NEW YORK, Aug. 7, 2014 /PRNewswire/ -- CIFC Corp.
(NASDAQ: CIFC) ("CIFC" or the "Company") today announced its
results for the second quarter ended June 30, 2014.
Highlights
- Economic Net Income ("ENI", a non-GAAP measure) for the quarter
was $15.2 million, compared to
$10.3 million(1) for the
same period of the prior year. ENI for the six months was
$28.4 million, compared to
$15.9 million(1) for the
prior year.
- GAAP net income (loss) for the quarter was $6.4 million as compared to $7.5 million for the same period in the prior
year. GAAP net income (loss) for the six months was $6.7 million compared to $10.3 million for the prior year.
- Fee Earning Assets Under Management ("Fee Earning AUM" or
"AUM") from loan-based products totaled $12.6 billion as of June 30, 2014 as
compared to $12.0 billion as of
December 31, 2013 and $12.4
billion as of June 30, 2013.
- During the quarter, the Company sponsored the issuance of one
new CLO and increased subscriptions to other loan-based products
that represented $825.1 million of
new AUM.
- Subsequent to quarter end, the Company sponsored the issuance
of a new CLO that represents approximately $700 million of new loan-based AUM. In addition,
the Company priced a fourth CLO for the year that represents
approximately $600 million of new
loan-based AUM.
- During the quarter, the Company gave notice to its convertible
note holder of its intention to redeem the notes at their full par
value of $25.0 million. On
July 12, 2014, the note holder, DFR
Holdings LLC, exercised its right to convert the notes into
4,132,231 shares of common stock.
- CIFC declares a cash dividend of $0.10 per share. The dividend will be paid on
September 15, 2014 to shareholders of
record as of the close of business on August
25, 2014.
Executive Overview
We had a strong quarter with ENI increasing 48% year over year.
Our CLOs and total return funds continue to perform well. The CLO
market has been strong in 2014 and outpaced the record levels of
2013. Our loan-based AUM increased by $0.5
billion during the first half of the year. During the
quarter, CIFC sponsored its largest CLO that represents
approximately $0.8 billion of new
AUM. Year-to-date, we have priced four CLOs with aggregate new AUM
of $2.7 billion. Our ability to
establish warehouses and accumulate assets before pricing the CLOs
has been a key competitive advantage we continue to leverage.
|
|
|
Explanatory
Note:
|
|
(1)
|
Prior year ENI has
been adjusted to make it consistent with current year ENI by
excluding management fees attributable to non-core investment
products (i.e. Legacy ABS and Corporate Bond collateralized debt
obligations ("non-core")).
|
Selected Financial Metrics
(In thousands, except
per share data) (unaudited)
|
NON-GAAP FINANCIAL
MEASURES (1)
|
2Q'14
|
2Q'13
|
% Change vs.
2Q'13
|
YTD
'14
|
YTD
'13
|
% Change vs.
YTD'13
|
|
Management Fees -
Senior
|
$
|
5,634
|
|
$
|
4,987
|
|
13%
|
$
|
10,326
|
|
$
|
9,750
|
|
6%
|
|
Management Fees -
Subordinated
|
8,343
|
|
8,102
|
|
3%
|
16,812
|
|
16,448
|
|
2%
|
|
Incentive Fees from
CLOs
|
4,511
|
|
4,553
|
|
(1)%
|
9,411
|
|
7,167
|
|
31%
|
|
Other loan-based
products
|
828
|
|
359
|
|
131%
|
1,736
|
|
682
|
|
155%
|
|
Total Management
Fees
|
19,316
|
|
18,001
|
|
7%
|
38,285
|
|
34,047
|
|
12%
|
|
Net Investment
Income
|
8,240
|
|
2,898
|
|
184%
|
14,236
|
|
3,987
|
|
257%
|
|
Total ENI
Revenues
|
27,556
|
|
20,899
|
|
32%
|
52,521
|
|
38,034
|
|
38%
|
|
Compensation and
benefits
|
7,617
|
|
6,428
|
|
18%
|
14,445
|
|
12,853
|
|
12%
|
|
Other operating
expenses
|
3,227
|
|
2,742
|
|
18%
|
6,722
|
|
6,315
|
|
6%
|
|
Corporate interest
expense
|
1,486
|
|
1,452
|
|
2%
|
2,953
|
|
2,934
|
|
1%
|
|
Total ENI
Expenses
|
12,330
|
|
10,622
|
|
16%
|
24,120
|
|
22,102
|
|
9%
|
|
ENI
(1)
|
$
|
15,226
|
|
$
|
10,277
|
|
48%
|
$
|
28,401
|
|
$
|
15,932
|
|
78%
|
|
ENI per share -
basic
|
$
|
0.73
|
|
$
|
0.49
|
|
49%
|
$
|
1.36
|
|
$
|
0.77
|
|
77%
|
|
ENI per share -
diluted (2) (3)
|
$
|
0.61
|
|
$
|
0.43
|
|
42%
|
$
|
1.15
|
|
$
|
0.68
|
|
69%
|
|
|
NON-GAAP FINANCIAL
MEASURES (1)
|
2Q'14
|
2Q'13
|
% Change vs.
