Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2017 | May 11, 2017 | |
Document Information [Line Items] | ||
Entity Registrant Name | MEDLEY MANAGEMENT INC. | |
Entity Central Index Key | 1,611,110 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Smaller Reporting Company | |
Trading Symbol | mdly | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2017 | |
Document Fiscal Year Focus | 2,017 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 5,638,891 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 100 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 63,245 | $ 49,666 |
Restricted cash equivalents | 7,554 | 4,897 |
Investments, at fair value | 36,311 | 31,904 |
Management fees receivable | 11,226 | 12,630 |
Performance fees receivable | 2,744 | 4,961 |
Other assets | 17,393 | 18,311 |
Total assets | 138,473 | 122,369 |
Liabilities and Equity | ||
Senior unsecured debt | 116,480 | 49,793 |
Loans payable | 8,736 | 52,178 |
Accounts payable, accrued expenses and other liabilities | 27,723 | 37,255 |
Total liabilities | 152,939 | 139,226 |
Commitments and contingencies | ||
Redeemable Non-controlling Interests | 36,041 | 30,805 |
Equity | ||
Additional paid in capital | 3,911 | 3,310 |
Accumulated other comprehensive income | 65 | 33 |
Accumulated deficit | (6,164) | (5,254) |
Total stockholders' deficit, Medley Management Inc. | (2,130) | (1,853) |
Total deficit | (50,507) | (47,662) |
Total liabilities, redeemable non-controlling interests and equity | 138,473 | 122,369 |
Consolidated Subsidiaries [Member] | ||
Equity | ||
Non-controlling interests | (1,714) | (1,717) |
Medley LLC [Member] | ||
Equity | ||
Non-controlling interests | (46,663) | (44,092) |
Common Class A [Member] | ||
Equity | ||
Common stock, value | 58 | 58 |
Common Class B [Member] | ||
Equity | ||
Common stock, value | $ 0 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2017 | Dec. 31, 2016 |
Common Class A [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 3,000,000,000 | 3,000,000,000 |
Common stock, shares issued (in shares) | 6,046,842 | 6,042,050 |
Common stock, shares outstanding (in shares) | 5,764,722 | 5,809,130 |
Common Class B [Member] | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized (in shares) | 1,000,000 | 1,000,000 |
Common stock, shares issued (in shares) | 100 | 100 |
Common stock, shares outstanding (in shares) | 100 | 100 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Revenues | ||
Management fees (includes Part I incentive fees of $544 and $3,369, respectively) | $ 13,895 | $ 16,263 |
Performance fees | (2,219) | (591) |
Other revenues and fees | 2,320 | 1,899 |
Total revenues | 13,996 | 17,571 |
Expenses | ||
Compensation and benefits | 5,794 | 5,868 |
Performance fee compensation | (881) | (71) |
General, administrative and other expenses | 2,668 | 7,979 |
Total expenses | 7,581 | 13,776 |
Other income (expense) | ||
Dividend income | 735 | 222 |
Interest expense | (3,647) | (2,118) |
Other income (expense), net | 1,560 | (751) |
Total other expense, net | (1,352) | (2,647) |
Income before income taxes | 5,063 | 1,148 |
Provision for income taxes | 413 | 112 |
Net income | 4,650 | 1,036 |
Net income attributable to Medley Management Inc. | $ 394 | $ 94 |
Dividends declared per Class A common stock (in dollars per share) | $ 0.20 | $ 0.20 |
Net income (loss) per Class A common stock: | ||
Basic (in dollars per share) | 0.06 | (0.01) |
Diluted (in dollars per share) | $ 0.06 | $ (0.01) |
Weighted average number shares outstanding - Basic and Diluted (in shares) | 5,808,626 | 5,851,129 |
Consolidated Subsidiaries [Member] | ||
Other income (expense) | ||
Net income (loss) attributable to non-controlling interests | $ 1,488 | $ 263 |
Medley LLC [Member] | ||
Other income (expense) | ||
Net income (loss) attributable to non-controlling interests | $ 2,768 | $ 679 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Income Statement [Abstract] | ||
Incentive fees | $ 544 | $ 3,369 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Net income | $ 4,650 | $ 1,036 |
Other comprehensive income: | ||
Change in fair value of available-for-sale securities | 485 | 0 |
Total comprehensive income | 5,135 | 1,036 |
Comprehensive income attributable to Medley Management Inc. | 426 | 94 |
Consolidated Subsidiaries [Member] | ||
Other comprehensive income: | ||
Comprehensive income (loss) attributable to non-controlling interests | 1,812 | 263 |
Medley LLC [Member] | ||
Other comprehensive income: | ||
Comprehensive income (loss) attributable to non-controlling interests | $ 2,897 | $ 679 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Changes in Equity and Redeemable Non-controlling Interests (unaudited) - USD ($) $ in Thousands | Total | Common Stock [Member]Common Class A [Member] | Common Stock [Member]Common Class B [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income [Member] | Accumulated Deficit [Member] | Noncontrolling Interests [Member]Consolidated Subsidiaries [Member] | Noncontrolling Interests [Member]Medley LLC [Member] | Redeemable Non Controlling Interest [Member] |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | $ 118 | $ 1,039 | $ (120) | $ (801) | |||||
Balance at Dec. 31, 2016 | (47,662) | $ 58 | $ 0 | 3,310 | $ 33 | (5,254) | $ (1,717) | (44,092) | $ 30,805 |
Balance (in shares) at Dec. 31, 2016 | 5,809,130 | 100 | |||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||
Net income | 4,650 | 394 | 3 | 2,768 | |||||
Net income (loss) | 3,165 | ||||||||
Net income (loss) | 1,485 | ||||||||
Change in fair value of available-for-sale securities | 161 | 32 | 129 | ||||||
Change in fair value of available-for-sale securities | 324 | ||||||||
Stock-based compensation | (37) | (37) | |||||||
Dividends on Class A common stock ($0.20 per share) | (1,600) | (1,600) | |||||||
Reclass of cumulative dividends on forfeited RSUs | 416 | 416 | |||||||
Issuance of Class A common stock related to vesting of restricted stock units (shares) | 4,792 | ||||||||
Repurchases of Class A common stock | (401) | $ 0 | (401) | ||||||
Repurchase of Class A common stock (in shares) | (49,200) | ||||||||
Contributions | 0 | 0 | 5,000 | ||||||
Distributions | (4,667) | 0 | (4,667) | (1,573) | |||||
Balance at Mar. 31, 2017 | $ (50,507) | $ 58 | $ 0 | $ 3,911 | $ 65 | $ (6,164) | $ (1,714) | $ (46,663) | $ 36,041 |
Balance (in shares) at Mar. 31, 2017 | 5,764,722 | 100 |
Condensed Consolidated Stateme8
Condensed Consolidated Statement of Changes in Equity and Redeemable Non-controlling Interests (unaudited) (Parenthetical) | Mar. 31, 2017$ / shares |
Statement of Stockholders' Equity [Abstract] | |
Dividends (in dollars per share) | $ 0.20 |
Condensed Consolidated Stateme9
Condensed Consolidated Statements of Cash Flows (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Cash flows from operating activities | ||
Net income | $ 4,650 | $ 1,036 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Stock-based compensation | (37) | 836 |
Amortization of debt issuance costs | 979 | 135 |
Accretion of debt discount | 552 | 198 |
Provision for (benefit from) deferred taxes | 82 | (66) |
Depreciation and amortization | 235 | 188 |
Net change in unrealized depreciation on investments | 72 | 110 |
Income from equity method investments | (69) | (12) |
Reclassification of cumulative dividends paid on forfeited restricted stock units | 416 | 0 |
Other non-cash amounts | 0 | 27 |
Changes in operating assets and liabilities: | ||
Management fees receivable | 1,404 | 3,144 |
Performance fees receivable | (2,217) | (574) |
Other assets | 715 | 872 |
Accounts payable, accrued expenses and other liabilities | (9,519) | (3,201) |
Net cash provided by operating activities | 1,697 | 3,841 |
Cash flows from investing activities | ||
Purchases of fixed assets | (18) | (1,867) |
Distributions received from equity method investments | 17 | 810 |
Purchases of available-for-sale securities | (3,728) | 0 |
Net cash used in investing activities | (3,729) | (1,057) |
Cash flows from financing activities | ||
Repayment of loans payable | (44,800) | (312) |
Proceeds from issuance of senior unsecured debt | 69,108 | 0 |
Capital contributions from redeemable non-controlling interests | 5,000 | 0 |
Distributions to members and redeemable non-controlling interests | (6,240) | (6,214) |
Debt issuance costs | (2,585) | 0 |
Dividends paid | (1,600) | (1,314) |
Repurchases of Class A common stock | (401) | (1,198) |
Capital contributions to equity method investments | (214) | (53) |
Net cash provided by (used in) financing activities | 18,268 | (9,091) |
Net increase (decrease) in cash, cash equivalents and restricted cash equivalents | 16,236 | (6,307) |
Cash, cash equivalents and restricted cash equivalents, beginning of period | 54,563 | 71,688 |
Cash, cash equivalents and restricted cash equivalents, end of period | 70,799 | 65,381 |
Reconciliation of cash, cash equivalents, and restricted cash equivalents reported on the condensed consolidated balance sheets to the total of such amounts reported on the condensed consolidated statements of cash flows | ||
Total cash, cash equivalents and restricted cash equivalents | 54,563 | 71,688 |
Supplemental cash flow information | ||
Fixed assets | 0 | 2,293 |
Reclassification of redeemable non-controlling interest | $ 0 | $ 12,155 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Medley Management Inc. is an asset management firm offering yield solutions to retail and institutional investors. The Company's national direct origination franchise provides capital to the middle market in the U.S. Medley Management Inc., through its consolidated subsidiary, Medley LLC, provides investment management services to permanent capital vehicles, long-dated private funds and separately managed accounts and serves as the general partner to the private funds, which are generally organized as pass-through entities. Medley LLC is headquartered in New York City and has an office in San Francisco. The Company’s business is currently comprised of only one reportable segment, the investment management segment, and substantially all of the Company operations are conducted through this segment. The investment management segment provides investment management services to permanent capital vehicles, long-dated private funds and separately managed accounts. The Company conducts its investment management business in the U.S., where substantially all its revenues are generated. Initial Public Offering of Medley Management Inc. Medley Management Inc. was incorporated on June 13, 2014 and commenced operations on September 29, 2014 upon the completion of its initial public offering (“IPO”) of its Class A common stock. Medley Management Inc. raised $100.4 million , net of underwriting discount, through the issuance of 6,000,000 shares of Class A common stock at an offering price to the public of $18.00 per share. Medley Management Inc. used the offering proceeds to purchase 6,000,000 newly issued LLC Units (defined below) from Medley LLC. Prior to the IPO, Medley Management Inc. had not engaged in any business or other activities except in connection with its formation and IPO. In connection with the IPO, Medley Management Inc. issued 100 shares of Class B common stock to Medley Group LLC (“Medley Group”), an entity wholly owned by the pre-IPO members of Medley LLC. For as long as the pre-IPO members and then-current Medley personnel hold at least 10% of the aggregate number of shares of Class A common stock and LLC Units (defined below) (excluding those LLC Units held by Medley Management Inc.) then outstanding, the Class B common stock entitles Medley Group to a number of votes that is equal to 10 times the aggregate number of LLC Units held by all non-managing members of Medley LLC that do not themselves hold shares of Class B common stock and entitle each other holder of Class B common stock, without regard to the number of shares of Class B common stock held by such other holder, to a number of votes that is equal to 10 times the number of membership units held by such holder. The Class B common stock does not participate in dividends and does not have any liquidation rights. Medley LLC Reorganization In connection with the IPO, Medley LLC amended and restated its limited liability agreement to modify its capital structure by reclassifying the 23,333,333 interests held by the pre-IPO members into a single new class of units (“LLC Units”). The pre-IPO members also entered into an exchange agreement under which they (or certain permitted transferees thereof) have the right, subject to the terms of an exchange agreement, to exchange their LLC Units for shares of Medley Management Inc.’s Class A common stock on a one-for-one basis , subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. In addition, pursuant to the amended and restated limited liability agreement, Medley Management Inc. became the sole managing member of Medley LLC. The pre-IPO owners are, subject to limited exceptions, prohibited from transferring any LLC Units held by them or any shares of Class A common stock received upon exchange of such LLC Units, until the third anniversary of the date of the closing of the IPO without the Company’s consent. Thereafter and prior to the fourth and fifth anniversaries of the closing of the IPO, such holders may not transfer more than 33 1/3% and 66 2/3%, respectively, of the number of LLC Units held by them, together with the number of any shares of Class A common stock received by them upon exchange therefor, without the Company’s consent. Basis of Presentation The accompanying condensed consolidated financial statements have been prepared on the accrual basis of accounting in conformity with U.S. generally accepted accounting principles (“GAAP”) and include the accounts of Medley Management Inc., Medley LLC and its consolidated subsidiaries (collectively, “Medley” or the “Company”). Additionally, the accompanying condensed consolidated financial statements of the Company and related financial information have been prepared pursuant to the requirements for reporting on Form 10-Q and Article 10 of Regulation S-X. Accordingly, certain disclosures accompanying annual financial statements prepared in accordance with U.S. GAAP may be omitted. In the opinion of management, the unaudited condensed consolidated financial results included herein contain all adjustments, consisting solely of normal recurring accruals, considered necessary for the fair presentation of financial statements for the interim periods included herein. Therefore, this Form 10-Q should be read in conjunction with the Company's Annual Report on Form 10-K for the fiscal year ended December 31, 2016. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for the full year ending December 31, 2017. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Summary of Significant Accounting Policies | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , the Company consolidates those entities where it has a direct and indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates entities that the Company concludes are variable interest entities (“VIEs”), for which the Company is deemed to be the primary beneficiary and entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity. For legal entities evaluated for consolidation, the Company must determine whether the interests that it holds and fees paid to it qualify as a variable interest in an entity. This includes an evaluation of the management fees and performance fees paid to the Company when acting as a decision maker or service provider to the entity being evaluated. If fees received by the Company are customary and commensurate with the level of services provided, and the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, the interest that the Company holds would not be considered a variable interest. The Company factors in all economic interests including proportionate interests through related parties, to determine if fees are considered a variable interest. An entity in which the Company holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk have the right to direct the activities of the entity that most significantly impact the legal entity’s economic performance, (c) the voting rights of some investors are disproportionate to their obligation to absorb losses or rights to receive returns from a legal entity. For limited partnerships and other similar entities, non-controlling investors must have substantive rights to either dissolve the fund or remove the general partner (“kick-out rights”) in order to not qualify as a VIE. For those entities that qualify as a VIE, the primary beneficiary is generally defined as the party who has a controlling financial interest in the VIE. The Company is generally deemed to have a controlling financial interest if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. The primary beneficiary evaluation is generally performed qualitatively on the basis of all facts and circumstances. However, quantitative information may also be considered in the analysis, as appropriate. These assessments require judgments. Each entity is assessed for consolidation on a case-by-case basis. For those entities evaluated under the voting interest model, the Company consolidates the entity if it has a controlling financial interest. The Company has a controlling financial interest in a voting interest entity (“VOE”) if it owns a majority voting interest in the entity. Consolidated Variable Interest Entities Medley Management Inc. is the sole managing member of Medley LLC and, as such, it operates and controls all of the business and affairs of Medley LLC and, through Medley LLC, conducts its business. Under ASC 810, Medley LLC meets the definition of a VIE because the equity of Medley LLC is not sufficient to permit activities without additional subordinated financial support. Medley Management Inc. has the obligation to absorb expected losses that could be significant to Medley LLC and holds 100% of the voting power, therefore Medley Management Inc. is considered to be the primary beneficiary of Medley LLC. As a result, Medley Management Inc. consolidates the financial results of Medley LLC and its subsidiaries