Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2016 | Apr. 15, 2016 | |
Document And Entity Information [Abstract] | ||
Entity Registrant Name | WESTWOOD HOLDINGS GROUP INC | |
Entity Central Index Key | 1,165,002 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2016 | |
Amendment Flag | false | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q1 | |
Current Fiscal Year End Date | --12-31 | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 8,759,861 |
CONDENSED CONSOLIDATED BALANCE
CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Current Assets: | ||
Cash and cash equivalents | $ 26,425 | $ 22,740 |
Accounts receivable | 25,796 | 19,618 |
Investments, at fair value | 44,755 | 72,320 |
Other current assets | 2,263 | 2,926 |
Total current assets | 99,239 | 117,604 |
Goodwill | 27,144 | 27,144 |
Deferred income taxes | 11,178 | 11,042 |
Intangible assets, net | 22,864 | 23,354 |
Property and equipment, net of accumulated depreciation of $3,895 and $3,687 | 4,027 | 2,192 |
Total assets | 164,452 | 181,336 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 4,792 | 3,549 |
Dividends payable | 5,758 | 5,749 |
Compensation and benefits payable | 4,429 | 20,264 |
Contingent consideration | 9,309 | 9,023 |
Income taxes payable | 8,434 | 6,268 |
Total current liabilities | 32,722 | 44,853 |
Accrued dividends | 956 | 1,699 |
Deferred rent | 1,763 | 817 |
Total liabilities | $ 35,441 | $ 47,369 |
Commitments and contingencies | ||
Stockholders' Equity: | ||
Common stock, $0.01 par value, authorized 25,000,000 shares, issued 9,735,788 and outstanding 8,759,861 shares at March 31, 2016; issued 9,425,309 and outstanding 8,630,687 shares at December 31, 2015 | $ 97 | $ 94 |
Additional paid-in capital | 147,726 | 143,797 |
Treasury stock, at cost - 975,927 shares at March 31, 2016; 794,622 shares at December 31, 2015 | (43,631) | (34,910) |
Foreign currency translation adjustment | (3,385) | (4,688) |
Accumulated other comprehensive loss | (3,385) | (4,688) |
Retained earnings | 28,204 | 29,674 |
Total stockholders' equity | 129,011 | 133,967 |
Total liabilities and stockholders' equity | $ 164,452 | $ 181,336 |
CONDENSED CONSOLIDATED BALANCE3
CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Statement of Financial Position [Abstract] | ||
Property and equipment, accumulated depreciation | $ 3,895 | $ 3,687 |
Common stock, par value (dollars per share) | $ 0.01 | $ 0.01 |
Common stock, shares authorized | 25,000,000 | 25,000,000 |
Common stock, shares issued | 9,735,788 | 9,425,309 |
Common stock, shares outstanding | 8,759,861 | 8,630,687 |
Treasury stock, shares | 975,927 | 794,622 |
CONDENSED CONSOLIDATED STATEMEN
CONDENSED CONSOLIDATED STATEMENTS OF COMPREHENSIVE INCOME - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Advisory fees: | ||
Asset-based | $ 21,815 | $ 23,929 |
Performance-based | 0 | 288 |
Trust fees | 7,465 | 5,150 |
Other, net | (151) | 241 |
Total revenues | 29,129 | 29,608 |
EXPENSES: | ||
Employee compensation and benefits | 16,494 | 15,309 |
Sales and marketing | 328 | 395 |
Westwood mutual funds | 696 | 827 |
Information technology | 1,964 | 1,037 |
Professional services | 1,646 | 2,072 |
General and administrative | 2,355 | 1,590 |
Total expenses | 23,483 | 21,230 |
Income before income taxes | 5,646 | 8,378 |
Provision for income taxes | 2,124 | 2,768 |
Net income | 3,522 | 5,610 |
Other comprehensive income (loss): | ||
Foreign currency translation adjustments | 1,303 | (1,388) |
Total comprehensive income | $ 4,825 | $ 4,222 |
Earnings per share: | ||
Basic (dollars per share) | $ 0.45 | $ 0.74 |
Diluted (dollars per share) | $ 0.44 | $ 0.71 |
Weighted average shares outstanding: | ||
Basic (shares) | 7,862,449 | 7,596,223 |
Diluted (shares) | 8,047,084 | 7,861,090 |
Cash dividends declared per share (dollars per share) | $ 0.57 | $ 0.50 |
CONDENSED CONSOLIDATED STATEME5
CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY - 3 months ended Mar. 31, 2016 - USD ($) $ in Thousands | Total | Common Stock, Par | Additional Paid-In Capital | Treasury Stock | Accumulated Other Comprehensive Income (Loss) | Retained Earnings |
BALANCE at Dec. 31, 2015 | $ 133,967 | $ 94 | $ 143,797 | $ (34,910) | $ (4,688) | $ 29,674 |
BALANCE, shares at Dec. 31, 2015 | 8,630,687 | 8,630,687 | ||||
Net income | $ 3,522 | 3,522 | ||||
Other comprehensive income | 1,303 | 1,303 | ||||
Issuance of restricted stock, net of forfeitures | 0 | $ 3 | (3) | |||
Issuance of restricted stock, net of forfeitures, shares | 310,479 | |||||
Dividends declared | (4,992) | (4,992) | ||||
Stock based compensation expense | 4,003 | 4,003 | ||||
Reclassification of compensation liability to be paid in shares | 167 | 167 | ||||
Adjustments to Additional Paid in Capital, Income Tax Deficiency from Share-based Compensation | (238) | (238) | ||||
Purchases of treasury stock | $ (4,411) | (4,411) | ||||
Treasury Shares Acquired for Benefit Plan | 10,474 | |||||
Treasury Shares Value Acquired for Benefit Plan | $ 614 | 614 | ||||
Purchases of treasury stock, shares | (93,053) | (93,053) | ||||
Restricted stock returned for payment of taxes | $ (3,696) | (3,696) | ||||
Restricted stock returned for payment of taxes, shares | (77,778) | |||||
BALANCE at Mar. 31, 2016 | $ 129,011 | $ 97 | $ 147,726 | $ (43,631) | $ (3,385) | $ 28,204 |
BALANCE, shares at Mar. 31, 2016 | 8,759,861 | 8,759,861 |
CONDENSED CONSOLIDATED STATEME6
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Statement of Cash Flows [Abstract] | ||
Payments for (Proceeds from) Tenant Allowance | $ (1,128) | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | 3,522 | $ 5,610 |
Adjustments to reconcile net income to net cash provided by operating activities: | ||
Depreciation | 258 | 145 |
Amortization of intangible assets | 490 | 90 |
Unrealized gains on trading investments | (248) | (119) |
Stock based compensation expense | 4,003 | 3,678 |
Deferred income taxes | (109) | (570) |
Excess tax benefits from stock based compensation | (165) | (1,392) |
Net sales of investments - trading securities | 27,813 | 15,700 |
Other Operating Activities, Cash Flow Statement | 288 | 0 |
Change in operating assets and liabilities: | ||
Accounts receivable | (5,675) | (690) |
Other current assets | 675 | 42 |
Accounts payable and accrued liabilities | 374 | 1,285 |
Compensation and benefits payable | (15,749) | (12,406) |
Income taxes payable | 1,666 | 2,414 |
Other liabilities | 82 | (6) |
Net cash provided by operating activities | 17,225 | 13,781 |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | (378) | (288) |
Net cash used in investing activities | (378) | (288) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Purchases of treasury stock | (4,411) | 0 |
Payment for Repurchases of Stock for Benefit Plan | (614) | (1,289) |
Restricted stock returned for payment of taxes | (3,696) | (5,576) |
Excess tax benefits from stock based compensation | 165 | 1,392 |
Cash dividends | (5,724) | (4,855) |
Net cash used in financing activities | (14,280) | (10,328) |
Effect of currency rate changes on cash | 1,118 | (1,689) |
NET INCREASE IN CASH AND CASH EQUIVALENTS | 3,685 | 1,476 |
Cash and cash equivalents, beginning of period | 22,740 | 18,131 |
Cash and cash equivalents, end of period | 26,425 | 19,607 |
Supplemental cash flow information: | ||
Cash paid during the period for income taxes | 541 | 957 |
DividendsAccrued | 6,714 | $ 5,706 |
Capital Expenditures Incurred but Not yet Paid | $ 832 |
DESCRIPTION OF THE BUSINESS
DESCRIPTION OF THE BUSINESS | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
DESCRIPTION OF THE BUSINESS | DESCRIPTION OF THE BUSINESS Westwood Holdings Group, Inc. (“Westwood”, the “Company”, “we”, “us” or “our”) was incorporated under the laws of the State of Delaware on December 12, 2001 . Westwood provides investment management services to institutional investors, private wealth clients and financial intermediaries through its subsidiaries, Westwood Management Corp. and Westwood Advisors, LLC (together “Westwood Management”), Westwood Trust (“Westwood Trust”), and Westwood International Advisors Inc. (“Westwood International”). Revenue is largely dependent on the total value and composition of assets under management (“AUM”). Accordingly, fluctuations in financial markets and in the composition of AUM impact revenues and results of operations. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | EARNINGS PER SHARE Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. There were approximately 94,000 and 44,000 anti-dilutive restricted shares for the three months ended March 31, 2016 and 2015 , respectively. The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts): Three Months Ended March 31, 2016 2015 Net income $ 3,522 $ 5,610 Weighted average shares outstanding - basic 7,862,449 7,596,223 Dilutive potential shares from unvested restricted shares 102,217 264,867 Dilutive potential shares from contingent consideration 82,418 — Weighted average shares outstanding - diluted 8,047,084 7,861,090 Earnings per share: Basic $ 0.45 $ 0.74 Diluted $ 0.44 $ 0.71 |
INVESTMENTS
INVESTMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
INVESTMENTS | INVESTMENTS Investment balances are presented in the table below (in thousands). All investments are carried at fair value and are accounted for as trading securities. Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value March 31, 2016: U.S. Government and Government agency obligations $ 22,180 $ 32 $ — $ 22,212 Money market funds 10,873 — — 10,873 Equity funds 11,938 134 (402 ) 11,670 Marketable securities $ 44,991 $ 166 $ (402 ) $ 44,755 December 31, 2015: U.S. Government and Government agency obligations $ 50,972 $ 15 $ (15 ) $ 50,972 Money market funds 9,179 — — 9,179 Equity funds 12,653 — (484 ) 12,169 Marketable securities $ 72,804 $ 15 $ (499 ) $ 72,320 As of March 31, 2016 and December 31, 2015 , $10.6 million and $10.7 million in corporate funds, respectively, were invested in Westwood Funds®, Westwood Common Trust Funds and the UCITS Fund. See Note 8 “Variable Interest Entities.” |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
