Document and Entity Information
Document and Entity Information - shares | 9 Months Ended | |
Sep. 30, 2015 | Oct. 28, 2015 | |
Entity Registrant Name | Moelis & Co | |
Entity Central Index Key | 1,596,967 | |
Document Type | 10-Q | |
Document Period End Date | Sep. 30, 2015 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Non-accelerated Filer | |
Document Fiscal Year Focus | 2,015 | |
Document Fiscal Period Focus | Q3 | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 20,203,279 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 31,358,729 |
Condensed Consolidated and Comb
Condensed Consolidated and Combined Statements of Financial Condition - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Assets | ||
Cash and cash equivalents | $ 87,836 | $ 197,944 |
Restricted cash | 847 | 833 |
Receivables: | ||
Accounts receivable, net of allowance for doubtful accounts of $1,776 and $1,552 as of September 30, 2015 and December 31, 2014, respectively | 34,103 | 22,987 |
Other receivables | 6,259 | 4,907 |
Total receivables | 40,362 | 27,894 |
Deferred compensation | 8,495 | 5,652 |
Investments at fair value (cost basis $112,986 and $39,999 as of September 30, 2015 and December 31, 2014, respectively) | 113,002 | 39,997 |
Equity method investments | 18,231 | 17,416 |
Equipment and leasehold improvements, net | 8,288 | 7,338 |
Deferred tax asset | 164,434 | 160,137 |
Prepaid expenses and other assets | 9,413 | 7,038 |
Total assets | 450,908 | 464,249 |
Liabilities and Equity | ||
Compensation payable | 73,327 | 135,920 |
Accounts payable and accrued expenses | 17,328 | 19,888 |
Amount due pursuant to tax receivable agreement | 120,897 | 119,738 |
Deferred revenue | 7,078 | 5,152 |
Other liabilities | 9,704 | 9,166 |
Total liabilities | $ 228,334 | $ 289,864 |
Commitments and Contingencies (See Note 13) | ||
Treasury stock, at cost; 242,619 and 0 shares as of September 30, 2015 and December 31, 2014, respectively | $ (7,006) | |
Additional paid-in-capital | 175,654 | $ 136,896 |
Retained earnings (accumulated deficit) | (18,353) | (24,118) |
Accumulated other comprehensive income (loss) | 66 | 85 |
Total Moelis & Company equity | 150,879 | 113,377 |
Noncontrolling interests | 71,695 | 61,008 |
Total equity | 222,574 | 174,385 |
Total liabilities and equity | 450,908 | 464,249 |
Class A common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | 204 | 198 |
Class B common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | $ 314 | $ 316 |
Condensed Consolidated and Com3
Condensed Consolidated and Combined Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Accounts receivable, allowance for doubtful accounts | $ 1,776 | $ 1,552 |
Investments at fair value, cost basis | $ 112,986 | $ 39,999 |
Treasury Stock, Shares | 242,619 | 0 |
Class A common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 20,400,849 | 19,770,893 |
Common Stock, Shares, Outstanding | 20,158,230 | 19,770,893 |
Class B common stock | ||
Common stock, par value (in dollars per share) | $ 0.01 | $ 0.01 |
Common Stock, Shares Authorized | 1,000,000,000 | 1,000,000,000 |
Common Stock, Shares, Issued | 31,358,729 | 31,621,542 |
Common Stock, Shares, Outstanding | 31,358,729 | 31,621,542 |
Condensed Consolidated and Com4
Condensed Consolidated and Combined Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Revenues | $ 151,789 | $ 128,651 | $ 377,074 | $ 374,855 |
Expenses | ||||
Compensation and benefits | 86,277 | 68,148 | 211,333 | 300,793 |
Occupancy | 3,836 | 3,560 | 11,228 | 10,195 |
Professional fees | 5,116 | 5,995 | 12,813 | 14,588 |
Communication, technology and information services | 4,862 | 3,945 | 13,403 | 11,589 |
Travel and related expenses | 5,951 | 8,083 | 16,695 | 19,433 |
Depreciation and amortization | 646 | 542 | 1,954 | 1,636 |
Other expenses | 5,192 | 2,605 | 15,586 | 14,220 |
Total expenses | 111,880 | 92,878 | 283,012 | 372,454 |
Operating income (loss) | 39,909 | 35,773 | 94,062 | 2,401 |
Other income and (expenses) | (456) | 617 | (474) | 622 |
Income (loss) from equity method investments | 450 | 1,105 | 3,510 | (2,966) |
Income (loss) before income taxes | 39,903 | 37,495 | 97,098 | 57 |
Provision for income taxes | 5,273 | 4,710 | 15,652 | 5,790 |
Net income (loss) | 34,630 | 32,785 | 81,446 | (5,733) |
Net income (loss) attributable to noncontrolling interests | 24,540 | 26,285 | 58,889 | 6,777 |
Net income (loss) attributable to Moelis & Company | 10,090 | 6,500 | 22,557 | (12,510) |
Class A common stock | ||||
Expenses | ||||
Net income (loss) attributable to Moelis & Company | $ 10,090 | $ 6,500 | $ 22,557 | $ (12,510) |
Weighted-average shares of Class A common stock outstanding | ||||
Basic (in shares) | 20,184,835 | 15,262,343 | 19,919,675 | 15,262,940 |
Diluted (in shares) | 21,466,021 | 16,205,254 | 21,105,523 | 15,262,940 |
Net income (loss) per share attributable to holders of shares of Class A common stock | ||||
Basic (in dollars per share) | $ 0.50 | $ 0.43 | $ 1.13 | $ (0.82) |
Diluted (in dollars per share) | 0.47 | 0.40 | 1.07 | (0.82) |
Dividends declared per share | $ 0.30 | $ 0.20 | $ 0.70 | $ 0.20 |
Condensed Consolidated and Com5
Condensed Consolidated and Combined Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Condensed Consolidated and Combined Statements of Comprehensive Income | ||||
Net income (loss) | $ 34,630 | $ 32,785 | $ 81,446 | $ (5,733) |
Foreign currency translation adjustment, net of tax | (1,583) | (3,156) | (17) | (1,442) |
Other comprehensive income (loss) | (1,583) | (3,156) | (17) | (1,442) |
Comprehensive income (loss) | 33,047 | 29,629 | 81,429 | (7,175) |
Less : Comprehensive income (loss) attributable to noncontrolling interests | 23,546 | 24,017 | 58,891 | 5,740 |
Comprehensive income (loss) attributable to Moelis & Company | $ 9,501 | $ 5,612 | $ 22,538 | $ (12,915) |
Condensed Consolidated and Com6
Condensed Consolidated and Combined Statements of Cash Flows - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Cash flows from operating activities | ||
Net income (loss) | $ 81,446 | $ (5,733) |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Bad debt expense | 668 | 1,496 |
Depreciation and amortization | 1,954 | 1,636 |
(Income) loss from equity method investments | (3,510) | 2,966 |
Equity-based compensation | 33,337 | 112,726 |
Deferred tax provision | 595 | (295) |
Other | 484 | 3,244 |
Changes in assets and liabilities: | ||
Accounts receivable | (11,913) | 4,738 |
Other receivables | (1,376) | (3,234) |
Prepaid expenses and other assets | (2,397) | 1,018 |
Deferred compensation | (2,863) | (1,181) |
Compensation payable | (62,206) | (7,998) |
Accounts payable and accrued expenses | (2,233) | 7,667 |
Deferred revenue | 1,925 | 484 |
Dividends received | 2,473 | |
Other liabilities | 540 | 294 |
Net cash provided by (used in) operating activities | 36,924 | 117,828 |
Cash flows from investing activities | ||
Purchase of investments | (129,984) | (91,107) |
Proceeds from sales of investments | 57,000 | 83,237 |
Return of capital from equity method investments | 221 | |
Investment in equity method investments | (4,445) | |
Note payments received from employees | 831 | |
Notes issued to employees | (119) | |
Purchase of equipment and leasehold improvements | (2,902) | (2,381) |
Change in restricted cash | (32) | (131) |
Net cash provided by (used in) investing activities | (75,697) | (14,115) |
Cash flows from financing activities | ||
Pre-offering distribution to partners | (195,017) | |
Dividends and distributions | (64,394) | (57,884) |
IPO related proceeds (net of $10,316 of offering costs) | 163,682 | |
Distributions of IPO proceeds to partners | (139,429) | |
Other cash contributions from (distributions to) Parent | (34,730) | |
Purchase of treasury stock | (7,006) | |
Cash proceeds from issuance of Class B common stock | 500 | |
Class A partnership units and other equity purchased | (90) | |
Excess tax benefits from equity-based compensation | 449 | |
Other | (938) | |
Net cash provided by (used in) financing activities | (71,041) | (263,816) |
Effect of exchange rate fluctuations on cash and cash equivalents | (294) | (823) |
Net increase (decrease) in cash and cash equivalents | (110,108) | (160,926) |
Cash and cash equivalents, beginning of period | 197,944 | 303,024 |
Cash and cash equivalents, end of period | 87,836 | 142,098 |
Cash paid during the period for: | ||
Income taxes | 19,280 | 2,877 |
Other non-cash activity | ||
Initial establishment of deferred tax assets, net of amounts payable | 10,854 | |
Capitalized offering costs paid in prior or subsequent period | 1,575 | |
Tax benefit related to settlement of appreciation units | 4,308 | |
Establishment of deferred tax asset related to reorganization | 3,261 | |
Increase in deferred tax asset related to IPO | 1,302 | |
Other non-cash distributions | $ 1,724 | |
Class A Partnership Units or other equity converted into Class A Common Stock | 4,478 | |
Dividend equivalents issued | $ 2,732 |
Condensed Consolidated and Com7
Condensed Consolidated and Combined Statements of Cash Flows (Parenthetical) $ in Thousands | 9 Months Ended |
Sep. 30, 2014USD ($) | |
Condensed Consolidated and Combined Statements of Cash Flows | |
Offering costs | $ 10,316 |
Condensed Consolidated and Com8
Condensed Consolidated and Combined Statements of Changes in Equity - USD ($) $ in Thousands | Class A common stockCommon Stock | Class B common stockCommon Stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit). | Parent Company Investment | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
Balance at beginning of period at Dec. 31, 2013 | $ 308,444 | $ 926 | $ 309,370 | ||||||
Changes in Equity | |||||||||
Net income (loss) | 29,768 | 29,768 | |||||||
Net cash distributions to Parent | (80,983) | (80,983) | |||||||
Equity-based compensation | 13,834 | 13,834 | |||||||
Equity-based contributions to joint venture and Parent's advisory board | 1,223 | 1,223 | |||||||
Pre-offering distribution to partners | (195,017) | (195,017) | |||||||
Other non-cash distributions | (1,105) | (1,105) | |||||||
Other comprehensive income (loss) | 1 | 1 | |||||||
Establishment of deferred tax asset related to reorganization | $ 3,261 | 3,261 | |||||||
Reorganization of equity structure | $ 77 | 12,475 | (76,164) | $ 63,612 | |||||
Reorganization of equity structure (in shares) | 7,699,851 | ||||||||
Issuance of common stock | $ 362 | 138 | 500 | ||||||
Issuance of common stock (in shares) | 36,158,698 | ||||||||
Balance at end of period at Apr. 21, 2014 | $ 77 | $ 362 | 15,874 | 927 | 63,612 | 80,852 | |||
Balance at end of the period (in shares) at Apr. 21, 2014 | 7,699,851 | 36,158,698 | |||||||
Balance at beginning of period at Dec. 31, 2013 | $ 308,444 | 926 | 309,370 | ||||||
Changes in Equity | |||||||||
Net income (loss) | (5,733) | ||||||||
Balance at end of period at Sep. 30, 2014 | $ 153 | $ 362 | 94,367 | $ (15,517) | 521 | 94,802 | 174,688 | ||
Balance at end of the period (in shares) at Sep. 30, 2014 | 15,260,806 | 36,149,180 | |||||||
Balance at beginning of period at Apr. 21, 2014 | $ 77 | $ 362 | 15,874 | 927 | 63,612 | 80,852 | |||
Balance at beginning of the period (in shares) at Apr. 21, 2014 | 7,699,851 | 36,158,698 | |||||||
Changes in Equity | |||||||||
Distributions of IPO proceeds to partners | (139,429) | (139,429) | |||||||
Equity-based compensation | $ 1 | 33,185 | 65,706 | 98,892 | |||||
Equity-based compensation (in shares) | 77,693 | ||||||||
Dividends and distributions | 437 | (3,007) | (8,324) | (10,894) | |||||
Equity-based contributions to joint venture and Parent's advisory board | 5,692 | 123 | 5,815 | ||||||
Other comprehensive income (loss) | (406) | (1,037) | (1,443) | ||||||
Initial establishment of deferred tax assets, net of amounts payable under tax receivable agreement | 10,854 | 10,854 | |||||||
Increase in deferred tax asset related to IPO | 1,302 | 1,302 | |||||||
Tax benefit related to appreciation units | 4,308 | 4,308 | |||||||
Issuance of common stock | $ 75 | 162,032 | 162,107 | ||||||
Issuance of common stock (in shares) | 7,483,442 | ||||||||
Other | 112 | (2,287) | (2,175) | ||||||
Other (in shares) | (180) | (9,518) | |||||||
Net income (loss) | (12,510) | (22,991) | (35,501) | ||||||
Balance at end of period at Sep. 30, 2014 | $ 153 | $ 362 | 94,367 | (15,517) | 521 | 94,802 | 174,688 | ||
Balance at end of the period (in shares) at Sep. 30, 2014 | 15,260,806 | 36,149,180 | |||||||
Balance at beginning of period at Dec. 31, 2014 | $ 198 | $ 316 | 136,896 | (24,118) | 85 | 61,008 | 174,385 | ||
Balance at beginning of the period (in shares) at Dec. 31, 2014 | 19,770,893 | 31,621,542 | |||||||
Changes in Equity | |||||||||
Net income (loss) | 22,557 | 58,889 | 81,446 | ||||||
Equity-based compensation | $ 1 | 30,479 | 2,857 | 33,337 | |||||
Equity-based compensation (in shares) | 84,841 | (5,412) | |||||||
Dividends and distributions | 2,732 | (16,792) | (50,334) | (64,394) | |||||
Treasury Stock Purchases | $ (7,006) | $ (7,006) | |||||||
Treasury Stock Purchases (in shares) | (242,619) | (242,619) | |||||||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock | $ 5 | $ (2) | 5,112 | (727) | $ 4,388 | ||||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock (in shares) | 545,115 | (257,401) | |||||||
Net excess tax benefit from equity-based compensation | 435 | 435 | |||||||
Other comprehensive income (loss) | (19) | 2 | (17) | ||||||
Balance at end of period at Sep. 30, 2015 | $ 204 | $ 314 | $ (7,006) | $ 175,654 | $ (18,353) | $ 66 | $ 71,695 | $ 222,574 | |
Balance at end of the period (in shares) at Sep. 30, 2015 | 20,400,849 | 31,358,729 | (242,619) |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 9 Months Ended |