2Q'13
|
YTD
'14
|
YTD
'13
|
% Change vs.
YTD'13
|
|
ENI EBIT
(4)
|
$
|
16,712
|
|
$
|
11,729
|
|
42%
|
$
|
31,354
|
|
$
|
18,866
|
|
66%
|
|
ENI EBITDA
(5)
|
$
|
16,974
|
|
$
|
11,908
|
|
43%
|
$
|
31,852
|
|
$
|
19,214
|
|
66%
|
|
ENI EBITDA Margin
(6)
|
62%
|
|
57%
|
|
5%
|
61%
|
|
51%
|
|
10%
|
|
Fee Related ENI
EBITDA Margin (6)
|
45%
|
|
50%
|
|
(5)%
|
46%
|
|
45%
|
|
1%
|
|
ENI Margin
(6)
|
55%
|
|
49%
|
|
6%
|
54%
|
|
42%
|
|
12%
|
|
NON-GAAP FINANCIAL
MEASURES - AUM
|
6/30/2014
|
|
12/31/2013
|
|
% Change vs.
12/31/2013
|
|
6/30/2013
|
|
% Change vs.
6/30/13
|
|
Fee Earning AUM
from loan-based products (7)
|
$12,571,662
|
|
$12,045,859
|
|
4%
|
|
$12,386,681
|
|
1%
|
|
SELECTED GAAP
RESULTS
|
2Q'14
|
2Q'13
|
% Change vs.
2Q'13
|
YTD
'14
|
YTD
'13
|
% Change vs.
YTD'13
|
|
Total net
revenues
|
$
|
1,475
|
|
$
|
2,346
|
|
(37)%
|
$
|
3,184
|
|
$
|
4,980
|
|
(36)%
|
|
Total
expenses
|
$
|
13,882
|
|
$
|
13,822
|
|
—%
|
$
|
27,626
|
|
$
|
28,971
|
|
(5)%
|
|
Net income (loss)
attributable to CIFC Corp.
|
$
|
6,444
|
|
$
|
7,543
|
|
(15)%
|
$
|
6,679
|
|
$
|
10,330
|
|
(35)%
|
|
Earnings (loss)
per share - basic
|
$
|
0.31
|
|
$
|
0.36
|
|
(14)%
|
$
|
0.32
|
|
$
|
0.50
|
|
(36)%
|
|
Earnings (loss)
per share - diluted (2)
|
$
|
0.26
|
|
$
|
0.31
|
|
(16)%
|
$
|
0.29
|
|
$
|
0.44
|
|
(34)%
|
|
Weighted average
shares outstanding - basic
|
20,972
|
|
20,809
|
|
1%
|
20,906
|
|
20,803
|
|
—%
|
|
Weighted average
shares outstanding - diluted
|
26,213
|
|
25,601
|
|
2%
|
26,141
|
|
25,720
|
|
2%
|
|
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. Prior year ENI has been adjusted to make it consistent
with current year ENI by excluding management fees attributable to
non-core investment products (i.e.: Legacy ABS and Corporate Bond
collateralized debt obligations ("non-core")).
|
|
(2)
|
The 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)
|
GAAP weighted average
shares outstanding was used as ENI weighted average shares
outstanding.
|
|
(4)
|
ENI EBIT is ENI
before corporate interest expense. See Appendix.
|
|
(5)
|
ENI EBITDA is ENI
EBIT before depreciation of fixed assets. See Appendix.
|
|
(6)
|
ENI EBITDA Margin is
ENI EBITDA divided by Total ENI Revenue. Fee Related ENI EBITDA
Margin is ENI EBITDA less Net Investment Income divided by Total
Management Fees. ENI Margin is ENI divided by Total ENI
Revenue.
|
|
(7)
|
Amount excludes Fee
Earning AUM attributable to non-core products of $0.7 billion, $0.8
billion and $1.3 billion as of June 30, 2014,
December 31, 2013 and June 30, 2013, respectively. Fee Earning
AUM attributable to non-core products are expected to continue to
decline as these funds run-off per their contractual
terms.
