NEW YORK, Aug. 6, 2013
/PRNewswire/ -- CIFC Corp. (NASDAQ: CIFC) ("CIFC" or the
"Company") today announced its results for the second quarter ended
June 30, 2013.
Highlights
- Economic Net Income ("ENI", a non-GAAP measure) for the quarter
was $12.4 million as compared to
$3.3 million for the same period in
the prior year.
- ENI management fees for the quarter were $15.6 million, an increase of 29% as compared to
$12.0 million for the same period in
the prior year.
- ENI incentive fees for the quarter were $4.6 million, an increase of >100% as
compared to $0.2 million for the same
period in the prior year.
- GAAP net income for the quarter was $7.5
million as compared to $(8.5)
million for the same period in the prior year.
- The Company sponsored the issuance of one new CLO that
represented approximately $626
million of new loan-based Fee Earning Assets Under
Management ("Fee Earning AUM" or "AUM").
- Fee Earning AUM from loan-based products totaled $12.4 billion as of June 30, 2013 as
compared to $10.1 billion as of
June 30, 2012, an increase of 23% over the last twelve
months.
- Subsequent to quarter end, the Company priced another CLO that
represents approximately $400 million
of new loan-based AUM. The CLO is expected to be sponsored in
September 2013.
- CIFC declares a quarterly cash dividend of $0.10 per share. The cash dividend will be paid
on September 17, 2013 to shareholders
of record as of the close of business on August 27, 2013. Future declarations of dividends
are subject to the discretion of CIFC's Board of Directors.
(Logo:
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Executive Overview
"We had strong performance for the second quarter with ENI
management fees and ENI increasing significantly compared to the
same period last year. We are also pleased to declare a dividend of
$0.10 per share. AUM grew during
the year despite the high level of loan refinancing activity and
associated loan prepayments on funds that were out of their
reinvestment periods. Our performance has also improved as a result
of increased incentive fees, as more CLOs reached their incentive
hurdles and we achieved a fee sharing hurdle on the legacy CIFC
CLOs whereby we now retain a portion of the incentive fees. We are
encouraged by these strong quarterly results and are well
positioned for the second half of the year," said Peter Gleysteen, President and Chief Executive
Officer.
Selected Financial Metrics
(In thousands, except per share data) (unaudited)
NON-GAAP FINANCIAL
MEASURES (1)
|
2Q'13
|
2Q'12
|
% Change vs.
2Q'12
|
YTD
'13
|
YTD
'12
|
% Change vs.
YTD'12
|
Management Fees -
Senior
|
$
|
5,848
|
|
$
|
4,845
|
|
21%
|
$
|
11,476
|
|
$
|
9,737
|
|
18%
|
Management Fees -
Subordinated
|
9,710
|
|
7,179
|
|
35%
|
18,056
|
|
13,909
|
|
30%
|
Incentive
fees
|
4,554
|
|
219
|
|
>100%
|
7,167
|
|
432
|
|
>100%
|
Total Investment
Advisory Fees
|
20,112
|
|
12,243
|
|
64%
|
36,699
|
|
24,078
|
|
52%
|
Net interest
income
|
3,435
|
|
750
|
|
>100%
|
6,163
|
|
1,924
|
|
>100%
|
Realized net
investment gains/(losses)
|
2,582
|
|
143
|
|
>100%
|
6,025
|
|
(1,476)
|
|
>100%
|
Unrealized net
investment gains/(losses)
|
(3,119)
|
|
679
|
|
>100%
|
(8,201)
|
|
1,662
|
|
>100%
|
Net Investment
Income
|
2,898
|
|
1,572
|
|
84%
|
3,987
|
|
2,110
|
|
89%
|
Total ENI
Revenues
|
23,010
|
|
13,815
|
|
67%
|
40,686
|
|
26,188
|
|
55%
|
Compensation and
benefits
|
6,428
|
|
5,547
|
|
16%
|
12,853
|
|
11,291
|
|
14%
|
Other operating
expenses
|
2,742
|
|
3,482
|
|
(21)%
|
6,315
|
|
6,392
|
|
(1)%
|
Corporate interest
expense
|
1,452
|
|
1,466
|
|
(1)%
|
2,934
|
|
2,935
|
|
—%
|
Total ENI
Expenses
|
10,622
|
|
10,495
|
|
1%
|
22,102
|
|
20,618
|
|
7%
|
ENI
|
$
|
12,388
|
|
$
|
3,320
|
|
>100%
|
$
|
18,584
|
|
$
|
5,570
|
|
>100%
|
ENI per share -
basic
|
$
|
0.60
|
|
$
|
0.16
|
|
>100%
|
$
|
0.89
|
|
$
|
0.27
|
|
>100%
|
ENI per share -
diluted (2)
|
$
|
0.51
|
|
$
|
0.17
|
|
>100%
|
$
|
0.77
|
|
$
|
0.29
|
|
>100%
|
ENI Weighted average
shares outstanding -
diluted (3)
|
26,074
|
|
24,437
|
|
7%
|
26,239
|
|
24,525
|
|
7%
|
NON-GAAP FINANCIAL
MEASURES (1)
|
2Q'13
|
2Q'12
|
% Change vs.