Sep. 30, 2015 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION The accompanying condensed consolidated and combined financial statements include the accounts and operations of Moelis & Company since its initial public offering ("IPO") in April of 2014, along with the historical carved out accounts and operations of the advisory business of Moelis & Company Holdings LP (the "Parent" or "Old Holdings") prior to Moelis & Company's IPO (Moelis & Company and the advisory business of the Parent are referred to as the "Company," "we," "our," or "us"). Prior to the Company's IPO, the Parent operated as a Delaware limited partnership that commenced operations during 2007. The general partner of the Parent was Moelis & Company Holdings GP LLC. The sole member of Moelis & Company Holdings GP LLC was Moelis & Company Manager LLC ("Manager"), which was wholly-owned by certain co-founding partners. In April of 2014, Old Holdings reorganized its business in connection with the IPO of 7,475,000 shares of Moelis & Company Class A common stock. Following the reorganization, the advisory business is now held under Moelis & Company Group LP ("Group LP"), a U.S. Delaware limited partnership, and Group LP is controlled by Moelis & Company. The net assets associated with the advisory operations were distributed to Group LP at their carrying amounts. The details of the reorganization and IPO are described further in Note 4. The Company's activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, governments and financial sponsors, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters. Basis of Presentation —The condensed consolidated and combined financial statements of Moelis & Company include its partnership interests in Group LP, its equity interest in the sole general partner of Group LP, Moelis & Company Group GP LLC ("Group GP"), and its interests in its subsidiaries. Moelis & Company will operate and control all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP. The Company operates through the following subsidiaries: • Moelis & Company LLC ("Moelis U.S."), a Delaware limited liability company, a registered broker-dealer with the U.S. Securities and Exchange Commission ("SEC") and a member of the Financial Industry Regulatory Authority, Inc. ("FINRA"). • Moelis & Company International Holdings LLC ("Moelis International"), a Delaware limited liability company, owns the following entities: • Moelis & Company UK LLP ("Moelis UK"), a limited liability partnership registered under the laws of England and Wales. In addition to the United Kingdom, Moelis UK maintains operations through the following branches: • Moelis & Company UK LLP, French Branch (French branch) (previously operated as a subsidiary named Moelis & Company France SAS through June 4, 2015) • Moelis & Company Europe Limited, Frankfurt am Main (German branch) • Moelis & Company UK LLP, DIFC Branch (Dubai branch) • 50% of Moelis Australia Holdings PTY Limited ("Moelis Australia Holdings", or the "Australian JV"), a joint venture with Magic Trust Trustee PTY Limited (the "Trust"). • Moelis & Company Asia Limited ("Moelis Asia"), a limited company incorporated in Hong Kong licensed under the Hong Kong Securities and Futures Ordinance to provide financial advisory services. In addition to Hong Kong, Moelis Asia maintains operations in Beijing China through Moelis & Company Consulting (Beijing) Company Limited. • Moelis & Company India Private Limited, a private limited company incorporated in Mumbai, India. • Moelis & Company Assessoria Financeira Ltda. ("Moelis Brazil"), a limited liability company incorporated in São Paulo, Brazil. |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Accounting —The Company prepared the accompanying condensed consolidated and combined financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated and combined financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company's management, the accompanying unaudited condensed consolidated and combined financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated and combined financial statements. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. Consolidation —The Company's policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company is the general partner, unless the presumption of control is overcome. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity's operating and financial decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company's subsidiaries have been eliminated in consolidation. Use of Estimates —The preparation of condensed consolidated and combined financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary. In preparing the condensed consolidated and combined financial statements, management makes estimates and assumptions regarding: • the adequacy of the allowance for doubtful accounts; • the realization of deferred taxes; • the measurement of equity-based compensation; and • other matters that affect the reported amounts and disclosures of contingencies in the financial statements. Cash and Cash Equivalents —Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of September 30, 2015, the Company had cash equivalents of $29,419 (December 31, 2014: $128,739) invested primarily in government securities money market funds and U.S. Treasury Bills. Additionally, as of September 30, 2015, the Company had cash of $58,417 (December 31, 2014: $69,205) maintained in U.S. and non-U.S. bank accounts, of which most U.S. bank account balances exceeded the FDIC coverage limit of $250. Restricted Cash —The Company held cash of $847 and $833 as of September 30, 2015 and December 31, 2014, respectively, in restricted collateral deposits primarily held by certain non-U.S. subsidiaries. Receivables —The accompanying condensed consolidated and combined statements of financial condition present accounts receivable balances net of allowance for doubtful accounts based on the Company's assessment of the collectability of customer accounts. The Company maintains an allowance for doubtful accounts that, in management's opinion, provides for an adequate reserve to cover losses that may be incurred. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable, and the current economic conditions that may affect a customer's ability to pay such amounts owed to the Company. After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This is determined based on several factors including the age of the accounts receivable and the credit worthiness of the customer. This has the effect of reducing both the gross receivable and the allowance for doubtful accounts. Deferred Compensation —Deferred compensation costs represent arrangements with certain employees whereby cash payments are subject to a required period of service subsequent to payment by the Company. These amounts are charged to expenses over the period that the employee is required to provide services in order to vest in the payment. Financial Instruments at Fair Value —Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily-available actively quoted prices or for which fair value can be measured from actively-quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs: Level 1 —Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price. Level 2 —Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies. Level 3 —Pricing inputs are unobservable for the instruments and include situations where there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company's management. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. 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 instrument. For level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based on the best information available, may incorporate management's own assumptions and involves a significant degree of judgment. Equity Method Investments —The Company accounts for its equity method investments under the equity method of accounting as the Company does not control these entities but has the ability to exercise significant influence. The amounts recorded on the condensed consolidated and combined financial statements of financial condition reflects the Company's share of contributions made to, distributions received from, and the equity earnings and losses of, the investments. The Company reflects its share of gains and losses of the investment in income (loss) from equity method investments in the condensed consolidated and combined statements of operations. Equipment and Leasehold Improvements —Office equipment and furniture and fixtures are stated at cost less accumulated depreciation, which is determined using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years, respectively. Leasehold improvements are stated at cost less accumulated amortization, which is determined using the straight-line method over the lesser of the term of the lease or the estimated useful life of the asset. Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to expenses as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation or amortization are removed from the condensed consolidated and combined statements of financial condition and any gain or loss is reflected in the condensed consolidated and combined statements of operations. Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company is treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. In the future, additional Group LP Class A partnership units may be exchanged for shares of Class A common stock in the Company. The initial purchase and these future exchanges are expected to result in an increase in the tax basis of Group LP's assets attributable to the Company's interest in Group LP. These increases in the tax basis of Group LP's assets attributable to the Company's interest in Group LP would not have been available but for this initial purchase and future exchanges. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax the Company would otherwise be required to pay in the future. As a result, the Company records a deferred tax asset for such increase in tax basis. The Company has entered into a tax receivable agreement with its eligible Managing Directors that will provide for the payment by the Company to its eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes as a result of (a) the increases in tax basis attributable to exchanges by its eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by the Company as a result of this tax receivable agreement. The Company expects to benefit from the remaining 15% of cash savings, if any, in income tax that it realizes and record any such estimated tax benefits as an increase to additional paid-in-capital. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing the Company's actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had it not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. The Company has recorded the estimated tax benefits related to the increase in tax basis and imputed interest as a result of the initial purchase described above as a deferred tax asset in the condensed consolidated and combined statements of financial condition. The amount due to its eligible Managing Directors related to the tax receivable agreement as a result of the initial purchase described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The amounts recorded for the deferred tax asset and the liability for our obligations under the tax receivable agreement are estimates. Any adjustments to our estimates subsequent to their initial establishment will be included in net income (loss). Future exchanges of Class A partnership units in Group LP for Class A common shares in the Company will be accounted for in a similar manner. Revenue and Expense Recognition —The Company recognizes revenues from providing advisory services when earned and collection is reasonably assured. Upfront fees are recognized over the estimated period that the related services are performed. Transaction-related fees are recognized when all services for a transaction have been provided, specified conditions have been met and the transaction closes. Underwriting revenues are recognized when the offering is deemed complete and is presented net of related expenses. Deferred revenues are recorded for fees received that have not yet been earned. Expenses are reflected on the condensed consolidated and combined statements of operations, net of client reimbursements. Reimbursable expenses billed to clients totaled $3,639 and $2,793 for the three months ended September 30, 2015 and 2014, respectively, and $9,510 and $7,520 for the nine months ended September 30, 2015 and 2014, respectively. Equity-based Compensation —The Company recognizes the cost of employee services received in exchange for an equity instrument award. The cost is based on its grant-date fair value amortized over the service period required by the award's vesting terms. Prior to the Company's IPO, the measurement of the grant-date fair value required the Company's Parent to make estimates about its future operating results and the appropriate risk-adjusted discount rates. The methods used to estimate the fair value of equity-based compensation generally included the market approach and the income approach, each of which involve a significant degree of judgment. Under the market approach, fair value is determined with reference to observable valuation measures for comparable companies (e.g., multiplying a key performance metric of the comparable company by a relevant valuation multiple-adjusted for differences between the Company's Parent and the referenced comparable). Under the income approach, fair value is determined by converting future amounts (e.g., cash flows or earnings) to a single present amount (discounted) using current expectations about those future amounts. Subsequent to the Company's IPO, the grant-date fair value of equity awards is based on quoted market prices at the time of grant. The Company recognizes such amounts in compensation and benefits expenses in the accompanying condensed consolidated and combined statements of operations and as an increase to equity in the accompanying condensed consolidated and combined statements of financial condition and changes in equity. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units ("RSUs"). