pronouncements:On February 18, 2015, the Financial Accounting Standards Board (“FASB”) issued Accounting Standard Update (“ ASU”) 2015-02,Amendments to the Consolidation Analysis (“ASU 2015-02”), which amends the consolidation requirements in ASC 810 and significantly changes the consolidation analysis required under U.S. GAAP. The FASB’s focus during deliberations was largely on the investment management industry. The key amendments that are going to have significant impact on Company’s consolidation conclusion include:

• Limited partnerships will be variable interest entities (VIEs), unless the limited partners have either substantive kick-out or participating rights. Although more partnerships will be VIEs, it is less likely that a general partner will consolidate a limited partnership.

• The ASU changes the effect that fees paid to a decision maker or service provider that have on the consolidation analysis. Specifically, it is less likely that the fees themselves will be considered a variable interest, that an entity will be a VIE, or that consolidation will result.

• The deferral of ASU 2009-17 for investments in certain investment funds has been eliminated. Therefore, investment managers, general partners, and investors in these investment funds will need to perform a drastically different consolidation evaluation.

• For entities other than limited partnerships, the ASU clarifies how to determine whether the equity holders (as a group) have power over the entity (this will most likely result in a change to current practice). The clarification could affect whether the entity is a VIE.

ASU 2015-02 becomes effective for the Company on January 1, 2016. Early adoption is permitted. At this time, management is evaluating the ASU to determine whether it will impact the financial statement and whether to early adopt this ASU.

In April 2015, the FASB issued ASU No. 2015-03,Simplifying the Presentation of Debt Issuance Costs,which requires that all costs incurred to issue debt be presented in the balance sheet as a direct deduction from the carrying value of the debt. Prior to the issuance of this ASU, debt issuance costs were required to be presented in the balance sheet as an asset. Upon adoption, the standard requires prior period financial statements to be retrospectively adjusted. This ASU is effective for fiscal years, and interim periods within those years, beginning after December 15, 2015 with early adoption permitted in certain circumstances. At this time, management is evaluating the ASU to determine whether it will impact the financial statement and whether to early adopt this ASU.

3. Investment Valuations and Fair Value Measurements

Investments at Fair Value: Investments held by the Company are valued at fair value. Fair value is generally determined on the basis of last reported sales prices or official closing prices on the primary exchange in which each security trades, or if no sales are reported, based on the mean of the latest quoted bid and asked prices obtained for debt investments from a quotation reporting system, established market makers or pricing service.

Investments for which market quotes are not readily available or market quotations are not considered reliable are valued at fair value by the Board of Directors based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified by the Company based on valuation inputs used to determine fair value into three levels.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect the Company’s determination of assumptions that market participants might reasonably use in valuing the assets.

10

Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in those securities.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level1),include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Level 3 Assets (Investments):The following valuation techniques and significant inputs are used to determine fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), include investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach incorporating a weighted average cost of capital is generally used to determine fair value. Valuation may also include a shadow rating method. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt, credit, industry, and market risk and events.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized form sales or other dispositions of investments.

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Schedule of Investments as of March 31, 2015:

	Level 1		Level 2		Level 3		Total
Investments
Debt	$	—		—	$	112,078	$	112,078
Cash equivalents		66,814		—		—		66,814
Total Assets	$	66,814	$	—	$	112,078	$	178,892

The following is a summary by major security type of the fair valuations according to inputs used in valuing investments listed in the Schedule of Investments as of December 31, 2014:

	Level 1		Level 2		Level 3		Total
Investments
Debt	$	—	$	—	$	112,500	$	112,500
Total Assets	$	—	$	—	$	112,500	$	112,500

The following table provides a reconciliation of the beginning and ending balances for total investments that use Level 3 inputs for the three months ended March 31, 2015:

	Investments
Balance, December 31, 2014	$	112,500
Purchases		—
Sales and paydowns of investments		(422	)
Amortization of discount/(premium)		114
Net realized gains (losses)		8
Net change in unrealized appreciation/ (depreciation)		(122	)
Balance, March 31, 2015	$	112,078
Change in net unrealized appreciation (depreciation) in investments held as of March 31, 2015
	$	(121,602	)

Transfers between levels of the fair value hierarchy are reported at the beginning of the reporting period in which they occur. During the three months ended March 31, 2015 the Company did not have any transfers between levels.

11

Level 3 Valuation and Quantitative Information:The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of March 31, 2015.

Investment Type	Fair Value at March 31, 2015		Valuation Technique		Unobservable Input	Range		Weighted Average		Impact to Valuation from an Increase in Input
Debt	$	112,078		Income method	Weighted average cost of capital		7.4% - 9.7%		8.6%		Decrease
					Shadow rating method		B to CCC+		NA		Increase

Level 3 Valuation and Quantitative Information:The following table summarizes the valuation techniques and quantitative information utilized in determining the fair value of the Level 3 investments as of December 31, 2014.

Investment Type	Fair Value at December 31, 2014		Valuation Technique		Unobservable Input	Range		Weighted Average		Impact to Valuation from an Increase in Input
Debt	$	112,500		Income method	Weighted average cost of capital		7.8% - 10.1%		9.0%		Decrease
					Shadow rating method		B to CCC+		NA		Increase

Valuation Process:

Oversight for determining fair value is the responsibility of the Board of Directors of the Company (with input from the Adviser, the audit committee and an external, independent valuation firm retained by the Company). The Company and the Adviser value the investments at fair value on a quarterly basis and whenever required by the Company’s operating agreement. The Company has engaged an external, independent valuation firm to assist the Board in determining the fair market value of the Company’s investments for which market quotations are not readily available.

