DEERFIELD CAP CORP (DFR, Financial) filed Quarterly Report for the period ended 2012-09-30.
Cifc Corp has a market cap of $129.7 million; its shares were traded at around $6.4 with and P/S ratio of 9.
Net revenues decreased by $0.3 million and $2.8 million for the three and nine months ended September 30, 2012, respectively, compared to the prior year periods. The decrease for the nine months ended September 30, 2012 is primarily the result of a decrease in net investment and interest income of $2.8 million, compared to the prior year period, due to the liquidation of the RMBS portfolio during the second quarter of 2011.
Our operating activities provided cash of $41.0 million for the nine months ended September 30, 2012. Significant operating activities included the receipt of proceeds from our investment in the Warehouse SPV of $47.4 million and an investment in CIFC 2012-III Warehouse of $25.1 million. During the period we also utilized cash to acquire positions in our on-balance sheet warehouse. While we sold all of our on-balance sheet warehouse positions prior to September 30, 2012, we had a net receivable of $8.4 million for net unsettled purchases and sales. Additionally, cash flows from operating activities include the receipt of investment advisory fees and net investment and interest income and the payment of operating expenses.
CLO investment advisory fee revenue increased by $1.7 million and $9.5 million for the three and nine months ended September 30, 2012, respectively, as compared to the prior year periods. The increases in CLO investment advisory fee revenues for the three months ended September 30, 2012 are primarily the result of the closing(s) of CIFC 2011-1 and CIFC 2012-1 during 2012. During the three months ended September 30, 2012, we collected the first payment of subordinated investment advisory fees for CIFC 2011-I. While most CLOs pay us advisory fees quarterly, a CLOs initial payment may relate to a period longer than one quarter. Additionally, during the three months ended September 30, 2012, we collected an incentive fee payment from a CLO which reached its incentive management fee hurdle during the period and a one-time deferred management fee payment. The increases in CLO investment advisory fee revenues for the nine months ended September 30, 2012 are primarily the result of the aforementioned and the addition of investment advisory fees from CIFCAM and CypressTree as a result of the Merger, which were only included in revenues during the 2011 period subsequent to the Merger.
Goodwill and Other Intangible Assets— Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Goodwill has been recognized as a result of the acquisition of CNCIM and the Merger with Legacy CIFC. In accordance with ASC Topic 350—Intangibles—Goodwill and Other (“ASC Topic 350”), goodwill is not amortized. We periodically (at least on an annual basis in the fourth quarter of each year) review goodwill, considering factors such as our projected cash flows and revenues and earnings multiples of comparable companies, to determine whether the carrying value of the goodwill is impaired. If the goodwill is deemed to be impaired, the difference between the carrying amount reflected in the financial statements and the estimated fair value is recognized as an expense in the period in which the impairment occurs. We have one overall reporting unit for which goodwill is tested for impairment. The evaluation of goodwill and intangible assets for impairment requires us to make estimates and exercise significant judgment. During the three and nine months ended September 30, 2012, there were no events or changes in circumstances that would indicate that the current carrying amount of goodwill might be impaired; accordingly, we did not perform an interim impairment test. Our next annual impairment test of goodwill will be performed and completed in the fourth quarter of 2012.
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Cifc Corp has a market cap of $129.7 million; its shares were traded at around $6.4 with and P/S ratio of 9.
