Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2017 | Nov. 06, 2017 | |
Document And Entity Information | ||
Entity Registrant Name | B. Riley Financial, Inc. | |
Entity Central Index Key | 1,464,790 | |
Document Type | 10-Q | |
Trading Symbol | RILY | |
Document Period End Date | Sep. 30, 2017 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity a Well-known Seasoned Issuer | No | |
Entity a Voluntary Filer | No | |
Entity's Reporting Status Current | Yes | |
Entity Filer Category | Accelerated Filer | |
Entity Common Stock, Shares Outstanding | 26,467,594 | |
Document Fiscal Period Focus | Q3 | |
Document Fiscal Year Focus | 2,017 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets (Unaudited) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Assets | ||
Cash and cash equivalents | $ 102,409 | $ 112,105 |
Restricted cash | 9,269 | 3,294 |
Due from clearing brokers | 21,580 | |
Securities and other investments owned, at fair value | 95,965 | 16,579 |
Securities borrowed | 730,022 | |
Accounts receivable, net | 19,924 | 18,989 |
Due from related parties | 6,082 | 3,009 |
Advances against customer contracts | 5,298 | 427 |
Prepaid expenses and other assets | 20,375 | 5,742 |
Property and equipment, net | 13,105 | 5,785 |
Goodwill | 100,903 | 48,903 |
Other intangible assets, net | 59,671 | 41,166 |
Deferred income taxes | 41,474 | 8,619 |
Total assets | 1,226,077 | 264,618 |
Liabilities | ||
Accounts payable | 4,046 | 2,703 |
Accrued expenses and other liabilities | 58,954 | 53,168 |
Deferred revenue | 3,181 | 4,130 |
Due to related parties and partners | 1,244 | 10,037 |
Securities sold not yet purchased | 25,046 | 846 |
Securities loaned | 728,201 | |
Mandatorily redeemable noncontrolling interests | 12,830 | 4,019 |
Acquisition consideration payable | 10,381 | |
Notes payable | 2,364 | |
Senior notes payable | 115,574 | 27,700 |
Contingent consideration | 1,242 | |
Total liabilities | 951,440 | 114,226 |
Commitments and contingencies | ||
B. Riley Financial, Inc. stockholders' equity: | ||
Preferred stock, $0.0001 par value; 1,000,000 shares authorized; none issued | ||
Common stock, $0.0001 par value; 40,000,000 shares authorized; 26,461,568 and 19,140,342 issued and outstanding as of September 30, 2017 and December 31, 2016, respectively | 2 | 2 |
Additional paid-in capital | 259,047 | 141,170 |
Retained earnings | 15,956 | 9,887 |
Accumulated other comprehensive loss | (321) | (1,712) |
Total B. Riley Financial, Inc. stockholders' equity | 274,684 | 149,347 |
Noncontrolling interests | (47) | 1,045 |
Total equity | 274,637 | 150,392 |
Total liabilities and equity | $ 1,226,077 | $ 264,618 |
Condensed Consolidated Balance3
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
Statement of Financial Position [Abstract] | ||
Preferred stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Preferred stock, authorized | 1,000,000 | 1,000,000 |
Common stock, par value (in dollars per share) | $ 0.0001 | $ 0.0001 |
Common stock, authorized | 40,000,000 | 40,000,000 |
Common stock, issued | 26,461,568 | 19,140,342 |
Common stock, outstanding | 26,461,568 | 19,140,342 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Revenues: | ||||
Services and fees | $ 85,141 | $ 50,300 | $ 202,354 | $ 90,505 |
Interest income - Securities lending | 7,206 | 9,424 | ||
Sale of goods | 79 | 6,666 | 221 | 6,668 |
Total revenues | 92,426 | 56,966 | 211,999 | 97,173 |
Operating expenses: | ||||
Direct cost of services | 10,138 | 12,841 | 46,224 | 25,084 |
Cost of goods sold | 124 | 2,391 | 313 | 2,393 |
Selling, general and administrative expenses | 70,962 | 22,727 | 132,836 | 48,844 |
Restructuring charge | 4,896 | 3,585 | 11,484 | 3,585 |
Interest expense - Securities lending | 4,950 | 6,515 | ||
Total operating expenses | 91,070 | 41,544 | 197,372 | 79,906 |
Operating income | 1,356 | 15,422 | 14,627 | 17,267 |
Other income (expense): | ||||
Interest income | 76 | 26 | 358 | 32 |
Loss from equity investment | (157) | (157) | ||
Interest expense | (2,510) | (991) | (5,195) | (1,398) |
(Loss) income before income taxes | (1,235) | 14,457 | 9,633 | 15,901 |
Benefit from (provision for) income taxes | 1,357 | (6,083) | 7,753 | (6,184) |
Net income | 122 | 8,374 | 17,386 | 9,717 |
Net (loss) income attributable to noncontrolling interests | (246) | (565) | (283) | 631 |
Net income attributable to B. Riley Financial, Inc. | $ 368 | $ 8,939 | $ 17,669 | $ 9,086 |
Basic income per share (in dollars per share) | $ 0.01 | $ 0.47 | $ 0.80 | $ 0.51 |
Diluted income per share (in dollars per share) | 0.01 | 0.47 | 0.76 | 0.50 |
Cash dividends per share (in dollars per share) | $ 0.13 | $ 0.03 | $ 0.55 | $ 0.03 |
Weighted average basic shares outstanding (in shares) | 26,059,490 | 18,977,072 | 22,180,808 | 17,805,127 |
Weighted average diluted shares outstanding (in shares) | 27,639,862 | 19,191,035 | 23,385,014 | 18,009,158 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Net income | $ 122 | $ 8,374 | $ 17,386 | $ 9,717 |
Other comprehensive income (loss): | ||||
Change in cumulative translation adjustment | 345 | (23) | 1,391 | (40) |
Other comprehensive income (loss), net of tax | 345 | (23) | 1,391 | (40) |
Total comprehensive income | 467 | 8,351 | 18,777 | 9,677 |
Comprehensive (loss) income attributable to noncontrolling interests | (246) | (565) | (283) | 631 |
Comprehensive income attributable to B. Riley Financial, Inc. | $ 713 | $ 8,916 | $ 19,060 | $ 9,046 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Equity (Unaudited) - USD ($) $ in Thousands | Preferred Stock {Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Retained Earnings [Member] | Accumulated Other Comprehensive Loss [Member] | Noncontrolling Interest [Member] | Total |
Balance at Beginning at Dec. 31, 2015 | $ 2 | $ 116,799 | $ (6,305) | $ (1,058) | $ (118) | $ 109,320 | |
Balance at Beginning (in shares) at Dec. 31, 2015 | 16,448,119 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of MK Capital, LLC - contigent equity consideration on February 2, 2017 | |||||||
Issuance of common stock for acquisition of MK Capital, LLC - contigent equity consideration on February 2, 2017 (in shares) | 166,667 | ||||||
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 | |||||||
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 (in shares) | |||||||
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 | |||||||
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 (in shares) | |||||||
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 | |||||||
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 (in shares) | |||||||
Vesting of restricted stock, net of shares withheld for employer taxes | |||||||
Vesting of restricted stock, net of shares withheld for employer taxes (in shares) | 7,306 | ||||||
Offering of common stock, net of offering expenses | 22,759 | 22,759 | |||||
Offering of common stock, net of offering expenses (in shares) | 2,420,980 | ||||||
Share based payments | 1,831 | 1,831 | |||||
Dividends on common stock | (571) | (571) | |||||
Net income for the nine months ended September 30, 2017 | 9,086 | 1,209 | 9,717 | ||||
Distributions to noncontrolling interest | |||||||
Foreign currency translation adjustment | (40) | (40) | |||||
Balance at End at Sep. 30, 2016 | $ 2 | 141,389 | 2,210 | (1,098) | 1,091 | 143,594 | |
Balance at End (in shares) at Sep. 30, 2016 | 19,043,072 | ||||||
Balance at Beginning at Dec. 31, 2016 | $ 2 | 141,170 | 9,887 | (1,712) | 1,045 | 150,392 | |
Balance at Beginning (in shares) at Dec. 31, 2016 | 19,140,342 | ||||||
Increase (Decrease) in Stockholders' Equity [Roll Forward] | |||||||
Issuance of common stock for acquisition of MK Capital, LLC - contigent equity consideration on February 2, 2017 | 1,151 | 1,151 | |||||
Issuance of common stock for acquisition of MK Capital, LLC - contigent equity consideration on February 2, 2017 (in shares) | 166,666 | ||||||
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 | 1,952 | 1,952 | |||||
Issuance of common stock for acquisition of Dialectic general partner interests on April 13, 2017 (in shares) | 158,484 | ||||||
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 | 73,472 | 73,472 | |||||
Issuance of common stock for acquisition of FBR & Co. on June 1, 2017 (in shares) | 4,779,354 | ||||||
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 | 36,306 | 36,306 | |||||
Issuance of common stock and common stock warrants for acquisition of Wunderlich on July 3, 2017 (in shares) | 1,974,812 | ||||||
Vesting of restricted stock, net of shares withheld for employer taxes | (2,683) | (2,683) | |||||
Vesting of restricted stock, net of shares withheld for employer taxes (in shares) | 241,910 | ||||||
Offering of common stock, net of offering expenses | |||||||
Offering of common stock, net of offering expenses (in shares) | |||||||
Share based payments | 7,679 | 7,679 | |||||
Dividends on common stock | (11,600) | (11,600) | |||||
Net income for the nine months ended September 30, 2017 | 17,669 | (170) | 17,386 | ||||
Distributions to noncontrolling interest | (922) | (922) | |||||
Foreign currency translation adjustment | 1,391 | 1,391 | |||||
Balance at End at Sep. 30, 2017 | $ 2 | $ 259,047 | $ 15,956 | $ (321) | $ (47) | $ 274,637 | |
Balance at End (in shares) at Sep. 30, 2017 | 26,461,568 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Cash flows from operating activities: | ||
Net income | $ 17,386 | $ 9,717 |
Adjustments to reconcile net income to net cash (used in) provided by operating activities: | ||
Depreciation and amortization | 7,705 | 2,381 |
Provision (recoveries) for doubtful accounts | 827 | (178) |
Share-based compensation | 7,679 | 1,831 |
Recovery of key man life insurance | (6,000) | |
Non-cash interest and other | 319 | 147 |
Effect of foreign currency on operations | (1,022) | 640 |
Loss from equity investment | 157 | |
Deferred income taxes | (24,560) | 1,839 |
Impairment of leaseholds, lease loss accrual and loss on disposal of fixed assets | 2,838 | |
Income allocated and fair value adjustment for mandatorily redeemable noncontrolling interests | 10,766 | 1,450 |
Change in operating assets and liabilities: | ||
Due from clearing brokers | 13,258 | |
Securities and other investments owned | (41,350) | 16,515 |
Securities borrowed | 129,998 | |
Accounts receivable and advances against customer contracts | 1,635 | (1,871) |
Goods held for sale or auction | (8,447) | |
Prepaid expenses and other assets | 15,522 | 1,410 |
Accounts payable, accrued payroll and related expenses, accrued value added tax payable and other accrued expenses | (38,597) | 3,032 |
Amounts due from related parties and partners | (12,313) | (488) |
Securities sold, not yet purchased | 7,700 | (343) |
Deferred revenue | (1,302) | 963 |
Securities loaned | (139,425) | |
Auction and liquidation proceeds payable | (672) | |
Net cash (used in) provided by operating activities | (48,779) | 27,926 |
Cash flows from investing activities: | ||
Acquisition of Wunderlich, net of cash acquired $4,259 | (25,478) | |
Cash acquired from acquisition of FBR & Co. | 15,738 | |
Acquisition of United Online, net of cash acquired $125,542 in 2016 | (10,381) | (33,430) |
Acquisition of other businesses | (2,052) | |
Purchases of property and equipment | (550) | (297) |
Proceeds from key man life insurance | 6,000 | |
Proceeds from sale of property and equipment and intangible asset | 619 | 15 |
Equity investment | (1,015) | |
Increase in restricted cash | (5,797) | (78,161) |
Net cash provided by (used in) investing activities | (22,916) | (111,873) |
Cash flows from financing activities: | ||
Repayment of revolving line of credit | (272) | |
Proceeds from asset based credit facility | 65,987 | 56,255 |
Repayment of asset based credit facility | (65,987) | (56,255) |
Repayment of notes payable | (8,214) | |
Borrowings from participating note payable | 61,400 | |
Payment of contingent consideration | (1,250) | (1,250) |
Proceeds from issuance of senior notes | 89,330 | |
Payment of debt issuance costs | (2,093) | |
Proceeds from issuance of common stock | 22,999 | |
Offering costs from issuance of common stock | (240) | |
Payment of employment taxes on vesting of restricted stock | (2,683) | |
Dividends paid | (13,493) | (571) |
Distribution to noncontrolling interests | (2,878) | (1,680) |
Net cash provided by financing activities | 58,719 | 80,386 |
Decrease in cash and cash equivalents | (12,976) | (3,561) |
Effect of foreign currency on cash | 3,280 | 23 |
Net decrease in cash and cash equivalents | (9,696) | (3,538) |
Cash and cash equivalents, beginning of year | 112,105 | 30,012 |
Cash and cash equivalents, end of period | 102,409 | 26,474 |
Supplemental disclosures: | ||
Interest paid | 11,513 | 505 |
Taxes paid | $ 11,668 | $ 409 |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Cash Flows (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2017 | Sep. 30, 2016 |
Wunderlich Securities, Inc. [Member] | ||
Cash and cash equivalents for aquired | $ 4,259 | |
United Online, Inc. ("UOL") [Member] | ||
Cash and cash equivalents for aquired | $ 125,542 |
ORGANIZATION, BUSINESS OPERATIO
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES | NOTE 1—ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES Organization and Nature of Operations B. Riley Financial, Inc. and its subsidiaries (collectively the “Company”) provide investment banking and financial services to corporate, institutional and high net worth clients, and asset disposition, valuation and appraisal and capital advisory services to a wide range of retail, wholesale and industrial clients, as well as lenders, capital providers, private equity investors and professional services firms throughout the United States, Australia, Canada, and Europe and with the acquisition of United Online, Inc. (“UOL”) on July 1, 2016, provide consumer Internet access and related subscription services. The Company operates in four operating segments: (i) Capital Markets, through which the Company provides investment banking, corporate finance, securities lending, restructuring, research, sales and trading and wealth management services to corporate, institutional and high net worth clients; (ii) Auction and Liquidation, through which the Company provides auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property; (iii) Valuation and Appraisal, through which the Company provides valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs; and (iv) Principal Investments - United Online, through which the Company provides consumer Internet access and related subscription services. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | NOTE 2—SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (a) Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 10, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods. (b) Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, reserves for accounts receivable and slow moving goods held for sale or auction, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share-based arrangements, fair value of contingent consideration in business combination’s and accounting for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. (c) Revenue Recognition Revenues are recognized in accordance with the accounting guidance when persuasive evidence of an arrangement exists, the related services have been provided, the fee is fixed or determinable, and collection is reasonably assured. Revenues in the Capital Markets segment are primarily comprised of (i) fees earned from corporate finance, investment banking, restructuring and wealth management services; (ii) revenues from sales and trading activities; and (iii) interest income from securities lending activities. Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent and from financial advisory services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. Fees from underwriting activities are recognized in earnings when the services related to the underwriting transaction are completed under the terms of the engagement and when the income was determined and is not subject to any other contingencies. Fees earned from wealth management services consist primarily of investment management fees that are recognized over the period the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed. Revenues from sales and trading include (i) commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis; (ii) related net trading gains and losses from market making activities and from the commitment of capital to facilitate customer orders; (iii) fees paid for equity research; and (iv) principal transactions which include realized and unrealized gains and losses and interest and dividend income resulting from our principal investments in equity and other securities for the Company’s account. Revenues from securities lending activities consist of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned. Revenues in the Auction and Liquidation segment are comprised of (i) commissions and fees earned on the sale of goods at auctions and liquidations; (ii) revenues from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation; (iii) revenue from the sale of goods that are purchased by the Company for sale at auction or liquidation sales events; (iv) fees earned from real estate services and the origination of loans; (v) revenues from financing activities is recorded over the lives of related loans receivable using the interest method; and (vi) revenues from contractual reimbursable expenses incurred in connection with auction and liquidation contracts. Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of an arrangement exists, the sales price has been determined, title has passed to the buyer and the buyer has assumed the risks of ownership, and collection is reasonably assured. The commission and fees earned for these services are included in revenues in the accompanying condensed consolidated statements of operations. Under these types of arrangements, revenues also include contractual reimbursable costs. Revenues earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized based on proceeds received. The Company records proceeds received from these types of engagements first as a reduction of contractual reimbursable expenses, second as a recovery of its guarantee and thereafter as revenue, subject to such revenue meeting the criteria of having been fixed or determinable. Contractual reimbursable expenses and amounts advanced to customers for minimum guarantees are initially recorded as advances against customer contracts in the accompanying condensed consolidated balance sheets. If, during the auction or liquidation sale, the Company determines that the proceeds from the sale will not meet the minimum guaranteed recovery value as defined in the auction or liquidation services contract, the Company accrues a loss on the contract in the period that the loss becomes known. The Company also evaluates revenue from auction and liquidation contracts in accordance with the accounting guidance to determine whether to report Auction and Liquidation segment revenue on a gross or net basis. The Company has determined that it acts as an agent in a substantial majority of its auction and liquidation services contracts and therefore reports the auction and liquidation revenues on a net basis. Revenues from the sale of goods are recorded gross and are recognized in the period in which the sale of goods held for sale or auction are completed, title to the property passes to the purchaser and the Company has fulfilled its obligations with respect to the transaction. These revenues are primarily the result of the Company acquiring title to merchandise with the intent of selling the items at auction or for augmenting liquidation sales. For liquidation contracts where we take title to retail goods, our net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional allowances and are recorded net of sales or value added tax. Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized upon the delivery of the completed services to the related customers and collection of the fee is reasonably assured. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs. Revenues in the Principal Investments - United Online segment are primarily comprised of services revenues, which are derived primarily from fees charged to pay accounts; advertising and other revenues; and products revenues, which are derived primarily from the sale mobile broadband service devices, including the related shipping and handling fees. Service revenues are derived primarily from fees charged to pay accounts and are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Advance payments from pay accounts are recorded in the condensed consolidated balance sheets as deferred revenue. In circumstances where payment is not received in advance, revenues are only recognized if collectability is reasonably assured. Advertising revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available. (d) Direct Cost of Services Direct cost of services relate to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to auction and liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments - United Online segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks and data centers, depreciation of network computers and equipment, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs. (e) Interest Expense - Securities Lending Activities Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company. (f) Concentration of Risk Revenue from one liquidation engagement represented 24.4% of total revenues during the three months ended September 30, 2016 and 15.6% of total revenues during the nine months ended September 30, 2016. Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments - United Online segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe. The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts operations with third parties through collaborative arrangements. The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements. (g) Advertising Expenses The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $183 and $339 for the three months ended September 30, 2017 and 2016, respectively, and $1,227 and $1,235 for the nine months ended September 30, 2017 and 2016, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. (h) Share-Based Compensation The Company’s share-based payment awards principally consist of grants of restricted stock and restricted stock units. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period. (i) Restructuring Charge The Company recorded a restructuring charge in the amount of $11,484 during the nine months ended September 30, 2017. In the second and third quarters of 2017, the Company implemented costs savings measures taking into account the planned synergies as a result of the acquisition of FBR & Co. (“FBR”) and Wunderlich Investment Company, Inc. (“Wunderlich”), as more fully described in Note 3, which included a reduction in force for some of the corporate executives of FBR’s and Wunderlich and a restructuring to integrate FBR and Wunderlich’s operations with the Company’s existing operations. These initiatives resulted in a restructuring charge of $6,105 in the second quarter of 2017 and $4,746 in the third quarters of 2017. The restructuring charges during the second and third quarter of 2017 included $2,400 related to severance and $884 related to the accelerated vesting of restricted stock awards to former corporate executives of FBR and Wunderlich and $3,109 of severance and $1,710 related to accelerated vesting of stock awards to employees and $2,748 of lease loss accruals and impairments for the planned consolidation of office space related to operations of FBR and Wunderlich. Of the $10,851 of restructuring charges related to these initiatives, $7,245 related to the Capital Markets segment and $3,606 related to corporate overhead. The restructuring charge in 2017 also included employee termination costs of $150 and $633 in the third quarter and the nine months ended 2017, respectively, related to a reduction in personnel in the principal investments – United Online segment of our operations. The following table summarizes the changes in accrued restructuring charge during the nine months ended September 30, 2017: Nine Months Ended September 30, 2017 Accrued restructuring charge, beginning of year $ 694 Restructuring charge 11,484 Cash paid (4,880 ) Non-cash items (3,939 ) Accrued restructuring charge, end of period $ 3,359 The following tables summarize the restructuring activities during the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, 2017 2016 Capital Principal Corporate Total Capital Principal Corporate Total Restructuring charge: Employee termination costs $ 2,285 $ 150 $ 1,102 $ 3,537 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 1,037 — 322 1,359 — — 398 398 Total restructuring charge $ 3,322 $ 150 $ 1,424 $ 4,896 $ — $ 3,187 $ 398 $ 3,585 Nine Months Ended September 30, 2017 2016 Capital Principal Corporate Total Capital Principal Corporate Total Restructuring charge: Employee termination costs $ 4,819 $ 633 $ 3,284 $ 8,736 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 2,426 — 322 2,748 — — 398 398 Total restructuring charge $ 7,245 $ 633 $ 3,606 $ 11,484 $ — $ 3,187 $ 398 $ 3,585 (j) Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. (k) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. (l) Restricted Cash As of September 30, 2017, restricted cash balance of $9,269 included $8,759 of cash collateral related to certain retail liquidation engagements and $510 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication supplier. As of December 31, 2016, restricted cash balance of $3,294 included $1,440 of cash collateral related to a retail liquidation engagement in Australia, $1,320 of cash collateral for foreign exchange contracts and $534 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication suppliers. (m) Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate. The Company accounts for securities lending transactions in accordance with Accounting Standards Update (“ASU”) 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” requiring companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets. (n) Due from/to Brokers, Dealers, and Clearing Organizations The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker. (o) Accounts Receivable Accounts receivable represents amounts due from the Company’s auction and liquidation, valuation and appraisal, capital markets and principal investments - United Online customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. Bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2017 and 2016 are included in Note 5. (p) Advances Against Customer Contracts Advances against customer contracts represent advances of contractually reimbursable expenses incurred prior to, and during the term of the auction and liquidation services contract. These advances are charged to expense in the period that revenue is recognized under the contract. (q) Property and Equipment Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense was $1,243 and $531 for the three months ended September 30, 2017 and 2016, respectively, and $2,458 and $706 for the nine months ended September 30, 2017 and 2016, respectively. (r) Securities Owned and Securities Sold Not Yet Purchased Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these securities are reflected currently in the results of operations. As of September 30, 2017 and December 31, 2016, the Company’s securities owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, Securities and other investments owned: Common stocks and warrants $ 41,412 $ 2,084 Corporate bonds 6,328 1,025 Loan receivable 26,868 — Partnership interests and other 21,357 13,470 $ 95,965 $ 16,579 Securities sold not yet purchased: Common stocks $ 23,570 $ — Corporate bonds 982 846 Partnership interests and other 494 — $ 25,046 $ 846 (s) Fair Value Measurements The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common stocks and warrants, corporate bonds, loans receivable and investments in partnerships. Investments in common stocks are based on quoted prices in active markets which are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company’s partnership interests are valued based on the Company’s proportionate share of the net assets of the partnership which is derived from the most recent statements received from the general partner which are included in Level 2 of the fair value hierarchy. The Company also invests in proprietary investment funds that are valued at net asset value (“NAV”) determined by the fund administrator. The underlying securities held by these investment companies are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. As a practical expedient, the Company relies on the NAV of these investments as their fair value. The NAVs that have been provided by the fund administrators are derived from the fair values of the underlying investments as of the reporting date. In accordance with ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent),” (“ASU 2015-07”), these investment funds are not categorized within the fair value hierarchy. The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models. The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. Financial Assets and Liabilities Measured at Fair Value Fair value at Quoted prices in Other Significant Assets: Securities and other investments owned: Common stocks and warrants $ 41,412 $ 31,430 $ — $ 9,982 Corporate bonds 6,328 — 6,328 — Loan receivable 26,868 — — 26,868 Partnership interests and other 16,505 4,462 187 11,856 Total assets measured at fair value $ 91,113 $ 35,892 $ 6,515 $ 48,706 Liabilities: Securities sold not yet purchased: Common stocks $ 23,569 $ 23,569 $ — $ — Corporate bonds 982 — 982 Partnership interests and other 495 — 495 — Total securities sold not yet purchased 25,046 23,569 1,477 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 12,830 — — 12,830 Total liabilities measured at fair value $ 37,876 $ 23,569 $ 1,477 $ 12,830 Financial Assets and Liabilities Measured at Fair Value Fair value at Quoted prices in Other Significant Assets: Securities and other investments owned: Common stocks $ 2,084 $ 1,785 $ — $ 299 Corporate bonds 1,025 — 865 160 Partnership interests 13,470 — 44 13,426 Total assets measured at fair value $ 16,579 $ 1,785 $ 909 $ 13,885 Liabilities: Securities sold not yet purchased: $ 846 $ — $ 846 $ — Corporate bonds Mandatorily redeemable noncontrolling interests issued after November 5, 2003 3,214 — — 3,214 Contingent consideration 1,242 — — 1,242 Total liabilities measured at fair value $ 5,302 $ — $ 846 $ 4,456 As of September 30, 2017, securities and other inv |
ACQUISITIONS
ACQUISITIONS | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
ACQUISITIONS | NOTE 3— ACQUISITIONS Acquisition of Wunderlich Investment Company, Inc. On May 17, 2017, the Company entered into a Merger Agreement (the “Wunderlich Merger Agreement”) with Wunderlich, a Delaware Corporation. Pursuant to the Wunderlich Merger Agreement, customary closing conditions were satisfied and the acquisition was completed on July 3, 2017. In connection with the Wunderlich acquisition on July 3, 2017, the total consideration of $66,043 paid to Wunderlich shareholders was comprised of (a) cash in the amount of $29,737; (b) 1,974,812 newly issued shares of the Company’s common stock at closing which were valued at $31,414 for accounting purposes determined based on the closing market price of the Company’s shares of common stock on the acquisition date on July 3, 2017, less a 13.3% discount for lack of marketability as the shares issued are subject to certain escrow provisions and restrictions that limit their trade or transfer; and (c) 821,816 newly issued common stock warrants with an estimated fair value of $4,892. The common stock and common stock warrants issued includes 387,365 common shares and 167,352 common stock warrants that are held in escrow and subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition. The Company believes that the acquisition of Wunderlich will allow the Company to benefit from wealth management, investment banking, corporate finance, and sales and trading services provided by Wunderlich. The acquisition of Wunderlich is accounted for using the purchase method of accounting. The Company also entered into a registration rights agreement with certain shareholders of Wunderlich (the “Registration Rights Agreement”) on July 3, 2017 for the shares issued in connection with the Wunderlich Merger Agreement. The Registration Rights Agreement provides the Wunderlich shareholders with the right to notice of and, subject to certain conditions, the right to register shares of the Company’s common stock in certain future registered offerings of shares of the Company’s common stock. The assets and liabilities of Wunderlich, both tangible and intangible, were recorded at their estimated fair values as of the July 3, 2017 acquisition date for Wunderlich. The application of the purchase method of accounting resulted in goodwill of $33,568 which represents the benefits from synergies with our existing business and acquired workforce. Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of Wunderlich, were charged against earnings in the amount of approximately $53 and included in selling, general and administrative expenses in the condensed consolidated statements of operations for the nine months ended September 30, 2017. The preliminary purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes. The preliminary purchase price allocation was as follows: Consideration paid by B. Riley Cash paid $ 29,737 Fair value of 1,974,812 B. Riley common shares issued 31,414 Fair value of 821,816 B. Riley common stock warrants issued 4,892 Total consideration $ 66,043 The preliminary assets acquired and assumed was as follows: Tangible assets acquired and assumed: Cash and cash equivalents $ 4,259 Securities owned 1,413 Accounts receivable 3,193 Due from clearing broker 15,133 Prepaid expenses and other assets 10,248 Property and equipment 2,315 Deferred taxes 8,067 Accounts payable (517 ) Accrued payroll and related expenses (6,387 ) Accrued expenses and other liabilities (9,773 ) Securities sold, not yet purchased (1,707 ) Notes payable (10,579 ) Customer relationships 15,440 Trademarks 1,370 Goodwill 33,568 Total $ 66,043 The revenue and loss of Wunderlich included in our condensed consolidated financial statements for the period from July 3, 2017 (the date of acquisition) through September 30, 2017 were $20,412 and $1,928, respectively. The loss from Wunderlich of $1,928 includes a restructuring charge in the amount of $1,387 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment. Acquisition of FBR & Co. On February 17, 2017, the Company entered into an Agreement and Plan of Merger (the “FBR Merger Agreement”) with FBR, pursuant to which FBR was to merge with and into the Company (or a subsidiary of the Company), with the Company (or its subsidiary) as the surviving corporation (the “Merger”). On May 1, 2017, the Company and FBR filed a registration statement for the planned Merger. The stockholders of the Company and FBR approved the acquisition on June 1, 2017, customary closing conditions were satisfied and the acquisition was completed on June 1, 2017. Subject to the terms and conditions of the FBR Merger Agreement, each outstanding share of FBR common stock (“FBR Common Stock”) was converted into the right to receive 0.671 of a share of the Company’s common stock as summarized below. The Company believes that the acquisition of FBR will allow the Company to benefit from investment banking, corporate finance, securities lending, research, and sales and trading services provided by FBR and planned synergies from the elimination of duplicate corporate overhead and management functions with the Company. The acquisition of FBR is accounted for using the purchase method of accounting. The assets and liabilities of FBR, both tangible and intangible, were recorded at their estimated fair values as of the June 1, 2017 acquisition date for FBR. The application of the purchase method of accounting resulted in goodwill of $14,528 which represents expected overhead synergies and acquired workforce. Acquisition related costs, such as legal, accounting, valuation and other professional fees related to the acquisition of FBR, were charged against earnings in the amount of approximately $1,389 and included in selling, general and administrative expenses in the condensed consolidated statement of operations for the nine months ended September 30, 2017. The preliminary purchase accounting for the acquisition has been accounted for as a stock purchase with all of the recognized goodwill is expected to be non-deductible for tax purposes. The preliminary purchase price allocation was as follows: Consideration paid by B. Riley Number of FBR Common Shares outstanding at June 1, 2017 7,099,511 Stock merger exchange ratio 0.671 Number of B. Riley common shares 4,763,772 Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards 67,861 Total number of B. Riley common shares to be issued 4,831,633 Closing market price of B. Riley common shares on December 31, 2016 $ 14.70 Total value of B. Riley common shares 71,025 Fair value of RSU’s attributable to service period prior to June 1, 2017 (a) 2,446 Total consideration $ 73,471 (a) Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the FBR Merger Agreement with the right to receive 0.671 shares of the Company’s common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company’s common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period. The preliminary assets acquired and assumed was as follows: Tangible assets acquired and assumed: Cash and cash equivalents $ 15,738 Securities owned 11,188 Securities borrowed 861,197 Accounts receivable 4,341 Due from clearing broker 29,169 Prepaid expenses and other assets 5,486 Property and equipment 8,663 Deferred taxes 14,514 Accounts payable (1,524 ) Accrued payroll and related expenses (7,182 ) Accrued expenses and other liabilities (22,411 ) Securities loaned (867,626 ) Customer relationships 5,600 Tradename and other intangibles 1,790 Goodwill 14,528 Total $ 73,471 The revenue and loss of FBR included in our condensed consolidated financial statements for the period from June 1, 2017 (the date of acquisition) through September 30, 2017 were $37,745 and $12,706, respectively. The loss from FBR of $12,706 includes transaction costs of $3,551 related to an employment agreement with the former Chief Executive Officer of FBR and restructuring charges in the amount of $9,096 related primarily to severance costs and lease loss accruals for the planned consolidation of office space related to operations in the Capital Markets segment. Acquisition of Rights to Manage Dialectic Hedge Funds On April 13, 2017, the Company entered into an Asset Purchase and Assignment Agreement with Dialectic Capital Management, L.P., Dialectic Capital, LLC and John Fichthorn (collectively “Dialectic”), pursuant to which Dialectic assigned and transferred the rights to manage certain hedge funds to the Company (the “Dialectic Acquisition”). In addition to obtaining the rights to manage certain hedge funds previously managed by Dialectic, the Company hired the employees that were previously employed by the management company that managed the Dialectic hedge funds and assumed Dialectic’s office lease. In connection with the Dialectic Acquisition, the Company paid the Dialectic parties $700 in cash consideration and 158,484 shares of common stock which has a fair value of approximately $1,952 for total purchase consideration of $2,652. The Dialectic Acquisition expands the Company’s assets under management in the Capital Markets segment and the Company believes such acquisition will allow the Company to benefit from planned synergies from the elimination of duplicate administrative functions of the Company. The acquisition of Dialectic is accounted for using the purchase method of accounting. The assets acquired from Dialectic were recorded at fair value as of April 13, 2017, the acquisition date of Dialectic. The application of the purchase method of accounting resulted in preliminary purchase allocation of $2,552 to goodwill, which represents expected overhead synergies and acquired workforce, purchase accounting for the acquisition has been accounted for as an asset purchase with all of the recognized goodwill and other intangible assets expected to be deductible for tax purposes. The revenue and loss of Dialectic included in our condensed consolidated financial statements for the period from April 13, 2017 (the date of acquisition) through September 30, 2017 were $714 and $392, respectively. Acquisition of UOL On May 4, 2016, the Company entered into a definitive agreement and plan of merger to acquire all of the outstanding common stock of UOL, a provider of consumer Internet access and related subscription services, for $11.00 per share, or approximately $169,354 in aggregate merger consideration plus an additional $1,352 of cash consideration paid to settle the legal matter as more fully described in Note 11. The shareholders of UOL approved the acquisition on June 29, 2016 and customary closing conditions were satisfied and the acquisition was completed on July 1, 2016. The acquisition of UOL allows the Company to benefit from the expected cash flows of UOL due in part to planned synergies from the elimination of duplicate overhead functions with the Company. The acquisition of UOL is accounted for using the purchase method of accounting. The assets and liabilities of UOL, both tangible and intangible, were recorded at their estimated fair values as of the July 1, 2016 acquisition date for UOL. The application of the purchase method of accounting resulted in goodwill of $14,375 which represents expected overhead synergies and acquired workforce. The revenue and earnings of UOL included in our condensed consolidated financial statements for the three months ended September 30, 2017 were $12,327 and $4,944, respectively, and $38,724 and $14,220 respectively, for the nine months ended September 30, 2017. The revenue and earnings of UOL included in the condensed consolidated financial statements for the three and nine months ended September 30, 2016 were $15,646 and $3,423, respectively. Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations of the Company, Wunderlich, FBR and UOL, as though the acquisitions had occurred as of January 1, of the respective periods presented. The pro forma financial information presented includes the effects of adjustments related to the amortization charges from the acquired intangible assets and the elimination of certain activities excluded from the transaction and transaction related costs. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results. Pro Forma (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues $ 92,461 $ 111,340 $ 320,546 $ 298,118 Net (loss) income attributable to B. Riley Financial, Inc. $ (42 ) $ 2,843 $ 11,780 $ (13,657 ) Basic (loss) earnings per share $ (0.00 ) $ 0.11 $ 0.41 $ (0.55 ) Diluted (loss) earnings per share $ (0.00 ) $ 0.11 $ 0.41 $ (0.55 ) Weighted average basic shares outstanding 32,366,657 25,783,517 28,487,975 24,611,572 Weighted average diluted shares outstanding 32,366,657 25,997,480 28,692,181 24,611,572 |
SECURITIES LENDING
SECURITIES LENDING | 9 Months Ended |
Sep. 30, 2017 | |
Securities Lending | |
SECURITIES LENDING | NOTE 4— SECURITIES LENDING As a result of the acquisition of FBR, the Company has an active securities borrowed and loaned business in which it borrows securities from one party and lends them to another. Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate. The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2017 Amounts not offset in the consolidated balance Gross amounts Net amounts sheets but eligible offset in the included in the for offsetting Gross amounts consolidated consolidated upon counterparty recognized balance sheets (1) balance sheets default (2) Net amounts As of September 30, 2017 Securities borrowed $ 730,022 $ — $ 730,022 $ 730,022 $ — Securities loaned $ 728,201 $ — $ 728,201 $ 728,201 $ — |
ACCOUNTS RECEIVABLE
ACCOUNTS RECEIVABLE | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
ACCOUNTS RECEIVABLE | NOTE 5— ACCOUNTS RECEIVABLE The components of accounts receivable, net, include the following: September 30, December 31, 2017 2016 Accounts receivable $ 14,218 $ 16,610 Investment banking fees, commissions and other receivables 5,074 576 Unbilled receivables 1,260 2,058 Total accounts receivable 20,552 19,244 Allowance for doubtful accounts (628 ) (255 ) Accounts receivable, net $ 19,924 $ 18,989 Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Balance, beginning of period $ 599 $ 86 $ 255 $ 89 Add: Additions to reserve 123 428 827 488 Less: Write-offs (94 ) (15 ) (262 ) (49 ) Less: Recoveries — (321 ) (192 ) (350 ) Balance, end of period $ 628 $ 178 $ 628 $ 178 Unbilled receivables represent the amount of contractual reimbursable costs and fees for services performed in connection with fee and service based auction and liquidation contracts. |
GOODWILL AND OTHER INTANGIBLE A
GOODWILL AND OTHER INTANGIBLE ASSETS | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
GOODWILL AND OTHER INTANGIBLE ASSETS | NOTE 6— GOODWILL AND OTHER INTANGIBLE ASSETS Goodwill was $100,903 and $48,903 at September 30, 2017 and December 31, 2016, respectively. Goodwill at September 30, 2017 is comprised of $79,488 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $15,727 in the Principal Investments - United Online segment. Goodwill in the Capital Markets segment increased by $50,648 due to $33,568 from the acquisition of Wunderlich, $14,528 from the acquisition of FBR and $2,552 from the acquisition of Dialectic. Goodwill in the Principal Investments - United Online segment increased by $1,352 from the resolution of acquisition related legal matter as more fully described in Note 11. Goodwill at December 31, 2016 is comprised of $28,840 in the Capital Markets segment, $1,975 in the Auction and Liquidation segment, $3,713 in the Valuation and Appraisal segment and $14,375 in the Principal Investments - United Online segment. Intangible assets consisted of the following: September 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 13 Years $ 58,440 $ 7,301 $ 51,139 $ 37,300 $ 3,100 $ 34,200 Domain names 7 Years 807 144 663 1,419 101 1,318 Advertising relationships 8 Years 100 16 84 100 6 94 Internally developed software and other intangibles 0.5 to 4 Years 3,373 1,245 2,128 3,333 550 2,783 Trademarks 7 to 9 Years 4,220 302 3,918 1,100 69 1,031 Total 66,940 9,008 57,932 43,252 3,826 39,426 Non-amortizable assets: Tradenames 1,740 — 1,740 1,740 — 1,740 Total intangible assets $ 68,680 $ 9,008 $ 59,672 $ 44,992 $ 3,826 $ 41,166 Amortization expense was $2,172 and $1,465 for the three months ended September 30, 2017 and 2016, respectively, and $5,248 and $1,688 for the nine months ended September 30, 2017 and 2016, respectively. At September 30, 2017, estimated future amortization expense is $2,205, $8,590, $8,470, $8,088 and $7,706 for the years ended December 31, 2017 (remaining three months), 2018, 2019, 2020 and 2021, respectively. The estimated future amortization expense after December 31, 2021 is $22,872. |
CREDIT FACILITIES
CREDIT FACILITIES | 9 Months Ended |
Sep. 30, 2017 | |
Line of Credit Facility [Abstract] | |