The Company and its Adviser undertake a multi-step valuation process for investments whose market prices are not otherwise readily available. The valuation process begins with each investment being preliminarily valued by the Adviser. The Company’s external, independent valuation firm also values the investments and provides a valuation range. Based on its own valuation and a review of the external, independent valuation firm’s range and related documentation, the Adviser formulates and documents valuation recommendations. The Adviser provides its valuation recommendation for each investment to the Company’s audit committee, based on / along with the independent valuation report. After the Company’s audit committee reviews the valuation recommendations, the Board of Directors discusses the portfolio company and investment valuations with the Adviser and determines the fair value of these investments in good faith.

The Company uses all relevant factors in determining fair value including, without limitation, any of the following factors as may be deemed relevant by the Board: current financial position and current and historical operating results of the issuer; sales prices of recent public or private transactions in the same or similar securities, including transactions on any securities exchange on which such securities are listed or in the over-the-counter market; general level of interest rates; recent trading volume of the security; restrictions on transfer including the Company’s right, if any, to require registration of its securities by the issuer under the securities laws; any liquidation preference or other special feature or term of the security; significant recent events affecting the Portfolio Company, including any pending private placement, public offering, merger, or acquisition; the price paid by the Company to acquire the asset; the percentage of the issuer’s outstanding securities that is owned by the Company and all other factors affecting value.

4. Agreements and Related Party Transactions

On September 15, 2014, the Company entered into an Investment Advisory and Management Agreement (the “Advisory Agreement”) with the Adviser, its registered investment adviser under the Investment Advisers Act of 1940, as amended. The Advisory Agreement was approved by the Company’s board of directors (the “Board”) at an in-person meeting. Unless earlier terminated, the Advisory Agreement will remain in effect for a period of two years and will remain in effect from year to year thereafter if approved annually by (i) the vote of the Board, or by the vote of a majority of our outstanding voting securities, and (ii) the vote of a majority of the independent directors of the Board.

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Pursuant to the Advisory Agreement, and subject to the overall supervision of the Board, the Adviser will manage the Company’s day-to-day operations and provide investment advisory services to the Company. The Company will pay to the Adviser, quarterly in advance, a management fee (the “Management Fee”) calculated as follows: (i) for the period starting on the initial closing date and ending on the earlier of (A) the last day of the calendar quarter during which the Commitment Period (as defined below) ends or (B) the last day of the calendar quarter during which the Adviser or an affiliate thereof begins to accrue a management fee with respect to a successor fund, 0.375% (i.e., 1.50% per annum) of the aggregate commitments determined as of the end of the Closing Period, and (ii) for each calendar quarter thereafter during the term of the Company (but not beyond the tenth anniversary of the initial closing date), 0.1875% (i.e., 0.75% per annum) of the aggregate cost basis (whether acquired by the Company with contributions from members, other Company funds or borrowings) of all portfolio investments that have not been sold, distributed to the members, or written off for tax purposes (but reduced by any portion of such cost basis that has been written down to reflect a permanent impairment of value of any portfolio investment), determined in each case as of the first day of such calendar quarter. The Management Fee in respect of the Closing Period will be calculated as if all capital commitments of the Company were made on the initial closing date, regardless of when Common Units were actually funded. The actual payment of the Management Fee with respect to the Closing Period will not be made prior to the first day of the first full calendar quarter following the end of the Closing Period. The “Commitment Period” of the Company will begin on the initial closing date and end on the earlier of (a) three years from the initial closing date and (b) the date on which the undrawn Commitment of each Common Unit has been reduced to zero. While the Management Fee will accrue from the initial closing date, the Adviser intends to defer payment of such fees to the extent that such fees cannot be paid from interest and fee income generated by our investments.

For the three months ended March 31, 2015, Management Fees incurred amounted to $12,593 of which $16,086 remained payable at March 31, 2015 including $3,493 from 2014.

In addition, the Adviser will receive an incentive fee (the “Incentive Fee”) as follows:

(a) First, no Incentive Fee will be owed until the unitholders have collectively received cumulative distributions pursuant to this clause (a) equal to their aggregate capital contributions in respect of all Common Units;

(b) Second, no Incentive Fee will be owed until the unitholders have collectively received cumulative distributions equal to a 9% internal rate of return on their aggregate capital contributions in respect of all Common Units (the “Hurdle”);

(c) Third, the Adviser will be entitled to an Incentive Fee out of 100% of additional amounts otherwise distributable to unitholders until such time as the cumulative Incentive Fee paid to the Adviser is equal to 20% of the sum of (i) the amount by which the Hurdle exceeds the aggregate capital contributions of the unitholders in respect of all Common Units and (ii) the amount of Incentive Fee being paid to the Adviser pursuant to this clause (c); and

(d) Thereafter, the Adviser will be entitled to an Incentive Fee equal to 20% of additional amounts otherwise distributable to unitholders, with the remaining 80% distributed to the unitholders.

The Incentive Fee will be calculated on a cumulative basis and the amount of the Incentive Fee payable in connection with any distribution (or deemed distribution) will be determined and, if applicable, paid in accordance with the foregoing formula each time amounts are to be distributed to the unitholders.