FAIR VALUE MEASUREMENTS | FAIR VALUE MEASUREMENTS We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our condensed consolidated financial statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds ® mutual funds, the UCITS fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. The fair value of contingent consideration related to the Woodway acquisition is categorized as a level 3 liability, as the measurement of the Earn-Out Amount is based primarily on significant inputs not observable in the market. ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows: • level 1 – quoted market prices in active markets for identical assets • level 2 – inputs other than quoted prices that are directly or indirectly observable • level 3 – significant unobservable inputs where there is little or no market activity The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands). Level 1 Level 2 Level 3 Total As of March 31, 2016: Investments in trading securities $ 41,684 $ 3,071 $ — $ 44,755 Contingent consideration — — (9,309 ) (9,309 ) Total financial instruments $ 41,684 $ 3,071 $ (9,309 ) $ 35,446 As of December 31, 2015: Investments in trading securities $ 69,260 $ 3,060 $ — $ 72,320 Contingent consideration — — (9,023 ) (9,023 ) Total financial instruments $ 69,260 $ 3,060 $ (9,023 ) $ 63,297 Investments categorized as level 2 assets consist of investments in common trust funds sponsored by Westwood Trust. Common trust funds are private investment vehicles comprised of commingled investments held in trusts that are valued using the Net Asset Value (“NAV”) calculated by us as administrator of the funds. The NAV is calculated using indirectly observed inputs, as the unit price is based on the market value of the underlying investments traded on an active market. We can make withdrawals from the common trust funds on a daily basis as needed for liquidity and there are no restrictions on redemption as of March 31, 2016 . Contingent consideration categorized as a level 3 liability is related to the acquisition of Woodway (see Note 6 “Acquisitions, Goodwill and Other Intangibles”). As of the acquisition date, the Company estimated that the Earn-Out Amount would be $9.1 million , based on then existing facts and circumstances. For the period subsequent to the initial measurement of the contingent consideration, changes in the fair value of the contingent consideration are recorded in Other revenues, net on the condensed consolidated statements of comprehensive income. During the first quarter of 2016, the Company revised its estimate of the Earn-Out Amount to $9.3 million based on the actual revenues from the post-closing business of Woodway for the twelve month period ending March 31, 2016 and recorded a charge of $286,000 in Other revenues, net. The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (in thousands): Contingent Consideration Beginning balance, December 31, 2015 $ 9,023 Change in carrying value 286 Ending balance, March 31, 2016 $ 9,309 |
ACQUISITIONS, GOODWILL AND OTHE
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS | 3 Months Ended |
Mar. 31, 2016 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS | ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS Acquisition of Woodway Financial Advisors Westwood completed the acquisition of Woodway on April 1, 2015. The total Merger consideration consisted of (i) $30.6 million in cash and stock, as described below, and (ii) contingent consideration equal to the annualized revenue from the post-closing business of Woodway for the twelve-month period ending March 31, 2016 (the “Earn-Out Period”), adjusted for certain clients or accounts that have terminated, and capped at $15 million (the “Earn-Out Amount”). The Earn-Out Amount will be paid 54.84% in cash and 45.16% in shares of Westwood’s common stock, valued using the average closing price during the last 30 calendar days of the Earn-Out Period. In relation to the Merger, Westwood entered into employment agreements with certain Woodway employees, which, among other things, provided for specified compensation and benefits for the related employees. The Merger consideration of $39.7 million consisted of (i) closing date consideration of $25.3 million paid in cash and issuance of 109,712 shares of Westwood common stock, valued at $5.3 million (discounted from $6.7 million due to certain required holding periods), and (ii) contingent consideration of $9.1 million , based on estimates and assumptions on the closing date of the acquisition, to be paid no later than 75 calendar days after the last day of the Earn-Out Period. The estimated fair value of the Earn-Out Amount was determined by using overall revenue growth projections combined with existing customer base lost revenue projections, both discounted and probability-weighted. The fair value measurement of the Earn-Out Amount was based primarily on significant inputs not observable in the market and thus represents a level 3 measurement as defined in ASC 820. See further discussion in Note 5 “Fair Value Measurements.” The acquisition of Woodway was accounted for using the acquisition method of accounting. Accordingly, the purchase price was allocated to the tangible and intangible assets acquired and the liabilities assumed based on their estimated fair values as of the acquisition date. As of March 31, 2016 , consideration of $39.7 million has been allocated using Woodway’s historical balance sheet at March 31, 2015 based on valuations of acquired assets and assumed liabilities in connection with the acquisition. The allocation of the purchase price is as follows (in thousands): Cash and cash equivalents $ 1,205 Accounts receivable 936 Other current assets 253 Goodwill (i) 15,889 Identifiable intangibles (ii) 21,334 Property and equipment 197 Accounts payable and accrued liabilities (61 ) Income tax payable (20 ) Purchase price $ 39,733 _________________ (i) The excess of the purchase price over the fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. (ii) The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives): Intangible Asset Fair Value Estimated Useful Lives Client relationships $ 20,391 15 years Non-compete agreements 257 3 years Trade name 686 5 years At the time of the acquisition, the Company believed that its enhanced market position and future growth potential were the primary factors that contributed to a total purchase price that resulted in the recognition of goodwill. As of March 31, 2016 , $6.8 million of the goodwill arising from the acquisition is expected to be deductible for tax purposes. We incurred transaction costs of $1.1 million related to the Woodway acquisition during 2015, of which $700,000 are included in “Professional services” on our condensed consolidated statements of comprehensive income for the three months ended March 31, 2015 . Our consolidated results for the three months ended March 31, 2016 included Total revenues and Net income attributable to Woodway of $2.4 million and $611,000 , respectively. Pro Forma Financial Information The following unaudited pro forma results of operations for the three months ended March 31, 2016 and 2015 assume that the Woodway acquisition had occurred on January 1, 2015, after giving effect to acquisition accounting adjustments relating to amortization of the valued intangible assets and to record additional compensation costs related to employment contracts entered into as a result of the acquisition. These unaudited pro forma results exclude one-time, non-recurring costs related to the acquisition, including transaction costs. This unaudited pro forma information should not be relied upon as being necessarily indicative of the historical results that would have been obtained if the Merger had actually occurred on those dates, nor of the results that may be obtained in the future. Three Months Ended March 31, 2016 2015 (in thousands) Total revenues $ 29,129 $ 32,301 Net income $ 3,522 $ 6,484 Goodwill Goodwill represents the excess of the cost of acquired assets over the fair value of the underlying identifiable assets at the date of acquisition. Goodwill is not amortized but is tested for impairment at least annually. We completed our annual goodwill impairment assessment during the third quarter of 2015 and determined that no impairment loss was required. No impairments were recorded during the three months ended March 31, 2016 or 2015 . Other Intangible Assets Our intangible assets represent the acquisition date fair value of acquired client relationships, trade names and non-compete agreements and internally developed software and are reflected net of amortization. In valuing these assets, we made significant estimates regarding their useful lives, growth rates and potential attrition. We periodically review intangible assets for events or circumstances that would indicate impairment. There have been no impairments on intangible assets recorded during the three months ended March 31, 2016 or 2015 . |
BALANCE SHEET COMPONENTS
BALANCE SHEET COMPONENTS | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
BALANCE SHEET COMPONENTS | BALANCE SHEET COMPONENTS Property and Equipment The following table reflects information about our property and equipment as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 As of December 31, 2015 Leasehold improvements $ 3,301 $ 1,728 Furniture and fixtures 2,239 1,804 Computer hardware and office equipment 2,134 2,116 Construction in progress 248 231 Accumulated depreciation (3,895 ) (3,687 ) Net property and equipment $ 4,027 $ 2,192 Stockholders' Equity Accumulated Other Comprehensive Loss The components of accumulated other comprehensive loss were as follows (in thousands): As of March 31, 2016 As of December 31, 2015 Foreign currency translation adjustment $ (3,385 ) $ (4,688 ) Accumulated other comprehensive loss $ (3,385 ) $ (4,688 ) Stock Repurchase Program On July 20, 2012, our board of directors authorized management to repurchase up to $10 million of our outstanding common stock on the open market or in privately negotiated transactions. The share repurchase program has no expiration date and may be discontinued at any time by the board of directors. Between January 1, 2016 and March 4, 2016, the Company repurchased 93,053 shares of our common stock at an average price of $47.41 , including commissions, at an aggregate purchase price of $4.4 million under our share repurchase program. |
VARIABLE INTEREST ENTITIES
VARIABLE INTEREST ENTITIES | 3 Months Ended |
Mar. 31, 2016 | |
Variable Interest Entities [Abstract] | |