|
|
Q2'14 - ENI
Total
Management
Fees
|
|
($ in
thousands)
|
|
|
Senior management
fees
|
$
5,634
|
29%
|
|
Subordinated
management fees
|
8,343
|
43%
|
|
Incentive fees from
CLOs
|
4,511
|
24%
|
|
Other loan-based
products
|
828
|
4%
|
|
Total ENI Management Fees
|
$
19,316
|
100%
|
|
|
|
|
Q2'13 - ENI
Total
Management
Fees
|
|
($ in
thousands)
|
|
|
Senior management
fees
|
$
4,987
|
28%
|
|
Subordinated
management fees
|
8,102
|
45%
|
|
Incentive fees from
CLOs
|
4,553
|
25%
|
|
Other loan-based
products
|
359
|
2%
|
|
Total ENI Management Fees
|
$
18,001
|
100%
|
Second Quarter Overview
CIFC reported ENI of $15.2 million
for the second quarter of 2014, as compared to $10.3 million for the same period in the prior
year. ENI increased period to period by $4.9
million or 48% primarily related to higher net investment
income and management fees. Net investment income increased
primarily driven by an increase in net gains from the Company's
investments in CLOs, credit funds and warehouses during the current
quarter. In addition, management fees increased as the Company
recognized more revenues from CLOs and credit funds launched since
the second quarter of 2013. These increases were partially offset
by (i) decreases in management fees from certain legacy CLOs that
are amortizing pursuant to their contractual terms, and (ii)
increases in compensation, benefits and other operating expenses to
support the continued growth of the Company.
CIFC reported GAAP net income attributable to CIFC Corp. of
$6.4 million for the second quarter
of 2014, as compared to $7.5 million
in the same period of the prior year. GAAP operating results
decreased from the prior year period due to (i) $3.3 million reduction in revenues from fee
sharing (GAAP presents fees gross of fee sharing), (ii)
$1.9 million reduction in management
fees from non-core funds, and (iii) $2.1
million increase in losses on contingent liabilities related
to improvement in the expected performance of legacy CIFC CLOs with
fee sharing arrangements. These decreases were partially offset
by an increase of $4.9 million
related to factors noted in ENI above and a $1.5 million reduction in intangible asset
amortization compared to the prior year as certain CLO and CDO
management contracts were impaired in the prior year. See
Non-GAAP Financial Measures section for a reconciliation between
GAAP and Non-GAAP ENI.
Fee Earning AUM
Fee Earning AUM or AUM refers to the assets managed by the
Company on which it is paid management fees and/or incentive fees.
Generally, fees are paid on the aggregate collateral balance at
par, and principal cash of CLOs and the value of the assets in
credit funds (excluding non-fee earning AUM such as the Company's
investments).
The Company's total loan-based Fee Earning AUM was $12.6 billion as of June 30, 2014. During
the second quarter, the Company sponsored the issuance of one new
CLO and increased subscriptions to other loan-based products
increasing Fee Earning AUM by $825.1
million. New AUM 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).
The following table summarizes Fee Earning AUM for the Company's
significant loan-based products (1):
|
|
June 30,
2014
|
|
December 31,
2013
|
|
June 30,
2013
|
|
(in thousands,
except # of Products)
|
|
# of
Products
|
|
Fee Earning
AUM
|
|
# of
Products
|
|
Fee Earning
AUM
|
|
# of
Products
|
|
Fee Earning
AUM
|
|
Post 2011
CLOs
|
|
10
|
|
|
$
|
5,539,964
|
|
|
8
|
|
|
$
|
4,127,951
|
|
|
6
|
|
|
$
|
3,219,531
|
|
|
Legacy CLOs
(2)
|
|
19
|
|
|
5,819,791
|
|
|
20
|
|
|
6,811,382
|
|
|
26
|
|
|
8,344,616
|
|
|
Total CLOs
|
|
29
|
|
|
11,359,755
|
|
|
28
|
|
|
10,939,333
|
|
|
32
|
|
|
11,564,147
|
|
|
Other loan-based
products (3)
|
|
6
|
|
|
1,211,907
|
|
|
6
|
|
|
1,106,526
|
|
|
3
|
|
|
822,534
|
|
|
AUM from
loan-based products
|
|
35
|
|
|
$
|
12,571,662
|
|
|
34
|
|
|
$
|
12,045,859
|
|
|
35
|
|
|
$
|
12,386,681
|
|
|
Explanatory
Notes:
|
|
(1)
|
Table excludes Fee
Earning AUM attributable to non-core products of $0.7 billion, $0.8
billion and $1.3 billion as of June 30, 2014,
December 31, 2013 and June 30, 2013, respectively. Fee Earning
AUM attributable to non-core products are expected to continue to
decline as these funds run-off per their contractual
terms.
|
|
(2)
|
Legacy CLOs represent
all managed CLOs issued prior to 2011, including CLOs acquired
since 2011 but issued prior to 2011.
|
|
(3)
|
Other loan-based
products management fee structures vary by fund and may not be
similar to a CLO.