2Q'12
|
YTD
'13
|
YTD
'12
|
% Change vs.
YTD'12
|
EBIT (4)
|
$
|
13,840
|
|
$
|
4,786
|
|
>100%
|
$
|
21,518
|
|
$
|
8,505
|
|
>100%
|
EBITDA (5)
|
$
|
14,019
|
|
$
|
4,832
|
|
>100%
|
$
|
21,866
|
|
$
|
8,676
|
|
>100%
|
EBITDA Margin
(6)
|
61
|
%
|
35
|
%
|
26%
|
54
|
%
|
33
|
%
|
21%
|
Fee Related EBITDA
Margin (6)
|
55
|
%
|
27
|
%
|
28%
|
49
|
%
|
27
|
%
|
22%
|
ENI Margin
(6)
|
54
|
%
|
24
|
%
|
30%
|
46
|
%
|
21
|
%
|
25%
|
NON-GAAP FINANCIAL
MEASURES - AUM
|
6/30/2013
|
|
3/31/2013
|
|
% Change vs.
3/31/2013
|
|
6/30/2012
|
|
% Change vs.
6/30/12
|
Fee Earning AUM
from loan-based products (7)
|
$12,386,681
|
|
$12,369,633
|
|
—
|
%
|
|
$10,080,597
|
|
23%
|
|
|
|
|
|
|
|
|
|
|
|
|
SELECTED GAAP
RESULTS
|
2Q'13
|
2Q'12
|
% Change vs.
2Q'12
|
YTD
'13
|
YTD
'12
|
% Change vs.
YTD'12
|
Total net
revenues
|
$
|
2,346
|
|
$
|
2,701
|
|
(13)%
|
$
|
4,980
|
|
$
|
5,446
|
|
(9)%
|
Total
expenses
|
$
|
13,822
|
|
$
|
15,445
|
|
(11)%
|
$
|
28,971
|
|
$
|
32,072
|
|
(10)%
|
Net income (loss)
attributable to CIFC Corp.
|
$
|
7,543
|
|
$
|
(8,498)
|
|
>100%
|
$
|
10,330
|
|
$
|
(6,903)
|
|
>100%
|
Earnings (loss)
per share - basic
|
$
|
0.36
|
|
$
|
(0.42)
|
|
>100%
|
$
|
0.50
|
|
$
|
(0.34)
|
|
>100%
|
Earnings (loss)
per share - diluted (2)
|
$
|
0.31
|
|
$
|
(0.42)
|
|
>100%
|
$
|
0.44
|
|
$
|
(0.34)
|
|
>100%
|
Weighted average
shares outstanding - basic
|
20,809
|
|
20,223
|
|
3%
|
20,803
|
|
20,325
|
|
2%
|
Weighted average
shares outstanding - diluted
|
25,602
|
|
20,223
|
|
27%
|
25,720
|
|
20,325
|
|
27%
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) See Appendix for
a detailed description of these non-GAAP measures and
reconciliations from net income (loss) attributable to CIFC Corp.
to non-GAAP measures.
|
(2) Numerator in the
dilution calculation has been adjusted to add-back the effect
of convertible note interest charges before taxes for ENI and after
taxes for GAAP.
|
(3) Total diluted ENI
shares represents the weighted average shares outstanding plus
Non-GAAP adjustments assuming (i) shares repurchased from proceeds
received from the exercise of dilutive options, (ii) the conversion
of the convertible notes, and (iii) all dilutive warrants have been
fully exercised.
|
(4) EBIT is ENI
before corporate interest expense. See Appendix.
|
(5) EBITDA is EBIT
before depreciation of fixed assets. See Appendix.
|
(6) EBITDA Margin is
EBITDA divided by Total ENI Revenue. Fee Related EBITDA Margin is
EBITDA less Net Investment Income divided by Total Investment
Advisory Fees. ENI Margin is ENI divided by Total ENI
Revenue.
|
(7) Amount excludes
non-core AUM of $1.3 billion, $2.1 billion and $2.7 billion as of
June 30, 2013, March 31, 2013 and June 30, 2012,
respectively.