VARIABLE INTEREST ENTITIES | VARIABLE INTEREST ENTITIES Westwood Trust sponsors common trust funds (“CTFs”) for its clients. These funds allow clients to commingle assets to achieve economies of scale. Westwood International and Westwood Management provide investment advisory services to Westwood Investment Funds PLC (the “UCITS Fund”), which was authorized on June 18, 2013 by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS”), and which is an umbrella-type, open-ended self-managed investment company domiciled in Ireland. Westwood Management provides investment advisory services to the Westwood Funds ® , a family of mutual funds, and two collective investment trusts (“CITs”). Some clients of Westwood Management hold their investments in one or more of ten limited liability companies (“LLCs”). The CTFs, UCITS, Westwood Funds ® , CITs and LLCs (“Westwood VIEs”) are considered variable interest entities (“VIEs”) because our clients, who hold the equity at risk, do not have a direct or indirect ability through voting or similar rights to make decisions about the funds that would have a significant effect on their success. We receive fees for managing assets in these entities at market rates. We evaluate all of our advisory relationships and CTFs to determine whether or not we qualify as the primary beneficiary based on whether there is an obligation to absorb the majority of expected losses or a right to receive the majority of expected residual returns. Since all losses and returns are distributed to the shareholders of the Company’s VIEs, we are not the primary beneficiary and consequently the Westwood VIEs are not included in our condensed consolidated financial statements. In May 2015, the Company provided seed investments of $5.4 million for two new Westwood mutual funds. In both December 2015 and January 2014, the Company provided seed investments of $2.0 million to two common trust funds. In October 2014, the Company provided a seed investment of €1.6 million , or $2.0 million at the then current exchange rate, to the UCITS Fund. These seed investments were provided for the sole purpose of showing economic substance needed to establish the funds or sub-funds. The corporate capital invested in these funds is included in “Investments, at fair value” on our condensed consolidated balance sheet at March 31, 2016 . Otherwise, we have not provided any financial support we were not previously contractually obligated to provide and there are no arrangements that would require us to provide additional financial support to any of these VIEs. Our investments in the Westwood Funds ®, the CTFs and the UCITS Fund are accounted for as investments in accordance with our other investments described in Note 4 “Investments.” We recognized fee revenue from the Westwood VIEs of $13.0 million and $14.3 million for the three months ended March 31, 2016 and 2015 , respectively. The following table displays assets under management, corporate capital invested and risk of loss in each vehicle (in millions): As of March 31, 2016 Assets Corporate Amount at Risk VIEs: Westwood Funds® $ 3,598 $ 6 $ 6 Common Trust Funds 2,939 3 3 Collective Investment Trusts 278 — — LLCs 128 — — UCITS Fund 722 2 2 VIE totals 7,665 11 11 All other assets: Private Wealth 2,238 Institutional 11,232 Total AUM $ 21,135 |
LONG-TERM INCENTIVE COMPENSATIO
LONG-TERM INCENTIVE COMPENSATION | 3 Months Ended |
Mar. 31, 2016 | |
Employee Benefits and Share-based Compensation [Abstract] | |
LONG-TERM INCENTIVE COMPENSATION | LONG-TERM INCENTIVE COMPENSATION Restricted Stock Awards We have issued restricted shares to our employees and non-employee directors. The Third Amended and Restated Westwood Holdings Group, Inc. Stock Incentive Plan, as amended (the “Plan”), reserves shares of Westwood common stock for issuance to eligible employees, directors and consultants of Westwood or its subsidiaries in the form of restricted stock. The total number of shares issuable under the Plan (including predecessor plans to the Plan) may not exceed 4,398,100 shares. At March 31, 2016 , approximately 353,000 shares remain available for issuance under the Plan. Canadian Plan The Share Award Plan of Westwood Holdings Group, Inc. for Service Provided in Canada to its Subsidiaries (the “Canadian Plan”) provides compensation in the form of common stock for services performed by employees of Westwood International. Under the Canadian Plan, no more than $10 million CDN ( $7.7 million in U.S. Dollars using the exchange rate on March 31, 2016 ) may be funded to the Plan Trustee for purchases of common stock with respect to awards granted under the Canadian Plan. At March 31, 2016 , approximately $6.0 million CDN ( $4.6 million in U.S. Dollars using the exchange rate on March 31, 2016 ) remains available for issuance under the Canadian Plan, or approximately 78,150 shares based on the closing share price of our stock of $58.65 as of March 31, 2016 . During the first three months of 2016 , the trust formed pursuant to the Canadian Plan purchased in the open market 10,474 Westwood common shares for approximately $614,000 . As of March 31, 2016 , the trust holds 43,648 shares of Westwood common stock. As of March 31, 2016 , unrecognized compensation cost related to restricted stock grants under the Canadian Plan totaled $1.1 million , which we expect to recognize over a weighted-average period of 2.0 years. The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Service condition stock based compensation expense $ 2,550 $ 2,183 Performance condition stock based compensation expense 1,243 1,354 Stock based compensation expense under the Plan 3,793 3,537 Canada EB Plan stock based compensation expense 210 141 Total stock based compensation expense $ 4,003 $ 3,678 Restricted Stock Under the Plan, we have granted to employees and non-employee directors restricted stock subject to service conditions, and to certain key employees restricted stock subject to both service and performance conditions. As of March 31, 2016 , there was approximately $34.1 million of unrecognized compensation cost for restricted stock grants under the Plan, which we expect to recognize over a weighted-average period of 2.8 years. Our two types of restricted stock grants under the Plan are discussed below. Restricted Stock Subject Only to a Service Condition We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period. The following table details the status and changes in our restricted stock grants subject only to a service condition for the three months ended March 31, 2016 : Restricted shares subject only to a service condition: Shares Weighted Average Grant Date Fair Value Non-vested, January 1, 2016 580,469 $ 56.76 Granted 243,448 47.41 Vested (162,468 ) 50.66 Forfeited (8,999 ) 58.98 Non-vested, March 31, 2016 652,450 $ 54.76 Restricted Stock Subject to Service and Performance Conditions Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that annual performance goals established by the Compensation Committee of Westwood’s board of directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares. Restricted shares subject to service and performance conditions: Shares Weighted Average Non-vested, January 1, 2016 101,313 $ 61.29 Granted 143,711 55.90 Vested (101,313 ) 61.29 Forfeited — — Non-vested, March 31, 2016 143,711 $ 55.90 The above amounts as of March 31, 2016 do not include 51,258 non-vested restricted shares that potentially vest over performance years subsequent to 2016 inasmuch as the Compensation Committee has not set annual performance goals for later years and therefore no grant date has been established. Mutual Fund Share Incentive Awards We grant annually to certain employees mutual fund incentive awards, which are bonus awards based on our mutual funds achieving specific performance goals. Awards granted are notionally credited to a participant account maintained by us that contains a number of mutual fund shares equal to the award amount divided by the net closing value of a fund share on the date the amount is credited to the account. These awards vest after approximately one year of service following the year in which the participant earns the award. We begin accruing a liability for mutual fund incentive awards when we believe it is probable that the award will be earned and record expense for these awards over the service period of the award, which is approximately two years . During the year in which the amount of the award is determined, we record expense based on the expected value of the award. After the award is earned, we record expense based on the value of the shares awarded and the percentage of the vesting period that has elapsed. Our liability under these awards may increase or decrease based on changes in the value of the mutual fund shares awarded, including reinvested income from the mutual funds during the vesting period. Upon vesting, participants receive the value of the mutual fund share awards adjusted for earnings or losses attributable to the underlying mutual funds. For the three months ended March 31, 2016 and 2015 , we recorded expense of $262,000 and $426,000 , respectively, related to mutual fund share incentive awards. As of March 31, 2016 and December 31, 2015 , we had an accrued liability of $761,000 and $2.0 million , respectively, related to mutual fund incentive awards. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2016 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | RELATED PARTY TRANSACTIONS Some of our directors, executive officers and their affiliates invest their personal funds directly in trust accounts that we manage. For the three months ended March 31, 2016 and 2015 , we recorded trust fees from these accounts of $112,000 and $74,000 , respectively. There was $110,000 due from these accounts as of March 31, 2016 and no amounts due from these accounts as of December 31, 2015 . The Company engages in transactions with its affiliates in the ordinary course of business. Westwood International and Westwood Management provide investment advisory services to the UCITS Fund. Certain members of our management and board of directors serve on the board of directors of the UCITS Fund, which began operations in August 2013. Under the terms of the investment advisory agreements, the Company earns quarterly fees paid by clients of the UCITS Fund and, in certain cases, by the UCITS Fund. The fees are based on negotiated fee schedules applied to AUM. These fees are commensurate with market rates and are negotiated and contracted for at arm’s length. For the three months ended March 31, 2016 and 2015 , the Company earned approximately $319,000 and $346,000 , respectively, in fees from the UCITS Fund. These fees do not include fees paid directly to Westwood International by certain clients invested in the UCITS Fund that have an investment management agreement with Westwood International. As of March 31, 2016 and December 31, 2015 , $442,000 and $96,000 , respectively, of these fees were unpaid and included in “Accounts receivable” on our condensed consolidated balance sheets. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2016 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | COMMITMENTS AND CONTINGENCIES On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC. (“Warren”). The action relates to the hiring of certain members of Westwood’s global and emerging markets investment team previously employed by AGF. AGF is alleging that the former employees breached certain obligations when they resigned from AGF and that Westwood and Warren induced such breaches. AGF is seeking an unspecified amount of damages and punitive damages of $10 million CDN in the lawsuit. On November 5, 2012, Westwood responded to AGF’s lawsuit with a counterclaim against AGF for defamation. Westwood is seeking $1 million CDN in general damages, $10 million CDN in special damages, $1 million CDN in punitive damages, and costs. On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary , alleging that the employee made defamatory statements about AGF. In this second lawsuit, AGF is seeking $5 million CDN in general damages, $1 million CDN per defendant in punitive damages, unspecified special damages, interest and costs. The pleadings phase was completed in 2013, and we are currently in the discovery phase. While we intend to vigorously defend both actions and pursue our counterclaims, we are currently unable to estimate the ultimate aggregate amount of monetary gain, loss or financial impact of these actions and counterclaims. Defending these actions and pursuing these counterclaims may be expensive for us, as well as time consuming for our personnel. While we do not currently believe these proceedings will have a material impact, adverse resolution of these actions and counterclaims could have a material adverse effect on our business, financial condition or results of operations and cash flows. Our policy is to not accrue legal fees and directly related costs as part of potential loss contingencies. We have agreed with our Directors & Officers insurance provider that 50% of the defense costs related to both AGF claims, excluding Westwood’s counterclaim against AGF, are covered by insurance. We expense legal fees and directly related costs as incurred. We have received insurance proceeds of approximately $928,000 as of March 31, 2016 and recorded a receivable of $94,000 and $240,000 as of March 31, 2016 and December 31, 2015, respectively, which represents our current minimum estimate of expenses that we expect to recover under our insurance policy. This receivable is part of “Other current assets” on our condensed consolidated balance sheets. |
SEGMENT REPORTING
SEGMENT REPORTING | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
SEGMENT REPORTING | SEGMENT REPORTING We operate two segments: Advisory and Trust. These segments are managed separately based on the types of products and services offered and their related client bases. The Company’s segment information is prepared on the same basis that management reviews the financial information for operational decision-making purposes. The Company’s chief operating decision maker, our Chief Executive Officer, evaluates the performance of our segments based primarily on fee revenues and economic earnings. Westwood Holdings Group, Inc., the parent company of Advisory and Trust, does not have revenues and is the entity in which we record typical holding company expenses including employee compensation and benefits for holding company employees, directors’ fees and investor relations costs. All segment accounting policies are the same as those described in the summary of significant accounting policies. Intersegment balances that eliminate in consolidation have been applied to the appropriate segment. Advisory Our Advisory segment provides investment advisory services to corporate retirement plans, public retirement plans, endowments, foundations, individuals, the Westwood Funds ® , and the UCITS Fund, as well as investment subadvisory services to mutual funds and our Trust segment. Westwood Management and Westwood International, which provide investment advisory services to clients of similar type, are included in our Advisory segment along with Westwood Advisors, LLC. Trust Trust provides trust and custodial services and participation in common trust funds that it sponsors to institutions and high net worth individuals. Westwood Trust is included in our Trust segment. Advisory Trust Westwood Eliminations Consolidated (in thousands) Three Months Ended March 31, 2016 Net fee revenues from external sources $ 21,815 $ 7,465 $ — $ — $ 29,280 Net intersegment revenues 4,394 — — (4,394 ) — Net interest and dividend revenue 133 2 — — 135 Other, net (3 ) (283 ) — — (286 ) Total revenues $ 26,339 $ 7,184 $ — $ (4,394 ) $ 29,129 Economic Earnings $ 9,076 $ 1,032 $ (2,015 ) $ — $ 8,093 Less: Restricted stock expense 4,003 Intangible amortization 490 Deferred taxes on goodwill 78 Net income $ 3,522 Segment assets $ 184,478 $ 66,794 $ 8,264 $ (95,084 ) $ 164,452 Segment goodwill $ 5,219 $ 21,925 $ — $ — $ 27,144 Three Months Ended March 31, 2015 Net fee revenues from external sources $ 24,217 $ 5,150 $ — $ — $ 29,367 Net intersegment revenues 3,627 — — (3,627 ) — Net interest and dividend revenue 49 — — — 49 Other, net 191 1 — — 192 Total revenues $ 28,084 $ 5,151 $ — $ (3,627 ) $ 29,608 Economic Earnings $ 10,717 $ 503 $ (1,804 ) $ — $ 9,416 Less: Restricted stock expense 3,678 Intangible amortization 90 Deferred taxes on goodwill 38 Net income $ 5,610 Segment assets $ 146,948 $ 15,327 $ 10,914 $ (46,331 ) $ 126,858 Segment goodwill $ 5,219 $ 6,036 $ — $ — $ 11,255 We are providing a performance measure that we refer to as Economic Earnings. Both our management and Board of Directors review Economic Earnings to evaluate our ongoing performance, allocate resources and review the dividend policy. We also believe that this performance measure is useful for management and investors when evaluating our underlying operating and financial performance and our available resources. In calculating Economic Earnings, we add to net income the non-cash expense associated with equity-based compensation awards of restricted stock, amortization of intangible assets and the deferred taxes related to the tax-basis amortization of goodwill. Although depreciation on property and equipment is a non-cash expense, we do not add it back when calculating Economic Earnings because depreciation charges represent a decline in the value of the related assets that will ultimately require replacement. The following tables provide a reconciliation of net income to Economic Earnings (in thousands, except per share and share amounts): Three Months Ended March 31, 2016 2015 Net Income $ 3,522 $ 5,610 Add: Stock based compensation expense 4,003 3,678 Add: Intangible amortization 490 90 Add: Tax benefit from goodwill amortization 78 38 Economic Earnings $ 8,093 $ 9,416 |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2016 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | SUBSEQUENT EVENTS Dividend Declared In April 2016, Westwood’s Board of Directors declared a quarterly cash dividend of $0.57 per common share, payable on July 1, 2016 to stockholders of record on June 10, 2016 . |
INCOME TAXES (Notes)
INCOME TAXES (Notes) | 3 Months Ended |
Mar. 31, 2016 | |
Income Tax Disclosure [Abstract] | |
Income Tax Disclosure [Text Block] | 10. INCOME TAXES Our effective income tax rate was 37.6% for the first quarter of 2016, compared with 33.0% for the first quarter of 2015. The increase is primarily related to a $251,000 tax charge for uncertain tax positions related to current and prior years (net of federal benefit). As of March 31, 2016 and December 31, 2015, the Company's gross liability related to uncertain tax positions was $2.0 million and $1.6 million , respectively. A number of years may elapse before an uncertain tax position is finally resolved. To the extent that the Company has favorable tax settlements, or determines that accrued amounts are no longer needed due to a lapse in the applicable statute of limitations or other changes in circumstances, such liabilities, as well as any related interest and penalties, would be reversed as a reduction of income tax expense, net of federal tax effects, in the period such determination is made. A reconciliation of the change in recorded uncertain tax positions during the three months ended March 31, 2016 is as follows (in thousands): Balance at January 1, 2016 $ 1,629 Additions for tax positions related to the current year 69 Additions for tax positions related to prior years 316 Balance at March 31, 2016 $ 2,014 Within the next twelve months, it is reasonably possible that the liability for uncertain tax positions could decrease by as much as $1.9 million as a result of settlements with certain taxing authorities, which, if recognized, would decrease our provision for income taxes by $1.3 million . |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2016 | |
Accounting Policies [Abstract] | |
Basis of Presentation | Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The Company’s condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2015 . Operating results for the periods in these condensed consolidated financial statements are not necessarily indicative of the results for any future period. The accompanying condensed consolidated financial statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. |
