Document And Entity Information
Document And Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | May 11, 2018 | |
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, 2018 | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Amendment Flag | false | |
Common Class A [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 5,546,076 | |
Common Class B [Member] | ||
Document Information [Line Items] | ||
Entity Common Stock, Shares Outstanding | 100 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (unaudited) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 30,069 | $ 36,163 |
Investments, at fair value | 46,755 | 56,632 |
Management fees receivable | 10,119 | 14,714 |
Performance fees receivable | 0 | 2,987 |
Other assets | 15,955 | 17,262 |
Total Assets | 103,275 | 127,922 |
Liabilities, Redeemable Non-controlling Interests and Equity | ||
Senior unsecured debt | 117,049 | 116,892 |
Loans payable | 9,395 | 9,233 |
Accounts payable, accrued expenses and other liabilities | 20,884 | 25,130 |
Total Liabilities | 147,328 | 151,255 |
Commitments and Contingencies (Note 10) | ||
Redeemable Non-controlling Interests | 46,787 | 53,741 |
Equity | ||
Additional paid in capital | 3,805 | 2,820 |
Accumulated other comprehensive loss | 0 | (1,301) |
Accumulated deficit | (14,080) | (9,545) |
Total stockholders' deficit, Medley Management Inc. | (10,220) | (7,971) |
Total deficit | (90,840) | (77,074) |
Total Liabilities, Redeemable Non-controlling Interests and Equity | 103,275 | 127,922 |
Consolidated Subsidiaries [Member] | ||
Assets | ||
Cash and cash equivalents | 377 | 164 |
Equity | ||
Non-controlling interests | (1,644) | (1,702) |
Medley LLC [Member] | ||
Equity | ||
Non-controlling interests | (78,976) | (67,401) |
Common Class A [Member] | ||
Equity | ||
Common stock, value | 55 | 55 |
Common Class B [Member] | ||
Equity | ||
Common stock, value | $ 0 | $ 0 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (unaudited) (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
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) | 6,249,607 | 6,235,332 |
Common stock, shares outstanding (in shares) | 5,495,343 | 5,481,068 |
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 | Feb. 07, 2018 | Feb. 09, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Revenues | ||||
Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) | $ 12,085 | $ 13,895 | ||
Performance fees | 0 | (2,363) | ||
Other revenues and fees | 2,329 | 2,320 | ||
Investment income (loss): | ||||
Carried interest | 165 | 145 | ||
Other investment loss | (183) | (1) | ||
Total Revenues | 14,396 | 13,996 | ||
Expenses | ||||
Compensation and benefits | 8,338 | 5,794 | ||
Performance fee compensation | (7) | (881) | ||
General, administrative and other expenses | 4,509 | 2,668 | ||
Total Expenses | 12,840 | 7,581 | ||
Other Income (Expense) | ||||
Dividend income | 1,429 | 735 | ||
Interest expense | (2,681) | (3,647) | ||
Other income (expense), net | (9,755) | 1,560 | ||
Total Other Expense, Net | (11,007) | (1,352) | ||
(Loss) Income before income taxes | (9,451) | 5,063 | ||
Provision for income taxes | 190 | 413 | ||
Net (Loss) Income | (9,641) | 4,650 | ||
Net (Loss) Income Attributable to Medley Management Inc. | $ (1,228) | $ 394 | ||
Dividends declared per share of Class A common stock (in dollars per share) | $ 0.20 | $ 0.20 | ||
Net Income (Loss) Per Share of Class A Common Stock: | ||||
Basic (in dollars per share) | $ (0.26) | $ 0.06 | ||
Diluted (in dollars per share) | $ (0.26) | $ 0.06 | ||
Weighted average number shares outstanding - Basic and Diluted (in shares) | 5,483,303 | 5,808,626 | ||
Consolidated Subsidiaries [Member] | ||||
Other Income (Expense) | ||||
Net income (loss) attributable to non-controlling interests | $ (4,514) | $ 1,488 | ||
Medley LLC [Member] | ||||
Other Income (Expense) | ||||
Net income (loss) attributable to non-controlling interests | $ (3,899) | $ 2,768 | ||
Common Class A [Member] | ||||
Other Income (Expense) | ||||
Dividends declared per share of Class A common stock (in dollars per share) | $ 0.20 | $ 0.20 | ||
Net Income (Loss) Per Share of Class A Common Stock: | ||||
Weighted average number shares outstanding - Basic and Diluted (in shares) | 5,483,303 | 5,808,626 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Operations (unaudited) (Parenthetical) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Incentive fees | $ 0 | $ 544 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Comprehensive Income (unaudited) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net (Loss) Income | $ (9,641) | $ 4,650 |
Other Comprehensive Income: | ||
Change in fair value of available-for-sale securities | 0 | 485 |
Total Comprehensive (Loss) Income | (9,641) | 5,135 |
Comprehensive (Loss) Income Attributable to Medley Management Inc. | (1,228) | 426 |
Consolidated Subsidiaries [Member] | ||
Other Comprehensive Income: | ||
Comprehensive income (loss) attributable to non-controlling interests | (4,514) | 1,812 |
Medley LLC [Member] | ||
Other Comprehensive Income: | ||
Comprehensive income (loss) attributable to non-controlling interests | $ (3,899) | $ 2,897 |
Condensed Consolidated Stateme7
Condensed Consolidated Statement of Changes in Equity (unaudited) - USD ($) $ in Thousands | Total | Common Class A [Member] | Common Stock [Member]Common Class A [Member] | Common Stock [Member]Common Class B [Member] | Additional Paid-in Capital [Member] | Accumulated Other Comprehensive Income (Loss) [Member] | Accumulated Earnings (Deficit) [Member] | Non-Controlling Interests [Member]Consolidated Subsidiaries [Member] | Non-Controlling Interests [Member]Medley LLC [Member] | Consolidated Subsidiaries [Member]Non-Controlling Interests [Member] | Medley LLC [Member]Non-Controlling Interests [Member] |
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Cumulative effect of accounting change | ASC 606 [Member] | $ (3,591) | $ (686) | $ (2,905) | ||||||||
Cumulative effect of accounting change | ASU 2016-01 and 2018-02 [Member] | $ 1,301 | (1,301) | |||||||||
Balance at Dec. 31, 2017 | (77,074) | $ 55 | $ 0 | $ 2,820 | (1,301) | (9,545) | $ (1,702) | (67,401) | |||
Balance (in shares) at Dec. 31, 2017 | 5,481,068 | 100 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Net loss | (9,641) | (1,228) | 0 | (3,899) | |||||||
Net loss | (5,127) | ||||||||||
Stock-based compensation | 1,046 | 1,046 | |||||||||
Dividends on Class A common stock ($0.20 per share) | (1,345) | (1,345) | |||||||||
Reclass of cumulative dividends on forfeited restricted stock units to compensation and benefits expense | 25 | 25 | |||||||||
Issuance of Class A common stock related to vesting of restricted stock units, net of tax withholdings | (61) | $ 0 | (61) | ||||||||
Issuance of Class A common stock related to vesting of restricted stock units, net of tax withholdings (in shares) | 14,275 | 14,275 | |||||||||
Distributions | (4,771) | (4,771) | |||||||||
Contributions | 2 | 2 | |||||||||
Issuance of non-controlling interests, at fair value | 56 | $ 56 | $ 0 | ||||||||
Balance at Mar. 31, 2018 | (90,840) | $ 55 | $ 0 | $ 3,805 | $ 0 | $ (14,080) | $ (1,644) | $ (78,976) | |||
Balance (in shares) at Mar. 31, 2018 | 5,495,343 | 100 | |||||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||||||
Cumulative effect of accounting change | ASU 2016-01 and 2018-02 [Member] | $ 0 |
Condensed Consolidated Stateme8
Condensed Consolidated Statement of Changes in Equity (unaudited) (Parenthetical) | 3 Months Ended |
Mar. 31, 2018$ / shares | |
Common Class A [Member] | |
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, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net (Loss) Income | $ (9,641) | $ 4,650 |
Adjustments to reconcile net (loss) income to net cash provided by operating activities: | ||
Stock-based compensation | 1,046 | (37) |
Amortization of debt issuance costs | 185 | 979 |
Accretion of debt discount | 147 | 552 |
Provision for deferred taxes | 1,332 | 82 |
Depreciation and amortization | 219 | 235 |
Net change in unrealized depreciation on investments | 9,807 | 72 |
Income from equity method investments | (180) | (69) |
Reclassification of cumulative dividends paid on forfeited restricted stock units to compensation and benefits expense | 25 | 416 |
Other non-cash amounts | 55 | 0 |
Changes in operating assets and liabilities: | ||
Management fees receivable | 4,595 | 1,404 |
Performance fees receivable | 0 | 2,217 |
Distributions of income received from equity method investments | 288 | 17 |
Purchase of investments | (415) | 0 |
Sale of investments | 392 | 0 |
Other assets | (1,026) | 715 |
Accounts payable, accrued expenses and other liabilities | (4,083) | (9,519) |
Net cash provided by operating activities | 2,533 | 1,714 |
Cash flows from investing activities | ||
Purchases of fixed assets | 0 | (18) |
Capital contributions to equity method investments | (14) | (214) |
Purchases of investments | 0 | (3,728) |
Net cash used in investing activities | (14) | (3,960) |
Cash flows from financing activities | ||
Repayments of loans payable | 0 | (44,800) |
Proceeds from issuance of senior unsecured debt | 0 | 69,108 |
Capital contributions from redeemable non-controlling interests | 2 | 5,000 |
Distributions to members and non-controlling interests | (7,209) | (6,240) |
Debt issuance costs | 0 | (2,585) |
Dividends paid | (1,345) | (1,600) |
Repurchases of Class A common stock | 0 | (401) |
Payments of tax withholdings related to net share settlement of restricted stock units | (61) | 0 |
Net cash (used in) provided by financing activities | (8,613) | 18,482 |
Net (decrease) increase in cash, cash equivalents and restricted cash equivalents | (6,094) | 16,236 |
Cash, cash equivalents and restricted cash equivalents, beginning of period | 36,163 | 54,563 |
Cash, cash equivalents and restricted cash equivalents, end of period | 30,069 | 70,799 |
Cash and cash equivalents | 30,069 | 63,245 |
Restricted cash equivalents | 0 | 7,554 |
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | 1,400 | |
Issuance of non-controlling interest, at fair value | 56 | 0 |
ASC 606 [Member] | ||
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | (125) | 0 |
ASU 2016-01 [Member] | ||
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | 649 | |
ASU 2018-02 [Member] | ||
Supplemental cash flow information | ||
Reclassification of the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive loss to retained earnings due to the early adoption of accounting standards update 2018-02 (Note 2) | 207 | 0 |
ASU 2016-09 [Member] | ||
Supplemental cash flow information | ||
Deferred tax asset impact on cumulative effect of accounting change due to the adoption of ASU | 0 | 118 |
Consolidated Subsidiaries [Member] | ||
Changes in operating assets and liabilities: | ||
Cash and cash equivalents of consolidated fund | (213) | $ 0 |
Cash flows from financing activities | ||
Cash and cash equivalents | $ 377 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Organization and Basis of Presentation | ORGANIZATION AND BASIS OF PRESENTATION Medley Management Inc. is an alternative 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 United States of America. 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. 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 were, 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 September 29, 2017, which was 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 therefore, 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, 2017. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for any future interim period or the full year ending December 31, 2018. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
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 judgment. 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. As of March 31, 2018, Medley Management Inc.’s and the non-managing members’ economic interests in Medley LLC are 18.5% and 81.5% , respectively, and as of December 31, 2017, were 18.7% and 81.3% , respectively. 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, 2018 and 2017, Medley LLC had four majority owned subsidiaries, SIC Advisors LLC, Medley Seed Funding I LLC, Medley Seed Funding II 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 to strategically invest capital as well as isolate business risk. As of March 31, 2018 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $54.0 million and $12.9 million , respectively. As of December 31, 2017 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $63.3 million and $13.0 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. The Company seed funded $2.1 million to Sierra Total Return Fund ("STRF"), which commenced investment operations in June 2017. As of March 31, 2018 , the Company owned 100% of the equity of STRF and, as such, consolidated STRF in its condensed consolidated financial statements. The condensed balance sheet of STRF as of March 31, 2018 is presented in the table below (in thousands). As of March 31, 2018 December 31, 2017 Assets Cash and cash equivalents $ 377 $ 164 Investments, at fair value 2,029 2,005 Other assets 1,048 1,698 Total assets $ 3,454 $ 3,867 Liabilities and Equity Accrued expenses and other liabilities $ 1,314 $ 1,744 Equity 2,140 2,123 Total liabilities and equity $ 3,454 $ 3,867 As of March 31, 2018 , the Company's condensed consolidated balance sheet reflects the elimination of $0.8 million of other assets, $0.8 million of accrued expenses and other liabilities and $2.1 million of equity as a result of the consolidation of STRF. As of December 31, 2017, the Company's condensed consolidated balance sheet reflects the elimination of $1.0 million of other assets, $1.5 million of accrued expenses and other liabilities and $2.1 million of equity as a result of the consolidation of STRF. During the three months ended March 31, 2018, the fund did not generate any significant income or losses from operations. 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, 2018 , the Company recorded investments, at fair value, attributed to these non-consolidated VIEs of $4.6 million , receivables of $1.7 million included as a component of other assets and a clawback obligation of $7.2 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s 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, 2017 , the Company recorded investments, at fair value, attributed to non-consolidated VIEs of $4.8 million , receivables of $2.4 million included as a component of other assets and a clawback obligation of $7.2 million included as a component of accounts payable, accrued expenses and other liabilities on the Company’s consolidated balance sheets. As of March 31, 2018 , the Company’s maximum exposure to losses from these entities is $6.3 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. 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 Company. These interests are classified in the mezzanine section on the Company's condensed consolidated balance sheets. Cash and Cash Equivalents Cash and cash equivalents include liquid investments in money market funds and demand deposits. The Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits as of March 31, 2018 and December 31, 2017. The Company monitors the credit standing of these financial institutions and has not experienced, and has no expectations of experiencing any losses with respect to such balances. 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 Net Asset Value ("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 investment income in the consolidated statements of operations along with the income/ expense allocations from such investments. 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 balance sheets. 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. For presentation in its consolidated statements of cash flows, the Company treats distributions received from certain equity method investments using the cumulative earnings approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Investments also include publicly traded common stock. The Company measures the fair value of its publicly traded common stock at the quoted market price on the primary market or exchange on which they trade. Any realized gains (losses) from the sale of investments and unrealized appreciation (depreciation) resulting from changes in fair value are recorded in other income (expenses), net. In connection with the adoption of the new revenue recognition guidance, ASC 606, Revenue from Contracts, on January 1, 2018, the Company reassessed its accounting policy for performance fees earned during the period which represent a capital allocation to the general partner or investment manager. As a result of this reassessment the Company has determined that it should account for such performance fees within the scope of ASC 323, Investments - Equity Method and Joint Ventures. Accordingly, these performance fees are now classified as carried interest within investment income on the Company's consolidated statements of operations and balances due for such fees are included as a part of equity method investments within Investments, at fair value on the Company's consolidated balance sheets. The Company has applied this change in accounting principle on a full retrospective basis, and prior periods presented have been reclassified to conform to the current period's presentation. Investments also include the Company's investment in CK Pearl Fund, L.P. which is measured at cost less impairment. The Company performs a quantitative and qualitative assessment at each reporting date to determine whether the investment is impaired and an impairment loss equal to the difference between the carrying value and fair value is recorded within other income (expenses), net on the Company's condensed consolidated statement of operations if an impairment has been determined. Revenues As further described under Recently Issued Accounting Pronouncements Adopted as of January 1, 2018, the Company adopted new revenue recognition guidance for revenue from contracts with customers , effective January 1, 2018 using the modified retrospective approach. The adoption of this new guidance did not have an impact on the Company's accounting for management fees, administrative fees and loan administration fees. 