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a dividend payment and a charge to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the award does not vest. See Note 9 for further discussion. For the purposes of calculating diluted net income (loss) per share to holders of Class A common stock, unvested service-based awards are included in the diluted weighted average shares of Class A common stock outstanding using the treasury stock method. See Note 8 for further discussion. The Company generally permits a retiring employee to retain and not forfeit certain qualifying incentive RSUs granted during employment if at retirement the employee (i) is at least 54 years old and (ii) has provided at least 8 consecutive years of service to the Company. Any such RSUs will continue to vest on their applicable vesting schedule, subject to noncompetition and other terms. Over time a greater number of employees may become retirement eligible and the related requisite service period over which we will expense these awards will be shorter than the stated vesting period. Any unvested RSUs prior to meeting the stated requisite service period or retirement eligibility date are eligible to receive dividends in kind; however, the right to dividends in kind will be forfeited if the underlying award does not vest. Income Taxes —Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes as applicable. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal and state income tax on its allocable share of results of operations from Group LP. The Company accounts for income taxes in accordance with ASC 740, " Accounting for Income Taxes " ("ASC 740"), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company's condensed consolidated and combined statements of financial condition as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. For the three and nine months ended September 30, 2015 and 2014, no unrecognized tax benefit was recorded. To the extent that the Company's assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties, if applicable, as a component of income tax expense. For the three and nine months ended September 30, 2015 and 2014, no such amounts were recorded. Foreign Currency Translation —Assets and liabilities held in non-U.S. dollar denominated (functional) currencies are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary. Non-functional currency related transaction gains and losses are immediately recorded in the condensed consolidated and combined statements of operations. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS In May 2014, the FASB issued ASU No. 2014-09, "Revenue from Contracts with Customers" ("ASU 2014-09"). ASU 2014-09 requires a company to recognize revenue in an amount that reflects the consideration to which the entity expects to be entitled in exchange for services provided. The amendment requires enhanced disclosures regarding the nature, amount, timing and uncertainty of revenues and cash flows from contracts with customers. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2017, with early adoption prohibited. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on its condensed consolidated and combined financial statements. In January 2015, the FASB issued ASU No. 2015-01, "Income Statement—Extraordinary and Unusual Items" ("ASU 2015-01"). ASU 2015-01 eliminates the concept of extraordinary items under U.S. GAAP. The amendments in this update are effective prospectively during interim and annual periods beginning after December 15, 2015, with early adoption permitted. The amendments may also be applied retrospectively to all prior periods in the financial statements. The adoption of ASU 2015-01 will not have a material impact on the Company's condensed consolidated and combined financial statements. In February 2015, the FASB issued ASU No. 2015-02, "Amendments to the Consolidation Analysis" ("ASU No. 2015-02") to provide consolidation guidance for limited partnerships, limited liability companies and securitization structures. In addition to reducing the number of consolidation models, the new standard places more emphasis on risk of loss when determining a controlling financial interest. ASU No. 2015-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. The adoption of ASU 2015-02 will not have a material impact on the Company's condensed consolidated and combined financial statements. |
BUSINESS CHANGES AND DEVELOPMEN
BUSINESS CHANGES AND DEVELOPMENTS | 9 Months Ended |
Sep. 30, 2015 | |
BUSINESS CHANGES AND DEVELOPMENTS | |
BUSINESS CHANGES AND DEVELOPMENTS | 4. BUSINESS CHANGES AND DEVELOPMENTS Moelis Brazil In August 2014, the Company established Moelis Brazil, a new corporate entity located in São Paulo, Brazil for the purpose of providing investment banking advisory services to clients in Brazil and increasing the global reach of the Company. The Company owns a 94% interest in Moelis Brazil and the remaining 6% is owned by senior bankers of the newly formed entity. As the majority owner of Moelis Brazil, the Company consolidates its financial results. Reorganization and Initial Public Offering In April 2014, Old Holdings reorganized its business in connection with the IPO of Class A common stock by Moelis & Company, a newly-formed Delaware corporation. Following the reorganization, the advisory operations are owned by Group LP and Group LP is controlled by Moelis & Company. The shareholders are entitled to receive a portion of the economics of the operations through their direct ownership interests in shares of Class A common stock of Moelis & Company. The existing owners of Group LP will continue to receive the majority of the economics of the operations, as noncontrolling interest holders, primarily through direct and indirect ownership interests in Group LP partnership units. As a corporation, Moelis & Company is subject to United States federal and state corporate income taxes, which results in a material increase in the applicable tax rates and current tax expense incurred post reorganization. Group LP has one principal class of units, Class A partnership units. Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings units. Following the reorganization, each Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock. In addition, Group LP issued Class B partnership units to Moelis & Company. The Class B partnership units correspond with the economic rights of shares of Moelis & Company Class B common stock. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1), and the aggregate number of shares of Class B common stock may be converted to Class A common stock (up to a maximum of 20,000 shares). Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1. Group LP Class A partnership unitholders have no voting rights by virtue of their ownership of Group LP Class A partnership units, except for the limited rights described in Group LP's Amended and Restated Agreement of Limited Partnership. Moelis & Company Partner Holdings LP holds all shares of Class B common stock, enabling it initially to exercise majority voting control over Moelis & Company. Among other items, Class B common stock contains a condition (the "Class B Condition") that calls for Mr. Moelis to maintain a defined minimum equity stake. So long as the Class B Condition is satisfied, each share of Class B common stock entitles its holder to ten votes for each share held of record on all matters submitted to a vote of stockholders. Shares of Class B common stock are generally not transferrable and, if transferred other than in the limited circumstances set forth in Moelis & Company's Amended and Restated Certificate of Incorporation, such shares shall automatically convert into a number of shares of Class A common stock, or dollar equivalent, set forth in Moelis & Company's Amended and Restated Certificate of Incorporation. Upon failure of the Class B Condition, each share of Class B common stock will have one vote for each share held. Each share of Class B common stock may, at the option of the holder, be converted into a number of shares of Class A common stock, or dollar set forth in Moelis & Company's Amended and Restated Certificate of Incorporation. In connection with the reorganization and IPO described above, several transactions took place which impacted the Company's condensed consolidated and combined financial statements including the following: • A pre-offering distribution to the partners of Old Holdings of $195,017 reflected within financing activities in the consolidated and combined statements of cash flows and in the condensed consolidated and combined statements of changes in equity; • The purchase by Moelis & Company of Class A partnership units directly from Group LP with the proceeds of the IPO. The proceeds received related to the issuance of Class A common stock in connection with the IPO is recorded net of underwriting discounts, commissions and offering expenses. Net cash received of $163,682 during the nine months ended September 30, 2014 is reflected within financing activities in the condensed consolidated and combined statements of cash flows. Net proceeds recorded in the condensed consolidated and combined statements of changes in equity of $162,107 during the period ended September 30, 2014, adjusts for IPO related expenses paid during 2013 and any accruals remaining as of September 30, 2014; • The one-time cash distribution of $139,429 by Group LP to the partners of Old Holdings of a portion of the proceeds arising from the sale of Class A partnership units to Moelis & Company is reflected within financing activities in the condensed consolidated and combined statements of cash flows and in the condensed consolidated and combined statements of changes in equity; • The tax impact associated with the one-time cash distribution to certain partners of Old Holdings is treated as an acquisition for U.S. federal income tax purposes of Class A partnership units in Group LP from certain partners of Old Holdings. This transaction resulted in a deferred tax asset of which approximately $60,946 is attributable to exchanges by certain of the partners of Old Holdings who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $51,804) of the tax benefits associated with this portion of the deferred tax asset are payable to certain partners of Old Holdings over the next 15 years and is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital. • Expenses related to the reorganization and IPO recorded in the condensed consolidated and combined statements of operations for the nine months ended September 30, 2014 include the following: • $87,601 of compensation and benefits expense associated with the one-time non-cash acceleration of unvested equity held by Managing Directors. Excluded from this acceleration was $10,349 of compensation and benefits expense associated with the amortization of equity held by Managing Directors during the three months ended March 31, 2014 which was subsequently accelerated upon completion of the IPO; • $763 of compensation and benefits expense associated with the amortization of RSUs granted in connection with the IPO (excludes expense associated with RSUs granted at the time of the IPO in connection with 2013 equity incentive compensation); amortization expense of RSUs granted in connection with the IPO will be recognized over a five year vesting period; • $2,046 of compensation and benefits expense associated with the amortization of stock options granted in connection with the IPO; amortization expense of stock options granted in connection with the IPO will be recognized over a five year vesting period; • $4,014 of compensation and benefits expense associated with the issuance of cash (expense of $2,004) and fully vested shares of Class A common stock (expense of $2,010) in settlement of appreciation rights issued in prior years; • $1,240 of professional fees expense associated with the one-time non-cash acceleration of unvested equity held by non-employee members of Moelis & Company's Global Advisory Board; and • $4,916 of expenses associated with the one-time non-cash acceleration of unvested equity held by employees of the Australian JV. Half of the expenses associated with acceleration of equity held by employees of the Australian JV is included in other expenses and the other half is included in income (loss) from equity method investments. Secondary Offering In November 2014, the Company completed a secondary offering of 6,325,000 shares of Class A common stock in order to facilitate organized liquidity and increase the public float of its Class A common stock. In connection with the offering, the Company issued 4,509,400 shares of Class A common stock and used the proceeds to acquire the same quantity (4,509,400) of Group LP Class A partnership units. The remaining 1,815,600 shares of Class A common stock included in the offering were sold by current holders of Class A common stock, thus having no impact on the quantity of shares of Class A common stock outstanding. In addition, in connection with the Company's acquisition of Group LP Class A partnership units, 4,507,453 shares of Class B common stock were either purchased (1,509,131 shares for $28) or converted to Class A common stock (2,998,322 shares of Class B common stock converted to 1,658 shares of Class A common stock based on a conversion ratio of .00055 to 1). The Company did not retain any proceeds from the secondary offering. Immediately following the secondary transactions described above; • 19,770,893 shares of Class A common stock were outstanding; • the Company owned 19,770,893 Group LP Class A partnership units and its economic ownership in Group LP increased from 28% to 36%; • the noncontrolling interest holders owned 34,479,961 Group LP Class A partnership units and their economic ownership in Group LP decreased from 72% to 64%; • Partner Holdings owned all 31,621,542 shares of Class B common stock, enabling it to exercise majority voting control of the Company. Class B common stock is entitled to an insignificant amount of economic participation in the Company. This transaction is treated for U.S. federal income tax purposes as an acquisition of Class A partnership units in Group LP from certain partners of Group LP, which resulted in a deferred tax asset of which approximately $80,117 is attributable to exchanges by certain partners of Group LP who are party to the tax receivable agreement. Pursuant to the tax receivable agreement, 85% (or $68,099) of the tax benefits associated with this portion of the deferred tax asset are payable to certain partners of Group LP over the next 15 years and is recorded as amount due pursuant to tax receivable agreement in the consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital. |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | 9 Months Ended |
Sep. 30, 2015 | |
EQUITY METHOD INVESTMENTS. | |