and records a non-controlling interest for the economic interest in Medley LLC held by the non-managing members. Medley Management Inc.’s and the non-managing members’ economic interests in Medley LLC are 19.5% and 80.5% , respectively, as of March 31, 2017 and 19.9% and 80.1% , respectively, as of December 31, 2016 . Net income attributable to the non-controlling interests in Medley LLC on the consolidated statements of operations represents the portion of earnings attributable to the economic interest in Medley LLC held by its non-managing members. Non-controlling interests in Medley LLC on the consolidated balance sheets represents the portion of net assets of Medley LLC attributable to the non-managing members based on total LLC Units of Medley LLC owned by such non-managing members. As of March 31, 2017 and December 31, 2016 , Medley LLC has three majority owned subsidiaries, SIC Advisors LLC, Medley Seed Funding I LLC and STRF Advisors LLC, which are consolidated VIEs. Each of these entities were organized as a limited liability company and was legally formed to either manage a designated fund or strategically invest capital as well as isolate business risk. As of March 31, 2017 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the condensed consolidated balance sheets were $54.7 million and $20.1 million , respectively. As of December 31, 2016 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the condensed consolidated balance sheets were $51.7 million and $22.8 million , respectively. Except to the extent of the assets of these VIEs that are consolidated, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company. Seed Investments The Company accounts for seed investments through the application of the voting interest model under ASC 810-10-25-1 through 25-14 and consolidates a seed investment when the investment advisor holds a controlling interest, which is, in general, 50% or more of the equity in such investment. For seed investments in which the Company does not hold a controlling interest, the Company accounts for such seed investment under the equity method of accounting, at its ownership percentage of such seed investment’s net asset value. Non-Consolidated Variable Interest Entities The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary. The Company's interest in these entities is in the form of insignificant equity interests and fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. As of March 31, 2017 , the Company recorded investments, at fair value, attributed to these non-consolidated VIEs of $5.4 million , receivables of $2.0 million included as a component of other assets and a clawback obligation of $7.1 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. The clawback obligation assumes a hypothetical liquidation of a fund’s investments, at their then current fair values and a portion of tax distributions relating to performance fees which would need to be returned. As of December 31, 2016 , the Company recorded investments, at fair value of $5.1 million , receivables of $1.9 million included as a component of other assets and a clawback obligation of $7.1 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s condensed consolidated balance sheets. As of March 31, 2017 , the Company’s maximum exposure to losses from these entities is $7.4 million . 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Management’s estimates are based on historical experience and other factors, including expectations of future events that management believes to be reasonable under the circumstances. These assumptions and estimates also require management to exercise judgment in the process of applying the Company’s accounting policies. Significant estimates and assumptions by management affect the carrying value of investments, performance compensation payable and certain accrued liabilities. Actual results could differ from these estimates, and such differences could be material. Indemnification In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has not experienced any prior claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote. Non-Controlling Interests in Consolidated Subsidiaries Non-controlling interests in consolidated subsidiaries represent the component of equity in such consolidated entities held by third-parties. These interests are adjusted for contributions to and distributions from Medley entities and are allocated income from Medley entities based on their ownership percentages. Redeemable Non-Controlling Interests Redeemable non-controlling interests represents interests of certain third parties that are not mandatorily redeemable but redeemable for cash or other assets at a fixed or determinable price or a fixed or determinable date, at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer. These interests are classified in temporary equity. Class A Earnings per Share The Company computes and presents earnings per share using the two-class method. Under the two-class method, the Company allocates earnings between common stock and participating securities. The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. For purposes of calculating earnings per share, the Company reduces its reported net earnings by the amount allocated to participating securities to arrive at the earnings allocated to Class A common stockholders. Earnings are then divided by the weighted average number of Class A common stock outstanding to arrive at basic earnings per share. Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in our earnings. Participating securities consist of the Company's unvested restricted stock units that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in its basic and diluted calculations. Investments Investments include equity method investments that are not consolidated but over which the Company exerts significant influence. The Company measures the carrying value of its public non-traded equity method investment at NAV per share. The Company measures the carrying value of its privately-held equity method investments by recording its share of the underlying income or loss of these entities. Unrealized appreciation (depreciation) resulting from changes in fair value of the equity method investments is reflected as a component of other income (expense), net in the condensed consolidated statements of operations. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The carrying amounts of equity method investments are reflected in investments in the consolidated statements of financial condition. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value. The Company evaluates its equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Investments also include available-for-sale securities which consist of an investment in publicly traded common stock. The Company measures the carrying value of its publicly traded investment in available-for-sale securities at the quoted market price on the primary market or exchange on which they trade. Unrealized appreciation (depreciation) resulting from changes in fair value of available-for-sale securities is recorded in accumulated other comprehensive income, redeemable non-controlling interests and non-controlling interests in Medley LLC. Realized gains (losses) and declines in value determined to be other than temporary, if any, are reported in other income (expenses), net. The Company evaluates its investment in available-for-sale securities for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investment may not be recoverable. Debt Issuance Costs Debt issuance costs represent direct costs incurred in obtaining financing and are amortized over the term of the underlying debt using the effective interest method. Debt issuance costs, and the related amortization expense, are adjusted when any prepayments of principal are made to the related outstanding debt. Amortization of debt issuance costs is included as a component of interest expense in the Company's consolidated statement of operations. Revenues Management Fees Medley provides investment management services to both public and private investment vehicles. Management fees include base management fees, other management fees, and Part I incentive fees, as described below. Base management fees are calculated based on either (i) the average or ending gross assets balance for the relevant period, (ii) limited partners’ capital commitments to the funds, (iii) invested capital, (iv) NAV or (v) lower of cost or market value of a fund’s portfolio investments. Depending upon the contracted terms of the investment management agreement, management fees are paid either quarterly in advance or quarterly in arrears, and are recognized as earned over the period the services are provided. Certain management agreements provide for Medley to receive other management fee revenue derived from up front origination fees paid by the funds' and/or separately managed accounts' underlying portfolio companies. These fees are recognized when Medley becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net interest income (excluding gains and losses) above a hurdle rate. As it relates to Medley Capital Corporation (“MCC”), these fees are subject to netting against realized and unrealized losses. Part I incentive fees are paid quarterly and are recognized as earned over the period the services are provided. Performance Fees Performance fees consist principally of the allocation of profits from certain funds and separately managed accounts, to which Medley provides management services. Medley is generally entitled to an allocation of income as a performance fee after returning the invested capital plus a specified preferred return as set forth in each respective agreement. Medley recognizes revenues attributable to performance fees based upon the amount that would be due pursuant to the respective agreement at each period end as if the funds were terminated at that date. Accordingly, the amount recognized in the Company's condensed consolidated financial statements reflects Medley’s share of the gains and losses of the associated funds’ underlying investments measured at their current fair values. Performance fee revenue may include reversals of previously recognized performance fees due to a decrease in the net income of a particular fund that results in a decrease of cumulative performance fees earned to date. Since fund return hurdles are cumulative, previously recognized performance fees also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate. During the three months ended March 31, 2017 and 2016, the Company reversed $2.6 million and $0.7 million , respectively, of previously recognized performance fees. As of March 31, 2017 , the Company recognized cumulative performance fees of $4.8 million . Performance fees received in prior periods may be required to be returned by Medley in future periods if the funds’ investment performance declines below certain levels. Each fund is considered separately in this regard and, for a given fund, performance fees can never be negative over the life of a fund. If upon a hypothetical liquidation of a fund’s investments, at their then current fair values, previously recognized and distributed performance fees would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2017 , the Company had not received any performance fee distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of performance fees. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2017 , the Company had accrued $7.1 million for clawback obligations that would need to be paid if the funds were liquidated at fair value as of the end of the reporting period. The Company’s actual obligation, however, would not become payable or realized until the end of a fund’s life. Other Revenues and Fees Medley provides administrative services to certain affiliated funds and is reimbursed for direct and allocated expenses incurred in providing such administrative services, as set forth in the respective underlying agreements. These fees are recognized as revenue in the period administrative services are rendered. Performance Fee Compensation Medley has issued profit interests in certain subsidiaries to select employees. These profit-sharing arrangements are accounted for under ASC 710, Compensation — General, which requires compensation expense to be measured at fair value at the grant date and expensed over the vesting period, which is usually the period over which the service is provided. The fair value of the profit interests are re-measured at each balance sheet date and adjusted for changes in estimates of cash flows and vesting percentages. The impact of such changes is recorded in the condensed consolidated statements of operations as an increase or decrease to performance fee compensation. Stock-based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. Prior to January 1, 2017, the fair value of the awards were amortized on a straight line basis over the requisite service period as stock based compensation expenses and was reduced for the impact of estimated forfeitures. The Company estimated forfeitures based on its historical experience and revised its estimate if actual forfeitures differed from its initial estimates. Effective January 1, 2017, the Company adopted a change in accounting policy as a result of the adoption of ASU 2016-09 to account for forfeitures as they occur. As such, stock based compensation expense relating to equity based awards are measured at fair value as of the grant date, reduced for actual forfeitures in the period they occur, and expensed over the requisite service period on a straight-line basis as a component of compensation and benefits on the Company's condensed consolidated statements of operations. Income Taxes The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions and other tax matters as a component of income tax expense. For interim periods, the Company accounts for income taxes based on its estimate of the effective tax rate for the year. Discrete items and changes in its estimate of the annual effective tax rate are recorded in the period they occur. Medley Management Inc. is subject to U.S. federal, state and local corporate income taxes on its allocable portion of the income of Medley LLC at prevailing corporate tax rates. Medley LLC and its subsidiaries are not subject to federal, state and local corporate income taxes since all income, gains and losses are passed through to its members. However, a portion of taxable income from Medley LLC and its subsidiaries are subject to New York City’s unincorporated business tax, which is included in the Company’s provision for income taxes. The Company analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. Recently Issued Accounting Pronouncements Adopted as of January 1, 2017 In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies and improves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Under the new guidance, all excess tax benefits and tax deficiencies related to employee stock compensation will be recognized within income tax expense. Under prior guidance, excess tax benefits were recognized to additional paid-in capital and tax deficiencies were only recognized to the extent they exceeded the pool of excess tax benefits. In addition, excess tax benefits will be classified as cash flows from operating activities, and cash withheld by the Company for employees' withholding taxes will be classified as cash flows from financing activities on the Company's consolidated statements of cash flows. In connection with the adoption of ASU 2016-09, the Company elected to account for forfeitures as they occur, instead of utilizing an estimated forfeiture rate assumption. The change in accounting for forfeitures was applied on a modified retrospective basis by means of a cumulative-effect adjustment to equity. As of January 1, 2017, retained earnings and non-controlling interests in Medley LLC decreased by $0.1 million and $0.8 million , respectively, additional paid in capital increased by $1.0 million and a deferred tax asset was recorded in the amount of $0.1 million to reflect the change in accounting principle. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contracts, (3) determine the transaction prices, (4) allocate the transaction prices to the performance obligations in the contracts, and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarified the implementation guidance regarding performance obligations and licensing arrangements. The new standard will become effective for the Company on January 1, 2018. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. However, the adoption of this guidance is expected to impact the timing of performance fee revenue recognition. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , which requires that all equity investments (except those accounted for under the equity method of accounting) be measured at fair value with changes in fair value recognized in net income. This guidance eliminates the available-for-sale classification for equity securities with readily determinable fair values. However, companies may elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. This new guidance will become effective for the Company on January 1, 2018. Under this new guidance, changes in the fair value of available-for-sale securities will no longer be classified in the Company's condensed consolidated statements of comprehensive income but rather as a component of other income in its condensed consolidated statements of operations. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. This new guidance will become effective for the Company on January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements. However, the adoption of this guidance is expected to result in a significant increase in total assets and total liabilities, but is not expected to have a significant impact on the consolidated statement of operations. The Company does not believe any other recently issued, but not yet effective, revisions to authoritative guidance will have a material effect on its consolidated balance sheets, results of operations or cash flows. |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Schedule of Investments [Abstract] | |