If the Advisory Agreement terminates early for any reason other than (i) the Adviser voluntarily terminating the agreement or (ii) our terminating the agreement for cause (as set out in the Advisory Agreement), we will be required to pay the Adviser a final incentive fee payment (the “Final Incentive Fee Payment”). The Final Incentive Fee Payment will be calculated as of the date the Advisory Agreement is so terminated and will equal the amount of Incentive Fee that would be payable to the Adviser if (A) all our investments were liquidated for their current value (but without taking into account any unrealized appreciation of any portfolio investment), and any unamortized deferred portfolio investment-related fees would be deemed accelerated, (B) the proceeds from such liquidation were used to pay all our outstanding liabilities, and (C) the remainder were distributed to unitholders and paid as Incentive Fee in accordance with the “waterfall” (i.e., clauses (a) through (d)) described above for determining the amount of the Incentive Fee. We will make the Final Incentive Fee Payment in cash on or immediately following the date the Advisory Agreement is so terminated. The Adviser Return Obligation (defined below) will not apply in connection with a Final Incentive Fee Payment.

For the three months ended March 31, 2015 no Incentive Fees were incurred.

Administration Agreement:On September 15, 2014, the Company entered into the Administration Agreement with the Adviser under which the Adviser (or one or more delegated service providers) will oversee the maintenance of our financial records and otherwise assist on the Company’s compliance with regulations applicable to a business development company under the Investment Company Act of 1940, as amended, and a regulated investment company under Subchapter M of the U.S. Internal Revenue Code of 1986, as

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amended, prepare reports to our unitholders, monitor the payment of our expenses and the performance of other administrative or professional service providers, and generally provide us with administrative and back office support. The Company will reimburse the Administrator for expenses incurred by it on behalf of the Company in performing its obligations under the Administration Agreement. Amounts paid pursuant to the Administration Agreement are subject to the annual cap on Company Expenses (as defined below), as described more fully below.

The Company, and indirectly the unitholders, will bear (including by reimbursing the Adviser or Administrator) all other costs and expenses of its operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of the Company’s counsel and accounting fees. However, the Company will not bear (a) more than an amount equal to 10 basis points of the aggregate capital commitments of the Company for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments of the Company per annum (pro-rated for partial years) for its costs and expenses other than ordinary operating expenses (“Company Expenses”), including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser. All expenses that the Company will not bear will be borne by the Adviser or its affiliates. Notwithstanding the foregoing, the cap on Company Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap), amounts payable in connection with the Company’s borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to the liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments).

Affiliates:At March 31, 2015, TAMCO owned less than 0.00% of the outstanding units of the Company.

5. Commitments and Contingencies

The Company had the following unfunded commitments and unrealized gain/(loss) as of March 31, 2015 by investment type:

Unfunded Commitments	Amount		Unrealized gain/(loss)
Angie’s List, Inc. (commitment expiration September 2017)	$	18,750	$	0

The Company had the following unfunded commitments and unrealized gain/(loss) as of December 31, 2014 by investment type:

Unfunded Commitments	Amount		Unrealized gain/(loss)
Angie’s List, Inc. (commitment expiration September 2017)	$	18,750	$	0

From time to time, the Company may become a party to certain legal proceedings incidental to the normal course of its business. At March 31, 2015, management is not aware of any pending or threatened litigation.

In the normal course of business, the Company enters into contracts which provide a variety of representations and warranties, and that provide general indemnifications. Such contracts include those with certain service providers, brokers and trading counterparties. Any exposure to the Company under these arrangements is unknown as it would involve future claims that may be made against the Company; however, based on the Company’s experience, the risk of loss is remote and no such claims are expected to occur. As such, the Company has not accrued any liability in connection with such indemnifications.

6. Members’ Capital

As of the three months ended March 31, 2015, the Company sold and issued 11,894,188 Common Units at an aggregate purchase price of $100 per unit. The Company has issued and committed units as follows:

	For the three months ended March 31, 2015
Units at beginning of period		8,240,510
Units issued and committed		11,894,188
Units issued and committed at end of period		20,134,698

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As of December 31, 2014, the Company sold and issued 8,240,510 Common Units at an aggregate purchase price of $100 per unit. The Company has issued and committed units as follows:

	For the period from May 13, 2014 (Inception) to December 31, 2014
Units at beginning of period		10
Units issued and committed		8,240,500
Units issued and committed at end of period		8,240,510

7. Credit Facility

On November 12, 2014, the Company entered into a new senior secured Revolving Credit Agreement (the “Credit Agreement”) among the Company, as borrower, and Natixis, New York Branch, as administrative agent and committed lender (“Natixis”).

The Credit Agreement provides for up to $750,000 of total lender commitments, with an initial commitment of $250,000 which may be periodically increased in amounts designated by the Company, up to an aggregate amount of $750,000. The maturity date of the Credit Agreement is November 12, 2017, unless such date is extended at the Company’s option no more than 2 times for a term of up to twelve 12 months per such extension. Borrowings under the Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner (which will never be less than the adjusted eurodollar rate plus 1.00%) plus 0.70% or (b) adjusted eurodollar rate calculated in a customary manner plus 1.70%.

Also on November 12, 2014, the Company consummated two loan purchases pursuant to the Loan Sale Agreement between the Company and TCW Bridge. The revolving credit facility for TCW Bridge with Natixis has been repaid in full from the proceeds of those loan sales and the revolving credit facility for TCW Bridge has been terminated.