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 the Company becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net investment 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 in the period the services are provided. Performance Fees Performance fees are contractual fees which do not represent a capital allocation to the general partner or investment manager that are earned based on the performance of certain funds, typically, the Company’s separately managed accounts. Performance fees are earned based on the fund performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Prior to the adoption of ASC 606, effective January 1, 2018, the Company accounted for performance fees under Method 2 of ASC 605, Revenue Recognition , for revenue based on a formula. Under this method, performance fees for any period were based upon an assumed liquidation of the underlying fund's net assets on the reporting date and were subject to reversal to the extent that cumulative previously recognized performance fees exceeded the amount due to the general partner or investment manager based on a fund's cumulative investment returns. Upon the adoption of ASC 606, the Company accounts for performance fees in accordance with this new standard, and will only recognize performance fees when it is probable that a significant reversal of such fees will not occur in the future. During the three months ended March 31, 2018, the Company did no t record any performance fees. During the three months ended March 31, 2017, the Company recorded reversals of $2.6 million of previously recognized performance fees under the previous revenue recognition standard. 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. Medley also acts as the administrative agent on certain deals for which Medley may earn loan administration fees and transaction fees. These fees are recognized as revenue over the period to which the fees directly relate. Carried Interest Carried interest are performance based fees that represent a capital allocation to the general partner or investment manager. Carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. Prior to January 1, 2018, the Company accounted for carried interest under Method 2 of ASC 605, as previously described above. Upon adoption of ASC 606, the Company reassessed its accounting policy for carried interest, and determined that carried interest is within the scope of the accounting for equity method investments, ASC 323, Investments-Equity Method and Joint Ventures, and, as such, is not within the scope of ASC 606. Under ASC 323, the Company will record carried interest in a consistent manner as it historically had which is based upon an assumed liquidation of that fund's net assets as of the reporting date, regardless of whether such amounts have been realized. For any given period, carried interest on the Company's condensed consolidated statements of operations may include reversals of previously recognized carried interest due to a decrease in the value of a particular fund that results in a decrease of cumulative fees earned to date. Since fund return hurdles are cumulative, previously recognized carried interest also may be reversed in a period of appreciation that is lower than the particular fund's hurdle rate. Carried interest received in prior peri ods may be required to be returned by the Company 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, carried interest 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 carried interest would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2018 , the Company had not received any carried interest distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of carried interest. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2018 , the Company had accrued $7.2 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 Investment Income (loss) Other investment income is comprised of unrealized appreciation (depreciation) resulting from changes in fair value of the Company's equity method investments in addition to the income/ expense allocations from such investments. Stock-based Compensation 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 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 its provision for income taxes. 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. 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 dividend equivalent payments, whether paid or unpaid, in the number of shares outstanding in its basic and diluted calculations. Reclassification of Prior year Presentation On January 1, 2018, the Company elected a change in accounting policy to account for performance fees earned which represent a capital allocation to the general partner or investment manager under ASC 323, Investments - Equity Method and Joint Ventures. As a result of this change in accounting policy, certain prior year amounts have been reclassified for consistency with the current period presentation. Performance fees earned which represent a capital allocation to the general partner or investment manager were reclassified from performance fees to investment income along with capital-based allocations of income and losses from our equity method investments, which were previously classified under other income (expense), net on the condensed consolidated statements of operations. On the Company's condensed consolidated balance sheet, receivable amounts related to such performance fees were reclassified from performance fees receivable to investments, at fair value. There were no changes to the income allocations from our equity method investments, which are still included within investments, at fair value. These reclassifications had no net effect on the reported condensed consolidated statements of operations or condensed consolidated balance sheets for any period. Recently Issued Accounting Pronouncements Adopted as of January 1, 2018 In May 2014, the FASB issued accounting standards update ("ASU") 2014-09, Revenue from Contracts with Customers (ASC 606) , and since then, has issued several amendments intended to provide interpretive clarifications and to reduce the cost and complexity of applying the new revenue recognition standard, both at transition and on an ongoing basis. The core principle of this guidance is 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, entities will apply a five step approach: (1) identify the contract(s) with a customer, (2) identify the performance obligations within the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when, or as, each performance obligation is satisfied. 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. This guidance became effective for the Company beginning on January 1, 2018 and entities had the option of adopting this guidance using either a full retrospective or a modified retrospective approach. The Company has adopted this guidance as of January 1, 2018 using the modified retrospective method. Under this method, the Company recognized the cumulative-effect of adoption of this guidance as an adjustment to equity as of January 1, 2018, as further described below, but did not restate prior periods presented in its condensed consolidated financial statements. Effective January 1, 2018, the Company’s current policy of recognizing performance fees earned from certain funds and separately managed accounts, which do not represent a capital allocation to the general partner or investment manager changed. Previously such fees were recognized on a hypothetical liquidation basis as of each reporting date (Method 2 of ASC 605, Revenue Recognition , for revenue based on a formula). Effective January 1, 2018, the Company will not be able to recognize such fees until such time that it is probable that a significant reversal in cumulative performance fees will not occur in the future. For performance fees earned which represent a capital allocation to the general partner or investment manager, the Company effected a change in accounting policy and now accounts for them under ASC 323, Investments - Equity Method and Joint Ventures. As such, these types of performance fees are not in the scope of the new revenue recognition standard. The Company expects that the pattern and amount of recognition under this new policy will not differ materially from the Company’s historical recognition of such fees, however the presentation and disclosure of such fees and the income from capital allocations related to these fees were altered. This change in accounting policy for performance fees earned which represent a capital allocation to the general partner or investment manager was retrospectively applied. Additionally, as of January 1, 2018, the Company no longer defers reimbursable organizational, offering and other pre-launch costs associated with a fund’s formation. Effective January 1, 2018, the Company began expensing such costs as incurred until the respective fund commences operations and receives third party committed capital. Reimbursements for these costs will be recognized as a component of other revenues in the Company’s consolidated statements of operations when the respective fund commences operations and receives third party committed capital. As a result of the adoption of the new revenue recognition guidance, the Company recorded a cumulative effect decrease to equity of $3.6 million , net of benefit from income taxes of $0.1 million , as of January 1, 2018, which relates to (1) certain performance fee revenue that would not have met the “probable that significant reversal will not occur” criteria of $3.0 million and (2) the reversal of reimbursable fund formation costs which were deferred on the Company’s consolidated balance sheet of $0.7 million . Also, certain reimbursable costs incurred on behalf of the Company's funds that were previously presented net in the Company's consolidated statements of operations are now presented on a gross basis beginning January 1, 2018. There were no changes from the way the Company previously recognized management fees, administrative fees and loan administration fees as the result of its adoption of ASU 2014-09 or its change in accounting policy for performance fees earned which represent a capital allocation to the general partner or investment manager 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 investments in equity securities (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 guidan |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Investments [Abstract] | |
Investments | INVESTMENTS Investments consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Equity method investments, at fair value $ 13,345 $ 14,136 Investment in shares of MCC, at fair value 30,873 40,491 Investment held at cost less impairment 508 — Investments of consolidated fund 2,029 2,005 Total investments, at fair value $ 46,755 $ 56,632 Equity Method Investments Medley measures the carrying value of its public non-traded equity method investment at NAV per share. Unrealized appreciation (depreciation) resulting from changes in NAV per share is reflected as a component of investment income in the 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, 2018 and 2017. As of March 31, 2018 and December 31, 2017, the Company’s carrying value of its equity method investments was $ 13.3 million and $14.1 million , respectively. The Company's equity method investment in shares of Sierra Income Corporation (“SIC”), a related party, were $8.3 million and $8.5 million as of March 31, 2018 and December 31, 2017, respectively. The remaining balance as of March 31, 2018 and December 31, 2017 relates primarily to the Company’s investments in Medley Opportunity Fund II, LP ("MOF II"), Medley Opportunity Fund III LP (“MOF III”), Medley Opportunity Fund Offshore III LP (“MOF III Offshore”) and CK Pearl Fund, L.P. ("CK Pearl"). As of January 1, 2018, for performance fees earned which represent a capital allocation to the general partner or investment manager, the Company elected a change in accounting policy and now accounts for them under the equity method of accounting . As a result, such performance fees are now included as a part of equity method investments within investments, at fair value on the Company's condensed consolidated balance sheets. As of March 31, 2018 and December 31, 2017, the balance of such performance fees was $0.4 million and $0.2 million , respectively. Revenues associated with such performance fees are classified as carried interest within investment income on the Company's condensed consolidated statements of operations. The entities in which the Company's investments are accounted for under the equity method are considered to be related parties. Investments in shares of MCC, at fair value As of March 31, 2018 and December 31, 2017, the Company held 7,756,938 shares of MCC which are carried at fair value based upon the quoted market price on the exchange on which the shares trade. During the three months ended March 31, 2018 , the Company recognized unrealized losses of $9.6 million which was included as a component of other income (expense), net on the Company’s condensed consolidated statements of operations. Prior to the adoption of ASU 2016-01 on January 1, 2018, the Company's investment in shares of MCC were classified as available-for-sale securities, with cumulative unrealized gains (losses) recorded in other comprehensive income (loss). During the three months ended March 31, 2017, the Company recorded unrealized gains of $0.5 million as a component of other comprehensive income. Investment Held at Cost Less Impairment Effective January 1, 2018, the Company elected to use the measurement alternative provided under ASC 321, Investments - Equity Securities and measure its investment in CK Pearl at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer. The carrying amount of this investment was $0.5 million as of both March 31, 2018 and December 31, 2017. Prior to January 1, 2018, the Company's investment in CK Pearl was accounted for under the equity method. The carrying value of the Company's investment in CK Pearl is determined based on the financial information provided to the Company by the fund manager and the likelihood of recovering the Company's investment in the fund. Investments of consolidated fund Medley measures the carrying value of investments held by its consolidated fund at fair value. As of March 31, 2018 , and December 31, 2017, investments of consolidated fund consisted of $0.4 million of equity investments and $1.6 million of senior secured loans. Refer to Note 5 " Fair Value Measurements " for additional information. |
REVENUES FROM CONTRACTS WITH CU
