0001564590-16-024121.txt : 20160812 0001564590-16-024121.hdr.sgml : 20160812 20160811191625 ACCESSION NUMBER: 0001564590-16-024121 CONFORMED SUBMISSION TYPE: 10-Q PUBLIC DOCUMENT COUNT: 78 CONFORMED PERIOD OF REPORT: 20160630 FILED AS OF DATE: 20160812 DATE AS OF CHANGE: 20160811 FILER: COMPANY DATA: COMPANY CONFORMED NAME: PJT Partners Inc. CENTRAL INDEX KEY: 0001626115 STANDARD INDUSTRIAL CLASSIFICATION: INVESTMENT ADVICE [6282] IRS NUMBER: 364797143 STATE OF INCORPORATION: DE FISCAL YEAR END: 1231 FILING VALUES: FORM TYPE: 10-Q SEC ACT: 1934 Act SEC FILE NUMBER: 001-36869 FILM NUMBER: 161825878 BUSINESS ADDRESS: STREET 1: 280 PARK AVENUE STREET 2: 16TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 BUSINESS PHONE: 212-364-7800 MAIL ADDRESS: STREET 1: 280 PARK AVENUE STREET 2: 16TH FLOOR CITY: NEW YORK STATE: NY ZIP: 10017 FORMER COMPANY: FORMER CONFORMED NAME: Blackstone Advisory Inc. DATE OF NAME CHANGE: 20141120 10-Q 1 pjt-10q_20160630.htm 10-Q pjt-10q_20160630.htm

 

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

 

FORM 10-Q

 

(Mark One)

x

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2016

OR

o

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 FOR THE TRANSITION PERIOD FROM           TO           

Commission File Number: 001-36869

 

PJT Partners Inc.

(Exact name of Registrant as specified in its charter)

 

 

Delaware

36-4797143

(State or other jurisdiction of

(I.R.S. Employer

incorporation or organization)

Identification No.)

 

280 Park Avenue

New York, New York 10017

(Address of principal executive offices)(Zip Code)

(212) 364-7800

(Registrant’s telephone number, including area code)

 

Indicate by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes x No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x No o

Indicate by check mark whether the Registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

 

Large accelerated filer

o

 

Accelerated filer

o

Non-accelerated filer

x

(Do not check if a smaller reporting company)

Smaller reporting company

o

Indicate by check mark whether the Registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No x

As of August 4, 2016, there were 17,966,456 shares of Class A common stock, par value $0.01 per share, and 302 shares of Class B common stock, par value $0.01 per share, outstanding.

 

 

 

 

 


 

TABLE OF CONTENTS

 

 

 

Page

PART I.

 

FINANCIAL INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

FINANCIAL STATEMENTS

 

3

 

 

 

 

 

 

 

Unaudited Condensed Consolidated and Combined Financial Statements — June 30, 2016 and 2015:

 

 

 

 

 

 

 

 

 

Condensed Consolidated and Combined Statements of Financial Condition as of June 30, 2016 and December 31, 2015

 

3

 

 

 

 

 

 

 

Condensed Consolidated and Combined Statements of Operations for the Three and Six Months Ended June 30, 2016 and 2015

 

4

 

 

 

 

 

 

 

Condensed Consolidated and Combined Statements of Comprehensive Income (Loss) for the Three and Six Months Ended June 30, 2016 and 2015

 

5

 

 

 

 

 

 

 

Condensed Consolidated and Combined Statements of Changes in Equity for the Six Months Ended June 30, 2016 and 2015

 

6

 

 

 

 

 

 

 

Condensed Consolidated and Combined Statements of Cash Flows for the Six Months Ended June 30, 2016 and 2015

 

7

 

 

 

 

 

 

 

Notes to Condensed Consolidated and Combined Financial Statements

 

8

 

 

 

 

 

ITEM 2.

 

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

 

26

 

 

 

 

 

ITEM 3.

 

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

 

36

 

 

 

 

 

ITEM 4.

 

CONTROLS AND PROCEDURES

 

36

 

 

 

 

 

PART II.

 

OTHER INFORMATION

 

 

 

 

 

 

 

ITEM 1.

 

LEGAL PROCEEDINGS

 

37

 

 

 

 

 

ITEM 1A.

 

RISK FACTORS

 

37

 

 

 

 

 

ITEM 2.

 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

 

38

 

 

 

 

 

ITEM 3.

 

DEFAULTS UPON SENIOR SECURITIES

 

38

 

 

 

 

 

ITEM 4.

 

MINE SAFETY DISCLOSURES

 

38

 

 

 

 

 

ITEM 5.

 

OTHER INFORMATION

 

38

 

 

 

 

 

ITEM 6.