As of the three months ended March 31, 2015 and for the period ended December 31, 2014, the commitment amount was $500,000 and $500,000, respectively and $110,000 and $55,000 was outstanding under the Credit Facility. The carrying amount of the amount outstanding under the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of March 31, 2015 and December 31, 2014, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and condition. The Company incurred $4,691 in connection with obtaining the Credit Facility, which the Company has recorded as deferred financing costs on its statement of asset and liabilities and is amortizing these fees over the life of the Credit Facility. As of March 31, 2015 and December 31, 2014, $4,091 and $4,457, respectively, of such prepaid deferred financing costs had yet to be amortized.

The summary information regarding the Credit Facility for the three months ended March 31, 2015 and December 31, 2014 was as follows:

	For the three months ended March 31, 2015			For the Period Ended December 31, 2014(1)
Borrowing interest expense	$	263		$	334
Unused fees		388			72
Administrative fees		19			19
Amortization of financing costs		391			209
Total	$	1,061		$	634
Weighted average interest rate		1.87	%		1.86	%
Average outstanding balance	$	56,222		$	62,880

⁽¹⁾  For the period from September 19, 2014 (Initial Closing Date) to December 31, 2014.

8. Income Taxes

The Company has elected to be treated as a BDC under the 1940 Act. The Company intends to elect to be treated as a RIC under the Internal Revenue Code. So long as the Company maintains its status as a RIC, it will generally not pay corporate-level U.S. federal

15

income or excise taxes on any ordinary income or capital gains that it distributes at least annually to its common unitholders as dividends. As a result, any tax liability related to income earned and distributed by the Company represents obligations of the Company’s common unitholders and will not be reflected in the consolidated financial statements of the Company. The company was a C corporation (“C-Corp”) and filed or will file a tax return 1120 for 2014. The Company anticipates converting from a C-Corp to a RIC in 2015. There were no earnings and profits for 2014. Expected activity is interest income and amortized OID (less) organization and offering costs, management fees, interest expense and fund expenses resulting in a net loss for tax purposes in 2014. Built-in gains by a C-Corp transferred to a RIC are subject to tax. The company does not anticipate a tax on its built-in gains due its current net operating losses.

The Company evaluates tax positions taken or expected to be taken in the course of preparing its financial statements to determine whether the tax positions are “more-likely-than-not” to be sustained by the applicable tax authority. Tax positions not deemed to meet the “more-likely-than-not” threshold are reversed and recorded as a tax benefit or expense in the current year. All penalties and interest associated with income taxes are included in income tax expense. Conclusions regarding tax positions are subject to review and may be adjusted at a later date based on factors including, but not limited to, on-going analyses of tax laws, regulations and interpretations thereof.

As of March 31, 2015 and December 31, 2014, the Company’s aggregate investment unrealized appreciation and depreciation based on cost were as follows:

	March 31, 2015		December 31, 2014
Tax cost	$	110,013	$	110,313
Gross unrealized appreciation	$	2,065	$	2,187
Gross unrealized depreciation	$	—	$	—
Net unrealized appreciation on investments	$	2,065	$	2,187

The significant components of the net deferred tax assets and liabilities as of March 31, 2015 and December 31, 2014 were as follows:

	March 31, 2015			December 31, 2014
Deferred income tax assets:
Net operating loss	$	1,080		$	1,080
Deferred organization costs		219			219
Subtotal deferred income tax assets		1,299			1,299
Less: Valuation allowance		(490	)		(490	)
Total deferred income tax assets		809			809
Deferred tax liability - unrealized appreciation		(809	)		(809	)
Deferred income tax assets - net	$	—		$	—

The current and non-current portion of the deferred tax assets are $51 and $1,248 respectively for March 31, 2015 and December 31, 2014. The deferred tax liabilities are all classified as non-current.

The Company has a net operation loss (“NOL”) carryforward of $1,080 which will expire over the next 20 years. The Company does not plan on being able to utilize this NOL carryforward and has recorded a corresponding valuation allowance.

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9. Financial Highlights

Selected data for a unit outstanding throughout the three months ended March 31, 2015 is below. The accrual base Net Asset Value is calculated by subtracting the per unit loss from investment operations from the beginning Net Asset Value per unit and reflects all units issued and outstanding.

	For the three months ended March 31, 2015
Net Asset Value Per Unit (accrual base), Beginning of Period	$	99.84
Net Increase in Common Unitholder NAV from Prior Year(1)		0.09
Income from Investment Operations:
Net investment loss(1)		(0.60	)
Net realized and unrealized gain (loss)		(0.03	)
Total from investment operations		(0.63	)
Less Distributions:
From net investment income		—
From net realized gains		—
Total distributions		—
Net Asset Value Per Unit (accrual base), End of Period	$	99.30
Common Unitholder IRR (3)		N/A
Common Unitholder Total Return(4)		-18.2	%
Ratios and Supplemental Data
Members’ Capital, end of period	$	157,058
Units outstanding, end of period		20,134,698
Ratios based on average net assets of Members’ Capital:
Ratio of total expenses to average net assets		16.48	%
Expenses recaptured by Investment Adviser		.37	%
Ratio of net expenses to average net assets		16.85	%
Ratio of interest expense to average net assets		1.25	%
Ratio of net investment income (loss) before expense recapture to average net assets		(13.76	)%
Ratio of net investment income (loss) to average net assets		(14.13	)%
Credit facility payable		110,000
Asset coverage ratio		2.4
Portfolio turnover rate		0	%

⁽¹⁾  Net increase in Common Unitholder NAV from prior year is a one-time adjustment to account for the increase in the Common Units issued from January 1, 2015 through the final closing date of March 19, 2015.

