DEERFIELD CAP CORP Reports Operating Results (10-Q)

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Aug 12, 2013
DEERFIELD CAP CORP (DFR, Financial) filed Quarterly Report for the period ended 2013-06-30.

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Highlight of Business Operations:

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.

Adjusted Investment Advisory Fees—During the three months ended June 30, 2013, total adjusted advisory fee revenue increased by 64% primarily as a result of an increase in incentive fees as more CLOs reached their incentive fee hurdles as compared to the same period of the prior year. In addition, during the second quarter, we began realizing 50% of incentive fees earned from the legacy CIFC CLOs acquired through the Merger. Previously, all incentive fees earned were shared with the seller (see also Contingent Liabilities and Other Commitments below for further details). Senior and subordinated management fees also increased as the current period included a full quarter of results from CLOs and CDOs sponsored and acquired since the second quarter of 2012, including the sponsorships of three new CLOs during the first half of the year. These increases were offset by principal paydowns, calls and redemptions of certain legacy CLOs and CDOs.

Adjusted Investment Advisory Fees—During the six months ended June 30, 2013, total adjusted advisory fee revenue increased by 52% primarily as a result of an increase in incentive fees as more CLOs reached their incentive fee hurdles as compared to the same period of the prior year. In addition, during the first half of the year, we began realizing 50% of incentive fees earned from the legacy CIFC CLOs acquired through the Merger. Previously, all incentive fees earned were shared with the seller (see also Contingent Liabilities and Other Commitments below for further details). Senior and subordinated management fees also increased as the current period included a full quarter of results from CLOs and CDOs sponsored and acquired since 2012, including the sponsorships of three new CLOs during the first half of the year. These increases were offset by principal paydowns, calls and redemptions of certain legacy CLOs and CDOs.

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