|
|
|
|
Q2'13 - ENI
Total Investment
Advisory Fees
|
Senior management
fees
|
29%
|
Subordinated
management fees
|
48%
|
Incentive
fees
|
23%
|
Total
ENI Investment Advisory Fees
|
100%
|
|
|
|
|
|
Q2'12 - ENI
Total
Investment
Advisory Fees
|
Senior management
fees
|
39%
|
Subordinated
management fees
|
59%
|
Incentive
fees
|
2%
|
Total
ENI Investment Advisory Fees
|
100%
|
Second Quarter 2013 Financial Overview
CIFC reported ENI of $12.4 million
for the second quarter of 2013, as compared to $3.3 million for the same period in the prior
year. ENI increased period to period by $9.1
million primarily as a result of the increase in (i)
incentive fees as more CLOs reached their incentive hurdles as
compared to the second quarter of the prior year, (ii) incentive
fees on legacy CIFC CLOs acquired in April
2011 as we began recognizing 50% of incentive fees earned
from these CLOs (previously, all incentive fees were paid to the
seller), (iii) management fees from the five CLOs sponsored in 2012
and 2013, other new loan-based products and the four Navigator CLOs
acquired since the second quarter of 2012, and (iv) net interest
income from CLO equity distributions and realized gains from
warehouse activity. These increases were partially offset by higher
unrealized losses on investments in CLO equity, and a decrease in
management fees from certain legacy CLOs and CDOs that are winding
down pursuant to their contractual terms. In addition, compensation
expense increased to support the growth of the company.
CIFC reported GAAP net income attributable to CIFC Corp. of
$7.5 million for the second quarter
of 2013, as compared to $(8.5)
million in the same period of the prior year. GAAP operating
results increased by $16.0 million
from the prior year period, primarily due to the activity noted
above, decreases in net losses on contingent liabilities due to
changes in expected performance on certain CLOs and the absence of
expenses associated with impairment of intangible costs during the
current quarter.
Fee Earning AUM
Investment advisory fees earned from investment products the
Company manages on behalf of third party investors are the
Company's primary source of revenue. These fees typically consist
of senior and subordinated management fees based on a percentage of
the investment product's assets and, in some cases, incentive fees
based on the returns the Company generates for investors in the
products.
The Company's total loan-based Fee Earning AUM was approximately
$12.4 billion for both periods ended
June 30, 2013 and March 31, 2013. During the quarter, the
Company sponsored the issuance of one new CLO with AUM of
approximately $0.6 billion, which was
offset by declines in Fee Earning AUM for certain CLOs which have
reached the end of their contractual reinvestment periods, after
which capital is returned to investors as the loan assets
underlying the CLOs repay principal. This reduction was higher than
historical norms due to an increase in refinancing activity during
the first half of the year. Incentive fees are generally paid to
the Company as CLOs mature when the relevant incentive return
hurdles and certain other restrictions have been met.
The following table summarizes Fee Earning AUM for the Company's
significant loan-based products (1):
|
|
June 30,
2013
|
|
March 31,
2013
|
|
June 30,
2012
|
(in thousands,
except # of Products)
|
|
# of
Products
|
|
Fee Earning
AUM(2)
|
|
# of
Products
|
|
Fee Earning
AUM(2)
|
|
# of
Products
|
|
Fee Earning
AUM(2)
|
Post 2011
CLOs
|
|
6
|
|
|
$
|
3,219,531
|
|
|
5
|
|
|
$
|
2,585,214
|
|
|
1
|
|
|
$
|
401,313
|
|
Legacy CLOs
(3)
|
|
26
|
|
|
8,344,616
|
|
|
27
|
|
|
9,004,131
|
|
|
27
|
|
|
9,545,456
|
|
Total CLOs
|
|
32
|
|
|
11,564,147
|
|
|
32
|
|
|
11,589,345
|
|
|
28
|
|
|
9,946,769
|
|
Other loan-based
products
|
|
3
|
|
|
822,534
|
|
|
2
|
|
|
780,288
|
|
|
1
|
|
|
133,828
|
|
AUM from
loan-based products
|
|
35
|
|
|
$
|
12,386,681
|
|
|
34
|
|
|
$
|
12,369,633
|
|
|
29
|
|
|
$
|
10,080,597
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Table excludes
Fee Earning AUM from non-core products, which consists of legacy
ABS and Corporate Bond CDOs of $1.3 billion, $2.1 billion and $2.7
billion as of June 30, 2013, March 31, 2013 and June 30, 2012,
respectively. Fee Earning AUM on CDOs are expected to continue to
decline as these funds run-off per their contractual
terms.
|
(2) Fee Earning AUM
generally reflects the aggregate principal or notional balance of
the collateral and, in some cases, the cash balance held by the CLO
as of the date of the last trustee report received for each CLO
prior to the respective AUM date.
|
(3) Legacy CLOs
represent all managed CLOs issued prior to 2011, including CLOs
acquired since 2011 but issued prior to 2011.