CREDIT FACILITIES | NOTE 7— CREDIT FACILITIES Credit facilities consist of the following arrangements: (a) $200,000 Asset Based Credit Facility On April 21, 2017, the Company amended its credit agreement (as amended, the “Credit Agreement”) governing its asset based credit facility with Wells Fargo Bank, National Association (“Wells Fargo Bank”) to increase the maximum borrowing limit from $100,000 to $200,000. Such amendment, among other things, also extended the expiration date of the credit facility from July 15, 2018 to April 21, 2022. The Credit Agreement continues to allow for borrowings under the separate credit agreement (a “UK Credit Agreement”) which was dated March 19, 2015 with an affiliate of Wells Fargo Bank which provides for the financing of transactions in the United Kingdom. Such facility allows the Company to borrow up to 50 million British Pounds. Any borrowings on the UK Credit Agreement reduce the availability on the asset based $200,000 credit facility. The UK Credit Agreement is cross collateralized and integrated in certain respects with the Credit Agreement. Cash advances and the issuance of letters of credit under the credit facility are made at the lender’s discretion. The letters of credit issued under this facility are furnished by the lender to third parties for the principal purpose of securing minimum guarantees under liquidation services contracts more fully described in Note 2(c). All outstanding loans, letters of credit, and interest are due on the expiration date which is generally within 180 days of funding. The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. The Company paid Wells Fargo Bank a closing fee in the amount of $500 in connection with the April 2017 amendment to the Credit Agreement. The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. Interest expense totaled $168 and $813 (including amortization of deferred loan fees of $23) for the three months ended September 30, 2017 and 2016, respectively, and $863 and $1,087 (including amortization of deferred loan fees of $69) for the nine months ended September 30, 2017 and 2016, respectively. There was no outstanding balance of this credit facility at September 30, 2017 and December 31, 2016. The Credit Agreement governing the credit facility contains certain covenants, including covenants that limit or restrict the Company’s ability to incur liens, incur indebtedness, make investments, dispose of assets, make certain restricted payments, merge or consolidate and enter into certain transactions with affiliates. Upon the occurrence of an event of default under the Credit Agreement, the lender may cease making loans, terminate the Credit Agreement and declare all amounts outstanding under the Credit Agreement to be immediately due and payable. The Credit Agreement specifies a number of events of default (some of which are subject to applicable grace or cure periods), including, among other things, nonpayment defaults, covenant defaults, cross-defaults to other material indebtedness, bankruptcy and insolvency defaults, and material judgment defaults. (b) $20,000 UOL Line of Credit On April 13, 2017, UOL, in the capacity as borrower, entered into a credit agreement (the “UOL Credit Agreement”) with the Banc of California, N.A. in the capacity as agent and lender. The UOL Credit Agreement provides for a revolving credit facility under which UOL may borrow (or request the issuance of letters of credit) up to $20,000 which amount is reduced by $1,500 commencing on June 30, 2017 and on the last day of each calendar quarter thereafter. The final maturity date is April 13, 2020. The proceeds of the UOL Credit Agreement can be used (a) for working capital and general corporate purposes and/or (b) to pay dividends or permitted tax distributions to its parent company, subject to the terms of the UOL Credit Agreement. Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans. UOL paid a commitment fee equal to 1.00% of the aggregate commitments upon the closing of the UOL Credit Agreement. The UOL Credit Agreement also provides for an unused line fee payable quarterly, in arrears, in an amount equal to: (a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank). Any amounts outstanding under the UOL Credit Facility are due at maturity. There was no outstanding balance under the UOL Credit Agreement at September 30, 2017. Each of UOL’s U.S. subsidiaries is a guarantor of all obligations under the UOL Credit Agreement and are parties to the UOL Credit Agreement in such capacity (collectively, the “Secured Guarantors”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of UOL and a subsidiary of the Company, are guarantors of the obligations under the UOL Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares of outstanding capital stock of UOL are pledged as collateral. The obligations under the UOL Credit Agreement are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of UOL and the Secured Guarantors, including a pledge of (a) 100% of the equity interests of the Secured Guarantors and (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India. Such security interests are evidenced by pledge, security and other related agreements. The UOL Credit Agreement contains certain negative covenants, including those limiting UOL’s and its subsidiaries’ ability to incur indebtedness, incur liens, sell or acquire assets or businesses, change the nature of their businesses, engage in transactions with related parties, make certain investments or pay dividends. In addition, the UOL Credit Agreement requires UOL and its subsidiaries to maintain certain financial ratios. |
NOTES PAYABLE
NOTES PAYABLE | 9 Months Ended |
Sep. 30, 2017 | |
Notes Payable [Abstract] | |
NOTES PAYABLE | NOTE 8—NOTES PAYABLE (a) $34,034 Senior Notes Payable due October 31, 2021 At September 30, 2017, the Company had $34,034 of Senior Notes Payable (“2021 Notes”) due in 2021, interest payable quarterly at 7.5%. On November 2, 2016, the Company issued $28,750 of 2021 Notes and during the three months ended September 30, 2017, the Company issued an additional $5,284 of 2021 Notes pursuant to an At The Market Issuance Sales Agreement (the “Sales Agreement”) as further discussed below. The 2021 Notes are unsecured and due and payable in full on October 31, 2021. In connection with the issuance of the 2021 Notes on November 2, 2016, the Company received net proceeds of $27,664 (after underwriting commissions, fees and other issuance costs of $1,086). In connection with the issuance of the 2021 Notes in 2017 pursuant to the Sales Agreement, the Company received net proceeds of $5,364 (after premiums less underwriting commissions, fees and other issuance costs of $80). The outstanding balance of the 2021 Notes was $33,224 (net of unamortized debt issue costs and premiums of $810) and $27,700 (net of unamortized debt issue costs of $1,050) at September 30, 2017 and December 31, 2016, respectively. In connection with the offering of 2021 Notes on November 2, 2016, certain members of management and the Board of Directors of the Company purchased $2,731 or 9.5% of the 2021 Notes offered by the Company. Interest expense on the 2021 Notes totaled $643 and $1,829 for the three and nine months ended September 30, 2017, respectively. (b) $84,047 Senior Notes Payable due May 31, 2027 At September 30, 2017, the Company had $84,047 of Senior Notes Payable (“2027 Notes”) due in 2027, interest payable quarterly at 7.5%. On May 31, 2017, the Company issued $60,375 of 2027 Notes and during the three months ended September 30, 2017 the Company issued an additional $23,672 of 2027 Notes pursuant to the Sales Agreement as further discussed below. The 2027 Notes are unsecured and due and payable in full on May 31, 2027. In connection with the issuance of the 2027 Notes, the Company received net proceeds of $82,284 (after underwriting commissions, fees and other issuance costs of $1,763). The outstanding balance of the 2027 Notes was $82,350 (net of unamortized debt issue costs of $1,697) at September 30, 2017. Interest expense on the 2027 Notes totaled $1,407 and $1,810 for the three and nine months ended September 30, 2017. (c) At Market Issuance Sales Agreement to Issue Up to Aggregate of $39,625 of 2021 Notes or 2027 Notes On June 28, 2017, the Company entered into the Sales Agreement and filed a prospectus supplement, pursuant to which the Company may sell from time to time, at the Company’s option up to an aggregate of $39,625 of 2021 Notes or 2027 Notes. The Notes sold pursuant to the Sales Agreement will be issued pursuant to a prospectus dated March 29, 2017, as supplemented by a prospectus supplement dated June 28, 2017, in each case filed with the Securities and Exchange Commission pursuant to the Company’s effective Registration Statement on Form S-3 (File No. 333-216763), which was declared effective by the SEC on March 29, 2017. The Notes will be issued pursuant to the Indenture, dated as of November 2, 2016, as supplemented by a First Supplemental Indenture, dated as of November 2, 2016 and the Second Supplemental Indenture, dated as of May 31, 2017, each between the Company and U.S. Bank, National Association, as trustee. Future sales of the 2021 Notes and 2027 Notes pursuant to the Sales Agreement will depend on a variety of factors including, but not limited to, market conditions, the trading price of the notes and the Company’s capital needs. During the three months ended September 30, 2017, the Company issued $5,284 of 2021 Notes and $23,672 of 2027 Notes. At September 30, 2017, the Company has an additional $10,669 of 2021 Notes or 2027 Notes that may be sold pursuant to the Sales Agreement. There can be no assurance that the Company will be successful in consummating future sales based on prevailing market conditions or in the quantities or at the prices that the Company may deem appropriate. (d) Australian Dollar $80,000 Note Payable In August 2016, the Company formed GA Retail Investments, L.P., a Delaware limited partnership, (the “Partnership”) which required the Company to contribute $15,350. The Partnership borrowed $80,000 Australian dollars from a third party investor in connection with its formation and the $80,000 Australian dollars were exchanged for a 50% special limited partnership interest in the Partnership. The Partnership was formed to provide funding for the retail liquidation engagement the Company entered into to liquidate the Masters Home Improvement stores. The $80,000 Australian dollar participating note payable was non-interest bearing, shares in 50% of the all of the profits and losses of the Partnership and was subject to repayment upon the completion of the going-out-of-business sale of Masters Home Improvement stores as defined in the partnership agreement. Although the terms of the participating note payable included the issuance of a 50% equity interest in the Partnership, sharing in all profits and losses of the Partnership, and no repayment until certain events occur, in accordance with ASC 480 Distinguishing Liabilities From Equity, this financial instrument was classified as a participating note payable. The $80,000 Australian dollar participating note payable was repaid in December 2016 upon the completion of the going-out-of-business sale of Masters Home Improvement stores as defined in the partnership agreement. At September 30, 2017 and December 31, 2016, $524 and $10,037, respectively, were payable in accordance with the participating note payable share of profits and is included in due to related parties and partners in the condensed consolidated balance sheets. (e) Other Notes Payable Other notes payable include notes payable to a clearing organization for one of the Company’s broker dealers. The notes payable accrue interest at rates ranging from the prime rate plus 0.25% to 2.0% (4.5% to 6.25% at September 30, 2017) payable annually. The principal payments on the notes payable are due annually in the amount of $121 on October 31, $214 on September 30, and $357 on January 31. The notes payable mature at various dates from January 31, 2018 through January 31, 2022. At September 30, 2017, the outstanding balance for the notes payable was $2,364. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
INCOME TAXES | NOTE 9— INCOME TAXES The Company’s effective income tax rate was a benefit of 80.5% and an expense of 38.9% for the nine months ended September 30, 2017 and 2016, respectively. During the nine months ended September 30, 2017, the Company elected to treat the acquisition of UOL as a taxable business combination for income tax purposes in accordance with Internal Revenue Code Section 338(g) (“IRS Code Section 338(g)”). This resulted in the Company foregoing the income tax attributes of UOL that existed at the acquisition date which included net operating loss carryforwards, capital loss carryforwards and foreign tax credits. The income tax election in accordance with IRS Code Section 338(g) provides the Company with a tax step-up in the basis of the intangible assets and goodwill acquired for tax purposes. In accordance with ASC 740, the impact of the election in accordance with IRS Code Section 338(g) on deferred income taxes resulted in the recording of a tax benefit in the amount of $8,389 during the nine months ended September 30, 2017. The effective income tax rate for the nine months ended September 30, 2016 was lower than the statutory federal and state income tax rate due to the tax differential on net income attributable to noncontrolling interests. As of September 30, 2017, the Company had federal net operating loss carry forwards of approximately $65,500 and state net operating loss carry forwards of $77,200. The Company’s federal net operating loss carry forwards will expire in the tax year ending December 31, 2036, the state net operating loss carry forwards will expire in 2034, and the foreign tax credit carry forwards will expire in 2023. The Company establishes a valuation allowance if, based on the weight of available evidence, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Tax benefits of operating loss and tax credit carry forwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carry forward period, and other circumstances. As a result of the common stock offering by the Company that was completed on June 5, 2014, the Company had a more than 50% ownership shift in accordance with Internal Revenue Code Section 382. Accordingly, the Company is limited to the amount of net operating loss that may be utilized in future taxable years depending on the Company’s actual taxable income. As of September 30, 2017, the Company believes that the net operating loss that existed as of the more than 50% ownership shift will be utilized in future tax periods before the loss carry forwards expire and it is more-likely-than-not that future taxable earnings will be sufficient to realize its deferred tax assets and has not provided an allowance. The Company files income tax returns in the U.S., various state and local jurisdictions, and certain other foreign jurisdictions. The Company is currently under audit by certain federal, state and local, and foreign tax authorities. The audits are in varying stages of completion. The Company evaluates its tax positions and establishes liabilities for uncertain tax positions that may be challenged by tax authorities. Uncertain tax positions are reviewed on an ongoing basis and are adjusted in light of changing facts and circumstances, including progress of tax audits, case law developments and closing of statutes of limitations. Such adjustments are reflected in the provision for income taxes, as appropriate. The Company is currently open to audit under the statute of limitations by the Internal Revenue Service for the calendar years ended December 31, 2013 to 2016. |
EARNINGS PER SHARE
EARNINGS PER SHARE | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
EARNINGS PER SHARE | NOTE 10— EARNINGS PER SHARE Basic earnings per share is calculated by dividing net income by the weighted-average number of shares outstanding during the period. Diluted earnings per share is calculated by dividing net income by the weighted-average number of common shares outstanding, after giving effect to all dilutive potential common shares outstanding during the period. Basic common shares outstanding exclude 453,365 common shares that are held in escrow and subject to forfeiture. The common shares held in escrow includes 66,000 common shares issued to the former members of Great American Group, LLC that are subject to forfeiture upon the final settlement of claims for goods held for sale in connection with the transaction with Alternative Asset Management Acquisition Corp. in 2009 and 387,365 common shares that are subject to forfeiture to indemnify the Company for certain representations and warranties in connection with the acquisition of Wunderlich. These shares Basic and diluted earnings per share was calculated as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net income attributable to B. Riley Financial, Inc. $ 368 $ 8,939 $ 17,669 $ 9,086 Weighted average shares outstanding: Basic 26,059,490 18,977,072 22,180,808 17,805,127 Effect of dilutive potential common shares: Restricted stock units and non-vested shares 1,193,007 169,311 816,841 159,376 Contingently issuable shares 387,365 44,652 387,365 44,655 Diluted 27,639,862 19,191,035 23,385,014 18,009,158 Basic income per share $ 0.01 $ 0.47 $ 0.80 $ 0.51 Diluted income per share $ 0.01 $ 0.47 $ 0.76 $ 0.50 |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
COMMITMENTS AND CONTINGENCIES | NOTE 11— COMMITMENTS AND CONTINGENCIES Legal Matters The Company is subject to certain legal and other claims that arise in the ordinary course of its business. In particular, the Company and its subsidiaries are named in and subject to various proceedings and claims arising primarily from our securities business activities, including lawsuits, arbitration claims, class actions, and regulatory matters. Some of these claims seek substantial compensatory, punitive, or indeterminate damages. The Company and its subsidiaries are also involved in other reviews, investigations, and proceedings by governmental and self-regulatory organizations regarding our business, which may result in adverse judgments, settlements, fines, penalties, injunctions, and other relief. In view of the number and diversity of claims against our company, the number of jurisdictions in which litigation is pending, and the inherent difficulty of predicting the outcome of litigation and other claims, we cannot state with certainty what the eventual outcome of pending litigation or other claims will be. Notwithstanding this uncertainty, the Company does not believe that the results of these claims are likely to have a material effect on its financial position or results of operations. In 2012, Gladden v. Cumberland Trust, WSI, et al. filed a complaint in Circuit Court, Hamblen County, TN at Morristown, Case No. 12-CV-119. This complaint alleges the improper distribution and misappropriation of trust funds. The plaintiff seeks damages of no less than $3,925, an accounting, and among other things, punitive damages. In October 2017, the Tennessee Supreme Court remanded the case to the Tennessee State Trial Court for determination of which claims are subject to arbitration and which are not. At the present time, the financial impact to the Company, if any, cannot be estimated. In January 2015, Great American Group, LLC (“Great American Group”) was served with a lawsuit that seeks to assert claims of breach of contract and other matters in connection with auction services provided to a debtor. The proceeding in the United States Bankruptcy Court for the District of Delaware (“Bankruptcy Court”) is pending in the bankruptcy case of the debtor and its affiliates (the “Debtor”). In the lawsuit, a former landlord of the Debtor generally alleges that Great American Group and a joint venture partner were responsible for contamination while performing services in connection with the auction of certain assets of the Debtor and is seeking approximately $10,000 in damages. In January 2017, the parties filed a proposed scheduling order with the Bankruptcy Court. Discovery in the action is currently proceeding. Great American Group is vigorously defending this lawsuit. This lawsuit is ongoing, and the financial impact to the Company, if any, cannot be estimated. On July 5, 2016, Quadre Investments LP (“Quadre”) filed a petition with the Delaware Court of Chancery (the “Court”) seeking a determination of fair value for 943,769 shares of common stock of UOL in connection with the acquisition of UOL by the Company. Such transaction gave rise to appraisal rights pursuant to Section 262 of the General Corporation Law of the State of Delaware. As a result, Quadre petitioned the Court to receive fair value as determined by the Court. On June 30, 2017, the parties settled the action and the petition was dismissed. As discussed in Note 3, the settlement of this action resulted in an increased in goodwill. In May 2014, Waterford Township Police & Fire Retirement System et al. v. Regional Management Corp et al., filed a complaint in the Southern District of New York (the “Court”), against underwriters alleging violations under sections 11 and 12 of the Securities Act of 1933, as amended (the “Securities Act”). FBR Capital Markets & Co. (“FBRCM”), a broker-dealer subsidiary of ours, was a co-manager of 2 offerings. On January 30, 2017, the Court denied the plaintiffs’ motion to file a first amended complaint, which would have revived claims previously dismissed by the Court on March 30, 2016. On March 1 , On January 5, Gaynor v. Miller et al., In April 2017, two purported shareholders of FBR filed a putative class action against FBR and the members of its board of directors that challenged the disclosures made in connection with the merger of FBR with the Company, styled Michael Rubin v. FBR & Co., et al Kim v. FBR & Co., et al In February 2017, certain former employees filed an arbitration claim with FINRA against Wunderlich Securities, Inc. (“WSI”) alleging misrepresentations in the recruitment of claimants to join WSI. Claimants also allege that WSI failed to support their mortgage trading business resulting in the loss of opportunities during their employment with WSI. Claimants are seeking $10 million in damages. WSI has counterclaimed alleging that claimants mispresented their process for doing business, particularly their capital needs, resulting in substantial losses to WSI. WSI believes the claims are meritless and intends to vigorously defend the action. A hearing has been scheduled for March 2018. In March 2017, United Online, Inc. received a letter from PeopleConnect, Inc. (formerly, Classmates, Inc.) (“Classmates”) regarding a notice of investigation received from the Consumer Protection Divisions of the District Attorneys’ offices of four California counties (“California DAs”). These entities suggest that Classmates may be in violation of California codes relating to unfair competition, false or deceptive advertising, and auto-renewal practices. Classmates asserts that these claims are indemnifiable claims under the purchase agreement between United Online, Inc. and the buyer of Classmates. A tolling agreement with the California DAs has been signed and informal discovery and production is in process. At the present time, the financial impact to the Company, if any, cannot be estimated. In July 2017, an arbitration claim was filed with FINRA by Dominick & Dickerman LLC and Michael Campbell against WSI and Gary Wunderlich with respect to the acquisition by Wunderlich Investment Company, Inc. (“WIC”) (the parent corporation of WSI) of certain assets of Dominick & Dominick LLC in 2015. The Claimants allege that respondents overvalued WIC so that the purchase price paid to the Claimants in shares of WIC stock was artificially inflated. The Statement of Claim includes claims for common law fraud, negligent misrepresentation, and breach of contract. Claimants are seeking damages of approximately $8 million plus unspecified punitive damages. Respondents believe the claims are meritless and intend to vigorously defend the action. In September 2017, a statement of claim was filed in a FINRA arbitration naming FBRCM and other underwriters related to the underwriting of the now-bankrupt, Quantum Fuel Systems Technologies Worldwide, Inc. (“Quantum”). Claimants are seeking $37,000 in actual damages, plus $75,000 in punitive damages and attorney’s fees. On October 24, 2017, we joined in a motion with the other underwriters requesting that the claim be dismissed on the grounds that it is improper under FINRA Rules 12204 and 122205 which prohibit class actions and derivative claims, respectively. Our initial response is due in November 2017 and we have agreed to a dual representation arrangement with the other underwriters. At the present time, the financial impact to the Company, if any, cannot be estimated. |
SHARE BASED PAYMENTS
SHARE BASED PAYMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Disclosure of Compensation Related Costs, Share-based Payments [Abstract] | |