⁽²⁾  Per unit data was calculated using the number of common units issued and outstanding as of March 31, 2015.

⁽³⁾  IRR is not meaningful for this period. The Company will provide in future periods.

⁽⁴⁾  The Total Return for the three months ended March 31, 2015 was calculated by taking the net loss of the Company for the period divided by the weighted average capital contributions from the members during the period. The return is net of management fees and expenses.

10. Subsequent Events

The Company evaluates the need for disclosures and/or adjustments resulting from subsequent events through the date the financial statements are issued. There have been no subsequent events that require recognition or disclosure through the date the financial statement was available to be issued.

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

The information contained in this section should be read in conjunction with the financial statements and notes thereto appearing elsewhere in this report. This discussion also should be read in conjunction with the “Cautionary Statement Regarding Forward Looking Statements” set forth on page 3 of this quarterly report. All dollar amounts are presented in thousands.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This report contains forward-looking statements that involve substantial risks and uncertainties. These forward-looking statements are not historical facts, but rather are based on current expectations, estimates and projections about us, our prospective portfolio investments, our industry, our beliefs, and our assumptions. Words such as “anticipates,” “expects,” “intends,” “plans,” “believes,” “seeks,” “estimates,” “would,” “should,” “targets,” “projects,” and variations of these words and similar expressions are intended to identify forward-looking statements. These statements are not guarantees of future performance and are subject to risks, uncertainties, and other factors, some of which are beyond our control and are difficult to predict, that could cause actual results to differ materially from those expressed or forecasted in the forward-looking statements including, without limitation:

• An economic downturn could impair our portfolio companies’ ability to continue to operate, which could lead to the loss of some or all of our investments in such portfolio companies;

• a contraction of available credit could impair our lending and investment activities;

• interest rate volatility could adversely affect our results, particularly if we elect to use leverage as part of our investment strategy;

• our future operating results;

• our business prospects and the prospects of our portfolio companies;

• our contractual arrangements and relationships with third parties;

• the ability of our portfolio companies to achieve their objectives;

• competition with other entities and our affiliates for investment opportunities;

• an inability to replicate the historical success of any previously launched fund managed by the direct lending team of our investment adviser, TCW Asset Management Company (the “Adviser”);

• the speculative and illiquid nature of our investments;

• the use of borrowed money to finance a portion of our investments;

• the adequacy of our financing sources and working capital;

• the costs associated with being a public entity;

• the loss of key personnel;

• the timing of cash flows, if any, from the operations of our portfolio companies;

• the ability of the Adviser to locate suitable investments for us and to monitor and administer our investments;

• the ability of The TCW Group, Inc. to attract and retain highly talented professionals that can provide services to the Adviser in its capacity as our investment adviser and administrator;

• our ability to qualify and maintain our qualification as a regulated investment company, or “RIC,” under Subchapter M of the U.S. Internal Revenue Code of 1986, as amended, or the “Code,” and as a business development company (“BDC”) under the Investment Company Act of 1940;

• the effect of legal, tax and regulatory changes; and

• the other risks, uncertainties and other factors we identify under “Item 1A. Risk Factors” in the Form 10-K that we filed with the SEC on March 27, 2015 and in this report.

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Although we believe that the assumptions on which these forward-looking statements are based are reasonable, some of those assumptions are based on the work of third parties and any of those assumptions could prove to be inaccurate; as a result, the forward-looking statements based on those assumptions also could prove to be inaccurate. In light of these and other uncertainties, the inclusion of a projection or forward-looking statement in this report should not be regarded as a representation by us that our plans and objectives will be achieved. You should not place undue reliance on these forward-looking statements, which apply only as of the date of this report. We do not undertake any obligation to update or revise any forward-looking statements or any other information contained herein, except as required by applicable law. The safe harbor provisions of Section 21E of the 1934 Act, which preclude civil liability for certain forward-looking statements, do not apply to the forward-looking statements in this report because we are an investment company.

Overview

We were formed on April 1, 2014 as a limited liability company under the laws of the State of Delaware. We have filed an election to be regulated as a BDC under the 1940 Act. We also intend to elect to be treated for U.S. federal income tax purposes as a RIC for the first taxable year in which it anticipates to have significant net taxable income, and expects to meet the minimum distribution and other requirements for RIC qualification and anticipate this will be 2015. As such, we will be required to comply with various regulatory requirements, such as the requirement to invest at least 70% of our assets in “qualifying assets,” source of income limitations, asset diversification requirements, and the requirement to distribute annually at least 90% of our taxable income and tax-exempt interest.

Each investor was required to enter into a subscription agreement in connection with its Commitment (a Subscription Agreement”). Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the Unitholders. On March 19, 2015, TCW Direct Lending LLC (the “Company”) completed its final private placement by entering into additional subscription agreements with certain investors for the subscription of 5,686,188 Common Units of the Company for an aggregate offering price of $568,619. With this final closing, investors have entered into subscription agreements for 20,134,698 Common Units of the Company issued and outstanding representing a total of $2,013,470 of committed capital.

Revenues

We generate revenues in the form of interest income and capital appreciation by providing private capital to middle market companies operating in a broad range of industries primarily in the United States. We do not expect the Direct Lending Team to originate investments for us with PIK interest features, although, we may have investments with payment-in-kind (“PIK”) interest features in limited circumstances involving debt restructurings or work-outs of current investments. Our highly negotiated private investments may include senior secured loans, unsecured senior loans, subordinated and mezzanine loans, convertible securities, equity securities, and equity-linked securities such as options and warrants. However, our investment bias will be towards adjustable-rate, senior secured loans. We do not anticipate a secondary market developing for our private investments.