REVENUES FROM CONTRACTS WITH CUSTOMERS | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenues from Contracts with Customers | REVENUES FROM CONTRACTS WITH CUSTOMERS The majority of the Company's revenues are derived from investment management and advisory contracts that are accounted for in accordance with the new revenue recognition standard, ASC 606. Performance Obligations Performance obligations are the unit of account under the new revenue recognition standard and represent the distinct goods or services that are promised to the customer. The majority of the Company's contracts have a single performance obligation to provide asset management, advisory and other related services to permanent capital vehicles, long-dated private funds and separately managed accounts. The Company also has a separate performance obligation to act as an agent for certain third party lenders and provide loan administration services to certain borrowers. These loan administration services also represent a single performance obligation. The Company primarily provides investment management services to a fund by managing the fund’s investments and maximizing returns on those investments. The Company’s asset management, advisory and other related services are transferred over time to the customer on a day-to-day basis. The contracts with each fund create a distinct performance obligation for each quarter the Company provides the promised services to the customer, from which the customer can benefit from each individual quarter of service. Furthermore, each quarter of the promised services is considered separately identifiable because there is no integration of the promised services between quarters, each quarter does not modify services provided prior to that quarter, and the services provided are not interdependent or interrelated. Most services provided to these funds are provided continuously over the contract period, so the services in the contract generally represents a single performance obligation comprising a series of distinct service periods. A contract’s transaction price is allocated to the series of distinct services that constitute a single performance obligation and recognized as revenue when, or as, the performance obligation is satisfied. The management fees earned by the Company are largely dependent on fluctuations in the market and, thus, the determination of such fees is highly susceptible to factors outside the Company's influence. Management fees typically have a large number and broad range of possible consideration amounts and historical experience is generally not indicative of future performance of the market. Hence, the Company is applying the exemption provided under the new revenue recognition guidance as the Company is unable to estimate the aggregate amount of the transaction price allocated to the performance obligations that are unsatisfied and the variable consideration is allocated entirely to a wholly unsatisfied performance obligation. The new revenue recognition standard also revises the criteria for determining if an entity is acting as a principal or agent in certain arrangements. Depending on whether the Company is acting as the principal or as an agent, certain reimbursable expenses that were previously recorded net are now presented as an expense on a gross basis on the Company's condensed consolidated statement of operations. Significant Judgments The Company's contracts with customers generally include a single performance obligation to provide asset management, advisory and other related services on a quarterly basis. Revenues are recognized as such performance obligation is satisfied and the constraint on the management fees is lifted on a quarterly basis, hence, the Company does not need to exercise significant judgments in regards to management fees. Consideration for management fees is received on a quarterly basis as the performance obligations is satisfied. With respect to performance fees based on the economic performance of its SMAs, significant judgment is required when determining recognition of revenues. Such judgments include the below: • whether the fund is near final liquidation • whether the fair value of the remaining assets in the fund is significantly in excess of the threshold at which the Company would earn an incentive fee • the probability of significant fluctuations in the fair value of the remaining assets • the SMA’s remaining investments are under contract for sale with contractual purchase prices that would result in no clawback and it is highly likely that the contracts will be consummated As such, the Company will consider the above factors at each reporting period to determine whether there is an amount of the SMA performance fees which should be recognized as revenue because it is probable that there will not be a significant future revenue reversal, hence, the “constraint” on the performance fees has been lifted. The Company accounts for performance fees which represent capital allocations to the general partner or investment manager pursuant to accounting rules relating to investments accounted for under the equity method of accounting. As such, these types of performance fees are not within the scope of the new revenue recognition standard and the above significant judgments and constraints do not apply to them. Refer to Note 2 “ Summary of Significant Accounting Policies ” and Note 4 " Investments " for additional information. Revenue by Category The following tables presents the Company's revenue from contracts with customers disaggregated by type of customer. For the Three Months Ended March 31, 2018 Permanent Long-dated SMAs Third-party Borrowers Total (Amounts in thousands) Management fees $ 8,392 $ 2,061 $ 1,632 $ — $ 12,085 Performance fees — — — — — Other revenues and fees 1,845 — — 484 2,329 Total revenues from contracts with customers $ 10,237 $ 2,061 $ 1,632 $ 484 $ 14,414 The Company's asset management, advisory and other related services are transferred over time and the Company recognizes these revenues over time as well. Contract Balances For certain customers, the Company has a performance obligation to provide loan administration services. The timing of revenue recognition may differ from the timing of invoicing to such customers or receiving consideration. For the majority of these services cash deposits are received prior to the performance obligation being met. The performance obligation of acting as a loan administrator is satisfied over time, therefore, the Company defers any payments received upfront as deferred revenue and recognizes revenue on a pro-rata basis over time as the loan administrative services are performed. These contract liabilities are reported as deferred revenue within accounts payable, accrued expenses and other liabilities on the condensed consolidated balance sheets and amounted to $0.3 million as of March 31, 2018. During the three months ended March 31, 2018, the Company recognized revenue from amounts included in deferred revenue of $0.2 million and received cash deposits of $0.2 million . The Company did not have any contract assets as of March 31, 2018 or December 31, 2017. Comparative Tables As the Company adopted the new revenue guidance (ASC 606) under the modified retrospective method, the Company is required to present what the Company's revenues would have been under the previous revenue guidance (ASC 605). The following tables present the reconciliation between the financial statement line items reported on the condensed consolidated balance sheet as of March 31, 2018 under ASC 606 to what would have been reported under the previous guidance ASC 605. As of March 31, 2018 As Reported under ASC 606 Adjustments to reported balances Balances under ASC 605 Assets (Amounts in thousands) Performance fees receivable $ — $ 2,788 $ 2,788 Other assets 15,955 753 16,708 Liabilities Accounts payable, accrued expenses and other liabilities 20,884 134 21,018 Equity Accumulated deficit (14,080 ) 650 (13,430 ) Non-controlling interests in Medley LLC (78,976 ) 2,757 (76,219 ) The following tables present the reconciliation between the Company's reported condensed consolidated statement of operations for the three months ended March 31, 2018 under ASC 606 to what would have been reported under the previous revenue recognition guidance, ASC 605. For the three months ended March 31, 2018 As Reported under ASC 606 Adjustments to reported balances Balances under ASC 605 Revenues (Amounts in thousands) Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) $ 12,085 $ — $ 12,085 Performance fees — (198 ) (198 ) Other revenues and fees 2,329 (272 ) 2,057 Investment income (loss): Carried interest 165 — 165 Other investment loss (183 ) — (183 ) Total Revenues 14,396 (470 ) 13,926 Expenses Compensation and benefits 8,338 — 8,338 Performance fee compensation (7 ) — (7 ) General, administrative and other expenses 4,509 (188 ) 4,321 Total Expenses 12,840 (188 ) 12,652 Other Income (Expense) Dividend income 1,429 — 1,429 Interest expense (2,681 ) — (2,681 ) Other income (expense), net (9,755 ) — (9,755 ) Total Other Expense, Net (11,007 ) — (11,007 ) Loss before provision for income taxes (9,451 ) (282 ) (9,733 ) Provision for income taxes 190 6 196 Net Loss (9,641 ) (288 ) (9,929 ) Net loss attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries (4,514 ) — (4,514 ) Net loss income attributable to non-controlling interests in Medley LLC (3,899 ) (234 ) (4,133 ) Net Loss Attributable to Medley Management Inc. $ (1,228 ) $ (54 ) $ (1,282 ) Net Loss Per Share of Class A Common Stock: Basic $ (0.26 ) $ (0.01 ) $ (0.27 ) Diluted $ (0.26 ) $ (0.01 ) $ (0.27 ) Weighted average shares outstanding - Basic and Diluted 5,483,303 — 5,483,303 Assets Recognized for the Costs to Obtain or Fulfill a Contract As part of providing investment management services to a fund, the Company might incur certain placement fees to third parties for obtaining new investors for the fund. Any placement fees incurred to third party placement agents for placing investors into a fund are variable as it is based on a percentage of future fees and cannot be reasonably estimated. The Company determined that placement fees which are paid in cash over time, as fees are earned, do not relate to a new contract at the time the payment is made and these costs do not represent a cost to obtain a new contract but to fulfill an existing contract. The Company does not recognize any assets for the incremental costs of obtaining or fulfilling a contract with a customer and expenses placement fees as incurred. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Fair Value Measurements | FAIR VALUE MEASUREMENTS 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. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments 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. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy: • 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 active markets, quoted prices for identical or similar assets or liabilities in non- active markets including actionable 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 are 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 which 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. The following tables summarize the fair value hierarchy of the Company's financial assets measured at fair value (in thousands): As of March 31, 2018 Level I Level II Level III Total Assets Investments of consolidated fund $ 275 $ — $ 1,754 $ 2,029 Investment in shares of MCC 30,873 — — 30,873 Total Assets $ 31,148 $ — $ 1,754 $ 32,902 As of December 31, 2017 Level I Level II Level III Total Assets Investments of consolidated fund $ 435 $ — $ 1,570 $ 2,005 Investment in shares of MCC 40,491 — — 40,491 Total Assets $ 40,926 $ — $ 1,570 $ 42,496 Included in investments of consolidated fund as of March 31, 2018 are Level I assets of $0.3 million in equity investments and Level III assets of $1.8 million , which consists of senior secured loans and equity investments. Included in investments of consolidated fund as of December 31, 2017 are Level I assets of $0.4 million in equity investments and Level III assets of $1.6 million , which consists of senior secured loans and preferred equity investments. The significant unobservable inputs used in the fair value measurement of Level III assets of the consolidated fund's investments in senior secured loans include market yields. Significant increases or decreases in market yields in isolation would result in a significantly higher or lower fair value measurement. There were no significant unrealized gains or losses related to the investments of consolidated fund for the three months ended March 31, 2018. The following is a summary of changes in fair value of the Company's financial assets that have been categorized within Level III of the fair value hierarchy (in thousands): Level III Financial Assets as of March 31, 2018 Balance at December 31, 2017 Purchases Transfers In or (Out) of Level III Sale of Level III Assets Balance at March 31, 2018 Investments of consolidated fund $ 1,570 $ 365 $ — $ (181 ) $ 1,754 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, 2018. When determining the fair value of publicly traded equity securities, the Company uses the quoted closing market price as of the valuation date on the primary market or exchange on which they trade. 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. The Company's investments of consolidated fund are treated as investments at fair value and any realized and unrealized gains and losses from those investments are recorded through the condensed consolidated statement of operations. The Company's treatment is consistent with that of STRF, which is considered an investment company under ASC 946, Financial Services - Investment Companies, for standalone reporting purposes. |
OTHER ASSETS
OTHER ASSETS | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Other Assets | OTHER ASSETS Other assets consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Fixed assets, net of accumulated depreciation and amortization of $2,589 and $2,370, respectively $ 3,941 $ 4,160 Security deposits 1,975 1,975 Administrative fees receivable (Note 11) 2,213 1,903 Deferred tax assets (Note 13) 1,377 2,777 Due from affiliates (Note 11) 1,930 2,979 Prepaid expenses and taxes 2,786 1,353 Other assets 1,733 2,115 Total other assets $ 15,955 $ 17,262 |
LOANS PAYABLE
LOANS PAYABLE | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Loans Payable | LOANS PAYABLE Loans payable consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Non-recourse promissory notes, net of unamortized discount of $605 and $767, respectively 9,395 9,233 Total loans payable $ 9,395 $ 9,233 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 most recent amendment dated September 22, 2017 extended the Revolving Credit Facility maturity date to March 31, 2020 and provides for an incremental facility in an amount up to $10.0 million upon the fulfillment of certain customary conditions, as well as other changes. 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 0.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 2.5% . As of and during the three months ended March 31, 2018 , there were no amounts drawn under the Revolving Credit Facility. The capitalized terms below are defined in the Revolving Credit Facility, where applicable. The Revolving Credit Facility also contains financial covenants that require the Company to maintain a Maximum Net Leverage Ratio, as defined, of not greater than 5.0 to 1.0, a Total Leverage Ratio, as defined, of not greater than 7.0 to 1.0 and Core EBITDA, as defined, of not less than $15.0 million . These ratios are calculated on a trailing twelve months basis and are calculated using the Company’s financial results and include 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. The Revolving Credit Facility also contains customary negative covenants and 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, 2018 . 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. During the three months ending March 31, 2017, interest expense under the Term Loan Facility, including accretion of the note discount and amortization of debt issuance costs, as well as the deferred issuance costs associated with the Revolving Credit facility, was $1.5 million . 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 notes, including accretion of the notes discount, was $0.3 million for each of the three months ended March 31, 2018 and 2017. The fair value of the outstanding balance of the notes was $10.0 million as of March 31, 2018 and $10.1 million as of December 31, 2017. Contractual Maturities of Loans Payable As of March 31, 2018 , $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 carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,212 and $3,266, respectively $ 50,383 $ 50,329 2024 Notes, net of unamortized premium and debt issuance costs of $2,333 and $2,437, respectively 66,666 66,563 Total senior unsecured debt $ 117,049 $ 116,892 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 and interest payments commenced 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 the 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 their underlying quoted market price was $53.5 million as of March 31, 2018 . Interest expense on the 2026 Notes, including accretion of note discount and amortization of debt issuance costs, $1.0 million for the three months ended March 31, 2018 and 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 and interest payments commenced 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 premium and direct issuance costs of $2.8 million which are being amortized over the term of the 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 their underlying quoted market price was $69.9 million as of March 31, 2018 . Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $1.4 million and $0.8 million for the three months ended March 31, 2018 and 2017, respectively. |
SENIOR UNSECURED DEBT