SHARE BASED PAYMENTS | NOTE 12— SHARE-BASED PAYMENTS (a) Amended and Restated 2009 Stock Incentive Plan During the nine months ended September 30, 2017, the Company granted restricted stock units representing 486,049 shares of common stock with a total fair value of $7,732 to certain employees of the Company under the Company’s Amended and Restated 2009 Stock Incentive Plan (the “Plan”). During the year ended December 31, 2016, the Company granted restricted stock units representing 544,605 shares of common stock with a total fair value of $5,301 to certain employees and directors of the Company under the Plan. Share-based compensation expense for such restricted stock units was $1,410 and $3,624 for the three and nine months ended September 30, 2017, respectively. Share-based compensation expense for such restricted stock units was $834 and $1,831 for the three and nine months ended September 30, 2016, respectively. The restricted stock units generally vest over a period of one to three years based on continued service. In determining the fair value of restricted stock units on the grant date, the fair value is adjusted for (a) estimated forfeitures, (b) expected dividends based on historical patterns and the Company’s anticipated dividend payments over the expected holding period and (c) the risk-free interest rate based on U.S. Treasuries for a maturity matching the expected holding period. As of September 30, 2017, the expected remaining unrecognized share-based compensation expense of $9,271 will be expensed over a weighted average period of 2.2 years. A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2017 was as follows: Weighted Average Shares Fair Value Nonvested at December 31, 2016 680,135 $ 9.74 Granted 486,049 15.91 Vested (193,626 ) 10.32 Forfeited (29,724 ) 10.49 Nonvested at September 30, 2017 942,834 $ 12.78 The per-share weighted average grant-date fair value of restricted stock units was $15.91 during the nine months ended September 30, 2017. There were 193,626 restricted stock units with a fair value of $1,999 that vested during the nine months ended September 30, 2017 under the Plan. Amended and Restated FBR & Co. 2006 Long-Term Stock Incentive Plan In connection with the acquisition of FBR on June 1, 2017, the equity awards previously granted or available for issuance under the FBR & Co. 2006 Long-Term Stock Incentive Plan (the “FBR Stock Plan”) may be issued under the Plan. During the nine months ended September 30, 2017, the Company granted restricted stock units representing 784,638 shares of common stock with a total grant date fair value of $13,129. Share-based compensation expense was $1,383 and $1,687 for the three and nine months ended September 30, 2017, respectively, in connection with the June 13, 2017 restricted stock award. In connection with the restructuring discussed in Note 2(i), the Company recorded share-based compensation expense of $2,391 related to the accelerated vesting of restricted stock awards. Of the $2,391, $884 related to former corporate executives of FBR and $1,507 related to employees in the Capital Markets segment. As of September 30, 2017, the expected remaining unrecognized share-based compensation expense of $11,916 will be expensed over a weighted average period of 2.7 years. A summary of equity incentive award activity for the period from June 1, 2017, the date of the acquisition of FBR, through September 30, 2017 was as follows: Weighted Averag Shares Fair Value Nonvested at June 1, 2017, acquisition date of FBR resulting from the exchange of previously existing FBR awards 530,661 $ 14.70 Granted 784,638 16.73 Vested (200,905 ) 15.08 Forfeited (93,963 ) 15.93 Nonvested at September 30, 2017 1,020,431 $ 16.14 |
NET CAPITAL REQUIREMENTS
NET CAPITAL REQUIREMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Brokers and Dealers [Abstract] | |
NET CAPITAL REQUIREMENTS | NOTE 13— NET CAPITAL REQUIREMENTS B. Riley & Co., LLC (“BRC”), FBRCM, MLV and Wunderlich Securities, Inc. (“WSI”), the Company’s broker-dealer subsidiaries, are registered with the SEC as broker-dealers and are members of the Financial Industry Regulatory Authority, Inc. (“FINRA”). As such, they are subject to the minimum net capital requirements promulgated by the SEC. As of September 30, 2017, BRC had net capital of $12,052, which was $11,728 in excess of its required net capital of $324, FBRCM had net capital of $38,976, which was $37,976 in excess of its required net capital of $1,000, MLV had net capital of $407, which was $307 in excess of its required net capital of $100, and WSI had net capital of $3,601, which was $2,891 in excess of its required net capital of $710. |
RELATED PARTY TRANSACTIONS
RELATED PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
RELATED PARTY TRANSACTIONS | NOTE 14— RELATED PARTY TRANSACTIONS At September 30, 2017, amounts due from related parties include $5,452 from GACP I, L.P. and $30 from GACP II, L.P. for management fees, incentive fees and other operating expenses and $600 from CA Global Partners, LLC (“CA Global”) for advances on certain wholesale and industrial liquidation engagements. Amounts due to related parties includes $720 payable to CA Global for operating expenses related to wholesale and industrial liquidation engagements managed by CA Global. At December 31, 2016, amounts due from related parties include $2,050 from GACP I, L.P. for management fees, incentive fees and other operating expenses and $959 from CA Global. Great American Capital Partners, LLC, a subsidiary of the Company, is the general partner of GACP I, L.P. CA Global is one of the members of Great American Global Partners, LLC (“GA Global Ptrs”). The amounts receivable and payable from CA Global are comprised of amounts due to and due from CA Global in connection with certain auctions of wholesale and industrial machinery and equipment that they were managed by CA Global on behalf of GA Global Ptrs. In connection with the offering of $28,750 of 2021 Notes as more fully described in Note 8, certain members of management and the Board of Directors of the Company purchased $2,731 or 9.5% of the Senior Notes offered by the Company. |
BUSINESS SEGMENTS
BUSINESS SEGMENTS | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
BUSINESS SEGMENTS | NOTE 15— BUSINESS SEGMENTS The Company’s operating segments reflect the manner in which the business is managed and how the Company allocates resources and assesses performance internally. The Company has several operating subsidiaries through which it delivers specific services. The Company provides investment banking, corporate finance, securities lending, restructuring, research, sales and trading and wealth management services to corporate, institutional and high net worth clients. The Company also provides auction and liquidation services to help clients dispose of assets that include multi-location retail inventory, wholesale inventory, trade fixtures, machinery and equipment, intellectual property and real property and valuation and appraisal services to clients with independent appraisals in connection with asset based loans, acquisitions, divestitures and other business needs. As a result of the acquisition of UOL on July 1, 2016, the Company provides consumer services and products over the Internet. The Company’s business is classified into the Capital Markets segment, Auction and Liquidation segment, Valuation and Appraisal segment and Principal Investments - United Online segment. These reportable segments are all distinct businesses, each with a different marketing strategy and management structure. The following is a summary of certain financial data for each of the Company’s reportable segments: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Capital Markets reportable segment: Revenues - Services and fees $ 56,473 $ 10,063 $ 95,872 $ 22,799 Interest income - Securities lending 7,206 — 9,424 — Total revenues 63,679 10,063 105,296 22,799 Selling, general, and administrative expenses (53,955 ) (8,916 ) (87,753 ) (22,535 ) Restructuring costs (3,322 ) — (7,245 ) — Interest expense - Securities lending (4,950 ) — (6,515 ) — Depreciation and amortization (1,636 ) (138 ) (2,167 ) (406 ) Segment (loss) income (184 ) 1,009 1,616 (142 ) Auction and Liquidation reportable segment: Revenues - Services and fees 7,376 17,058 43,179 29,358 Revenues - Sale of goods 1 6,503 1 6,505 Total revenues 7,377 23,561 43,180 35,863 Direct cost of services (3,385 ) (4,365 ) (25,482 ) (9,870 ) Cost of goods sold (2 ) (2,223 ) (2 ) (2,225 ) Selling, general, and administrative expenses (1,963 ) (3,976 ) (6,562 ) (6,840 ) Depreciation and amortization (5 ) (6 ) (15 ) (22 ) Segment income 2,022 12,991 11,119 16,906 Valuation and Appraisal reportable segment: Revenues - Services and fees 9,043 7,696 24,799 22,865 Direct cost of services (3,778 ) (3,549 ) (11,031 ) (10,287 ) Selling, general, and administrative expenses (2,253 ) (2,136 ) (6,395 ) (6,379 ) Depreciation and amortization (43 ) (19 ) (130 ) (72 ) Segment income 2,969 1,992 7,243 6,127 Principal Investments - United Online segment: Revenues - Services and fees 12,249 15,483 38,504 15,483 Revenues - Sale of goods 78 163 220 163 Total revenues 12,327 15,646 38,724 15,646 Direct cost of services (2,975 ) (4,927 ) (9,711 ) (4,927 ) Cost of goods sold (122 ) (168 ) (311 ) (168 ) Selling, general, and administrative expenses (2,433 ) (2,139 ) (8,536 ) (2,139 ) Depreciation and amortization (1,703 ) (1,802 ) (5,313 ) (1,802 ) Restructuring costs (150 ) (3,187 ) (633 ) (3,187 ) Segment income 4,944 3,423 14,220 3,423 Consolidated operating income from reportable segments 9,751 19,415 34,198 26,314 Corporate and other expenses (including restructuring costs of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively, and $398 during the three and nine months ended September 30, 2016) (8,395 ) (3,993 ) (19,571 ) (9,047 ) Interest income 76 26 358 32 Loss on equity investment (157 ) — (157 ) — Interest expense (2,510 ) (991 ) (5,195 ) (1,398 ) (Loss) income before income taxes (1,235 ) 14,457 9,633 15,901 Benefit from (provision for) income taxes 1,357 (6,083 ) 7,753 (6,184 ) Net income 122 8,374 17,386 9,717 Net (loss) income attributable to noncontrolling interests (246 ) (565 ) (283 ) 631 Net income attributable to B. Riley Financial, Inc. $ 368 $ 8,939 $ 17,669 $ 9,086 The following table presents revenues by geographical area: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues: Revenues - Services and fees: North America $ 85,128 $ 49,882 $ 200,500 $ 89,790 Australia — — 940 — Europe 13 418 914 715 Total Revenues - Services and fees $ 85,141 $ 50,300 $ 202,354 $ 90,505 Revenues - Sale of goods North America $ 79 $ 163 $ 221 $ 165 Europe — 6,503 — 6,503 Total Revenues - Sale of goods $ 79 $ 6,666 $ 221 $ 6,668 Revenues - Interest income - Securities lending: North America $ 7,206 $ — $ 9,424 $ — Total Revenues: North America $ 92,406 $ 50,045 $ 210,138 $ 89,955 Australia — — 940 — Europe 20 6,921 921 7,218 Total Revenues $ 92,426 $ 56,966 $ 211,999 $ 97,173 The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area: As of As of S eptember 30, December 31, 2017 2016 Long-lived Assets - Property and Equipment, net: North America $ 13,105 $ 5,785 Australia — — Europe — — Total $ 13,105 $ 5,785 Segment assets are not reported to, or used by, the Company’s Chief Operating Decision Maker to allocate resources to, or assess performance of, the segments and therefore, total segment assets have not been disclosed. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2017 | |
Subsequent Events [Abstract] | |
SUBSEQUENT EVENTS | NOTE 16— SUBSEQUENT EVENTS On November 8, 2017, the Company’s Board of Directors approved a regular quarterly dividend of $0.08 per share and a special dividend of $0.04 per share, which will be paid on or about November 30, 2017 to stockholders of record on November 22, 2017. Acquisition of magicJack VocalTec Ltd. On November 9, 2017, the Company entered into an Agreement and Plan of Merger with B. R. Acquisition Ltd., an Israeli corporation and wholly-owned subsidiary of the Company (“Merger Sub”), and magicJack VocalTec Ltd., an Israeli corporation (“magicJack”), pursuant to which Merger Sub will merge with and into magicJack, with magicJack continuing as the surviving corporation and as an indirect subsidiary of the Company. Subject to the terms and conditions of the Agreement and Plan of Merger, each outstanding share of magicJack will be converted into the right to receive $8.71 in cash without interest, representing approximately $143,500 in aggregate merger consideration. The closing of the transaction is subject to the receipt of certain regulatory approvals, the approval of the magicJack shareholder’s and the satisfaction of other closing conditions. It is anticipated that the acquisition of magicJack will close in the first half of 2018. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Principles of Consolidation and Basis of Presentation | (a) Principles of Consolidation and Basis of Presentation The condensed consolidated financial statements include the accounts of B. Riley Financial, Inc. and its wholly-owned and majority-owned subsidiaries. The condensed consolidated financial statements also include the accounts of (a) Great American Global Partners, LLC which is controlled by the Company as a result of its ownership of a 50% member interest, appointment of two of the three executive officers and significant influence over the funding of operations, and (b) GA Retail Investments, L.P. which is controlled by the Company as a result of its ownership of a 50% partnership interest, appointment of executive officers and significant influence over the operations. The condensed consolidated financial statements have been prepared by the Company, without audit, pursuant to interim financial reporting guidelines and the rules and regulations of the Securities and Exchange Commission. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) have been condensed or omitted pursuant to such rules and regulations. In the opinion of the Company’s management, all adjustments, consisting of only normal and recurring adjustments, necessary for a fair presentation of the financial position and the results of operations for the periods presented have been included. These condensed consolidated financial statements and the accompanying notes should be read in conjunction with the audited consolidated financial statements and accompanying notes included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2016, filed with the Securities and Exchange Commission (“SEC”) on March 10, 2017. The results of operations for the nine months ended September 30, 2017 are not necessarily indicative of the operating results to be expected for the full fiscal year or any future periods. |
Use of Estimates | (b) Use of Estimates The preparation of the condensed consolidated financial statements in accordance with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and reported amounts of revenue and expense during the reporting period. Estimates are used when accounting for certain items such as valuation of securities, reserves for accounts receivable and slow moving goods held for sale or auction, the carrying value of intangible assets and goodwill, the fair value of mandatorily redeemable noncontrolling interests, fair value of share-based arrangements, fair value of contingent consideration in business combination’s and accounting for income tax valuation allowances. Estimates are based on historical experience, where applicable, and assumptions that management believes are reasonable under the circumstances. Due to the inherent uncertainty involved with estimates, actual results may differ. |
Revenue Recognition | (c) Revenue Recognition Revenues are recognized in accordance with the accounting guidance when persuasive evidence of an arrangement exists, the related services have been provided, the fee is fixed or determinable, and collection is reasonably assured. Revenues in the Capital Markets segment are primarily comprised of (i) fees earned from corporate finance, investment banking, restructuring and wealth management services; (ii) revenues from sales and trading activities; and (iii) interest income from securities lending activities. Fees earned from corporate finance and investment banking services are derived from debt, equity and convertible securities offerings in which the Company acted as an underwriter or placement agent and from financial advisory services rendered in connection with client mergers, acquisitions, restructurings, recapitalizations and other strategic transactions. Fees from underwriting activities are recognized in earnings when the services related to the underwriting transaction are completed under the terms of the engagement and when the income was determined and is not subject to any other contingencies. Fees earned from wealth management services consist primarily of investment management fees that are recognized over the period the services are provided. Investment management fees are primarily comprised of fees for investment management services and are generally based on the dollar amount of the assets being managed. Revenues from sales and trading include (i) commissions resulting from equity securities transactions executed as agent or principal and are recorded on a trade date basis; (ii) related net trading gains and losses from market making activities and from the commitment of capital to facilitate customer orders; (iii) fees paid for equity research; and (iv) principal transactions which include realized and unrealized gains and losses and interest and dividend income resulting from our principal investments in equity and other securities for the Company’s account. Revenues from securities lending activities consist of interest income from equity and fixed income securities that are borrowed from one party and loaned to another. The Company maintains relationships with a broad group of banks and broker-dealers to facilitate the sourcing, borrowing and lending of equity and fixed income securities in a “matched book” to limit the Company’s exposure to fluctuations in the market value or securities borrowed and securities loaned. Revenues in the Auction and Liquidation segment are comprised of (i) commissions and fees earned on the sale of goods at auctions and liquidations; (ii) revenues from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation; (iii) revenue from the sale of goods that are purchased by the Company for sale at auction or liquidation sales events; (iv) fees earned from real estate services and the origination of loans; (v) revenues from financing activities is recorded over the lives of related loans receivable using the interest method; and (vi) revenues from contractual reimbursable expenses incurred in connection with auction and liquidation contracts. Commission and fees earned on the sale of goods at auction and liquidation sales are recognized when evidence of an arrangement exists, the sales price has been determined, title has passed to the buyer and the buyer has assumed the risks of ownership, and collection is reasonably assured. The commission and fees earned for these services are included in revenues in the accompanying condensed consolidated statements of operations. Under these types of arrangements, revenues also include contractual reimbursable costs. Revenues earned from auction and liquidation services contracts where the Company guarantees a minimum recovery value for goods being sold at auction or liquidation are recognized based on proceeds received. The Company records proceeds received from these types of engagements first as a reduction of contractual reimbursable expenses, second as a recovery of its guarantee and thereafter as revenue, subject to such revenue meeting the criteria of having been fixed or determinable. Contractual reimbursable expenses and amounts advanced to customers for minimum guarantees are initially recorded as advances against customer contracts in the accompanying condensed consolidated balance sheets. If, during the auction or liquidation sale, the Company determines that the proceeds from the sale will not meet the minimum guaranteed recovery value as defined in the auction or liquidation services contract, the Company accrues a loss on the contract in the period that the loss becomes known. The Company also evaluates revenue from auction and liquidation contracts in accordance with the accounting guidance to determine whether to report Auction and Liquidation segment revenue on a gross or net basis. The Company has determined that it acts as an agent in a substantial majority of its auction and liquidation services contracts and therefore reports the auction and liquidation revenues on a net basis. Revenues from the sale of goods are recorded gross and are recognized in the period in which the sale of goods held for sale or auction are completed, title to the property passes to the purchaser and the Company has fulfilled its obligations with respect to the transaction. These revenues are primarily the result of the Company acquiring title to merchandise with the intent of selling the items at auction or for augmenting liquidation sales. For liquidation contracts where we take title to retail goods, our net sales represent gross sales invoiced to customers, less certain related charges for discounts, returns, and other promotional allowances and are recorded net of sales or value added tax. Revenues in the Valuation and Appraisal segment are primarily comprised of fees for valuation and appraisal services. Revenues are recognized upon the delivery of the completed services to the related customers and collection of the fee is reasonably assured. Revenues in the Valuation and Appraisal segment also include contractual reimbursable costs. Revenues in the Principal Investments - United Online segment are primarily comprised of services revenues, which are derived primarily from fees charged to pay accounts; advertising and other revenues; and products revenues, which are derived primarily from the sale mobile broadband service devices, including the related shipping and handling fees. Service revenues are derived primarily from fees charged to pay accounts and are recognized in the period in which fees are fixed or determinable and the related services are provided to the customer. The Company’s pay accounts generally pay in advance for their services by credit card, PayPal, automated clearinghouse or check, and revenues are then recognized ratably over the service period. Advance payments from pay accounts are recorded in the condensed consolidated balance sheets as deferred revenue. In circumstances where payment is not received in advance, revenues are only recognized if collectability is reasonably assured. Advertising revenues consist primarily of amounts from the Company’s Internet search partner that are generated as a result of users utilizing the partner’s Internet search services and amounts generated from display advertisements. The Company recognizes such advertising revenues in the period in which the advertisement is displayed or, for performance-based arrangements, when the related performance criteria are met. In determining whether an arrangement exists, the Company ensures that a written contract is in place, such as a standard insertion order or a customer-specific agreement. The Company assesses whether performance criteria have been met and whether the fees are fixed or determinable based on a reconciliation of the performance criteria and the payment terms associated with the transaction. The reconciliation of the performance criteria generally includes a comparison of customer-provided performance data to the contractual performance obligation and to internal or third-party performance data in circumstances where that data is available. |