 

EXHIBITS

 

39

 

 

 

 

 

SIGNATURES

 

40

 

 

 

 

1


 

PJT Partners Inc. was formed in connection with certain merger and spin-off transactions whereby the financial and strategic advisory services, restructuring and reorganization advisory services and Park Hill Group businesses of The Blackstone Group L.P. (“Blackstone”) were combined with PJT Capital LP, a financial advisory firm founded by Paul J. Taubman in 2013 (together with its then affiliates, “PJT Capital”), and the combined business was distributed to Blackstone’s unitholders to create PJT Partners Inc., a stand-alone, independent publicly traded company. PJT Partners Inc. is a holding company and its only material asset is its controlling equity interest in PJT Partners Holdings LP, a holding partnership that holds the company’s operating subsidiaries, and certain cash and cash equivalents it may hold from time to time. As sole general partner of PJT Partners Holdings LP, PJT Partners Inc. operates and controls all of the business and affairs of PJT Partners Holdings LP and its operating entity subsidiaries.

In this Quarterly Report on Form 10-Q, unless the context requires otherwise, the words “PJT Partners Inc.” refers to PJT Partners Inc., and “PJT Partners,” the “company,” “we,” “us” and “our” refer to PJT Partners Inc., together with its consolidated subsidiaries, including PJT Partners Holdings LP and its operating subsidiaries.

Forward-Looking Statements

Certain material presented herein contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. Forward-looking statements include the information concerning our results of operations, business strategies, financing plans, competitive position, potential growth opportunities, potential operating performance improvements, the effects of competition and the effects of future legislation or regulations. Forward-looking statements include all statements that are not historical facts and can be identified by the use of forward-looking terminology such as the words “believe,” “expect,” “plan,” “intend,” “anticipate,” “estimate,” “predict,” “potential,” “continue,” “may,” “might,” “should,” “could” or the negative of these terms or similar expressions.

Forward-looking statements involve risks, uncertainties and assumptions. Actual results may differ materially from those expressed in such forward-looking statements. You should not put undue reliance on any forward-looking statements contained herein. We undertake no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

The risk factors discussed in the “Risk Factors” section of our Annual Report on Form 10-K for the year ended December 31, 2015, as filed with the United States Securities and Exchange Commission (“SEC”) on February 29, 2016, as such factors may be updated from time to time in our periodic filings with the SEC, accessible on the SEC’s website at www.sec.gov, could cause our results to differ materially from those expressed in forward-looking statements. There may be other risks and uncertainties that we are unable to predict at this time or that are not currently expected to have a material adverse effect on its business. Any such risks could cause our results to differ materially from those expressed in forward-looking statements.

Website Disclosure

We use our website (www.pjtpartners.com) as a channel of distribution of company information. The information we post may be deemed material. Accordingly, investors should monitor the website, in addition to following our press releases, SEC filings and public conference calls and webcasts. In addition, you may automatically receive e-mail alerts and other information about our Company when you enroll your e-mail address by visiting the “Investor Relations” page of our website at ir.pjtpartners.com/investor-relations. The contents of our website are not, however, a part of this report.

 

 

 

2


 

PART I.

FINANCIAL INFORMATION 

ITEM 1.

FINANCIAL STATEMENTS

PJT Partners Inc.

Condensed Consolidated and Combined Statements of Financial Condition (Unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

June 30,

 

 

December 31,

 

 

 

2016

 

 

2015

 

Assets

 

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

103,200

 

 

$

82,322

 

Restricted Cash

 

 

 

 

 

827

 

Accounts Receivable (net of allowance for doubtful accounts of $2,173 and

   $862 at June 30, 2016 and December 31, 2015, respectively)

 

 

184,585

 

 

 

169,590

 

Intangible Assets, Net

 

 

18,014

 

 

 

23,646

 

Goodwill

 

 

72,286

 

 

 

75,769

 

Furniture, Equipment and Leasehold Improvements, Net

 

 

37,047

 

 

 

31,490

 

Other Assets

 

 

26,211

 

 

 

14,920

 

Deferred Tax Assets

 

 

74,043

 

 

 

68,688

 

Total Assets

 

$

515,386

 

 

$

467,252

 

 

 

 

 

 

 

 

 

 

Liabilities, Redeemable Non-Controlling Interests and Equity

 

 

 

 

 

 

 

 

Accrued Compensation and Benefits

 

$

78,960

 

 

$

81,221

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

29,147

 

 

 

29,533

 

Deferred Rent Liability

 

 

17,042

 

 

 

12,414

 

Taxes Payable

 

 

878

 

 

 

1,672

 

Deferred Revenue

 

 

5,159

 

 

 

477

 

Total Liabilities

 

 

131,186

 

 

 

125,317

 

 

 

 

 

 

 

 

 

 

Commitments and Contingencies

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Redeemable Non-Controlling Interests

 

 

