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 and Wealth Management and interests in private equity funds which are not managed by the Company. On October 18, 2017, the Company completed the sale of the Institutional Trust and Independent Fiduciary business of ETC, which was in the Investment Management segment.

The Company's segment information for the three months ended March 31, 2018 and 2017 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, execution, clearing and custody fees, 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, Class G and H LP Interests and Class J LP Units issued in conjunction with the acquisition of ISI and certain other related awards.


•	Special Charges - Includes expenses in 2018 related to separation benefits and costs for the termination of certain contracts associated with closing the Company's agency trading platform in the U.K.


•	Acquisition and Transition Costs - Includes costs incurred in connection with acquisitions, divestitures and other ongoing business development initiatives, primarily comprised of professional fees for legal and other services.


•	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.

One client accounted for more than 10% of the Company's Consolidated Net Revenues for the three months ended March 31, 2018.

The following information presents each segment's contribution.



	For the Three Months Ended March 31,
	2018		2017
Investment Banking
Net Revenues⁽¹⁾	$	450,200	$	370,770
Operating Expenses	331,683		281,592
Other Expenses⁽²⁾	8,037		(18,979		)
Operating Income	110,480		108,157
Income (Loss) from Equity Method Investments	—		(149		)
Pre-Tax Income	$	110,480	$	108,008
Identifiable Segment Assets	$	1,148,662	$	1,077,509
Investment Management
Net Revenues⁽¹⁾	$	13,363	$	16,477
Operating Expenses	11,273		13,305
Other Expenses⁽²⁾	21		—
Operating Income	2,069		3,172
Income from Equity Method Investments	2,125		1,759
Pre-Tax Income	$	4,194	$	4,931
Identifiable Segment Assets	$	268,991	$	355,253
Total
Net Revenues⁽¹⁾	$	463,563	$	387,247
Operating Expenses	342,956		294,897
Other Expenses⁽²⁾	8,058		(18,979		)
Operating Income	112,549		111,329
Income from Equity Method Investments	2,125		1,610
Pre-Tax Income	$	114,674	$	112,939
Identifiable Segment Assets	$	1,417,653	$	1,432,762


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



	For the Three Months Ended March 31,
	2018			2017
Investment Banking^(A)	$	(1,428	)	$	(1,178	)
Investment Management^(B)	1,608			1,195
Total Other Revenue, net	$	180		$	17


(A)	Investment Banking Other Revenue, net, includes interest expense on the Notes Payable, subordinated borrowings and the line of credit of $2,261 and $2,581 for the three months ended March 31, 2018 and 2017, respectively. Also includes ($10) of principal trading losses for the three months ended March 31, 2017 to conform to the current presentation.


(B)	Includes $1,064 of net realized and unrealized gains on private equity investments for the three months ended March 31, 2017 to conform to the current presentation.


(2)	Other Expenses are as follows:



	For the Three Months Ended March 31,
	2018		2017
Investment Banking
Amortization of LP Units / Interests and Certain Other Awards	$	3,983	$	(21,371	)
Special Charges	1,897		—
Intangible Asset and Other Amortization	2,157		2,392
Total Investment Banking	8,037		(18,979		)
Investment Management
Acquisition and Transition Costs	21		—
Total Investment Management	21		—
Total Other Expenses	$	8,058	$	(18,979	)

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 located and managed in the following geographical areas:



	For the Three Months Ended March 31,
	2018		2017
Net Revenues:⁽¹⁾
United States	$	386,517	$	263,100
Europe and Other	65,230		122,911
Latin America	11,636		1,219
Total	$	463,383	$	387,230

(1) Excludes Other Revenue, Including Interest and Investments, and Interest Expense.

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



	March 31, 2018		December 31, 2017
Total Assets:
United States	$	1,175,193	$	1,284,163
Europe and Other	169,620		234,984
Latin America	72,840		65,739
Total	$	1,417,653	$	1,584,886