Investments | INVESTMENTS The components of investments are as follows: As of As of December 31, 2016 (Amounts in thousands) Equity method investments, at fair value $ 15,088 $ 14,895 Available-for-sale securities 21,223 17,009 Total investments, at fair value $ 36,311 $ 31,904 Equity Method Investments Medley measures the carrying value of its public non-traded equity method investments at NAV per share. Unrealized appreciation (depreciation) resulting from changes in NAV per share is reflected as a component of other income (expense) in the condensed consolidated statements of operations. The carrying value of the Company’s privately-held equity method investments is determined based on the amounts invested by the Company plus the equity in earnings or losses of the investee allocated based on the respective underlying agreements, less distributions received. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. There were no impairment losses recorded during the three months ended March 31, 2017 and 2016. As of March 31, 2017 and December 31, 2016, the Company’s carrying value of its equity method investments was $15.1 million and $14.9 million , respectively. Included in this balance was $9.0 million as of March 31, 2017 and December 31, 2016 from the Company’s investment in publicly-held Sierra Income Corporation (“SIC”). The remaining balance as of March 31, 2017 and December 31, 2016 relates primarily to the Company’s investments in Medley Opportunity Fund II, LP ("MOF II"), Medley Opportunity Fund III LP (“MOF III”) and CK Pearl Fund, LP. Available-For-Sale Securities As of March 31, 2017 and December 31, 2016, the Company’s carrying value of its available-for-sale securities was $21.2 million and $ 17.0 million , respectively, and consisted of 2,759,748 and 2,264,892 shares of MCC, respectively. The Company measures the carrying value of its investment in MCC at fair value based on the quoted market price on the exchange on which its shares trade. As of March 31, 2017 , cumulative unrealized gains in redeemable non-controlling interests, non-controlling interests in Medley LLC and accumulated other comprehensive income on the Company's consolidated balance sheets was $0.3 million , $ 0.3 million , and $ 0.1 million respectively. There were no impairment charges recorded related to the Company’s investments in available-for-sale securities during the three months ended March 31, 2017 and 2016. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2017 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS The Company follows the guidance set forth in ASC 820 for measuring the fair value of investments in available-for-sale securities. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Financial instruments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows: • Level I – Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II – Valuations based on inputs other than quoted prices in active markets included in Level I, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in non-active markets including bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. • Level III – Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets and liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level III information, assuming no additional corroborating evidence. When determining the fair value of publicly traded equity securities, the Company uses the quoted market price as of the valuation date on the primary market or exchange on which they trade. The Company’s investments in available-for-sale securities are categorized as Level I. As of March 31, 2017 and December 31, 2016, there were no financial instruments classified as Level II or Level III. Our equity method investments for which fair value is measured at NAV per share, or its equivalent, using the practical expedient, are not categorized in the fair value hierarchy. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting all levels of the fair value hierarchy are reported as transfers in or out of Level I, II or III category as of the beginning of the quarter during which the reclassifications occur. There were no transfers between levels in the fair value hierarchy during the three months ended March 31, 2017 and 2016. |
OTHER ASSETS
OTHER ASSETS | 3 Months Ended |
Mar. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | OTHER ASSETS The components of other assets are as follows: As of As of December 31, 2016 (Amounts in thousands) Fixed assets, net of accumulated depreciation of $2,053 and $1,816, respectively $ 4,781 $ 4,998 Security deposits 1,975 1,975 Administrative fees receivable (Note 10) 2,113 2,068 Deferred tax assets (Note 12) 1,906 2,001 Due from affiliates (Note 10) 1,893 2,133 Prepaid expenses and taxes 2,464 3,078 Other 2,261 2,058 Total other assets $ 17,393 $ 18,311 |
LOANS PAYABLE
LOANS PAYABLE | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
LOANS PAYABLE | LOANS PAYABLE The Company's loans payable consist of the following: As of As of December 31, 2016 (Amounts in thousands) Term loans under the Credit Suisse Term Loan Facility, net of unamortized discount and debt issuance costs of $1,207 at December 31, 2016 $ — $ 43,593 Non-recourse promissory notes, net of unamortized discount of $1,264 and $1,415, respectively 8,736 8,585 Total loans payable $ 8,736 $ 52,178 Credit Suisse Term Loan Facility On August 14, 2014 , the Company entered into a $110.0 million senior secured term loan credit facility (as amended, “Term Loan Facility”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent thereunder, Credit Suisse Securities (USA) LLC, as bookrunner and lead arranger, and the lenders from time-to-time party thereto, which had an original maturity date of June 15, 2019 . In February 2017, borrowings under this facility were paid off using the proceeds from the issuance of senior unsecured debt and the Term Loan Facility was terminated. Borrowings under the Term Loan Facility, bore interest, at the borrower’s option, at a rate equal to either a Eurodollar margin over an adjusted LIBOR (with a “floor” of 1.0% ) or a base rate margin over an adjusted base rate determined by reference to the highest of (i) the term loan administrative agent’s prime rate; (ii) the federal funds effective rate in effect on such day plus 0.5% ; and (iii) an adjusted LIBOR plus 1.0% . The applicable margins for the Term Loan Facility was 5.5% , in the case of Eurodollar loans and 4.5% , in the case of adjusted base rate loans. Outstanding borrowings under the Term Loan Facility bore interest at a rate of 6.5% as of December 31, 2016. Borrowings were collateralized by substantially all of the equity interests in Medley LLC’s wholly owned subsidiaries. Total interest expense under the Term Loan Facility, including accretion of the note discount and amortization of debt issuance costs, was $1.5 million and $1.8 million for the three months ended March 31, 2017 and 2016, respectively. CNB Credit Agreement On August 19, 2014 , the Company entered into a $15.0 million senior secured revolving credit facility with City National Bank (as amended, the “Revolving Credit Facility”). The Company intends to use any proceeds from borrowings under the Revolving Credit Facility for general corporate purposes, including funding of its working capital needs. Borrowings under the Revolving Credit Facility bear interest at the option of the Company, either (i) at an Alternate Base Rate, as defined, plus an applicable margin not to exceed 3.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 4.0% . As of and during the three months ended March 31, 2017 and 2016, there were no amounts drawn under the Revolving Credit Facility. The Revolving Credit Facility also contains a financial covenant that requires the Company to maintain a Maximum Net Leverage Ratio of not greater than 3.5 to 1.0, with which the Company is compliant. This ratio is calculated on a trailing twelve months basis and is the ratio of Total Net Debt, as defined, to Core EBITDA, as defined, and is calculated using the Company’s financial results and includes adjustments made to calculate Core EBITDA. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default under the Revolving Credit Facility. The Revolving Credit Facility also contains other customary events of default, including defaults based on events of bankruptcy and insolvency, dissolution, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties. There were no events of default under the Revolving Credit Facility as of March 31, 2017 . Non-Recourse Promissory Notes In April 2012, the Company borrowed $10.0 million under two non-recourse promissory notes. Proceeds from the borrowings were used to purchase 1,108,033 shares of common stock of SIC, which were pledged as collateral for the obligations. Interest on the notes is paid monthly and is equal to the dividends received by the Company related to the pledged shares. The Company may prepay the notes in whole or in part at any time without penalty and the lenders may call the notes if certain conditions are met. The notes are scheduled to mature in March 2019 . The proceeds from the notes were recorded net of issuance costs of $3.8 million and are being accreted, using the effective interest method, over the term of the non-recourse promissory notes. Total interest expense under these non-recourse promissory notes, including accretion of the note discount, was $0.3 million and $0.4 million for the three months ended March 31, 2017 and 2016, respectively. The fair value of the outstanding balance of the notes was $10.2 million as of March 31, 2017 and December 31, 2016. Contractual Maturities of Loans Payable As of March 31, 2017 , $10.0 million of future principal payments will be due, relating to loans payable, during the year ended December 31, 2019. SENIOR UNSECURED DEBT The Company’s senior unsecured debt consist of the following: As of March 31, As of (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,549 at March 31, 2017 and $3,802 at December 31, 2016 $ 50,046 $ 49,793 2024 Notes, net of unamortized premium and debt issuance costs of $2,565 at March 31, 2017 66,434 — Total senior unsecured debt $ 116,480 $ 49,793 2026 Notes On August 9, 2016 and October 18, 2016, the Company issued debt consisting of $53.6 million in aggregate principal amount of senior unsecured notes due 2026 at a stated coupon rate of 6.875% (the "2026 Notes"). The net proceeds from these offerings were used to pay down a portion of the Company's outstanding indebtedness under its Term Loan Facility. Interest is payable quarterly commencing on November 15, 2016. The 2026 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after August 15, 2019 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2026 notes were recorded net of discount and direct issuance costs of $3.8 million which are being amortized over the term of notes using the effective interest rate method. The 2026 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLX.” The fair value of the 2026 Notes based on there underlying quoted market price was $53.0 million as of March 31, 2017. Interest expense on the 2026 Notes, including amortization of discount and debt issuance costs, was $1.0 million for the three months ended March 31, 2017. 2024 Notes On January 18, 2017 and February 22, 2017, the Company issued $69.0 million in aggregate principal amount of senior unsecured notes due 2024 at a stated coupon rate of 7.25% (the "2024 Notes"). The net proceeds from these offerings were used to pay down the remaining portion of the Company's outstanding indebtedness under its Term Loan Facility with the remaining to be used for general corporate purposes. Interest is payable quarterly commencing on April 30, 2017. The 2024 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after January 30, 2020 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2024 notes were recorded net of discount and direct issuance costs of $2.6 million which are being amortized over the term of notes using the effective interest rate method. The 2024 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLQ.” The fair value of the 2024 Notes based on there underlying quoted market price was $70.4 million as of March 31, 2017. Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $0.8 million for the three months ended March 31, 2017. |
SENIOR UNSECURED DEBT
SENIOR UNSECURED DEBT | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Senior Unsecured Debt | LOANS PAYABLE The Company's loans payable consist of the following: As of As of December 31, 2016 (Amounts in thousands) Term loans under the Credit Suisse Term Loan Facility, net of unamortized discount and debt issuance costs of $1,207 at December 31, 2016 $ — $ 43,593 Non-recourse promissory notes, net of unamortized discount of $1,264 and $1,415, respectively 8,736 8,585 Total loans payable $ 8,736 $ 52,178 Credit Suisse Term Loan Facility On August 14, 2014 , the Company entered into a $110.0 million senior secured term loan credit facility (as amended, “Term Loan Facility”) with Credit Suisse AG, Cayman Islands Branch, as administrative agent and collateral agent thereunder, Credit Suisse Securities (USA) LLC, as bookrunner and lead arranger, and the lenders from time-to-time party thereto, which had an original maturity date of June 15, 2019 . In February 2017, borrowings under this facility were paid off using the proceeds from the issuance of senior unsecured debt and the Term Loan Facility was terminated. Borrowings under the Term Loan Facility, bore interest, at the borrower’s option, at a rate equal to either a Eurodollar margin over an adjusted LIBOR (with a “floor” of 1.0% ) or a base rate margin over an adjusted base rate determined by reference to the highest of (i) the term loan administrative agent’s prime rate; (ii) the federal funds effective rate in effect on such day plus 0.5% ; and (iii) an adjusted LIBOR plus 1.0% . The applicable margins for the Term Loan Facility was 5.5% , in the case of Eurodollar loans and 4.5% , in the case of adjusted base rate loans. Outstanding borrowings under the Term Loan Facility bore interest at a rate of 6.5% as of December 31, 2016. Borrowings were collateralized by substantially all of the equity interests in Medley LLC’s wholly owned subsidiaries. Total interest expense under the Term Loan Facility, including accretion of the note discount and amortization of debt issuance costs, was $1.5 million and $1.8 million for the three months ended March 31, 2017 and 2016, respectively. CNB Credit Agreement On August 19, 2014 , the Company entered into a $15.0 million senior secured revolving credit facility with City National Bank (as amended, the “Revolving Credit Facility”). The Company intends to use any proceeds from borrowings under the Revolving Credit Facility for general corporate purposes, including funding of its working capital needs. Borrowings under the Revolving Credit Facility bear interest at the option of the Company, either (i) at an Alternate Base Rate, as defined, plus an applicable margin not to exceed 3.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 4.0% . As of and during the three months ended March 31, 2017 and 2016, there were no amounts drawn under the Revolving Credit Facility. The Revolving Credit Facility also contains a financial covenant that requires the Company to maintain a Maximum Net Leverage Ratio of not greater than 3.5 to 1.0, with which the Company is compliant. This ratio is calculated on a trailing twelve months basis and is the ratio of Total Net Debt, as defined, to Core EBITDA, as defined, and is calculated using the Company’s financial results and includes adjustments made to calculate Core EBITDA. Non-compliance with any of the financial or non-financial covenants without cure or waiver would constitute an event of default under the Revolving Credit Facility. The Revolving Credit Facility also contains other customary events of default, including defaults based on events of bankruptcy and insolvency, dissolution, nonpayment of principal, interest or fees when due, breach of specified covenants, change in control and material inaccuracy of representations and warranties. There were no events of default under the Revolving Credit Facility as of March 31, 2017 . Non-Recourse Promissory Notes In April 2012, the Company borrowed $10.0 million under two non-recourse promissory notes. Proceeds from the borrowings were used to purchase 1,108,033 shares of common stock of SIC, which were pledged as collateral for the obligations. Interest on the notes is paid monthly and is equal to the dividends received by the Company related to the pledged shares. The Company may prepay the notes in whole or in part at any time without penalty and the lenders may call the notes if certain conditions are met. The notes are scheduled to mature in March 2019 . The proceeds from the notes were recorded net of issuance costs of $3.8 million and are being accreted, using the effective interest method, over the term of the non-recourse promissory notes. Total interest expense under these non-recourse promissory notes, including accretion of the note discount, was $0.3 million and $0.4 million for the three months ended March 31, 2017 and 2016, respectively. The fair value of the outstanding balance of the notes was $10.2 million as of March 31, 2017 and December 31, 2016. Contractual Maturities of Loans Payable As of March 31, 2017 , $10.0 million of future principal payments will be due, relating to loans payable, during the year ended December 31, 2019. SENIOR UNSECURED DEBT The Company’s senior unsecured debt consist of the following: As of March 31, As of (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,549 at March 31, 2017 and $3,802 at December 31, 2016 $ 50,046 $ 49,793 2024 Notes, net of unamortized premium and debt issuance costs of $2,565 at March 31, 2017 66,434 — Total senior unsecured debt $ 116,480 $ 49,793 2026 Notes On August 9, 2016 and October 18, 2016, the Company issued debt consisting of $53.6 million in aggregate principal amount of senior unsecured notes due 2026 at a stated coupon rate of 6.875% (the "2026 Notes"). The net proceeds from these offerings were used to pay down a portion of the Company's outstanding indebtedness under its Term Loan Facility. Interest is payable quarterly commencing on November 15, 2016. The 2026 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after August 15, 2019 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2026 notes were recorded net of discount and direct issuance costs of $3.8 million which are being amortized over the term of notes using the effective interest rate method. The 2026 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLX.” The fair value of the 2026 Notes based on there underlying quoted market price was $53.0 million as of March 31, 2017. Interest expense on the 2026 Notes, including amortization of discount and debt issuance costs, was $1.0 million for the three months ended March 31, 2017. 