Direct Cost of Services | (d) Direct Cost of Services Direct cost of services relate to service and fee revenues. The costs consist of employee compensation and related payroll benefits, travel expenses, the cost of consultants assigned to revenue-generating activities and direct expenses billable to clients in the Valuation and Appraisal segment. Direct costs of services include participation in profits under collaborative arrangements in which the Company is a majority participant. Direct costs of services also include the cost of consultants and other direct expenses related to auction and liquidation contracts pursuant to commission and fee based arrangements in the Auction and Liquidation segment. Direct cost of services in the Principal Investments - United Online segment include cost of telecommunications and data center costs, personnel and overhead-related costs associated with operating the Company’s networks and data centers, depreciation of network computers and equipment, third party advertising sales commissions, license fees, costs related to providing customer support, costs related to customer billing and processing of customer credit cards and associated bank fees. Direct cost of services does not include an allocation of the Company’s overhead costs. |
Interest Expense - Securities Lending Activities | (e) Interest Expense - Securities Lending Activities Interest expense from securities lending activities is included in operating expenses related to operations in the Capital Markets segment. Interest expense from securities lending activities is incurred from equity and fixed income securities that are loaned to the Company. |
Concentration of Risk | (f) Concentration of Risk Revenue from one liquidation engagement represented 24.4% of total revenues during the three months ended September 30, 2016 and 15.6% of total revenues during the nine months ended September 30, 2016. Revenues in the Capital Markets, Valuation and Appraisal and Principal Investments - United Online segments are currently primarily generated in the United States. Revenues in the Auction and Liquidation segment are primarily generated in the United States, Australia, Canada and Europe. The Company’s activities in the Auction and Liquidation segment are executed frequently with, and on behalf of, distressed customers and secured creditors. Concentrations of credit risk can be affected by changes in economic, industry, or geographical factors. The Company seeks to control its credit risk and potential risk concentration through risk management activities that limit the Company’s exposure to losses on any one specific liquidation services contract or concentration within any one specific industry. To mitigate the exposure to losses on any one specific liquidation services contract, the Company sometimes conducts operations with third parties through collaborative arrangements. The Company maintains cash in various federally insured banking institutions. The account balances at each institution periodically exceed the Federal Deposit Insurance Corporation’s (“FDIC”) insurance coverage, and as a result, there is a concentration of credit risk related to amounts in excess of FDIC insurance coverage. The Company has not experienced any losses in such accounts. The Company also has substantial cash balances from proceeds received from auctions and liquidation engagements that are distributed to parties in accordance with the collaborative arrangements. |
Advertising Expense | (g) Advertising Expenses The Company expenses advertising costs, which consist primarily of costs for printed materials, as incurred. Advertising costs totaled $183 and $339 for the three months ended September 30, 2017 and 2016, respectively, and $1,227 and $1,235 for the nine months ended September 30, 2017 and 2016, respectively. Advertising expense is included as a component of selling, general and administrative expenses in the accompanying condensed consolidated statements of operations. |
Share-Based Compensation | (h) Share-Based Compensation The Company’s share-based payment awards principally consist of grants of restricted stock and restricted stock units. In accordance with the applicable accounting guidance, share-based payment awards are classified as either equity or liabilities. For equity-classified awards, the Company measures compensation cost for the grant of membership interests at fair value on the date of grant and recognizes compensation expense in the condensed consolidated statements of operations over the requisite service or performance period the award is expected to vest. The fair value of the liability-classified award will be subsequently remeasured at each reporting date through the settlement date. Change in fair value during the requisite service period will be recognized as compensation cost over that period. |
Restructuring Charge | (i) Restructuring Charge The Company recorded a restructuring charge in the amount of $11,484 during the nine months ended September 30, 2017. In the second and third quarters of 2017, the Company implemented costs savings measures taking into account the planned synergies as a result of the acquisition of FBR & Co. (“FBR”) and Wunderlich Investment Company, Inc. (“Wunderlich”), as more fully described in Note 3, which included a reduction in force for some of the corporate executives of FBR’s and Wunderlich and a restructuring to integrate FBR and Wunderlich’s operations with the Company’s existing operations. These initiatives resulted in a restructuring charge of $6,105 in the second quarter of 2017 and $4,746 in the third quarters of 2017. The restructuring charges during the second and third quarter of 2017 included $2,400 related to severance and $884 related to the accelerated vesting of restricted stock awards to former corporate executives of FBR and Wunderlich and $3,109 of severance and $1,710 related to accelerated vesting of stock awards to employees and $2,748 of lease loss accruals and impairments for the planned consolidation of office space related to operations of FBR and Wunderlich. Of the $10,851 of restructuring charges related to these initiatives, $7,245 related to the Capital Markets segment and $3,606 related to corporate overhead. The restructuring charge in 2017 also included employee termination costs of $150 and $633 in the third quarter and the nine months ended 2017, respectively, related to a reduction in personnel in the principal investments – United Online segment of our operations. The following table summarizes the changes in accrued restructuring charge during the nine months ended September 30, 2017: Nine Months Ended September 30, 2017 Accrued restructuring charge, beginning of year $ 694 Restructuring charge 11,484 Cash paid (4,880 ) Non-cash items (3,939 ) Accrued restructuring charge, end of period $ 3,359 The following tables summarize the restructuring activities during the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, 2017 2016 Capital Markets Principal Investments - United Online Corporate Total Capital Markets Principal Investments - United Online Corporate Total Restructuring charge: Employee termination costs $ 2,285 $ 150 $ 1,102 $ 3,537 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 1,037 — 322 1,359 — — 398 398 Total restructuring charge $ 3,322 $ 150 $ 1,424 $ 4,896 $ — $ 3,187 $ 398 $ 3,585 Nine Months Ended September 30, 2017 2016 Capital Markets Principal Investments - United Online Corporate Total Capital Markets Principal Investments - United Online Corporate Total Restructuring charge: Employee termination costs $ 4,819 $ 633 $ 3,284 $ 8,736 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 2,426 — 322 2,748 — — 398 398 Total restructuring charge $ 7,245 $ 633 $ 3,606 $ 11,484 $ — $ 3,187 $ 398 $ 3,585 |
Income Taxes | (j) Income Taxes The Company recognizes deferred tax liabilities and assets for the expected future tax consequences of events that have been included in the condensed consolidated financial statements or tax returns. Deferred tax liabilities and assets are determined based on the difference between the financial statement basis and tax basis of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse. The Company estimates the degree to which tax assets and credit carryforwards will result in a benefit based on expected profitability by tax jurisdiction. A valuation allowance for such tax assets and loss carryforwards is provided when it is determined to be more likely than not that the benefit of such deferred tax asset will not be realized in future periods. Tax benefits of operating loss carryforwards are evaluated on an ongoing basis, including a review of historical and projected future operating results, the eligible carryforward period, and other circumstances. If it becomes more likely than not that a tax asset will be used, the related valuation allowance on such assets would be reduced. The Company recognizes tax benefits from uncertain tax positions only if it is more likely than not that the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. Once this threshold has been met, the Company’s measurement of its expected tax benefits is recognized in its financial statements. The Company accrues interest on unrecognized tax benefits as a component of income tax expense. Penalties, if incurred, would be recognized as a component of income tax expense. |
Cash and Cash Equivalents | (k) Cash and Cash Equivalents The Company considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. |
Restricted Cash | (l) Restricted Cash As of September 30, 2017, restricted cash balance of $9,269 included $8,759 of cash collateral related to certain retail liquidation engagements and $510 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication supplier. As of December 31, 2016, restricted cash balance of $3,294 included $1,440 of cash collateral related to a retail liquidation engagement in Australia, $1,320 of cash collateral for foreign exchange contracts and $534 cash segregated in a special bank account for the benefit of customers related to our broker dealer subsidiary and collateral for one of our telecommunication suppliers. |
Securities Borrowed and Securities Loaned | (m) Securities Borrowed and Securities Loaned Securities borrowed and securities loaned are recorded based upon the amount of cash advanced or received. Securities borrowed transactions facilitate the settlement process and require the Company to deposit cash or other collateral with the lender. With respect to securities loaned, the Company receives collateral in the form of cash. The amount of collateral required to be deposited for securities borrowed, or received for securities loaned, is an amount generally in excess of the market value of the applicable securities borrowed or loaned. The Company monitors the market value of the securities borrowed and loaned on a daily basis, with additional collateral obtained, or excess collateral recalled, when deemed appropriate. The Company accounts for securities lending transactions in accordance with Accounting Standards Update (“ASU”) 2013-01, “Balance Sheet (Topic 210): Clarifying the Scope of Disclosures about Offsetting Assets and Liabilities,” requiring companies to report disclosures of offsetting assets and liabilities. The Company does not net securities borrowed and securities loaned and these items are presented on a gross basis in the condensed consolidated balance sheets. |
Due from/to Brokers, Dealers, and Clearing Organizations | (n) Due from/to Brokers, Dealers, and Clearing Organizations The Company clears all of its proprietary and customer transactions through other broker-dealers on a fully disclosed basis. The amount receivable from or payable to the clearing brokers represents the net of proceeds from unsettled securities sold, the Company’s clearing deposit and amounts receivable for commissions less amounts payable for unsettled securities purchased by the Company and amounts payable for clearing costs and other settlement charges. This amount also includes the cash collateral received for securities loaned less cash collateral for securities borrowed. Any amounts payable would be fully collateralized by all of the securities owned by the Company and held on deposit at the clearing broker. |
Accounts Receivable | (o) Accounts Receivable Accounts receivable represents amounts due from the Company’s auction and liquidation, valuation and appraisal, capital markets and principal investments - United Online customers. The Company maintains an allowance for doubtful accounts for estimated losses inherent in its accounts receivable portfolio. In establishing the required allowance, management utilizes a specific customer identification methodology. Management also considers historical losses adjusted for current market conditions and the customers’ financial condition and the current receivables aging and current payment patterns. Account balances are charged off against the allowance after all means of collection have been exhausted and the potential for recovery is considered remote. The Company does not have any off-balance sheet credit exposure related to its customers. Bad debt expense and changes in the allowance for doubtful accounts for the three and nine months ended September 30, 2017 and 2016 are included in Note 5. |
Advances Against Customer Contracts | (p) Advances Against Customer Contracts Advances against customer contracts represent advances of contractually reimbursable expenses incurred prior to, and during the term of the auction and liquidation services contract. These advances are charged to expense in the period that revenue is recognized under the contract. |
Property and Equipment | (q) Property and Equipment Property and equipment are stated at cost. Depreciation and amortization is computed using the straight-line method over the estimated useful lives of the assets. Property and equipment held under capital leases are amortized on a straight-line basis over the shorter of the lease term or estimated useful life of the asset. Depreciation and amortization expense was $1,243 and $531 for the three months ended September 30, 2017 and 2016, respectively, and $2,458 and $706 for the nine months ended September 30, 2017 and 2016, respectively. |
Securities and Other Investments Owned and Securities Sold Not Yet Purchased | (r) Securities Owned and Securities Sold Not Yet Purchased Securities owned consist of marketable securities and investments in partnership interests and other securities recorded at fair value. Securities sold, but not yet purchased represents obligations of the Company to deliver the specified security at the contracted price and thereby create a liability to purchase the security in the market at prevailing prices. Changes in the value of these securities are reflected currently in the results of operations. As of September 30, 2017 and December 31, 2016, the Company’s securities owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, Securities and other investments owned: Common stocks and warrants $ 41,412 $ 2,084 Corporate bonds 6,328 1,025 Loan receivable 26,868 — Partnership interests and other 21,357 13,470 $ 95,965 $ 16,579 Securities sold not yet purchased: Common stocks $ 23,570 $ — Corporate bonds 982 846 Partnership interests and other 494 — $ 25,046 $ 846 |
Fair Value Measurements | (s) Fair Value Measurements The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment and considers factors specific to the asset or liability. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability or, in the absence of a principal market, the most advantageous market. In general, fair values determined by Level 1 inputs utilize quoted prices (unadjusted) for identical instruments that are highly liquid, observable and actively traded in over-the-counter markets. Fair values determined by Level 2 inputs utilize inputs other than quoted prices included in Level 1 that are observable for the asset or liability, either directly or indirectly. Level 2 inputs include quoted prices for similar instruments in active markets, quoted prices for identical or similar instruments in markets that are not active and model-derived valuations whose inputs are observable and can be corroborated by market data. Level 3 inputs are unobservable inputs that are supported by little or no market activity and that are significant to the fair value of the assets or liabilities. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the level in the fair value hierarchy within which the fair value measurement in its entirety falls has been determined based on the lowest level input that is significant to the fair value measurement in its entirety. The Company’s assessment of the significance of a particular input to the fair value measurement in its entirety requires judgment, and considers factors specific to the asset or liability. The Company’s securities and other investments owned and securities sold and not yet purchased are comprised of common stocks and warrants, corporate bonds, loans receivable and investments in partnerships. Investments in common stocks are based on quoted prices in active markets which are included in Level 1 of the fair value hierarchy. The Company also holds nonpublic common stocks and warrants for which there is little or no public market and fair value is determined by management on a consistent basis. For investments where little or no public market exists, management’s determination of fair value is based on the best available information which may incorporate management’s own assumptions and involves a significant degree of judgment, taking into consideration various factors including earnings history, financial condition, recent sales prices of the issuer’s securities and liquidity risks. These investments are included in Level 3 of the fair value hierarchy. Investments in partnership interests include investments in private equity partnerships that primarily invest in equity securities, bonds, and direct lending funds. The Company’s partnership interests are valued based on the Company’s proportionate share of the net assets of the partnership which is derived from the most recent statements received from the general partner which are included in Level 2 of the fair value hierarchy. The Company also invests in proprietary investment funds that are valued at net asset value (“NAV”) determined by the fund administrator. The underlying securities held by these investment companies are primarily corporate and asset-backed fixed income securities and restrictions exist on the redemption of amounts invested by the Company. As a practical expedient, the Company relies on the NAV of these investments as their fair value. The NAVs that have been provided by the fund administrators are derived from the fair values of the underlying investments as of the reporting date. In accordance with ASU 2015-07, “Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent),” (“ASU 2015-07”), these investment funds are not categorized within the fair value hierarchy. The fair value of mandatorily redeemable noncontrolling interests is determined based on the issuance of similar interests for cash, references to industry comparables, and relied, in part, on information obtained from appraisal reports and internal valuation models. The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. Financial Assets and Liabilities Measured at Fair Value Fair value at Quoted prices in Other Significant Assets Securities and other investments owned: Common stocks and warrants $ 41,412 $ 31,430 $ — $ 9,982 Corporate bonds 6,328 — 6,328 — Loan receivable 26,868 — — 26,868 Partnership interests and other 16,505 4,462 187 11,856 Total assets measured at fair value $ 91,113 $ 35,892 $ 6,515 $ 48,706 Liabilities Securities sold not yet purchased: Common stocks $ 23,569 $ 23,569 $ — $ — Corporate bonds 982 — 982 Partnership interests and other 495 — 495 — Total securities sold not yet purchased 25,046 23,569 1,477 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 12,830 — — 12,830 Total liabilities measured at fair value $ 37,876 $ 23,569 $ 1,477 $ 12,830 Financial Assets and Liabilities Measured at Fair Value Fair value at Quoted prices in Other Significant Assets: Securities and other investments owned: Common stocks $ 2,084 $ 1,785 $ — $ 299 Corporate bonds 1,025 — 865 160 Partnership interests 13,470 — 44 13,426 Total assets measured at fair value $ 16,579 $ 1,785 $ 909 $ 13,885 Liabilities: Securities sold not yet purchased: $ 846 $ — $ 846 $ — Corporate bonds Mandatorily redeemable noncontrolling interests issued after November 5, 2003 3,214 — — 3,214 Contingent consideration 1,242 — — 1,242 Total liabilities measured at fair value $ 5,302 $ — $ 846 $ 4,456 As of September 30, 2017, securities and other investments owned included $4,852 of investment funds valued at NAV per share. As such, total securities and other investments owned of $95,965 in the condensed consolidated balance sheets at September 30, 2017 included investments in investment funds of $4,852 and securities and other investments owned in the amount of $91,113 as outlined in the fair value table above. As of September 30, 2017 and December 31, 2016, financial assets measured and reported at fair value on a recurring basis and classified within Level 3 were $48,706 and $13,885, respectively, or 4.0% and 5.2%, respectively, of the Company’s total assets. In determining the fair value for these Level 3 financial assets, the Company analyzes various financial, performance and market factors to estimate the value, including where applicable, over-the-counter market trading activity. The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2017 and 2016 are as follows: Level 3 Level 3 Changes During the Period Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Period Adjustments Earnings Settlements of Level 3 Period Nine Months Ended September 30, 2017 Common stocks and warrants $ 299 $ (463 ) $ — $ 10,146 $ — $ 9,982 Corporate bonds 160 — — — (160 ) — Loan receivable — 1,375 — 25,493 — 26,868 Partnership interests and other 13,426 2,820 — (4,390 ) — 11,856 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 3,214 9,000 (190 ) — 806 12,830 Contingent consideration 1,242 8 — (1,250 ) — — Nine Months Ended September 30, 2016 Common stocks $ 290 $ (15 ) $ — $ — $ — $ 275 Corporate bonds — (409 ) — 569 — 160 Partnership interests 1,766 123 418 94 — 2,401 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,330 — (96 ) — — 2,234 Contingent consideration 2,391 78 — (1,250 ) — 1,219 The fair value adjustment for contingent consideration of $8 and $78 represents imputed interest for the nine months ended September 30, 2017 and 2016, respectively. The Company had a triggering event in the second quarter of 2017 for the mandatorily redeemable noncontrolling interests that resulted in a fair value adjustment of $6,050 of the total fair value adjustment of $9,000 for the nine months ended September 30, 2017. In connection with this event, the Company received proceeds of $6,000 from key man life insurance. These amounts have been recorded in the condensed consolidated statements of operations in Selling, general and administrative expenses in the corporate segment. The amount reported in the table above also for the nine months ended September 30, 2017 and 2016 includes the amount of undistributed earnings attributable to the noncontrolling interests that is distributed on a quarterly basis. The carrying amounts reported in the condensed consolidated financial statements for cash, restricted cash, accounts receivable, accounts payable, accrued payroll and related, accrued value added tax, income taxes payable and accrued expenses and other current liabilities approximate fair value based on the short-term maturity of these instruments. The carrying amount of the senior notes payable approximates fair value because the contractual interest rates or effective yields of such instruments are consistent with current market rates of interest for instruments of comparable credit risk. During the nine months ended September 30, 2017 and 2016, there were no assets or liabilities measured at fair value on a non-recurring basis. |
Contingent Consideration | (t) Contingent Consideration In connection with the acquisition of MK Capital Advisors , LLC (“MK Capital”) The contingent cash and stock consideration was payable on the first and second anniversary dates of the closing provided that MK Capital generated a minimum amount of gross revenues as defined in the purchase agreement for the twelve months following the first and second anniversary dates of the closing. MK Capital achieved the minimum amount of revenues for the first and second anniversary periods and the contingent cash consideration and contingent stock consideration for the first anniversary period was paid and issued on February 2, 2016 and for the second anniversary period was paid and issued on February 2, 2017. Upon the payment of the contingent stock consideration on February 2, 2017, the Company recorded a deferred tax asset and an increase to additional paid-in capital in the amount of $1,151 in accordance with ASC 805. |