298,785

 

 

 

309,855

 

 

 

 

 

 

 

 

 

 

Equity

 

 

 

 

 

 

 

 

Class A Common Stock, par value $0.01 per share (3,000,000,000 shares

   authorized; 17,966,456 issued and outstanding at June 30, 2016;

   17,966,456 issued and outstanding at December 31, 2015)

 

 

180

 

 

 

180

 

Class B Common Stock, par value $0.01 per share (1,000,000 shares

   authorized; 302 issued and outstanding at June 30, 2016;

   300 issued and outstanding at December 31, 2015)

 

 

 

 

 

 

Additional Paid-In Capital

 

 

97,825

 

 

 

43,132

 

Retained Deficit

 

 

(13,114

)

 

 

(11,184

)

Accumulated Other Comprehensive Income (Loss)

 

 

524

 

 

 

(48

)

Total Equity

 

 

85,415

 

 

 

32,080

 

Total Liabilities, Redeemable Non-Controlling Interests

   and Equity

 

$

515,386

 

 

$

467,252

 

 

See notes to condensed consolidated and combined financial statements.

 

 

 

3


 

PJT Partners Inc.

Condensed Consolidated and Combined Statements of Operations (Unaudited)

(Dollars in Thousands, Except Share and Per Share Data)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Revenues

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees

 

$

59,078

 

 

$

46,592

 

 

$

140,632

 

 

$

105,266

 

Placement Fees

 

 

28,652

 

 

 

25,189

 

 

 

60,603

 

 

 

48,323

 

Interest Income and Other

 

 

1,554

 

 

 

688

 

 

 

3,353

 

 

 

1,205

 

Total Revenues

 

 

89,284

 

 

 

72,469

 

 

 

204,588

 

 

 

154,794

 

Expenses

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Compensation and Benefits

 

 

71,964

 

 

 

60,125

 

 

 

160,135

 

 

 

139,760

 

Occupancy and Related

 

 

6,622

 

 

 

8,762

 

 

 

13,040

 

 

 

14,044

 

Travel and Related

 

 

2,802

 

 

 

3,055

 

 

 

5,547

 

 

 

6,359

 

Professional Fees

 

 

6,691

 

 

 

3,007

 

 

 

10,187

 

 

 

5,536

 

Communications and Information Services

 

 

2,647

 

 

 

1,761

 

 

 

4,700

 

 

 

3,167

 

Depreciation and Amortization

 

 

4,025

 

 

 

1,508

 

 

 

7,926

 

 

 

3,035

 

Other Expenses

 

 

4,788

 

 

 

690

 

 

 

10,575

 

 

 

4,021

 

Total Expenses

 

 

99,539

 

 

 

78,908

 

 

 

212,110

 

 

 

175,922

 

Loss Before Provision (Benefit) for Taxes

 

 

(10,255

)

 

 

(6,439

)

 

 

(7,522

)

 

 

(21,128

)

Provision (Benefit) for Taxes

 

 

(5,539

)

 

 

584

 

 

 

(4,237

)

 

 

2,002

 

Net Loss

 

 

(4,716

)

 

$

(7,023

)

 

 

(3,285

)

 

$

(23,130

)

Net Loss Attributable to Redeemable

  Non-Controlling Interests

 

 

(4,393

)

 

 

 

 

 

 

(3,217

)

 

 

 

 

Net Loss Attributable to PJT Partners Inc.

 

$

(323

)

 

 

 

 

 

$

(68

)

 

 

 

 

Net Loss Per Share of Class A Common

  Stock — Basic and Diluted

 

$

(0.02

)

 

 

 

 

 

$

(0.00

)

 

 

 

 

Weighted-Average Shares of Class A Common Stock

  Outstanding — Basic and Diluted

 

 

18,264,742

 

 

 

 

 

 

 

18,263,365

 

 

 

 

 

Dividends Declared Per Share of Class A

  Common Stock

 

$

0.05

 

 

 

 

 

 

$

0.10

 

 

 

 

 

Revenues Earned from Affiliates

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Advisory Fees

 

$

 

 

$

960

 

 

$

 

 

$

3,410

 

Placement Fees

 

$

 

 

$

10,300

 

 

$

 

 

$

11,368

 

 

See notes to condensed consolidated and combined financial statements.

 

 

 

4


 

PJT Partners Inc.