|
Fee Earning AUM ($
in thousands)
|
|
|
|
|
|
|
Legacy
CLOs
|
Post 2011
CLOs
|
Other loan
based products
|
Total
|
Q2'12
|
9,545,456
|
401,313
|
133,828
|
10,080,597
|
Q3'12
|
9,804,751
|
848,714
|
320,042
|
10,973,507
|
Q4'12
|
9,599,220
|
1,579,558
|
666,120
|
11,844,898
|
Q1 '13
|
9,004,131
|
2,585,214
|
780,288
|
12,369,633
|
Q2'13
|
8,344,616
|
3,219,531
|
822,534
|
12,386,681
|
Total loan-based Fee Earning AUM activity for the quarter and
year ended June 30, 2013 is as follows ($ in thousands):
Activity during
2Q'13
|
|
Amount
|
|
Activity during
YTD '13
|
|
Amount
|
March 31,
2013
|
|
$
|
12,369,633
|
|
|
December 31,
2012
|
|
$
|
11,844,898
|
|
CLO New
Issuances
|
|
626,303
|
|
|
CLO New
Issuances
|
|
1,627,637
|
|
CLO Principal
Paydown
|
|
(574,026)
|
|
|
CLO Principal
Paydown
|
|
(986,438)
|
|
CLO Calls,
Redemptions and Sales
|
|
(53,961)
|
|
|
CLO Calls,
Redemptions and Sales
|
|
(219,102)
|
|
Fund
Subscriptions
|
|
60,000
|
|
|
Fund
Subscriptions
|
|
182,597
|
|
Fund
Redemptions
|
|
—
|
|
|
Fund
Redemptions
|
|
(10,354)
|
|
Other (1)
|
|
(41,268)
|
|
|
Other (1)
|
|
(52,557)
|
|
June 30,
2013
|
|
$
|
12,386,681
|
|
|
June 30,
2013
|
|
$
|
12,386,681
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) Other includes
changes in collateral balances of CLOs between periods and market
appreciation on other loan-based products.
|
Liquidity
As of June 30, 2013, the Company's total liquidity was
comprised of unrestricted cash and cash equivalents of $33.5 million, warehouse investments of
$15.0 million and investments of
$54.7 million. The decrease of
$14.2 million in cash and cash
equivalents from $47.7 million as of
December 31, 2012, was primarily attributable to net new
investments in CLO equity and warehouses during the first half of
the year. This was partially offset by positive operating cash
flows.
Non-GAAP Financial Measures
The Company discloses financial measures that are calculated and
presented on a basis of methodology other than in accordance with
generally accepted accounting principles of the United States of America ("Non-GAAP") as
follows:
ENI is a non-GAAP financial measure of profitability which
management uses in addition to GAAP to measure the performance of
its core business. The Company believes ENI reflects the nature and
substance of the business, the economic results driven by
investment advisory fee revenues from the management of client
funds and earnings on the Company's investments. ENI represents net
income (loss) attributable to CIFC Corp. before taxes, gains
(losses) on disposition(s) of non-core assets, a portion of
non-cash compensation related to profits interests granted by CIFC
Parent Holdings LLC (a significant stockholder in the Company) in
June 2011, amortization and
impairments of intangible assets, gains/(losses) on derivatives and
contingent liabilities and certain non-recurring operating expenses
and strategic transaction expenses (such as those associated with
the mergers and acquisitions). ENI also presents investment
advisory fee revenues net of any fee-sharing arrangements primarily
resulting from mergers or acquisitions.
EBIT and EBITDA are also non-GAAP financial measures that
management considers, in addition to net income (loss) attributable
to CIFC Corp., to evaluate the Company's core performance. EBIT
represents ENI before corporate interest expense and EBITDA
represents EBIT before depreciation of fixed assets, a non-cash
item.
ENI, EBIT and EBITDA may not be comparable to similar measures
presented by other companies, as they are non-GAAP financial
measures that are not based on a comprehensive set of accounting
rules or principles and therefore may be defined differently
by other companies. In addition, ENI, EBIT and EBITDA should be
considered an addition to, not as a substitute for, or superior to,
financial measures determined in accordance with GAAP.
A detailed calculation of ENI, EBIT and EBITDA and a
reconciliation to the most comparable GAAP financial measure is
included in the Appendix.
[Financial Tables to Follow in
Appendix]
About CIFC
CIFC is a fundamentals-based, relative value credit manager. Our
senior management team averages 30 years of credit experience
having managed credit businesses in every cycle since the 1980's.
Headquartered in New York, CIFC is
an SEC registered investment adviser and a publicly traded company
(NASDAQ: CIFC). We currently serve over 200 institutional investors
globally. For more information, please visit CIFC's website at
www.cifc.com.