|
The following chart illustrates that, since 2011, CIFC has been
able to replace run-off from legacy CLOs (including acquisitions)
with growth in loan-based AUM:
|
|
|
|
|
|
Legacy
CLOs
|
Post 2011
CLOs
|
Other
loan-
based
products
|
Total
AUM
|
|
($ in
thousands)
|
|
Q2 '12
|
$
9,545,456
|
$
401,313
|
$
133,828
|
$
10,080,597
|
|
Q3
'12(1)
|
$
9,804,751
|
$
848,714
|
$
320,042
|
$
10,973,507
|
|
Q4 '12
|
$
9,599,219
|
$
1,579,557
|
$
666,122
|
$
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
|
|
Q3 '13
|
$
7,626,653
|
$
3,622,438
|
$
1,031,464
|
$
12,280,555
|
|
Q4 '13
|
$
6,811,382
|
$
4,127,951
|
$
1,106,526
|
$
12,045,859
|
|
Q1 '14
|
$
6,423,605
|
$
4,732,728
|
$
1,189,120
|
$
12,345,453
|
|
Q2 '14
|
$
5,819,791
|
$
5,539,964
|
$
1,211,907
|
$
12,571,662
|
|
|
|
|
|
|
Explanatory
Note:
|
|
(1)
|
Increase in AUM on
the Legacy CLOs is the result of the acquisition of the rights to
manage four "Navigator" CLOs during September
2012.
|
Total loan-based Fee Earning AUM activity for the three months
ended June 30, 2014, and the last twelve months ("LTM") ended
June 30, 2014, are as follows ($ in thousands):
|
|
2Q'14
|
|
LTM
2Q'14
|
|
Opening AUM
Balance
|
|
$
|
12,345,453
|
|
|
$
|
12,386,681
|
|
|
CLO New Issuances
|
|
800,000
|
|
|
2,303,694
|
|
|
CLO Principal
Paydown
|
|
(527,131)
|
|
|
(1,935,706)
|
|
|
CLO Calls, Redemptions and
Sales
|
|
(86,693)
|
|
|
(548,758)
|
|
|
Fund
Subscriptions
|
|
25,101
|
|
|
383,853
|
|
|
Other (1)
|
|
14,932
|
|
|
(18,102)
|
|
|
Ending AUM
Balance
|
|
$
|
12,571,662
|
|
|
$
|
12,571,662
|
|
|
Explanatory
Note:
|
|
(1)
|
Other includes
changes in collateral balances of CLOs between periods and market
value changes in certain other loan-based products.
|
Liquidity and Capital Resources
As of June 30, 2014, total deconsolidated non-GAAP cash and
cash equivalents increased by $0.7
million to $22.0 million from
$21.4 million as of December 31,
2013. For the six months ended June 30, 2014, cash flows from
operations provided net cash proceeds of $26.4 million. Our net investment activity in
CIFC managed CLO equity, warehouses and funds during the six
months was $18.1 million. The
Company paid down $4.3 million of
contingent liabilities (related to fee sharing arrangements) and
paid dividends of $4.2 million.
Investments
|
Deconsolidated
Non-GAAP (1)
|
|
June 30,
2014
|
|
December 31,
2013
|
|
CIFC Managed CLO
Equity (Residual Interests)
|
|
$
|
32,479
|
|
|
$
|
44,292
|
|
|
Warehouses
(2)(3)
|
|
65,598
|
|
|
32,529
|
|
|
Other loan-based
products (3)
|
|
41,538
|
|
|
36,310
|
|
|
Total
|
|
$
|
139,615
|
|
|
$
|
113,131
|
|
|
|
|
|
|
|
|
|
|
|
Explanatory Notes:
|
|
(1)
|
Pursuant to GAAP,
investments in consolidated CLOs, warehouses and certain other
loan-based products are eliminated from "Investments at fair value"
on the Company's Consolidated Balance Sheets. See Appendix for a
Reconciliation from GAAP to Non-GAAP - Consolidated Balance Sheets
for further details.
|
|
(2)
|
From time to time,
the Company establishes "warehouses", entities designed to
accumulate investments in advance of sponsoring new CLOs or other
funds managed by the Company. To establish a warehouse, the
Company contributes equity capital to a newly formed entity which
is typically levered (three to five times) and begins accumulating
investments. When the related CLO or fund is sponsored,
typically three to nine months later, the warehouse is
"terminated", with it concurrently repaying the related financing
and returning to the Company its equity contribution, net of gains
and losses, if any.
|
|
(3)
|
As of June 30,
2014 and December 31, 2013, $24.2 million and $16.9 million,
respectively, of the Company's investments in funds and warehouses
was not consolidated and included on our Consolidated Balance
Sheets.
|
Excluding non-recourse variable interest entity ("VIE") debt,
CIFC had $120.0 million of Junior
Subordinated Notes which mature in 2035 and have a weighted average
interest rate of LIBOR + 2.77% over the term of the loans. In
addition, as of June 30, 2014, the Company had Convertible
Notes with a face value of $25.0
million that were convertible into 4.1 million shares of
common stock at $6.05 per share and
bearing a 11% coupon payable quarterly (with an effective interest
rate of 18.14%). On July 12, 2014,
the Convertible Notes were redeemed and converted into 4.1 million
shares of common stock.
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 Net income attributable to CIFC
Corp. to measure the performance of its core business (excluding
non-core products). The Company believes ENI reflects the nature
and substance of the business, the economic results driven by
management fee revenues from the management of client funds and
earnings on the Company's investments. ENI presents management fee
revenues net of (i) any fee-sharing arrangements resulting from
mergers or acquisitions and (ii) revenues attributable to non-core
investment products. In addition, ENI represents net income (loss)
attributable to CIFC Corp. before taxes, gains (losses) on
disposition(s) attributable to non-core assets, a portion of
non-cash compensation related to profits interests granted by CIFC
Parent 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
mergers and acquisitions).
