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Segment Operating Results
 9 Months Ended
Sep. 30, 2016
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 September 30, 2016, the Company deconsolidated the assets and liabilities of its Mexican Private Equity business, which was in the Investment Management segment (see Note 8 for further information). On December 31, 2015, the Company deconsolidated the assets and liabilities of Atalanta Sosnoff, which was in the Investment Management segment, and accounted for its interest as an equity method investment from that date forward.
The Company’s segment information for the three and nine months ended September 30, 2016 and 2015 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 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 in 2015 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, separation benefits and costs associated with the termination of certain contracts within the Company’s Evercore ISI business and the finalization of a matter associated with the wind-down of the Company’s U.S. Private Equity business.
•
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 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.
One client accounted for more than 10% (11%) of the Company's consolidated Net Revenues for the three months ended September 30, 2016.
The following information presents each segment’s contribution.
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Investment Banking
 
 
 
 
 
 
 
Net Revenues (1)
$
368,634

 
$
285,918

 
$
936,504

 
$
746,875

Operating Expenses
268,666

 
220,565

 
707,846

 
586,200

Other Expenses (2)
17,422

 
30,131

 
75,854

 
85,168

Operating Income
82,546

 
35,222

 
152,804

 
75,507

Income (Loss) from Equity Method Investments
(112
)
 
(528
)
 
(94
)
 
238

Pre-Tax Income
$
82,434

 
$
34,694

 
$
152,710

 
$
75,745

Identifiable Segment Assets
$
1,114,565

 
$
919,000

 
$
1,114,565

 
$
919,000

Investment Management
 
 
 
 
 
 
 
Net Revenues (1)
$
17,680

 
$
23,033

 
$
58,179

 
$
68,155

Operating Expenses
14,843

 
18,275

 
46,357

 
58,050

Other Expenses (2)
298

 
28,082

 
811

 
31,605

Operating Income (Loss)
2,539

 
(23,324
)
 
11,011

 
(21,500
)
Income from Equity Method Investments
1,290

 
1,457

 
4,223

 
3,796

Pre-Tax Income (Loss)
$
3,829

 
$
(21,867
)
 
$
15,234

 
$
(17,704
)
Identifiable Segment Assets
$
347,065

 
$
411,389

 
$
347,065

 
$
411,389

Total
 
 
 
 
 
 
 
Net Revenues (1)
$
386,314

 
$
308,951

 
$
994,683

 
$
815,030

Operating Expenses
283,509

 
238,840

 
754,203

 
644,250

Other Expenses (2)
17,720

 
58,213

 
76,665

 
116,773

Operating Income
85,085

 
11,898

 
163,815

 
54,007

Income from Equity Method Investments
1,178

 
929

 
4,129

 
4,034

Pre-Tax Income
$
86,263

 
$
12,827

 
$
167,944

 
$
58,041

Identifiable Segment Assets
$
1,461,630

 
$
1,330,389

 
$
1,461,630

 
$
1,330,389


(1)
Net revenues include Other Revenue, net, allocated to the segments as follows:
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Investment Banking (A)
$
200

 
$
357

 
$
270

 
$
(2,874
)
Investment Management (B)
522

 
(779
)
 
337

 
(2,243
)
Total Other Revenue, net
$
722

 
$
(422
)
 
$
607

 
$
(5,117
)
(A)
Investment Banking Other Revenue, net, includes interest expense on the Notes Payable, subordinated borrowings and the line of credit of $2,592 and $6,946 for the three and nine months ended September 30, 2016, respectively, and $1,452 and $4,889 for the three and nine months ended September 30, 2015, respectively.
(B)
Investment Management Other Revenue, net, includes interest expense on the Notes Payable and the line of credit of $670 for the nine months ended September 30, 2016 and $962 and $2,874 for the three and nine months ended September 30, 2015, respectively.
(2)
Other Expenses are as follows:
 
For the Three Months Ended September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Investment Banking
 
 
 
 
 
 
 
Amortization of LP Units / Interests and Certain Other Awards
$
13,859

 
$
21,980

 
$
66,356

 
$
66,123

Other Acquisition Related Compensation Charges
—

 
—

 
—

 
1,537

Special Charges
—

 
—

 
—

 
2,151

Acquisition and Transition Costs
41

 
538

 
(692
)
 
1,928

Fair Value of Contingent Consideration
984

 
2,797

 
1,671

 
2,797

Intangible Asset and Other Amortization
2,538

 
4,816

 
8,519

 
10,632

Total Investment Banking
17,422

 
30,131

 
75,854

 
85,168

Investment Management
 
 
 
 
 
 
 
Special Charges
—

 
28,000

 
—

 
31,348

Acquisition and Transition Costs
298

 
—

 
702

 
11

Intangible Asset and Other Amortization
—

 
82

 
109

 
246

Total Investment Management
298

 
28,082

 
811

 
31,605

Total Other Expenses
$
17,720

 
$
58,213

 
$
76,665

 
$
116,773


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 September 30,
 
For the Nine Months Ended September 30,
 
2016
 
2015
 
2016
 
2015
Net Revenues: (1)
 
 
 
 
 
 
 
United States
$
322,128

 
$
238,231

 
$
714,983

 
$
603,239

Europe and Other
54,690

 
61,838

 
247,371

 
189,976

Latin America
8,774

 
9,304

 
31,722

 
26,932

Total
$
385,592

 
$
309,373

 
$
994,076

 
$
820,147

(1) Excludes Other Revenue and Interest Expense.
The Company’s total assets are located in the following geographical areas:
 
September 30, 2016
 
December 31, 2015
Total Assets:
 
 
 
United States
$
1,196,511

 
$
1,135,570

Europe and Other
179,333

 
221,358

Latin America
85,786

 
122,243

Total
$
1,461,630

 
$
1,479,171