SENIOR UNSECURED DEBT | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Senior Unsecured Debt | LOANS PAYABLE Loans payable consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Non-recourse promissory notes, net of unamortized discount of $605 and $767, respectively 9,395 9,233 Total loans payable $ 9,395 $ 9,233 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 most recent amendment dated September 22, 2017 extended the Revolving Credit Facility maturity date to March 31, 2020 and provides for an incremental facility in an amount up to $10.0 million upon the fulfillment of certain customary conditions, as well as other changes. 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 0.25% or (ii) at an Adjusted LIBOR plus an applicable margin not to exceed 2.5% . As of and during the three months ended March 31, 2018 , there were no amounts drawn under the Revolving Credit Facility. The capitalized terms below are defined in the Revolving Credit Facility, where applicable. The Revolving Credit Facility also contains financial covenants that require the Company to maintain a Maximum Net Leverage Ratio, as defined, of not greater than 5.0 to 1.0, a Total Leverage Ratio, as defined, of not greater than 7.0 to 1.0 and Core EBITDA, as defined, of not less than $15.0 million . These ratios are calculated on a trailing twelve months basis and are calculated using the Company’s financial results and include 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. The Revolving Credit Facility also contains customary negative covenants and 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, 2018 . 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. During the three months ending March 31, 2017, interest expense under the Term Loan Facility, including accretion of the note discount and amortization of debt issuance costs, as well as the deferred issuance costs associated with the Revolving Credit facility, was $1.5 million . 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 notes, including accretion of the notes discount, was $0.3 million for each of the three months ended March 31, 2018 and 2017. The fair value of the outstanding balance of the notes was $10.0 million as of March 31, 2018 and $10.1 million as of December 31, 2017. Contractual Maturities of Loans Payable As of March 31, 2018 , $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 carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,212 and $3,266, respectively $ 50,383 $ 50,329 2024 Notes, net of unamortized premium and debt issuance costs of $2,333 and $2,437, respectively 66,666 66,563 Total senior unsecured debt $ 117,049 $ 116,892 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 and interest payments commenced 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 the 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 their underlying quoted market price was $53.5 million as of March 31, 2018 . Interest expense on the 2026 Notes, including accretion of note discount and amortization of debt issuance costs, $1.0 million for the three months ended March 31, 2018 and 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 and interest payments commenced 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 premium and direct issuance costs of $2.8 million which are being amortized over the term of the 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 their underlying quoted market price was $69.9 million as of March 31, 2018 . Interest expense on the 2024 Notes, including amortization of debt premium and debt issuance costs, was $1.4 million and $0.8 million for the three months ended March 31, 2018 and 2017, respectively. |
ACCOUNTS PAYABLE, ACCRUED EXPEN
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Accounts Payable, Accrued Expenses and Other Liabilities | ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES Accounts payable, accrued expenses and other liabilities consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Accrued compensation and benefits $ 3,001 $ 6,835 Due to affiliates (Note 11) 7,237 7,315 Revenue share payable (Note 10) 3,566 3,841 Accrued interest 1,294 1,294 Professional fees 1,034 1,366 Deferred rent 2,419 2,506 Deferred tax liabilities (Note 13) — 92 Performance fee compensation 104 111 Accounts payable and other accrued expenses 2,229 1,770 Total accounts payable, accrued expenses and other liabilities $ 20,884 $ 25,130 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
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 for the three months ending March 31, 2018 and 2017 . As of March 31, 2018 future minimum rental payments under non-cancelable leases are as follows (in thousands): Remaining in 2018 $ 1,800 2019 2,247 2020 2,364 2021 2,430 2022 2,431 Thereafter 1,823 Total future minimum lease payments $ 13,095 Consolidation of Business Activities During the three months ended March 31, 2018, the Company initiated the consolidation of its business activities to its New York office. The Company believes this will enhance operations by consolidating origination, underwriting and asset management operations and personnel in a single location. During the three months ended March 31, 2018, the Company recorded $1.4 million in severance costs and expects to incur additional one-time costs of $1.2 million . The Company anticipates that most of the remaining charges will be recognized during the second quarter of 2018. At this time, the Company does not anticipate a material change in overall headcount upon completion of the consolidation. Capital Commitments to Funds As of March 31, 2018 and December 31, 2017, the Company had aggregate unfunded commitments of $0.3 million 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 $10.0 million non-recourse promissory notes that were issued to the same parties (Note 7). The two transactions were deemed to be related freestanding contracts and the $10.0 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, 2018 and December 31, 2017, this obligation amounted to $3.6 million and $3.8 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), net 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 . On June 6, 2016, the court granted the Medley defendants’ demurrers on several counts and dismissed Mr. Barkat’s claims with prejudice except with respect to his claim for intentional interference with contract. On March 18, 2018, the court granted the Medley defendants’ motion for summary adjudication with respect to Mr. Barkat’s sole remaining claim against the Medley Defendants for intentional interference. Now that the trial court has ruled in favor of the Medley defendants on all counts, the only remaining claims in the Barkat litigation are MCC and MOF II’s affirmative counterclaims against Mr. Barkat and MVF Holdings, which MCC and MOF II are diligently prosecuting. 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 causes of action asserted in the Derivative Action are without merit and all defendants intend to continue to assert a vigorous defense. Medley LLC, MCC, MOF II, Medley Management Inc., Medley Group LLC, Brook Taube, and Seth Taube were named as defendants, along with other various parties, in a putative class action lawsuit captioned as Royce Solomon, Jodi Belleci, Michael Littlejohn, and Giulianna Lomaglio v. American Web Loan, Inc., AWL, Inc., Mark Curry, MacFarlane Group, Inc., Sol Partners, Medley Opportunity Fund, II, LP, Medley LLC, Medley Capital Corporation, Medley Management, Inc., Medley Group, LLC, Brook Taube, Seth Taube, DHI Computing Service, Inc., Middlemarch Partners, and John Does 1-100, filed on December 15, 2017 and amended on March 9, 2018, in the United States District Court for the Eastern District of Virginia, Newport News Division, as Case No. 4:17-cv-145 (hereinafter, “Class Action 1”). MOF II and MCC were also named as defendants, along with various other parties, in a putative class action lawsuit captioned George Hengle and Lula Williams v. Mark Curry, American Web Loan, Inc., AWL, Inc., Red Stone, Inc., Medley Opportunity Fund II LP, and Medley Capital Corporation, filed February 13, 2018, in the United States District Court, Eastern District of Virginia, Richmond Division, as Case No. 3:18-cv-100 (“Class Action 2”) (together with Class Action 1, the “Class Action Complaints”). The plaintiffs in the Class Action Complaints filed their putative class actions alleging claims under the Racketeer Influenced and Corrupt Organizations Act, and various other claims arising out of the alleged payday lending activities of American Web Loan. The claims against Medley LLC, MCC, MOF II, the Company, Medley Group LLC, Brook Taube, and Seth Taube (in Class Action 1), and the claims against MOF II and MCC (in Class Action 2), allege that those defendants in each respective action exercised control over American Web Loan’s payday lending activities as a result of a loan to American Web Loan. The loan was made by MOF II in 2011. American Web Loan repaid the loan from MOF II in full in February of 2015, more than 1 year and 10 months prior to any of the loans allegedly made by American Web Loan to the alleged class plaintiff representatives in Class Action 1; in Class Action 2, the alleged class plaintiff representatives have not alleged when they received any loans from American Web Loan. Medley LLC and MCC never made any loans or provided financing to, or had any other relationship with, American Web Loan. MOF II, Medley LLC, and MCC are seeking indemnification from American Web Loan, various affiliates, and other parties with respect to the claims in the Class Action Complaints. MOF II, Medley LLC, and MCC believe the alleged claims in the Class Action Complaints are without merit and they intend to defend these lawsuits vigorously. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
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 asset management, advisory and other related services. Administration Agreements In January 2011 and April 2012, Medley entered into administration agreements with MCC (the “MCC Admin Agreement”) and SIC (the “SIC Admin Agreement”), respectively, whereby, as part of its performance obligation to provide asset management, advisory and other related services, Medley agreed to provide administrative services necessary for the operations of MCC and SIC. MCC and 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 MCC and SIC’s officers and their respective staffs. Additionally, Medley has 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 performance obligation of providing such administrative services is satisfied and are included in other revenues and fees on the condensed consolidated statements of operations. Amounts due from these agreements are included as a component of other assets on the Company's condensed consolidated balance sheets. Total revenues recorded under these agreements for the three months ended March 31, 2018 and 2017 are reflected in the table below: For the Three Months Ended 2018 2017 (Amounts in thousands) MCC Admin Agreement $ 901 $ 997 SIC Admin Agreement 699 794 Funds Admin Agreements 245 306 Total administrative fees from related parties $ 1,845 $ 2,097 Amounts due from related parties under these agreements are reflected in the table below: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Amounts due from MCC under the MCC Admin Agreement $ 966 $ 867 Amounts due from SIC under the SIC Admin Agreement 724 696 Amounts due from entities under the Funds Admin Agreements 523 340 Total administrative fees receivable $ 2,213 $ 1,903 Management fee Waiver During the first quarter of 2018, the Company voluntarily waived $0.4 million in management fees for MCC. Investments Refer to Note 4 " Investments " for more information related to the Company's investments in related parties. 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. There have been no transactions under this agreement through March 31, 2018 . |
EARNINGS PER CLASS A SHARE
EARNINGS PER CLASS A SHARE | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Earnings Per Class A Share | EARNINGS PER CLASS A SHARE The table below presents basic and diluted net (loss) income per share of Class A common stock using the two-class method for the three months ending March 31, 2018 and 2017 , respectively: For the Three Months Ended 2018 2017 (Amounts in thousands, except share and per share amounts) Basic and diluted net (loss) income per share: Numerator Net (loss) income attributable to Medley Management Inc. $ (1,228 ) $ 394 Less: Allocation to participating securities (224 ) (22 ) Net (loss) income available to Class A common stockholders $ (1,452 ) $ 372 Denominator Weighted average shares of Class A common stock outstanding 5,483,303 5,808,626 Net (loss) income per Class A share $ (0.26 ) $ 0.06 The allocation to participating securities above generally represents dividends paid to holders of unvested restricted stock 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 24,032,533 and 23,653,333 LLC Units as of March 31, 2018 and 2017, respectively, to shares of Class A common stock, the impact of which would be antidilutive. The following table reflects the per share dividend amounts that the Company declared on its common stock during the three months ended March 31, 2018 and 2017. Declaration Dates Payment Dates Per Share February 9, 2017 March 6, 2017 $ 0.20 February 7, 2018 March 7, 2018 $ 0.20 |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
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 on the Company’s consolidated balance sheets. These temporary differences result in taxable or deductible amounts in future years. As of March 31, 2018 and December 31, 2017, the Company's deferred tax assets were $1.4 million and $2.8 million , respectively, which consists primarily of temporary differences relating to certain accrued expenses, stock compensation and a tax benefit relating to tax goodwill. The Company's deferred tax asset balance as of March 31, 2018 is presented net of a valuation allowance of $0.6 million . This valuation allowance was established during the three months ended March 31, 2018 and relates to the portion of the Company's deferred tax assets associated with the cumulative unrealized loss on shares of MCC. At this time, the Company considers it more likely than not that it would not be able to generate enough capital gains in the near future to realize the deferred tax asset associated with such capital losses. Deferred tax liabilities were less than $0.1 million and $0.1 million as of March 31, 2018 and December 31, 2017, respectively, 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 (2.0)% and 8.2% for the three months ended March 31, 2018 and 2017, 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 recognized on a discrete basis in the income tax provision in the quarter in which they occur. 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. However, a portion of the Company's subsidiaries' income is subject to New York City’s unincorporated business tax. For the three months ended March 31, 2018 and 2017 , the Company was only subject to federal, state and city corporate income taxes on its pre-tax income attributable to Medley Management Inc. On December 22, 2017, the U.S. government enacted the Tax Cuts and Jobs Act (the “Tax Act”). The Tax Act includes significant changes to the U.S. corporate income tax system including: a federal corporate rate reduction from 34% to 21%; limitations on the deductibility of interest expense and executive compensation; and the transition of U.S. international taxation from a worldwide tax system to a modified territorial tax system. Changes under the Tax Act were effective for the Company at January 1, 2018. The decrease in the effective tax rate for the three months ended March 31, 2018 compared to the three months ended March 31, 2017 was due primarily to the aforementioned rate reduction resulting from the Tax Act and the establishment of a $0.6 million valuation allowance during the period. Interest expense and penalties related to income tax matters are recognized as a component of the provision for income taxes and were not significant during the three months ended March 31, 2018 and 2017 . As of and during the three months ended March 31, 2018 and 2017, there were no uncertain tax positions taken that were not more likely than not to be sustained. |
COMPENSATION EXPENSE
COMPENSATION EXPENSE | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Compensation Expense | COMPENSATION EXPENSE Compensation generally includes salaries, bonuses, equity and profit sharing awards. Bonuses, equity 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 $1.3 million during each of the three months ended March 31, 2018 and 2017. During the three months ended March 31, 2018 and 2017 , 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, Compensation - General , 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, 2018 and 2017, the Company recorded a reversal of performance fee compensation expense of less than $0.1 million and $0.9 million , respectively. As of March 31, 2018 and December 31, 2017, total performance fee compensation payable for these awards was $0.1 million each and is included as a component of accounts payable, accrued expenses and other liabilities on the Company's 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 $0.3 million and $0.1 million for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018 and December 31, 2017 the Company's outstanding liability to the plan was $0.8 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, 2018 , there were 1.9 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, 2018 and 2017, stock-based compensation was $1.0 million and less than $0.1 million , respectively. A summary of RSU and restricted LLC units activity for the three months ended March 31, 2018 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, 2017 1,451,393 $ 10.44 320,000 $ 11.67 Granted 246,100 6.60 379,200 7.33 Forfeited (14,000 ) 6.41 — — Vested (20,668 ) 12.68 — — Balance at March 31, 2018 1,662,825 $ 9.58 699,200 $ 9.32 The fair value of RSUs vested during the three months ended March 31, 2018 was $0.3 million . The vesting of 20,668 restricted stock units resulted in the issuance of 14,275 Class A common shares, as the restricted stock units were net-share settled such that the Company withheld awards with the aggregate fair value equivalent to the employees' minimum statutory tax obligations in accordance with the terms of the Plan. Total tax obligations amounted to less than $0.1 million and payments to the appropriate taxing authorities are reflected as a financing activity on the Company's consolidated statements of cash flows. During the three months ended March 31, 2018 and 2017, $0.5 and $1.8 million of previously recognized compensation was reversed relating to forfeited RSUs, respectively. In addition, during the three months ended March 31, 2018 and 2017, the Company reclassified cumulative dividends of less than $0.1 million and $0.4 million , respectively, from retained earnings to other compensation expense as a result of such forfeited RSUs. Unamortized compensation cost related to unvested RSUs and restricted LLC units as of March 31, 2018 was $15.2 million and is expected to be recognized over a weighted average period of 3.5 years. |
