Segment Operating Results

6 Months Ended

Jun. 30, 2017

Segment Reporting [Abstract]

Segment Operating Results

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 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 September 30, 2016, the Company deconsolidated the assets and liabilities of its Mexican Private Equity business, which was in the Investment Management segment.

The Company's segment information for the three and six months ended June 30, 2017 and 2016 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 or the reversal of expenses associated with 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.

• Special Charges - Includes expenses in 2017 related to the impairment of goodwill in the Company's Institutional Asset Management reporting unit and the impairment of the Company's investment in G5 | Evercore.

• Acquisition and Transition Costs - Includes costs incurred in connection with acquisitions and other ongoing business development initiatives, primarily comprised of professional fees for legal and other services, as well as the reversal of a provision for certain settlements in 2016 which was previously established in the fourth quarter of 2015.

• 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.

No client accounted for more than 10% of the Company's consolidated Net Revenues for the three and six months ended June 30, 2017.

The following information presents each segment's contribution.

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017			2016		2017			2016
Investment Banking
Net Revenues (1)	$	356,409		$	328,157	$	727,179		$	567,870
Operating Expenses	269,717			246,916		551,309			439,180
Other Expenses (2)	33,894			23,404		14,915			58,432
Operating Income	52,798			57,837		160,955			70,258
Income (Loss) from Equity Method Investments	113			290		(36		)	18
Pre-Tax Income	$	52,911		$	58,127	$	160,919		$	70,276
Identifiable Segment Assets	$	1,135,094		$	964,009	$	1,135,094		$	964,009
Investment Management
Net Revenues (1)	$	14,061		$	22,499	$	30,538		$	40,499
Operating Expenses	13,109			17,300		26,414			31,514
Other Expenses (2)	7,484			431		7,484			513
Operating Income (Loss)	(6,532		)	4,768		(3,360		)	8,472
Income from Equity Method Investments	1,957			1,374		3,716			2,933
Pre-Tax Income (Loss)	$	(4,575	)	$	6,142	$	356		$	11,405
Identifiable Segment Assets	$	316,192		$	342,641	$	316,192		$	342,641
Total
Net Revenues (1)	$	370,470		$	350,656	$	757,717		$	608,369
Operating Expenses	282,826			264,216		577,723			470,694
Other Expenses (2)	41,378			23,835		22,399			58,945
Operating Income	46,266			62,605		157,595			78,730
Income from Equity Method Investments	2,070			1,664		3,680			2,951
Pre-Tax Income	$	48,336		$	64,269	$	161,275		$	81,681
Identifiable Segment Assets	$	1,451,286		$	1,306,650	$	1,451,286		$	1,306,650

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

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017			2016		2017			2016
Investment Banking (A)	$	(1,122	)	$	983	$	(2,290	)	$	70
Investment Management (B)	179			244		310			(185		)
Total Other Revenue, net	$	(943	)	$	1,227	$	(1,980	)	$	(115	)

(A) Investment Banking Other Revenue, net, includes interest expense on the Notes Payable, subordinated borrowings and the line of credit of $2,425 and $5,006for the three and six months ended June 30, 2017, respectively, and $2,876 and $4,354for the three and six months ended June 30, 2016, respectively.

(B) Investment Management Other Revenue, net, includes interest expense on the Notes Payable and the line of credit of $670 for six months ended June 30, 2016.

(2) Other Expenses are as follows:

	For the Three Months Ended June 30,					For the Six Months Ended June 30,
	2017		2016			2017			2016
Investment Banking
Amortization of LP Units / Interests and Certain Other Awards	$	17,102	$	20,738		$	(4,269	)	$	52,497
Special Charges	14,400		—			14,400			—
Acquisition and Transition Costs	—		(733		)	—			(733		)
Fair Value of Contingent Consideration	—		581			—			687
Intangible Asset and Other Amortization	2,392		2,818			4,784			5,981
Total Investment Banking	33,894		23,404			14,915			58,432
Investment Management
Special Charges	7,107		—			7,107			—
Acquisition and Transition Costs	377		404			377			404
Intangible Asset and Other Amortization	—		27			—			109
Total Investment Management	7,484		431			7,484			513
Total Other Expenses	$	41,378	$	23,835		$	22,399		$	58,945

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 Three Months Ended June 30,				For the Six Months Ended June 30,
	2017		2016		2017		2016
Net Revenues: (1)
United States	$	274,484	$	218,945	$	537,649	$	392,855
Europe and Other	96,589		120,470		219,500		192,681
Latin America	340		10,014		2,548		22,948
Total	$	371,413	$	349,429	$	759,697	$	608,484

(1) Excludes Other Revenue and Interest Expense.

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

	June 30, 2017		December 31, 2016
Total Assets:
United States	$	1,160,457	$	1,376,101
Europe and Other	219,021		190,380
Latin America	71,808		95,865
Total	$	1,451,286	$	1,662,346