Forward-Looking Statements
This release may contain forward-looking statements within the
meaning of Section 27A of the Securities Act of 1933 and Section
21E of the Securities Exchange Act of 1934 which reflect CIFC's
current views with respect to, among other things, CIFC's
operations and financial performance. You can identify these
forward-looking statements by the use of words such as "outlook,"
"believes," "expects," "potential," "continues," "may," "will,"
"should," "seeks," "approximately," "predicts," "intends," "plans,"
"estimates," "anticipates" or the negative version of these words
or other comparable words. Such forward-looking statements are
subject to various risks and uncertainties. Accordingly, there are
or will be important factors that could cause actual outcomes or
results to differ materially from those indicated in these
statements. CIFC believes these factors include but are not limited
to those described under the section entitled "Risk Factors" in its
Annual Report on Form 10-K for the fiscal year ended December 31, 2012, as such factors may be updated
from time to time in its periodic filings with the Securities and
Exchange Commission, which are accessible on the SEC's website at
www.sec.gov. These factors should not be construed as exhaustive
and should be read in conjunction with the other cautionary
statements that are included in this release and in the filings.
CIFC undertakes no obligation to publicly update or review any
forward-looking statement, whether as a result of new information,
future developments or otherwise.
Appendix - Table of Contents
- Summary reconciliation of GAAP net income (loss)
attributable to CIFC Corp. to Non-GAAP measures (ENI, EBIT and
EBITDA) for the Three and Six Months Ended June 30, 2013 and 2012 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Statement of Operations are adjusted to exclude the consolidation
of VIEs) for the Three Months Ended June 30,
2013 and 2012 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Statement of Operations are adjusted to exclude the consolidation
of VIEs) for the Six Months Ended June 30,
2013 and 2012 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Balance Sheets are adjusted to exclude the consolidation of VIEs)
as of June 30, 2013 and December 31, 2012 (unaudited)
Appendix
Summary
Reconciliation of GAAP Net income (loss) attributable to CIFC Corp.
to Non-GAAP Measures
|
|
|
|
|
|
|
|
(In thousands)
(unaudited)
|
2Q'13
|
2Q'12
|
YTD
'13
|
YTD
'12
|
GAAP Net income
(loss) attributable to CIFC Corp.
|
$
|
7,543
|
|
$
|
(8,498)
|
|
$
|
10,330
|
|
$
|
(6,903)
|
|
Advisory fee sharing
arrangements (1)
|
(5,688)
|
|
(2,223)
|
|
(9,898)
|
|
(4,632)
|
|
Compensation costs
(2)
|
558
|
|
—
|
|
1,657
|
|
—
|
|
Insurance settlement
received
|
—
|
|
—
|
|
—
|
|
(657)
|
|
Amortization and
impairment of intangibles
|
4,100
|
|
6,397
|
|
8,148
|
|
11,123
|
|
Restructuring
charges
|
—
|
|
19
|
|
—
|
|
3,923
|
|
Net (gain)/loss on
contingent liabilities, derivatives and other
|
(613)
|
|
1,403
|
|
(499)
|
|
3,990
|
|
Gain on sales of
contracts
|
—
|
|
—
|
|
(752)
|
|
(5,772)
|
|
Income tax expense
(benefit)
|
6,488
|
|
6,222
|
|
9,598
|
|
4,498
|
|
Total reconciling and
non-recurring items
|
4,845
|
|
11,818
|
|
8,254
|
|
12,473
|
|
ENI
|
$
|
12,388
|
|
$
|
3,320
|
|
$
|
18,584
|
|
$
|
5,570
|
|
Add: Corporate
interest expense
|
1,452
|
|
1,466
|
|
2,934
|
|
2,935
|
|
EBIT
|
$
|
13,840
|
|
$
|
4,786
|
|
$
|
21,518
|
|
$
|
8,505
|
|
Add: Depreciation
of fixed assets
|
179
|
|
46
|
|
348
|
|
171
|
|
EBITDA
|
$
|
14,019
|
|
$
|
4,832
|
|
$
|
21,866
|
|
$
|
8,676
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Notes:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Company
shares advisory fees on certain of the CLOs it manages (for
example, advisory fees on certain acquired funds are shared with
the party that sold the funds to CIFC). These amounts are netted
from investment advisory fees in the computation of ENI.
|
(2) For the three and
six months ended June 30, 2013, compensation has been adjusted for
non-cash compensation related to profits interests granted to
certain CIFC employees by CIFC Parent Holdings LLC (as significant
stockholder in the Company) in 2011 and sharing of incentive fees
with certain former employees established in connection with the
Company's CNCIM Acquisition.