EQUITY METHOD INVESTMENTS | 5. EQUITY METHOD INVESTMENTS Investment in Joint Venture On April 1, 2010, the Company entered into a 50-50 joint venture in Moelis Australia Holdings, investing a combination of cash and certain net assets of its wholly-owned subsidiary, Moelis Australia, in exchange for its interests. The remaining 50% is owned by an Australian trust established by and for the benefit of Moelis Australia senior executives. For the three months ended September 30, 2015 and 2014, $163 and $1,105 of income was recorded on this investment, respectively, and for the nine months ended September 30, 2015 and 2014, $442 of income and $2,966 of loss was recorded on this investment, respectively. During the nine months ended September 30, 2014, the Company made a cash contribution to Moelis Australia Holdings in the amount of $4,180. The Company treated this contribution as an increase in equity method investments in the condensed consolidated and combined financial statements. Other Equity Method Investment In June 2014, the Company made an investment of $265 into a general partner entity which invests third-party funds and is controlled by a related party, Moelis Asset Management LP. The Company has determined that it should account for this investment as an equity method investment on its condensed consolidated and combined financial statements. For the three and nine months ended September 30, 2015, $287 and $3,068 of income was recorded on this investment, respectively. During the nine months ended September 30, 2015, the Company received cash distributions from this entity in the amount of $2,694. |
EQUIPMENT AND LEASEHOLD IMPROVE
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 9 Months Ended |
Sep. 30, 2015 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 6. EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements, net consist of the following: September 30, 2015 December 31, 2014 Office equipment $ $ Furniture and fixtures Leasehold improvements ​ ​ ​ ​ ​ ​ ​ ​ Total Less accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Equipment and leasehold improvements, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Depreciation and amortization expenses for fixed assets totaled $646 and $542 for the three months ended September 30, 2015 and 2014, respectively, and $1,954 and $1,595 for the nine months ended September 30, 2015 and 2014, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 7. FAIR VALUE MEASUREMENTS The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring investments at fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs: Level 1—Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price. Level 2—Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies. The estimated fair values of government securities money markets and U.S. Treasury Bills classified in Level 2 as of September 30, 2015 and December 31, 2014 are based on quoted prices for recent trading activity in identical or similar instruments. The Company generally invests in U.S. Treasury Bills with maturities of less than twelve months. Level 3—Pricing inputs are unobservable for the instruments and include situations in which there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company's management. See Note 2 for further information on the Company's fair value hierarchy. The following tables summarize the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall as of September 30, 2015: Financial assets: Total Level 1 Level 2 Level 3 Included in cash and cash equivalents U.S. treasury bills $ $ — $ $ — Government securities money market — — Investments U.S. treasury bills — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table summarizes the levels of the fair value hierarchy into which the Company's financial assets fall as of December 31, 2014: Financial assets: Total Level 1 Level 2 Level 3 Included in cash and cash equivalents Government securities money market $ $ — $ $ — Investments U.S. treasury bills — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The Company's methodology for reclassifications impacting the fair value hierarchy is that transfers in/out of the respective category are reported at fair value as of the beginning of the period in which the reclassification occurred. There were no investments classified as Level 3 as of September 30, 2015. The changes to the Company's investment classified as Level 3 are as follows for the nine months ended September 30, 2014. Common Stock January 1, 2014 $ Non-cash settlement of customer receivable Distribution to Parent ) ​ ​ ​ ​ ​ September 30, 2014 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains (losses) related to investment still held as of September 30, 2014 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ There were no transfers between Level 1, Level 2 or Level 3 during the nine months ended September 30, 2015 and 2014. Investment Risk Factors and Concentration of Investments The Company's financial instruments are subject to the following risk factors: Market Risk Market risk represents the loss that can be caused by a change in the fair value of a financial instrument. Currency Risk The Company is exposed to the risk that the exchange rate of the U.S. dollar relative to other currencies may have an adverse effect on the reported value of the Company's non-U.S. dollar denominated or based assets and liabilities. |
NET INCOME (LOSS) PER SHARE ATT
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | 8. NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS The calculations of basic and diluted net income (loss) per share attributable to holders of shares of Class A common stock for the three and nine months ended September 30, 2015 and 2014 are presented below. Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands, except per share amounts) 2015 2014 2015 2014 Numerator: Net income (loss) attributable to holders of shares of Class A common stock—basic $ $ $ $ ) Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) (a) (a) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to holders of shares of Class A common stock—diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted average shares of Class A common stock outstanding—basic Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) (a) (a) Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method (b) (b) (b) (b) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares of Class A common stock outstanding—diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The allocation of income (loss) to Class A shareholders only began following the IPO closing on April 22, 2014. We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation. (a) Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable lock-up, vesting and transfer restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 55,398,692 and 55,197,575 for the three months ended September 30, 2015 and 2014, respectively, and 55,303,354 and 54,254,664 for the nine months ended September 30, 2015 and 2014, respectively. In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) available to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests in consolidated entities associated with the Group LP Class A partnership units (including any tax impact). For the three and nine months ended September 30, 2015 and 2014, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive. (b) During the three and nine months ended September 30, 2015 and 2014, certain shares of Moelis & Company's Class A common stock assumed to be issued pursuant to certain RSUs as calculated using the treasury stock method were antidilutive and therefore have been excluded from the calculation of diluted net income (loss) per share attributable to Moelis & Company. During the three months ended September 30, 2015 and 2014, the additional weighted average amount of RSUs that would have been included in this calculation if the effect were dilutive would have been 15,397 and 11,644 units, respectively, and 7,945 and 665,649 units for the nine months ended September 30, 2015 and September 30, 2014, respectively. Antidilution in the prior year is the result of the Company producing a loss for the nine months ended September 30, 2014. Additionally, during the three months ended September 30, 2015, the additional weighted average amount of options that would have been included in this calculation if the effect were dilutive would have been 1,049,977. No options were excluded from this calculation for the three months ended September 30, 2014 and the nine months ended September 30, 2015 and September 30, 2014. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 9 Months Ended |
Sep. 30, 2015 | |
EQUITY-BASED COMPENSATION | |
EQUITY-BASED COMPENSATION | 9. EQUITY-BASED COMPENSATION Partnership Units Prior to the Company's restructuring and IPO, the Parent's ownership structure was comprised of common partners (principally outside investors) holding units and employees holding units, which collectively represented the partnership interests in the Parent and evidence of the right to receive distributions and allocations of net profit and losses as defined in the Parent Limited Partnership Agreement. The common partners contributed capital to the Parent and are not subject to vesting. Units granted to Managing Directors upon joining the Company and as part of annual incentive compensation generally vested based on service over five to eight years. Certain non-Managing Director employees were granted units as part of their incentive arrangements and these units generally vest based on service ratably over four years. In connection with the Company's restructuring and IPO, substantially all of the Managing Director partner equity subject to vesting had been accelerated. Units granted to non-Managing Director employees were not accelerated in connection with the Company's restructuring and IPO and continue to vest based on the original terms of the grant. In connection with the reorganization and IPO, Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings. Following the reorganization, a Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock and represents the Company's noncontrolling interests. As of September 30, 2015, partners held 33,933,414 Group LP partnership units, 639,821 of which were unvested and will continue to vest over their service life. In relation to the vesting of units, the Company recognized compensation expenses of $945 and $886 for the three months ended September 30, 2015 and 2014, respectively, and expenses of $2,857 and $100,835 for the nine months ended September 30, 2015 and 2014, respectively. As of September 30, 2015, there was $6,822 of unrecognized compensation expense related to unvested Class A partnership units. The Company expects to recognize the unrecognized compensation expense at September 30, 2015, over a weighted-average period of 2.4 years, using the graded vesting method. 2014 Omnibus Incentive Plan In connection with the IPO, the Company adopted the Moelis & Company 2014 Omnibus Incentive Plan (the "Plan") to provide additional incentives to selected officers, employees, Managing Directors, non-employee directors, independent contractors, partners, senior advisors and consultants. The Plan provides for the issuance of incentive stock options ("ISOs"), nonqualified stock options, stock appreciation rights ("SARs"), restricted stock, RSUs, stock bonuses, other stock-based awards and cash awards. In the first quarter of 2015, the Board of Directors authorized the repurchase of up to $25 million of shares of Class A common stock of the Company and/or Class A partnership units of Group LP with no expiration date. Under this share repurchase program, shares may be repurchased from time to time in open market transactions, in privately negotiated transactions or otherwise. The timing and the actual number of shares repurchased will be opportunistic and measured in nature and will depend on a variety of factors, including price and market conditions. As of September 30, 2015, approximately $20 million of shares remain that may yet be purchased under the program. Restricted Stock and Restricted Stock Units (RSUs) Pursuant to the Plan and in connection with the Company's annual compensation process and ongoing hiring process, the Company has issued 2,615,660 RSUs in 2015 which generally vest over a service life of four to five years. For the three months ended September 30, 2015 and 2014, the Company recognized expenses of $10,826 and $4,509 respectively, and expenses of $27,398 and $7,835 for the nine months ended September 30, 2015 and 2014, respectively, in relation to these awards. The following table summarizes activity related to restricted stock and RSUs for the nine months ended September 30, 2015 and 2014. Restricted Stock & RSUs 2015 2014 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested Balance at January 1, $ — $ — Granted Forfeited ) ) Vested ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unvested Balance at September 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of September 30, 2015, the total compensation expense related to unvested restricted stock and RSUs not yet recognized was $88,882. The Company assumes a forfeiture rate of 3% annually based on expected turnover and periodically reassesses this rate. The weighted-average period over which this compensation expense is expected to be recognized at September 30, 2015 is 2.7 years. During the nine months ended September 30, 2015, the Company repurchased 242,619 shares pursuant to the Company's share repurchase program, as well as shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of RSUs. The result of the repurchases was an increase of $7,006 in the treasury stock balance on the Company's condensed consolidated and combined statement of financial condition as of September 30, 2015. Stock Options Pursuant to the Plan, the Company issued 3,501,881 stock options in 2014 which vest over a five-year period. The Company estimated the fair value of stock option awards at grant using the Black-Scholes valuation model with the following assumptions: Assumptions Expected life (in years) Weighted-average risk free interest rate % Expected volatility % Dividend yield % Weighted-average fair value at grant date $ On November 24, 2014 the Company paid a special dividend of $1.00 per share to common stock holders of record as of November 10, 2014. As required under Section 5 of the Company's 2014 Omnibus Incentive Plan, the Compensation Committee of the Company's Board of Directors equitably reduced the exercise price of the Company's outstanding options to purchase common stock by $1.00 from $25.00 per share to $24.00 per share. The following table summarizes activity related to stock options for the nine months ended September 30, 2015 and 2014. Stock Options Outstanding 2015 2014 Number Outstanding Weighted-Average Exercise Price Per Share Number Outstanding Weighted-Average Exercise Price Per Share Outstanding at January 1, $ — $ — Grants — — Exercises — — — Forfeiture or expirations ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at September 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended September 30, 2015 and 2014, the Company recognized expenses of $1,048 and $1,094, respectively, and expenses of $3,082 and $2,046 for the nine months ended September 30, 2015 and 2014, respectively, in relation to these stock options. As of September 30, 2015, the total compensation expense related to unvested stock options not yet recognized was $12,161. The Company assumes a forfeiture rate of 3% annually based on expected turnover and periodically reassesses this rate. This compensation expense is expected to be recognized over a weighted-average period of 3.1 years. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 9 Months Ended |
