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Segment Operating Results
 6 Months Ended
Jun. 30, 2014
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 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 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 three and six months ended June 30, 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: a) amortization costs associated with the modification and vesting of LP Units and certain other awards, b) the amortization of intangible assets associated with certain acquisitions, c) compensation charges associated with deferred consideration, retention awards and related compensation for The Lexicon Partnership LLP ("Lexicon") employees and d) professional fees for the expense associated with share based awards which will be settled in Class A Shares and which reflect required adjustments for changes in the Company's share price due to changes in employment status.
The Company evaluates segment results based on net revenues and pre-tax income, both including and excluding the impact of the Other Expenses.
No clients accounted for more than 10% of the Company’s consolidated Net Revenues for the three and six months ended June 30, 2014.
The following information presents each segment’s contribution.

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Investment Banking
 
 
 
 
 
 
 
Net Revenues (1)
$
191,323

 
$
182,605

 
$
319,174

 
$
314,201

Operating Expenses
148,751

 
138,389

 
254,283

 
243,455

Other Expenses (2)
4,237

 
9,456

 
7,451

 
19,311

Operating Income
38,335

 
34,760

 
57,440

 
51,435

Income from Equity Method Investments
813

 
290

 
503

 
460

Pre-Tax Income from Continuing Operations
$
39,148

 
$
35,050

 
$
57,943

 
$
51,895

Identifiable Segment Assets
$
671,290

 
$
562,690

 
$
671,290

 
$
562,690

Investment Management
 
 
 
 
 
 
 
Net Revenues (1)
$
26,373

 
$
24,192

 
$
47,635

 
$
45,227

Operating Expenses
21,591

 
20,175

 
41,162

 
40,885

Other Expenses (2)
82

 
596

 
164

 
1,346

Operating Income
4,700

 
3,421

 
6,309

 
2,996

Income from Equity Method Investments
1,225

 
725

 
1,776

 
1,311

Pre-Tax Income from Continuing Operations
$
5,925

 
$
4,146

 
$
8,085

 
$
4,307

Identifiable Segment Assets
$
476,607

 
$
470,273

 
$
476,607

 
$
470,273

Total
 
 
 
 
 
 
 
Net Revenues (1)
$
217,696

 
$
206,797

 
$
366,809

 
$
359,428

Operating Expenses
170,342

 
158,564

 
295,445

 
284,340

Other Expenses (2)
4,319

 
10,052

 
7,615

 
20,657

Operating Income
43,035

 
38,181

 
63,749

 
54,431

Income from Equity Method Investments
2,038

 
1,015

 
2,279

 
1,771

Pre-Tax Income from Continuing Operations
$
45,073

 
$
39,196

 
$
66,028

 
$
56,202

Identifiable Segment Assets
$
1,147,897

 
$
1,032,963

 
$
1,147,897

 
$
1,032,963


(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,
 
2014
 
2013
 
2014
 
2013
Investment Banking (A)
$
(928
)
 
$
(849
)
 
$
(1,581
)
 
$
(636
)
Investment Management (B)
(428
)
 
(897
)
 
(1,081
)
 
(1,299
)
Total Other Revenue, net
$
(1,356
)
 
$
(1,746
)
 
$
(2,662
)
 
$
(1,935
)
 
(A)
Investment Banking Other Revenue, net, includes interest expense on the Senior Notes of $1,105 and $2,210 for the three and six months ended June 30, 2014, respectively, and $1,095 and $2,183 for the three and six months ended June 30, 2013, respectively.
(B)
Investment Management Other Revenue, net, includes interest expense on the Senior Notes of $932 and $1,864 for the three and six months ended June 30, 2014, respectively, and $924 and $1,843 for the three and six months ended June 30, 2013, respectively.

(2)
Other Expenses are as follows:

 
For the Three Months Ended June 30,
 
For the Six Months Ended June 30,
 
2014
 
2013
 
2014
 
2013
Investment Banking
 
 
 
 
 
 
 
Amortization of LP Units and Certain Other Awards
$
—

 
$
4,300

 
$
—

 
$
9,209

Acquisition Related Compensation Charges
2,565

 
5,156

 
5,779

 
10,102

Professional Fees
1,672

 
—

 
1,672

 
—

Total Investment Banking
4,237

 
9,456

 
7,451

 
19,311

Investment Management
 
 
 
 
 
 
 
Amortization of LP Units and Certain Other Awards
—

 
514

 
—

 
1,182

Intangible Asset Amortization
82

 
82

 
164

 
164

Total Investment Management
82

 
596

 
164

 
1,346

Total Other Expenses
$
4,319

 
$
10,052

 
$
7,615

 
$
20,657



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,
 
2014
 
2013
 
2014
 
2013
Net Revenues: (1)
 
 
 
 
 
 
 
United States
$
142,502

 
$
157,595

 
$
250,429

 
$
248,451

Europe and Other
47,997

 
35,497

 
84,785

 
74,866

Latin America
28,553

 
15,451

 
34,257

 
38,046

Total
$
219,052

 
$
208,543

 
$
369,471

 
$
361,363

 
(1)
Excludes Other Revenue and Interest Expense.
The substantial majority of the Company’s long-lived assets are located in the United States and the United Kingdom.