Recent Accounting Pronouncements | SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying condensed consolidated financial statements are unaudited and are presented in accordance with the requirements for quarterly reports on Form 10-Q and consequently do not include all of the information and footnote disclosures required by accounting principles generally accepted in the United States of America (“GAAP”). The Company’s condensed consolidated financial statements reflect all adjustments (consisting only of normal recurring adjustments) necessary in the opinion of management to present fairly our interim financial position and results of operations and cash flows for the periods presented. The accompanying condensed consolidated financial statements are presented in accordance with GAAP and the rules and regulations of the Securities and Exchange Commission (“SEC”). The accompanying unaudited condensed consolidated financial statements should be read in conjunction with our consolidated financial statements, and notes thereto, included in our Annual Report on Form 10-K for the year ended December 31, 2015 . Operating results for the periods in these condensed consolidated financial statements are not necessarily indicative of the results for any future period. The accompanying condensed consolidated financial statements include the accounts of Westwood and its subsidiaries. All intercompany accounts and transactions have been eliminated upon consolidation. Recent Accounting Pronouncements In January 2016, the FASB issued ASU 2016-01, Financial Instruments-Overall: Recognition and Measurement of Financial Assets and Financial Liabilities. The main objective of this update is to enhance the reporting model for financial instruments to provide users of financial statements with more useful information for making decisions. The amendment addresses various aspects of recognition, measurement, presentation and disclosure of financial instruments. The amendment is effective for fiscal years beginning after December 15, 2017, including interim periods within those fiscal years. We are currently evaluating the impact that the application of ASU 2016-01 will have on our consolidated financial statements and disclosures and expect to adopt the new standard in the required time frame. In February 2016, the FASB issued ASU 2016-02, Leases . ASU 2016-02 requires lessees to recognize a lease liability and a right-of-use asset for all leases at the commencement date, excluding short-term leases. The amendment is effective beginning after December 15, 2018, including interim periods within those fiscal years. Early application is permitted. We are currently evaluating the impact that the application of ASU 2016-02 will have on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame. In March 2016, the FASB issues ASU 2016-08, Revenue from Contracts with Customers (Reporting Revenue Gross versus Net) , which clarifies the implementation guidance on principal versus agent considerations in ASU 2014-09. The amendment is effective beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU 2016-08 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame. In March 2016, the FASB issued ASU 2016-09, Compensation-Stock Compensation: Improvements to Employee Share-Based Payment Accounting. The purpose of the amendment is to simplify the accounting for share-based payment transactions, and includes changes to the accounting for the classification of awards as either equity or liabilities, classification of certain share-based payment items on the statement of cash flows, the accounting for forfeitures and certain income tax consequences. The amendment is effective for annual periods beginning after December 15, 2016, and interim periods within those annual periods. Early adoption is permitted. Amendments related to the presentation of employee taxes paid on the statement of cash flows should be applied retrospectively. Amendments requiring recognition of excess tax benefits and tax deficiencies in the income statement and practical expedient for estimating expected term should be applied prospectively. An entity may elect to apply the amendments related to the presentation of tax benefits on the statement of cash flows using either a prospective or retrospective transition method. We are currently evaluating the impact that the application of ASU 2016-09 will have on our consolidated financial statements and disclosures and expect to adopt the new standard within the required time frame. In April 2016, the FASB issued ASU 2016-10, Revenue from Contracts with Customers: Identifying Performance Obligations and Licensing , which clarifies the guidance related to identifying performance obligations and the licensing guidance in ASU 2014-09. The amendment is effective beginning after December 14, 2017, including interim reporting periods within that reporting year. We do not expect the adoption of ASU2016-10 to have a material impact on our consolidated financial statements and disclosures and expect to adopt the standard within the required time frame. |
Earnings Per Share | Basic earnings per common share is computed by dividing net income available to common stockholders by the weighted average number of shares outstanding for the applicable period. Diluted earnings per share is computed based on the weighted average number of shares outstanding plus the effect of any dilutive shares of restricted stock granted to employees and non-employee directors. |
Fair Value Measurements | We determine estimated fair values for our financial instruments using available information. The fair value amounts discussed in our condensed consolidated financial statements are not necessarily indicative of either amounts realizable upon disposition of these instruments or our intent or ability to dispose of these assets. The estimated fair value of cash and cash equivalents, accounts receivable, other current assets, accounts payable and accrued liabilities, dividends payable, compensation and benefits payable and income taxes payable approximates their carrying value due to their short-term maturities. The carrying amount of investments designated as “trading” securities, primarily U.S. Government and Government agency obligations, money market funds, Westwood Funds ® mutual funds, the UCITS fund and Westwood Trust common trust fund shares, equals their fair value based on prices quoted in active markets and, with respect to common trust funds, the net asset value of the shares held as reported by each fund. Market values of our money market holdings generally do not fluctuate. The fair value of contingent consideration related to the Woodway acquisition is categorized as a level 3 liability, as the measurement of the Earn-Out Amount is based primarily on significant inputs not observable in the market. ASC 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value and requires additional disclosures regarding certain fair value measurements. ASC 820 establishes a three-tier hierarchy for measuring fair value, as follows: • level 1 – quoted market prices in active markets for identical assets • level 2 – inputs other than quoted prices that are directly or indirectly observable • level 3 – significant unobservable inputs where there is little or no market activity |
Variable Interest Entities | Westwood Trust sponsors common trust funds (“CTFs”) for its clients. These funds allow clients to commingle assets to achieve economies of scale. Westwood International and Westwood Management provide investment advisory services to Westwood Investment Funds PLC (the “UCITS Fund”), which was authorized on June 18, 2013 by the Central Bank of Ireland pursuant to the European Communities (Undertakings for Collective Investment in Transferable Securities) Regulations 2011 (“UCITS”), and which is an umbrella-type, open-ended self-managed investment company domiciled in Ireland. Westwood Management provides investment advisory services to the Westwood Funds ® , a family of mutual funds, and two collective investment trusts (“CITs”). Some clients of Westwood Management hold their investments in one or more of ten limited liability companies (“LLCs”). The CTFs, UCITS, Westwood Funds ® , CITs and LLCs (“Westwood VIEs”) are considered variable interest entities (“VIEs”) because our clients, who hold the equity at risk, do not have a direct or indirect ability through voting or similar rights to make decisions about the funds that would have a significant effect on their success. We receive fees for managing assets in these entities at market rates. We evaluate all of our advisory relationships and CTFs to determine whether or not we qualify as the primary beneficiary based on whether there is an obligation to absorb the majority of expected losses or a right to receive the majority of expected residual returns. Since all losses and returns are distributed to the shareholders of the Company’s VIEs, we are not the primary beneficiary and consequently the Westwood VIEs are not included in our condensed consolidated financial statements. |
Restricted Stock Subject Only to a Service Condition | Restricted Stock Subject Only to a Service Condition We calculate compensation cost for restricted stock grants by using the fair market value of our common stock at the date of grant, the number of shares issued, an adjustment for restrictions on dividends and an estimate of shares that will not vest due to forfeitures. This compensation cost is amortized on a straight-line basis over the applicable vesting period. |
Restricted Stock Subject to Service and Performance Conditions | Restricted Stock Subject to Service and Performance Conditions Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that annual performance goals established by the Compensation Committee of Westwood’s board of directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares. |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Earnings Per Share [Abstract] | |
Computation of Basic and Diluted Earnings Per Share | The following table sets forth the computation of basic and diluted earnings per share (in thousands, except per share and share amounts): Three Months Ended March 31, 2016 2015 Net income $ 3,522 $ 5,610 Weighted average shares outstanding - basic 7,862,449 7,596,223 Dilutive potential shares from unvested restricted shares 102,217 264,867 Dilutive potential shares from contingent consideration 82,418 — Weighted average shares outstanding - diluted 8,047,084 7,861,090 Earnings per share: Basic $ 0.45 $ 0.74 Diluted $ 0.44 $ 0.71 |
INVESTMENTS (Tables)
INVESTMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Investments, Debt and Equity Securities [Abstract] | |
Investment Balances | Investment balances are presented in the table below (in thousands). All investments are carried at fair value and are accounted for as trading securities. Cost Gross Unrealized Gains Gross Unrealized Losses Estimated Market Value March 31, 2016: U.S. Government and Government agency obligations $ 22,180 $ 32 $ — $ 22,212 Money market funds 10,873 — — 10,873 Equity funds 11,938 134 (402 ) 11,670 Marketable securities $ 44,991 $ 166 $ (402 ) $ 44,755 December 31, 2015: U.S. Government and Government agency obligations $ 50,972 $ 15 $ (15 ) $ 50,972 Money market funds 9,179 — — 9,179 Equity funds 12,653 — (484 ) 12,169 Marketable securities $ 72,804 $ 15 $ (499 ) $ 72,320 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Fair Value Disclosures [Abstract] | |