Sep. 30, 2015 | |
STOCKHOLDERS EQUITY | |
STOCKHOLDERS EQUITY | 10. STOCKHOLDERS EQUITY Class A Common Stock IPO and Reorganization In April 2014, the Company issued 15,263,653 shares of Class A common stock as follows: • 7,699,851 shares in connection with the reorganization; • 7,475,000 shares in connection with the IPO; and • 88,802 shares in connection with the settlement of appreciation rights issued in prior years. Secondary Offering In November 2014, the Company completed a secondary offering of 6,325,000 shares of Class A common stock in order to facilitate organized liquidity and increase the public float of its Class A common stock. In connection with the offering, the shares of Class A common stock outstanding of the Company increased by 4,511,058 shares as a result of the Company acquiring additional Class A partnership units in Group LP. The Company did not retain any proceeds from the secondary offering. As of September 30, 2015, 20,400,849 shares of Class A common stock were issued and 20,158,230 shares were outstanding, due primarily to the IPO and secondary offering transactions described above. Class B Common Stock IPO and Reorganization In conjunction with Moelis & Company's IPO of its Class A common stock, the Company issued 36,158,698 shares of Class B common stock. The economic rights of Class B common stock are based on the ratio of the Class B subscription price to the initial public offering price of shares of Class A common stock (.00055 to 1), and the aggregate number of shares of Class B common stock may be converted to Class A common stock (up to a maximum of 20,000 shares). Holders of shares of Class B common stock are entitled to receive dividends of the same type as any dividends payable on outstanding shares of Class A common stock at a ratio of .00055 to 1. Secondary Offering In connection with the secondary offering in November 2014, Partner Holdings surrendered 2,998,322 shares of Class B common stock and was issued 1,658 shares of Class A common stock at a conversion ratio of .00055 to 1. The Company also purchased 1,509,131 shares of Class B common stock from Partner Holdings for cash of $28 and subsequently cancelled those shares. The Company did not retain any proceeds from the secondary offering. As of September 30, 2015 and December 31, 2014, 31,358,729 and 31,621,542 shares of Class B common stock were issued and outstanding, respectively, due primarily to the IPO and secondary offering transactions described above. Treasury Stock During the nine months ended September 30, 2015, the Company repurchased 242,619 shares pursuant to the Company's share repurchase program, as well as shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of RSUs. The result of the repurchases was an increase of $7,006 in the treasury stock balance on the Company's condensed consolidated and combined statement of financial condition as of September 30, 2015. Noncontrolling Interests In connection with the Company's reorganization, Group LP issued Class A partnership units to Moelis & Company and to certain existing holders of Old Holdings. Following the reorganization, a Group LP Class A partnership unit (not held by Moelis & Company or its subsidiaries) is exchangeable into one share of Moelis & Company Class A common stock and represents the Company's noncontrolling interests (non-redeemable). As of September 30, 2015, partners held 33,933,414 Group LP partnership units, representing a 63% noncontrolling interest in Moelis & Company. Moelis & Company operates and controls all of the business and affairs of Group LP and its operating entity subsidiaries indirectly through its equity interest in Group GP, and thus the 20,158,230 shares of Class A common stock outstanding at September 30, 2015 represents the controlling interest. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 9 Months Ended |
Sep. 30, 2015 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | 11. RELATED-PARTY TRANSACTIONS Aircraft Lease —On April 21, 2010, Manager acquired an aircraft with funds received solely from its managing member (Mr. Moelis). Manager was obligated to bear all depreciation and other costs of operating the aircraft related to uses other than for the Company's business. To the extent the Company utilized the aircraft for business; the Company was obligated to incur such expenses. For the three and nine months ended September 30, 2014, the Company recorded expenses of $0 and $401 for use of the aircraft. In connection with the restructuring and IPO, Manager could no longer operate the aircraft for use in the Company's business and as a result, the arrangement under which the plane was provided to the Company for its use was required to be restructured. Starting on April 15, 2014, the aircraft was used by the Company pursuant to a ten-year dry lease with Manager, the terms of which were comparable to the market rates of leasing from an independent third party. For the three and nine months ended September 30, 2014 the Company incurred $156 and $310 in lease costs to be paid to manager, respectively. Consistent with such dry lease arrangement, the Company was obligated to bear all the costs of operating the aircraft. While the primary use of the aircraft was for business purposes, because of the benefit afforded to the Company in terms of security and productivity while traveling for personal reasons, the Company entered into a timesharing agreement with Mr. Moelis to allow him to use the aircraft for personal use. Under such timesharing agreement, Mr. Moelis was required to reimburse the Company for the maximum amount of reimbursement allowed by applicable Federal Aviation Administration rules. Such amounts are included in prepaid expenses and other assets on the condensed consolidated and combined statements of financial condition. During the third quarter of fiscal 2014, Manager sold the aircraft and the ten-year dry lease was terminated. On August 30, 2014, Manager acquired a new aircraft with funds received solely from its managing member (Mr. Moelis). The aircraft is used and operated by the Company pursuant to a dry lease with Manager which terminates on December 31, 2019. The terms of the dry lease are comparable to the market rates of leasing from an independent third party. Pursuant to this dry lease arrangement, the lessee is obligated to bear its share of the costs of operating the aircraft. For the three months ended September 30, 2015 and 2014, the Company incurred $312 and $61 in aircraft lease costs to be paid to Manager, respectively, and $936 and $61 for the nine months ended September 30, 2015 and 2014, respectively. In addition, there are two other lessees of the aircraft; one of whom is Mr. Moelis and the other is Moelis Asset Management LP. These lessees share the lease, operating and related costs of the plane in proportion to their respective use pursuant to a cost sharing and operating agreement. Promissory Notes —As of September 30, 2015, there were $119 of unsecured promissory notes from employees held by the Company (December 31, 2014: $119). Any outstanding balances are reflected in other receivables on the condensed consolidated and combined statements of financial condition. The notes held as of September 30, 2015 and December 31, 2014 bear a fixed interest rate of 4.00%. During the nine months ended September 30, 2015 and 2014, the Company received $0 and $831, respectively, of principal repayments and recognized interest income of $4 and $5, respectively, on such notes, which is included in other income and expenses on the condensed consolidated and combined statements of operations. Expense Allocations —Prior to the Company's IPO in April of 2014, certain expenses have been allocated from the Parent based on the most relevant measure, including relative usage or proportion of the Company's headcount to that of the Parent. For the three and nine months ended September 30, 2014, $0 and $2,316 of occupancy expenses have been allocated to the Company, respectively, based on the proportion of the Company's headcount to that of the Parent. For the three and nine months ended September 30, 2014, $0 and $2,745 of communication, technology and information services expense have been allocated to the Company, respectively, based on a combination of relative usage and the proportion of the Company's headcount to that of the Parent. All other expenses were specifically identifiable to the Company. Management believes the assumptions and allocations underlying the condensed consolidated and combined financial statements are reasonable and the allocated amounts are representative of the amounts that would have been recorded in the condensed consolidated and combined financial statements had the Company operated independent of the Parent for the historical periods presented. Services Agreement —In connection with the Company's IPO, the Company entered into a services agreement with a related party, Moelis Asset Management LP, whereby the Company provides certain administrative services, technology, and office space to Moelis Asset Management LP for a fee. For the three months ended September 30, 2015 and 2014, this fee totaled $420 and $500, respectively, and $1,265 and $960 for the nine months ended September 30, 2015 and the year-to-date post-IPO period ended September 30, 2014, respectively. The amount of the fee is based upon the estimated usage and related expense of all shared services between the Company and Moelis Asset Management LP during the relevant period, and will be assessed periodically by Management as per the terms of the agreement. As of September 30, 2015 and December 31, 2014 the Company had balances due from Moelis Asset Management LP of $0 and $79, respectively. Joint Venture —As of September 30, 2015 and December 31, 2014, the Company had a net balance due from the Australian JV of $62 and $945, respectively, which are reflected in other receivables on the condensed consolidated and combined statements of financial condition. These balances consist of amounts due from the Australian JV for advisory services performed and billable expenses incurred on behalf of the Company during the period, offset by expenses paid by the Company on behalf of the Australian JV. The relationship between the Company and the Australian JV is governed by a services agreement. Other Equity Method Investment —In June of 2014, the Company made an investment of $265 into an entity controlled by a related party, Moelis Asset Management LP. The Company has determined that it should account for this investment as an equity method investment on the condensed consolidated and combined financial statements. For the three months ended September 30, 2015 and 2014, income of $287 and $0 was recorded on this investment, respectively, and income of $3,068 and $0 was recorded on this investment for the nine months ended September 30, 2015 and 2014, respectively. During the nine months ended September 30, 2015 and 2014, the Company received cash distributions from this entity in the amounts of $2,694 and $0, respectively. Revenues —From time to time, the Company enters into advisory transactions with Moelis Asset Management LP and its affiliates. The Company earned revenues associated with such transactions of $1,299 and $2,769 for the three months ended September 30, 2015 and 2014, respectively, and $5,635 and $3,717 for the nine months ended September 30, 2015 and 2014, respectively. |
REGULATORY REQUIREMENTS
REGULATORY REQUIREMENTS | 9 Months Ended |
Sep. 30, 2015 | |
REGULATORY REQUIREMENTS | |