REDEEMABLE NON-CONTROLLING INTE
REDEEMABLE NON-CONTROLLING INTERESTS | 3 Months Ended |
Mar. 31, 2018 | |
Temporary Equity Disclosure [Abstract] | |
Redeemable Non-controlling Interests | REDEEMABLE NON-CONTROLLING INTERESTS Changes in redeemable non-controlling interests during the three months ended March 31, 2018 and 2017 are reflected in the table below: For the Three Months Ended 2018 2017 (Amounts in thousands) Beginning balance $ 53,741 $ 30,805 Net (loss) income attributable to redeemable non-controlling interests in consolidated subsidiaries (4,516 ) 1,485 Contributions — 5,000 Distributions (2,438 ) (1,573 ) Change in fair value of available-for-sale securities — 324 Ending balance $ 46,787 $ 36,041 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 consolidated 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, 2018 , net income allocated to this non-controlling interest was $0.8 million , and distributions paid were $1.4 million . 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, 2018 , and December 31 , 2017, the balance of the redeemable non-controlling interest in SIC Advisors LLC was $12.9 million and $13.5 million , respectively. 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 $50.0 million in new and existing Medley managed funds (the ‘‘Joint Venture’’). The Company agreed to contribute up to $10.0 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. On June 6, 2017, the Company entered into an amendment to its Master Investment Agreement with the Investors, which provided for, among other things, an increase in the Company’s capital contribution to up to $13.8 million and extended the term of the Joint Venture from seven to ten years. The Investors agreed to invest up to $40.0 million in exchange for preferred equity interests in the Joint Venture. As of June 30, 2017, the Company and the Investors had fully satisfied their capital contributions. 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 ten 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 $34.4 million and $ 40.6 million as of March 31, 2018 and December 31, 2017, respectively. Total contributions to the Joint Venture amounted to $53.8 million and $16.8 million through March 31, 2018 and 2017, respectively, and were used to purchase $51.8 million of MCC shares on the open market and seed fund $2.0 million to STRF. During the three months ended March 31, 2018 and 2017, net income (loss) allocated to this non-controlling interest was $(5.2) million and $0.5 million , respectively. Distributions paid during the three months ended March 31, 2018 and 2017 was $1.0 million and $0.4 million , respectively. In October 2016, the Company executed an operating agreement for STRF Advisors LLC 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 STRF and SC Distributors LLC, an affiliate of the minority interest holder. As a result of this redemption feature, the non-controlling interest in STRF Advisors LLC is classified as in redeemable non-controlling interests in the mezzanine section of the balance sheet. During the three months ended March 31, 2018 , net losses allocated to this redeemable non-controlling interest was $0.1 million . As of March 31, 2018 and December 31, 2017, the balance of the redeemable non-controlling interest in STRF Advisors LLC was $(0.5) million and $(0.4) million , respectively. |
MARKET AND OTHER RISK FACTORS
MARKET AND OTHER RISK FACTORS | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 | |
Subsequent Events [Abstract] | |
Subsequent Events | SUBSEQUENT EVENTS Management has evaluated subsequent events through the date of issuance of the condensed consolidated financial statements included herein. There have been no subsequent events that occurred during such period that would require disclosure in this Form 10-Q or would be required to be recognized in the condensed consolidated financial statements as of and for the three months ended March 31, 2018, except as disclosed below. On May 10, 2018, the Company’s Board of Directors declared a dividend of $0.20 per share of Class A common stock for the first quarter of 2018. The dividend will be paid on June 1, 2018 to stockholders of record as of May 24, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN27
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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, 2017. The current period's results of operations will not necessarily be indicative of results that ultimately may be achieved for any future interim period or the full year ending December 31, 2018. |
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 judgment. 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 and Non-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. As of March 31, 2018, Medley Management Inc.’s and the non-managing members’ economic interests in Medley LLC are 18.5% and 81.5% , respectively, and as of December 31, 2017, were 18.7% and 81.3% , respectively. 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, 2018 and 2017, Medley LLC had four majority owned subsidiaries, SIC Advisors LLC, Medley Seed Funding I LLC, Medley Seed Funding II 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 to strategically invest capital as well as isolate business risk. As of March 31, 2018 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $54.0 million and $12.9 million , respectively. As of December 31, 2017 , total assets and total liabilities, after eliminating entries, of these VIEs reflected in the consolidated balance sheets were $63.3 million and $13.0 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. 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. |
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. |
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. |
Non-Controlling Interests in Consolidated Subsidiaries and Redeemable 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 Company. These interests are classified in the mezzanine section on the Company's condensed consolidated balance sheets. |
Cash and Cash Equivalents | Cash and Cash Equivalents Cash and cash equivalents include liquid investments in money market funds and demand deposits. The Company had cash balances with financial institutions in excess of Federal Deposit Insurance Corporation insured limits as of March 31, 2018 and December 31, 2017. The Company monitors the credit standing of these financial institutions and has not experienced, and has no expectations of experiencing any losses with respect to such balances. |
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 Net Asset Value ("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 investment income in the consolidated statements of operations along with the income/ expense allocations from such investments. 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 balance sheets. 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. For presentation in its consolidated statements of cash flows, the Company treats distributions received from certain equity method investments using the cumulative earnings approach. Under the cumulative earnings approach, an investor would compare the distributions received to its cumulative equity-method earnings since inception. Any distributions received up to the amount of cumulative equity earnings would be considered a return on investment and classified in operating activities. Any excess distributions would be considered a return of investment and classified in investing activities. Investments also include publicly traded common stock. The Company measures the fair value of its publicly traded common stock at the quoted market price on the primary market or exchange on which they trade. Any realized gains (losses) from the sale of investments and unrealized appreciation (depreciation) resulting from changes in fair value are recorded in other income (expenses), net. In connection with the adoption of the new revenue recognition guidance, ASC 606, Revenue from Contracts, on January 1, 2018, the Company reassessed its accounting policy for performance fees earned during the period which represent a capital allocation to the general partner or investment manager. As a result of this reassessment the Company has determined that it should account for such performance fees within the scope of ASC 323, Investments - Equity Method and Joint Ventures. Accordingly, these performance fees are now classified as carried interest within investment income on the Company's consolidated statements of operations and balances due for such fees are included as a part of equity method investments within Investments, at fair value on the Company's consolidated balance sheets. The Company has applied this change in accounting principle on a full retrospective basis, and prior periods presented have been reclassified to conform to the current period's presentation. Investments also include the Company's investment in CK Pearl Fund, L.P. which is measured at cost less impairment. The Company performs a quantitative and qualitative assessment at each reporting date to determine whether the investment is impaired and an impairment loss equal to the difference between the carrying value and fair value is recorded within other income (expenses), net on the Company's condensed consolidated statement of operations if an impairment has been determined. |
Revenues | Revenues As further described under Recently Issued Accounting Pronouncements Adopted as of January 1, 2018, the Company adopted new revenue recognition guidance for revenue from contracts with customers , effective January 1, 2018 using the modified retrospective approach. The adoption of this new guidance did not have an impact on the Company's accounting for management fees, administrative fees and loan administration fees. 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 the Company becomes entitled to such fees. Certain management agreements also provide for Medley to receive Part I incentive fee revenue derived from net investment 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 in the period the services are provided. Performance Fees Performance fees are contractual fees which do not represent a capital allocation to the general partner or investment manager that are earned based on the performance of certain funds, typically, the Company’s separately managed accounts. Performance fees are earned based on the fund performance during the period, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s investment management agreement. Prior to the adoption of ASC 606, effective January 1, 2018, the Company accounted for performance fees under Method 2 of ASC 605, Revenue Recognition , for revenue based on a formula. Under this method, performance fees for any period were based upon an assumed liquidation of the underlying fund's net assets on the reporting date and were subject to reversal to the extent that cumulative previously recognized performance fees exceeded the amount due to the general partner or investment manager based on a fund's cumulative investment returns. Upon the adoption of ASC 606, the Company accounts for performance fees in accordance with this new standard, and will only recognize performance fees when it is probable that a significant reversal of such fees will not occur in the future. During the three months ended March 31, 2018, the Company did no t record any performance fees. During the three months ended March 31, 2017, the Company recorded reversals of $2.6 million of previously recognized performance fees under the previous revenue recognition standard. 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. Medley also acts as the administrative agent on certain deals for which Medley may earn loan administration fees and transaction fees. These fees are recognized as revenue over the period to which the fees directly relate. Carried Interest Carried interest are performance based fees that represent a capital allocation to the general partner or investment manager. Carried interest is allocated to the Company based on cumulative fund performance to date, subject to the achievement of minimum return levels in accordance with the respective terms set out in each fund’s governing documents. Prior to January 1, 2018, the Company accounted for carried interest under Method 2 of ASC 605, as previously described above. Upon adoption of ASC 606, the Company reassessed its accounting policy for carried interest, and determined that carried interest is within the scope of the accounting for equity method investments, ASC 323, Investments-Equity Method and Joint Ventures, and, as such, is not within the scope of ASC 606. Under ASC 323, the Company will record carried interest in a consistent manner as it historically had which is based upon an assumed liquidation of that fund's net assets as of the reporting date, regardless of whether such amounts have been realized. For any given period, carried interest on the Company's condensed consolidated statements of operations may include reversals of previously recognized carried interest due to a decrease in the value of a particular fund that results in a decrease of cumulative fees earned to date. Since fund return hurdles are cumulative, previously recognized carried interest also may be reversed in a period of appreciation that is lower than the particular fund's hurdle rate. Carried interest received in prior peri ods may be required to be returned by the Company 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, carried interest 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 carried interest would be required to be returned, a liability is established for the potential clawback obligation. As of March 31, 2018 , the Company had not received any carried interest distributions, except for tax distributions related to the Company’s allocation of net income, which included an allocation of carried interest. Pursuant to the organizational documents of each respective fund, a portion of these tax distributions may be subject to clawback. As of March 31, 2018 , the Company had accrued $7.2 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 Investment Income (loss) Other investment income is comprised of unrealized appreciation (depreciation) resulting from changes in fair value of the Company's equity method investments in addition to the income/ expense allocations from such investments. |
Stock-based Compensation | Stock-based Compensation 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 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 its provision for income taxes. 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. |
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 dividend equivalent payments, whether paid or unpaid, in the number of shares outstanding in its basic and diluted calculations. |
Reclassification of Prior year Presentation | Reclassification of Prior year Presentation On January 1, 2018, the Company elected a change in accounting policy to account for performance fees earned which represent a capital allocation to the general partner or investment manager under ASC 323, Investments - Equity Method and Joint Ventures. As a result of this change in accounting policy, certain prior year amounts have been reclassified for consistency with the current period presentation. Performance fees earned which represent a capital allocation to the general partner or investment manager were reclassified from performance fees to investment income along with capital-based allocations of income and losses from our equity method investments, which were previously classified under other income (expense), net on the condensed consolidated statements of operations. On the Company's condensed consolidated balance sheet, receivable amounts related to such performance fees were reclassified from performance fees receivable to investments, at fair value. There were no changes to the income allocations from our equity method investments, which are still included within investments, at fair value. These reclassifications had no net effect on the reported condensed consolidated statements of operations or condensed consolidated balance sheets for any period. |