2024 Notes On January 18, 2017 and February 22, 2017, the Company issued $69.0 million in aggregate principal amount of senior unsecured notes due 2024 at a stated coupon rate of 7.25% (the "2024 Notes"). The net proceeds from these offerings were used to pay down the remaining portion of the Company's outstanding indebtedness under its Term Loan Facility with the remaining to be used for general corporate purposes. Interest is payable quarterly commencing on April 30, 2017. The 2024 Notes are subject to redemption in whole or in part at any time or from time to time, at the option of the Company, on or after January 30, 2020 at a redemption price per security equal to 100% of the outstanding principal amount thereof plus accrued and unpaid interest payments. The 2024 notes were recorded net of discount and direct issuance costs of $2.6 million which are being amortized over the term of notes using the effective interest rate method. The 2024 Notes are listed on the New York Stock Exchange and trades thereon under the trading symbol “MDLQ.” The fair value of the 2024 Notes based on there underlying quoted market price was $70.4 million as of March 31, 2017. Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $0.8 million for the three months ended March 31, 2017. |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Accounts Payable, Accrued Expenses and Other Liabilities | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES The components of accounts payable, accrued expenses and other liabilities are as follows: As of As of December 31, 2016 (Amounts in thousands) Accrued compensation and benefits $ 1,755 $ 7,978 Due to affiliates (Note 10) 13,946 15,043 Revenue share payable (Note 9) 4,903 6,472 Accrued interest 1,472 558 Professional fees 684 858 Deferred rent 2,755 2,833 Deferred tax liabilities (Note 12) 189 202 Performance fee compensation 105 985 Accounts payable and other accrued expenses 1,914 2,326 Total accounts payable, accrued expenses and other liabilities $ 27,723 $ 37,255 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | COMMITMENTS AND CONTINGENCIES Operating Leases Medley leases office space in New York City and San Francisco under non-cancelable lease agreements that expire at various times through September 2023 . Rent expense was $0.6 million and $0.7 million for the three months ended March 31, 2017 and 2016 . Future minimum rental payments under non-cancelable leases are as follows as of March 31, 2017 (in thousands): Remaining in 2017 $ 2,017 2018 2,704 2019 2,710 2020 2,833 2021 2,430 Thereafter 4,254 Total future minimum lease payments $ 16,948 Capital Commitments to Funds As of March 31, 2017 and December 31, 2016, the Company had aggregate unfunded commitments of $0.3 million and $ 0.5 million , respectively, to certain long-dated private funds. Other Commitments In April 2012, the Company entered into an obligation to pay a fixed percentage of management and incentive fees received by the Company from SIC. The agreement was entered into contemporaneously with the $10 million non-recourse promissory notes that were issued to the same parties (Note 6). The two transactions were deemed to be related freestanding contracts and the $10 million of loan proceeds were allocated to the contracts using their relative fair values. At inception, the Company recognized an obligation of $4.4 million representing the present value of the future cash flows expected to be paid under this agreement. As of March 31, 2017 and December 31, 2016, this obligation amounted to $4.9 million and $6.5 million , respectively, and is recorded as revenue share payable, a component of accounts payable, accrued expenses and other liabilities on the consolidated balance sheets. The change in the estimated cash flows for this obligation is recorded in other income (expense) on the consolidated statements of operations. Legal Proceedings From time to time, the Company is involved in various legal proceedings, lawsuits and claims incidental to the conduct of its business. Its business is also subject to extensive regulation, which may result in regulatory proceedings against it. Except as described below, the Company is not currently party to any material legal proceedings. One of the Company's subsidiaries, MCC Advisors LLC, was named as a defendant in a lawsuit on May 29, 2015, by Moshe Barkat and Modern VideoFilm Holdings, LLC (“MVF Holdings”) against MCC, MOF II, MCC Advisors LLC, Deloitte Transactions and Business Analytics LLP A/K/A Deloitte ERG (“Deloitte”), Scott Avila (“Avila”), Charles Sweet, and Modern VideoFilm, Inc. (“MVF”). The lawsuit is pending in the California Superior Court, Los Angeles County, Central District, as Case No. BC 583437. The lawsuit was filed after MCC, as agent for the lender group, exercised remedies following a series of defaults by MVF and MVF Holdings on a secured loan with an outstanding balance at the time in excess of $65 million . The lawsuit sought damages in excess of $100 million . Deloitte and Avila have settled the claims against them in exchange for payment of $1.5 million . Following a separate lawsuit by Mr. Barkat against MVF’s D&O insurance carrier, the carrier, Charles Sweet and MVF have settled the claims against them. On June 6, 2016, the court granted the defendants’ demurrers on several counts and dismissed Mr. Barkat’s claims with prejudice except with respect to his claim for intentional interference with contract. MCC and the other defendants continue to dispute the remaining allegations and are vigorously defending the lawsuit while pursuing affirmative counterclaims against Mr. Barkat and MVF Holdings. On August 29, 2016, MVF Holdings filed another lawsuit in the California Superior Court, Los Angeles County, Central District, as Case No. BC 631888 (the “Derivative Action”), naming MCC Advisors LLC and certain of Medley’s employees as defendants, among others. The plaintiff in the Derivative Action, asserts claims against the defendants for breach of fiduciary duty, aiding and abetting breach of fiduciary duty, unfair competition, breach of the implied covenant of good faith and fair dealing, interference with prospective economic advantage, fraud, and declaratory relief. MCC Advisors LLC and the other defendants believe the outstanding claims for alleged interference with Mr. Barkat’s employment contract, and the other causes of action asserted in the Derivative Action are without merit and all defendants intend to continue to assert a vigorous defense. On May 4, 2017, Medley Capital LLC entered into a Settlement Agreement with CK Pearl Fund, Ltd. and CK Pearl Fund, LP (the “CK Pearl Funds”), pursuant to which the CK Pearl Funds granted Medley Capital LLC and its affiliates, managers, officers, directors, employees (the “Medley Parties”) a full release of claims and further agreed to indemnify the Medley Parties from any liabilities and to reimburse Medley Capital LLC for its reasonable legal fees and expenses in connection with the following lawsuit: CK Pearl Fund, Ltd. and CK Pearl Fund, LP v. Rothstein Kass & Company, P.C., Rothstein-Kass P.A., Rothstein Kass & Co. LLC and Rothstein, Kass & Company (Cayman); Rothstein Kass & Company, P.C., Rothstein-Kass P.A., Rothstein Kass & Co. LLC and Rothstein, Kass & Company (Cayman) v. Medley Capital LLC, filed on September 19, 2016, in the Superior Court of New Jersey Law Division: Essex County, as Docket No. L-5196-15 (the “Rothstein Lawsuit”). Pursuant to the settlement, Medley Capital LLC will be filing a motion seeking dismissal as a defendant in the Rothstein Litigation. While Medley Capital LLC will remain as a named defendant until it is dismissed or the action is resolved, in light of the CK Pearl Funds’ agreement to indemnify the Medley Parties and to advance expenses on their behalf, we believe the Rothstein litigation no longer constitutes a material pending legal proceeding. The settlement also resolves our affirmative lawsuit against the CK Pearl Funds, Medley Capital LLC v. CK Pearl Fund, Ltd., filed on November 28, 2016, in the Grand Court of the Cayman Islands in the Financial Services Division, as Cause No. FSD 196 of 2016. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2017 | |
Related Party Transactions [Abstract] | |
Related Party Transactions | RELATED PARTY TRANSACTIONS Substantially all of Medley’s revenue is earned through agreements with its non-consolidated funds for which it collects management and performance fees for providing investment and management services. From June 2012 through December 2016, Medley was party to an Expense Support and Reimbursement Agreement (“ESA”) with SIC. During the term of the ESA, which expired on December 31, 2016, Medley agreed to pay up to 100% of SIC's operating expenses in order for SIC to achieve a reasonable level of expenses relative to its investment income. Pursuant to the ESA, SIC had a conditional obligation to reimburse Medley for any amounts they funded under the ESA if, within three years of the date on which Medley funded such amounts, SIC met certain financial levels. ESA expenses are recorded within general, administrative, and other expense in the consolidated statements of operations. The remaining amounts due to SIC as of March 31, 2017 and December 31, 2016 under the ESA agreement were $6.6 million and $7.9 million , respectively. These amounts are included in accounts payable, accrued expenses and other liabilities as due to affiliates on the consolidated balance sheets. During the three months ended March 31, 2016 , Medley recorded $5.2 million of ESA expenses under this agreement. In January 2011, Medley entered into an administration agreement with MCC (the “MCC Admin Agreement”), whereby Medley agreed to provide administrative services necessary for the operations of MCC. MCC agreed to pay Medley for the costs and expenses incurred in providing such administrative services, including an allocable portion of Medley’s overhead expenses and an allocable portion of the cost of MCC’s officers and their respective staffs. Medley records these administrative fees as revenue in the period when the services are provided and are included in other revenues and fees on the consolidated statements of operations. During the three months ended March 31, 2017 and 2016 , the Company recorded $1.0 million and $1.1 million , respectively, of revenue related to the MCC Admin Agreement. Amounts due from MCC under the MCC Admin Agreement were $1.0 million and $0.9 million as of March 31, 2017 and December 31, 2016 , respectively, and are included as a component of other assets on the consolidated balance sheets. In April 2012, Medley entered into an administration agreement with SIC (the “SIC Admin Agreement”), whereby Medley agreed to provide administrative services necessary for the operations of SIC. SIC agreed to pay Medley for the costs and expenses incurred in providing such administrative services including an allocable portion of Medley’s overhead expenses and an allocable portion of the cost of SIC’s officers and their respective staffs. Medley records these administrative fees as revenue in the period when the services are provided and are included in other revenues and fees on the condensed consolidated statements of operations. During the three months ended March 31, 2017 and 2016 , the Company recorded $0.8 million and $0.6 million , respectively, of revenue related to the SIC Admin Agreement. Amounts due from SIC under the SIC Admin Agreement were $0.8 million and $0.9 million as of March 31, 2017 and December 31, 2016 , respectively, and are included as a component of other assets on the Company's condensed consolidated balance sheets. Additionally, Medley entered into administration agreements with other entities that it manages (the “Funds Admin Agreements”), whereby Medley agreed to provide administrative services necessary for the operations of these other vehicles. These other entities agreed to pay Medley for the costs and expenses incurred in providing such administrative services, including an allocable portion of Medley’s overhead expenses and an allocable portion of the cost of these other vehicles' officers and their respective staffs. Medley records these administrative fees as revenue in the period when the services are provided and are included in other revenues and fees on the consolidated statements of operations. For the three months ended March 31, 2017 and 2016 , the Company recorded $0.3 million and $0.2 million , respectively, of revenue related to the Funds Admin Agreements. Amounts due from these entities under the Funds Admin Agreements were $0.3 million as of March 31, 2017 and December 31, 2016 , and are included as a component of other assets on the consolidated balance sheets. Equity Method Investments The Company holds equity method investments in SIC, MOF II, MOF III, CK Pearl Fund, L.P. and other vehicles. As of March 31, 2017 and December 31, 2016 , the Company’s carrying value of its equity method investments was $15.1 million and $14.9 million , respectively. Included in this balance was $9.0 million as of March 31, 2017 and December 31, 2016 , from the Company’s investment in SIC. Available-For-Sale Securities As of March 31, 2017 and December 31, 2016, the Company’s carrying value of its available-for-sale securities was $21.2 million and $17.0 million , respectively, and consisted of 2,759,748 and 2,264,892 shares of MCC, respectively. As of March 31, 2017 , the Company recorded $0.7 million of cumulative unrealized gains in redeemable non-controlling interests, non-controlling interests in Medley LLC and accumulated other comprehensive income on the Company's condensed consolidated balance sheets. Exchange Agreement Prior to the completion of the Company's IPO, Medley LLC's limited liability agreement was restated among other things, to modify its capital structure by reclassifying the interests held by its existing owners (i.e. the members of Medley prior to the IPO) into the LLC Units. Medley’s existing owners also entered into an exchange agreement under which they (or certain permitted transferees thereof) have the right (subject to the terms of the exchange agreement as described therein), to exchange their LLC Units for shares of Medley Management Inc.’s Class A common stock on a one -for-one basis at fair value, subject to customary conversion rate adjustments for stock splits, stock dividends and reclassifications. Tax Receivable Agreement Medley Management Inc. entered into a tax receivable agreement with the holders of LLC Units that provides for the payment by Medley Management Inc. to exchanging holders of LLC Units of 85% of the benefits, if any, that Medley Management Inc. is deemed to realize as a result of increases in tax basis of tangible and intangible assets of Medley LLC from the future exchange of LLC Units for shares of Class A common stock, as well as certain other tax benefits related to entering into the tax receivable agreement, including tax benefits attributable to payments under the tax receivable agreement. The term of the tax receivable agreement will continue until all such tax benefits under the agreement have been utilized or have expired, unless Medley Management Inc. exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. As of March 31, 2017 , there were no transactions under this agreement. |
EARNINGS (LOSS) PER CLASS A SHA