REGULATORY REQUIREMENTS | 12. REGULATORY REQUIREMENTS Under the SEC Uniform Net Capital Rule (SEC Rule 15c3-1) Alternative Standard under Section (a)(1)(ii), the minimum net capital requirement is $250. At September 30, 2015, Moelis U.S. had net capital of $45,821, which was $45,571 in excess of its required net capital. At December 31, 2014, Moelis U.S. had net capital of $80,270 which was $80,020 in excess of its required net capital. Moelis U.S. does not carry customer accounts and does not otherwise hold funds or securities for, or owe money or securities to, customers and accordingly is exempt under Section (k)(2)(ii) of SEC Rule 15c3-3. At September 30, 2015, the aggregate regulatory net capital of Moelis UK was $18,104 which exceeded the minimum requirement by $18,048. At December 31, 2014, the aggregate regulatory net capital of Moelis UK was $22,980, which exceeded the minimum requirement by $22,919. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 9 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 13. COMMITMENTS AND CONTINGENCIES Bank Line of Credit —In May 2015 the Company renewed its unsecured revolving credit facility which increased the commitment amount and extended the maturity date to June 30, 2017. As of September 30, 2015, the commitment amount was $40,000. Borrowings on the facility bear interest at the greater of a fixed rate of 3.50% per annum or at the borrower's option of (i) LIBOR plus 1% or (ii) Prime minus 1.50%. As of September 30, 2015 and 2014, the Company had no borrowings under the credit facility. As of September 30, 2015, the Company's available credit under this facility was $31,745 as a result of the issuance of an aggregate amount of $8,255 of various standby letters of credit, which were required in connection with certain office lease and other agreements. The Company incurs a 1% per annum fee on the outstanding balance of issued letters of credit. Leases —The Company maintains operating leases with expiration dates that extend through 2023. The Company incurred expense relating to its operating leases of $3,192 and $2,756 for the three months ended September 30, 2015 and 2014, respectively, and $9,577 and $8,501 for the nine months ended September 30, 2015 and 2014, respectively. The future minimum rental payments required under the operating leases in place at September 30, 2015 are as follows: Fiscal year ended Amount Remainder of 2015 $ 2016 2017 2018 2019 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Contractual Arrangements —In the normal course of business, the Company enters into contracts that contain a variety of representations and warranties and which provide indemnification for specified losses, including certain indemnification of certain officers, directors and employees. Joint Venture Put and Call Options —In connection with the Company's Australian JV, the Company granted a put option in April 2010 enabling the key senior Australian executive to sell his shares held in the Australian JV back to the Company at fair value. The put option can be exercised if the key senior Australian executive ceases to be employed by the Australian JV (including due to death, disability or resignation but excluding termination for cause) and following such cessation of employment, the key senior Australian executive, the remaining Australian executives and the Company are unable to agree upon a restructuring of the Australian JV. If the put option is exercised, the Company will be required to pay 50% of the purchase price upon exercise and the remaining balance within 18 months (in cash or listed stock). In addition, since April 2010, the Company has held a call option to purchase the shares from the Trust at fair value with payment terms equal to those called for under the put option. Legal —There are no legal actions pending or, to management's knowledge, threatened against the Company or any of its combined entities, other than ordinary course of business actions that we believe will not have a material adverse effect on our business or financial statements. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 9 Months Ended |
Sep. 30, 2015 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 14. EMPLOYEE BENEFIT PLANS The Company covers substantially all U.S. salaried employees with a defined contribution 401(k) plan. Each salaried employee of the Company who has attained the age of 21 is eligible to participate in the 401(k) plan on their first day of employment. Any employer contributions to the 401(k) plan are entirely at the discretion of the Company. The Company accrued expenses relating to employer matching contributions to the 401(k) plan for the three months ended September 30, 2015 and 2014 in the amount of $361 and $348, respectively, and $1,017 and $973 for the nine months ended September 30, 2015 and 2014, respectively. |
INCOME TAXES
INCOME TAXES | 9 Months Ended |
Sep. 30, 2015 | |
INCOME TAXES | |
INCOME TAXES | 15. INCOME TAXES Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal, state and local income tax on its allocable share of results of operations from Group LP. The Company's provision for income taxes and effective tax rate were $5,273 and 13% and $4,710 and 13% for the three months ended September 30, 2015 and 2014, respectively. For the nine months ended September 30, 2015 and 2014, the Company's provision for income taxes was $15,652 on income before taxes of $97,098 and $5,790 on income before taxes of $57, respectively. The income tax provision for the aforementioned periods primarily reflects the effect of certain nondeductible expenses related to the vesting of Class A partnership units in Group LP in connection with the Company's reorganization and IPO in 2014 and the Company's allocable share of earnings from Group LP being subject to U.S. federal, state and local income tax at the prevailing corporate income tax rate following the Company's reorganization and IPO. The Company recorded an increase in the net deferred tax asset of $4,297 for the nine months ended September 30, 2015, which primarily relates to the step-up in tax basis in Group LP assets resulting from the exchange of Class A partnership units in Group LP for Class A common stock during the nine month period. Approximately $769 of this deferred tax asset is attributable to exchanges by certain partners of Group LP who are party to the tax receivable agreement. Pursuant to this agreement, 85% (or $654) of the tax benefits associated with this portion of the deferred tax asset are payable to such exchanging partners over the next 15 years and recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital. |
BUSINESS INFORMATION
BUSINESS INFORMATION | 9 Months Ended |
Sep. 30, 2015 | |
BUSINESS INFORMATION | |
BUSINESS INFORMATION | 16. BUSINESS INFORMATION The Company's activities as an investment banking advisory firm constitute a single business segment offering clients, including corporations, governments and financial sponsors, a range of advisory services with expertise across all major industries in mergers and acquisitions, recapitalizations and restructurings and other corporate finance matters. We do not allocate our revenue by the type of advice we provide because of the complexity of the transactions on which we may earn revenue and our comprehensive approach to client service. For example, a restructuring engagement may evolve to require a sale of all or a portion of the client, M&A assignments can develop from relationships established on prior restructuring engagements and capital markets expertise can be instrumental on both M&A and restructuring assignments. There were no clients that accounted for more than 10% of revenues for the three and nine months ended September 30, 2015 and 2014. Since the financial markets are global in nature, the Company generally manages its business based on the operating results of the enterprise taken as whole, not by geographic region. The following table sets forth the geographical distribution of revenues and assets based on the location of the office that generates the revenues or holds the assets, and therefore may not be reflective of the geography in which our clients are located. Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: United States $ $ $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2015 December 31, 2014 Assets: United States $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 9 Months Ended |
Sep. 30, 2015 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 17. SUBSEQUENT EVENTS On October 28, 2015, the Board of Directors of Moelis & Company declared a quarterly dividend of $0.30 per share. The dividend will be paid on December 8, 2015 to Class A common stockholders of record on November 23, 2015. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 9 Months Ended |
Sep. 30, 2015 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Accounting | Basis of Accounting —The Company prepared the accompanying condensed consolidated and combined financial statements in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP"). As permitted by the interim reporting rules and regulations set forth by the SEC, the condensed consolidated and combined financial statements presented exclude certain financial information and footnote disclosures normally included in audited financial statements prepared in accordance with U.S. GAAP. In the opinion of the Company's management, the accompanying unaudited condensed consolidated and combined financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated and combined financial statements. These unaudited condensed consolidated and combined financial statements should be read in conjunction with the consolidated and combined audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2014. |
Consolidation | Consolidation —The Company's policy is to consolidate (i) entities in which it has a controlling financial interest, (ii) variable interest entities where the Company has a variable interest and is deemed to be the primary beneficiary and (iii) limited partnerships where the Company is the general partner, unless the presumption of control is overcome. When the Company does not have a controlling interest in an entity, but exerts significant influence over the entity's operating and financial decisions, the Company applies the equity method of accounting in which it records in earnings its share of income or losses of the entity. All intercompany balances and transactions with the Company's subsidiaries have been eliminated in consolidation. |
Use of Estimates | Use of Estimates —The preparation of condensed consolidated and combined financial statements and related disclosures in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period in which they are determined to be necessary. In preparing the condensed consolidated and combined financial statements, management makes estimates and assumptions regarding: • the adequacy of the allowance for doubtful accounts; • the realization of deferred taxes; • the measurement of equity-based compensation; and • other matters that affect the reported amounts and disclosures of contingencies in the financial statements. |
Cash and Cash Equivalents | Cash and Cash Equivalents —Cash and cash equivalents include all short-term highly liquid investments that are readily convertible to known amounts of cash and have original maturities of three months or less from the date of purchase. As of September 30, 2015, the Company had cash equivalents of $29,419 (December 31, 2014: $128,739) invested primarily in government securities money market funds and U.S. Treasury Bills. Additionally, as of September 30, 2015, the Company had cash of $58,417 (December 31, 2014: $69,205) maintained in U.S. and non-U.S. bank accounts, of which most U.S. bank account balances exceeded the FDIC coverage limit of $250. |
Restricted Cash | Restricted Cash —The Company held cash of $847 and $833 as of September 30, 2015 and December 31, 2014, respectively, in restricted collateral deposits primarily held by certain non-U.S. subsidiaries. |
Receivables | Receivables —The accompanying condensed consolidated and combined statements of financial condition present accounts receivable balances net of allowance for doubtful accounts based on the Company's assessment of the collectability of customer accounts. The Company maintains an allowance for doubtful accounts that, in management's opinion, provides for an adequate reserve to cover losses that may be incurred. The Company regularly reviews the allowance by considering factors such as historical experience, credit quality, age of the accounts receivable, and the current economic conditions that may affect a customer's ability to pay such amounts owed to the Company. After concluding that a reserved accounts receivable is no longer collectible, the Company will charge-off the receivable. This is determined based on several factors including the age of the accounts receivable and the credit worthiness of the customer. This has the effect of reducing both the gross receivable and the allowance for doubtful accounts. |
Deferred Compensation | Deferred Compensation —Deferred compensation costs represent arrangements with certain employees whereby cash payments are subject to a required period of service subsequent to payment by the Company. These amounts are charged to expenses over the period that the employee is required to provide services in order to vest in the payment. |
Financial Instruments at Fair Value | Financial Instruments at Fair Value —Fair value is generally based on quoted prices, however if quoted market prices are not available, fair value is determined based on other relevant factors, including dealer price quotations, price activity for equivalent instruments and valuation pricing models. The Company established a fair value hierarchy which prioritizes and ranks the level of market price observability used in measuring financial instruments at fair value. Market price observability is affected by a number of factors, including the type of instrument, the characteristics specific to the instrument and the state of the marketplace (including the existence and transparency of transactions between market participants). Financial instruments with readily-available actively quoted prices or for which fair value can be measured from actively-quoted prices in an orderly market will generally have a higher degree of market price observability and a lesser degree of judgment used in measuring fair value. Financial instruments measured and reported at fair value are classified and disclosed in one of the following categories (from highest to lowest) based on inputs: Level 1 —Quoted prices (unadjusted) are available in active markets for identical instruments that the Company has the ability to access as of the reporting date. The Company, to the extent that it holds such instruments, does not adjust the quoted price for these instruments, even in situations in which the Company holds a large position and a sale could reasonably affect the quoted price. Level 2 —Pricing inputs are observable for the instruments, either directly or indirectly, as of the reporting date, but are not the same as those used in Level 1. Fair value is determined through the use of models or other valuation methodologies. Level 3 —Pricing inputs are unobservable for the instruments and include situations where there is little, if any, market activity for the investments. The inputs into the determination of fair value require significant judgment or estimation by the Company's management. In certain cases, the inputs used to measure fair value may fall into different levels of the fair value hierarchy. In such cases, the determination of which category within the fair value hierarchy is appropriate for any given investment is based on the lowest level of input that is significant to the fair value measurement. 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 instrument. For level 3 investments in which pricing inputs are unobservable and limited market activity exists, management's determination of fair value is based on the best information available, may incorporate management's own assumptions and involves a significant degree of judgment. |