Condensed Consolidated and Combined Statements of Comprehensive Income (Loss) (Unaudited)

(Dollars in Thousands)

 

 

 

Three Months Ended

 

 

Six Months Ended

 

 

 

June 30,

 

 

June 30,

 

 

 

2016

 

 

2015

 

 

2016

 

 

2015

 

Net Loss

 

$

(4,716

)

 

$

(7,023

)

 

$

(3,285

)

 

$

(23,130

)

Other Comprehensive Income (Loss), Net of Tax

  Currency Translation Adjustment

 

 

436

 

 

 

(255

)

 

 

572

 

 

 

828

 

Comprehensive Loss

 

 

(4,280

)

 

$

(7,278

)

 

 

(2,713

)

 

$

(22,302

)

Less

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Comprehensive Loss Attributable to Redeemable

  Non-Controlling Interests

 

 

(4,124

)

 

 

 

 

 

 

(2,884

)

 

 

 

 

Comprehensive Income (Loss) Attributable to

   PJT Partners Inc.

 

$

(156

)

 

 

 

 

 

$

171

 

 

 

 

 

 

See notes to condensed consolidated and combined financial statements.

 

 

 

5


 

 

PJT Partners Inc.

Condensed Consolidated and Combined Statements of Changes in Equity (Unaudited)

(Dollars in Thousands, Except Share Data)

 

 

 

Shares

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accumulated

 

 

Former

 

 

 

 

 

 

Redeemable

 

 

 

Class A

 

 

Class B

 

 

Class A

 

 

Class B

 

 

Additional

 

 

 

 

 

 

Other

 

 

Parent

 

 

 

 

 

 

Non-

 

 

 

Common

 

 

Common

 

 

Common

 

 

Common

 

 

Paid-In

 

 

Retained

 

 

Comprehensive

 

 

Company

 

 

 

 

 

 

Controlling

 

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Stock

 

 

Capital

 

 

Deficit

 

 

Income (Loss)

 

 

Investment

 

 

Total

 

 

Interests

 

Balance at December 31, 2014

 

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1,010

 

 

$

331,310

 

 

$

332,320

 

 

$

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(23,130

)

 

 

(23,130

)

 

 

 

Currency Translation Adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

828

 

 

 

 

 

 

828

 

 

 

 

Net Decrease in Former Parent Company

   Investment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(26,165

)

 

 

(26,165

)

 

 

 

Balance at June 30, 2015

 

 

 

 

 

 

 

$

 

 

$

 

 

$

 

 

$

 

 

$

1,838

 

 

$

282,015

 

 

$

283,853

 

 

$

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at December 31, 2015

 

 

17,966,456

 

 

 

300

 

 

$

180

 

 

$

 

 

$

43,132

 

 

$

(11,184

)

 

$

(48

)

 

$

 

 

$

32,080

 

 

$

309,855

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(68

)

 

 

 

 

 

 

 

 

(68

)

 

 

(3,217

)

Currency Translation Adjustment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

572

 

 

 

 

 

 

572

 

 

 

 

Dividends

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,862

)

 

 

 

 

 

 

 

 

(1,862

)

 

 

 

Non-Cash Contributions from Former

  Parent

 

 

 

 

 

 

 

 

 

 

 

 

 

 

4,061

 

 

 

 

 

 

 

 

 

 

 

 

4,061

 

 

 

 

Equity-Based Compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

23,937

 

 

 

 

 

 

 

 

 

 

 

 

23,937

 

 

 

18,225

 

Forfeiture Liability for Equity Awards

 

 

 

 

 

 

 

 

 

 

 

 

 

 

653

 

 

 

 

 

 

 

 

 

 

 

 

653

 

 

 

 

Net Share Settlement

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(36

)

Issuance of Shares of Class B Common

   Stock

 

 

 

 

 

4

 

 

 

 

 

 

 

 

 

(3,401

)

 

 

 

 

 

 

 

 

 

 

 

(3,401

)

 

 

3,401

 

Forfeitures of Shares of Class B Common

   Stock

 

 

 

 

 

(2

)

 

 

 

 

 

 

 

 

1,511

 

 

 

 

 

 

 

 

 

 

 

 

1,511

 

 

 

(1,511

)

Adjustment of Redeemable Non-

  Controlling Interests to Redemption

  Value

 

 

 

 

 

 

 

 

 

 

 

 

 

 

27,932

 

 

 

 

 

 

 

 

 

 

 

 

27,932

 

 

 

(27,932

)

Balance at June 30, 2016

 

 

17,966,456

 

 

 

302

 

 

$

180

 

 

$

 

 

$

97,825

 

 

$

(13,114

)

 

$

524

 

 

$

 

 

$

85,415

 

 

$

298,785

 

 

See notes to condensed consolidated and combined financial statements.

 

 

 

6


 

PJT Partners Inc.