Recently Issued Accounting Pronouncements Adopted and Not Yet Adopted | Recently Issued Accounting Pronouncements Adopted as of January 1, 2018 In May 2014, the FASB issued accounting standards update ("ASU") 2014-09, Revenue from Contracts with Customers (ASC 606) , and since then, has issued several amendments intended to provide interpretive clarifications and to reduce the cost and complexity of applying the new revenue recognition standard, both at transition and on an ongoing basis. The core principle of this guidance is 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, entities will apply a five step approach: (1) identify the contract(s) with a customer, (2) identify the performance obligations within the contract, (3) determine the transaction price, (4) allocate the transaction price to the separate performance obligations and (5) recognize revenue when, or as, each performance obligation is satisfied. 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. This guidance became effective for the Company beginning on January 1, 2018 and entities had the option of adopting this guidance using either a full retrospective or a modified retrospective approach. The Company has adopted this guidance as of January 1, 2018 using the modified retrospective method. Under this method, the Company recognized the cumulative-effect of adoption of this guidance as an adjustment to equity as of January 1, 2018, as further described below, but did not restate prior periods presented in its condensed consolidated financial statements. Effective January 1, 2018, the Company’s current policy of recognizing performance fees earned from certain funds and separately managed accounts, which do not represent a capital allocation to the general partner or investment manager changed. Previously such fees were recognized on a hypothetical liquidation basis as of each reporting date (Method 2 of ASC 605, Revenue Recognition , for revenue based on a formula). Effective January 1, 2018, the Company will not be able to recognize such fees until such time that it is probable that a significant reversal in cumulative performance fees will not occur in the future. For performance fees earned which represent a capital allocation to the general partner or investment manager, the Company effected a change in accounting policy and now accounts for them under ASC 323, Investments - Equity Method and Joint Ventures. As such, these types of performance fees are not in the scope of the new revenue recognition standard. The Company expects that the pattern and amount of recognition under this new policy will not differ materially from the Company’s historical recognition of such fees, however the presentation and disclosure of such fees and the income from capital allocations related to these fees were altered. This change in accounting policy for performance fees earned which represent a capital allocation to the general partner or investment manager was retrospectively applied. Additionally, as of January 1, 2018, the Company no longer defers reimbursable organizational, offering and other pre-launch costs associated with a fund’s formation. Effective January 1, 2018, the Company began expensing such costs as incurred until the respective fund commences operations and receives third party committed capital. Reimbursements for these costs will be recognized as a component of other revenues in the Company’s consolidated statements of operations when the respective fund commences operations and receives third party committed capital. As a result of the adoption of the new revenue recognition guidance, the Company recorded a cumulative effect decrease to equity of $3.6 million , net of benefit from income taxes of $0.1 million , as of January 1, 2018, which relates to (1) certain performance fee revenue that would not have met the “probable that significant reversal will not occur” criteria of $3.0 million and (2) the reversal of reimbursable fund formation costs which were deferred on the Company’s consolidated balance sheet of $0.7 million . Also, certain reimbursable costs incurred on behalf of the Company's funds that were previously presented net in the Company's consolidated statements of operations are now presented on a gross basis beginning January 1, 2018. There were no changes from the way the Company previously recognized management fees, administrative fees and loan administration fees as the result of its adoption of ASU 2014-09 or its change in accounting policy for performance fees earned which represent a capital allocation to the general partner or investment manager 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 investments in equity securities (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. The Company adopted this guidance effective 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 consolidated statements of comprehensive income but rather as a component of other income (expense), net in its consolidated statements of operations. As a result of the adoption of this ASU, on January 1, 2018, the Company reclassed $1.3 million of cumulative unrealized losses, net of income tax benefit, from accumulated other comprehensive (loss) income to accumulated deficit on the Company's condensed consolidated balance sheet. Also, on the adoption date, the Company elected the measurement alternative provided under ASC 321, Investments - Equity Securities and will now account for its investment in CK Pearl Fund, L.P. at cost less impairment, adjusted for observable price changes for an identical or similar investment of the same issuer. The adoption of this guidance may have a significant impact to the consolidated statements of operations going forward as any changes to the fair value of the Company's publicly traded securities that were previously accounted for as available-for-sale securities will now be reflected within other income on the Company's consolidated statements of operations. In May 2017, the FASB issued ASU 2017-09, Scope of Modification Accounting . This guidance clarifies when changes to share-based payment awards must be accounted for as modifications. The guidance requires an entity to apply modification accounting guidance if the value, vesting conditions or classification of the award changes but will provide relief to entities that make non-substantive changes to their share-based payment awards. The Company adopted this guidance effective January 1, 2018. The Company has evaluated the impact of adopting this standard on its consolidated financial statements, and it did not have a significant impact on the Company's consolidated financial statements. In February 2018, the FASB issued ASU 2018-02, Income Statement - Reporting Comprehensive Income (Topic 220): Reclassification of Certain Tax Effects from Accumulated Other Comprehensive Income . This guidance permits entities to reclassify tax effects stranded in accumulated other comprehensive income (OCI) as a result of tax reform to retained earnings. An entity can apply this new guidance either (1) in the period of adoption or (2) retrospectively to each period in which the income tax effects of the 2017 Tax Cuts and Jobs Act related to items in accumulated OCI are recognized. The Company early adopted ASU 2018-02 effective January 1, 2018 and applied this new guidance in the period of adoption. As a result, $0.2 million of income taxes stranded in accumulated other comprehensive income was reclassified to accumulated deficit. Recently Issued Accounting Pronouncements Not Yet Adopted 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 Company's consolidated statements of operations. In February 2018, the FASB issued ASU 2018-03, Technical Corrections and Improvements to Financial Instruments - Overall (Subtopic 825-10) Recognition and Measurement of Financial Assets and Financial Liabilities . ASU 2018-03 clarifies certain aspects of the guidance issued in ASU 2016-01. This new guidance will become effective for the Company on July 1, 2018. The Company is currently evaluating the impact of adopting this standard on its consolidated financial statements. The adoption of this guidance is not expected to have a material impact on the Company's consolidated financial statements. 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 | 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. The Company’s fair value analysis includes an analysis of the value of any unfunded loan commitments. Financial investments 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. Investments which are valued using NAV as a practical expedient are excluded from this hierarchy: • 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 active markets, quoted prices for identical or similar assets or liabilities in non- active markets including actionable 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 are 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 which 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. |
SUMMARY OF SIGNIFICANT ACCOUN28
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Accounting Policies [Abstract] | |
Condensed Balance Sheet of STRF | The condensed balance sheet of STRF as of March 31, 2018 is presented in the table below (in thousands). As of March 31, 2018 December 31, 2017 Assets Cash and cash equivalents $ 377 $ 164 Investments, at fair value 2,029 2,005 Other assets 1,048 1,698 Total assets $ 3,454 $ 3,867 Liabilities and Equity Accrued expenses and other liabilities $ 1,314 $ 1,744 Equity 2,140 2,123 Total liabilities and equity $ 3,454 $ 3,867 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Schedule of Investments [Abstract] | |
Composition of Investments | Investments consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Equity method investments, at fair value $ 13,345 $ 14,136 Investment in shares of MCC, at fair value 30,873 40,491 Investment held at cost less impairment 508 — Investments of consolidated fund 2,029 2,005 Total investments, at fair value $ 46,755 $ 56,632 |
REVENUES FROM CONTRACTS WITH 30
REVENUES FROM CONTRACTS WITH CUSTOMERS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Revenue from Contract with Customer [Abstract] | |
Revenue by Category | The following tables presents the Company's revenue from contracts with customers disaggregated by type of customer. For the Three Months Ended March 31, 2018 Permanent Long-dated SMAs Third-party Borrowers Total (Amounts in thousands) Management fees $ 8,392 $ 2,061 $ 1,632 $ — $ 12,085 Performance fees — — — — — Other revenues and fees 1,845 — — 484 2,329 Total revenues from contracts with customers $ 10,237 $ 2,061 $ 1,632 $ 484 $ 14,414 The Company's asset management, advisory and other related services are transferred over time and the Company recognizes these revenues over time as well. |
Comparative Tables | The following tables present the reconciliation between the financial statement line items reported on the condensed consolidated balance sheet as of March 31, 2018 under ASC 606 to what would have been reported under the previous guidance ASC 605. As of March 31, 2018 As Reported under ASC 606 Adjustments to reported balances Balances under ASC 605 Assets (Amounts in thousands) Performance fees receivable $ — $ 2,788 $ 2,788 Other assets 15,955 753 16,708 Liabilities Accounts payable, accrued expenses and other liabilities 20,884 134 21,018 Equity Accumulated deficit (14,080 ) 650 (13,430 ) Non-controlling interests in Medley LLC (78,976 ) 2,757 (76,219 ) The following tables present the reconciliation between the Company's reported condensed consolidated statement of operations for the three months ended March 31, 2018 under ASC 606 to what would have been reported under the previous revenue recognition guidance, ASC 605. For the three months ended March 31, 2018 As Reported under ASC 606 Adjustments to reported balances Balances under ASC 605 Revenues (Amounts in thousands) Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) $ 12,085 $ — $ 12,085 Performance fees — (198 ) (198 ) Other revenues and fees 2,329 (272 ) 2,057 Investment income (loss): Carried interest 165 — 165 Other investment loss (183 ) — (183 ) Total Revenues 14,396 (470 ) 13,926 Expenses Compensation and benefits 8,338 — 8,338 Performance fee compensation (7 ) — (7 ) General, administrative and other expenses 4,509 (188 ) 4,321 Total Expenses 12,840 (188 ) 12,652 Other Income (Expense) Dividend income 1,429 — 1,429 Interest expense (2,681 ) — (2,681 ) Other income (expense), net (9,755 ) — (9,755 ) Total Other Expense, Net (11,007 ) — (11,007 ) Loss before provision for income taxes (9,451 ) (282 ) (9,733 ) Provision for income taxes 190 6 196 Net Loss (9,641 ) (288 ) (9,929 ) Net loss attributable to redeemable non-controlling interests and non-controlling interests in consolidated subsidiaries (4,514 ) — (4,514 ) Net loss income attributable to non-controlling interests in Medley LLC (3,899 ) (234 ) (4,133 ) Net Loss Attributable to Medley Management Inc. $ (1,228 ) $ (54 ) $ (1,282 ) Net Loss Per Share of Class A Common Stock: Basic $ (0.26 ) $ (0.01 ) $ (0.27 ) Diluted $ (0.26 ) $ (0.01 ) $ (0.27 ) Weighted average shares outstanding - Basic and Diluted 5,483,303 — 5,483,303 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Fair Value Disclosures [Abstract] | |
Financial Assets | The following tables summarize the fair value hierarchy of the Company's financial assets measured at fair value (in thousands): As of March 31, 2018 Level I Level II Level III Total Assets Investments of consolidated fund $ 275 $ — $ 1,754 $ 2,029 Investment in shares of MCC 30,873 — — 30,873 Total Assets $ 31,148 $ — $ 1,754 $ 32,902 As of December 31, 2017 Level I Level II Level III Total Assets Investments of consolidated fund $ 435 $ — $ 1,570 $ 2,005 Investment in shares of MCC 40,491 — — 40,491 Total Assets $ 40,926 $ — $ 1,570 $ 42,496 |
Changes in Fair Value of Financial Assets Categorized within Level 3 | The following is a summary of changes in fair value of the Company's financial assets that have been categorized within Level III of the fair value hierarchy (in thousands): Level III Financial Assets as of March 31, 2018 Balance at December 31, 2017 Purchases Transfers In or (Out) of Level III Sale of Level III Assets Balance at March 31, 2018 Investments of consolidated fund $ 1,570 $ 365 $ — $ (181 ) $ 1,754 |
OTHER ASSETS (Tables)
OTHER ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | |
Components of Other Assets | Other assets consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Fixed assets, net of accumulated depreciation and amortization of $2,589 and $2,370, respectively $ 3,941 $ 4,160 Security deposits 1,975 1,975 Administrative fees receivable (Note 11) 2,213 1,903 Deferred tax assets (Note 13) 1,377 2,777 Due from affiliates (Note 11) 1,930 2,979 Prepaid expenses and taxes 2,786 1,353 Other assets 1,733 2,115 Total other assets $ 15,955 $ 17,262 |
LOANS PAYABLE (Tables)
LOANS PAYABLE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Debt | Loans payable consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Non-recourse promissory notes, net of unamortized discount of $605 and $767, respectively 9,395 9,233 Total loans payable $ 9,395 $ 9,233 The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,212 and $3,266, respectively $ 50,383 $ 50,329 2024 Notes, net of unamortized premium and debt issuance costs of $2,333 and $2,437, respectively 66,666 66,563 Total senior unsecured debt $ 117,049 $ 116,892 |
SENIOR UNSECURED DEBT (Tables)
SENIOR UNSECURED DEBT (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Schedule of Senior Unsecured Debt | Loans payable consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Non-recourse promissory notes, net of unamortized discount of $605 and $767, respectively 9,395 9,233 Total loans payable $ 9,395 $ 9,233 The carrying value of the Company’s senior unsecured debt consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) 2026 Notes, net of unamortized discount and debt issuance costs of $3,212 and $3,266, respectively $ 50,383 $ 50,329 2024 Notes, net of unamortized premium and debt issuance costs of $2,333 and $2,437, respectively 66,666 66,563 Total senior unsecured debt $ 117,049 $ 116,892 |
ACCOUNTS PAYABLE, ACCRUED EXP35
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Payables and Accruals [Abstract] | |
Components of Accounts Payable, Accrued Expenses, and Other Liabilities | Accounts payable, accrued expenses and other liabilities consist of the following: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Accrued compensation and benefits $ 3,001 $ 6,835 Due to affiliates (Note 11) 7,237 7,315 Revenue share payable (Note 10) 3,566 3,841 Accrued interest 1,294 1,294 Professional fees 1,034 1,366 Deferred rent 2,419 2,506 Deferred tax liabilities (Note 13) — 92 Performance fee compensation 104 111 Accounts payable and other accrued expenses 2,229 1,770 Total accounts payable, accrued expenses and other liabilities $ 20,884 $ 25,130 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Future Minimum Rental Payments | As of March 31, 2018 future minimum rental payments under non-cancelable leases are as follows (in thousands): Remaining in 2018 $ 1,800 2019 2,247 2020 2,364 2021 2,430 2022 2,431 Thereafter 1,823 Total future minimum lease payments $ 13,095 |
RELATED PARTY TRANSACTIONS (Tab
RELATED PARTY TRANSACTIONS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Related Party Transactions [Abstract] | |
Schedule of Related Party Transactions | Total revenues recorded under these agreements for the three months ended March 31, 2018 and 2017 are reflected in the table below: For the Three Months Ended 2018 2017 (Amounts in thousands) MCC Admin Agreement $ 901 $ 997 SIC Admin Agreement 699 794 Funds Admin Agreements 245 306 Total administrative fees from related parties $ 1,845 $ 2,097 Amounts due from related parties under these agreements are reflected in the table below: As of March 31, 2018 December 31, 2017 (Amounts in thousands) Amounts due from MCC under the MCC Admin Agreement $ 966 $ 867 Amounts due from SIC under the SIC Admin Agreement 724 696 Amounts due from entities under the Funds Admin Agreements 523 340 Total administrative fees receivable $ 2,213 $ 1,903 |
EARNINGS PER CLASS A SHARE (Tab
EARNINGS PER CLASS A SHARE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Earnings Per Share [Abstract] | |
Basic and Diluted Income per Class A Share | The table below presents basic and diluted net (loss) income per share of Class A common stock using the two-class method for the three months ending March 31, 2018 and 2017 , respectively: For the Three Months Ended 2018 2017 (Amounts in thousands, except share and per share amounts) Basic and diluted net (loss) income per share: Numerator Net (loss) income attributable to Medley Management Inc. $ (1,228 ) $ 394 Less: Allocation to participating securities (224 ) (22 ) Net (loss) income available to Class A common stockholders $ (1,452 ) $ 372 Denominator Weighted average shares of Class A common stock outstanding 5,483,303 5,808,626 Net (loss) income per Class A share $ (0.26 ) $ 0.06 |
