Segment Operating Results

Business Segments – The Company’s business results are categorized into the following two segments: Investment Banking and Investment Management. Investment Banking includes providing advice to clients on significant mergers, acquisitions, divestitures and other strategic corporate transactions, as well as services related to securities underwriting, private fund placement services and commissions for agency-based equity trading services and equity research. Investment Management includes advising third-party investors in the Institutional Asset Management, Wealth Management and Private Equity sectors. On December 31, 2015 the Company deconsolidated the assets and liabilities of Atalanta Sosnoff and will account for its interest as an equity method investment from that date forward. On October 31, 2014, the Company acquired the operating businesses of ISI, which is included in the Investment Banking segment. On December 3, 2013, the Company sold its investment in Pan and the results are presented within Discontinued Operations. The following segment information reflects the Company's results from its continuing operations.

The Company’s segment information for the years ended December 31, 2015, 2014 and 2013 is prepared using the following methodology:


•	Revenue, expenses and income (loss) from equity method investments directly associated with each segment are included in determining pre-tax income.


•	Expenses not directly associated with specific segments are allocated based on the most relevant measures applicable, including headcount, square footage and other performance and time-based factors.


•	Segment assets are based on those directly associated with each segment, or for certain assets shared across segments; those assets are allocated based on the most relevant measures applicable, including headcount and other factors.


•	Investment gains and losses, interest income and interest expense are allocated between the segments based on the segment in which the underlying asset or liability is held.

Each segment’s Operating Expenses include: a) employee compensation and benefits expenses that are incurred directly in support of the segment and b) non-compensation expenses, which include expenses for premises and occupancy, professional fees, travel and entertainment, communications and information services, equipment and indirect support costs (including compensation and other operating expenses related thereto) for administrative services. Such administrative services include, but are not limited to, accounting, tax, legal, facilities management and senior management activities.

Other Expenses include the following:


•	Amortization of LP Units/Interests and Certain Other Awards - Includes amortization costs associated with the modification and vesting of Class A LP Units, the vesting of Class E LP Units and Class G and H LP Interests issued in conjunction with the acquisition of ISI and certain other related awards.


•	Other Acquisition Related Compensation Charges - Includes compensation charges associated with deferred consideration, retention awards and related compensation for Lexicon employees.

•

Special Charges - Includes expenses in 2015 primarily related to an impairment charge associated with the impairment of goodwill in the Company's Institutional Asset Management reporting unit and charges related to the restructuring of our investment in Atalanta Sosnoff, primarily related to the conversion of certain of Atalanta Sosnoff’s profits interests held by management to equity interests. Special Charges for 2015 also include separation benefits and costs associated with the termination of certain contracts within the Company’s Evercore ISI business, as well as the finalization of a matter associated with the wind-down of the Company’s U.S. Private Equity business. Special Charges in 2014 primarily related to separation benefits and certain exit costs related to combining the equities business upon the ISI acquisition during 2014 and a provision recorded in 2014 against contingent consideration due on the 2013 disposition of Pan. Special Charges in 2013 includes expenses related to the write-off of intangible assets from the Company’s acquisition of Morse, Williams and Company, Inc.


•	Professional Fees - Includes expense associated with share based awards resulting from increases in the share price, which is required upon change in employment status.


•	Acquisition and Transition Costs - Includes professional fees for legal and other services incurred related to the Company’s acquisitions, as well as costs related to certain regulatory settlements and transitioning ISI’s infrastructure.


•	Fair Value of Contingent Consideration - Includes expense associated with changes in the fair value of contingent consideration issued to the sellers of certain of the Company’s acquisitions.


•	Intangible Asset and Other Amortization - Includes amortization of intangible assets and other purchase accounting-related amortization associated with certain acquisitions.

The Company evaluates segment results based on net revenues and pre-tax income, both including and excluding the impact of the Other Expenses.

The following information presents each segment’s contribution.