The Deconsolidated Non-GAAP Statements represent the
Consolidated GAAP statements adjusted to eliminate the impact of
the Consolidated Entities. On the Statement of Operations, the
Company has reclassed the sum of Net results of Consolidated
Entities, Net (income) loss attributable to noncontrolling interest
in Consolidated Entities and Net gain (loss) on investments at fair
value to the Deconsolidated Non-GAAP line items that represent its
characteristics; management fees and interest income. On the
Balance Sheets, the Company has excluded amounts related to all
consolidated entities. Management uses these Non-GAAP statements in
addition to Consolidated GAAP Statements to measure the performance
of its core asset management business.
EBIT and ENI 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. ENI EBIT
represents ENI before corporate interest expense and ENI EBITDA
represents ENI EBIT before depreciation of fixed assets, a non-cash
item.
ENI, ENI EBIT and ENI 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, ENI EBIT and ENI
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, ENI EBIT and ENI 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.
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, 2013, 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, ENI EBIT and
ENI EBITDA) for the Three and Six Months Ended June 30, 2014 and 2013 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Statements of Operations are adjusted to exclude the consolidation
of Entities) for the Three Months Ended June
30, 2014 and 2013 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Statements of Operations are adjusted to exclude the consolidation
of Entities) for the Six Months Ended June
30, 2014 and 2013 (unaudited)
- Reconciliation of GAAP to Non-GAAP measures (GAAP basis
Balance Sheets are adjusted to exclude the consolidation of
Entities) as of June 30, 2014 and
December 31, 2013
(unaudited)
Appendix
Summary Reconciliation of GAAP Net income (loss) attributable
to CIFC Corp. to Non-GAAP Measures (unaudited)
|
(In thousands)
(unaudited)
|
2Q'14
|
2Q'13
|
YTD
'14
|
YTD
'13
|
|
GAAP Net income
(loss) attributable to CIFC Corp.
|
$
|
6,444
|
|
$
|
7,543
|
|
$
|
6,679
|
|
$
|
10,330
|
|
|
Management fee
sharing arrangements (1)
|
(2,421)
|
|
(5,688)
|
|
(5,066)
|
|
(9,898)
|
|
|
Management fees
attributable to non-core funds (2)
|
(201)
|
|
(2,111)
|
|
(442)
|
|
(2,652)
|
|
|
Compensation costs
(3)
|
430
|
|
558
|
|
942
|
|
1,657
|
|
|
Amortization and
impairment of intangibles
|
2,608
|
|
4,100
|
|
5,517
|
|
8,148
|
|
|
Net (gain)/loss on
contingent liabilities and other (4)
|
1,529
|
|
(613)
|
|
1,758
|
|
(499)
|
|
|
Gain on sales of
contracts (5)
|
—
|
|
—
|
|
(228)
|
|
(752)
|
|
|
Income tax expense
(benefit)
|
6,837
|
|
6,488
|
|
19,241
|
|
9,598
|
|
|
Total reconciling and
non-recurring items
|
8,782
|
|
2,734
|
|
21,722
|
|
5,602
|
|
|
ENI
|
$
|
15,226
|
|
$
|
10,277
|
|
$
|
28,401
|
|
$
|
15,932
|
|
|
Add: Corporate
interest expense
|
1,486
|
|
1,452
|
|
2,953
|
|
2,934
|
|
|
ENI
EBIT
|
$
|
16,712
|
|
$
|
11,729
|
|
$
|
31,354
|
|
$
|
18,866
|
|
|
Add: Depreciation
of fixed assets
|
262
|
|
179
|
|
498
|
|
348
|
|
|
ENI
EBITDA
|
$
|
16,974
|
|
$
|
11,908
|
|
$
|
31,852
|
|
$
|
19,214
|
|
|
Explanatory
Notes:
|
|
(1)
|
The Company shares
management fees on certain of the acquired CLOs it manages (shared
with the party that sold the funds to CIFC). Management fees are
presented on a gross basis for GAAP and on a net basis for Non-GAAP
ENI.
|
|
(2)
|
Current year ENI
calculation includes the reduction attributable to non-core
management fees. Prior year ENI calculation has been adjusted to
conform with the current year's calculation.
|
|
(3)
|
Compensation has been
adjusted for non-cash compensation related to profits interests
granted to CIFC employees by CIFC Parent and sharing of incentive
fees with certain former employees established in connection with
the Company's acquisition of certain CLOs from Columbus Nova Credit
Investments Management, LLC ("CNCIM").
|
|
(4)
|
Adjustment primarily
includes the elimination of gains (losses) on contingent
liabilities during the respective periods.