Dividends Declared | The following table reflects the per share dividend amounts that the Company declared on its common stock during the three months ended March 31, 2018 and 2017. Declaration Dates Payment Dates Per Share February 9, 2017 March 6, 2017 $ 0.20 February 7, 2018 March 7, 2018 $ 0.20 |
COMPENSATION EXPENSE (Tables)
COMPENSATION EXPENSE (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Retirement Benefits [Abstract] | |
Schedule of Nonvested RSU Activity | A summary of RSU and restricted LLC units activity for the three months ended March 31, 2018 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, 2017 1,451,393 $ 10.44 320,000 $ 11.67 Granted 246,100 6.60 379,200 7.33 Forfeited (14,000 ) 6.41 — — Vested (20,668 ) 12.68 — — Balance at March 31, 2018 1,662,825 $ 9.58 699,200 $ 9.32 |
REDEEMABLE NON-CONTROLLING IN40
REDEEMABLE NON-CONTROLLING INTERESTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Temporary Equity Disclosure [Abstract] | |
Schedule of Redeemable Noncontrolling Interest | Changes in redeemable non-controlling interests during the three months ended March 31, 2018 and 2017 are reflected in the table below: For the Three Months Ended 2018 2017 (Amounts in thousands) Beginning balance $ 53,741 $ 30,805 Net (loss) income attributable to redeemable non-controlling interests in consolidated subsidiaries (4,516 ) 1,485 Contributions — 5,000 Distributions (2,438 ) (1,573 ) Change in fair value of available-for-sale securities — 324 Ending balance $ 46,787 $ 36,041 |
ORGANIZATION AND BASIS OF PRE41
ORGANIZATION AND BASIS OF PRESENTATION (Initial Public Offering) (Details) $ / shares in Units, $ in Millions | Sep. 29, 2014USD ($)$ / sharesshares | Mar. 31, 2018segment |
Subsidiary, Sale of Stock [Line Items] | ||
Number of reportable segments | segment | 1 | |
Date of incorporation | Jun. 13, 2014 | |
Commencement of operations date | Sep. 29, 2014 | |
Common Class A [Member] | ||
Subsidiary, Sale of Stock [Line Items] | ||
Proceeds from IPO | $ | $ 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 | |
Percentage of common stock owned by LLC personnel for voting rights entitlement, minimum | 10.00% | |
Common Class B [Member] | ||
Subsidiary, Sale of Stock [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 |
ORGANIZATION AND BASIS OF PRE42
ORGANIZATION AND BASIS OF PRESENTATION (Medley LLC Reorganization) (Details) | Sep. 29, 2014shares | Mar. 31, 2018 |
Class of Stock [Line Items] | ||
Transfer of units to common stock, prior to fourth anniversary | 33.33% | |
Transfer of units to common stock, prior to fifth anniversary | 66.66% | |
Common Class A [Member] | ||
Class of Stock [Line Items] | ||
Common stock exchange ratio | 1 | |
Medley LLC [Member] | ||
Class of Stock [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 |
SUMMARY OF SIGNIFICANT ACCOUN43
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Consolidated and Non-Consolidated Variable Interest Entities Narrative) (Details) $ in Millions | 3 Months Ended | ||
Mar. 31, 2018USD ($)subsidiary | Dec. 31, 2017USD ($) | Mar. 31, 2017subsidiary | |
Variable Interest Entity [Line Items] | |||
Percent of voting power in Medley LLC | 100.00% | ||
Total assets of consolidated variable interest entity | $ 54 | $ 63.3 | |
Total liabilities of consolidated variable interest entity | 12.9 | 13 | |
Fair value of investments in non-consolidated VIEs | 4.6 | 4.8 | |
Receivables included as a component of other assets and clawback obligation | 1.7 | 2.4 | |
Accrued clawback obligations | 7.2 | $ 7.2 | |
Maximum loss exposure | $ 6.3 | ||
Medley LLC [Member] | |||
Variable Interest Entity [Line Items] | |||
Number of majority owned subsidiaries | subsidiary | 4 | 4 | |
Medley LLC [Member] | |||
Variable Interest Entity [Line Items] | |||
Parent ownership percentage of LLC | 18.50% | 18.70% | |
Noncontrolling interest ownership percentage of LLC | 81.50% | 81.30% |
SUMMARY OF SIGNIFICANT ACCOUN44
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Seed Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 |
Assets | |||
Cash and cash equivalents | $ 30,069 | $ 36,163 | $ 63,245 |
Investments, at fair value | 46,755 | 56,632 | |
Other assets | 15,955 | 17,262 | |
Total Assets | 103,275 | 127,922 | |
Liabilities, Redeemable Non-controlling Interests and Equity | |||
Accrued expenses and other liabilities | 20,884 | 25,130 | |
Equity | (10,220) | (7,971) | |
Total Liabilities, Redeemable Non-controlling Interests and Equity | 103,275 | 127,922 | |
STRF [Member] | |||
Schedule of Equity Method Investments [Line Items] | |||
Amount funded | 2,100 | ||
Assets | |||
Cash and cash equivalents | 377 | 164 | |
Investments, at fair value | 2,029 | 2,005 | |
Other assets | 1,048 | 1,698 | |
Total Assets | 3,454 | 3,867 | |
Liabilities, Redeemable Non-controlling Interests and Equity | |||
Accrued expenses and other liabilities | 1,314 | 1,744 | |
Equity | 2,140 | 2,123 | |
Total Liabilities, Redeemable Non-controlling Interests and Equity | 3,454 | 3,867 | |
Other assets eliminated | 800 | 1,000 | |
Accrued expense and other liabilities eliminated | 800 | 1,500 | |
Equity eliminated | $ 2,100 | $ 2,100 |
SUMMARY OF SIGNIFICANT ACCOUN45
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Revenues Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Accounting Policies [Abstract] | |||
Performance fees | $ 0 | $ (2,363) | |
Reversal of performance fee | $ 2,600 | ||
Accrued clawback obligations | $ 7,200 | $ 7,200 |
SUMMARY OF SIGNIFICANT ACCOUN46
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Recently Issued Accounting Pronouncements Adopted Narrative) (Details) - USD ($) $ in Thousands | Jan. 01, 2018 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in equity | $ 14,080 | $ 9,545 | ||
Provision for income taxes | (190) | $ (413) | ||
Performance fees | 0 | (2,363) | ||
ASC 606 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in equity | $ 3,600 | |||
Provision for income taxes | 100 | |||
Performance fees | 3,000 | |||
Cost of reimbursable fund | 700 | |||
ASU 2016-01 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Decrease in equity | 1,300 | |||
ASU 2018-02 [Member] | ||||
New Accounting Pronouncements or Change in Accounting Principle [Line Items] | ||||
Reclassification of the income tax effects of the Tax Cuts and Jobs Act on items within accumulated other comprehensive loss to retained earnings due to the early adoption of accounting standards update 2018-02 (Note 2) | $ 200 | $ 207 | $ 0 |
INVESTMENTS (Composition of Inv
INVESTMENTS (Composition of Investments) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Investment [Line Items] | ||
Equity method investments, at fair value | $ 13,345 | $ 14,136 |
Investment held at cost less impairment | 508 | 0 |
Investments of consolidated fund | 2,029 | 2,005 |
Total investments, at fair value | 46,755 | 56,632 |
MCC Member] | ||
Investment [Line Items] | ||
Equity method investments, at fair value | $ 30,873 | $ 40,491 |
REVENUES FROM CONTRACTS WITH 48
REVENUES FROM CONTRACTS WITH CUSTOMERS (Revenue by Category) (Details) $ in Thousands | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | $ 14,414 |
Base Management Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 12,085 |
Investment Performance [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Other Revenues And Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 2,329 |
Permanent Capital Vehicles [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 10,237 |
Permanent Capital Vehicles [Member] | Base Management Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 8,392 |
Permanent Capital Vehicles [Member] | Investment Performance [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Permanent Capital Vehicles [Member] | Other Revenues And Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 1,845 |
Long-dated Private Funds [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 2,061 |
Long-dated Private Funds [Member] | Base Management Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 2,061 |
Long-dated Private Funds [Member] | Investment Performance [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Long-dated Private Funds [Member] | Other Revenues And Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
SMAs [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 1,632 |
SMAs [Member] | Base Management Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 1,632 |
SMAs [Member] | Investment Performance [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
SMAs [Member] | Other Revenues And Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Corporate [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 484 |
Corporate [Member] | Base Management Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Corporate [Member] | Investment Performance [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | 0 |
Corporate [Member] | Other Revenues And Fees [Member] | |
Disaggregation of Revenue [Line Items] | |
Total revenues from contracts with customers | $ 484 |
INVESTMENTS (Narrative) (Detail
INVESTMENTS (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Schedule of Investments [Line Items] | |||
Loss from other than temporary impairment equity investments | $ 0 | $ 0 | |
Equity method investments, at fair value | 13,345,000 | $ 14,136,000 | |
Performance fees | 400,000 | 200,000 | |
Investment held at cost less impairment | 508,000 | 0 | |
Consolidated Subsidiaries [Member] | Reported Value Measurement [Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | 400,000 | 400,000 | |
Consolidated Subsidiaries [Member] | Senior Notes [Member] | Reported Value Measurement [Member] | |||
Schedule of Investments [Line Items] | |||
Investments of consolidated fund | 1,600,000 | 1,600,000 | |
Sierra Income Corporation [Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | 8,300,000 | 8,500,000 | |
MCC Member] | |||
Schedule of Investments [Line Items] | |||
Equity method investments, at fair value | $ 30,873,000 | 40,491,000 | |
Shares in MCC (in shares) | 7,756,938 | ||
Cumulative unrealized gains (loss) | $ (9,600,000) | $ 500,000 | |
CK Pearl Fund [Member] | |||
Schedule of Investments [Line Items] | |||
Investment held at cost less impairment | $ 500,000 | $ 500,000 |
REVENUES FROM CONTRACTS WITH 50
REVENUES FROM CONTRACTS WITH CUSTOMERS (Narrative) (Details) $ in Millions | 3 Months Ended |
Mar. 31, 2018USD ($) | |
Revenue from Contract with Customer [Abstract] | |
Contract liabilities | $ 0.3 |
Deferred revenue | 0.2 |
Cash deposits | $ 0.2 |
REVENUES FROM CONTRACTS WITH 51
REVENUES FROM CONTRACTS WITH CUSTOMERS (Balance Sheet) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Jan. 01, 2018 | Dec. 31, 2017 |
Assets | |||
Performance fees receivable | $ 0 | $ 2,987 | |
Other assets | 15,955 | 17,262 | |
Liabilities | |||
Accounts payable, accrued expenses and other liabilities | 20,884 | 25,130 | |
Equity | |||
Accumulated deficit | (14,080) | (9,545) | |
ASU 2014-09 [Member] | |||
Equity | |||
Accumulated deficit | $ (3,600) | ||
Adjustments to reported balances [Member] | ASU 2014-09 [Member] | |||
Assets | |||
Performance fees receivable | 2,788 | ||
Other assets | 753 | ||
Liabilities | |||
Accounts payable, accrued expenses and other liabilities | 134 | ||
Equity | |||
Accumulated deficit | 650 | ||
Balances under ASC 605 [Member] | ASU 2014-09 [Member] | |||
Assets | |||
Performance fees receivable | 2,788 | ||
Other assets | 16,708 | ||
Liabilities | |||
Accounts payable, accrued expenses and other liabilities | 21,018 | ||
Equity | |||
Accumulated deficit | (13,430) | ||
Medley LLC [Member] | |||
Equity | |||
Non-controlling interests in Medley LLC | (78,976) | $ (67,401) | |
Medley LLC [Member] | Adjustments to reported balances [Member] | ASU 2014-09 [Member] | |||
Equity | |||
Non-controlling interests in Medley LLC | 2,757 | ||
Medley LLC [Member] | Balances under ASC 605 [Member] | ASU 2014-09 [Member] | |||
Equity | |||
Non-controlling interests in Medley LLC | $ (76,219) |
REVENUES FROM CONTRACTS WITH 52
REVENUES FROM CONTRACTS WITH CUSTOMERS (Statement of Operations) (Details) - USD ($) $ / shares in Units, $ in Thousands | Jan. 01, 2018 | Mar. 31, 2018 | Mar. 31, 2017 |
Revenues | |||
Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) | $ 12,085 | $ 13,895 | |
Performance fees | 0 | (2,363) | |
Other revenues and fees | 2,329 | 2,320 | |
Investment income (loss): | |||
Carried interest | 165 | 145 | |
Other investment loss | (183) | (1) | |
Total Revenues | 14,396 | 13,996 | |
Expenses | |||
Compensation and benefits | 8,338 | 5,794 | |
Performance fee compensation | (7) | (881) | |
General, administrative and other expenses | 4,509 | 2,668 | |
Total Expenses | 12,840 | 7,581 | |
Other Income (Expense) | |||
Dividend income | 1,429 | 735 | |
Interest expense | (2,681) | (3,647) | |
Other income (expense), net | (9,755) | 1,560 | |
Total Other Expense, Net | (11,007) | (1,352) | |
(Loss) Income before income taxes | (9,451) | 5,063 | |
Provision for income taxes | 190 | 413 | |
Net (Loss) Income | (9,641) | 4,650 | |
Net (Loss) Income Attributable to Medley Management Inc. | $ (1,228) | $ 394 | |
Net Income (Loss) Per Share of Class A Common Stock: | |||
Basic (in dollars per share) | $ (0.26) | $ 0.06 | |
Diluted (in dollars per share) | $ (0.26) | $ 0.06 | |
Weighted average number shares outstanding - Basic and Diluted (in shares) | 5,483,303 | 5,808,626 | |
Incentive fees | $ 0 | $ 544 | |
ASU 2014-09 [Member] | |||
Revenues | |||
Performance fees | $ 3,000 | ||
Other Income (Expense) | |||
Provision for income taxes | $ (100) | ||
Net Income (Loss) Per Share of Class A Common Stock: | |||
Incentive fees | $ 0 | 544 | |
Adjustments to reported balances [Member] | |||
Net Income (Loss) Per Share of Class A Common Stock: | |||
Weighted average number shares outstanding - Basic and Diluted (in shares) | 0 | ||
Adjustments to reported balances [Member] | ASU 2014-09 [Member] | |||
Revenues | |||
Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) | $ 0 | ||
Performance fees | (198) | ||
Other revenues and fees | (272) | ||
Investment income (loss): | |||
Carried interest | 0 | ||
Other investment loss | 0 | ||
Total Revenues | (470) | ||
Expenses | |||
Compensation and benefits | 0 | ||
Performance fee compensation | 0 | ||
General, administrative and other expenses | (188) | ||
Total Expenses | (188) | ||
Other Income (Expense) | |||
Dividend income | 0 | ||
Interest expense | 0 | ||
Other income (expense), net | 0 | ||
Total Other Expense, Net | 0 | ||
(Loss) Income before income taxes | (282) | ||
Provision for income taxes | 6 | ||
Net (Loss) Income | (288) | ||
Net (Loss) Income Attributable to Medley Management Inc. | $ (54) | ||
Net Income (Loss) Per Share of Class A Common Stock: | |||
Basic (in dollars per share) | $ (0.01) | ||
Diluted (in dollars per share) | $ (0.01) | ||
Balances under ASC 605 [Member] | |||
Net Income (Loss) Per Share of Class A Common Stock: | |||
Weighted average number shares outstanding - Basic and Diluted (in shares) | 5,483,303 | ||
Balances under ASC 605 [Member] | ASU 2014-09 [Member] | |||
Revenues | |||
Management fees (includes Part I incentive fees of $0 and $544 for the three months ending March 31, 2018 and 2017, respectively) | $ 12,085 | ||
Performance fees | (198) | ||
Other revenues and fees | 2,057 | ||
Investment income (loss): | |||
Carried interest | 165 | ||
Other investment loss | (183) | ||
Total Revenues | 13,926 | ||
Expenses | |||
Compensation and benefits | 8,338 | ||
Performance fee compensation | (7) | ||
General, administrative and other expenses | 4,321 | ||
Total Expenses | 12,652 | ||
Other Income (Expense) | |||
Dividend income | 1,429 | ||
Interest expense | (2,681) | ||
Other income (expense), net | (9,755) | ||
Total Other Expense, Net | (11,007) | ||
(Loss) Income before income taxes | (9,733) | ||
Provision for income taxes | 196 | ||
Net (Loss) Income | (9,929) | ||
Net (Loss) Income Attributable to Medley Management Inc. | $ (1,282) | ||
Net Income (Loss) Per Share of Class A Common Stock: | |||
Basic (in dollars per share) | $ (0.27) | ||
Diluted (in dollars per share) | $ (0.27) | ||
Consolidated Subsidiaries [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | $ (4,514) | 1,488 | |
Consolidated Subsidiaries [Member] | Adjustments to reported balances [Member] | ASU 2014-09 [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | 0 | ||
Consolidated Subsidiaries [Member] | Balances under ASC 605 [Member] | ASU 2014-09 [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | (4,514) | ||
Medley LLC [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | (3,899) | $ 2,768 | |
Medley LLC [Member] | Adjustments to reported balances [Member] | ASU 2014-09 [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | (234) | ||
Medley LLC [Member] | Balances under ASC 605 [Member] | ASU 2014-09 [Member] | |||
Other Income (Expense) | |||
Net income (loss) attributable to non-controlling interests | $ (4,133) |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Dec. 31, 2017 | |
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | $ 46,755 | $ 56,632 |
Investment in shares of MCC | 13,345 | 14,136 |
Level III [Member] | Consolidated Subsidiaries [Member] | Investments [Member] | ||