Condensed Consolidated and Combined Statements of Cash Flows (Unaudited)

(Dollars in Thousands)

 

 

 

Six Months Ended June 30,

 

 

 

2016

 

 

2015

 

Operating Activities

 

 

 

 

 

 

 

 

Net Loss

 

$

(3,285

)

 

$

(23,130

)

Adjustments to Reconcile Net Loss to Net Cash Provided by

   Operating Activities

 

 

 

 

 

 

 

 

Equity-Based Compensation Expense

 

 

42,185

 

 

 

19,345

 

Depreciation Expense

 

 

2,342

 

 

 

1,709

 

Amortization Expense

 

 

5,584

 

 

 

1,326

 

Bad Debt Expense (Recovery)

 

 

1,185

 

 

 

(740

)

Foreign Currency Transaction Gains

 

 

(320

)

 

 

 

Deferred Taxes

 

 

(1,750

)

 

 

 

Other Non-Cash Amounts Included in Net Loss

 

 

 

 

 

(365

)

Cash Flows Due to Changes in Operating Assets and Liabilities

 

 

 

 

 

 

 

 

Accounts Receivable

 

 

(16,211

)

 

 

29,912

 

Receivable from Affiliates

 

 

 

 

 

(8,273

)

Due from Blackstone

 

 

 

 

 

2,750

 

Deferred Tax Assets

 

 

(228

)

 

 

 

Other Assets

 

 

(11,853

)

 

 

(3,447

)

Accrued Compensation and Benefits

 

 

(815

)

 

 

46,127

 

Accounts Payable, Accrued Expenses and Other Liabilities

 

 

4,641

 

 

 

10,048

 

Deferred Rent Liability

 

 

5,049

 

 

 

2,187

 

Taxes Payable

 

 

(795

)

 

 

2

 

Deferred Revenue

 

 

4,679

 

 

 

(57

)

Net Cash Provided by Operating Activities

 

 

30,408

 

 

 

77,394

 

Investing Activities

 

 

 

 

 

 

 

 

Proceeds from Repayment of Note Issued to Employee

 

 

538

 

 

 

 

Purchases of Furniture, Equipment and Leasehold Improvements

 

 

(8,716

)

 

 

 

Change in Restricted Cash

 

 

800

 

 

 

 

Net Cash Used in Investing Activities

 

 

(7,378

)

 

 

 

Financing Activities

 

 

 

 

 

 

 

 

Dividends

 

 

(1,862

)

 

 

 

Principal Payments on Capital Lease Obligations

 

 

(6

)

 

 

 

Employee Taxes Paid for Shares Withheld for Taxes

 

 

(36

)

 

 

 

Net Decrease from Former Parent Company Investment

 

 

 

 

 

(45,146

)

Net Cash Used in Financing Activities

 

 

(1,904

)

 

 

(45,146

)

Effect of Exchange Rate Changes on Cash and Cash Equivalents

 

 

(248

)

 

 

 

Net Increase in Cash and Cash Equivalents

 

 

20,878

 

 

 

32,248

 

Cash and Cash Equivalents, Beginning of Period

 

 

82,322

 

 

 

38,533

 

Cash and Cash Equivalents, End of Period

 

$

103,200

 

 

$

70,781

 

Supplemental Disclosure of Cash Flows Information

 

 

 

 

 

 

 

 

Payments for Income Taxes, including those to Former Parent

 

$

3,886

 

 

$

1,148

 

Supplemental Disclosure of Significant Non-Cash Activities

 

 

 

 

 

 

 

 

Non-Cash Contributions from Former Parent

 

$

4,061

 

 

$

 

 

See notes to condensed consolidated and combined financial statements.

 

 

 

7


PJT Partners Inc.

Notes to Condensed Consolidated and Combined Financial Statements (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

1.

ORGANIZATION 

On October 7, 2014, the board of directors of the general partner of The Blackstone Group L.P. (the “former Parent” or “Blackstone”) approved a plan to separate Blackstone’s strategic advisory services, restructuring and reorganization advisory services and Park Hill Group businesses from Blackstone and combine the separated business with PJT Capital (as defined below) to form PJT Partners (“PJT Partners” or the “Company”), which separation occurred on October 1, 2015.

On October 1, 2015, Blackstone distributed on a pro rata basis to its common unitholders all of the issued and outstanding shares of Class A common stock of PJT Partners Inc. held by it. This pro rata distribution is referred to as the “Distribution.” The separation of the PJT Partners business from Blackstone and related transactions, including the Distribution, the internal reorganization that preceded the Distribution and the acquisition by PJT Partners of PJT Capital LP (together with its general partner and their respective subsidiaries, “PJT Capital”) that occurred substantially concurrently with the Distribution, is referred to as the “spin-off.”

The spin-off, including the consummation of the acquisition of PJT Capital and the Distribution is described in Note 3. “Reorganization and Spin-off” and information regarding the Class A and Class B common stock issued in connection with the spin-off and Redeemable Non-Controlling Interests is described in Note 11. “Stockholders’ Equity” in the “Notes to Consolidated and Combined Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015. As of June 30, 2016, there were 17,966,456 and 302 shares, respectively, of Class A common stock and Class B common stock issued and outstanding.