|
Reconciliation
from GAAP to Non-GAAP Measures - Consolidated Statements of
Operations (1)
|
|
|
|
|
|
|
|
2Q'13
|
|
2Q'12
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
(unaudited)
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
fees
|
|
$
|
2,240
|
|
|
$
|
23,559
|
|
|
$
|
25,799
|
|
|
$
|
2,554
|
|
|
$
|
11,912
|
|
|
$
|
14,466
|
|
Net investment
income
|
|
106
|
|
|
2,792
|
|
|
2,898
|
|
|
147
|
|
|
1,425
|
|
|
1,572
|
|
Total net
revenues
|
|
2,346
|
|
|
26,351
|
|
|
28,697
|
|
|
2,701
|
|
|
13,337
|
|
|
16,038
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
6,986
|
|
|
—
|
|
|
6,986
|
|
|
5,547
|
|
|
—
|
|
|
5,547
|
|
Professional
services
|
|
715
|
|
|
—
|
|
|
715
|
|
|
1,676
|
|
|
—
|
|
|
1,676
|
|
General and
administrative expenses
|
|
1,843
|
|
|
—
|
|
|
1,843
|
|
|
1,760
|
|
|
—
|
|
|
1,760
|
|
Depreciation and
amortization
|
|
4,278
|
|
|
—
|
|
|
4,278
|
|
|
4,672
|
|
|
—
|
|
|
4,672
|
|
Impairment of
intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,771
|
|
|
—
|
|
|
1,771
|
|
Restructuring
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
19
|
|
|
—
|
|
|
19
|
|
Total
expenses
|
|
13,822
|
|
|
—
|
|
|
13,822
|
|
|
15,445
|
|
|
—
|
|
|
15,445
|
|
Other Income
(Expense) and Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on
investments at fair value
|
|
251
|
|
|
(251)
|
|
|
—
|
|
|
144
|
|
|
(144)
|
|
|
—
|
|
Net gain (loss) on
contingent liabilities at fair value
|
|
613
|
|
|
—
|
|
|
613
|
|
|
(965)
|
|
|
—
|
|
|
(965)
|
|
Corporate interest
expense
|
|
(1,452)
|
|
|
—
|
|
|
(1,452)
|
|
|
(1,466)
|
|
|
—
|
|
|
(1,466)
|
|
Other, net
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
|
(438)
|
|
|
—
|
|
|
(438)
|
|
Net other income
(expense) and gain (loss)
|
|
(593)
|
|
|
(251)
|
|
|
(844)
|
|
|
(2,725)
|
|
|
(144)
|
|
|
(2,869)
|
|
Operating income
(loss)
|
|
(12,069)
|
|
|
26,100
|
|
|
14,031
|
|
|
(15,469)
|
|
|
13,193
|
|
|
(2,276)
|
|
Net results of
Consolidated VIEs
|
|
53,102
|
|
|
(53,102)
|
|
|
—
|
|
|
17,433
|
|
|
(17,433)
|
|
|
—
|
|
Income (loss)
before income tax (expense)
benefit
|
|
41,033
|
|
|
(27,002)
|
|
|
14,031
|
|
|
1,964
|
|
|
(4,240)
|
|
|
(2,276)
|
|
Income tax (expense)
benefit
|
|
(6,488)
|
|
|
—
|
|
|
(6,488)
|
|
|
(6,222)
|
|
|
—
|
|
|
(6,222)
|
|
Net income
(loss)
|
|
34,545
|
|
|
(27,002)
|
|
|
7,543
|
|
|
(4,258)
|
|
|
(4,240)
|
|
|
(8,498)
|
|
Net (income)
loss attributable to noncontrollinginterest in Consolidated
VIEs
|
|
(27,002)
|
|
|
27,002
|
|
|
—
|
|
|
(4,240)
|
|
|
4,240
|
|
|
—
|
|
Net income (loss)
attributable to CIFC Corp.
|
|
$
|
7,543
|
|
|
$
|
—
|
|
|
$
|
7,543
|
|
|
$
|
(8,498)
|
|
|
$
|
—
|
|
|
$
|
(8,498)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Consolidated
Statements of Operations have been adjusted to present on a
deconsolidated non-GAAP basis, which eliminates the impact of
Consolidated VIEs. Management uses these statements in addition to
GAAP to measure the performance of its core business.