	For the Years Ended December 31,
	2015			2014		2013
Investment Banking
Net Revenues (1)	$	1,130,915		$	819,637	$	670,785
Operating Expenses	869,301			632,927		516,921
Other Expenses (2)	108,739			25,109		33,740
Operating Income	152,875			161,601		120,124
Income from Equity Method Investments	978			495		2,906
Pre-Tax Income from Continuing Operations	$	153,853		$	162,096	$	123,030
Identifiable Segment Assets	$	1,097,373		$	934,648	$	693,890
Investment Management
Net Revenues (1)	$	92,358		$	96,221	$	94,643
Operating Expenses	77,231			86,547		81,885
Other Expenses (2)	39,332			328		2,707
Operating Income (Loss)	(24,205		)	9,346		10,051
Income from Equity Method Investments	5,072			4,685		5,420
Pre-Tax Income (Loss) from Continuing Operations	$	(19,133	)	$	14,031	$	15,471
Identifiable Segment Assets	$	381,798		$	511,908	$	486,893
Total
Net Revenues (1)	$	1,223,273		$	915,858	$	765,428
Operating Expenses	946,532			719,474		598,806
Other Expenses (2)	148,071			25,437		36,447
Operating Income	128,670			170,947		130,175
Income from Equity Method Investments	6,050			5,180		8,326
Pre-Tax Income from Continuing Operations	$	134,720		$	176,127	$	138,501
Identifiable Segment Assets	$	1,479,171		$	1,446,556	$	1,180,783


(1)	Net revenues include Other Revenue, net, allocated to the segments as follows:



	For the Years Ended December 31,
	2015			2014			2013
Investment Banking (A)	$	(2,945	)	$	(1,722	)	$	3,979
Investment Management (B)	(2,771		)	(2,530		)	(1,116		)
Total Other Revenue, net	$	(5,716	)	$	(4,252	)	$	2,863


(A)	Investment Banking Other Revenue, net, includes interest expense on the Senior Notes, New Loan, subordinated borrowings and line of credit of $6,041, $4,470 and $4,386 for the years ended December 31, 2015, 2014 and 2013, respectively, and changes in amounts due pursuant to the Company's tax receivable agreement of $5,524 for the year ended December 31, 2013.


(B)	Investment Management Other Revenue, net, includes interest expense on the Senior Notes, New Loan and line of credit of $3,576, $3,770 and $3,702 for the years ended December 31, 2015, 2014 and 2013, respectively, and changes in amounts due pursuant to the Company's tax receivable agreement of $1,381 for the year ended December 31, 2013.


(2)	Other Expenses are as follows:



	For the Years Ended December 31,
	2015		2014		2013
Investment Banking
Amortization of LP Units / Interests and Certain Other Awards	$	83,673	$	3,399	$	17,817
Other Acquisition Related Compensation Charges	1,537		7,939		15,923
Special Charges	2,151		4,893		—
Professional Fees	—		1,672		—
Acquisition and Transition Costs	4,879		4,712		—
Fair Value of Contingent Consideration	2,704		—		—
Intangible Asset and Other Amortization	13,795		2,494		—
Total Investment Banking	108,739		25,109		33,740
Investment Management
Amortization of LP Units and Certain Other Awards	—		—		2,209
Special Charges	38,993		—		170
Acquisition and Transition Costs	11		—		—
Intangible Asset and Other Amortization	328		328		328
Total Investment Management	39,332		328		2,707
Total Other Expenses	$	148,071	$	25,437	$	36,447

Geographic Information – The Company manages its business based on the profitability of the enterprise as a whole.

The Company’s revenues were derived from clients and private equity funds located and managed in the following geographical areas:



	For the Years Ended December 31,
	2015		2014		2013
Net Revenues: (1)
United States	$	900,672	$	608,631	$	532,615
Europe and Other	287,884		248,815		145,267
Latin America	40,433		62,664		84,683
Total	$	1,228,989	$	920,110	$	762,565

(1) Excludes Other Revenue and Interest Expense.

The Company’s total assets are located in the following geographical areas:



	For the Years Ended December 31,
	2015		2014
Total Assets:
United States	$	1,135,570	$	1,099,363
Europe and Other	221,358		160,934
Latin America	122,243		186,259
Total	$	1,479,171	$	1,446,556