Following the spin-off, PJT Partners Inc. became the sole general partner of PJT Partners Holdings LP. PJT Partners Inc. owns less than 100% of the economic interest in PJT Partners Holdings LP, but has 100% of the voting power and controls the management of PJT Partners Holdings LP. As of June 30, 2016, the non-controlling interest was 47.2%.

PJT Partners delivers a wide array of strategic advisory, restructuring and special situations and private fund advisory and placement services to corporations, financial sponsors, institutional investors and governments around the world. The Company offers a balanced portfolio of advisory services designed to help its clients realize major corporate milestones and solve complex issues. Also, through the Park Hill Group, the Company provides private fund advisory and placement services for alternative investment managers, including private equity funds, real estate funds and hedge funds.

 

 

2.

SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The Company prepared the accompanying unaudited condensed consolidated and combined financial statements in conformity with accounting principles generally accepted in the United States of America (“GAAP”) for interim financial information and the instructions to Form 10-Q. The condensed consolidated and combined financial statements, including these notes, are unaudited and exclude some of the disclosures required in audited financial statements. Management believes it has made all necessary adjustments (consisting of only normal recurring items) so that the condensed consolidated and combined financial statements are presented fairly and that estimates made in preparing its condensed consolidated and combined financial statements are reasonable and prudent. The operating results presented for interim periods are not necessarily indicative of the results that may be expected for any other interim period or for the entire year. These condensed consolidated and combined financial statements should be read in conjunction with the audited consolidated and combined financial statements included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015 filed with the SEC. For a comprehensive disclosure of the Company’s significant accounting policies, see Note 2. “Summary of Significant Accounting Policies” in the “Notes to Consolidated and Combined Financial Statements” in “Part II. Item 8. Financial Statements and Supplementary Data” in the Company’s Annual Report on Form 10-K for the year ended December 31, 2015.

 

8


PJT Partners Inc.

Notes to Condensed Consolidated and Combined Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

As the sole general partner of PJT Partners Holdings LP, PJT Partners Inc. operates and controls all of the business and affairs and consolidates the financial results of PJT Partners Holdings LP and its subsidiaries. The Company operates through the following subsidiaries: PJT Partners LP, Park Hill Group LLC, PJT Partners (UK) Limited and PJT Partners (HK) Limited.

The Company did not operate as an independent, stand-alone entity for all periods included in these condensed consolidated and combined financial statements. Prior to the spin-off on October 1, 2015, the Company’s operations were included in Blackstone’s results as they were historically managed as part of Blackstone, in conformity with GAAP. For periods prior to October 1, 2015, the accompanying condensed consolidated and combined financial statements were prepared on a stand-alone basis and were derived from the consolidated financial statements and accounting records of Blackstone. Prior to October 1, 2015, the condensed consolidated and combined financial statements included certain assets that were historically held at the Blackstone corporate level but were specifically identifiable or otherwise attributable to these financial statements, primarily goodwill and intangible assets. Additionally prior to October 1, 2015, Blackstone’s net investment in PJT Partners is shown as Former Parent Company Investment in lieu of Stockholders’ Equity in the condensed consolidated and combined financial statements.

All intercompany transactions have been eliminated for all periods presented.

The Condensed Consolidated and Combined Statements of Operations reflect intercompany expense allocations made to the Company by Blackstone for certain corporate functions and for shared services provided by Blackstone prior to October 1, 2015. Where possible, these allocations were made on a specific identification basis and, in other cases, these expenses were allocated by Blackstone based on a pro rata basis of headcount, usage or some other basis depending on the nature of the allocated cost. Expenses without a specific consumption based indicator were allocated based on revenues adjusted for factors such as the size and complexity of the business. See Note 10. “Transactions with Related Parties” for further information on expenses allocated by Blackstone.

Both the Company and Blackstone consider the basis on which the expenses were previously allocated to be a reasonable reflection of the utilization of services provided to or the benefit received by the Company during the periods presented prior to October 1, 2015. The allocations may not, however, reflect the expense the Company would have incurred as an independent, publicly traded company for the periods presented. Actual costs that may have been incurred if PJT Partners had been a stand-alone company would depend on a number of factors, including the chosen organizational structure, which functions were outsourced or performed by employees and strategic decisions made in areas such as information technology and infrastructure. Following the spin-off, the Company has been performing these functions using its own resources or purchased services. For an interim period, however, some of these functions may continue to be provided by Blackstone, pursuant to a transition services agreement for a period of 24 months with the option for Blackstone or the Company to terminate any given service with 60 days’ notice. See Note 10. “Transactions with Related Parties” for further information on services provided by Blackstone to the Company for the three and six months ended June 30, 2016.