We are primarily focused on investing in senior secured debt obligations, although there may be occasions where the investment may be unsecured. We also consider an equity investment as the primary security, in combination with a debt obligation, or as a part of total return strategy. Our investments are mostly in corporations, partnerships or other business entities. Additionally, in certain circumstances, we may co-invest with other investors and/or strategic partners through indirect investments in portfolio companies through a joint venture vehicle, partnership or other special purpose vehicle (each, an “Investment Vehicle”). While we invest primarily in U.S. companies, there may be certain instances where we will invest in companies domiciled elsewhere.

Expenses

We do not currently have any employees and do not expect to have any employees. Services necessary for our business are provided through the Administration Agreement and the Advisory Agreement.

We will bear (including by reimbursing the Adviser or Administrator) all costs and expenses of our operations, administration and transactions, including, without limitation, organizational and offering expenses, management fees, costs of reporting required under applicable securities laws, legal fees of our counsel and accounting fees. However, we will not bear (a) more than an amount equal to 10 basis points of the aggregate Commitments for organization and offering expenses in connection with the offering of Common Units through the Closing Period and (b) more than an amount equal to 12.5 basis points of the aggregate Commitments per annum (pro-rated for partial years) for our Operating Expenses, including amounts paid to the Administrator under the Administration Agreement and reimbursement of expenses to the Adviser and its affiliates. Notwithstanding the foregoing, the cap on Operating

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Expenses does not apply to payments of the Management Fee, Incentive Fee, organizational and offering expenses (which are subject to the separate cap described above), amounts payable in connection with our borrowings (including interest, bank fees, legal fees and other transactional expenses related to any borrowing or borrowing facility and similar costs), costs and expenses relating to our liquidation of the Company, taxes, or extraordinary expenses (such as litigation expenses and indemnification payments to either the Adviser or the Administrator). All expenses that we will not bear will be borne by the Adviser or its affiliates.

Accumulated offering costs of $663 were charged to Members’ Capital on the final closing date. The Company received commitments sufficient to allow for this reimbursement to the Adviser.

Operating expenses for the period from January 1, 2015 to March 31, 2015 were as follows:

	For the three months ended March 31, 2015
Expenses
Management fees	$	12,593
Interest and credit facility expenses		1,061
Sub-administrator, transfer agent and custody fees		131
Insurance expense		80
Directors’ fees		75
Audit fees		30
Valuation fees		11
Tax service fees		3
Other expenses		2
Total expenses	$	13,986
Expense recaptured by the Investment Adviser		312
Net Expenses	$	14,298

Our total operating expenses were $13,986 for the period from January 1, 2015 to March 31, 2015. Our operating expenses include management fees attributed to the Adviser of $12,593. Interest and credit facility fees of $1,061 were recorded related to the Natixis Credit Agreement and includes $391 of amortization of the deferred financing fees related to obtaining the Credit Agreement. Net expenses include an expense recapture by the Investment Adviser of $312 related to the expense limitation on organization expenses as outlined in the Advisory Agreement.

Net Investment Loss

Our net investment loss totaled $11,988 for the period from January 1, 2015 to March 31, 2015. The loss is attributable to the commencement of investment operations, management fees charged on new commitments and ongoing costs in the period.

Net Realized Gain on Investments

Our net realized gain on investments was $8 for the period from January 1, 2015 to March 31, 2015 resulting from the investments originated in the fourth quarter of 2014.

Net Change in Unrealized Appreciation (depreciation) on investments

For the period from January 1, 2015 to March 31, 2015, our net change in unrealized appreciation (depreciation) on investments totaled ($122) and resulted from investments originated in 2014.

Net Increase (Decrease) in Members’ Capital from Operations

Our net decrease in Members’ Capital from operations was ($12,102) for the period from January 1, 2015 to March 31, 2015 and resulted from the commencement of investment operations, management fees charged on new commitments and ongoing costs in the period.

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Financial Condition, Liquidity and Capital Resources

We have commenced investment operations and have completed the final private placement of Common Units on March 19, 2015. We generate cash from (1) drawing down capital in respect of Units, (2) cash flows from investments and operations and (3) borrowings from banks or other lenders.

Our primary use of cash is for (1) investments in portfolio companies and other investments to comply with certain portfolio diversification requirements, (2) the cost of operations (including expenses, the Management Fee, the Incentive Fee, and any indemnification obligations), (3) debt service of any borrowings and (4) cash distributions to the Unitholders.

As of March 31, 2015, aggregate Commitment, Undrawn Commitments and subscribed for Units of the Company are as follows:

	Commitments		Undrawn Commitments		% of Commitments Funded			Units
Common Unitholder	$	2,013,470	$	1,842,324		8	%		20,134,698

Natixis Credit Agreement

On November 12, 2014, TCW Direct Lending LLC (“TCW Direct”) entered into a new senior secured Revolving Credit Agreement (the “Credit Agreement”) among TCW Direct, as borrower, and Natixis, New York Branch, as administrative agent and committed lender (“Natixis”). Certain terms of the Credit Agreement are described below, and reference is made to the Credit Agreement for complete terms and conditions. A copy of the Credit Agreement is filed as Exhibit 10.9 to a Form 8-K filed on November 18, 2014.