|
Reconciliation
from GAAP to Non-GAAP Measures - Consolidated Statements of
Operations (continued) (1)
|
|
|
|
|
|
|
|
YTD
'13
|
|
YTD
'12
|
(In thousands)
(unaudited)
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
Investment advisory
fees
|
|
$
|
4,883
|
|
|
$
|
41,714
|
|
|
$
|
46,597
|
|
|
$
|
5,298
|
|
|
$
|
23,413
|
|
|
$
|
28,711
|
|
Net investment
income
|
|
97
|
|
|
3,890
|
|
|
3,987
|
|
|
148
|
|
|
1,961
|
|
|
2,109
|
|
Total net
revenues
|
|
4,980
|
|
|
45,604
|
|
|
50,584
|
|
|
5,446
|
|
|
25,374
|
|
|
30,820
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
14,510
|
|
|
—
|
|
|
14,510
|
|
|
11,291
|
|
|
—
|
|
|
11,291
|
|
Professional
services
|
|
2,638
|
|
|
—
|
|
|
2,638
|
|
|
2,400
|
|
|
—
|
|
|
2,400
|
|
General and
administrative expenses
|
|
3,327
|
|
|
—
|
|
|
3,327
|
|
|
3,164
|
|
|
—
|
|
|
3,164
|
|
Depreciation and
amortization
|
|
8,496
|
|
|
—
|
|
|
8,496
|
|
|
9,523
|
|
|
—
|
|
|
9,523
|
|
Impairment of
intangible assets
|
|
—
|
|
|
—
|
|
|
—
|
|
|
1,771
|
|
|
—
|
|
|
1,771
|
|
Restructuring
charges
|
|
—
|
|
|
—
|
|
|
—
|
|
|
3,923
|
|
|
—
|
|
|
3,923
|
|
Total
expenses
|
|
28,971
|
|
|
—
|
|
|
28,971
|
|
|
32,072
|
|
|
—
|
|
|
32,072
|
|
Other Income
(Expense) and Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on
investments at fair value
|
|
600
|
|
|
(600)
|
|
|
—
|
|
|
144
|
|
|
(313)
|
|
|
(169)
|
|
Net gain (loss) on
contingent liabilities at fair value
|
|
499
|
|
|
—
|
|
|
499
|
|
|
(3,342)
|
|
|
—
|
|
|
(3,342)
|
|
Corporate interest
expense
|
|
(2,934)
|
|
|
—
|
|
|
(2,934)
|
|
|
(2,935)
|
|
|
—
|
|
|
(2,935)
|
|
Net gain on the sale
of management contracts
|
|
752
|
|
|
—
|
|
|
752
|
|
|
5,772
|
|
|
—
|
|
|
5,772
|
|
Other, net
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
(479)
|
|
|
—
|
|
|
(479)
|
|
Net other income
(expense) and gain (loss)
|
|
(1,085)
|
|
|
(600)
|
|
|
(1,685)
|
|
|
(840)
|
|
|
(313)
|
|
|
(1,153)
|
|
Operating income
(loss)
|
|
(25,076)
|
|
|
45,004
|
|
|
19,928
|
|
|
(27,466)
|
|
|
25,061
|
|
|
(2,405)
|
|
Net results of
Consolidated VIEs
|
|
100,160
|
|
|
(100,160)
|
|
|
—
|
|
|
56,213
|
|
|
(56,213)
|
|
|
—
|
|
Income (loss)
before income tax (expense)
benefit
|
|
75,084
|
|
|
(55,156)
|
|
|
19,928
|
|
|
28,747
|
|
|
(31,152)
|
|
|
(2,405)
|
|
Income tax (expense)
benefit
|
|
(9,598)
|
|
|
—
|
|
|
(9,598)
|
|
|
(4,498)
|
|
|
—
|
|
|
(4,498)
|
|
Net income
(loss)
|
|
65,486
|
|
|
(55,156)
|
|
|
10,330
|
|
|
24,249
|
|
|
(31,152)
|
|
|
(6,903)
|
|
Net (income) loss
attributable to noncontrolling interest in Consolidated
VIEs
|
|
(55,156)
|
|
|
55,156
|
|
|
—
|
|
|
(31,152)
|
|
|
31,152
|
|
|
—
|
|
Net income (loss)
attributable to CIFC Corp.
|
|
$
|
10,330
|
|
|
$
|
—
|
|
|
$
|
10,330
|
|
|
$
|
(6,903)
|
|
|
$
|
—
|
|
|
$
|
(6,903)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Consolidated
Statements of Operations have been adjusted to present on a
deconsolidated non-GAAP basis, which eliminates the impact of
Consolidated VIEs. Management uses these statements in addition to
GAAP to measure the performance of its core business.