Highlight of Business Operations:
CLOs typically issue multiple tranches of debt and subordinated note securities with varying ratings and levels of subordination to finance the purchase of investments. These securities receive interest and principal payments from the CLO in accordance with an agreed upon priority of payments, commonly referred to as a “waterfall.” The most senior notes, generally rated AAA/Aaa, commonly represent the majority of the total liabilities of the CLO. This tranche of notes is issued at a specified spread over LIBOR and normally has the first claim on the earnings on the CLO s investments after payment of certain fees and expenses. The mezzanine tranches of rated notes generally have ratings ranging from AA/Aa to BB/Ba and also are usually issued at a specified spread over LIBOR with higher spreads paid on the tranches with lower ratings. Each tranche is typically only entitled to a share of the earnings on the CLOs investments if the required interest and principal payments have been made on the more senior tranches. The most junior tranche can take the form of either subordinated notes or preference shares and is commonly referred to as the CLO s “subordinated notes” or "equity." The subordinated notes generally do not have a stated coupon but are entitled to residual cash flows from the CLOs investments after all of the other tranches of notes and certain other fees and expenses are paid. While the majority of the subordinated notes of the CLOs we manage are owned by third parties, we do own a portion of the subordinated note tranches of certain of the CLOs we manage. Our investments and beneficial interests in the Consolidated CLOs amounted to $37.6 million and $7.0 million as of September 30, 2012 and December 31, 2011, respectively.Net revenues decreased by $0.3 million and $2.8 million for the three and nine months ended September 30, 2012, respectively, compared to the prior year periods. The decrease for the nine months ended September 30, 2012 is primarily the result of a decrease in net investment and interest income of $2.8 million, compared to the prior year period, due to the liquidation of the RMBS portfolio during the second quarter of 2011.
Our operating activities provided cash of $41.0 million for the nine months ended September 30, 2012. Significant operating activities included the receipt of proceeds from our investment in the Warehouse SPV of $47.4 million and an investment in CIFC 2012-III Warehouse of $25.1 million. During the period we also utilized cash to acquire positions in our on-balance sheet warehouse. While we sold all of our on-balance sheet warehouse positions prior to September 30, 2012, we had a net receivable of $8.4 million for net unsettled purchases and sales. Additionally, cash flows from operating activities include the receipt of investment advisory fees and net investment and interest income and the payment of operating expenses.
CLO investment advisory fee revenue increased by $1.7 million and $9.5 million for the three and nine months ended September 30, 2012, respectively, as compared to the prior year periods. The increases in CLO investment advisory fee revenues for the three months ended September 30, 2012 are primarily the result of the closing(s) of CIFC 2011-1 and CIFC 2012-1 during 2012. During the three months ended September 30, 2012, we collected the first payment of subordinated investment advisory fees for CIFC 2011-I. While most CLOs pay us advisory fees quarterly, a CLOs initial payment may relate to a period longer than one quarter. Additionally, during the three months ended September 30, 2012, we collected an incentive fee payment from a CLO which reached its incentive management fee hurdle during the period and a one-time deferred management fee payment. The increases in CLO investment advisory fee revenues for the nine months ended September 30, 2012 are primarily the result of the aforementioned and the addition of investment advisory fees from CIFCAM and CypressTree as a result of the Merger, which were only included in revenues during the 2011 period subsequent to the Merger.
Goodwill and Other Intangible Assets— Goodwill represents the excess cost of a business acquisition over the fair value of the net assets acquired. Goodwill has been recognized as a result of the acquisition of CNCIM and the Merger with Legacy CIFC. In accordance with ASC Topic 350—Intangibles—Goodwill and Other (“ASC Topic 350”), goodwill is not amortized. We periodically (at least on an annual basis in the fourth quarter of each year) review goodwill, considering factors such as our projected cash flows and revenues and earnings multiples of comparable companies, to determine whether the carrying value of the goodwill is impaired. If the goodwill is deemed to be impaired, the difference between the carrying amount reflected in the financial statements and the estimated fair value is recognized as an expense in the period in which the impairment occurs. We have one overall reporting unit for which goodwill is tested for impairment. The evaluation of goodwill and intangible assets for impairment requires us to make estimates and exercise significant judgment. During the three and nine months ended September 30, 2012, there were no events or changes in circumstances that would indicate that the current carrying amount of goodwill might be impaired; accordingly, we did not perform an interim impairment test. Our next annual impairment test of goodwill will be performed and completed in the fourth quarter of 2012.
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