The Credit Agreement provides for up to $750,000 of total lender commitments, with an initial commitment of $250,000. The Credit Agreement may be periodically increased in amounts designated by TCW Direct, up to an aggregate amount of $750,000. The maturity date of the Credit Agreement, is November 12, 2017, unless such date is extended, at TCW Direct’s option, no more than 2 times for a term of up to twelve 12 months per such extension. Borrowings under the Credit Agreement bear interest at a rate equal to either (a) a base rate calculated in a customary manner (which will never be less than the adjusted eurodollar rate plus 1.00%) plus 0.70% or (b) adjusted eurodollar rate calculated in a customary manner plus 1.70%.

As of the three months ended March 31, 2015 and for the period ended December 31, 2014, the commitment amount was $500,000 and $500,000, respectively and $110,000 and $55,000 was outstanding under the Credit Facility. The carrying amount of the amount outstanding under the Credit Facility, which is categorized as Level 2 within the fair value hierarchy as of March 31, 2015 and December 31, 2014, approximates its fair value. Valuation techniques and significant inputs used to determine fair value include Company details, credit, market and liquidity risk and events, financial health of the Company, place in the capital structure, interest rate and terms and condition. The Company incurred $4,666 in connection with obtaining the Credit Facility, which the Company has recorded as deferred financing costs on its statement of asset and liabilities and is amortizing these fees over the life of the Credit Facility. As of March 31, 2015 and December 31, 2014, $4,091 and $4,457, respectively, of such prepaid deferred financing costs had yet to be amortized.

Investment Activity

Based on fair value as of March 31, 2015, our portfolio consisted of 100.0% of first-lien investments. We had investments in two portfolio companies with an aggregate fair value of $112,078 and $112,500 as of March 31, 2015 and December 31, 2014 respectively.

The table below describes investments by industry classification and enumerates the percentage, by fair value, of the total portfolio assets in industries as of March 31, 2015 and December 31, 2014:

	As of March 31, 2015			As of December 31, 2014
Machinery		59.8	%		60.0	%
Media		40.2	%		40.0	%
Total		100.0	%		100.0	%

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Interest from investments was $2,310 for the period from January 1, 2015 to March 31, 2015.

Results of Operations

Our operating results for the period from January 1, 2015 to March 31, 2015 were as follows:

	For three months ended March 31, 2015
Total investment income	$	2,310
Net Expenses		14,298
Net investment loss		(11,988	)
Net realized gain on investments		8
Net change in unrealized appreciation (depreciation) on investments		(122	)
Net decrease in Members’ Capital from operations	$	(12,102	)

The investment income of $2,310 is interest income from our investments earned for the three months ended March 31, 2015. Net expenses include an expense recapture by the Investment Adviser of $312 related to the expense limitation on organization expenses as outlined in the Advisory Agreement.

Critical Accounting Policies and Estimates

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements which have been prepared in accordance with GAAP. The preparation of these financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenues and expenses. Changes in the economic environment, financial markets and any other parameters used in determining such estimates could cause actual results to differ.

In addition to the discussion below, our critical accounting policies are further described in Note 2 to the financial statements. We consider these accounting policies to be deemed critical because they involve management judgments and assumptions, require estimates about matters that are inherently uncertain and because they are important for understanding and evaluating our reported financial results. These judgments will affect the reported amounts of assets and liabilities and our disclosure of contingent assets and liabilities at the dates of the financial statements and the reported amounts of revenue and expenses during the reporting periods. With different estimates or assumptions, materially different amounts could be reported in our financial statements. The critical accounting policies should be read in connection with our risk factors as disclosed in “ITEM 1A. RISK FACTORS.”

Investments at Fair Value

Our investments held for which market quotes are readily available are valued at fair value. Fair value is generally determined on the basis of last reported sales prices or official closing prices on the primary exchange in which each security trades, or if no sales are reported, based on the mean of the latest quoted bid and asked prices obtained for debt investments from a quotation reporting system, established market makers or pricing service.

Investments which we hold for which market quotes are not readily available or market quotations are not considered reliable are valued at fair value by our Board of Directors based on similar instruments, internal assumptions and the weighting of the best available pricing inputs.

Fair Value Hierarchy: Assets and liabilities are classified us based on valuation inputs used to determine fair value into three levels.

Level 1 values are based on unadjusted quoted market prices in active markets for identical assets.

Level 2 values are based on significant observable market inputs, such as quoted prices for similar assets and quoted prices in inactive markets or other market observable inputs.

Level 3 values are based on significant unobservable inputs that reflect our determination of assumptions that market participants might reasonably use in valuing the assets.

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Categorization within the hierarchy is based upon the lowest level of input that is significant to the fair value measurement. The valuation levels are not necessarily an indication of the risk associated with investing in those securities.

Level 1 Assets (Investments): The valuation techniques and significant inputs used to determine fair value are as follows:

Registered Investment Companies, (Level1),include registered open-end investment companies that are valued based upon the reported net asset value of such investment.

Level 3 Assets (Investments): The following valuation techniques and significant inputs are used to determine fair value of investments in private debt for which reliable market quotations are not available. Some of the inputs are independently observable however, a significant portion of the inputs and the internal assumptions applied are unobservable.

Debt, (Level 3), include investments in privately originated senior secured debt. Such securities are valued based on specific pricing models, internal assumptions and the weighting of the best available pricing inputs. A discounted cash flow approach is generally used to determine fair value. Standard pricing inputs include but are not limited to the financial health of the issuer, place in the capital structure, value of other issuer debt; credit, industry, and market risk and events.