|
Reconciliation
from GAAP to Non-GAAP - Consolidated Balance Sheets
(1)
|
|
|
|
|
|
June 30,
2013
|
|
December 31,
2012
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(In thousands)
(unaudited)
|
|
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
33,509
|
|
|
$
|
—
|
|
|
$
|
33,509
|
|
|
$
|
47,692
|
|
|
$
|
—
|
|
|
$
|
47,692
|
|
Due from
brokers
|
|
32,623
|
|
|
—
|
|
|
32,623
|
|
|
1,150
|
|
|
—
|
|
|
1,150
|
|
Restricted cash and
cash equivalents
|
|
1,614
|
|
|
—
|
|
|
1,614
|
|
|
1,612
|
|
|
—
|
|
|
1,612
|
|
Investments at fair
value
|
|
5,402
|
|
|
64,279
|
|
|
69,681
|
|
|
5,058
|
|
|
74,176
|
|
|
79,234
|
|
Receivables
|
|
2,000
|
|
|
2,941
|
|
|
4,941
|
|
|
2,432
|
|
|
2,675
|
|
|
5,107
|
|
Prepaid and other
assets
|
|
4,566
|
|
|
—
|
|
|
4,566
|
|
|
5,392
|
|
|
—
|
|
|
5,392
|
|
Deferred tax asset,
net
|
|
54,440
|
|
|
—
|
|
|
54,440
|
|
|
50,545
|
|
|
—
|
|
|
50,545
|
|
Equipment and
improvements, net
|
|
3,959
|
|
|
—
|
|
|
3,959
|
|
|
3,979
|
|
|
—
|
|
|
3,979
|
|
Intangible assets,
net
|
|
34,988
|
|
|
—
|
|
|
34,988
|
|
|
43,136
|
|
|
—
|
|
|
43,136
|
|
Goodwill
|
|
76,000
|
|
|
—
|
|
|
76,000
|
|
|
76,000
|
|
|
—
|
|
|
76,000
|
|
Subtotal
|
|
249,101
|
|
|
67,220
|
|
|
316,321
|
|
|
236,996
|
|
|
76,851
|
|
|
313,847
|
|
Total assets of
Consolidated VIEs
|
|
11,060,092
|
|
|
(11,060,092)
|
|
|
—
|
|
|
10,267,915
|
|
|
(10,267,915)
|
|
|
—
|
|
Total
Assets
|
|
$
|
11,309,193
|
|
|
$
|
(10,992,872)
|
|
|
$
|
316,321
|
|
|
$
|
10,504,911
|
|
|
$
|
(10,191,064)
|
|
|
$
|
313,847
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to
brokers
|
|
$
|
4,581
|
|
|
$
|
—
|
|
|
$
|
4,581
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
Accrued and other
liabilities
|
|
12,386
|
|
|
—
|
|
|
12,386
|
|
|
15,734
|
|
|
—
|
|
|
15,734
|
|
Deferred purchase
payments
|
|
2,507
|
|
|
—
|
|
|
2,507
|
|
|
4,778
|
|
|
—
|
|
|
4,778
|
|
Contingent
liabilities at fair value
|
|
23,777
|
|
|
—
|
|
|
23,777
|
|
|
33,783
|
|
|
—
|
|
|
33,783
|
|
Long-term
debt
|
|
138,678
|
|
|
—
|
|
|
138,678
|
|
|
138,233
|
|
|
—
|
|
|
138,233
|
|
Subtotal
|
|
181,929
|
|
|
—
|
|
|
181,929
|
|
|
192,528
|
|
|
—
|
|
|
192,528
|
|
Total non-recourse
liabilities of Consolidated VIEs
|
|
10,859,687
|
|
|
(10,859,687)
|
|
|
—
|
|
|
10,113,035
|
|
|
(10,113,035)
|
|
|
—
|
|
Total
Liabilities
|
|
11,041,616
|
|
|
(10,859,687)
|
|
|
181,929
|
|
|
10,305,563
|
|
|
(10,113,035)
|
|
|
192,528
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
21
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
21
|
|
Treasury
stock
|
|
(729)
|
|
|
—
|
|
|
(729)
|
|
|
(664)
|
|
|
—
|
|
|
(664)
|
|
Additional paid-in
capital
|
|
958,212
|
|
|
—
|
|
|
958,212
|
|
|
955,407
|
|
|
—
|
|
|
955,407
|
|
Accumulated other
comprehensive income (loss)
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(3)
|
|
|
—
|
|
|
(3)
|
|
Retained earnings
(deficit)
|
|
(823,112)
|
|
|
—
|
|
|
(823,112)
|
|
|
(833,442)
|
|
|
—
|
|
|
(833,442)
|
|
Total CIFC Corp.
Stockholder's Equity
|
|
134,392
|
|
|
—
|
|
|
134,392
|
|
|
121,319
|
|
|
—
|
|
|
121,319
|
|
Appropriated retained
earnings (deficit) of Consolidated VIEs
|
|
133,185
|
|
|
(133,185)
|
|
|
—
|
|
|
78,029
|
|
|
(78,029)
|
|
|
—
|
|
Total
Equity
|
|
267,577
|
|
|
(133,185)
|
|
|
134,392
|
|
|
199,348
|
|
|
(78,029)
|
|
|
121,319
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
11,309,193
|
|
|
$
|
(10,992,872)
|
|
|
$
|
316,321
|
|
|
$
|
10,504,911
|
|
|
$
|
(10,191,064)
|
|
|
$
|
313,847
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory
Note:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
(1) The Consolidated
Balance Sheets have been adjusted to present a deconsolidated
non-GAAP statements, which eliminates the impact of Consolidated
VIEs. Management uses these statements in addition to GAAP to
measure the performance of its core business.
|
SOURCE CIFC Corp.