Values of Assets Within Fair Value Hierarchy | The following table summarizes the values of our assets and liabilities as of the dates indicated within the fair value hierarchy (in thousands). Level 1 Level 2 Level 3 Total As of March 31, 2016: Investments in trading securities $ 41,684 $ 3,071 $ — $ 44,755 Contingent consideration — — (9,309 ) (9,309 ) Total financial instruments $ 41,684 $ 3,071 $ (9,309 ) $ 35,446 As of December 31, 2015: Investments in trading securities $ 69,260 $ 3,060 $ — $ 72,320 Contingent consideration — — (9,023 ) (9,023 ) Total financial instruments $ 69,260 $ 3,060 $ (9,023 ) $ 63,297 |
Reconciliation of Beginning and Ending Balances of Items Measured at Fair Value | The following table provides a reconciliation of the beginning and ending balances of items measured at fair value on a recurring basis that used significant unobservable inputs (in thousands): Contingent Consideration Beginning balance, December 31, 2015 $ 9,023 Change in carrying value 286 Ending balance, March 31, 2016 $ 9,309 |
ACQUISITIONS, GOODWILL AND OT24
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Finite-Lived Intangible Assets [Line Items] | |
Schedule of Recognized Identified Assets Acquired and Liabilities Assumed | The allocation of the purchase price is as follows (in thousands): Cash and cash equivalents $ 1,205 Accounts receivable 936 Other current assets 253 Goodwill (i) 15,889 Identifiable intangibles (ii) 21,334 Property and equipment 197 Accounts payable and accrued liabilities (61 ) Income tax payable (20 ) Purchase price $ 39,733 _________________ (i) The excess of the purchase price over the fair value amounts assigned to assets acquired and liabilities assumed represents the goodwill amount resulting from the acquisition. (ii) The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives): Intangible Asset Fair Value Estimated Useful Lives Client relationships $ 20,391 15 years Non-compete agreements 257 3 years Trade name 686 5 years |
Business Acquisition, Pro Forma Information | This unaudited pro forma information should not be relied upon as being necessarily indicative of the historical results that would have been obtained if the Merger had actually occurred on those dates, nor of the results that may be obtained in the future. Three Months Ended March 31, 2016 2015 (in thousands) Total revenues $ 29,129 $ 32,301 Net income $ 3,522 $ 6,484 |
Woodway Financial Advisors | |
Finite-Lived Intangible Assets [Line Items] | |
Schedule of Finite-Lived Intangible Assets Acquired as Part of Business Combination | The fair value of the acquired identifiable intangibles consists of (in thousands, except useful lives): Intangible Asset Fair Value Estimated Useful Lives Client relationships $ 20,391 15 years Non-compete agreements 257 3 years Trade name 686 5 years |
BALANCE SHEET COMPONENTS (Table
BALANCE SHEET COMPONENTS (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Property and Equipment | The following table reflects information about our property and equipment as of March 31, 2016 and December 31, 2015 (in thousands): As of March 31, 2016 As of December 31, 2015 Leasehold improvements $ 3,301 $ 1,728 Furniture and fixtures 2,239 1,804 Computer hardware and office equipment 2,134 2,116 Construction in progress 248 231 Accumulated depreciation (3,895 ) (3,687 ) Net property and equipment $ 4,027 $ 2,192 |
Components of Accumulated Other Comprehensive Loss | The components of accumulated other comprehensive loss were as follows (in thousands): As of March 31, 2016 As of December 31, 2015 Foreign currency translation adjustment $ (3,385 ) $ (4,688 ) Accumulated other comprehensive loss $ (3,385 ) $ (4,688 ) |
VARIABLE INTEREST ENTITIES (Tab
VARIABLE INTEREST ENTITIES (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Variable Interest Entities [Abstract] | |
Variable Interest Entities | The following table displays assets under management, corporate capital invested and risk of loss in each vehicle (in millions): As of March 31, 2016 Assets Corporate Amount at Risk VIEs: Westwood Funds® $ 3,598 $ 6 $ 6 Common Trust Funds 2,939 3 3 Collective Investment Trusts 278 — — LLCs 128 — — UCITS Fund 722 2 2 VIE totals 7,665 11 11 All other assets: Private Wealth 2,238 Institutional 11,232 Total AUM $ 21,135 |
LONG-TERM INCENTIVE COMPENSAT27
LONG-TERM INCENTIVE COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Total Expense Recorded for Stock Based Compensation | The following table presents the total stock based compensation expense recorded for stock based compensation arrangements for the periods indicated (in thousands): Three Months Ended March 31, 2016 2015 Service condition stock based compensation expense $ 2,550 $ 2,183 Performance condition stock based compensation expense 1,243 1,354 Stock based compensation expense under the Plan 3,793 3,537 Canada EB Plan stock based compensation expense 210 141 Total stock based compensation expense $ 4,003 $ 3,678 |
Restricted Stock Subject Only to a Service Condition | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Status and Changes in Restricted Stock Grants that Subject to Service Condition | The following table details the status and changes in our restricted stock grants subject only to a service condition for the three months ended March 31, 2016 : Restricted shares subject only to a service condition: Shares Weighted Average Grant Date Fair Value Non-vested, January 1, 2016 580,469 $ 56.76 Granted 243,448 47.41 Vested (162,468 ) 50.66 Forfeited (8,999 ) 58.98 Non-vested, March 31, 2016 652,450 $ 54.76 |
Restricted Shares Subject to Service and Performance Conditions | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |
Status and Changes in Restricted Stock Grants that Subject to Service Condition | Under the Plan, certain key employees are provided agreements for grants of restricted shares that vest over multiple years provided that annual performance goals established by the Compensation Committee of Westwood’s board of directors are met. Each year the Compensation Committee establishes a specific goal for that year’s vesting of the restricted shares, which historically has been based upon Westwood’s adjusted pre-tax income, as defined below. The date that the Compensation Committee establishes the annual goal is considered to be the grant date and the fair value measurement date to determine expense on the shares that are likely to vest. In most cases, the vesting period ends when the Compensation Committee formally approves the performance-based restricted stock vesting based on the final calculation of adjusted pre-tax income as derived from the Company’s audited consolidated financial statements. If a portion of the performance-based restricted shares does not vest, no compensation expense is recognized for that portion and any previously recognized compensation expense related to shares that do not vest is reversed. In March 2016, the Compensation Committee established the 2016 goal for adjusted pre-tax income, which is equal to income before income taxes increased by expenses incurred for the year for (i) incentive compensation for all officers and employees, (ii) performance-based restricted stock awards, and (iii) mutual fund share incentive awards, and excludes start up, non-recurring and similar expense items, at the Compensation Committee’s discretion. Beginning in the first quarter of 2016, we concluded that it was probable that we would meet the performance goals required to vest the applicable performance based restricted shares this year and began recording expense related to those shares. Restricted shares subject to service and performance conditions: Shares Weighted Average Non-vested, January 1, 2016 101,313 $ 61.29 Granted 143,711 55.90 Vested (101,313 ) 61.29 Forfeited — — Non-vested, March 31, 2016 143,711 $ 55.90 |
SEGMENT REPORTING (Tables)
SEGMENT REPORTING (Tables) | 3 Months Ended |
Mar. 31, 2016 | |
Segment Reporting [Abstract] | |
Intersegment Balances | Advisory Trust Westwood Eliminations Consolidated (in thousands) Three Months Ended March 31, 2016 Net fee revenues from external sources $ 21,815 $ 7,465 $ — $ — $ 29,280 Net intersegment revenues 4,394 — — (4,394 ) — Net interest and dividend revenue 133 2 — — 135 Other, net (3 ) (283 ) — — (286 ) Total revenues $ 26,339 $ 7,184 $ — $ (4,394 ) $ 29,129 Economic Earnings $ 9,076 $ 1,032 $ (2,015 ) $ — $ 8,093 Less: Restricted stock expense 4,003 Intangible amortization 490 Deferred taxes on goodwill 78 Net income $ 3,522 Segment assets $ 184,478 $ 66,794 $ 8,264 $ (95,084 ) $ 164,452 Segment goodwill $ 5,219 $ 21,925 $ — $ — $ 27,144 Three Months Ended March 31, 2015 Net fee revenues from external sources $ 24,217 $ 5,150 $ — $ — $ 29,367 Net intersegment revenues 3,627 — — (3,627 ) — Net interest and dividend revenue 49 — — — 49 Other, net 191 1 — — 192 Total revenues $ 28,084 $ 5,151 $ — $ (3,627 ) $ 29,608 Economic Earnings $ 10,717 $ 503 $ (1,804 ) $ — $ 9,416 Less: Restricted stock expense 3,678 Intangible amortization 90 Deferred taxes on goodwill 38 Net income $ 5,610 Segment assets $ 146,948 $ 15,327 $ 10,914 $ (46,331 ) $ 126,858 Segment goodwill $ 5,219 $ 6,036 $ — $ — $ 11,255 |
DESCRIPTION OF THE BUSINESS (De
DESCRIPTION OF THE BUSINESS (Details Textual) - USD ($) | Apr. 01, 2015 | Mar. 31, 2016 | Dec. 31, 2015 |
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Date of incorporation | Dec. 12, 2001 | ||
Contingent consideration | $ 9,309,000 | $ 9,023,000 | |
Woodway Financial Advisors | |||
Organization Consolidation And Presentation Of Financial Statements [Line Items] | |||
Cash and stock consideration transferred | $ 31,000,000 | ||
Maximum earn-out amount | 15,000,000 | ||
Consideration transferred | 39,700,000 | ||
Cash payment | $ 25,300,000 | ||
Common stock issued, shares | 109,712 | ||
Value after discount of common stock issued | $ 5,300,000 | ||
Value of common stock issued | 6,700,000 | ||
Contingent consideration | $ 9,100,000 |
EARNINGS PER SHARE (Details Tex
EARNINGS PER SHARE (Details Textual) - shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Restricted Stock | ||
Antidilutive Securities Excluded From Computation Of Earnings Per Share [Line Items] | ||
Anti-dilutive restricted shares | 94,000 | 44,000 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Computation of Basic and Diluted Shares | ||
Net income | $ 3,522 | $ 5,610 |
Weighted average shares outstanding - basic (shares) | 7,862,449 | 7,596,223 |
Dilutive potential shares from unvested restricted shares (shares) | 102,217 | 264,867 |
Incremental Common Shares Attributable to Dilutive Effect of Contingently Issuable Shares | 82,418 | |
Weighted average shares outstanding - diluted (shares) | 8,047,084 | 7,861,090 |
Earnings per share: | ||
Basic (dollars per share) | $ 0.45 | $ 0.74 |
Diluted (dollars per share) | $ 0.44 | $ 0.71 |