The Company changed the presentation of certain prior year financial statement amounts to conform to the current year presentation. Previously, the Company reported Interest Income and Other Revenue in separate financial statement captions and combined Depreciation and Amortization Expense with Other Expenses. These changes in presentation had no effect on Net Income (Loss).

 

9


PJT Partners Inc.

Notes to Condensed Consolidated and Combined Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

During the second quarter of 2016, a misstatement was identified in the accounting for certain partnership interests in PJT Partners Holdings LP, which resulted in a reclassification from Redeemable Non-Controlling Interests to Retained Deficit and Additional Paid-In Capital. In accordance with Accounting Standards Codification (“ASC”) Topic 250, Accounting Changes and Error Corrections, the Company evaluated the materiality of the misstatement from quantitative and qualitative perspectives, and concluded that it was immaterial to the prior periods. Consequently, the Company revised the historical consolidated financial information presented herein. The immaterial restatement resulted in a reduction in Retained Deficit and an increase in Additional Paid-In Capital of $99.8 million and $43.1 million, respectively, and a decrease in Redeemable Non-Controlling Interests of $142.9 million in the Company’s Condensed Consolidated and Combined Statements of Financial Condition and Statements of Changes in Equity as of December 31, 2015. This immaterial restatement had no impact in the Company’s Condensed Consolidated and Combined Statements of Operations and Statements of Cash Flows.

Contingencies and Litigation

The Company records loss contingencies if (a) information available prior to issuance of the condensed consolidated and combined financial statements indicates that it is probable that an asset had been impaired or a liability had been incurred at the date of the condensed consolidated and combined financial statements, and (b) the amount of loss can be reasonably estimated. If one or both criteria for accrual are not met, but there is at least a reasonable possibility that a loss will occur, the Company does not record an accrual for a loss contingency but describes the contingency and provides detail, when possible, of the estimated potential loss or range of loss. If an estimate cannot be made, a statement to that effect is made. Costs incurred with defending matters are expensed as incurred. Accruals related to loss contingencies are recorded in Other Expenses in the Condensed Consolidated and Combined Statements of Operations.

Insurance Reimbursements

Receipts from insurance reimbursements up to the amount of the losses recognized are considered recoveries. These recoveries are accounted for when they are probable of receipt. Insurance recoveries are not recognized prior to the recognition of the related loss. Any receivable for insurance recoveries is recorded separately from the corresponding liability, and only if recovery is determined to be probable and reasonably estimable. Insurance reimbursements are recorded in Other Expenses in the Condensed Consolidated and Combined Statements of Operations.

Recent Accounting Developments

In June 2014, the Financial Accounting Standards Board (“FASB”) issued amended guidance on revenue from contracts with customers. The guidance requires that an entity should recognize revenue to depict the transfer of promised goods or services to customers in an amount that reflects the consideration to which the entity expects to be entitled in exchange for those goods or services. An entity is required to (a) identify the contract(s) with a customer, (b) identify the performance obligations in the contract, (c) determine the transaction price, (d) allocate the transaction price to the performance obligations in the contract, and (e) recognize revenue when (or as) the entity satisfies a performance obligation. In determining the transaction price, an entity may include variable consideration only to the extent that it is probable that a significant reversal in the amount of cumulative revenue recognized would not occur when the uncertainty associated with the variable consideration is resolved. The guidance introduces new qualitative and quantitative disclosure requirements about contracts with customers including revenue and impairments recognized, disaggregation of revenue and information about contract balances and performance obligations. Information is required about significant judgments and changes in judgments in determining the timing of satisfaction of performance obligations and determining the transaction price and amounts allocated to performance obligations. Additional disclosures are required about assets recognized from the costs to obtain or fulfill a contract. As originally proposed, the guidance was effective prospectively for annual periods beginning after December 15, 2016 including interim periods within that reporting period. In recent re-deliberations, the FASB approved a one-year deferral of the effective date of this guidance, such that it will be effective for annual reporting periods beginning after December 31, 2017, with early adoption permitted for annual periods beginning

 

10


PJT Partners Inc.

Notes to Condensed Consolidated and Combined Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

after December 15, 2016. The Company is currently evaluating the impact of the new guidance and the method of adoption on the condensed consolidated and combined financial statements.

In September 2015, the FASB issued guidance on measurement-period adjustments with respect to business combinations. The amendments apply to entities that have reported provisional amounts for items in a business combination for which the accounting is incomplete by the end of the reporting period in which the combination occurs and during the measurement period have an adjustment to provisional amounts recognized. An entity is now required to recognize adjustments to provisional amounts that are identified during the measurement period in the reporting period in which the adjustment amounts are determined, not on a retrospective basis as previously required. The amendments apply prospectively to adjustments to provisional amounts that occur in fiscal years beginning after December 15, 2015, including interim periods within those fiscal years. Adoption of this guidance did not have a material impact on the Company’s condensed consolidated and combined financial statements.