EARNINGS (LOSS) PER CLASS A SHARE | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Earnings (Loss) Per Class A Share | EARNINGS (LOSS) PER CLASS A SHARE The table below presents basic and diluted net income (loss) per share of Class A common stock using the two-class method for the three months ended March 31, 2017 and 2016 : For the Three Months Ended March 31, (unaudited) 2017 2016 (Amounts in thousands, except share and per share amounts) Basic and diluted net income per share: Numerator Net income attributable to Medley Management Inc. $ 394 $ 94 Less: Allocation to participating securities (22 ) (158 ) Net income (loss) available to Class A common stockholders $ 372 $ (64 ) Denominator Weighted average shares of Class A common stock outstanding 5,808,626 5,851,129 Net income (loss) per Class A share $ 0.06 $ (0.01 ) The Company declared a $0.20 dividend per share of Class A common stock on February 11, 2016 and February 9, 2017 which were paid on March 4, 2016 and March 6, 2017 respectively. The allocation to participating securities above generally represents dividends paid to holders of unvested restricted stock units and, in 2017, restricted LLC units, which reduces net income available to common stockholders. The weighted average shares of Class A common stock is the same for both basic and diluted earnings per share as the diluted amount excludes the assumed conversion of 23,333,333 LLC Units to shares of Class A common stock, the impact of which would be antidilutive. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | INCOME TAXES Deferred income taxes reflect the net effect of temporary differences between the tax basis of an asset or liability and its reported amount in the Company’s consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. As of March 31, 2017 and December 31, 2016 , the Company had total deferred tax assets of $1.9 million and $2.0 million , respectively, which consists primarily of temporary differences relating to certain accrued expenses, stock compensation and a tax benefit relating to tax goodwill. Total deferred tax liabilities were $0.2 million as of March 31, 2017 and December 31, 2016 and consists primarily of temporary differences relating to accrued fee income and accumulated net unrealized losses. The tax provision for deferred income taxes results from temporary differences arising principally from certain accrued expenses, deferred rent, fee income accruals and depreciation. The Company’s effective tax rate was 8.2% and 9.8% for the three months ended March 31, 2017 and 2016 , respectively. The quarterly provision for income taxes is determined based on the Company’s estimated full year effective tax rate adjusted by the amount of tax attributable to infrequent or unusual items that are separately recognized on a discrete basis in the income tax provision in the quarter in which they occur. During the three months ended March 31, 2017, there was a $0.2 million impact to the Company's income tax provision for discrete items associated with the forfeiture of RSUs. The Company’s effective tax rate includes a rate benefit attributable to the fact that the Company’s subsidiaries operate as limited liability companies, which are not subject to federal or state income tax. Accordingly, a portion of the Company’s earnings attributable to non-controlling interests are not subject to corporate level taxes. For the three months ended March 31, 2017 and 2016 , the Company was only subject to federal, state and city corporate income taxes on its pre-tax income attributable to Medley Management Inc. Interest expense and penalties related to income tax matters are recognized as a component of the provision for income taxes. There were no such amounts incurred during the three months ended March 31, 2017 and 2016 . As of March 31, 2017 and December 31, 2016 and during the three months ended March 31, 2017 and 2016 , there were no uncertain tax positions taken that were not more likely than not to be sustained. Certain subsidiaries of the Company are no longer subject to tax examinations by taxing authorities for tax years prior to 2012. |
COMPENSATION EXPENSE
COMPENSATION EXPENSE | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Compensation Expense | COMPENSATION EXPENSE Compensation generally includes salaries, bonuses, and profit sharing awards. Bonuses and profit sharing awards are accrued over the service period to which they relate. Guaranteed payments made to our senior professionals who are members of Medley LLC are recognized as compensation expense. The guaranteed payments to the Company’s Co-Chief Executive Officers are performance based and are periodically set subject to maximums based on the Company’s total assets under management. Such maximums aggregated to $0.6 million for each of the Co-Chief Executive Officers during each of the three months ended March 31, 2017 and 2016. During the three months ended March 31, 2017 and 2016 , neither of the Company’s Co-Chief Executive Officers received any guaranteed payments. Performance Fee Compensation In October 2010 and January 2014, the Company granted shares of vested profit interests in certain subsidiaries to select employees. These awards are viewed as a profit-sharing arrangement and are accounted for under ASC 710, which requires compensation expense to be recognized over the vesting period, which is usually the period over which service is provided. The shares were vested at grant date, subject to a divestiture percentage based on percentage of service completed from the award grant date to the employee’s termination date. The Company adjusts the related liability quarterly based on changes in estimated cash flows for the profit interests. In February 2015 and March 2016, the Company granted incentive cash bonus awards to select employees. These awards entitle employees to receive cash compensation based on distributed performance fees received by the Company from certain institutional funds. Eligibility to receive payments pursuant to these incentive awards is based on continued employment and ceases automatically upon termination of employment. Performance compensation expense is recorded based on the fair value of the incentive awards at the date of grant and is recognized on a straight-line basis over the expected requisite service period. The performance compensation liability is subject to re-measurement at the end of each reporting period and any changes in the liability are recognized in such reporting period. For the three months ended March 31, 2017 and 2016 , the Company recorded a reversal of performance fee compensation expense of $0.9 million and $0.1 million , respectively. As of March 31, 2017 and December 31, 2016 , the total performance fee compensation payable for these awards was $0.1 million and $1.0 million , respectively, and is included as a component of accounts payable, accrued expenses and other liabilities on the Company's condensed consolidated balance sheets. Retirement Plan The Company sponsors a defined-contribution 401(k) retirement plan that covers all employees. Employees are eligible to participate in the plan immediately, and participants are 100% vested from the date of eligibility. The Company makes contributions to the plan of 3% of an employee’s eligible wages, up to a maximum limit as determined by the Internal Revenue Service. The Company also pays all administrative fees related to the plan. The Company's accrued contributions to the plan were $0.1 million for each of the three months ended March 31, 2017 and 2016 . As of March 31, 2017 and December 31, 2016 the Company's outstanding liability to the plan was $0.6 million and $0.5 million , respectively. Stock-Based Compensation In connection with the IPO, the Company adopted the Medley Management Inc. 2014 Omnibus Incentive Plan (the “Plan”). The purpose of the Plan is to provide a means through which the Company may attract and retain key personnel and to provide a means whereby directors, officers, employees, consultants and advisors (and prospective directors, officers, employees, consultants and advisors) of the Company can acquire and maintain an equity interest in the Company, or be paid incentive compensation, including incentive compensation measured by reference to the value of Medley Management Inc.’s Class A common stock or Medley LLC’s unit interests, thereby strengthening their commitment to the welfare of the Company and aligning their interests with those of the Company’s stockholders. The Plan provides for the issuance of incentive stock options, nonqualified stock options, stock appreciation rights, restricted stock, restricted stock units (“RSUs”), restricted LLC Units, stock bonuses, other stock-based awards and cash awards. The maximum aggregate number of awards available to be granted under the plan, as amended, is 4,500,000 , of which all or any portion may be issued as shares of Medley Management Inc.’s Class A common stock or Medley LLC’s unit interests. Shares of Class A common stock issued by the Company in settlement of awards may be authorized and unissued shares, shares held in the treasury of the Company, shares purchased on the market or by private purchase or a combination of the foregoing. As of March 31, 2017 , there were 2.3 million awards available to be granted under the Plan. The fair value of RSUs granted under the Plan is determined to be the fair value of the underlying shares on the date of grant. The fair value of restricted LLC Units of Medley LLC is based on the public share price of MDLY at date of grant, adjusted for different distribution rights. The aggregate fair value of these awards is charged to compensation expense on a straight-line basis over the vesting period, which is generally up to five years. For the three months ended March 31, 2017 stock-based compensation was less than $0.1 million . Stock-based compensation was $0.8 million for the three months ended March 31, 2016. A summary of RSU and restricted LLC units activity for the three months ended March 31, 2017 is as follows: Number of RSUs Weighted Average Grant Date Fair Value Number of Restricted LLC Units Weighted Average Grant Date Fair Value Balance at December 31, 2016 1,652,483 $ 12.88 — $ — Granted 389,236 10.09 320,000 11.67 Forfeited (235,624 ) 13.76 — — Vested (4,792 ) 8.16 — — Balance at March 31, 2017 1,801,303 $ 12.18 320,000 $ 11.76 During the three months ended March 31, 2017, $1.8 million of previously recognized compensation was reversed relating to forfeited RSUs. In addition, the Company reclassified cumulative dividends of $0.4 million from retained earnings to other compensation expense as a result of such forfeitures. Unamortized compensation cost related to unvested RSUs and restricted A LLC units as of March 31, 2017 was $17.3 million and is expected to be recognized over a weighted average period of 3.8 years. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2017 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Non-controlling Interests | REDEEMABLE NON-CONTROLLING INTERESTS In January 2016, the Company executed an amendment to SIC Advisors' operating agreement which provided the Company with the right to redeem membership units owned by the minority interest holder. The Company’s redemption right is triggered by the termination of the dealer manager agreement between SIC and SC Distributors LLC, an affiliate of the minority interest holder. As a result of this redemption feature, the Company reclassified the non-controlling interest in SIC Advisors from the equity section to redeemable non-controlling interests in the mezzanine section of the balance sheet based on its fair value as of the amendment date. The fair value of the non-controlling interest was determined to be $12.2 million on the date of the amendment and was adjusted through a charge to non-controlling interests in Medley LLC. During the three months ended March 31, 2017, net income allocated to this non-controlling interest was $1.0 million and distributions paid were $1.1 million . As of March 31, 2017 , the balance of the redeemable non-controlling interest in SIC Advisors LLC was $13.2 million . On June 3, 2016, the Company entered into a Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC (the ‘‘Investors’’) to invest up to $50 million in new and existing Medley managed funds (the ‘‘Joint Venture’’). The Company will contribute up to $10 million and an interest in STRF Advisors LLC, the investment advisor to Sierra Total Return Fund, in exchange for common equity interests in the Joint Venture. The Investors will invest up to $40 million in exchange for preferred equity interests in the Joint Venture. On account of the preferred equity interests, the Investors will receive an 8% preferred distribution, 15% of the Joint Venture’s profits, and all of the profits from the contributed interest in STRF Advisors LLC. Medley has the option, subject to certain conditions, to cause the Joint Venture to redeem the Investors’ interest in exchange for repayment of the outstanding investment amount at the time of redemption, plus certain other considerations. The Investors have the right, after seven years , to redeem their interests in the Joint Venture. As such, the Investors’ interest in the Joint Venture is included as a component of redeemable non-controlling interests on the Company’s consolidated balance sheets and amounted to $22.8 million as of March 31, 2017 . Total contributions to the Joint Venture amounted to $27.5 million through March 31, 2017 and were used to purchase $20.5 million of MCC shares on the open market. During the three months ended March 31, 2017, net income and other comprehensive income allocated to this non-controlling interest was $0.5 million and $0.3 million , respectively. Distributions paid during the three months ended March 31, 2017 were $0.4 million . The Company intends to use the remaining contributions of $7.0 million , which is included in restricted cash equivalents on our consolidated balance sheets, to fund future investments. |
MARKET AND OTHER RISK FACTORS
MARKET AND OTHER RISK FACTORS | 3 Months Ended |
Mar. 31, 2017 | |
Risks and Uncertainties [Abstract] | |
Market and Other Risk Factors | MARKET AND OTHER RISK FACTORS Due to the nature of the Medley funds’ investment strategy, their portfolio of investments has significant market and credit risk. As a result, the Company is subject to market and other risk factors, including, but not limited to the following: Market Risk The market price of investments may significantly fluctuate during the period of investment. Investments may decline in value due to factors affecting securities markets generally or particular industries represented in the securities markets. The value of an investment may decline due to general market conditions that are not specifically related to such investment, such as real or perceived adverse economic conditions, changes in the general outlook for corporate earnings, changes in interest or currency rates or adverse investor sentiment generally. They may also decline due to factors that affect a particular industry or industries, such as labor shortages or increased production costs and competitive conditions within an industry. Credit Risk There are no restrictions on the credit quality of the investments the Company intends to make. Investments may be deemed by nationally recognized rating agencies to have substantial vulnerability to default in payment of interest and/or principal. Some investments may have low-quality ratings or be unrated. Lower rated and unrated investments have major risk exposure to adverse conditions and are considered to be predominantly speculative. Generally, such investments offer a higher return potential than higher rated investments, but involve greater volatility of price and greater risk of loss of income and principal. In general, the ratings of nationally recognized rating organizations represent the opinions of agencies as to the quality of the securities they rate. Such ratings, however, are relative and subjective; they are not absolute standards of quality and do not evaluate the market value risk of the relevant securities. It is also possible that a rating agency might not change its rating of a particular issue on a timely basis to reflect subsequent events. The Company may use these ratings as initial criteria for the selection of portfolio assets for the Company but is not required to utilize them. Limited Liquidity of Investments The funds managed by the Company invest and intend to continue to invest in investments that may not be readily marketable. Illiquid investments may trade at a discount from comparable, more liquid investments and, at times there may be no market at all for such investments. Subordinate investments may be less marketable, or in some instances illiquid, because of the absence of registration under federal securities laws, contractual restrictions on transfer, the small size of the market or the small size of the issue (relative to issues of comparable interests). As a result, the funds managed by the Company may encounter difficulty in selling its investments or may, if required to liquidate investments to satisfy redemption requests of its investors or debt service obligations, be compelled to sell such investments at less than fair value. Counterparty Risk Some of the markets in which the Company, on behalf of its underlying funds, may affect its transactions are “over-the-counter” or “interdealer” markets. The participants in such markets are typically not subject to credit evaluation and regulatory oversight, unlike members of exchange-based markets. This exposes the Company to the risk that a counterparty will not settle a transaction in accordance with its terms and conditions because of a dispute over the terms of the applicable contract (whether or not such dispute is bona fide) or because of a credit or liquidity problem, causing the Company to suffer loss. Such “counterparty risk” is accentuated for contracts with longer maturities where events may intervene to prevent settlement, or where the Company has concentrated its transactions with a single or small group of counterparties. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2017 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS On May 10, 2017, the Company’s Board of Directors declared a dividend of $0.20 per share of Class A common stock for the first quarter of 2017. The dividend will be paid on May 31, 2017 to stockholders of record as of May 22, 2017. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation | Principles of Consolidation In accordance with Accounting Standards Codification (“ASC”) 810, Consolidation , the Company consolidates those entities where it has a direct and indirect controlling financial interest based on either a variable interest model or voting interest model. As such, the Company consolidates entities that the Company concludes are variable interest entities (“VIEs”), for which the Company is deemed to be the primary beneficiary and entities in which it holds a majority voting interest or has majority ownership and control over the operational, financial and investing decisions of that entity. For legal entities evaluated for consolidation, the Company must determine whether the interests that it holds and fees paid to it qualify as a variable interest in an entity. This includes an evaluation of the management fees and performance fees paid to the Company when acting as a decision maker or service provider to the entity being evaluated. If fees received by the Company are customary and commensurate with the level of services provided, and the Company does not hold other economic interests in the entity that would absorb more than an insignificant amount of the expected losses or returns of the entity, the interest that the Company holds would not be considered a variable interest. The Company factors in all economic interests including proportionate interests through related parties, to determine if fees are considered a variable interest. An entity in which the Company holds a variable interest is a VIE if any one of the following conditions exist: (a) the total equity investment at risk is not sufficient to permit the legal entity to finance its activities without additional subordinated financial support, (b) the holders of equity investment at risk have the right to direct the activities of the entity that most significantly impact the legal entity’s economic performance, (c) the voting rights of some investors are disproportionate to their obligation to absorb losses or rights to receive returns from a legal entity. For limited partnerships and other similar entities, non-controlling investors must have substantive rights to either dissolve the fund or remove the general partner (“kick-out rights”) in order to not qualify as a VIE. For those entities that qualify as a VIE, the primary beneficiary is generally defined as the party who has a controlling financial interest in the VIE. The Company is generally deemed to have a controlling financial interest if it has the power to direct the activities of a VIE that most significantly impact the VIE’s economic performance, and the obligation to absorb losses or receive benefits from the VIE that could potentially be significant to the VIE. The Company determines whether it is the primary beneficiary of a VIE at the time it becomes initially involved with the VIE and reconsiders that conclusion continuously. The primary beneficiary evaluation is generally performed qualitatively on the basis of all facts and circumstances. However, quantitative information may also be considered in the analysis, as appropriate. These assessments require judgments. Each entity is assessed for consolidation on a case-by-case basis. For those entities evaluated under the voting interest model, the Company consolidates the entity if it has a controlling financial interest. The Company has a controlling financial interest in a voting interest entity (“VOE”) if it owns a majority voting interest in the entity. |