Derivative and Foreign Currency Translation | (u) Derivative and Foreign Currency Translation The Company periodically uses derivative instruments, which primarily consist of the purchase of forward exchange contracts, for certain auction and liquidation engagements with operations outside the United States. During the nine months ended September 30, 2017, the Company’s use of derivatives consisted of the purchase of forward exchange contracts in the amount of $25,000 Australian dollars that was settled on January 31, 2017. During the nine months ended September 30, 2016, the Company’s use of derivatives consisted of the purchase of forward exchange contracts (a) in the amount of $10,200 Canadian dollars that was settled at various periods prior to August 31, 2016, (b) in the amount of $20,000 Australian dollars that was settled on December 30, 2016, and (c) 5,600 Euro’s that was settled on December 30, 2016. The forward exchange contract was entered into to improve the predictability of cash flows related to a retail store liquidation engagement that was completed in December 2016. The net loss from forward exchange contracts was $33 and $103 during the three and nine months ended September 30, 2017, respectively, and $76 and $115 during the three and nine months ended September 30, 2016, respectively. This amount is reported as a component of selling, general and administrative expenses in the condensed consolidated statements of operations. The Company transacts business in various foreign currencies. In countries where the functional currency of the underlying operations has been determined to be the local country’s currency, revenues and expenses of operations outside the United States are translated into United States dollars using average exchange rates while assets and liabilities of operations outside the United States are translated into United States dollars using period-end exchange rates. The effects of foreign currency translation adjustments are included in stockholders’ equity as a component of accumulated other comprehensive loss in the accompanying condensed consolidated balance sheets. Transaction losses were $389 and $511 during the three months ended September 30, 2017 and 2016, respectively, and $919 and $531 during the nine months ended September 30, 2017 and 2016, respectively. These amounts are included in selling, general and administrative expenses in our condensed consolidated statements of operations. |
Common Stock Warrants | (v) Common Stock Warrants The Company issued 821,816 warrants to purchase common stock of the Company in connection with the acquisition of Wunderlich on July 3, 2017. The common stock warrants entitle the holders of the warrants to acquire shares of the Company’s common stock from the Company at a price of $17.50 per share (the “Exercise Price”), subject to, among other matters, the proper completion of an exercise notice and payment. The Exercise Price and the number of shares of Company common stock issuable upon exercise are subject to customary anti-dilution and adjustment provisions, which include stock splits, subdivisions or reclassifications of the Company’s common stock. The common stock warrants expire on July 3, 2022. |
Recent Accounting Pronouncements | (w) Recent Accounting Pronouncements In February 2016, the Financial Accounting Standards Board (the “FASB”) issued ASU No. 2016-02: Leases (Topic 842) (“ASU 2016-02”) In May 2014, the FASB issued ASU No. 2014-09, Revenue from Contracts with Customers (Topic 606) In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments (ASU 2016-15) In January 2017, the FASB issued ASU 2017-04, Intangibles—Goodwill and Other (Topic 350) Simplifying the Test for Goodwill Impairment |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Schedule of restructuring charges | The following table summarizes the changes in accrued restructuring charge during the nine months ended September 30, 2017: Nine Months Ended September 30, 2017 Accrued restructuring charge, beginning of year $ 694 Restructuring charge 11,484 Cash paid (4,880 ) Non-cash items (3,939 ) Accrued restructuring charge, end of period $ 3,359 The following tables summarize the restructuring activities during the three and nine months ended September 30, 2017 and 2016: Three Months Ended September 30, 2017 2016 Capital Principal Corporate Total Capital Principal Corporate Tota Restructuring charge: Employee termination costs $ 2,285 $ 150 $ 1,102 $ 3,537 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 1,037 — 322 1,359 — — 398 398 Total restructuring charge $ 3,322 $ 150 $ 1,424 $ 4,896 $ — $ 3,187 $ 398 $ 3,585 Nine Months Ended September 30, 2017 2016 Capital Principal Corporate Total Capital Principal Corporate Tota Restructuring charge: Employee termination costs $ 4,819 $ 633 $ 3,284 $ 8,736 $ — $ 3,187 $ — $ 3,187 Facility closure and consolidation charge 2,426 — 322 2,748 — — 398 398 Total restructuring charge $ 7,245 $ 633 $ 3,606 $ 11,484 $ — $ 3,187 $ 398 $ 3,585 |
Schedule of securities owned and securities sold not yet purchased at fair value | As of September 30, 2017 and December 31, 2016, the Company’s securities owned and securities sold not yet purchased at fair value consisted of the following securities: September 30, December 31, Securities and other investments owned: Common stocks and warrants $ 41,412 $ 2,084 Corporate bonds 6,328 1,025 Loan receivable 26,868 — Partnership interests and other 21,357 13,470 $ 95,965 $ 16,579 Securities sold not yet purchased: Common stocks $ 23,570 $ — Corporate bonds 982 846 Partnership interests and other 494 — $ 25,046 $ 846 |
Schedule of financial assets and liabilities measured on recurring basis | The following tables present information on the financial assets and liabilities measured and recorded at fair value on a recurring basis as of September 30, 2017 and December 31, 2016. Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at September 30, 2017, Using Fair value at Quoted prices in Other Significant Assets: Securities and other investments owned: Common stocks and warrants $ 41,412 $ 31,430 $ — $ 9,982 Corporate bonds 6,328 — 6,328 — Loan receivable 26,868 — — 26,868 Partnership interests and other 16,505 4,462 187 11,856 Total assets measured at fair value $ 91,113 $ 35,892 $ 6,515 $ 48,706 Liabilities Securities sold not yet purchased: Common stocks $ 23,569 $ 23,569 $ — $ — Corporate bonds 982 — 982 Partnership interests and other 495 — 495 — Total securities sold not yet purchased 25,046 23,569 1,477 — Mandatorily redeemable noncontrolling interests issued after November 5, 2003 12,830 — — 12,830 Total liabilities measured at fair value $ 37,876 $ 23,569 $ 1,477 $ 12,830 Financial Assets and Liabilities Measured at Fair Value on a Recurring Basis at December 31, 2016, Using Fair value at Quoted prices in Other Significant unobservable inputs (Lev 3) Assets Securities and other investments owned: Common stocks $ 2,084 $ 1,785 $ — $ 299 Corporate bonds 1,025 — 865 160 Partnership interests 13,470 — 44 13,426 Total assets measured at fair value $ 16,579 $ 1,785 $ 909 $ 13,885 Liabilities Securities sold not yet purchased: $ 846 $ — $ 846 $ — Corporate bonds Mandatorily redeemable noncontrolling interests issued after November 5, 2003 3,214 — — 3,214 Contingent consideration 1,242 — — 1,242 Total liabilities measured at fair value $ 5,302 $ — $ 846 $ 4,456 |
Schedule of changes in Level 3 fair value hierarchy | The changes in Level 3 fair value hierarchy during the nine months ended September 30, 2017 and 2016 are as follows: Level 3 Level 3 Changes During the Period Level 3 Balance at Fair Relating to Purchases, Transfer in Balance at Beginning of Value Undistributed Sales and and/or out End of Period Adjustments Earnings Settlements of Level 3 Period Nine Months Ended September 30, 2017 Common stocks and warrants $ 299 $ (463 ) $ — $ 10,146 $ — $ 9,982 Corporate bonds 160 — — — (160 ) — Loan receivable — 1,375 — 25,493 — 26,868 Partnership interests and other 13,426 2,820 — (4,390 ) — 11,856 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 3,214 9,000 (190 ) — 806 12,830 Contingent consideration 1,242 8 — (1,250 ) — — Nine Months Ended September 30, 2016 Common stocks $ 290 $ (15 ) $ — $ — $ — $ 275 Corporate bonds — (409 ) — 569 — 160 Partnership interests 1,766 123 418 94 — 2,401 Mandatorily redeemable noncontrolling interests issued after November 5, 2003 2,330 — (96 ) — — 2,234 Contingent consideration 2,391 78 — (1,250 ) — 1,219 |
ACQUISITIONS (Tables)
ACQUISITIONS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Business Combinations [Abstract] | |
Schedule of purchase consideration | The preliminary purchase price allocation was as follows: Consideration paid by B. Riley: Cash paid $ 29,737 Fair value of 1,974,812 B. Riley common shares issued 31,414 Fair value of 821,816 B. Riley common stock warrants issued 4,892 Total consideration $ 66,043 The preliminary assets acquired and assumed was as follows: Tangible assets acquired and assumed: Cash and cash equivalents $ 4,259 Securities owned 1,413 Accounts receivable 3,193 Due from clearing broker 15,133 Prepaid expenses and other assets 10,248 Property and equipment 2,315 Deferred taxes 8,067 Accounts payable (517 ) Accrued payroll and related expenses (6,387 ) Accrued expenses and other liabilities (9,773 ) Securities sold, not yet purchased (1,707 ) Notes payable (10,579 ) Customer relationships 15,440 Trademarks 1,370 Goodwill 33,568 Total $ 66,043 The preliminary purchase price allocation was as follows: Consideration paid by B. Riley: Number of FBR Common Shares outstanding at June 1, 2017 7,099,511 Stock merger exchange ratio 0.671 Number of B. Riley common shares 4,763,772 Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards 67,861 Total number of B. Riley common shares to be issued 4,831,633 Closing market price of B. Riley common shares on December 31, 2016 $ 14.70 Total value of B. Riley common shares 71,025 Fair value of RSU’s attributable to service period prior to June 1, 2017 (a) 2,446 Total consideration $ 73,471 The preliminary assets acquired and assumed was as follows: Tangible assets acquired and assumed: Cash and cash equivalents $ 15,738 Securities owned 11,188 Securities borrowed 861,197 Accounts receivable 4,341 Due from clearing broker 29,169 Prepaid expenses and other assets 5,486 Property and equipment 8,663 Deferred taxes 14,514 Accounts payable (1,524 ) Accrued payroll and related expenses (7,182 ) Accrued expenses and other liabilities (22,411 ) Securities loaned (867,626 ) Customer relationships 5,600 Tradename and other intangibles 1,790 Goodwill 14,528 Total $ 73,471 |
Schedule of pro forma financial information | Pro Forma Financial Information The unaudited financial information in the table below summarizes the combined results of operations of the Company, Wunderlich, FBR and UOL, as though the acquisitions had occurred as of January 1, of the respective periods presented. The pro forma financial information presented includes the effects of adjustments related to the amortization charges from the acquired intangible assets and the elimination of certain activities excluded from the transaction and transaction related costs. The pro forma financial information as presented below is for informational purposes only and is not necessarily indicative of the results of operations that would have been achieved if the acquisition had taken place at the beginning of the earliest period presented, nor does it intend to be a projection of future results. Pro Forma (Unaudited) Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues $ 92,461 $ 111,340 $ 320,546 $ 298,118 Net (loss) income attributable to B. Riley Financial, Inc. $ (42 ) $ 2,843 $ 11,780 $ (13,657 ) Basic (loss) earnings per share $ (0.00 ) $ 0.11 $ 0.41 $ (0.55 ) Diluted (loss) earnings per share $ (0.00 ) $ 0.11 $ 0.41 $ (0.55 ) Weighted average basic shares outstanding 32,366,657 25,783,517 28,487,975 24,611,572 Weighted average diluted shares outstanding 32,366,657 25,997,480 28,692,181 24,611,572 |
SECURITIES LENDING (Tables)
SECURITIES LENDING (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Securities Lending | |
Schedule of contractual gross and net securities borrowing and lending balances | The following table presents the contractual gross and net securities borrowing and lending balances and the related offsetting amount as of September 30, 2017 Amounts not offset in the consolidated balance Gross amounts Net amounts sheets but eligible offset in the included in the for offsetting Gross amounts consolidated consolidated upon counterparty recognized balance sheets (1) balance sheets default (2) Net amounts As of September 30, 2017 Securities borrowed $ 730,022 $ — $ 730,022 $ 730,022 $ — Securities loaned $ 728,201 $ — $ 728,201 $ 728,201 $ — |
ACCOUNTS RECEIVABLE (Tables)
ACCOUNTS RECEIVABLE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Receivables [Abstract] | |
Schedule of components of accounts receivable | The components of accounts receivable, net, include the following: September 30, December 31, 2017 2016 Accounts receivable $ 14,218 $ 16,610 Investment banking fees, commissions and other receivables 5,074 576 Unbilled receivables 1,260 2,058 Total accounts receivable 20,552 19,244 Allowance for doubtful accounts (628 ) (255 ) Accounts receivable, net $ 19,924 $ 18,989 |
Schedule of allowance for doubtful accounts | Additions and changes to the allowance for doubtful accounts consist of the following: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Balance, beginning of period $ 599 $ 86 $ 255 $ 89 Add: Additions to reserve 123 428 827 488 Less: Write-offs (94 ) (15 ) (262 ) (49 ) Less: Recoveries — (321 ) (192 ) (350 ) Balance, end of period $ 628 $ 178 $ 628 $ 178 |
GOODWILL AND OTHER INTANGIBLE30
GOODWILL AND OTHER INTANGIBLE ASSETS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Goodwill and Intangible Assets Disclosure [Abstract] | |
Schedule of intangible assets | Intangible assets consisted of the following: Sept ember 30, 2017 December 31, 2016 Gross Gross Carrying Accumulated Intangibles Carrying Accumulated Intangibles Useful Life Value Amortization Net Value Amortization Net Amortizable assets: Customer relationships 4 to 13 Years $ 58,440 $ 7,301 $ 51,139 $ 37,300 $ 3,100 $ 34,200 Domain names 7 Years 807 144 663 1,419 101 1,318 Advertising relationships 8 Years 100 16 84 100 6 94 Internally developed software and other intangibles 0.5 to 4 Years 3,373 1,245 2,128 3,333 550 2,783 Trademarks 7 to 9 Years 4,220 302 3,918 1,100 69 1,031 Total 66,940 9,008 57,932 43,252 3,826 39,426 Non-amortizable assets: Tradenames 1,740 — 1,740 1,740 — 1,740 Total intangible assets $ 68,680 $ 9,008 $ 59,672 $ 44,992 $ 3,826 $ 41,166 |
EARNINGS PER SHARE (Tables)
EARNINGS PER SHARE (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Earnings Per Share [Abstract] | |
Schedule of basic and diluted earnings per share | Basic and diluted earnings per share was calculated as follows: Three Months Ended Nine Months Ended 2017 2016 2017 2016 Net income attributable to B. Riley Financial, Inc. $ 368 $ 8,939 $ 17,669 $ 9,086 Weighted average shares outstanding: Basic 26,059,490 18,977,072 22,180,808 17,805,127 Effect of dilutive potential common shares: Restricted stock units and non-vested shares 1,193,007 169,311 816,841 159,376 Contingently issuable shares 387,365 44,652 387,365 44,655 Diluted 27,639,862 19,191,035 23,385,014 18,009,158 Basic income per share $ 0.01 $ 0.47 $ 0.80 $ 0.51 Diluted income per share $ 0.01 $ 0.47 $ 0.76 $ 0.50 |
SHARE BASED PAYMENTS (Tables)
SHARE BASED PAYMENTS (Tables) - Restricted Stock Units (RSUs) [Member] | 9 Months Ended |
Sep. 30, 2017 | |
Amended and Restated 2009 Stock Incentive Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of equity incentive award activity | A summary of equity incentive award activity under the Plan for the nine months ended September 30, 2017 was as follows: Weighted Average Shares Fair Value Nonvested at December 31, 2016 680,135 $ 9.74 Granted 486,049 15.91 Vested (193,626 ) 10.32 Forfeited (29,724 ) 10.49 Nonvested at September 30, 2017 942,834 $ 12.78 |
FBR Stock Plan [Member] | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |
Schedule of equity incentive award activity | A summary of equity incentive award activity for the period from June 1, 2017, the date of the acquisition of FBR, through September 30, 2017 was as follows: Weighted Average Shares Fair Value Nonvested at June 1, 2017, acquisition date of FBR resulting from the exchange of previously existing FBR awards 530,661 $ 14.70 Granted 784,638 16.73 Vested (200,905 ) 15.08 Forfeited (93,963 ) 15.93 Nonvested at September 30, 2017 1,020,431 $ 16.14 |
BUSINESS SEGMENTS (Tables)
BUSINESS SEGMENTS (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Segment Reporting [Abstract] | |
Schedule of company's reportable segments | The following is a summary of certain financial data for each of the Company’s reportable segments: Three Months Ended Nine Months Ended September 30, September 30, 2017 2016 2017 2016 Capital Markets reportable segment: Revenues - Services and fees $ 56,473 $ 10,063 $ 95,872 $ 22,799 Interest income - Securities lending 7,206 — 9,424 — Total revenues 63,679 10,063 105,296 22,799 Selling, general, and administrative expenses (53,955 ) (8,916 ) (87,753 ) (22,535 ) Restructuring costs (3,322 ) — (7,245 ) — Interest expense - Securities lending (4,950 ) — (6,515 ) — Depreciation and amortization (1,636 ) (138 ) (2,167 ) (406 ) Segment (loss) income (184 ) 1,009 1,616 (142 ) Auction and Liquidation reportable segment: Revenues - Services and fees 7,376 17,058 43,179 29,358 Revenues - Sale of goods 1 6,503 1 6,505 Total revenues 7,377 23,561 43,180 35,863 Direct cost of services (3,385 ) (4,365 ) (25,482 ) (9,870 ) Cost of goods sold (2 ) (2,223 ) (2 ) (2,225 ) Selling, general, and administrative expenses (1,963 ) (3,976 ) (6,562 ) (6,840 ) Depreciation and amortization (5 ) (6 ) (15 ) (22 ) Segment income 2,022 12,991 11,119 16,906 Valuation and Appraisal reportable segment: Revenues - Services and fees 9,043 7,696 24,799 22,865 Direct cost of services (3,778 ) (3,549 ) (11,031 ) (10,287 ) Selling, general, and administrative expenses (2,253 ) (2,136 ) (6,395 ) (6,379 ) Depreciation and amortization (43 ) (19 ) (130 ) (72 ) Segment income 2,969 1,992 7,243 6,127 Principal Investments - United Online segment: Revenues - Services and fees 12,249 15,483 38,504 15,483 Revenues - Sale of goods 78 163 220 163 Total revenues 12,327 15,646 38,724 15,646 Direct cost of services (2,975 ) (4,927 ) (9,711 ) (4,927 ) Cost of goods sold (122 ) (168 ) (311 ) (168 ) Selling, general, and administrative expenses (2,433 ) (2,139 ) (8,536 ) (2,139 ) Depreciation and amortization (1,703 ) (1,802 ) (5,313 ) (1,802 ) Restructuring costs (150 ) (3,187 ) (633 ) (3,187 ) Segment income 4,944 3,423 14,220 3,423 Consolidated operating income from reportable segments 9,751 19,415 34,198 26,314 Corporate and other expenses (including restructuring costs of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively, and $398 during the three and nine months ended September 30, 2016) (8,395 ) (3,993 ) (19,571 ) (9,047 ) Interest income 76 26 358 32 Loss on equity investment (157 ) — (157 ) — Interest expense (2,510 ) (991 ) (5,195 ) (1,398 ) (Loss) income before income taxes (1,235 ) 14,457 9,633 15,901 Benefit from (provision for) income taxes 1,357 (6,083 ) 7,753 (6,184 ) Net income 122 8,374 17,386 9,717 Net (loss) income attributable to noncontrolling interests (246 ) (565 ) (283 ) 631 Net income attributable to B. Riley Financial, Inc. $ 368 $ 8,939 $ 17,669 $ 9,086 The following table presents revenues by geographical area: Three Months Ended September 30, Nine Months Ended September 30, 2017 2016 2017 2016 Revenues: Revenues - Services and fees: North America $ 85,128 $ 49,882 $ 200,500 $ 89,790 Australia — — 940 — Europe 13 418 914 715 Total Revenues - Services and fees $ 85,141 $ 50,300 $ 202,354 $ 90,505 Revenues - Sale of goods North America $ 79 $ 163 $ 221 $ 165 Europe — 6,503 — 6,503 Total Revenues - Sale of goods $ 79 $ 6,666 $ 221 $ 6,668 Revenues - Interest income - Securities lending: North America $ 7,206 $ — $ 9,424 $ — Total Revenues: North America $ 92,406 $ 50,045 $ 210,138 $ 89,955 Australia — — 940 — Europe 20 6,921 921 7,218 Total Revenues $ 92,426 $ 56,966 $ 211,999 $ 97,173 The following table presents long-lived assets, which consists of property and equipment and other assets, by geographical area: As of As of September 30, December 31, 2017 2016 Long-lived Assets - Property and Equipment, net: North America $ 13,105 $ 5,785 Australia — — Europe — — Total $ 13,105 $ 5,785 |
ORGANIZATION, BUSINESS OPERAT34
ORGANIZATION, BUSINESS OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) | 9 Months Ended |
Sep. 30, 2017Segment | |
Organization, Consolidation and Presentation of Financial Statements [Abstract] | |
Number of operating segment | 4 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring Reserve [Roll Forward] | ||||
Accrued restructuring charge, beginning of year | $ 694 | |||
Restructuring charge | $ 4,896 | $ 3,585 | 11,484 | $ 3,585 |
Cash paid | (4,880) | |||
Non-cash items | (3,939) | |||
Accrued restructuring charge, end of period | $ 3,359 | $ 3,359 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Restructuring charge | $ 4,896 | $ 3,585 | $ 11,484 | $ 3,585 |
Capital Markets Reportable Segment [Member] | ||||
Restructuring charge | (3,322) | (7,245) | ||
Principal Investments - United Online Segment [Member] | ||||
Restructuring charge | (150) | (3,187) | (633) | (3,187) |
Corporate Overhead [Member] | ||||
Restructuring charge | 1,424 | 398 | 3,606 | 398 |
Employee Termination Costs [Member] | ||||
Restructuring charge | 3,537 | 3,187 | 8,736 | 3,187 |
Employee Termination Costs [Member] | Capital Markets Reportable Segment [Member] | ||||
Restructuring charge | 2,285 | 4,819 | ||
Employee Termination Costs [Member] | Principal Investments - United Online Segment [Member] | ||||
Restructuring charge | 150 | 3,187 | 633 | 3,187 |
Employee Termination Costs [Member] | Corporate Overhead [Member] | ||||
Restructuring charge | 1,102 | 3,284 | ||
Facility Closure And Consolidation Charge [Member] | ||||
Restructuring charge | 1,359 | 398 | 2,748 | 398 |
Facility Closure And Consolidation Charge [Member] | Capital Markets Reportable Segment [Member] | ||||
Restructuring charge | 1,037 | 2,426 | ||
Facility Closure And Consolidation Charge [Member] | Principal Investments - United Online Segment [Member] | ||||
Restructuring charge | ||||
Facility Closure And Consolidation Charge [Member] | Corporate Overhead [Member] | ||||
Restructuring charge | $ 322 | $ 398 | $ 322 | $ 398 |
SUMMARY OF SIGNIFICANT ACCOUN37
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Securities and other investments owned | ||
Securities owned | $ 95,965 | $ 16,579 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 25,046 | 846 |
Common Stocks and Warrants [Member] | ||
Securities and other investments owned | ||
Securities owned | 41,412 | 2,084 |
Corporate Bonds [Member] | ||
Securities and other investments owned | ||
Securities owned | 6,328 | 1,025 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 982 | 846 |
Partnership Interests and Other [Member] | ||
Securities and other investments owned | ||
Securities owned | 21,357 | $ 13,470 |
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 494 | |
Common Stock [Member] | ||
Securities sold not yet purchased: | ||
Securities sold not yet purchased | 23,570 | |
Loans Receivable [Member] | ||
Securities and other investments owned | ||
Securities owned | $ 26,868 |
SUMMARY OF SIGNIFICANT ACCOUN38
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 3) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Securities and other investments owned: | ||