Equity Method Investments | Equity Method Investments —The Company accounts for its equity method investments under the equity method of accounting as the Company does not control these entities but has the ability to exercise significant influence. The amounts recorded on the condensed consolidated and combined financial statements of financial condition reflects the Company's share of contributions made to, distributions received from, and the equity earnings and losses of, the investments. The Company reflects its share of gains and losses of the investment in income (loss) from equity method investments in the condensed consolidated and combined statements of operations. |
Equipment and Leasehold Improvements | Equipment and Leasehold Improvements —Office equipment and furniture and fixtures are stated at cost less accumulated depreciation, which is determined using the straight-line method over the estimated useful lives of the assets, ranging from three to seven years, respectively. Leasehold improvements are stated at cost less accumulated amortization, which is determined using the straight-line method over the lesser of the term of the lease or the estimated useful life of the asset. Major renewals and improvements are capitalized and minor replacements, maintenance and repairs are charged to expenses as incurred. Upon retirement or disposal of assets, the cost and related accumulated depreciation or amortization are removed from the condensed consolidated and combined statements of financial condition and any gain or loss is reflected in the condensed consolidated and combined statements of operations. |
Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement | Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company is treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. In the future, additional Group LP Class A partnership units may be exchanged for shares of Class A common stock in the Company. The initial purchase and these future exchanges are expected to result in an increase in the tax basis of Group LP's assets attributable to the Company's interest in Group LP. These increases in the tax basis of Group LP's assets attributable to the Company's interest in Group LP would not have been available but for this initial purchase and future exchanges. Such increases in tax basis are likely to increase (for tax purposes) depreciation and amortization deductions and therefore reduce the amount of income tax the Company would otherwise be required to pay in the future. As a result, the Company records a deferred tax asset for such increase in tax basis. The Company has entered into a tax receivable agreement with its eligible Managing Directors that will provide for the payment by the Company to its eligible Managing Directors of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax or franchise tax that the Company actually realizes as a result of (a) the increases in tax basis attributable to exchanges by its eligible Managing Directors and (b) tax benefits related to imputed interest deemed to be paid by the Company as a result of this tax receivable agreement. The Company expects to benefit from the remaining 15% of cash savings, if any, in income tax that it realizes and record any such estimated tax benefits as an increase to additional paid-in-capital. For purposes of the tax receivable agreement, cash savings in income tax will be computed by comparing the Company's actual income tax liability to the amount of such taxes that it would have been required to pay had there been no increase to the tax basis of the tangible and intangible assets of Group LP as a result of the exchanges and had it not entered into the tax receivable agreement. The term of the tax receivable agreement commenced upon consummation of the IPO and will continue until all such tax benefits have been utilized or expired, unless the Company exercises its right to terminate the tax receivable agreement for an amount based on an agreed value of payments remaining to be made under the agreement. The Company has recorded the estimated tax benefits related to the increase in tax basis and imputed interest as a result of the initial purchase described above as a deferred tax asset in the condensed consolidated and combined statements of financial condition. The amount due to its eligible Managing Directors related to the tax receivable agreement as a result of the initial purchase described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated and combined statements of financial condition. The amounts recorded for the deferred tax asset and the liability for our obligations under the tax receivable agreement are estimates. Any adjustments to our estimates subsequent to their initial establishment will be included in net income (loss). Future exchanges of Class A partnership units in Group LP for Class A common shares in the Company will be accounted for in a similar manner. |
Revenue and Expense Recognition | Revenue and Expense Recognition —The Company recognizes revenues from providing advisory services when earned and collection is reasonably assured. Upfront fees are recognized over the estimated period that the related services are performed. Transaction-related fees are recognized when all services for a transaction have been provided, specified conditions have been met and the transaction closes. Underwriting revenues are recognized when the offering is deemed complete and is presented net of related expenses. Deferred revenues are recorded for fees received that have not yet been earned. Expenses are reflected on the condensed consolidated and combined statements of operations, net of client reimbursements. Reimbursable expenses billed to clients totaled $3,639 and $2,793 for the three months ended September 30, 2015 and 2014, respectively, and $9,510 and $7,520 for the nine months ended September 30, 2015 and 2014, respectively. |
Equity-based Compensation | Equity-based Compensation —The Company recognizes the cost of employee services received in exchange for an equity instrument award. The cost is based on its grant-date fair value amortized over the service period required by the award's vesting terms. Prior to the Company's IPO, the measurement of the grant-date fair value required the Company's Parent to make estimates about its future operating results and the appropriate risk-adjusted discount rates. The methods used to estimate the fair value of equity-based compensation generally included the market approach and the income approach, each of which involve a significant degree of judgment. Under the market approach, fair value is determined with reference to observable valuation measures for comparable companies (e.g., multiplying a key performance metric of the comparable company by a relevant valuation multiple-adjusted for differences between the Company's Parent and the referenced comparable). Under the income approach, fair value is determined by converting future amounts (e.g., cash flows or earnings) to a single present amount (discounted) using current expectations about those future amounts. Subsequent to the Company's IPO, the grant-date fair value of equity awards is based on quoted market prices at the time of grant. The Company recognizes such amounts in compensation and benefits expenses in the accompanying condensed consolidated and combined statements of operations and as an increase to equity in the accompanying condensed consolidated and combined statements of financial condition and changes in equity. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units ("RSUs"). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a dividend payment and a charge to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the award does not vest. See Note 9 for further discussion. For the purposes of calculating diluted net income (loss) per share to holders of Class A common stock, unvested service-based awards are included in the diluted weighted average shares of Class A common stock outstanding using the treasury stock method. See Note 8 for further discussion. The Company generally permits a retiring employee to retain and not forfeit certain qualifying incentive RSUs granted during employment if at retirement the employee (i) is at least 54 years old and (ii) has provided at least 8 consecutive years of service to the Company. Any such RSUs will continue to vest on their applicable vesting schedule, subject to noncompetition and other terms. Over time a greater number of employees may become retirement eligible and the related requisite service period over which we will expense these awards will be shorter than the stated vesting period. Any unvested RSUs prior to meeting the stated requisite service period or retirement eligibility date are eligible to receive dividends in kind; however, the right to dividends in kind will be forfeited if the underlying award does not vest. |
Income Taxes | Income Taxes —Prior to the Company's reorganization and IPO of Moelis & Company, the Company had been primarily subject to the New York City unincorporated business tax ("UBT") and certain other foreign, state and local taxes as applicable. The Company's operations were historically comprised of entities that are organized as limited liability companies and limited partnerships. For U.S. federal income tax purposes, taxes related to income earned by these entities represent obligations of the individual partners and members and have historically not been reflected in the condensed consolidated and combined statements of financial condition. In connection with the Company's reorganization and IPO, the Company became subject to U.S. corporate federal and state income tax on its allocable share of results of operations from Group LP. The Company accounts for income taxes in accordance with ASC 740, " Accounting for Income Taxes " ("ASC 740"), which requires the recognition of tax benefits or expenses on temporary differences between the financial reporting and tax bases of its assets and liabilities by applying the enacted tax rates in effect for the year in which the differences are expected to reverse. Such net tax effects on temporary differences are reflected on the Company's condensed consolidated and combined statements of financial condition as deferred tax assets and liabilities. Deferred tax assets are reduced by a valuation allowance when the Company believes that it is more-likely-than-not that some portion or all of the deferred tax assets will not be realized. ASC 740-10 prescribes a two-step approach for the recognition and measurement of tax benefits associated with the positions taken or expected to be taken in a tax return that affect amounts reported in the financial statements. The Company has reviewed and will continue to review the conclusions reached regarding uncertain tax positions, which may be subject to review and adjustment at a later date based on ongoing analyses of tax laws, regulations and interpretations thereof. For the three and nine months ended September 30, 2015 and 2014, no unrecognized tax benefit was recorded. To the extent that the Company's assessment of the conclusions reached regarding uncertain tax positions changes as a result of the evaluation of new information, such change in estimate will be recorded in the period in which such determination is made. The Company reports income tax-related interest and penalties, if applicable, as a component of income tax expense. For the three and nine months ended September 30, 2015 and 2014, no such amounts were recorded. |
Foreign Currency Translation | Foreign Currency Translation —Assets and liabilities held in non-U.S. dollar denominated (functional) currencies are translated into U.S. dollars at exchange rates in effect at the end of the reporting period. Revenues and expenses are translated at average exchange rates during the reporting period. A charge or credit is recorded to other comprehensive income to reflect the translation of these amounts to the extent the non-U.S. currency is designated the functional currency of the subsidiary. Non-functional currency related transaction gains and losses are immediately recorded in the condensed consolidated and combined statements of operations. |
EQUIPMENT AND LEASEHOLD IMPRO27
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
Schedule of equipment and leasehold improvements, net | September 30, 2015 December 31, 2014 Office equipment $ $ Furniture and fixtures Leasehold improvements ​ ​ ​ ​ ​ ​ ​ ​ Total Less accumulated depreciation and amortization ) ) ​ ​ ​ ​ ​ ​ ​ ​ Equipment and leasehold improvements, net $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
FAIR VALUE MEASUREMENTS | |
Summary of the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall | The following tables summarize the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall as of September 30, 2015: Financial assets: Total Level 1 Level 2 Level 3 Included in cash and cash equivalents U.S. treasury bills $ $ — $ $ — Government securities money market — — Investments U.S. treasury bills — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ The following table summarizes the levels of the fair value hierarchy into which the Company's financial assets fall as of December 31, 2014: Financial assets: Total Level 1 Level 2 Level 3 Included in cash and cash equivalents Government securities money market $ $ — $ $ — Investments U.S. treasury bills — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets $ $ — $ $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of changes to the Company's investment classified as Level 3 | The changes to the Company's investment classified as Level 3 are as follows for the nine months ended September 30, 2014. Common Stock January 1, 2014 $ Non-cash settlement of customer receivable Distribution to Parent ) ​ ​ ​ ​ ​ September 30, 2014 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains (losses) related to investment still held as of September 30, 2014 $ — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