Consolidated Variable Interest Entities | Consolidated Variable Interest Entities Medley Management Inc. is the sole managing member of Medley LLC and, as such, it operates and controls all of the business and affairs of Medley LLC and, through Medley LLC, conducts its business. Under ASC 810, Medley LLC meets the definition of a VIE because the equity of Medley LLC is not sufficient to permit activities without additional subordinated financial support. Medley Management Inc. has the obligation to absorb expected losses that could be significant to Medley LLC and holds 100% of the voting power, therefore Medley Management Inc. is considered to be the primary beneficiary of Medley LLC. As a result, Medley Management Inc. consolidates the financial results of Medley LLC and its subsidiaries and records a non-controlling interest for the economic interest in Medley LLC held by the non-managing members. Medley Management Inc.’s and the non-managing members’ economic interests in Medley LLC are 19.5% and 80.5% , respectively, as of March 31, 2017 and 19.9% and 80.1% , respectively, as of December 31, 2016 . Net income attributable to the non-controlling interests in Medley LLC on the consolidated statements of operations represents the portion of earnings attributable to the economic interest in Medley LLC held by its non-managing members. Non-controlling interests in Medley LLC on the consolidated balance sheets represents the portion of net assets of Medley LLC attributable to the non-managing members based on total LLC Units of Medley LLC owned by such non-managing members. As of March 31, 2017 and December 31, 2016 , Medley LLC has three majority owned subsidiaries, SIC Advisors LLC, Medley Seed Funding I LLC and STRF Advisors LLC, which are consolidated VIEs. Each of these entities were organized as a limited liability company and was legally formed to either manage a designated fund or strategically invest capital as well as isolate business risk. As of March 31, 2017 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the condensed consolidated balance sheets were $54.7 million and $20.1 million , respectively. As of December 31, 2016 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the condensed consolidated balance sheets were $51.7 million and $22.8 million , respectively. Except to the extent of the assets of these VIEs that are consolidated, the holders of the consolidated VIEs’ liabilities generally do not have recourse to the Company. |
Seed Investments | Seed Investments The Company accounts for seed investments through the application of the voting interest model under ASC 810-10-25-1 through 25-14 and consolidates a seed investment when the investment advisor holds a controlling interest, which is, in general, 50% or more of the equity in such investment. For seed investments in which the Company does not hold a controlling interest, the Company accounts for such seed investment under the equity method of accounting, at its ownership percentage of such seed investment’s net asset value. |
Non-Consolidated Variable Interest Entities | Non-Consolidated Variable Interest Entities The Company holds interests in certain VIEs that are not consolidated because the Company is not deemed the primary beneficiary. The Company's interest in these entities is in the form of insignificant equity interests and fee arrangements. The maximum exposure to loss represents the potential loss of assets by the Company relating to these non-consolidated entities. |
Use of Estimates | 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 disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of income and expenses during the reporting period. Management’s estimates are based on historical experience and other factors, including expectations of future events that management believes to be reasonable under the circumstances. These assumptions and estimates also require management to exercise judgment in the process of applying the Company’s accounting policies. Significant estimates and assumptions by management affect the carrying value of investments, performance compensation payable and certain accrued liabilities. Actual results could differ from these estimates, and such differences could be material. |
Indemnification | Indemnification In the normal course of business, the Company enters into contractual agreements that provide general indemnifications against losses, costs, claims and liabilities arising from the performance of individual obligations under such agreements. The Company has not experienced any prior claims or payments pursuant to such agreements. The Company’s individual maximum exposure under these arrangements is unknown, as this would involve future claims that may be made against the Company that have not yet occurred. However, based on management’s experience, the Company expects the risk of loss to be remote. |
Non-Controlling Interests | Non-Controlling Interests in Consolidated Subsidiaries Non-controlling interests in consolidated subsidiaries represent the component of equity in such consolidated entities held by third-parties. These interests are adjusted for contributions to and distributions from Medley entities and are allocated income from Medley entities based on their ownership percentages. Redeemable Non-Controlling Interests Redeemable non-controlling interests represents interests of certain third parties that are not mandatorily redeemable but redeemable for cash or other assets at a fixed or determinable price or a fixed or determinable date, at the option of the holder or upon the occurrence of an event that is not solely within the control of the issuer. These interests are classified in temporary equity. |
Class A Earnings per Share | Class A Earnings per Share The Company computes and presents earnings per share using the two-class method. Under the two-class method, the Company allocates earnings between common stock and participating securities. The two-class method includes an earnings allocation formula that determines earnings per share for each class of common stock according to dividends declared and undistributed earnings for the period. For purposes of calculating earnings per share, the Company reduces its reported net earnings by the amount allocated to participating securities to arrive at the earnings allocated to Class A common stockholders. Earnings are then divided by the weighted average number of Class A common stock outstanding to arrive at basic earnings per share. Diluted earnings per share reflects the potential dilution beyond shares for basic earnings per share that could occur if securities or other contracts to issue common stock were exercised, converted into common stock, or resulted in the issuance of common stock that would have shared in our earnings. Participating securities consist of the Company's unvested restricted stock units that contain non-forfeitable rights to dividends or dividend equivalents, whether paid or unpaid, in the number of shares outstanding in its basic and diluted calculations. |
Investments | Investments Investments include equity method investments that are not consolidated but over which the Company exerts significant influence. The Company measures the carrying value of its public non-traded equity method investment at NAV per share. The Company measures the carrying value of its privately-held equity method investments by recording its share of the underlying income or loss of these entities. Unrealized appreciation (depreciation) resulting from changes in fair value of the equity method investments is reflected as a component of other income (expense), net in the condensed consolidated statements of operations. The Company evaluates its equity method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. The carrying amounts of equity method investments are reflected in investments in the consolidated statements of financial condition. As the underlying entities that the Company manages and invests in are, for U.S. GAAP purposes, primarily investment companies which reflect their investments at estimated fair value, the carrying value of the Company’s equity method investments in such entities approximates fair value. The Company evaluates its equity-method investments for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investments may not be recoverable. Investments also include available-for-sale securities which consist of an investment in publicly traded common stock. The Company measures the carrying value of its publicly traded investment in available-for-sale securities at the quoted market price on the primary market or exchange on which they trade. Unrealized appreciation (depreciation) resulting from changes in fair value of available-for-sale securities is recorded in accumulated other comprehensive income, redeemable non-controlling interests and non-controlling interests in Medley LLC. Realized gains (losses) and declines in value determined to be other than temporary, if any, are reported in other income (expenses), net. The Company evaluates its investment in available-for-sale securities for impairment whenever events or changes in circumstances indicate that the carrying amounts of such investment may not be recoverable. |
Debt Issuance Costs | Debt Issuance Costs Debt issuance costs represent direct costs incurred in obtaining financing and are amortized over the term of the underlying debt using the effective interest method. Debt issuance costs, and the related amortization expense, are adjusted when any prepayments of principal are made to the related outstanding debt. Amortization of debt issuance costs is included as a component of interest expense in the Company's consolidated statement of operations. |
Revenues | Revenues Management Fees Medley provides investment management services to both public and private investment vehicles. Management fees include base management fees, other management fees, and Part I incentive fees, as described below. Base management fees are calculated based on either (i) the average or ending gross assets balance for the relevant period, (ii) limited partners’ capital commitments to the funds, (iii) invested capital, (iv) NAV or (v) lower of cost or market value of a fund’s portfolio investments. Depending upon the contracted terms of the investment management agreement, management fees are paid either quarterly in advance or quarterly in arrears, and are recognized as earned over the period the services are provided. Certain management agreements provide for Medley to receive other management fee revenue derived from up front origination fees paid by the funds' and/or separately managed accounts' underlying portfolio companies. These fees are recognized when Medley becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net interest income (excluding gains and losses) above a hurdle rate. As it relates to Medley Capital Corporation (“MCC”), these fees are subject to netting against realized and unrealized losses. Part I incentive fees are paid quarterly and are recognized as earned over the period the services are provided. Performance Fees Performance fees consist principally of the allocation of profits from certain funds and separately managed accounts, to which Medley provides management services. Medley is generally entitled to an allocation of income as a performance fee after returning the invested capital plus a specified preferred return as set forth in each respective agreement. Medley recognizes revenues attributable to performance fees based upon the amount that would be due pursuant to the respective agreement at each period end as if the funds were terminated at that date. Accordingly, the amount recognized in the Company's condensed consolidated financial statements reflects Medley’s share of the gains and losses of the associated funds’ underlying investments measured at their current fair values. Performance fee revenue may include reversals of previously recognized performance fees due to a decrease in the net income of a particular fund that results in a decrease of cumulative performance fees earned to date. Since fund return hurdles are cumulative, previously recognized performance fees also may be reversed in a period of appreciation that is lower than the particular fund’s hurdle rate. During the three months ended March 31, 2017 and 2016, the Company reversed $2.6 million and $0.7 million , respectively, of previously recognized performance fees. As of March 31, 2017 , the Company recognized cumulative performance fees of $4.8 million . Performance fees received in prior periods may be required to be returned by Medley in future periods if the funds’ investment performance declines below certain levels. Each fund is considered separately in this regard and, for a given fund, performance fees can never be negative over the life of a fund. If upon a hypothetical liquidation of a fund’s investments, at their then current fair values, previously recognized and distributed performance fees would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2017 , the Company had not received any performance fee distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of performance fees. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2017 , the Company had accrued $7.1 million for clawback obligations that would need to be paid if the funds were liquidated at fair value as of the end of the reporting period. The Company’s actual obligation, however, would not become payable or realized until the end of a fund’s life. Other Revenues and Fees Medley provides administrative services to certain affiliated funds and is reimbursed for direct and allocated expenses incurred in providing such administrative services, as set forth in the respective underlying agreements. These fees are recognized as revenue in the period administrative services are rendered. |
Performance Fee Compensation | Performance Fee Compensation Medley has issued profit interests in certain subsidiaries to select employees. These profit-sharing arrangements are accounted for under ASC 710, Compensation — General, which requires compensation expense to be measured at fair value at the grant date and expensed over the vesting period, which is usually the period over which the service is provided. The fair value of the profit interests are re-measured at each balance sheet date and adjusted for changes in estimates of cash flows and vesting percentages. The impact of such changes is recorded in the condensed consolidated statements of operations as an increase or decrease to performance fee compensation. |
Stock-based Compensation | Stock-based Compensation The Company accounts for stock-based compensation in accordance with ASC 718, Compensation – Stock Compensation . Stock-based compensation cost is measured at the grant date based on the fair value of the award and is recognized as expense over the requisite service period. Prior to January 1, 2017, the fair value of the awards were amortized on a straight line basis over the requisite service period as stock based compensation expenses and was reduced for the impact of estimated forfeitures. The Company estimated forfeitures based on its historical experience and revised its estimate if actual forfeitures differed from its initial estimates. Effective January 1, 2017, the Company adopted a change in accounting policy as a result of the adoption of ASU 2016-09 to account for forfeitures as they occur. As such, stock based compensation expense relating to equity based awards are measured at fair value as of the grant date, reduced for actual forfeitures in the period they occur, and expensed over the requisite service period on a straight-line basis as a component of compensation and benefits on the Company's condensed consolidated statements of operations. |