|
|
(5)
|
In January 2012, the
Company completed the sale of its right to manage Gillespie CLO
PLC. The Company recognized additional gains from contingent
payments collected during 2014 and 2013.
|
Reconciliation from GAAP to Non-GAAP Measures - Consolidated
Statements of Operations (unaudited)
|
|
2Q'14
|
|
2Q'13
|
|
(In thousands)
(unaudited)
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
1,378
|
|
|
$
|
20,560
|
|
|
$
|
21,938
|
|
|
$
|
2,240
|
|
|
$
|
23,559
|
|
|
$
|
25,799
|
|
|
Net investment
income
|
|
97
|
|
|
8,143
|
|
|
8,240
|
|
|
106
|
|
|
2,792
|
|
|
2,898
|
|
|
Total net
revenues
|
|
1,475
|
|
|
28,703
|
|
|
30,178
|
|
|
2,346
|
|
|
26,351
|
|
|
28,697
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
8,047
|
|
|
—
|
|
|
8,047
|
|
|
6,986
|
|
|
—
|
|
|
6,986
|
|
|
Professional
services
|
|
706
|
|
|
—
|
|
|
706
|
|
|
715
|
|
|
—
|
|
|
715
|
|
|
General and
administrative expenses
|
|
2,259
|
|
|
—
|
|
|
2,259
|
|
|
1,843
|
|
|
—
|
|
|
1,843
|
|
|
Depreciation and
amortization
|
|
2,870
|
|
|
—
|
|
|
2,870
|
|
|
4,278
|
|
|
—
|
|
|
4,278
|
|
|
Total
expenses
|
|
13,882
|
|
|
—
|
|
|
13,882
|
|
|
13,822
|
|
|
—
|
|
|
13,822
|
|
|
Other Income
(Expense) and Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on
investments at fair value
|
|
1,121
|
|
|
(1,121)
|
|
|
—
|
|
|
251
|
|
|
(251)
|
|
|
—
|
|
|
Net gain (loss) on
contingent liabilities at fair value
|
|
(1,529)
|
|
|
—
|
|
|
(1,529)
|
|
|
613
|
|
|
—
|
|
|
613
|
|
|
Corporate interest
expense
|
|
(1,486)
|
|
|
—
|
|
|
(1,486)
|
|
|
(1,452)
|
|
|
—
|
|
|
(1,452)
|
|
|
Other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(5)
|
|
|
—
|
|
|
(5)
|
|
|
Net other income
(expense) and gain (loss)
|
|
(1,894)
|
|
|
(1,121)
|
|
|
(3,015)
|
|
|
(593)
|
|
|
(251)
|
|
|
(844)
|
|
|
Operating income
(loss)
|
|
(14,301)
|
|
|
27,582
|
|
|
13,281
|
|
|
(12,069)
|
|
|
26,100
|
|
|
14,031
|
|
|
Net results of
Consolidated Entities
|
|
37,046
|
|
|
(37,046)
|
|
|
—
|
|
|
53,102
|
|
|
(53,102)
|
|
|
—
|
|
|
Income (loss)
before income taxes
|
|
22,745
|
|
|
(9,464)
|
|
|
13,281
|
|
|
41,033
|
|
|
(27,002)
|
|
|
14,031
|
|
|
Income tax (expense)
benefit
|
|
(6,837)
|
|
|
—
|
|
|
(6,837)
|
|
|
(6,488)
|
|
|
—
|
|
|
(6,488)
|
|
|
Net income
(loss)
|
|
15,908
|
|
|
(9,464)
|
|
|
6,444
|
|
|
34,545
|
|
|
(27,002)
|
|
|
7,543
|
|
|
Net (income) loss
attributable to noncontrolling interest in Consolidated
Entities
|
|
(9,464)
|
|
|
9,464
|
|
|
—
|
|
|
(27,002)
|
|
|
27,002
|
|
|
—
|
|
|
Net income (loss)
attributable to CIFC Corp.