Level III Financial Assets as of December 31, 2017 | ||
Beginning balance | 1,570 | |
Purchases | 365 | |
Transfers In or (Out) of Level III | 0 | |
Sale of Level III Assets | (181) | |
Ending balance | 1,754 | |
Reported Value Measurement [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 400 | 400 |
Reported Value Measurement [Member] | Senior Notes [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 1,600 | 1,600 |
Reported Value Measurement [Member] | Level I [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 300 | 400 |
Reported Value Measurement [Member] | Level III [Member] | Senior Notes [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Total Assets | 1,800 | 1,600 |
Nonrecurring [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 30,873 | 40,491 |
Total Assets | 32,902 | 42,496 |
Nonrecurring [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 2,029 | 2,005 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level I [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 30,873 | 40,491 |
Total Assets | 31,148 | 40,926 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level I [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 275 | 435 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level II [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 0 | 0 |
Total Assets | 0 | 0 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level II [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | 0 | 0 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level III [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investment in shares of MCC | 0 | 0 |
Total Assets | 1,754 | 1,570 |
Nonrecurring [Member] | Reported Value Measurement [Member] | Level III [Member] | Consolidated Subsidiaries [Member] | ||
Fair Value, Assets and Liabilities Measured on Recurring and Nonrecurring Basis [Line Items] | ||
Investments, at fair value | $ 1,754 | $ 1,570 |
OTHER ASSETS (Details)
OTHER ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Deferred Costs, Capitalized, Prepaid, and Other Assets Disclosure [Abstract] | ||
Fixed assets, net of accumulated depreciation and amortization of $2,589 and $2,370, respectively | $ 3,941 | $ 4,160 |
Security deposits | 1,975 | 1,975 |
Administrative fees receivable (Note 11) | 2,213 | 1,903 |
Deferred tax assets (Note 13) | 1,377 | 2,777 |
Due from affiliates (Note 11) | 1,930 | 2,979 |
Prepaid expenses and taxes | 2,786 | 1,353 |
Other assets | 1,733 | 2,115 |
Total other assets | 15,955 | 17,262 |
Accumulated depreciation | $ 2,589 | $ 2,370 |
LOANS PAYABLE (Schedule of Debt
LOANS PAYABLE (Schedule of Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Debt Instrument [Line Items] | ||
Long-term debt | $ 9,395 | $ 9,233 |
Non-recourse Promissory Notes [Member] | ||
Debt Instrument [Line Items] | ||
Long-term debt | 9,395 | 9,233 |
Unamortized discount | $ 605 | $ 767 |
LOANS PAYABLE (Narrative) (Deta
LOANS PAYABLE (Narrative) (Details) | Aug. 19, 2014USD ($) | Aug. 14, 2014USD ($) | Apr. 30, 2012USD ($)shares | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) |
Debt Instrument [Line Items] | ||||||
Future principal payments due in 2019 | $ 10,000,000 | |||||
Credit Suisse Term Loan Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 110,000,000 | |||||
Issuance date | Aug. 14, 2014 | |||||
Maturity date | Jun. 15, 2019 | |||||
Interest expense | $ 1,500,000 | |||||
Non-recourse Promissory Notes [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 | |||||
Maturity date | Mar. 31, 2019 | |||||
Interest expense | 300,000 | $ 300,000 | ||||
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 | 10,000,000 | $ 10,100,000 | ||||
Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Initiation date | Aug. 19, 2014 | |||||
Debt instrument, face amount | $ 15,000,000 | |||||
Amount drawn under credit facility | 0 | |||||
Net Leverage Ratio | 5 | |||||
Total Leverage Ratio | 7 | |||||
Core EBITDA | $ 15,000,000 | |||||
Revolving Credit Facility [Member] | Alternate Base Rate [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 0.25% | |||||
Revolving Credit Facility [Member] | London Interbank Offered Rate (LIBOR) [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Spread on interest rate | 2.50% | |||||
Revolving Credit Facility [Member] | Amended Revolving Credit Facility [Member] | ||||||
Debt Instrument [Line Items] | ||||||
Debt instrument, face amount | $ 10,000,000 |
SENIOR UNSECURED DEBT (Schedule
SENIOR UNSECURED DEBT (Schedule of Senior Unsecured Debt) (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Feb. 22, 2017 | Oct. 18, 2016 |
Debt Instrument [Line Items] | ||||
Senior unsecured debt | $ 117,049 | $ 116,892 | ||
Senior Notes [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt | 117,049 | 116,892 | ||
Senior Notes [Member] | Senior Notes Due 2026 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt | 50,383 | 50,329 | ||
Debt instrument, unamortized discount (premium) and debt issuance costs | 3,212 | 3,266 | $ 3,800 | |
Senior Notes [Member] | Senior Notes Due 2024 [Member] | ||||
Debt Instrument [Line Items] | ||||
Senior unsecured debt | 66,666 | 66,563 | ||
Debt instrument, unamortized discount (premium) and debt issuance costs | $ (2,333) | $ (2,437) | $ (2,800) |
SENIOR UNSECURED DEBT (Narrativ
SENIOR UNSECURED DEBT (Narrative) (Details) - Senior Notes [Member] - USD ($) | 3 Months Ended | ||||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 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 (premium) and direct issuance costs | $ 3,212,000 | $ 3,266,000 | $ 3,800,000 | ||
Notes payable, fair value disclosure | 53,500,000 | ||||
Interest expense, including amortization of discount and debt issuance costs | $ 1,000,000 | $ 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 (premium) and direct issuance costs | $ (2,333,000) | $ (2,437,000) | $ (2,800,000) | ||
Notes payable, fair value disclosure | 69,900,000 | ||||
Interest expense, including amortization of discount and debt issuance costs | $ 1,400,000 | $ 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 EXP59
ACCOUNTS PAYABLE, ACCRUED EXPENSES AND OTHER LIABILITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Payables and Accruals [Abstract] | ||
Accrued compensation and benefits | $ 3,001 | $ 6,835 |
Due to affiliates (Note 11) | 7,237 | 7,315 |
Revenue share payable (Note 10) | 3,566 | 3,841 |
Accrued interest | 1,294 | 1,294 |
Professional fees | 1,034 | 1,366 |
Deferred rent | 2,419 | 2,506 |
Deferred tax liabilities (Note 13) | 0 | 92 |
Performance fee compensation | 104 | 111 |
Accounts payable and other accrued expenses | 2,229 | 1,770 |
Total accounts payable, accrued expenses and other liabilities | $ 20,884 | $ 25,130 |
COMMITMENTS AND CONTINGENCIES60
COMMITMENTS AND CONTINGENCIES (Narrative) (Details) - USD ($) $ in Millions | May 29, 2015 | Apr. 30, 2012 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Loss Contingencies [Line Items] | |||||
Lease expiration period | various times through September 2023 | ||||
Rent expense | $ 0.6 | $ 0.6 | |||
Severance costs | 1.4 | ||||
Expected consolidation cost | 1.2 | ||||
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 | 3.6 | $ 3.8 | |||
Consolidated Funds [Member] | |||||
Loss Contingencies [Line Items] | |||||
Unfunded capital commitments | $ 0.3 | $ 0.3 | |||
MCC Advisors LLC [Member] | Moshe Barkat and MVF Holdings [Member] | |||||
Loss Contingencies [Line Items] | |||||
Debt default | $ 65 | ||||
Damages sought | 100 | ||||
Settlement amount | $ 1.5 |
COMMITMENTS AND CONTINGENCIES61
COMMITMENTS AND CONTINGENCIES (Future Minimum Rental Payments) (Details) $ in Thousands | Mar. 31, 2018USD ($) |
Commitments and Contingencies Disclosure [Abstract] | |
Remaining in 2018 | $ 1,800 |
2,019 | 2,247 |
2,020 | 2,364 |
2,021 | 2,430 |
2,022 | 2,431 |
Thereafter | 1,823 |
Total future minimum lease payments | $ 13,095 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Dec. 31, 2017USD ($) | |
Related Party Transaction [Line Items] | |||
Total administrative fees from related parties | $ 1,845 | $ 2,097 | |
Total administrative fees receivable | $ 2,213 | $ 1,903 | |
Percentage of tax benefit under tax receivable agreement | 85.00% | ||
Common Class A [Member] | |||
Related Party Transaction [Line Items] | |||
Common stock exchange ratio | 1 | ||
MCC Advisors LLC [Member] | |||
Related Party Transaction [Line Items] | |||
Management fees waived | $ 400 | ||
MCC Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees from related parties | 901 | 997 | |
Total administrative fees receivable | 966 | 867 | |
SIC Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees from related parties | 699 | 794 | |
Total administrative fees receivable | 724 | 696 | |
Funds Admin Agreement [Member] | |||
Related Party Transaction [Line Items] | |||
Total administrative fees from related parties | 245 | $ 306 | |
Total administrative fees receivable | $ 523 | $ 340 |
EARNINGS PER CLASS A SHARE (Bas
EARNINGS PER CLASS A SHARE (Basic and Diluted Income per Class A Share) (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Numerator | ||
Net (loss) income attributable to Medley Management Inc. | $ (1,228) | $ 394 |
Denominator | ||
Weighted average shares of Class A common stock outstanding (in shares) | 5,483,303 | 5,808,626 |
Participating Securities [Member] | ||
Numerator | ||
Less: Allocation to participating securities | $ (224) | $ (22) |
Common Class A [Member] | ||
Numerator | ||
Net (loss) income available to Class A common stockholders | $ (1,452) | $ 372 |
Denominator | ||
Weighted average shares of Class A common stock outstanding (in shares) | 5,483,303 | 5,808,626 |
Net income (loss) per Class A share (in dollars per share) | $ (0.26) | $ 0.06 |
EARNINGS PER CLASS A SHARE (Nar
EARNINGS PER CLASS A SHARE (Narrative) (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Earnings Per Share [Abstract] | ||
Antidilutive securities excluded from computation of earnings per share (shares) | 24,032,533 | 23,653,333 |
EARNINGS PER CLASS A SHARE (Div
EARNINGS PER CLASS A SHARE (Dividends Declared) (Details) - $ / shares | Mar. 07, 2018 | Feb. 07, 2018 | Mar. 06, 2017 | Feb. 09, 2017 |
Earnings Per Share [Abstract] | ||||
Dividends declared per share of Class A common stock (in dollars per share) | $ 0.20 | $ 0.20 | ||
Dividends paid per Class A common stock (in dollars per share) | $ 0.20 | $ 0.20 |
INCOME TAXES (Narrative) (Detai
INCOME TAXES (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income Tax Disclosure [Abstract] | |||
Deferred tax asset | $ 1,400,000 | $ 2,800,000 | |
Valuation allowance | 600,000 | ||
Deferred tax liabilities, less than | $ 100,000 | $ 100,000 | |
Effective tax rate | (2.00%) | 8.20% | |
Decrease in deferred tax asset | $ 600,000 | ||
Uncertain tax positions | $ 0 |
COMPENSATION EXPENSE (Narrative
COMPENSATION EXPENSE (Narrative) (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Performance fee compensation, less than for 2018 | $ (7) | $ (881) | |
Performance fee compensation payable | $ 104 | $ 111 | |
Percentage vested from participants eligibility date | 100.00% | ||
Contributions as a percent of employee eligible wages | 3.00% | ||
Accrued contributions | $ 300 | 100 | |
Retirement plan liability | $ 800 | $ 500 | |
Shares authorized for grant (in shares) | 4,500,000 | ||
Incentive Plan shares available for grant (in shares) | 1,900,000 | ||
Stock-based compensation, less than | $ 1,046 | (37) | |
Retained Earnings [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Reclass of cumulative dividends on forfeited RSUs, less than | $ 100 | 400 | |
Common Class A [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Issuance of Class A shares (in shares) | 14,275 | ||
Restricted Stock Units (RSUs) [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
RSU vesting period | 5 years | ||
Fair value of RSUs vested | $ 300 | ||
Shares vested (in shares) | 20,668 | ||
Cash used to settle awards | $ 100 | ||
Reversal of previously recognized compensation | 500 | 1,800 | |
Unvested RSU compensation cost not yet recognized | $ 15,200 | ||
Recognition period for unvested RSU compensation cost | 3 years 6 months 1 day | ||
Chief Executive Officer [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Maximum aggregate compensation | $ 1,300 | $ 1,300 |
COMPENSATION EXPENSE (Schedule
COMPENSATION EXPENSE (Schedule of RSU Activity) (Details) | 3 Months Ended |
Mar. 31, 2018$ / sharesshares | |
Restricted Stock Units (RSUs) [Member] | |
Number of RSUs | |
Beginning Balance (in shares) | shares | 1,451,393 |
Granted (in shares) | shares | 246,100 |
Forfeited (in shares) | shares | (14,000) |
Vested (in shares) | shares | (20,668) |
Ending Balance (in shares) | shares | 1,662,825 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 10.44 |
Granted (in dollars per share) | $ / shares | 6.60 |
Forfeited (in dollars per share) | $ / shares | 6.41 |
Vested (in dollars per share) | $ / shares | 12.68 |
Ending Balance (in dollars per share) | $ / shares | $ 9.58 |
Restricted Stock Units (RSUs), LLC [Member] | |
Number of RSUs | |
Beginning Balance (in shares) | shares | 320,000 |
Granted (in shares) | shares | 379,200 |
Forfeited (in shares) | shares | 0 |
Vested (in shares) | shares | 0 |
Ending Balance (in shares) | shares | 699,200 |
Weighted Average Grant Date Fair Value | |
Beginning Balance (in dollars per share) | $ / shares | $ 11.67 |
Granted (in dollars per share) | $ / shares | 7.33 |
Forfeited (in dollars per share) | $ / shares | 0 |
Vested (in dollars per share) | $ / shares | 0 |
Ending Balance (in dollars per share) | $ / shares | $ 9.32 |
REDEEMABLE NON-CONTROLLING IN69
REDEEMABLE NON-CONTROLLING INTERESTS (Schedule of Redeemable Non-controlling Interest) (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Beginning balance | $ 53,741 | |
Ending balance | 46,787 | |
Nonredeemable Noncontrolling Interest [Member] | ||
Increase (Decrease) in Temporary Equity [Roll Forward] | ||
Beginning balance | 53,741 | $ 30,805 |
Net (loss) income attributable to redeemable non-controlling interests in consolidated subsidiaries | (4,516) | 1,485 |
Contributions | 0 | 5,000 |
Distributions | (2,438) | (1,573) |
Change in fair value of available-for-sale securities | 0 | 324 |
Ending balance | $ 46,787 | $ 36,041 |
REDEEMABLE NON-CONTROLLING IN70
REDEEMABLE NON-CONTROLLING INTERESTS (Narrative) (Details) - USD ($) | Jun. 06, 2017 | Jun. 03, 2016 | Mar. 31, 2018 | Mar. 31, 2017 | Sep. 30, 2017 | Dec. 31, 2017 | Dec. 31, 2016 | Jan. 31, 2016 |
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Distributions to members and redeemable non-controlling interests | $ 7,209,000 | $ 6,240,000 | ||||||
Balance of redeemable non-controlling interest | 46,787,000 | $ 53,741,000 | ||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Distributions to members and redeemable non-controlling interests | 1,000,000 | 400,000 | ||||||
Investments and contributions | $ 13,800,000 | $ 10,000,000 | ||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | Minimum [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Investment period | 7 years | |||||||
Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | Maximum [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Investment period | 10 years | |||||||
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 | |||||||
Contributions to the joint venture | 53,800,000 | 16,800,000 | ||||||
Medley and ''Investors'' [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | MCC Advisors LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Purchases of available for sale securities | $ 51,800,000 | |||||||
Investors [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Percent of preferred distributions given to Investors | 8.00% | |||||||
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 | $ 40,000,000 | |||||||
Percent of Joint Venture profits given to Investors | 15.00% | |||||||
Period before Investors can redeem their interests | 10 years | |||||||
STRF [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Net income allocated to non-controlling interest | 100,000 | |||||||
Balance of redeemable non-controlling interest | (500,000) | (400,000) | ||||||
Seed investment | 2,100,000 | |||||||
STRF [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Seed investment | 2,000,000 | |||||||
Nonredeemable Noncontrolling Interest [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Balance of redeemable non-controlling interest | 46,787,000 | 36,041,000 | 53,741,000 | $ 30,805,000 | ||||
Nonredeemable Noncontrolling Interest [Member] | SIC Advisors LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Fair value of non-controlling interest | $ 12,200,000 | |||||||
Net income allocated to non-controlling interest | 800,000 | 1,000,000 | ||||||
Distributions to members and redeemable non-controlling interests | 1,400,000 | 1,100,000 | ||||||
Balance of redeemable non-controlling interest | 12,900,000 | $ 13,500,000 | ||||||
Non-Controlling Interests [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Net income allocated to non-controlling interest | (5,200,000) | 500,000 | ||||||
Non-Controlling Interests [Member] | Investors [Member] | Master Investment Agreement with DB MED Investor I LLC and DB MED Investor II LLC [Member] | ||||||||
Redeemable Noncontrolling Interest [Line Items] | ||||||||
Balance of redeemable non-controlling interest | $ 34,400,000 | $ 40,600,000 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | May 10, 2018$ / shares |
Subsequent Event [Member] | |
Subsequent Event [Line Items] | |
Dividends (in dollars per share) | $ 0.20 |