Income Taxes | Income Taxes The Company accounts for income taxes using the asset and liability approach, which requires the recognition of tax benefits or expenses for temporary differences between the financial reporting and tax basis of assets and liabilities. A valuation allowance is established when necessary to reduce deferred tax assets to the amounts expected to be realized. The Company also recognizes a tax benefit from uncertain tax positions only if it is “more likely than not” that the position is sustainable based on its technical merits. The Company’s policy is to recognize interest and penalties on uncertain tax positions and other tax matters as a component of income tax expense. For interim periods, the Company accounts for income taxes based on its estimate of the effective tax rate for the year. Discrete items and changes in its estimate of the annual effective tax rate are recorded in the period they occur. Medley Management Inc. is subject to U.S. federal, state and local corporate income taxes on its allocable portion of the income of Medley LLC at prevailing corporate tax rates. Medley LLC and its subsidiaries are not subject to federal, state and local corporate income taxes since all income, gains and losses are passed through to its members. However, a portion of taxable income from Medley LLC and its subsidiaries are subject to New York City’s unincorporated business tax, which is included in the Company’s provision for income taxes. The Company analyzes its tax filing positions in all of the U.S. federal, state and local tax jurisdictions where it is required to file income tax returns, as well as for all open tax years in these jurisdictions. If, based on this analysis, the Company determines that uncertainties in tax positions exist, a liability is established. |
Recently Issued Accounting Pronouncements | Recently Issued Accounting Pronouncements Adopted as of January 1, 2017 In March 2016, the FASB issued ASU 2016-09, Improvements to Employee Share-Based Payment Accounting, which simplifies and improves several aspects of the accounting for share-based payment transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification on the statement of cash flows. The Company adopted ASU 2016-09 effective January 1, 2017. Under the new guidance, all excess tax benefits and tax deficiencies related to employee stock compensation will be recognized within income tax expense. Under prior guidance, excess tax benefits were recognized to additional paid-in capital and tax deficiencies were only recognized to the extent they exceeded the pool of excess tax benefits. In addition, excess tax benefits will be classified as cash flows from operating activities, and cash withheld by the Company for employees' withholding taxes will be classified as cash flows from financing activities on the Company's consolidated statements of cash flows. In connection with the adoption of ASU 2016-09, the Company elected to account for forfeitures as they occur, instead of utilizing an estimated forfeiture rate assumption. The change in accounting for forfeitures was applied on a modified retrospective basis by means of a cumulative-effect adjustment to equity. As of January 1, 2017, retained earnings and non-controlling interests in Medley LLC decreased by $0.1 million and $0.8 million , respectively, additional paid in capital increased by $1.0 million and a deferred tax asset was recorded in the amount of $0.1 million to reflect the change in accounting principle. Recently Issued Accounting Pronouncements Not Yet Adopted In May 2014, the FASB issued ASU 2014-09, Revenue from Contracts with Customers (Topic 606) , which provides that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for such goods or services. To achieve this core principle, an entity should apply the following steps: (1) identify the contracts with a customer, (2) identify the performance obligations in the contracts, (3) determine the transaction prices, (4) allocate the transaction prices to the performance obligations in the contracts, and (5) recognize revenue when, or as, the entity satisfies a performance obligation. The guidance also requires advanced disclosures regarding the nature, amount, timing and uncertainty of revenue and cash flows arising from an entity’s contracts with customers. In March 2016, the FASB issued ASU 2016-08, Revenue from Contracts with Customers (Topic 606): Principal versus Agent Considerations (Reporting Revenue Gross versus Net) , which clarified the implementation guidance on principal versus agent considerations. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers (Topic 606): Identifying Performance Obligations and Licensing , which clarified the implementation guidance regarding performance obligations and licensing arrangements. The new standard will become effective for the Company on January 1, 2018. The Company is evaluating the effect that ASU 2014-09 will have on its consolidated financial statements and related disclosures. However, the adoption of this guidance is expected to impact the timing of performance fee revenue recognition. The Company has not yet selected a transition method nor has it determined the effect of the standard on its ongoing financial reporting. In January 2016, the FASB issued ASU 2016-01, Financial Instruments – Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , which requires that all equity investments (except those accounted for under the equity method of accounting) be measured at fair value with changes in fair value recognized in net income. This guidance eliminates the available-for-sale classification for equity securities with readily determinable fair values. However, companies may elect to measure equity investments that do not have readily determinable fair values at cost minus impairment, if any, plus or minus changes resulting from observable price changes in orderly transactions for an identical or similar investment of the same issuer. This new guidance will become effective for the Company on January 1, 2018. Under this new guidance, changes in the fair value of available-for-sale securities will no longer be classified in the Company's condensed consolidated statements of comprehensive income but rather as a component of other income in its condensed consolidated statements of operations. In February 2016, the FASB issued ASU 2016-02, Leases (Topic 842) . This guidance requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases, along with additional qualitative and quantitative disclosures. This new guidance will become effective for the Company on January 1, 2019, with early adoption permitted. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements. However, the adoption of this guidance is expected to result in a significant increase in total assets and total liabilities, but is not expected to have a significant impact on the consolidated statement of operations. The Company does not believe any other recently issued, but not yet effective, revisions to authoritative guidance will have a material effect on its consolidated balance sheets, results of operations or cash flows. |
Fair Value Measurements | The Company follows the guidance set forth in ASC 820 for measuring the fair value of investments in available-for-sale securities. Fair value is the price that would be received from the sale of an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Where available, fair value is based on observable market prices or parameters, or derived from such prices or parameters. Where observable prices or inputs are not available, valuation models are applied. These valuation models involve some level of management estimation and judgment, the degree of which is dependent on the price transparency for the instruments or market and the instruments’ complexity. Financial instruments recorded at fair value in the consolidated financial statements are categorized for disclosure purposes based upon the level of judgment associated with the inputs to the valuation of the investment as of the measurement date. The three levels are defined as follows: • Level I – Valuations based on quoted prices in active markets for identical assets or liabilities at the measurement date. • Level II – Valuations based on inputs other than quoted prices in active markets included in Level I, which are either directly or indirectly observable at the measurement date. This category includes quoted prices for similar assets or liabilities in non-active markets including bids from third parties for privately held assets or liabilities, and observable inputs other than quoted prices such as yield curves and forward currency rates that are entered directly into valuation models to determine the value of derivatives or other assets or liabilities. • Level III – Valuations based on inputs that are unobservable and where there is little, if any, market activity at the measurement date. The inputs for the determination of fair value may require significant management judgment or estimation and is based upon management’s assessment of the assumptions that market participants would use in pricing the assets and liabilities. These investments include debt and equity investments in private companies or assets valued using the market or income approach and may involve pricing models whose inputs require significant judgment or estimation because of the absence of any meaningful current market data for identical or similar investments. The inputs in these valuations may include, but are not limited to, capitalization and discount rates, beta and EBITDA multiples. The information may also include pricing information or broker quotes that include a disclaimer that the broker would not be held to such a price in an actual transaction. The non-binding nature of consensus pricing and/or quotes accompanied by disclaimer would result in classification as Level III information, assuming no additional corroborating evidence. When determining the fair value of publicly traded equity securities, the Company uses the quoted market price as of the valuation date on the primary market or exchange on which they trade. The Company’s investments in available-for-sale securities are categorized as Level I. As of March 31, 2017 and December 31, 2016, there were no financial instruments classified as Level II or Level III. Our equity method investments for which fair value is measured at NAV per share, or its equivalent, using the practical expedient, are not categorized in the fair value hierarchy. A review of the fair value hierarchy classifications is conducted on a quarterly basis. Changes in the observability of valuation inputs may result in a reclassification for certain financial assets or liabilities. Reclassifications impacting all levels of the fair value hierarchy are reported as transfers in or out of Level I, II or III category as of the beginning of the quarter during which the reclassifications occur. |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Schedule of Investments [Abstract] | |
Composition of Investments | The components of investments are as follows: As of As of December 31, 2016 (Amounts in thousands) Equity method investments, at fair value $ 15,088 $ 14,895 Available-for-sale securities 21,223 17,009 Total investments, at fair value $ 36,311 $ 31,904 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Assets | The components of other assets are as follows: As of As of December 31, 2016 (Amounts in thousands) Fixed assets, net of accumulated depreciation of $2,053 and $1,816, respectively $ 4,781 $ 4,998 Security deposits 1,975 1,975 Administrative fees receivable (Note 10) 2,113 2,068 Deferred tax assets (Note 12) 1,906 2,001 Due from affiliates (Note 10) 1,893 2,133 Prepaid expenses and taxes 2,464 3,078 Other 2,261 2,058 Total other assets $ 17,393 $ 18,311 |
LOANS PAYABLE (Tables)
LOANS PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | The Company's loans payable consist of the following: As of As of December 31, 2016 (Amounts in thousands) Term loans under the Credit Suisse Term Loan Facility, net of unamortized discount and debt issuance costs of $1,207 at December 31, 2016 $ — $ 43,593 Non-recourse promissory notes, net of unamortized discount of $1,264 and $1,415, respectively 8,736 8,585 Total loans payable $ 8,736 $ 52,178 The Company’s senior unsecured debt consist of the following: As of March 31, As of (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,549 at March 31, 2017 and $3,802 at December 31, 2016 $ 50,046 $ 49,793 2024 Notes, net of unamortized premium and debt issuance costs of $2,565 at March 31, 2017 66,434 — Total senior unsecured debt $ 116,480 $ 49,793 |
SENIOR UNSECURED DEBT (Tables)
SENIOR UNSECURED DEBT (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Unsecured Debt | The Company's loans payable consist of the following: As of As of December 31, 2016 (Amounts in thousands) Term loans under the Credit Suisse Term Loan Facility, net of unamortized discount and debt issuance costs of $1,207 at December 31, 2016 $ — $ 43,593 Non-recourse promissory notes, net of unamortized discount of $1,264 and $1,415, respectively 8,736 8,585 Total loans payable $ 8,736 $ 52,178 The Company’s senior unsecured debt consist of the following: As of March 31, As of (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,549 at March 31, 2017 and $3,802 at December 31, 2016 $ 50,046 $ 49,793 2024 Notes, net of unamortized premium and debt issuance costs of $2,565 at March 31, 2017 66,434 — Total senior unsecured debt $ 116,480 $ 49,793 |
ACCOUNTS PAYABLE, ACCRUED EXP31
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Payables and Accruals [Abstract] | |
Components of Accounts Payable, Accrued Expenses, and Other Liabilities | The components of accounts payable, accrued expenses and other liabilities are as follows: As of As of December 31, 2016 (Amounts in thousands) Accrued compensation and benefits $ 1,755 $ 7,978 Due to affiliates (Note 10) 13,946 15,043 Revenue share payable (Note 9) 4,903 6,472 Accrued interest 1,472 558 Professional fees 684 858 Deferred rent 2,755 2,833 Deferred tax liabilities (Note 12) 189 202 Performance fee compensation 105 985 Accounts payable and other accrued expenses 1,914 2,326 Total accounts payable, accrued expenses and other liabilities $ 27,723 $ 37,255 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Rental Payments | Future minimum rental payments under non-cancelable leases are as follows as of March 31, 2017 (in thousands): Remaining in 2017 $ 2,017 2018 2,704 2019 2,710 2020 2,833 2021 2,430 Thereafter 4,254 Total future minimum lease payments $ 16,948 |
EARNINGS (LOSS) PER CLASS A S33
EARNINGS (LOSS) PER CLASS A SHARE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Income per Class A Share | The table below presents basic and diluted net income (loss) per share of Class A common stock using the two-class method for the three months ended March 31, 2017 and 2016 : For the Three Months Ended March 31, (unaudited) 2017 2016 (Amounts in thousands, except share and per share amounts) Basic and diluted net income per share: Numerator Net income attributable to Medley Management Inc. $ 394 $ 94 Less: Allocation to participating securities (22 ) (158 ) Net income (loss) available to Class A common stockholders $ 372 $ (64 ) Denominator Weighted average shares of Class A common stock outstanding 5,808,626 5,851,129 Net income (loss) per Class A share $ 0.06 $ (0.01 ) |
COMPENSATION EXPENSE (Tables)
COMPENSATION EXPENSE (Tables) | 3 Months Ended |
Mar. 31, 2017 | |
Compensation and Retirement Disclosure [Abstract] | |
Schedule of Nonvested RSU Activity | A summary of RSU and restricted LLC units activity for the three months ended March 31, 2017 is as follows: Number of RSUs Weighted Average Grant Date Fair Value Number of Restricted LLC Units Weighted Average Grant Date Fair Value Balance at December 31, 2016 1,652,483 $ 12.88 — $ — Granted 389,236 10.09 320,000 11.67 Forfeited (235,624 ) 13.76 — — Vested (4,792 ) 8.16 — — Balance at March 31, 2017 1,801,303 $ 12.18 320,000 $ 11.76 |
ORGANIZATION AND BASIS OF PRE35
ORGANIZATION AND BASIS OF PRESENTATION (Details) $ / shares in Units, $ in Millions | Sep. 29, 2014$ / shares | Sep. 29, 2014$ / shares | Sep. 29, 2014$ / sharesshares | Sep. 29, 2014right$ / shares | Sep. 29, 2014USD ($)$ / shares | Mar. 31, 2017segment |
Organization And Basis Of Presentation [Line Items] | ||||||
Number of reportable segments | segment | 1 | |||||
Date of incorporation | Jun. 13, 2014 | |||||
Commencement of operations date | Sep. 29, 2014 | |||||
Transfer of units to common stock, prior to fourth anniversary | 33.33% | |||||
Transfer of units to common stock, prior to fifth anniversary | 66.66% | |||||
Medley LLC [Member] | ||||||
Organization And Basis Of Presentation [Line Items] | ||||||
Conversion of pre-IPO interests to LLC Units (in shares) | 23,333,333 | |||||
Basis of exchange of LLC Units for Class A shares | exchange their LLC Units for shares of Medley Management Inc.’s Class A common stock on a one-for-one basis | |||||
Common Class A [Member] | ||||||
Organization And Basis Of Presentation [Line Items] | ||||||
Proceeds from Initial Public Offering | $ | $ 100.4 | |||||
Issuance of Class A shares in Initial Public Offering, net of underwriters discount (in shares) | 6,000,000 | |||||
Issuance of Class A shares, offering price (in dollars per share) | $ / shares | $ 18 | $ 18 | $ 18 | $ 18 | $ 18 | |
Percentage of common stock owned by LLC personnel for voting rights entitlement, minimum | 10.00% | |||||
Common stock exchange ratio | 1 | |||||
Common Class B [Member] | ||||||
Organization And Basis Of Presentation [Line Items] | ||||||
Issuance of Class A shares in Initial Public Offering, net of underwriters discount (in shares) | 100 | |||||
Voting rights multiplier upon LLC ownership threshold | 10 | 10 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017USD ($)subsidiary | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)subsidiary | |
Variable Interest Entity [Line Items] | |||
Percent of voting power in Medley LLC | 100.00% | ||
Number of majority owned subsidiaries | subsidiary | 3 | 3 | |
Fair value of investments in non-consolidated VIEs | $ 5,400 | $ 5,100 | |
Receivables included as a component of other assets and clawback obligation | 2,000 | 1,900 | |
Accrued clawback obligations | 7,100 | 7,100 | |
Maximum loss exposure | 7,400 | ||
Reversal of performance fee | $ 2,600 | $ 700 | |
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | 118 | ||