|
|
$
|
6,444
|
|
|
$
|
—
|
|
|
$
|
6,444
|
|
|
$
|
7,543
|
|
|
$
|
—
|
|
|
$
|
7,543
|
|
Reconciliation from GAAP to Non-GAAP Measures - Consolidated
Statements of Operations (continued) (unaudited)
|
|
YTD
'14
|
|
YTD
'13
|
|
(In thousands)
(unaudited)
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Consolidated
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Revenues
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Management
fees
|
|
$
|
2,990
|
|
|
$
|
40,803
|
|
|
$
|
43,793
|
|
|
$
|
4,883
|
|
|
$
|
41,714
|
|
|
$
|
46,597
|
|
|
Net investment
income
|
|
194
|
|
|
14,042
|
|
|
14,236
|
|
|
97
|
|
|
3,890
|
|
|
3,987
|
|
|
Total net
revenues
|
|
3,184
|
|
|
54,845
|
|
|
58,029
|
|
|
4,980
|
|
|
45,604
|
|
|
50,584
|
|
|
Expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation and
benefits
|
|
15,387
|
|
|
—
|
|
|
15,387
|
|
|
14,510
|
|
|
—
|
|
|
14,510
|
|
|
Professional
services
|
|
1,752
|
|
|
—
|
|
|
1,752
|
|
|
2,638
|
|
|
—
|
|
|
2,638
|
|
|
General and
administrative expenses
|
|
4,472
|
|
|
—
|
|
|
4,472
|
|
|
3,327
|
|
|
—
|
|
|
3,327
|
|
|
Depreciation and
amortization
|
|
6,015
|
|
|
—
|
|
|
6,015
|
|
|
8,496
|
|
|
—
|
|
|
8,496
|
|
|
Total
expenses
|
|
27,626
|
|
|
—
|
|
|
27,626
|
|
|
28,971
|
|
|
—
|
|
|
28,971
|
|
|
Other Income
(Expense) and Gain (Loss)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net gain (loss) on
investments at fair value
|
|
2,527
|
|
|
(2,527)
|
|
|
—
|
|
|
600
|
|
|
(600)
|
|
|
—
|
|
|
Net gain (loss) on
contingent liabilities at fair value
|
|
(1,758)
|
|
|
—
|
|
|
(1,758)
|
|
|
499
|
|
|
—
|
|
|
499
|
|
|
Corporate interest
expense
|
|
(2,953)
|
|
|
—
|
|
|
(2,953)
|
|
|
(2,934)
|
|
|
—
|
|
|
(2,934)
|
|
|
Net gain on the sale
of management contracts
|
|
228
|
|
|
—
|
|
|
228
|
|
|
752
|
|
|
—
|
|
|
752
|
|
|
Other, net
|
|
—
|
|
|
—
|
|
|
—
|
|
|
(2)
|
|
|
—
|
|
|
(2)
|
|
|
Net other income
(expense) and gain (loss)
|
|
(1,956)
|
|
|
(2,527)
|
|
|
(4,483)
|
|
|
(1,085)
|
|
|
(600)
|
|
|
(1,685)
|
|
|
Operating income
(loss)
|
|
(26,398)
|
|
|
52,318
|
|
|
25,920
|
|
|
(25,076)
|
|
|
45,004
|
|
|
19,928
|
|
|
Net results of
Consolidated Entities
|
|
86,128
|
|
|
(86,128)
|
|
|
—
|
|
|
100,160
|
|
|
(100,160)
|
|
|
—
|
|
|
Income (loss)
before income taxes
|
|
59,730
|
|
|
(33,810)
|
|
|
25,920
|
|
|
75,084
|
|
|
(55,156)
|
|
|
19,928
|
|
|
Income tax (expense)
benefit
|
|
(19,241)
|
|
|
—
|
|
|
(19,241)
|
|
|
(9,598)
|
|
|
—
|
|
|
(9,598)
|
|
|
Net income
(loss)
|
|
40,489
|
|
|
(33,810)
|
|
|
6,679
|
|
|
65,486
|
|
|
(55,156)
|
|
|
10,330
|
|
|
Net (income) loss
attributable to noncontrolling interest in Consolidated
Entities
|
|
(33,810)
|
|
|
33,810
|
|
|
—
|
|
|
(55,156)
|
|
|
55,156
|
|
|
—
|
|
|
Net income (loss)
attributable to CIFC Corp.
|
|
$
|
6,679
|
|
|
$
|
—
|
|
|
$
|
6,679
|
|
|
$
|
10,330
|
|
|
$
|
—
|
|
|
$
|
10,330
|
|
Reconciliation from GAAP to Non-GAAP - Consolidated Balance
Sheets (unaudited)
|
|
June 30,
2014
|
|
December 31,
2013
|
|
(In thousands)
(unaudited)
|
|
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
GAAP
|
|
Consolidation
Adjustments
|
|
Deconsolidated
Non-GAAP
|
|
Assets
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash and cash
equivalents
|
|
$
|
22,046
|
|
|
$
|
—
|
|
|
$
|
22,046
|
|
|
$
|
25,497
|
|
|
$
|
(4,132)
|
|
|
$
|
21,365
|
|
|