INVESTMENTS (Details)
INVESTMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Investment balances | |||
Cost | $ 44,991 | $ 72,804 | |
Gross Unrealized Gains | 166 | $ 15 | |
Gross Unrealized Losses | (402) | (499) | |
Estimated Market Value | 44,755 | 72,320 | |
U.S. Government and Government agency obligations | |||
Investment balances | |||
Cost | 22,180 | 50,972 | |
Gross Unrealized Gains | 32 | 15 | |
Gross Unrealized Losses | 0 | (15) | |
Estimated Market Value | 22,212 | 50,972 | |
Money market funds | |||
Investment balances | |||
Cost | 10,873 | 9,179 | |
Estimated Market Value | 10,873 | 9,179 | |
Equity funds | |||
Investment balances | |||
Cost | 11,938 | 12,653 | |
Gross Unrealized Gains | 134 | 0 | |
Gross Unrealized Losses | (402) | $ (484) | |
Estimated Market Value | $ 11,670 | $ 12,169 |
INVESTMENTS (Details Textual)
INVESTMENTS (Details Textual) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Schedule Of Investments [Line Items] | ||
Estimated Market Value | $ 44,755 | $ 72,320 |
VIE | ||
Schedule Of Investments [Line Items] | ||
Estimated Market Value | $ 10,600 | $ 10,700 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Investments in securities: | ||
Investments in trading securities | $ 44,755 | $ 72,320 |
Contingent consideration | (9,309) | (9,023) |
Fair Value, Net Asset (Liability) | 35,446 | 63,297 |
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases | 286 | |
Level 1 | ||
Investments in securities: | ||
Investments in trading securities | 41,684 | 69,260 |
Contingent consideration | 0 | |
Fair Value, Net Asset (Liability) | 41,684 | 69,260 |
Level 2 | ||
Investments in securities: | ||
Investments in trading securities | 3,071 | 3,060 |
Contingent consideration | 0 | |
Fair Value, Net Asset (Liability) | 3,071 | 3,060 |
Level 3 | ||
Investments in securities: | ||
Investments in trading securities | 0 | 0 |
Contingent consideration | (9,309) | (9,023) |
Fair Value, Net Asset (Liability) | $ (9,309) | $ (9,023) |
FAIR VALUE MEASUREMENTS FAIR VA
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Apr. 01, 2015 |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 9,309 | $ 9,023 | |
Level 3 | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 9,309 | $ 9,023 | |
Woodway Financial Advisors | |||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | |||
Contingent consideration | $ 9,100 |
FAIR VALUE MEASUREMENTS FAIR 36
FAIR VALUE MEASUREMENTS FAIR VALUE MEASUREMENTS (Details 3) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Dec. 31, 2015 | |
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Fair Value, Measurement with Unobservable Inputs Reconciliation, Recurring Basis, Liability, Purchases | $ 286 | |
Contingent consideration | 9,309 | $ 9,023 |
Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Contingent consideration | 9,309 | $ 9,023 |
Contingent consideration | Level 3 | ||
Fair Value Assets And Liabilities Measured On Recurring And Nonrecurring Basis [Line Items] | ||
Beginning balance, December 31, 2015 | $ 9,023 |
ACQUISITIONS, GOODWILL AND OT37
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details Textual) - USD ($) | Apr. 01, 2015 | Mar. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2015 | Dec. 31, 2015 |
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items] | ||||||
Contingent consideration | $ 9,309,000 | $ 9,023,000 | ||||
Professional services | 1,646,000 | $ 2,072,000 | ||||
Goodwill impairment loss | $ 0 | $ 0 | $ 0 | |||
Woodway Financial Advisors | ||||||
Schedule Of Business Acquisitions Purchase Price Allocation [Line Items] | ||||||
Cash and stock consideration transferred | $ 31,000,000 | |||||
Maximum earn-out amount | $ 15,000,000 | |||||
Earn-out amount, percentage paid in cash | 54.84% | |||||
Earn-out amount, percentage paid in shares | 45.16% | |||||
Consideration transferred | $ 39,700,000 | |||||
Cash payment | $ 25,300,000 | |||||
Common stock issued, shares | 109,712 | |||||
Value after discount of common stock issued | $ 5,300,000 | |||||
Value of common stock issued | 6,700,000 | |||||
Contingent consideration | $ 9,100,000 | |||||
Number of days after the last day of the Earn-Out Period | 75 days | |||||
Goodwill expected to be deductible for tax purposes | $ 6,800,000 | 6,800,000 | ||||
Business acquisition, transaction costs | 1,100,000 | 1,100,000 | ||||
Professional services | $ 700,000 | |||||
Revenue of acquiree since acquisition date | 2,400,000 | |||||
Earnings of acquiree since acquisition date | $ 600,000 |
ACQUISITIONS, GOODWILL AND OT38
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 | Apr. 01, 2015 | Mar. 31, 2015 |
Business Acquisition [Line Items] | ||||
Goodwill | $ 27,144 | $ 27,144 | $ 11,255 | |
Woodway Financial Advisors | ||||
Business Acquisition [Line Items] | ||||
Cash and cash equivalents | $ 1,205 | |||
Accounts receivable | 936 | |||
Other current assets | 253 | |||
Goodwill | 15,889 | |||
Identifiable intangibles | 21,334 | |||
Property and equipment | 197 | |||
Accounts payable and accrued liabilities | (61) | |||
Income tax payable | (20) | |||
Purchase price | $ 39,733 |
ACQUISITIONS, GOODWILL AND OT39
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details 2) - Woodway Financial Advisors $ in Thousands | Apr. 01, 2015USD ($) |
Business Acquisition [Line Items] | |
Identifiable intangibles | $ 21,334 |
Customer Accounts [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangibles | $ 20,391 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 15 years |
Noncompete Agreements [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangibles | $ 257 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 3 years |
Trade Names [Member] | |
Business Acquisition [Line Items] | |
Identifiable intangibles | $ 686 |
Acquired Finite-lived Intangible Assets, Weighted Average Useful Life | 5 years |
ACQUISITIONS, GOODWILL AND OT40
ACQUISITIONS, GOODWILL AND OTHER INTANGIBLE ASSETS (Details 3) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016 | Sep. 30, 2015 | Mar. 31, 2015 | Sep. 30, 2014 | |
Business Acquisition [Line Items] | ||||
Revenues | $ 29,129 | $ 29,608 | ||
Net income | $ 3,522 | $ 5,610 | ||
Woodway Financial Advisors | ||||
Business Acquisition [Line Items] | ||||
Business Acquisition, Pro Forma Net Income (Loss) | $ 6,484 | |||
Revenues | $ 29,129 | |||
Business Acquisition, Pro Forma Revenue | $ 32,301 | |||
Net income | $ 3,522 |
BALANCE SHEET COMPONENTS (Detai
BALANCE SHEET COMPONENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Property and equipment | ||
Accumulated depreciation | $ (3,895) | $ (3,687) |
Net property and equipment | 4,027 | 2,192 |
Leasehold improvements | ||
Property and equipment | ||
Property and equipment cost | 3,301 | 1,728 |
Furniture and fixtures | ||
Property and equipment | ||
Property and equipment cost | 2,239 | 1,804 |
Computer hardware and office equipment | ||
Property and equipment | ||
Property and equipment cost | 2,134 | 2,116 |
Construction in progress | ||
Property and equipment | ||
Property and equipment cost | $ 248 | $ 231 |
BALANCE SHEET COMPONENTS (Det42
BALANCE SHEET COMPONENTS (Details 1) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Components of accumulated other comprehensive loss | ||
Foreign currency translation adjustment | $ (3,385) | $ (4,688) |
Accumulated other comprehensive loss | $ (3,385) | $ (4,688) |
BALANCE SHEET COMPONENTS BALANC
BALANCE SHEET COMPONENTS BALANCE SHEET COMPONENTS (Details 2) (Details) $ / shares in Units, $ in Thousands | 3 Months Ended |
Mar. 31, 2016USD ($)$ / sharesshares | |
Equity [Abstract] | |
Stock Repurchase Program, Authorized Amount | $ 10,000 |
Purchases of treasury stock, shares | shares | 93,053 |
Treasury Stock Acquired, Average Cost Per Share | $ / shares | $ 47.41 |
Treasury Stock, Value, Acquired, Cost Method | $ 4,411 |
VARIABLE INTEREST ENTITIES (Det
VARIABLE INTEREST ENTITIES (Details Textual) € in Millions, $ in Millions | 1 Months Ended | 3 Months Ended | ||||
May. 31, 2015USD ($)mutual_fund | Oct. 31, 2014EUR (€) | Oct. 31, 2014USD ($) | Jan. 31, 2014USD ($) | Mar. 31, 2016USD ($)Number_of_Limited_PartnershipNumber_of_Limited_Liability_Companies | Mar. 31, 2015USD ($) | |
Variable Interest Entity [Line Items] | ||||||
Number of clients in which investment advisory services are provided | Number_of_Limited_Partnership | 2 | |||||
New Westwood mutual funds | mutual_fund | 2 | |||||
Fee revenues from Westwood VIEs | $ 13 | $ 14.3 | ||||
Westwood Mutual Fund | ||||||
Variable Interest Entity [Line Items] | ||||||
Amount provided to fund for the sole purpose of showing economic substance | $ 5.4 | |||||
Common Trust Funds | ||||||
Variable Interest Entity [Line Items] | ||||||
Amount provided to fund for the sole purpose of showing economic substance | $ 2 | |||||
UCITS Fund | ||||||
Variable Interest Entity [Line Items] | ||||||
Amount provided to fund for the sole purpose of showing economic substance | € 1.6 | $ 2 | ||||
Minimum [Member] | ||||||
Variable Interest Entity [Line Items] | ||||||
Number of limited liability companies in which some clients hold their investments | Number_of_Limited_Liability_Companies | 1 | |||||
Maximum [Member] | ||||||
Variable Interest Entity [Line Items] | ||||||
Number of limited liability companies in which some clients hold their investments | Number_of_Limited_Liability_Companies | 10 |
VARIABLE INTEREST ENTITIES (D45
VARIABLE INTEREST ENTITIES (Details) - USD ($) $ in Thousands | Mar. 31, 2016 | Dec. 31, 2015 |
Variable Interest Entities | ||
Assets Under Management | $ 21,135,000 | |
Estimated Market Value | 44,755 | $ 72,320 |
Westwood Funds® | ||
Variable Interest Entities | ||
Assets Under Management | 3,598,000 | |
Estimated Market Value | 6,000 | |
Amount at Risk | 6,000 | |
Common Trust Funds | ||
Variable Interest Entities | ||
Assets Under Management | 2,939,000 | |
Estimated Market Value | 3,000 | |
Amount at Risk | 3,000 | |
Collective Investment Trusts | ||
Variable Interest Entities | ||
Assets Under Management | 278,000 | |
UCITS Fund | ||
Variable Interest Entities | ||
Assets Under Management | 722,000 | |
Estimated Market Value | 2,000 | |
Amount at Risk | 2,000 | |
VIE totals | ||
Variable Interest Entities | ||
Assets Under Management | 7,665,000 | |
Estimated Market Value | 10,600 | $ 10,700 |
Corporate Investment [Member] | ||
Variable Interest Entities | ||
Estimated Market Value | 11,000 | |
Amount at Risk | 11,000 | |
Private Wealth | ||
Variable Interest Entities | ||
Assets Under Management | 2,238,000 | |
Institutional | ||
Variable Interest Entities | ||
Assets Under Management | 11,232,000 | |