Retained Earnings [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | (120) | ||
Additional Paid-in Capital [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | $ 1,039 | ||
Medley LLC [Member] | |||
Variable Interest Entity [Line Items] | |||
Parent ownership percentage of LLC | 19.50% | 19.90% | |
Cumulative performance fees | $ 4,800 | ||
Medley LLC [Member] | Noncontrolling Interests [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | $ (801) | ||
Accounting Standards Update 2016-09 [Member] | |||
Variable Interest Entity [Line Items] | |||
Deferred tax asset | 118 | $ 0 | |
Accounting Standards Update 2016-09 [Member] | Retained Earnings [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | (100) | ||
Accounting Standards Update 2016-09 [Member] | Additional Paid-in Capital [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | 1,000 | ||
Accounting Standards Update 2016-09 [Member] | Medley LLC [Member] | Noncontrolling Interests [Member] | |||
Variable Interest Entity [Line Items] | |||
Cumulative effect of accounting change due to the adoption of ASU 2016-09 | (800) | ||
Sierra Income Corporation [Member] | |||
Variable Interest Entity [Line Items] | |||
Total assets of consolidated variable interest entity | 54,700 | 51,700 | |
Total liabilities of consolidated variable interest entity | $ 20,100 | $ 22,800 | |
Non Management [Member] | Medley LLC [Member] | |||
Variable Interest Entity [Line Items] | |||
Noncontrolling interest ownership percentage of LLC | 80.50% | 80.10% |
INVESTMENTS (Composition of Inv
INVESTMENTS (Composition of Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Schedule of Investments [Abstract] | ||
Equity method investments, at fair value | $ 15,088 | $ 14,895 |
Available-for-sale securities | 21,223 | 17,009 |
Total investments, at fair value | $ 36,311 | $ 31,904 |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | $ 15,088,000 | $ 14,895,000 | |
Available-for-sale securities | $ 21,223,000 | $ 17,009,000 | |
Publicly traded common stock (in shares) | 2,759,748 | 2,264,892 | |
Cumulative unrealized gains | $ 700,000 | ||
Accumulated other comprehensive income | 65,000 | $ 33,000 | |
Available for sale impairment | 0 | $ 0 | |
Redeemable Non Controlling Interest [Member] | |||
Schedule of Investments [Line Items] | |||
Cumulative unrealized gains | 300,000 | ||
Sierra Income Corporation [Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | 9,000,000 | $ 9,000,000 | |
Medley LLC [Member] | AOCI Attributable to Noncontrolling Interest [Member] | |||
Schedule of Investments [Line Items] | |||
Cumulative unrealized gains | 300,000 | ||
CK Pearl Fund [Member] | |||
Schedule of Investments [Line Items] | |||
Loss from other than temporary impairment equity investments | $ 0 | $ 0 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) | Mar. 31, 2017 | Mar. 31, 2016 |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Level 1 to Level 2 Transfers | $ 0 | $ 0 |
Level 2 to Level 1 Transfers | 0 | 0 |
Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Instruments classified as Level II or Level III | 0 | 0 |
Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Instruments classified as Level II or Level III | $ 0 | $ 0 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fixed assets, net of accumulated depreciation of $2,053 and $1,816, respectively | $ 4,781 | $ 4,998 |
Security deposits | 1,975 | 1,975 |
Administrative fees receivable | 2,113 | 2,068 |
Deferred tax assets | 1,906 | 2,001 |
Due from affiliates | 1,893 | 2,133 |
Prepaid expenses and taxes | 2,464 | 3,078 |
Other | 2,261 | 2,058 |
Total other assets | 17,393 | 18,311 |
Accumulated depreciation | $ 2,053 | $ 1,816 |
LOANS PAYABLE (Schedule of Debt
LOANS PAYABLE (Schedule of Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 8,736 | $ 52,178 |
Credit Suisse Term Loan Facility [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 0 | 43,593 |
Debt instrument, unamortized discount and debt issuance costs | 1,207 | |
Non-recourse Promissory Notes [Member] | ||
Debt Instrument [Line Items] | ||
Unamortized discount | 1,264 | 1,415 |
Non-recourse Promissory Notes [Member] | CNB Credit Agreement [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | $ 8,736 | $ 8,585 |
LOANS PAYABLE (Narrative) (Deta
LOANS PAYABLE (Narrative) (Details) | Aug. 19, 2014USD ($) | Aug. 14, 2014USD ($) | Apr. 30, 2012USD ($)shares | Mar. 31, 2017USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($) |
Debt Instrument [Line Items] | ||||||
Ratio of indebtedness to net capital | 3.5 | |||||
Future principal payments due in 2019 | $ 10,000,000 | |||||
London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 1.00% | |||||
Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 15,000,000 | |||||
Initiation date | Aug. 19, 2014 | |||||
Amount drawn under credit facility | 0 | $ 0 | ||||
Revolving Credit Facility [Member] | Maximum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 4.00% | |||||
Revolving Credit Facility [Member] | Maximum [Member] | Alternate Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 3.25% | |||||
Credit Suisse Term Loan Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Issuance date | Aug. 14, 2014 | |||||
Debt instrument, face amount | $ 110,000,000 | |||||
Maturity date | Jun. 15, 2019 | |||||
Interest rate during the period | 6.50% | |||||
Interest expense | 1,500,000 | 1,800,000 | ||||
Credit Suisse Term Loan Facility [Member] | Federal Funds Effective Swap Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 0.50% | |||||
Credit Suisse Term Loan Facility [Member] | Eurodollar [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 5.50% | |||||
Credit Suisse Term Loan Facility [Member] | Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 4.50% | |||||
Credit Suisse Term Loan Facility [Member] | Minimum [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 1.00% | |||||
Non-recourse Promissory Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 | |||||
Interest expense | 300,000 | $ 400,000 | ||||
Number of shares of common stock purchased (in shares) | shares | 1,108,033 | |||||
Unamortized debt issuance expense | $ 3,800,000 | |||||
Notes payable, fair value disclosure | $ 10,200,000 | $ 10,200,000 | ||||
Non Recourse Promissory Notes Due March 2019 [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Maturity date | Mar. 31, 2019 |
SENIOR UNSECURED DEBT (Schedule
SENIOR UNSECURED DEBT (Schedule of Senior Unsecured Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Debt Instrument [Line Items] | ||
Senior unsecured debt | $ 116,480 | $ 49,793 |
Senior Notes [Member] | ||
Debt Instrument [Line Items] | ||
Senior unsecured debt | 116,480 | 49,793 |
Senior Notes [Member] | Senior Notes Due 2026 [Member] | ||
Debt Instrument [Line Items] | ||
Senior unsecured debt | 50,046 | 49,793 |
Discount and direct issuance costs | 3,549 | 3,802 |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | ||
Debt Instrument [Line Items] | ||
Senior unsecured debt | 66,434 | $ 0 |
Discount and direct issuance costs | $ 2,565 |
SENIOR UNSECURED DEBT (Narrativ
SENIOR UNSECURED DEBT (Narrative) (Details) - Senior Notes [Member] - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Feb. 22, 2017 | Oct. 18, 2016 | |
Senior Notes Due 2026 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 53,600,000 | ||
Stated interest rate | 6.875% | ||
Discount and direct issuance costs | $ 3,800,000 | ||
Notes payable, fair value disclosure | $ 53,000,000 | ||
Interest expense, including amortization of discount and debt issuance costs | $ 1,000,000 | ||
Senior Notes Due 2026 [Member] | On or after August 15, 2019 [Member] | |||
Debt Instrument [Line Items] | |||
Redemption percentage | 100.00% | ||
Senior Notes Due 2024 [Member] | |||
Debt Instrument [Line Items] | |||
Debt instrument, face amount | $ 69,000,000 | ||
Stated interest rate | 7.25% | ||
Discount and direct issuance costs | $ 2,600,000 | ||
Notes payable, fair value disclosure | $ 70,400,000 | ||
Interest expense | $ 800,000 | ||
Senior Notes Due 2024 [Member] | On or after January 30, 2020 [Member] | |||
Debt Instrument [Line Items] | |||
Redemption percentage | 100.00% |
ACCOUNTS PAYABLE, ACCRUED EXP45
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2017 | Dec. 31, 2016 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 1,755 | $ 7,978 |
Due to affiliates | 13,946 | 15,043 |
Revenue share payable | 4,903 | 6,472 |
Accrued interest | 1,472 | 558 |
Professional fees | 684 | 858 |
Deferred rent | 2,755 | 2,833 |
Deferred tax liabilities | 189 | 202 |
Performance fee compensation | 105 | 985 |
Accounts payable and other accrued expenses | 1,914 | 2,326 |
Total accounts payable, accrued expenses and other liabilities | $ 27,723 | $ 37,255 |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) $ in Millions | May 29, 2015 | Apr. 30, 2012 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 |
Loss Contingencies [Line Items] | |||||
Lease expiration period | various times through September 2023 | ||||
Rent expense | $ 0.6 | $ 0.7 | |||
Moshe Barkat and MVF Holdings [Member] | |||||
Loss Contingencies [Line Items] | |||||
Debt default | $ 65 | ||||
Damages sought | 100 | ||||
Settlement amount | $ 1.5 | ||||
Non-recourse Promissory Notes [Member] | |||||
Loss Contingencies [Line Items] | |||||
Proceeds from issuance of debt | $ 10 | ||||
Present value of future cash flows expected to be paid | $ 4.4 | ||||
Contractual obligation | 4.9 | $ 6.5 | |||
Consolidated Funds [Member] | |||||
Loss Contingencies [Line Items] | |||||
Unfunded capital commitments | $ 0.3 | $ 0.5 |
COMMITMENTS AND CONTINGENCIES47
COMMITMENTS AND CONTINGENCIES (Future Minimum Rental Payments) (Details) $ in Thousands | Mar. 31, 2017USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remaining in 2017 | $ 2,017 |
2,018 | 2,704 |
2,019 | 2,710 |
2,020 | 2,833 |
2,021 | 2,430 |
Thereafter | 4,254 |
Total future minimum lease payments | $ 16,948 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | 12 Months Ended | 55 Months Ended | |
Mar. 31, 2017USD ($)shares | Mar. 31, 2016USD ($) | Dec. 31, 2016USD ($)shares | Dec. 31, 2016USD ($)shares | |
Related Party Transaction [Line Items] | ||||
Accrued fees and other revenue receivable | $ 2,113 | $ 2,068 | $ 2,068 | |
Equity method investments, at fair value | 15,088 | 14,895 | 14,895 | |
Available-for-sale securities | $ 21,223 | $ 17,009 | $ 17,009 | |
Publicly traded common stock (in shares) | shares | 2,759,748 | 2,264,892 | 2,264,892 | |
Cumulative unrealized gains | $ 700 | |||
Percentage of tax benefit under tax receivable agreement | 85.00% | |||
MCC Admin Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Administrative services revenue | $ 1,000 | $ 1,100 | ||
Accrued fees and other revenue receivable | 1,000 | $ 900 | $ 900 | |
SIC Admin Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Administrative services revenue | 800 | 600 | ||
Accrued fees and other revenue receivable | 800 | 900 | 900 | |
Funds Admin Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Administrative services revenue | 300 | 200 | ||
Accrued fees and other revenue receivable | 300 | 300 | 300 | |
Sierra Income Corporation [Member] | ||||
Related Party Transaction [Line Items] | ||||
Equity method investments, at fair value | 9,000 | $ 9,000 | $ 9,000 | |
Sierra Income Corporation [Member] | Expense Support and Reimbursement Agreement [Member] | ||||
Related Party Transaction [Line Items] | ||||
Operating expenses percentage | 100.00% | |||
Conditional obligation reimbursement period | 3 years | |||
Liability for ESA expenses | $ 6,600 | $ 7,900 | $ 7,900 | |
Expense support and reimbursement agreement expenses | $ 5,200 | |||
Common Class A [Member] | ||||
Related Party Transaction [Line Items] | ||||
Common stock exchange ratio | 1 |
EARNINGS (LOSS) PER CLASS A S49
EARNINGS (LOSS) PER CLASS A SHARE (Basic and Diluted Income per Class A Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2017 | Mar. 31, 2016 | |
Numerator | ||
Net income attributable to Medley Management Inc. | $ 394 | $ 94 |
Common Class A [Member] | ||
Numerator | ||
Net income attributable to Medley Management Inc. | 394 | 94 |
Net income (loss) available to Class A common stockholders | $ 372 | $ (64) |
Denominator | ||
Weighted average shares of Class A common stock outstanding (in shares) | 5,808,626 | 5,851,129 |
Net income (loss) per Class A share (in dollars per share) | $ 0.06 | $ (0.01) |
Participating Securities [Member] | ||
Numerator | ||
Less: Allocation to participating securities | $ (22) | $ (158) |
EARNINGS (LOSS) PER CLASS A S50
EARNINGS (LOSS) PER CLASS A SHARE (Narrative) (Details) - $ / shares | Mar. 06, 2017 | Mar. 04, 2017 | Feb. 09, 2017 | Feb. 11, 2016 | Mar. 31, 2017 | Mar. 31, 2016 |
Earnings Per Share [Abstract] | ||||||
Dividends declared per Class A common stock (in dollars per share) | $ 0.2 | $ 0.20 | $ 0.20 | $ 0.20 | ||
Dividends paid per Class A common stock (in dollars per share) | $ 0.2 | $ 0.2 | ||||
Antidilutive securities excluded from computation of earnings per share (shares) | 23,333,333 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax assets | $ 1,906,000 | $ 2,001,000 | |
Deferred tax liabilities | $ 189,000 | 202,000 | |
Effective tax rate | 8.20% | 9.80% | |
Income tax provision for discrete items associated with the forfeiture of RSUs | $ 200,000 | ||
Interest expense and penalties | 0 | $ 0 | |
Uncertain tax positions | $ 0 | $ 0 |
COMPENSATION EXPENSE (Narrative
COMPENSATION EXPENSE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance fee compensation | $ 881 | $ 71 | |
Performance fee compensation payable | $ 105 | $ 985 | |
Percentage vested from participants eligibility date | 100.00% | ||
Contributions as a percent of employee eligible wages | 3.00% | ||
Accrued contributions | $ 100 | 100 | |
Retirement plan liability | $ 600 | $ 500 | |
Shares authorized for grant (in shares) | 4,500,000 | ||
Incentive Plan shares available for grant (in shares) | 2,300,000 | ||
Stock-based compensation (less than in 2017) | $ (37) | 836 | |
Reclass of cumulative dividends on forfeited RSUs | $ 416 | 0 | |
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU vesting period | 5 years | ||
Reversal of previously recognized compensation | $ 1,800 | ||
Unvested RSU compensation cost not yet recognized | $ 17,300 | ||
Recognition period for unvested RSU compensation cost | 3 years 9 months 18 days | ||
Chief Executive Officer [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum aggregate compensation | $ 600 | $ 1,300 | |
Retained Earnings [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Reclass of cumulative dividends on forfeited RSUs | $ 416 |
COMPENSATION EXPENSE (Schedule
COMPENSATION EXPENSE (Schedule of RSU Activity) (Details) | 3 Months Ended |
Mar. 31, 2017$ / sharesshares | |
Restricted Stock Units (RSUs) [Member] | |
Number of RSUs | |
Beginning Balance (in shares) | shares | 1,652,483 |
Granted (in shares) | shares | 389,236 |
Forfeited (in shares) | shares | (235,624) |
Vested (in shares) | shares | (4,792) |
Ending Balance (in shares) | shares | 1,801,303 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 12.88 |
Granted (in dollars per share) | $ / shares | 10.09 |
Forfeited (in dollars per share) | $ / shares | 13.76 |
Vested (in dollars per share) | $ / shares | 8.16 |
Ending Balance (in dollars per share) | $ / shares | $ 12.18 |
Restricted Stock Units (RSUs), LLC [Member] | |
Number of RSUs | |
Beginning Balance (in shares) | shares | 0 |
Granted (in shares) | shares | 320,000 |
Forfeited (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Ending Balance (in shares) | shares | 320,000 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 0 |
Granted (in dollars per share) | $ / shares | 11.67 |
Forfeited (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Ending Balance (in dollars per share) | $ / shares | $ 11.76 |
REDEEMABLE NON-CONTROLLING IN54
REDEEMABLE NON-CONTROLLING INTERESTS (Details) - USD ($) | Jun. 03, 2016 | Mar. 31, 2017 | Mar. 31, 2016 | Dec. 31, 2016 | Jan. 31, 2016 |
Redeemable Noncontrolling Interest [Line Items] | |||||
Distributions to members and redeemable non-controlling interests | $ 6,240,000 | $ 6,214,000 | |||
Balance of redeemable non-controlling interest | 36,041,000 | $ 30,805,000 | |||
Contributions to the joint venture | 0 | ||||
Purchases of available for sale securities | 3,728,000 | $ 0 | |||
Remaining contributions included in restricted cash | 7,000,000 | ||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Investments and contributions | $ 10,000,000 | ||||
SIC [Member] | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Fair value of non-controlling interest | $ 12,200,000 | ||||
Net income allocated to non-controlling interest | 1,000,000 | ||||
Distributions to members and redeemable non-controlling interests | 1,100,000 | ||||
Balance of redeemable non-controlling interest | 13,200,000 | ||||
Medley and ''Investors'' [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Investments and contributions | $ 50,000,000 | ||||
DB MED INVESTOR I And II LLC [Member] | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Net income allocated to non-controlling interest | 500,000 | ||||
Distributions to members and redeemable non-controlling interests | 400,000 | ||||
Balance of redeemable non-controlling interest | 22,800,000 | ||||
Percent of preferred distributions given to Investors | 8.00% | ||||
Percent of Joint Venture profits given to Investors | 15.00% | ||||
Period before Investors can redeem their interests | 7 years | ||||
Contributions to the joint venture | 27,500,000 | ||||
Purchases of available for sale securities | 20,500,000 | ||||
Comprehensive income, attributable to noncontrolling interest | $ 300,000 | ||||
DB MED INVESTOR I And II LLC [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | |||||
Redeemable Noncontrolling Interest [Line Items] | |||||
Investments and contributions | $ 40,000,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - $ / shares | May 10, 2017 | Mar. 31, 2017 |
Subsequent Event [Line Items] | ||
Dividends (in dollars per share) | $ 0.20 | |
Subsequent Event [Member] | ||
Subsequent Event [Line Items] | ||
Dividends (in dollars per share) | $ 0.200 |