Total assets measured at fair value | $ 95,965 | $ 16,579 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 25,046 | 846 |
Contingent consideration | 1,242 | |
Common Stock [Member] | ||
Securities sold not yet purchased | ||
Securities sold not yet purchased | 23,570 | |
Corporate Bonds [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 6,328 | 1,025 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 982 | 846 |
Common Stocks and Warrants [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 41,412 | 2,084 |
Loans Receivable [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 26,868 | |
Partnership Interests and Other [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 21,357 | 13,470 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 494 | |
Fair Value, Measurements, Recurring [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 91,113 | 16,579 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 25,046 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 12,830 | 3,214 |
Contingent consideration | 1,242 | |
Total liabilities measured at fair value | 37,876 | 5,302 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 35,892 | 1,785 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 23,569 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | ||
Contingent consideration | ||
Total liabilities measured at fair value | 23,569 | |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 6,515 | 909 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 1,477 | |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | ||
Contingent consideration | ||
Total liabilities measured at fair value | 1,477 | 846 |
Fair Value, Measurements, Recurring [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 48,706 | 13,885 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 | 12,830 | 3,214 |
Contingent consideration | 1,242 | |
Total liabilities measured at fair value | 12,830 | 4,456 |
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 2,084 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 23,569 | |
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 1,785 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 23,569 | |
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Fair Value, Measurements, Recurring [Member] | Common Stock [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 299 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 6,328 | 1,025 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 982 | 846 |
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 6,328 | 865 |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 982 | 846 |
Fair Value, Measurements, Recurring [Member] | Corporate Bonds [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 160 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Fair Value, Measurements, Recurring [Member] | Partnership Interests [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 13,470 | |
Fair Value, Measurements, Recurring [Member] | Partnership Interests [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Fair Value, Measurements, Recurring [Member] | Partnership Interests [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 44 | |
Fair Value, Measurements, Recurring [Member] | Partnership Interests [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | $ 13,426 | |
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 41,412 | |
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 31,430 | |
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Fair Value, Measurements, Recurring [Member] | Common Stocks and Warrants [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 9,982 | |
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 26,868 | |
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | ||
Fair Value, Measurements, Recurring [Member] | Loans Receivable [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 26,868 | |
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 16,505 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 495 | |
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 1 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 4,462 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | ||
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 2 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | 187 | |
Securities sold not yet purchased | ||
Securities sold not yet purchased | 495 | |
Fair Value, Measurements, Recurring [Member] | Partnership Interests and Other [Member] | Fair Value, Inputs, Level 3 [Member] | ||
Securities and other investments owned: | ||
Total assets measured at fair value | $ 11,856 |
SUMMARY OF SIGNIFICANT ACCOUN39
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 4) - Fair Value, Inputs, Level 3 [Member] - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Common Stocks and Warrants [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | $ 299 | |
Fair Value Adjustments | (463) | |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | 10,146 | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 9,982 | |
Corporate Bond [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 160 | |
Fair Value Adjustments | (409) | |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | 569 | |
Transfer in and/or out of Level 3 | (160) | |
Balance at End of Period | 160 | |
Loans Receivable [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | ||
Fair Value Adjustments | 1,375 | |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | 25,493 | |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 26,868 | |
Partnership Interests [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 13,426 | 1,766 |
Fair Value Adjustments | 2,820 | 123 |
Relating to Undistributed Earnings | 418 | |
Purchases, Sales and Settlements | (4,390) | 94 |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 11,856 | 2,401 |
Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 3,214 | 2,330 |
Fair Value Adjustments | 9,000 | |
Relating to Undistributed Earnings | (190) | (96) |
Purchases, Sales and Settlements | ||
Transfer in and/or out of Level 3 | 806 | |
Balance at End of Period | 12,830 | 2,234 |
Contingent Consideration [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 1,242 | 2,391 |
Fair Value Adjustments | 8 | 78 |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | (1,250) | (1,250) |
Transfer in and/or out of Level 3 | ||
Balance at End of Period | 1,219 | |
Common Stock [Member] | ||
Fair Value, Instruments Classified in Shareholders' Equity Measured on Recurring Basis, Unobservable Input Reconciliation, Calculation [Roll Forward] | ||
Balance at Beginning of Period | 290 | |
Fair Value Adjustments | (15) | |
Relating to Undistributed Earnings | ||
Purchases, Sales and Settlements | ||
Transfer in and/or out of Level 3 | ||
Balance at End of Period | $ 275 |
SUMMARY OF SIGNIFICANT ACCOUN40
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) € in Thousands, CAD in Thousands, AUD in Thousands, $ in Thousands | 3 Months Ended | 6 Months Ended | 9 Months Ended | ||||||||||
Sep. 30, 2017USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Jun. 30, 2017USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017AUD | Feb. 02, 2017USD ($) | Dec. 31, 2016USD ($) | Dec. 31, 2016AUD | Dec. 31, 2016EUR (€) | Aug. 31, 2016CAD | Feb. 02, 2015USD ($) | |
Concentration risk, percentage | 24.40% | 15.60% | |||||||||||
Advertising costs | $ 183 | $ 339 | $ 1,227 | $ 1,235 | |||||||||
Restricted cash and cash equivalents | 9,269 | 9,269 | $ 3,294 | ||||||||||
Cash collateral | 8,759 | 8,759 | 1,440 | ||||||||||
Depreciation and amortization expense | 1,243 | 531 | 2,458 | 706 | |||||||||
Contingent consideration- current portion | 1,242 | ||||||||||||
Net loss from forward exchange contracts | 33 | 76 | 103 | 115 | |||||||||
Transaction losses | 389 | 511 | 919 | 531 | |||||||||
Restructuring charge | 4,896 | $ 3,585 | 11,484 | 3,585 | |||||||||
Securities and other investments owned | 4,852 | 4,852 | |||||||||||
Securities and other investments owned, at fair value | 95,965 | 95,965 | 16,579 | ||||||||||
Proceeds from key man life insurance | 6,000 | ||||||||||||
Foreign Exchange Contract [Member] | |||||||||||||
Cash collateral | 1,320 | ||||||||||||
Foreign Exchange Contract [Member] | Australia, Dollars [Member] | |||||||||||||
Derivatives | AUD | AUD 25 | AUD 20,000 | |||||||||||
Foreign Exchange Contract [Member] | Canada, Dollars [Member] | |||||||||||||
Derivatives | CAD | CAD 10,200 | ||||||||||||
Foreign Exchange Contract [Member] | Euro [Member] | |||||||||||||
Derivatives | € | € 5,600 | ||||||||||||
Special Bank Accounts [Member] | |||||||||||||
Restricted cash and cash equivalents | $ 510 | $ 510 | $ 534 | ||||||||||
Purchase Agreement [Member] | MK Capital Advisors, LLC [Member] | |||||||||||||
Initial discount on contingent consideration | $ 8 | ||||||||||||
Contingent consideration- current portion | 1,242 | ||||||||||||
Phased wise repayment of contingent consideration | $ 1,250 | $ 1,250 | |||||||||||
Percentage of initial discount on contingent consideration | 8.00% | ||||||||||||
Fair Value, Inputs, Level 3 [Member] | Mandatorily redeemable noncontrolling interests issued after November 5, 2003 [Member] | |||||||||||||
Fair Value Adjustments | $ 6,050 | $ 9,000 |
SUMMARY OF SIGNIFICANT ACCOUN41
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative 1) - USD ($) $ / shares in Units, $ in Thousands | Jul. 03, 2017 | Feb. 02, 2017 | Feb. 02, 2015 | Sep. 30, 2017 | Jun. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Restructuring charge | $ 4,896 | $ 3,585 | $ 11,484 | $ 3,585 | |||||
Contingent consideration- current portion | $ 1,242 | ||||||||
Net loss from forward exchange contracts | 33 | 76 | 103 | 115 | |||||
Transaction losses | 389 | 511 | 919 | 531 | |||||
Capital Markets Reportable Segment [Member] | |||||||||
Restructuring charge | (3,322) | (7,245) | |||||||
Corporate Overhead [Member] | |||||||||
Restructuring charge | 1,424 | 398 | 3,606 | 398 | |||||
Employee Termination Costs [Member] | |||||||||
Restructuring charge | 3,537 | 3,187 | 8,736 | 3,187 | |||||
Employee Termination Costs [Member] | Capital Markets Reportable Segment [Member] | |||||||||
Restructuring charge | 2,285 | 4,819 | |||||||
Employee Termination Costs [Member] | Corporate Overhead [Member] | |||||||||
Restructuring charge | 1,102 | 3,284 | |||||||
MK Capital Advisors, LLC [Member] | Purchase Agreement [Member] | |||||||||
Number of shares issued upon contingent consideration | 166,666 | 166,667 | |||||||
Contingent consideration- current portion | $ 1,242 | ||||||||
Deferred tax benefit and increase in additional paid-in capital | 1,151 | ||||||||
Imputed interest | $ 23 | 8 | $ 78 | ||||||
Phased wise repayment of contingent consideration | $ 1,250 | $ 1,250 | |||||||
Percentage of initial discount on contingent consideration | 8.00% | ||||||||
FBR & Co. ("FBR") [Member] | |||||||||
Restructuring charge | 4,746 | $ 6,105 | |||||||
Lease loss accruals and impairments | 2,748 | ||||||||
FBR & Co. ("FBR") [Member] | Capital Markets Reportable Segment [Member] | |||||||||
Restructuring charge | 7,245 | ||||||||
FBR & Co. ("FBR") [Member] | Corporate Overhead [Member] | |||||||||
Restructuring charge | 3,606 | ||||||||
FBR & Co. ("FBR") [Member] | Employee Termination Costs [Member] | |||||||||
Restructuring charge | 2,400 | 2,400 | |||||||
FBR & Co. ("FBR") [Member] | Employee Termination Costs [Member] | Employee [Member] | |||||||||
Restructuring charge | 1,710 | ||||||||
FBR & Co. ("FBR") [Member] | Employee Termination Costs [Member] | Restricted Stock [Member] | Former Corporate Executives [Member] | |||||||||
Restructuring charge | 884 | $ 884 | |||||||
FBR & Co. ("FBR") [Member] | Employee Severance#1 [Member] | |||||||||
Restructuring charge | 3,109 | ||||||||
FBR & Co. ("FBR") [Member] | Employee Termination Costs [Member] | |||||||||
Restructuring charge | $ 150 | $ 633 | |||||||
Warrant [Member] | Wunderlich [Member] | |||||||||
Number of shares issued | 821,816 | ||||||||
Exercise price (in dollars per share) | $ 17.50 |
ACQUISITIONS (Details)
ACQUISITIONS (Details) $ / shares in Units, $ in Thousands | Jul. 03, 2017USD ($)shares | Jun. 01, 2017USD ($)$ / sharesshares | Sep. 30, 2017shares | Dec. 31, 2016shares | Sep. 30, 2016shares | Dec. 31, 2015shares | |
Common Stock [Member] | |||||||
Consideration paid by B. Riley: | |||||||
Number of FBR Common Shares outstanding at June 1, 2017 | shares | 26,461,568 | 19,140,342 | 19,043,072 | 16,448,119 | |||
FBR & Co. ("FBR") [Member] | |||||||
Consideration paid by B. Riley: | |||||||
Number of FBR Common Shares outstanding at June 1, 2017 | shares | 7,099,511 | ||||||
Stock merger exchange ratio | 0.671 | ||||||
Number of B. Riley common shares | shares | 4,763,772 | ||||||
Number of B. Riley common shares to be issued from acceleration of vesting for outstanding FBR stock options, restricted stock and RSU awards | shares | 67,861 | ||||||
Total number of B. Riley common shares to be issued | shares | 4,831,633 | ||||||
Closing market price of B. Riley common shares on December 31, 2016 | $ / shares | $ 14.70 | ||||||
Total value of B. Riley common shares | $ 71,025 | ||||||
Fair value of RSU's attributable to service period prior to June 1, 2017 | [1] | 2,446 | |||||
Total consideration | $ 73,471 | ||||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | |||||||
Consideration paid by B. Riley: | |||||||
Cash paid | $ 29,737 | ||||||
Fair value of shares issued for acquisition | 31,414 | ||||||
Total consideration | $ 66,043 | ||||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member] | |||||||
Consideration paid by B. Riley: | |||||||
Total number of B. Riley common shares to be issued | shares | 1,974,812 | ||||||
Fair value of shares issued for acquisition | $ 4,892 | ||||||
[1] | Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the Merger Agreement with the right to receive 0.671 shares of the Company's common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company's common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period. |
ACQUISITIONS (Details 1)
ACQUISITIONS (Details 1) - USD ($) $ in Thousands | Sep. 30, 2017 | Jul. 03, 2017 | Jun. 01, 2017 | Dec. 31, 2016 |
Tangible assets acquired and assumed: | ||||
Securities borrowed | $ 730,022 | |||
Securities loaned | (728,201) | |||
Goodwill | $ 100,903 | $ 48,903 | ||
FBR & Co. ("FBR") [Member] | ||||
Tangible assets acquired and assumed: | ||||
Cash and cash equivalents | $ 15,738 | |||
Securities owned | 11,188 | |||
Securities borrowed | 861,197 | |||
Accounts receivables | 4,341 | |||
Due from clearing broker | 29,169 | |||
Prepaid expenses and other assets | 5,486 | |||
Property and equipment | 8,663 | |||
Deferred taxes | 14,514 | |||
Accounts payable | (1,524) | |||
Accrued payroll and related expenses | (7,182) | |||
Accrued expenses and other liabilities | (22,411) | |||
Securities loaned | (867,626) | |||
Customer relationships | 5,600 | |||
Trade name and trademarks | 1,790 | |||
Goodwill | 14,528 | |||
Total consideration | $ 73,471 | |||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | ||||
Tangible assets acquired and assumed: | ||||
Cash and cash equivalents | $ 4,259 | |||
Securities owned | 1,413 | |||
Accounts receivables | 3,193 | |||
Due from clearing broker | 15,133 | |||
Prepaid expenses and other assets | 10,248 | |||
Property and equipment | 2,315 | |||
Deferred taxes | 8,067 | |||
Accounts payable | (517) | |||
Accrued payroll and related expenses | (6,387) | |||
Accrued expenses and other liabilities | (9,773) | |||
Securities loaned | (1,707) | |||
Notes payable | (10,579) | |||
Customer relationships | 15,440 | |||
Trade name and trademarks | 1,370 | |||
Goodwill | 33,568 | |||
Total consideration | $ 66,043 |
ACQUISITIONS (Details 2)
ACQUISITIONS (Details 2) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Weighted average basic shares outstanding (in shares) | 26,059,490 | 18,977,072 | 22,180,808 | 17,805,127 |
Weighted average diluted shares outstanding (in shares) | 27,639,862 | 19,191,035 | 23,385,014 | 18,009,158 |
United Online Inc [Member] | ||||
Revenues | $ 92,461 | $ 111,340 | $ 320,546 | $ 298,118 |
Net (loss) income attributable to B. Riley Financial, Inc. | $ (42) | $ 2,843 | $ 11,780 | $ (13,657) |
Basic (loss) earnings per share (in dollars per share) | $ 0 | $ 0.11 | $ 0.41 | $ (0.55) |
Diluted (loss) earnings per share (in dollars per shares) | $ 0 | $ 0.11 | $ 0.41 | $ (0.55) |
Weighted average basic shares outstanding (in shares) | 32,366,657 | 25,783,517 | 28,487,975 | 24,611,572 |
Weighted average diluted shares outstanding (in shares) | 32,366,657 | 25,997,480 | 28,692,181 | 24,611,572 |
AQUISITIONS (Details Narrative)
AQUISITIONS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | Jul. 03, 2017 | Jun. 01, 2017 | Apr. 13, 2017 | May 04, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Acquisition consideration payable | $ 10,381 | ||||||||||
Goodwill | 100,903 | 100,903 | 100,903 | 48,903 | |||||||
Total revenues | 92,426 | $ 56,966 | 211,999 | $ 97,173 | |||||||
Net income (loss) | 122 | 8,374 | 17,386 | 9,717 | |||||||
Common Stock [Member] | |||||||||||
Net income (loss) | |||||||||||
Principal Investments - United Online Segment [Member] | |||||||||||
Increase in goodwill | 1,352 | ||||||||||
Cash consideration paid | 1,352 | ||||||||||
Goodwill | 15,727 | 15,727 | 15,727 | 14,375 | |||||||
Total revenues | 12,327 | 15,646 | 38,724 | 3,423 | |||||||
Capital Markets Reportable Segment [Member] | |||||||||||
Goodwill | 79,488 | 79,488 | 79,488 | $ 28,840 | |||||||
Total revenues | 63,679 | 10,063 | 105,296 | 22,799 | |||||||
FBR & Co. ("FBR") [Member] | |||||||||||
Share price (in dollars per share) | $ 14.70 | ||||||||||
Goodwill | $ 14,528 | ||||||||||
Number of shares issued for acquisition | 4,831,633 | ||||||||||
Total consideration | $ 73,471 | ||||||||||
Fair value of total purchase consideration | [1] | $ 2,446 | |||||||||
Revenues | 37,745 | ||||||||||
Net income (loss) | 12,706 | ||||||||||
FBR & Co. ("FBR") [Member] | Capital Markets Reportable Segment [Member] | |||||||||||
Increase in goodwill | 14,528 | ||||||||||
FBR & Co. ("FBR") [Member] | Selling, General and Administrative Expenses [Member] | |||||||||||
Acquisition related costs | 1,389 | ||||||||||
FBR & Co. ("FBR") [Member] | Richard J. Hendrix [Member] | |||||||||||
Acquisition related costs | 3,551 | ||||||||||
Payroll and severance costs | 9,096 | ||||||||||
United Online Inc [Member] | |||||||||||
Share price (in dollars per share) | $ 11 | ||||||||||
Merger consideration | $ 169,354 | ||||||||||
Goodwill | $ 14,375 | ||||||||||
Acquisition related costs | 12,327 | 4,944 | 38,724 | 14,220 | |||||||
Revenues | $ 92,461 | $ 111,340 | 320,546 | $ 298,118 | |||||||
Dialectic Capital Management, L.P., Dialectic Capital, LLC and John Fichthorn [Member] | Asset Purchase and Assignment Agreement [Member] | |||||||||||
Cash consideration paid | $ 700 | ||||||||||
Acquisition related costs | $ 714 | ||||||||||
Number of shares issued for acquisition | 158,484 | ||||||||||
Total consideration | $ 2,652 | ||||||||||
Fair value of total purchase consideration | $ 1,952 | ||||||||||
Dialectic Capital Management, L.P., Dialectic Capital, LLC and John Fichthorn [Member] | Capital Markets Reportable Segment [Member] | |||||||||||
Increase in goodwill | 2,552 | ||||||||||
Acquisition related costs | 392 | ||||||||||
Expected overhead synergies | $ 100 | ||||||||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | |||||||||||
Cash consideration paid | $ 29,737 | ||||||||||
Goodwill | 33,568 | ||||||||||
Payroll and severance costs | 1,387 | ||||||||||
Total consideration | $ 66,043 | ||||||||||
Revenues | 20,412 | ||||||||||
Net income (loss) | $ (1,928) | ||||||||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member] | |||||||||||
Number of shares issued for acquisition | 1,974,812 | ||||||||||
Number of shares issued held in escrow account | 387,365 | 387,365 | |||||||||
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Warrant [Member] | |||||||||||
Number of shares issued for acquisition | 821,816 | ||||||||||
Number of shares issued held in escrow account | 167,352 | ||||||||||
Delaware corporation ("Wunderlich") [Member] | Selling, General and Administrative Expenses [Member] | Merger Agreement [Member] | |||||||||||
Acquisition related costs | $ 53 | ||||||||||
[1] | Outstanding FBR restricted stock awards at June 1, 2017, the date of the acquisition, were adjusted in accordance with the Merger Agreement with the right to receive 0.671 shares of the Company's common stock for each outstanding FBR stock award unit. The fair value of the FBR restricted stock awards at June 1, 2017 was determined based on the closing price of the Company's common stock of $14.70 on June 1, 2017. The fair value of the FBR restricted stock awards were apportioned as purchase consideration based on service provided to FBR as of June 1, 2017 with the remaining fair value of the FBR restricted stock awards to be recognized prospectively over the restricted stock and FBR restricted stock awards remaining vesting period. |
SECURITIES LENDING (Details)
SECURITIES LENDING (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | |
Securities borrowed | |||
Gross amounts recognized | $ 730,022 | ||
Gross amounts offset in the consolidated balance sheets | [1] | ||
Net amounts included in the consolidated balance sheets | 730,022 | ||
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default | [2] | 730,022 | |
Net amounts | |||
Securities loaned | |||
Gross amounts recognized | 728,201 | ||
Gross amounts offset in the consolidated balance sheets | [1] | ||
Net amounts included in the consolidated balance sheets | 728,201 | ||
Amounts not offset in the consolidated balance sheets but eligible for offsetting upon counterparty default | [2] | 728,201 | |
Net amounts | |||
[1] | Includes financial instruments subject to enforceable master netting provisions that are permitted to be offset to the extent an event of default has occurred. | ||
[2] | Includes the amount of cash collateral held/posted. |
ACCOUNTS RECEIVABLE (Details)
ACCOUNTS RECEIVABLE (Details) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Receivables [Abstract] | ||
Accounts receivable | $ 14,218 | $ 16,610 |
Investment banking fees, commissions and other receivables | 5,074 | 576 |
Unbilled receivables | 1,260 | 2,058 |
Total accounts receivable | 20,552 | 19,244 |
Allowance for doubtful accounts | (628) | (255) |
Accounts receivable, net | $ 19,924 | $ 18,989 |
ACCOUNTS RECEIVABLE (Details 1)
ACCOUNTS RECEIVABLE (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Receivables [Abstract] | ||||
Balance, beginning of period | $ 599 | $ 86 | $ 255 | $ 89 |
Add: Additions to reserve | 123 | 428 | 827 | (178) |
Less: Write-offs | (94) | (15) | (262) | (49) |
Less: Recoveries | (321) | (192) | (350) | |
Balance, ending of period | $ 628 | $ 178 | $ 628 | $ 178 |
GOODWILL AND OTHER INTANGIBLE49
GOODWILL AND OTHER INTANGIBLE ASSETS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2017 | Dec. 31, 2016 | |
Amortizable assets: | ||
Gross Carrying Value | $ 66,940 | $ 43,252 |
Accumulated Amortization | 9,008 | 3,826 |
Intangibles Net | 57,932 | 39,426 |
Non-amortizable assets: | ||
Gross Carrying Value | 68,680 | 44,992 |
Accumulated Amortization | 9,008 | 3,826 |
Intangibles Net | 59,672 | 41,166 |
Customer Relationships [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | 58,440 | 37,300 |
Accumulated Amortization | 7,301 | 3,100 |
Intangibles Net | $ 51,139 | 34,200 |
Customer Relationships [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 4 years | |
Customer Relationships [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 13 years | |
Domain Names [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 807 | 1,419 |
Accumulated Amortization | 144 | 101 |
Intangibles Net | $ 663 | 1,318 |
Useful Life | 7 years | |
Advertising Relationships [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 100 | 100 |
Accumulated Amortization | 16 | 6 |
Intangibles Net | $ 84 | 94 |
Useful Life | 8 years | |
Internally Developed Software and Other Intangibles [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 3,373 | 3,333 |
Accumulated Amortization | 1,245 | 550 |
Intangibles Net | $ 2,128 | 2,783 |
Internally Developed Software and Other Intangibles [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 6 months | |