In February 2016, the FASB issued new guidance regarding leases. The guidance requires lessees to recognize, on the balance sheet, assets and liabilities for the rights and obligations created by leases. Entities are also required to provide enhanced disclosure about leasing arrangements. The amendments retain lease classifications, distinguishing finance leases from operating leases, using criteria that are substantially similar for distinguishing capital leases from operating leases in previous guidance. The guidance is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018, with early adoption permitted. Adoption requires a modified retrospective approach. The Company is currently assessing the impact the adoption of this guidance will have on its condensed consolidated and combined financial statements.

In March 2016, the FASB issued amendments to the guidance on employee share-based payment accounting intended to improve the accounting for employee share-based payments. This amended guidance simplifies several aspects of the accounting for share-based payment award transactions, including the income tax consequences, classification of awards as either equity or liabilities and classification in the statement of cash flows. The amendments are effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. The Company elected to early adopt the new guidance in the second quarter of fiscal year 2016, which requires the Company to reflect any adjustments as of January 1, 2016, the beginning of the annual period that includes the interim period of adoption. The primary impact of the adoption was the recognition of excess tax benefits in the Company’s Provision for Taxes rather than Additional Paid-In Capital for all periods in the year ended December 31, 2016. As no excess tax benefits were previously recognized during the three months ended March 31, 2016, no adjustments are required to show the impact to the previously reported amounts in the Company’s Quarterly Report on Form 10-Q for the period ended March 31, 2016. Additionally, there were no previously unrecognized excess tax benefits. The Company elected to apply the presentation requirements for cash flows related to excess tax benefits retrospectively and prior periods have been adjusted to remove the amounts of excess tax benefits presented in operating and financing activities in the Condensed Consolidated and Combined Statements of Cash Flows. Such prior period adjustment was immaterial. Additionally, the Company has retrospectively included in financing activities on the Condensed Consolidated and Combined Statements of Cash Flows amounts for employee taxes paid in instances when the Company withheld shares for tax withholding purposes. The Company has elected to maintain its current accounting policy of estimating forfeitures in its computation of equity-based compensation expense. Upon the adoption of this guidance, the Company excluded the estimated impact of excess tax benefits and tax deficiencies from the calculation of assumed proceeds for determining diluted net income (loss) per share using the treasury stock method. There was no impact on net loss per share of Class A common stock.

In June 2016, the FASB issued guidance regarding the measurement of credit losses on financial instruments. The new guidance replaces the incurred loss impairment methodology with a methodology that reflects expected credit losses and requires consideration of a broader range of reasonable and supportable information to inform credit loss estimates. The guidance is effective for fiscal years beginning after December 15, 2019, including interim periods within those fiscal years. Early adoption is permitted for fiscal years beginning after December 15, 2018. The Company is currently assessing the impact the adoption of this guidance will have on its condensed consolidated and combined financial statements.

 

 

 

11


PJT Partners Inc.

Notes to Condensed Consolidated and Combined Financial Statements – Continued (Unaudited)

(All Dollars Are in Thousands, Except Share and Per Share Data, Except Where Noted)

 

3.

BUSINESS COMBINATIONS 

Acquisition of PJT Capital LP

On October 1, 2015, PJT Partners Holdings LP acquired all of the outstanding equity interests in PJT Capital LP. The effect of the transaction was a transfer of PJT Capital LP interests to PJT Partners Holdings LP in exchange for unvested PJT Partners Holdings LP units. No other consideration was transferred. This transaction was accounted for as a business combination and PJT Capital LP’s operating results have been included in the Company’s financial statements from the date of the transaction. The Company incurred $0.1 million of costs related to the acquisition which were included in Professional Fees in the Condensed Consolidated and Combined Statements of Operations in the fourth quarter of 2015.

The following table summarizes the estimated allocation of the purchase price for PJT Capital LP at the acquisition date as well as measurement period adjustments to date:

 

 

 

December 31,

2015

 

 

Measurement

Period

Adjustments

 

 

June 30,

2016

 

Assets

 

 

 

 

 

 

 

 

 

 

 

 

Cash

 

$

12,653

 

 

$

 

 

$

12,653

 

Accounts Receivable

 

 

1,170

 

 

 

 

 

 

1,170

 

Furniture, Equipment and Leasehold Improvements

 

 

334

 

 

 

 

 

 

334

 

Other Assets

 

 

362

 

 

 

 

 

 

362

 

Intangible Assets

 

 

13,300

 

 

 

 

 

 

13,300

 

Deferred Tax Assets

 

 

 

 

 

3,483

 

 

 

3,483

 

Goodwill

 

 

6,896

 

 

 

(3,483

)

 

 

3,413

 

 

 

 

34,715