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August 02, 2012 | About:

OCH ZIFF CAPITAL MANAGEMENT GROUP LLC (NYSE:OZM) filed Quarterly Report for the period ended 2012-06-30.

Och-ziff Capital Management Group Llc has a market cap of $997 million; its shares were traded at around $7.47 with a P/E ratio of 15.8 and P/S ratio of 1.6. The dividend yield of Och-ziff Capital Management Group Llc stocks is 5.6%.

Highlight of Business Operations:

For any given quarter, our revenues will be influenced by the combination of assets under management and the investment performance of our funds. For the first three quarters of each year, our revenues will be primarily comprised of the management fees we have earned for each respective quarter. In the fourth quarter, our revenues will be primarily comprised of the management fees we have earned for the quarter, as well as incentive income related to the full-year investment performance generated on assets under management that are subject to annual measurement periods, or for other assets under management for which the measurement period expired in that quarter.

Management Fees. Management fees typically range from 1.5% to 2.5% annually of assets under management in our hedge funds. In our real estate funds and credit funds, management fees typically range from 0.75% to 1.5% based on the amount of capital committed to these platforms by our fund investors. Our average management fee rate is approximately 1.7%. This average rate takes into account the effect of non-fee paying assets under management, as well as our dedicated credit platforms and other alternative investment vehicles. Management fees are generally calculated and paid to us on a quarterly basis at the beginning of the quarter, based on the amount of assets under management at the beginning of the quarter. Management fees are prorated for capital inflows and redemptions during the quarter. Accordingly, changes in our management fee revenues from quarter to quarter are driven by changes in the quarterly opening balances of assets under management, the relative magnitude and timing of inflows and redemptions during the respective quarter, as well as the impact of differing management fee rates charged on those inflows and redemptions.

Income tax expense increased by $3.1 million for the quarter-to-date period and $8.9 million for the year-to-date period. The increase in both periods was primarily due to higher profitability and an increase in ownership in the Och-Ziff Operating Group, resulting in an increase in income tax expense of $3.1 million and $5.6 million for the quarter- and year-to-date periods, respectively. An additional increase of $1.2 million for the quarter-to-date period and $3.1 million for the year-to-date period was driven by lower deferred tax assets related to RSU amortization and write-offs of deferred tax assets relating to the vesting of RSUs. Also contributing to the increase for the year-to-date period was a $1.9 million true-up related to the tax treatment of prior net gains on early retirement of debt. These increases were partially offset by a decrease of $1.3 million and $2.2 million for the quarter- and year-to-date periods, respectively, due to lower foreign income taxes.

Based on our past results, managements experience and our current level of assets under management, we believe that our existing cash resources, together with the cash generated from management fees, will be sufficient to meet our anticipated fixed operating expenses and other working capital needs for at least the next 12 months. As we have done historically, we will determine the actual amount of discretionary cash bonuses during the fourth quarter of each year and intend to fund this amount through total annual revenues. Although we cannot predict the amount, if any, of incentive income we may earn, we are able to regularly monitor expected management fees and we believe that we will be able to adjust our expense infrastructure, including discretionary cash bonuses, as needed to meet the requirements of our business and in order to maintain positive operating cash flows. Nevertheless, if we generate insufficient cash flows from operations to meet our short-term liquidity needs, we may have to borrow funds or sell assets, subject to existing contractual arrangements.

The following tables present the reconciliations of Economic Income revenues and its components to the respective GAAP measure for the periods presented in this managements discussion and analysis of financial condition and results of operations:

Read the The complete Report

About the author:

Charlie Tian, Ph.D. - Founder of GuruFocus. You can now order his book Invest Like a Guru on Amazon.

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