Restricted cash and
cash equivalents
|
|
1,693
|
|
|
—
|
|
|
1,693
|
|
|
1,700
|
|
|
—
|
|
|
1,700
|
|
|
Due from
brokers
|
|
—
|
|
|
—
|
|
|
—
|
|
|
18,813
|
|
|
(4,985)
|
|
|
13,828
|
|
|
Investments at fair
value
|
|
24,177
|
|
|
115,438
|
|
|
139,615
|
|
|
16,883
|
|
|
96,248
|
|
|
113,131
|
|
|
Receivables
|
|
2,550
|
|
|
3,718
|
|
|
6,268
|
|
|
2,120
|
|
|
3,814
|
|
|
5,934
|
|
|
Prepaid and other
assets
|
|
3,833
|
|
|
—
|
|
|
3,833
|
|
|
5,104
|
|
|
(222)
|
|
|
4,882
|
|
|
Deferred tax asset,
net
|
|
50,815
|
|
|
—
|
|
|
50,815
|
|
|
57,675
|
|
|
—
|
|
|
57,675
|
|
|
Equipment and
improvements, net
|
|
4,443
|
|
|
—
|
|
|
4,443
|
|
|
4,261
|
|
|
—
|
|
|
4,261
|
|
|
Intangible assets,
net
|
|
19,707
|
|
|
—
|
|
|
19,707
|
|
|
25,223
|
|
|
—
|
|
|
25,223
|
|
|
Goodwill
|
|
76,000
|
|
|
—
|
|
|
76,000
|
|
|
76,000
|
|
|
—
|
|
|
76,000
|
|
|
Subtotal
|
|
205,264
|
|
|
119,156
|
|
|
324,420
|
|
|
233,276
|
|
|
90,723
|
|
|
323,999
|
|
|
Total assets of
Consolidated Entities
|
|
12,580,111
|
|
|
(12,580,111)
|
|
|
—
|
|
|
11,366,912
|
|
|
(11,366,912)
|
|
|
—
|
|
|
Total
Assets
|
|
$
|
12,785,375
|
|
|
$
|
(12,460,955)
|
|
|
$
|
324,420
|
|
|
$
|
11,600,188
|
|
|
$
|
(11,276,189)
|
|
|
$
|
323,999
|
|
|
Liabilities
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Due to
brokers
|
|
$
|
1,036
|
|
|
$
|
—
|
|
|
$
|
1,036
|
|
|
$
|
5,499
|
|
|
$
|
(4,991)
|
|
|
$
|
508
|
|
|
Accrued and other
liabilities
|
|
12,616
|
|
|
—
|
|
|
12,616
|
|
|
15,197
|
|
|
(270)
|
|
|
14,927
|
|
|
Deferred purchase
payments
|
|
1,348
|
|
|
—
|
|
|
1,348
|
|
|
1,179
|
|
|
—
|
|
|
1,179
|
|
|
Contingent
liabilities at fair value
|
|
14,450
|
|
|
—
|
|
|
14,450
|
|
|
16,961
|
|
|
—
|
|
|
16,961
|
|
|
Long-term
debt
|
|
139,697
|
|
|
—
|
|
|
139,697
|
|
|
139,164
|
|
|
—
|
|
|
139,164
|
|
|
Subtotal
|
|
169,147
|
|
|
—
|
|
|
169,147
|
|
|
178,000
|
|
|
(5,261)
|
|
|
172,739
|
|
|
Total non-recourse
liabilities of Consolidated Entities
|
|
12,095,720
|
|
|
(12,095,720)
|
|
|
—
|
|
|
11,114,435
|
|
|
(11,114,435)
|
|
|
—
|
|
|
Total Liabilities
|
|
12,264,867
|
|
|
(12,095,720)
|
|
|
169,147
|
|
|
11,292,435
|
|
|
(11,119,696)
|
|
|
172,739
|
|
|
Equity
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Common
stock
|
|
21
|
|
|
—
|
|
|
21
|
|
|
21
|
|
|
—
|
|
|
21
|
|
|
Treasury
stock
|
|
(914)
|
|
|
—
|
|
|
(914)
|
|
|
(914)
|
|
|
—
|
|
|
(914)
|
|
|
Additional paid-in
capital
|
|
964,533
|
|
|
—
|
|
|
964,533
|
|
|
963,011
|
|
|
—
|
|
|
963,011
|
|
|
Retained earnings
(deficit)
|
|
(808,367)
|
|
|
—
|
|
|
(808,367)
|
|
|
(810,858)
|
|
|
—
|
|
|
(810,858)
|
|
|
Total CIFC Corp. Stockholders' Equity
|
|
155,273
|
|
|
—
|
|
|
155,273
|
|
|
151,260
|
|
|
—
|
|
|
151,260
|
|
|
Noncontrolling
interest in Consolidated Funds
|
|
174,454
|
|
|
(174,454)
|
|
|
—
|
|
|
5,107
|
|
|
(5,107)
|
|
|
—
|
|
|
Appropriated retained
earnings (deficit) of Consolidated Entities
|
|
190,781
|
|
|
(190,781)
|
|
|
—
|
|
|
151,386
|
|
|
(151,386)
|
|
|
—
|
|
|
Total Equity
|
|
520,508
|
|
|
(365,235)
|
|
|
155,273
|
|
|
307,753
|
|
|
(156,493)
|
|
|
151,260
|
|
|
Total Liabilities
and Stockholders' Equity
|
|
$
|
12,785,375
|
|
|
$
|
(12,460,955)
|
|
|
$
|
324,420
|
|
|
$
|
11,600,188
|
|
|
$
|
(11,276,189)
|
|
|
$
|
323,999
|
|
Logo -
http://photos.prnewswire.com/prnh/20140324/NY79439LOGO
SOURCE CIFC Corp.