XML 40 R26.htm IDEA: XBRL DOCUMENT v3.21.1
Segment Operating Results
 3 Months Ended
Mar. 31, 2021
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 Institutional Asset Management and Wealth Management and interests in private equity funds which are not managed by the Company. The Company completed the sales of its ECB businesses in 2020. In addition, in 2020, the Company completed the transition of its advisory presence in Mexico to a strategic alliance relationship with a newly-formed independent strategic advisory firm founded by certain former employees.
The Company's segment information for the three months ended March 31, 2021 and 2020 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.
Other Revenue, net, included in each segment's Net Revenues includes the following:
•Interest income and income (losses) earned on investment securities, including the Company's investment funds and futures contracts which are used as an economic hedge against the Company's deferred cash compensation program, certificates of deposit, cash and cash equivalents and on the Company’s debt security investment in G5
•Adjustments to amounts due pursuant to the Company’s tax receivable agreement, subsequent to its initial establishment, related to changes in enacted tax rates
•Gains (losses) resulting from foreign currency fluctuations
•Realized and unrealized gains and losses on interests in Private Equity funds which are not managed by the Company
•Interest expense associated with the Company’s Notes Payable and lines of credit, as well as revenue and expenses associated with repurchase or resale transactions (prior to the sale of the Company's ECB business in December 2020)
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, technology, human capital, facilities management and senior management activities.
Other Expenses include the following:
•Amortization of LP Units and Certain Other Awards – Includes amortization costs associated with the vesting of Class J LP Units issued in conjunction with the acquisition of ISI and certain other related awards.
•Special Charges, Including Business Realignment Costs – Includes expenses in 2020 related to separation and transition benefits and related costs as a result of the Company's review of its operations and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the previously announced expansion of the Company's headquarters in New York and the Company's business realignment initiatives.
•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.
No client accounted for more than 10% of the Company's Consolidated Net Revenues for the three months ended March 31, 2021.
The following information presents each segment's contribution.
 For the Three Months Ended March 31,
 20212020
Investment Banking
Net Revenues(1)
$647,285 $413,656 
Operating Expenses456,526 339,795 
Other Expenses(2)
7 25,226 
Operating Income190,752 48,635 
Income from Equity Method Investments169 536 
Pre-Tax Income $190,921 $49,171 
Identifiable Segment Assets$2,576,598 $2,070,887 
Investment Management
Net Revenues(1)
$15,025 $13,351 
Operating Expenses11,569 12,651 
Other Expenses(2)
— 32 
Operating Income 3,456 668 
Income from Equity Method Investments2,855 2,592 
Pre-Tax Income $6,311 $3,260 
Identifiable Segment Assets$149,315 $150,665 
Total
Net Revenues(1)
$662,310 $427,007 
Operating Expenses468,095 352,446 
Other Expenses(2)
7 25,258 
Operating Income194,208 49,303 
Income from Equity Method Investments3,024 3,128 
Pre-Tax Income$197,232 $52,431 
Identifiable Segment Assets$2,725,913 $2,221,552 
(1)Net revenues include Other Revenue, net, allocated to the segments as follows:
 For the Three Months Ended March 31,
 20212020
Investment Banking(A)
$2,584 $(21,592)
Investment Management76 604 
Total Other Revenue, net$2,660 $(20,988)
(A)Investment Banking Other Revenue, net, includes interest expense on the Notes Payable of $4,570 and $4,842 for the three months ended March 31, 2021 and 2020, respectively.
(2)Other Expenses are as follows:
 For the Three Months Ended March 31,
 20212020
Investment Banking
Amortization of LP Units and Certain Other Awards$— $1,067 
Special Charges, Including Business Realignment Costs— 23,644 
Acquisition and Transition Costs7 8 
Intangible Asset and Other Amortization— 507 
Total Investment Banking7 25,226 
Investment Management
Special Charges, Including Business Realignment Costs— 32 
Acquisition and Transition Costs— — 
Total Investment Management— 32 
Total Other Expenses$7 $25,258 
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,
 20212020
Net Revenues:(1)
United States$460,648 $365,400 
Europe and Other198,614 80,021 
Latin America388 2,574 
Total$659,650 $447,995 
(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, 2021December 31, 2020
Total Assets:
United States$2,245,175 $2,862,343 
Europe and Other480,738 508,545 
Total$2,725,913 $3,370,888