Internally Developed Software and Other Intangibles [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 4 years | |
Trademarks [Member] | ||
Amortizable assets: | ||
Gross Carrying Value | $ 4,220 | 1,100 |
Accumulated Amortization | 302 | 69 |
Intangibles Net | $ 3,918 | 1,031 |
Trademarks [Member] | Minimum [Member] | ||
Amortizable assets: | ||
Useful Life | 7 years | |
Trademarks [Member] | Maximum [Member] | ||
Amortizable assets: | ||
Useful Life | 9 years | |
Tradenames [Member] | ||
Non-amortizable assets: | ||
Gross Carrying Value | $ 1,740 | 1,740 |
Accumulated Amortization | ||
Intangibles Net | $ 1,740 | $ 1,740 |
GOODWILL AND OTHER INTANGIBLE50
GOODWILL AND OTHER INTANGIBLE ASSETS (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 01, 2017 | Dec. 31, 2016 | |
Goodwill | $ 100,903 | $ 100,903 | $ 48,903 | |||
Amortization expense | 2,172 | $ 1,465 | 5,248 | $ 1,688 | ||
Estimated future amortization expense | ||||||
Estimated future amortization expense 2017 (Remaining nine month) | 2,205 | 2,205 | ||||
Estimated future amortization expense 2018 | 2,205 | 2,205 | ||||
Estimated future amortization expense 2019 | 8,470 | 8,470 | ||||
Estimated future amortization expense 2020 | 8,088 | 8,088 | ||||
Estimated future amortization expense 2021 | 7,706 | 7,706 | ||||
Estimated future amortization expense after 2021 | 22,872 | 22,872 | ||||
FBR & Co. ("FBR") [Member] | ||||||
Goodwill | $ 14,528 | |||||
Capital Markets Reportable Segment [Member] | ||||||
Goodwill | 79,488 | 79,488 | 28,840 | |||
Capital Markets Reportable Segment [Member] | FBR & Co. ("FBR") [Member] | ||||||
Increase in goodwill | 14,528 | |||||
Capital Markets Reportable Segment [Member] | Dialectic [Member] | ||||||
Increase in goodwill | 2,552 | |||||
Capital Markets Reportable Segment [Member] | Wunderlich [Member] | ||||||
Increase in goodwill | 33,568 | |||||
Auction and Liquidation Reportable Segment [Member] | ||||||
Goodwill | 1,975 | 1,975 | 1,975 | |||
Valuation and Appraisal Reportable Segment [Member] | ||||||
Goodwill | 3,713 | 3,713 | 3,713 | |||
Principal Investments - United Online Segment [Member] | ||||||
Goodwill | $ 15,727 | 15,727 | $ 14,375 | |||
Increase in goodwill | 1,352 | |||||
Amortization expense | 50,648 | |||||
Principal Investments - United Online Segment [Member] | Wunderlich [Member] | ||||||
Increase in goodwill | $ 33,568 |
CREDIT FACILITIES (Details Narr
CREDIT FACILITIES (Details Narrative) - USD ($) $ in Thousands | Apr. 21, 2017 | Apr. 13, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Mar. 19, 2015 |
Amortization of deferred loan fees | $ 23 | $ 23 | $ 69 | $ 69 | |||
Interest expense | $ 168 | $ 813 | $ 863 | $ 1,087 | |||
Second Amended and Restated Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Asset Based Credit Facility [Member] | |||||||
Credit facility | $ 200 | ||||||
Credit facility expiration date | Apr. 21, 2022 | ||||||
Description of interest rate | The interest rate for each revolving credit advance under the Credit Agreement is, subject to certain terms and conditions, equal to the LIBOR plus a margin of 2.25% to 3.25% depending on the type of advance and the percentage such advance represents of the related transaction for which such advance is provided. | ||||||
Description of success fees | The credit facility also provides for success fees in the amount of 2.5% to 17.5% of the net profits, if any, earned on the liquidation engagements funded under the Credit Agreement as set forth therein. | ||||||
Description of collateral | The credit facility is secured by the proceeds received for services rendered in connection with liquidation service contracts pursuant to which any outstanding loan or letters of credit are issued and the assets that are sold at liquidation related to such contract. | ||||||
Payment for closing fee | $ 500 | ||||||
UK Credit Agreement [Member] | Wells Fargo Bank, National Association [Member] | Line of Credit [Member] | GBP [Member] | |||||||
Maximum borrowing capacity credit facility | $ 50,000 | ||||||
Credit Agreement [Member] | Line of Credit [Member] | United Online, Inc. ("UOL") [Member] | |||||||
Credit facility | $ 20 | ||||||
Credit facility expiration date | Apr. 13, 2020 | ||||||
Description of interest rate | Borrowings under the UOL Credit Agreement will bear interest at a rate equal to (a) (i) the base rate (the greater of the federal funds rate plus one half of one percent (0.5%), or the prime rate) for U.S. dollar loans or (ii) at UOL’s option, the LIBOR Rate for Eurodollar loans, plus (b) the applicable margin rate, which ranges from two percent (2%) to three and one-half percent (3.5%) per annum, based upon UOL’s ratio of funded indebtedness to adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) for the preceding four (4) fiscal quarters. Interest payments are to be made each one, three or six months for Eurodollar loans, and quarterly for U.S. dollar loans. | ||||||
Description of collateral | Each of UOL’s U.S. subsidiaries is a guarantor of all obligations under the UOL Credit Agreement and are parties to the UOL Credit Agreement in such capacity (collectively, the “Secured Guarantors”). In addition, the Company and B. Riley Principal Investments, LLC, the parent corporation of UOL and a subsidiary of the Company, are guarantors of the obligations under the UOL Credit Agreement pursuant to standalone guaranty agreements pursuant to which the shares of outstanding capital stock of UOL are pledged as collateral. The obligations under the UOL Credit Agreement are secured by first-priority liens on, and a first-priority security interest in, substantially all of the assets of UOL and the Secured Guarantors, including a pledge of (a) 100% of the equity interests of the Secured Guarantors and (b) 65% of the equity interests in United Online Software Development (India) Private Limited, a private limited company organized under the laws of India. | ||||||
Description of line of credit | Amount is reduced by $1,500 commencing on June 30, 2017 and on the last day of each calendar quarter thereafter. | ||||||
Percent of commitment fees | 1.00% | ||||||
Description of unused line fee payable | (a) 0.50% per annum times the amount of the unused revolving commitment that is less than or equal to the amount of the cash maintained in accounts with the agent (as depositary bank); plus (b) 1.00% per annum times the amount of the unused revolving commitment that is greater than the amount of the cash maintained in accounts with the agent (as depositary bank). |
NOTES PAYABLE (Details Narrativ
NOTES PAYABLE (Details Narrative) AUD in Thousands, $ in Thousands | May 31, 2017USD ($) | Nov. 02, 2016USD ($) | Aug. 31, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Jun. 28, 2017USD ($) | Dec. 31, 2016USD ($) | Aug. 31, 2016AUD |
Interest expense | $ 168 | $ 813 | $ 863 | $ 1,087 | ||||||
Due to related parties | 1,244 | 1,244 | $ 10,037 | |||||||
Debt issuance cost | 2,093 | |||||||||
Senior notes payable | 115,574 | 115,574 | 27,700 | |||||||
Proceeds from Notes Payable | $ 61,400 | |||||||||
Notes payable | 2,364 | $ 2,364 | ||||||||
Other Notes Payable [Member] | ||||||||||
Description of non interest bearing notes payable | The notes payable accrue interest at rates ranging from the prime rate plus 0.25% to 2.0% (4.5% to 6.25% at September 30, 2017) payable annually. | |||||||||
Notes payable | 2,364 | $ 2,364 | ||||||||
Payment terms | The principal payments on the notes payable are due annually in the amount of $121 on October 31, $214 on September 30, and $357 on January 31. | |||||||||
Maturity date, description | The notes payable mature at various dates from January 31, 2018 through January 31, 2022. | |||||||||
GA Retail Investments, L.P [Member] | ||||||||||
Capital contributed | $ 15,350 | |||||||||
Third Party Investor [Member] | GA Retail Investments, L.P [Member] | ||||||||||
Due to related parties | 524 | $ 524 | 10,037 | |||||||
Third Party Investor [Member] | GA Retail Investments, L.P [Member] | Australia, Dollars [Member] | ||||||||||
Principal amount | AUD | AUD 80,000 | |||||||||
Description of non interest bearing notes payable | The $80,000 Australian note payable is non-interest bearing, shares in 50% of the all of the profits and losses of the Partnership and is subject to repayment upon the completion of the going-out-of-business sale of Masters Home Improvement stores as defined in the partnership agreement. | |||||||||
7.5% Senior Notes Due 2021 [Member] | ||||||||||
Principal amount | $ 28,750 | 34,034 | 34,034 | |||||||
Interest expense | $ 643 | $ 1,829 | ||||||||
Proceeds from note payable | 27,664 | |||||||||
Debt issuance cost | 1,086 | |||||||||
Interest rate | 7.50% | 7.50% | ||||||||
Senior notes payable | $ 33,224 | $ 33,224 | 27,700 | |||||||
Unamortized debt issuance cost and premiums | 810 | 810 | $ 1,050 | |||||||
7.5% Senior Notes Due 2021 [Member] | Management And Board Of Directors [Member] | ||||||||||
Principal amount | $ 2,731 | |||||||||
Interest rate | 9.50% | |||||||||
7.5% Senior Notes Due 2021 [Member] | At The Market Issuance Sales Agreement [Member] | ||||||||||
Principal amount | 5,284 | 5,284 | ||||||||
Proceeds from Notes Payable | 5,364 | |||||||||
Underwriting commissions, fees and other issuance costs | 80 | |||||||||
7.5% Senior Notes Due 2027 [Member] | ||||||||||
Principal amount | $ 60,375 | 84,047 | 84,047 | |||||||
Interest expense | $ 1,407 | $ 1,810 | ||||||||
Proceeds from note payable | 82,284 | |||||||||
Debt issuance cost | $ 1,763 | |||||||||
Interest rate | 7.50% | 7.50% | ||||||||
Senior notes payable | $ 82,350 | $ 82,350 | ||||||||
Unamortized debt issuance cost and premiums | 1,697 | 1,697 | ||||||||
7.5% Senior Notes Due 2027 [Member] | At The Market Issuance Sales Agreement [Member] | ||||||||||
Principal amount | 23,672 | 23,672 | ||||||||
7.5% Senior Notes Due 2021/ 7.5% Senior Notes Due 2027 [Member] | At The Market Issuance Sales Agreement [Member] | ||||||||||
Principal amount | $ 10,669 | $ 10,669 | $ 39,625 |
INCOME TAXES (Details Narrative
INCOME TAXES (Details Narrative) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Operating Loss Carryforwards [Line Items] | ||||
Effective income tax rate | 80.50% | 38.90% | ||
Tax benefit | $ (1,357) | $ 6,083 | $ (7,753) | $ 6,184 |
Expiration date | Dec. 31, 2023 | |||
Federal Tax Authority [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | 65,500 | $ 65,500 | ||
Expiration date | Dec. 31, 2036 | |||
State and Local Jurisdiction [Member] | ||||
Operating Loss Carryforwards [Line Items] | ||||
Net operating loss carryforwards | $ 77,200 | $ 77,200 | ||
Expiration date | Dec. 31, 2034 |
EARNINGS PER SHARE (Details)
EARNINGS PER SHARE (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Earnings Per Share [Abstract] | ||||
Net income attributable to B. Riley Financial, Inc. | $ 368 | $ 8,939 | $ 17,669 | $ 9,086 |
Weighted average shares outstanding: | ||||
Basic (in shares) | 26,059,490 | 18,977,072 | 22,180,808 | 17,805,127 |
Effect of dilutive potential common shares: | ||||
Restricted stock units and non-vested shares | 1,193,007 | 169,311 | 816,841 | 159,376 |
Contingently issuable shares | 387,365 | 44,652 | 387,365 | 44,655 |
Diluted | 27,639,862 | 19,191,035 | 23,385,014 | 18,009,158 |
Basic income per share (in dollars per share) | $ 0.01 | $ 0.47 | $ 0.80 | $ 0.51 |
Diluted income per share (in dollars per share) | $ 0.01 | $ 0.47 | $ 0.76 | $ 0.50 |
EARNINGS PER SHARE (Details Nar
EARNINGS PER SHARE (Details Narrative) - shares | Jul. 03, 2017 | Sep. 30, 2017 |
Delaware corporation ("Wunderlich") [Member] | Merger Agreement [Member] | Common Stock [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of shares held in escrow account | 387,365 | 387,365 |
Escrow Subject to Cancellation Escrow Claims [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of shares held in escrow account | 453,365 | |
Escrow Subject to Cancellation Escrow Claims [Member] | Great American Group, LLC [Member] | ||
Antidilutive Securities Excluded from Computation of Earnings Per Share [Line Items] | ||
Number of shares held in escrow account | 66,000 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($) $ in Thousands | Jan. 05, 2017 | Jul. 05, 2016 | Sep. 30, 2017 | Jul. 31, 2017 | Feb. 28, 2017 | Jan. 31, 2015 | Dec. 31, 2012 |
Bankruptcy Case [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages value | $ 10,000 | ||||||
Aquistion Letigation Case [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Number of shares connection with the acquisition | 943,769 | ||||||
Name of plaintiff | Quadre Investments LP (“Quadre”) | ||||||
Description of allegation | Seeking a determination of fair value for 943,769 shares of common stock of UOL in connection with the acquisition of UOL by the Company. Such transaction gave rise to appraisal rights. | ||||||
Arbitration Claim Against Wunderlich Securities, Inc. [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages value | $ 10,000 | ||||||
Arbitration Claim Against WSI and Gary Wunderlich [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages value | $ 8,000 | ||||||
Arbitration Claim Against WSI and Gary Wunderlich [Member] | MLV & Co. [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Offering price | $ 151 | ||||||
Gladden Vs Cumberland Trust [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages value | $ 3,925 | ||||||
Arbitration Claim Against Quantum Fuel Systems Technologies Worldwide, Inc. [Member] | |||||||
Loss Contingencies [Line Items] | |||||||
Damages value | $ 37,000 | ||||||
Punitive damages and attorney's fees | $ 75,000 |
SHARE BASED PAYMENTS (Details)
SHARE BASED PAYMENTS (Details) - Restricted Stock Units (RSUs) [Member] - $ / shares | 4 Months Ended | 9 Months Ended |
Sep. 30, 2017 | Sep. 30, 2017 | |
Amended and Restated 2009 Stock Incentive Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested at beginning | 680,135 | |
Granted | 486,049 | |
Vested | (193,626) | |
Forfeited | (29,724) | |
Nonvested at end | 942,834 | 942,834 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Nonvested at beginning | $ 9.74 | |
Granted | 15.91 | |
Vested | 10.32 | |
Forfeited | 10.49 | |
Nonvested at end | $ 12.78 | $ 12.78 |
FBR Stock Plan [Member] | ||
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Number of Shares [Roll Forward] | ||
Nonvested at beginning | 530,661 | |
Granted | 784,638 | 784,638 |
Vested | (200,905) | |
Forfeited | (93,963) | |
Nonvested at end | 1,020,431 | 1,020,431 |
Share-based Compensation Arrangement by Share-based Payment Award, Equity Instruments Other than Options, Nonvested, Weighted Average Grant Date Fair Value [Roll Forward] | ||
Nonvested at beginning | $ 14.70 | |
Granted | 16.73 | |
Vested | 15.08 | |
Forfeited | 15.93 | |
Nonvested at end | $ 16.14 | $ 16.14 |
SHARE BASED PAYMENTS (Details N
SHARE BASED PAYMENTS (Details Narrative) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 4 Months Ended | 9 Months Ended | 12 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share based compensation expense | $ 7,679 | $ 1,831 | ||||
Restricted Stock [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share based compensation expense | 2,391 | |||||
Restricted Stock [Member] | Employee [Member] | FBR & Co. ("FBR") [Member] | Capital Markets Reportable Segment [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share based compensation expense | 1,507 | |||||
Restricted Stock [Member] | Former Corporate Executives [Member] | FBR & Co. ("FBR") [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Share based compensation expense | $ 884 | |||||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | 486,049 | |||||
Number of shares vested | 193,626 | |||||
Total fair value | $ 1,999 | $ 1,999 | $ 1,999 | |||
Share based compensation expense | 1,410 | $ 834 | 3,624 | $ 1,831 | ||
Unrecognized share based compensation expense | 9,271 | 9,271 | $ 9,271 | |||
Unrecognized share based compensation weighted average period | 2 years 2 months 12 days | |||||
Weighted average grant date fair value (in dollars per share) | $ 15.91 | |||||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Minimum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting periods | 1 year | |||||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Maximum [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Vesting periods | 3 years | |||||
Amended and Restated 2009 Stock Incentive Plan [Member] | Restricted Stock Units (RSUs) [Member] | Employee [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | 486,049 | 544,605 | ||||
Total fair value | 7,732 | $ 7,732 | $ 7,732 | $ 5,301 | ||
FBR Stock Plan [Member] | Restricted Stock Units (RSUs) [Member] | ||||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||||
Number of shares granted | 784,638 | 784,638 | ||||
Number of shares vested | 200,905 | |||||
Total fair value | 13,129 | $ 13,129 | $ 13,129 | |||
Share based compensation expense | 1,383 | 1,687 | ||||
Unrecognized share based compensation expense | $ 11,916 | $ 11,916 | $ 11,916 | |||
Unrecognized share based compensation weighted average period | 2 years 8 months 12 days | |||||
Weighted average grant date fair value (in dollars per share) | $ 16.73 |
NET CAPITAL REQUIREMENTS (Detai
NET CAPITAL REQUIREMENTS (Details Narrative) $ in Thousands | Sep. 30, 2017USD ($) |
FBR & Co. ("FBR") [Member] | |
Net capital | $ 38,976 |
Excess capital | 37,976 |
MLV & Co. [Member] | |
Net capital | 407 |
Excess capital | 307 |
Wunderlich Securities, Inc. [Member] | |
Net capital | 3,601 |
Excess capital | 2,891 |
Maximum [Member] | FBR & Co. ("FBR") [Member] | |
Net capital | 1,000 |
Maximum [Member] | MLV & Co. [Member] | |
Net capital | 100 |
Maximum [Member] | Wunderlich Securities, Inc. [Member] | |
Net capital | 710 |
B. Riley & Co., LLC [Member] | |
Net capital | 12,052 |
Excess capital | 11,728 |
B. Riley & Co., LLC [Member] | Maximum [Member] | |
Net capital | $ 324 |
RELATED PARTY TRANSACTIONS (Det
RELATED PARTY TRANSACTIONS (Details Narrative) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 | Nov. 02, 2016 |
Due from related party | $ 6,082 | $ 3,009 | |
Due to related party | 1,244 | 10,037 | |
GACP I, L.P [Member] | |||
Due from related party | 5,452 | 2,050 | |
GACP II, L.P [Member] | |||
Due from related party | 30 | ||
CA Global Partners, LLC [Member] | |||
Due from related party | 600 | $ 959 | |
Due to related party | 720 | ||
7.5% Senior Notes Senior Notes Due 2021 [Member] | |||
Principal amount | $ 34,034 | $ 28,750 | |
Interest rate | 7.50% | ||
7.5% Senior Notes Senior Notes Due 2021 [Member] | Management And Board Of Directors [Member] | |||
Principal amount | $ 2,731 | ||
Interest rate | 9.50% |
BUSINESS SEGMENTS (Details)
BUSINESS SEGMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | $ 85,141 | $ 50,300 | $ 202,354 | $ 90,505 |
Revenues - Sale of goods | 79 | 6,666 | 221 | 6,668 |
Interest income - Securities lending | 7,206 | 9,424 | ||
Total revenues | 92,426 | 56,966 | 211,999 | 97,173 |
Interest expense - Securities lending | 4,950 | 6,515 | ||
Selling, general, and administrative expenses | (70,962) | (22,727) | (132,836) | (48,844) |
Depreciation and amortization | (7,705) | (2,381) | ||
Restructuring costs | 4,896 | 3,585 | 11,484 | 3,585 |
Segment (loss) income | 1,356 | 15,422 | 14,627 | 17,267 |
Corporate and other expenses (including restructuring costs of $1,424 and $3,606 during the three and nine months ended September 30, 2017, respectively, and $398 during the three and nine months ended September 30, 2016) | (8,395) | (3,993) | (19,571) | (9,047) |
Interest income | 76 | 26 | 358 | 32 |
Loss on equity investment | (157) | (157) | ||
Interest expense | (2,510) | (991) | (5,195) | (1,398) |
(Loss) income before income taxes | (1,235) | 14,457 | 9,633 | 15,901 |
Benefit from (provision for) income taxes | 1,357 | (6,083) | 7,753 | (6,184) |
Net income | 122 | 8,374 | 17,386 | 9,717 |
Net (loss) income attributable to noncontrolling interests | (246) | (565) | (283) | 631 |
Net income attributable to B. Riley Financial, Inc. | 368 | 8,939 | 17,669 | 9,086 |
Corporate and other expenses, restructuring costs | 1,424 | 398 | 3,606 | 398 |
Capital Markets Reportable Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 56,473 | 10,063 | 95,872 | 22,799 |
Interest income - Securities lending | 7,206 | 9,424 | ||
Total revenues | 63,679 | 10,063 | 105,296 | 22,799 |
Interest expense - Securities lending | (4,950) | (6,515) | ||
Selling, general, and administrative expenses | (53,955) | (8,916) | (87,753) | (22,535) |
Depreciation and amortization | (1,636) | (138) | (2,167) | (406) |
Restructuring costs | (3,322) | (7,245) | ||
Segment (loss) income | (184) | 1,009 | 1,616 | (142) |
Auction and Liquidation Reportable Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 7,376 | 17,058 | 43,179 | 29,358 |
Revenues - Sale of goods | 1 | 6,503 | 1 | 6,505 |
Total revenues | 7,377 | 23,561 | 43,180 | 35,863 |
Direct cost of services | (3,385) | (4,365) | (25,482) | (9,870) |
Cost of goods sold | (2) | (2,223) | (2) | (2,225) |
Selling, general, and administrative expenses | (1,963) | (3,976) | (6,562) | (6,840) |
Depreciation and amortization | (5) | (6) | (15) | (22) |
Segment (loss) income | 2,022 | 12,991 | 11,119 | 16,906 |
Valuation and Appraisal Reportable Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 9,043 | 7,696 | 24,799 | 22,865 |
Direct cost of services | (3,778) | (3,549) | (11,031) | (10,287) |
Selling, general, and administrative expenses | (2,253) | (2,136) | (6,395) | (6,379) |
Depreciation and amortization | (43) | (19) | (130) | (72) |
Segment (loss) income | 2,969 | 1,992 | 7,243 | 6,127 |
Principal Investments - United Online Segment [Member] | ||||
Segment Reporting Information [Line Items] | ||||
Revenues - Services and fees | 12,249 | 15,483 | 38,504 | 15,483 |
Revenues - Sale of goods | 78 | 163 | 220 | 163 |
Total revenues | 12,327 | 15,646 | 38,724 | 3,423 |
Direct cost of services | (2,975) | (4,927) | (9,711) | (4,927) |
Cost of goods sold | (122) | (168) | (311) | (168) |
Selling, general, and administrative expenses | (2,433) | (2,139) | (8,536) | (2,139) |
Depreciation and amortization | (1,703) | (1,802) | (5,313) | (1,802) |
Restructuring costs | (150) | (3,187) | (633) | (3,187) |
Segment (loss) income | 4,944 | 3,423 | 14,220 | 3,423 |
Consolidated operating income from reportable segments | $ 9,751 | $ 19,415 | $ 34,198 | $ 26,314 |
BUSINESS SEGMENTS (Details 1)
BUSINESS SEGMENTS (Details 1) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | $ 85,141 | $ 50,300 | $ 202,354 | $ 90,505 |
Total Revenues - Sale of goods | 79 | 6,666 | 221 | 6,668 |
Total Revenues - Interest income - Securities lending | 76 | 26 | 358 | 32 |
Total revenues | 92,426 | 56,966 | 211,999 | 97,173 |
North America | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 85,128 | 49,882 | 200,500 | 89,790 |
Total Revenues - Sale of goods | 79 | 163 | 221 | 165 |
Total Revenues - Interest income - Securities lending | 7,206 | 9,424 | ||
Total revenues | 92,406 | 50,045 | 210,138 | 89,955 |
Australia | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 940 | |||
Total revenues | 940 | |||
Europe | ||||
Segment Reporting Information [Line Items] | ||||
Total Revenues - Services and fees | 13 | 418 | 914 | 715 |
Total Revenues - Sale of goods | 6,503 | 6,503 | ||
Total revenues | $ 20 | $ 6,921 | $ 921 | $ 7,218 |
BUSINESS SEGMENTS (Details 2)
BUSINESS SEGMENTS (Details 2) - USD ($) $ in Thousands | Sep. 30, 2017 | Dec. 31, 2016 |
Total Long-lived Assets - Property and Equipment, net | $ 13,105 | $ 5,785 |
North America | ||
Total Long-lived Assets - Property and Equipment, net | 13,105 | 5,785 |
Australia | ||
Total Long-lived Assets - Property and Equipment, net | ||
Europe | ||
Total Long-lived Assets - Property and Equipment, net |
SUBSEQUENT EVENTS (Details Narr
SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($) $ / shares in Units, $ in Thousands | Nov. 09, 2017 | Nov. 22, 2017 |
Subsequent Event [Line Items] | ||
Dividends approved (in dollars per share) | $ 0.08 | |
Special dividends approved (in dollars per share) | $ 0.04 | |
MagicJack VocalTec [Member] | Merger Agreement [Member] | ||
Subsequent Event [Line Items] | ||
Share price (in dollars per share) | $ 8.71 | |
Transferred equity interests issued | $ 143,500 |