LLCs | ||
Variable Interest Entities | ||
Assets Under Management | $ 128,000 |
LONG-TERM INCENTIVE COMPENSAT46
LONG-TERM INCENTIVE COMPENSATION (Details Textual) $ / shares in Units, CAD in Millions | 3 Months Ended | 9 Months Ended | |||
Mar. 31, 2016USD ($)$ / sharesshares | Mar. 31, 2016CADshares | Mar. 31, 2015USD ($) | Sep. 30, 2015shares | Dec. 31, 2015USD ($)shares | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Amount of shares purchased in the open market | $ 4,411,000 | $ 0 | |||
Purchases of treasury stock, shares | shares | 93,053 | 93,053 | |||
Remaining unrecognized compensation cost recognized over a remaining weighted average period | 2 years 10 months 2 days | 2 years 10 months 2 days | |||
Accrued liability | $ 800,000 | $ 2,000,000 | |||
Mutual Fund | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Mutual fund vesting period | 1 year | 1 year | |||
Service period of mutual fund share incentive award | 2 years | 2 years | |||
Expense related to mutual fund share incentive awards | $ 262,000 | 426,000 | |||
Restricted Stock | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Total number of shares that may be issued under the stock based compensation Plan (including predecessor plans to the Plan) | shares | 4,398,100 | ||||
Shares remain available for issuance | shares | 353,000 | ||||
Remaining unrecognized compensation cost | $ 34,100,000 | ||||
Nonvested restricted shares | shares | 652,450 | 580,469 | |||
Expense related to mutual fund share incentive awards | $ 4,003,000 | $ 3,678,000 | |||
Canadian Plan | Westwood International Advisors Inc | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Shares remain available for issuance | shares | 78,150 | ||||
Share Based Compensation Arrangement By Share Based Payment Award Available For Grant, Original | $ 7,700,000 | CAD 10 | |||
Fund purchases of common stock | 43,648 | ||||
Purchases of common stock with respect to awards granted | $ 4,600,000 | CAD 6 | |||
Share price | $ / shares | $ 58.65 | ||||
Amount of shares purchased in the open market | $ 600,000 | ||||
Purchases of treasury stock, shares | shares | 10,474 | ||||
Remaining unrecognized compensation cost | $ 1,000,000 | ||||
Remaining unrecognized compensation cost recognized over a remaining weighted average period | 2 years | 2 years | |||
Performance Based Restricted Shares For Future Performance Years | |||||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | |||||
Nonvested restricted shares | shares | 51,258 |
LONG-TERM INCENTIVE COMPENSAT47
LONG-TERM INCENTIVE COMPENSATION (Details) - Restricted Stock - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $ 4,003 | $ 3,678 |
Service condition stock based compensation expense | The Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 2,550 | 2,183 |
Performance condition stock based compensation expense | The Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 1,243 | 1,354 |
Stock based compensation expense under the Plan | The Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | 3,793 | 3,537 |
Canada EB Plan stock based compensation expense | Canada EB Plan | ||
Share Based Compensation Arrangement By Share Based Payment Award [Line Items] | ||
Allocated Share-based Compensation Expense | $ 210 | $ 141 |
LONG-TERM INCENTIVE COMPENSAT48
LONG-TERM INCENTIVE COMPENSATION (Details 1) - Restricted Shares Subject Only to a Service Condition - $ / shares | 3 Months Ended | |
Mar. 31, 2016 | Mar. 31, 2015 | |
Restricted shares subject only to a service condition: | ||
Non-vested, beginning balance, shares | 580,469 | |
Granted (shares) | 243,448 | |
Vested (shares) | (162,468) | |
Forfeited (shares) | (8,999) | |
Non-vested, ending balance, shares | 652,450 | |
Non-vested, beginning balance, (dollars per share) | $ 56.76 | |
Granted (dollars per share) | 47.41 | |
Vested (dollars per share) | $ 50.66 | |
Forfeited (dollars per share) | $ 58.98 | |
Non-vested, ending balance, (dollars per share) | $ 54.76 |
LONG-TERM INCENTIVE COMPENSAT49
LONG-TERM INCENTIVE COMPENSATION (Details 2) - Restricted Shares Subject to Service and Performance Conditions | 3 Months Ended |
Mar. 31, 2016$ / sharesshares | |
Restricted shares subject only to a service condition: | |
Non-vested, beginning balance, shares | shares | 101,313 |
Granted (shares) | shares | 143,711 |
Vested (shares) | shares | (101,313) |
Forfeited (shares) | shares | 0 |
Non-vested, ending balance, shares | shares | 143,711 |
Non-vested, beginning balance, (dollars per share) | $ / shares | $ 61.29 |
Granted (dollars per share) | $ / shares | 55.90 |
Vested (dollars per share) | $ / shares | 61.29 |
Forfeited (dollars per share) | $ / shares | 0 |
Non-vested, ending balance, (dollars per share) | $ / shares | $ 55.90 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Textual) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
UCITS Fund | |||
Related Party Transaction [Line Items] | |||
Fees earned from related party | $ 319,000 | $ 346,000 | |
Fees unpaid from related party | 442,000 | $ 96,000 | |
Trust | |||
Related Party Transaction [Line Items] | |||
Due from related party | 110,000 | $ 0 | |
Fees earned from related party | $ 112,000 | $ 74,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Textual) CAD in Millions | Nov. 06, 2012CAD | Nov. 05, 2012CAD | Aug. 03, 2012CAD | Mar. 31, 2016USD ($) | Mar. 31, 2016USD ($) | Dec. 31, 2015USD ($) |
Loss Contingencies [Line Items] | ||||||
Percentage of defense costs which will be covered by insurance | 50.00% | |||||
Insurance proceeds | $ | $ 928,000 | |||||
Receivable | $ | $ 94,000 | $ 94,000 | $ 240,000 | |||
General Damage | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claim for damages | CAD 1 | |||||
Special Damage | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claim for damages | 10 | |||||
Punitive Damage | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claim for damages | CAD 1 | |||||
First Lawsuit by AGF | ||||||
Loss Contingencies [Line Items] | ||||||
Lawsuit filing date | On August 3, 2012, AGF Management Limited and AGF Investments Inc. (collectively, “AGF”) filed a lawsuit in the Ontario Superior Court of Justice against Westwood, certain Westwood employees and the executive recruiting firm of Warren International, LLC. (“Warren”). | |||||
Litigation claim for damages | CAD 10 | |||||
Second Lawsuit by AGF | ||||||
Loss Contingencies [Line Items] | ||||||
Lawsuit filing date | On November 6, 2012, AGF filed a second lawsuit against Westwood, Westwood Management and an employee of a Westwood subsidiary | |||||
Second Lawsuit by AGF | General Damage | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claim for damages | CAD 5 | |||||
Second Lawsuit by AGF | Punitive Damage | ||||||
Loss Contingencies [Line Items] | ||||||
Litigation claim for damages | CAD 1 |
SEGMENT REPORTING (Details Text
SEGMENT REPORTING (Details Textual) | 3 Months Ended |
Mar. 31, 2016Segment | |
Segment Reporting [Abstract] | |
Number of operating segments | 2 |
SEGMENT REPORTING (Details)
SEGMENT REPORTING (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2016 | Mar. 31, 2015 | Mar. 31, 2014 | Dec. 31, 2015 | |
Segment Reporting Information [Line Items] | ||||
Net fee revenues from external sources | $ 29,280 | $ 29,367 | ||
Net interest and dividend revenue | 135 | 49 | ||
Other, net | (286) | 192 | ||
Total revenues | 29,129 | 29,608 | ||
Economic Earnings | 8,093 | 9,416 | $ 9,416 | |
Restricted stock expense | 4,003 | 3,678 | ||
Intangible amortization | 490 | 90 | ||
Deferred taxes on goodwill | 78 | 38 | ||
Net income | 3,522 | 5,610 | ||
Segment assets | 164,452 | 126,858 | $ 181,336 | |
Segment goodwill | 27,144 | 11,255 | $ 27,144 | |
Operating Segments | Advisory | ||||
Segment Reporting Information [Line Items] | ||||
Net fee revenues from external sources | 21,815 | 24,217 | ||
Net intersegment revenues | 4,394 | 3,627 | ||
Net interest and dividend revenue | 133 | 49 | ||
Other, net | (3) | 191 | ||
Total revenues | 26,339 | 28,084 | ||
Economic Earnings | 9,076 | 10,717 | ||
Segment assets | 184,478 | 146,948 | ||
Segment goodwill | 5,219 | 5,219 | ||
Operating Segments | Trust | ||||
Segment Reporting Information [Line Items] | ||||
Net fee revenues from external sources | 7,465 | 5,150 | ||
Net intersegment revenues | 0 | 0 | ||
Net interest and dividend revenue | 2 | 0 | ||
Other, net | (283) | 1 | ||
Total revenues | 7,184 | 5,151 | ||
Economic Earnings | 1,032 | 503 | ||
Segment assets | 66,794 | 15,327 | ||
Segment goodwill | 21,925 | 6,036 | ||
Westwood Holdings | ||||
Segment Reporting Information [Line Items] | ||||
Net fee revenues from external sources | 0 | 0 | ||
Net intersegment revenues | 0 | 0 | ||
Net interest and dividend revenue | 0 | 0 | ||
Other, net | 0 | 0 | ||
Total revenues | 0 | 0 | ||
Economic Earnings | (2,015) | (1,804) | ||
Segment assets | 8,264 | 10,914 | ||
Segment goodwill | 0 | 0 | ||
Eliminations | ||||
Segment Reporting Information [Line Items] | ||||
Net fee revenues from external sources | 0 | 0 | ||
Net intersegment revenues | (4,394) | (3,627) | ||
Net interest and dividend revenue | 0 | 0 | ||
Other, net | 0 | 0 | ||
Total revenues | (4,394) | (3,627) | ||
Economic Earnings | 0 | 0 | ||
Segment assets | (95,084) | (46,331) | ||
Segment goodwill | 0 | 0 | ||
Restricted Stock | ||||
Segment Reporting Information [Line Items] | ||||
Allocated Share-based Compensation Expense | $ 4,003 | $ 3,678 |
SUBSEQUENT EVENTS (Details Text
SUBSEQUENT EVENTS (Details Textual) - $ / shares | Apr. 27, 2016 | Mar. 31, 2016 | Mar. 31, 2015 |
Subsequent Event [Line Items] | |||
Dividends declared per share (dollars per share) | $ 0.57 | $ 0.50 | |
Subsequent Event | |||
Subsequent Event [Line Items] | |||
Dividends declared per share (dollars per share) | $ 0.57 | ||
Dividends payable, date to be paid | Jul. 1, 2016 | ||
Dividends payable, date of record | Jun. 10, 2016 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2016 | Mar. 31, 2015 | Dec. 31, 2015 | |
Income Tax Disclosure [Abstract] | |||
Effective Income Tax Rate Reconciliation, Percent | 37.60% | 33.00% | |
Unrecognized Tax Benefits, Period Increase (Decrease) | $ 251,000 | ||
Unrecognized Tax Benefits | 2,014,000 | $ 1,629,000 | |
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions | 69,000 | ||
Unrecognized Tax Benefits, Increase Resulting from Current Period Tax Positions | 316,000 | ||
Significant Change in Unrecognized Tax Benefits is Reasonably Possible, Amount of Unrecorded Benefit | 1,900,000 | ||
Significant Change in Income Tax Provision is Reasonably Possible, Amount of Unrecorded Benefit | $ 1,300,000 |