Pricing inputs and weightings applied to determine value require subjective determination. Accordingly, valuations do not necessarily represent the amounts that may eventually be realized form sales or other dispositions of investments.

Income Recognition

Interest income is recorded on an accrual basis unless doubtful of collection or the related investment is in default. Realized gains and losses on investments are recorded on a specific identification basis. We typically receive a fee in the form of a discount to the purchase price at the time it funds an investment in a loan. The discount is accreted to interest income over the life of the respective loan, as reported in the Statement of Operations, and reflected in the amortized cost basis of the investment. Discounts associated with a revolver are treated as a discount to the issuers’ term loan. In the event, there is a fee associated with a delayed draw that remains unfunded; we will recognize the fee as fee income immediately. Ongoing facility, commitment or other additional fees including, prepayment fees, consent fees and forbearance fees are recognized immediately when earned as income.

Income Taxes

We intend to elect to be treated as a RIC under the Code for the taxable year ending December 31, 2015. So long as we maintain our status as a RIC, we generally will not pay corporate-level U.S. federal income taxes on any ordinary income or capital gains that is distributes at least annually to our Unitholders as dividends. Rather, any tax liability related to income earned and distributed by us represents obligations of our investors and will not be reflected in the financial statements.

Contractual Obligations

A summary of our contractual payment obligations as of March 31, 2015 is as follows:

	March 31, 2015
	Total Facility Commitment		Borrowings Outstanding		Amount Available
Revolving Credit Agreement (1)	$	500,000	$	110,000	$	390,000
Total Debt Obligations	$	500,000	$	110,000	$	390,000

(1) The amount available considers any limitations related to the debt facility borrowing. The facility has the ability to be increased up to $750,000 based on certain criteria.

The Company had the following unfunded commitments and unrealized gain/(loss) as of March 31, 2015 by investment type:

Unfunded Commitments	Amount		Unrealized gain/(loss)
Debt (commitment expiration September 2017)	$	18,750	$	0
Total Unfunded Commitments	$	18,750	$	0

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Recent Developments

None.

Item 3. Quantitative and Qualitative Disclosures About Market Risk

We are subject to financial market risks, including changes in interest rates. We plan to invest primarily in illiquid debt securities of private companies. Most of our investments will not have a readily available market price, and we will value these investments at fair value as determined (with the input of the Adviser, the audit committee of the Board, and an external, independent valuation firm retained by the Company) in good faith by the board of directors in accordance with our valuation policy. There is no single standard for determining fair value in good faith. As a result, determining fair value requires that judgment be applied to the specific facts and circumstances of each portfolio investment while employing a consistently applied valuation process for the types of investments we make.

Item 4. Controls and Procedures

As of the end of the period covered by this report, we carried out an evaluation, under the supervision and with the participation of our management, including our President and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Rule 13a-15 under the Securities Exchange Act of 1934). Based on that evaluation, our President and Chief Financial Officer have concluded that our current disclosure controls and procedures are effective in timely alerting them to material information relating to us that is required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934.

There have been no changes in our internal control over financial reporting that occurred during our most recently completed fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II. OTHER INFORMATION

Item 1. Legal Proceedings

We are not currently subject to any material legal proceedings, nor, to our knowledge, is any material legal proceeding threatened against us. From time to time, we may be a party to certain legal proceedings in the ordinary course of business, including proceedings relating to the enforcement of our rights under loans to or other contracts with our portfolio companies. While the outcome of these legal proceedings cannot be predicted with certainty, we do not expect that these proceedings will have a material effect upon our financial condition or results of operations.

Item 1A. Risk Factors

There have been no material changes from the risk factors previously disclosed in our Annual Report on Form 10-K.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

Sales of unregistered securities

On September 19, 2014, the Company began accepting subscription agreements from investors for the private sale of its Common Units. The Company has continued to enter into subscription agreements since that date through the final closing date of March 19, 2015. Under the terms of the subscription agreements, the Company may generally draw down all or any portion of the undrawn commitment with respect to each Common Unit upon at least ten business days’ prior written notice to the unitholders. The issuance of the Common Units pursuant to these subscription agreements and any draw by the Company under the related commitments is expected to be exempt from the registration requirements of the Securities Act of 1933, as amended, pursuant to Section 4(a)(2) thereof, and Rule 506(c) of Regulation D thereunder.

Issuer purchases of equity securities

None.

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Item 3. Defaults Upon Senior Securities

None.

Item 4. Mine Safety Disclosures

None.

Item 5. Other Information

None.

Item 6. Exhibits.

(a) Exhibits

3.1	Certificate of Formation (incorporated by reference to Exhibit 3.1 to a registration on Form 10 filed on April 18, 2014)
3.4	Second Amended and Restated Limited Liability Company Agreement, dated September 19, 2014 (incorporated by reference to Exhibit 3.4 to a filing on Form 10-Q filed on November 7, 2014)
31.1*	Certification of President Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
31.2*	Certification of Chief Financial Officer Pursuant to Rule 13a-14(a) under the Securities Exchange Act of 1934
32.1*	Certification of President Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)
32.2*	Certification of Chief Financial Officer Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 (18 U.S.C. 1350)

* Filed herewith

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

	TCW DIRECT LENDING LLC
Date: May 15, 2015	By:	/s/    Richard T. Miller
		Richard T. Miller
		President
Date: May 15, 2015	By:	/s/    James G. Krause
		James G. Krause
		Chief Financial Officer

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