NET INCOME (LOSS) PER SHARE A29
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | |
Schedule of calculation of basic and diluted net income (loss) per share | Three Months Ended September 30, Nine Months Ended September 30, (dollars in thousands, except per share amounts) 2015 2014 2015 2014 Numerator: Net income (loss) attributable to holders of shares of Class A common stock—basic $ $ $ $ ) Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) (a) (a) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) attributable to holders of shares of Class A common stock—diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Denominator: Weighted average shares of Class A common stock outstanding—basic Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) (a) (a) Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method (b) (b) (b) (b) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Weighted average shares of Class A common stock outstanding—diluted ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Diluted $ $ $ $ ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ (a) Class A partnership units may be exchanged for Moelis & Company Class A common stock on a one-for-one basis, subject to applicable lock-up, vesting and transfer restrictions. If all Class A partnership units were to be exchanged for Class A common stock, fully diluted Class A common stock outstanding would be 55,398,692 and 55,197,575 for the three months ended September 30, 2015 and 2014, respectively, and 55,303,354 and 54,254,664 for the nine months ended September 30, 2015 and 2014, respectively. In computing the dilutive effect, if any, that the aforementioned exchange would have on net income (loss) per share, net income (loss) available to holders of Class A common stock would be adjusted due to the elimination of the noncontrolling interests in consolidated entities associated with the Group LP Class A partnership units (including any tax impact). For the three and nine months ended September 30, 2015 and 2014, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive. (b) During the three and nine months ended September 30, 2015 and 2014, certain shares of Moelis & Company's Class A common stock assumed to be issued pursuant to certain RSUs as calculated using the treasury stock method were antidilutive and therefore have been excluded from the calculation of diluted net income (loss) per share attributable to Moelis & Company. During the three months ended September 30, 2015 and 2014, the additional weighted average amount of RSUs that would have been included in this calculation if the effect were dilutive would have been 15,397 and 11,644 units, respectively, and 7,945 and 665,649 units for the nine months ended September 30, 2015 and September 30, 2014, respectively. Antidilution in the prior year is the result of the Company producing a loss for the nine months ended September 30, 2014. Additionally, during the three months ended September 30, 2015, the additional weighted average amount of options that would have been included in this calculation if the effect were dilutive would have been 1,049,977. No options were excluded from this calculation for the three months ended September 30, 2014 and the nine months ended September 30, 2015 and September 30, 2014. |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
EQUITY-BASED COMPENSATION | |
Summary of activity related to restricted stock and RSUs | Restricted Stock & RSUs 2015 2014 Number of Shares Weighted Average Grant Date Fair Value Number of Shares Weighted Average Grant Date Fair Value Unvested Balance at January 1, $ — $ — Granted Forfeited ) ) Vested ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unvested Balance at September 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of assumptions used to estimates the fair value of stock option using the Black-Scholes valuation model | Assumptions Expected life (in years) Weighted-average risk free interest rate % Expected volatility % Dividend yield % Weighted-average fair value at grant date $ |
Summary of activity related to stock options | Stock Options Outstanding 2015 2014 Number Outstanding Weighted-Average Exercise Price Per Share Number Outstanding Weighted-Average Exercise Price Per Share Outstanding at January 1, $ — $ — Grants — — Exercises — — — Forfeiture or expirations ) ) ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Outstanding at September 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum rental payments required under the operating leases in place | The future minimum rental payments required under the operating leases in place at September 30, 2015 are as follows: Fiscal year ended Amount Remainder of 2015 $ 2016 2017 2018 2019 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
BUSINESS INFORMATION (Tables)
BUSINESS INFORMATION (Tables) | 9 Months Ended |
Sep. 30, 2015 | |
BUSINESS INFORMATION | |
Schedule of geographical distribution of revenues and assets | Three Months Ended September 30, Nine Months Ended September 30, 2015 2014 2015 2014 Revenues: United States $ $ $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ September 30, 2015 December 31, 2014 Assets: United States $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
ORGANIZATION AND BASIS OF PRE33
ORGANIZATION AND BASIS OF PRESENTATION (Details) | 1 Months Ended |
Apr. 30, 2014shares | |
Class A common stock | IPO | |
Organization and basis of presentation | |
Issuance of common stock (in shares) | 7,475,000 |
ORGANIZATION AND BASIS OF PRE34
ORGANIZATION AND BASIS OF PRESENTATION (Details 2) | Sep. 30, 2015 |
Moelis Australia Holdings | |
Equity Method Investments | |
Ownership percentage (as a percent) | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Cash and Cash Equivalents | ||
Cash equivalents | $ 29,419 | $ 128,739 |
Cash | 58,417 | 69,205 |
Restricted Cash | ||
Cash in restricted collateral accounts | $ 847 | $ 833 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 2) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 9 Months Ended | ||
Nov. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement | |||||
Percentage of tax benefits payable to partners under tax receivable agreement | 85.00% | 85.00% | |||
Remaining percentage of cash savings realized by the Company (as a percent) | 15.00% | ||||
Revenue and Expense Recognition | |||||
Reimbursable expenses billed to clients | $ 3,639 | $ 2,793 | $ 9,510 | $ 7,520 | |
Equity-based Compensation | |||||
Minimum age of retiring employees required so that certain qualifying awards granted during employment will not be forfeited | 54 years | ||||
Consecutive years of service of retiring employees required so that certain qualifying awards granted during employment will not be forfeited | 8 years | ||||
Income Taxes | |||||
Unrecognized tax benefits | 0 | 0 | $ 0 | 0 | |
Unrecognized tax benefits, interest and penalties | $ 0 | $ 0 | $ 0 | $ 0 | |
Office equipment and furniture and fixtures | Minimum | |||||
Equipment and leasehold improvements | |||||
Useful lives | 3 years | ||||
Office equipment and furniture and fixtures | Maximum | |||||
Equipment and leasehold improvements | |||||
Useful lives | 7 years |
BUSINESS CHANGES AND DEVELOPM37
BUSINESS CHANGES AND DEVELOPMENTS (Details) $ in Thousands | 1 Months Ended | 4 Months Ended | 5 Months Ended | 9 Months Ended | |||
Nov. 30, 2014 | Apr. 30, 2014USD ($)itemshares | Apr. 21, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($)shares | Sep. 30, 2014USD ($) | Aug. 31, 2014 | |
Reorganization and initial public offering | |||||||
IPO related proceeds (net of $10,316 of offering costs) | $ 163,682 | ||||||
Proceeds from IPO, net of expenses | $ 500 | $ 162,107 | |||||
Distribution of IPO proceeds to partners | 139,429 | ||||||
Tax benefits associated with deferred tax asset payable to partners (as a percent) | 85.00% | 85.00% | |||||
Class A common stock | |||||||
Reorganization and initial public offering | |||||||
Number of shares of common stock to be issued upon exchange of a partnership unit | shares | 1 | 1 | |||||
Class B common stock | |||||||
Reorganization and initial public offering | |||||||
Ratio of subscription price to the initial public offering price of shares of common stock | 0.00055 | ||||||
Aggregate number of shares of Class B common stock that may be converted into Class A common stock | shares | 20,000 | ||||||
Dividends payable ratio to outstanding shares of publicly traded common stock | 0.00055 | ||||||
Number of votes entitled to holder for each share of common stock held upon satisfaction of Class B Condition | item | 10 | ||||||
Number of votes entitled to holder for each share of common stock held upon failure of Class B Condition | item | 1 | ||||||
Moelis Brazil | |||||||
Reorganization and initial public offering | |||||||
Ownership percentage (as a percent) | 94.00% | ||||||
Moelis Brazil | Senior bankers | |||||||
Reorganization and initial public offering | |||||||
Ownership percentage (as a percent) | 6.00% | ||||||
Group LP | |||||||
Reorganization and initial public offering | |||||||
Number of principal classes of units | shares | 1 | ||||||
Distribution of IPO proceeds to partners | $ 139,429 | ||||||
Deferred tax assets attributable to exchanges by partners | $ 769 | ||||||
Tax benefits associated with deferred tax asset payable to partners | $ 654 | ||||||
Period of tax receivable agreement | 15 years | ||||||
Group LP | Class A common stock | |||||||
Reorganization and initial public offering | |||||||
IPO related proceeds (net of $10,316 of offering costs) | 163,682 | ||||||
Proceeds from IPO, net of expenses | $ 162,107 | ||||||
Old Holdings | |||||||
Reorganization and initial public offering | |||||||
Pre-offering distribution to partners | 195,017 | ||||||
Deferred tax assets attributable to exchanges by partners | $ 60,946 | ||||||
Tax benefits associated with deferred tax asset payable to partners (as a percent) | 85.00% | ||||||
Tax benefits associated with deferred tax asset payable to partners | $ 51,804 | ||||||
Period of tax receivable agreement | 15 years |
BUSINESS CHANGES AND DEVELOPM38
BUSINESS CHANGES AND DEVELOPMENTS (Details 2) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |
Mar. 31, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity Method Investments | |||
Professional fees expense associated with one-time non-cash acceleration of unvested equity | $ 1,240 | ||
Class A common stock | |||
Equity Method Investments | |||
Compensation and benefits expense associated with issuance of cash and fully vested shares | 4,014 | ||
Compensation and benefits expense associated with issuance of cash | 2,004 | ||
Compensation and benefits expense associated with issuance of fully vested shares | 2,010 | ||
Moelis Australia Holdings | |||
Equity Method Investments | |||
Expense associated with the one-time non-cash acceleration of unvested equity | 4,916 | ||
RSUs | |||
Equity Method Investments | |||
Compensation and benefits expense associated with the amortization of equity awards granted in connection with the IPO | $ 763 | ||
Vesting period | 5 years | ||
Stock options | |||
Equity Method Investments | |||
Compensation and benefits expense associated with the amortization of equity awards granted in connection with the IPO | $ 2,046 | ||
Vesting period | 5 years | 5 years | |
Managing Directors | |||
Equity Method Investments | |||
Expense associated with the one-time non-cash acceleration of unvested equity | $ 87,601 | ||
Expense associated with the non-cash acceleration of amortization of equity held prior to IPO | $ 10,349 |
BUSINESS CHANGES AND DEVELOPM39
BUSINESS CHANGES AND DEVELOPMENTS (Details 3) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | |||
Nov. 30, 2014USD ($)$ / sharesshares | Apr. 30, 2014shares | Sep. 30, 2015shares | Dec. 31, 2014shares | Oct. 31, 2014 | |
Secondary Offering | |||||
Deferred tax asset attributable to exchanges by partners in connection with secondary offering | $ | $ 80,117 | ||||
Percentage of tax benefits payable to partners under tax receivable agreement | 85.00% | 85.00% | |||
Tax benefit payable to partners under tax receivable agreement in connection with secondary offering | $ | $ 68,099 | ||||
Period for cash distribution payable to partners under tax receivable agreement for tax benefits | 15 years | ||||
Class A common stock | |||||
Secondary Offering | |||||
Common stock, shares outstanding | 19,770,893 | 20,158,230 | 19,770,893 | ||
Class A common stock | Secondary Offering | |||||
Secondary Offering | |||||
Issuance of new and sale of existing common stock (in shares) | 6,325,000 | ||||
Issuance of common stock (in shares) | 4,509,400 | ||||
Number of existing shares sold during the period by current holders to new investors | 1,815,600 | ||||
Number of shares purchased and converted | 4,511,058 | ||||
Shares issued upon conversion | 1,658 | ||||
Class B common stock | |||||
Secondary Offering | |||||
Issuance of common stock (in shares) | 36,158,698 | ||||
Common stock, shares outstanding | 31,358,729 | 31,621,542 | |||
Number of shares held by Partner Holdings, parent of the reporting entity | 31,621,542 | ||||
Class B common stock | Secondary Offering | |||||
Secondary Offering | |||||
Number of shares purchased and converted | 4,507,453 | ||||
Number of shares repurchased and retired | 1,509,131 | ||||
Price per share of stock which was repurchased and retired | $ / shares | $ 28 | ||||
Shares converted | 2,998,322 | ||||
Conversion ratio | 0.00055 | ||||
Group LP | |||||
Secondary Offering | |||||
Limited partnership interest held by parent (as a percent) | 36.00% | 28.00% | |||
Limited partnership interest held by noncontrolling interest (as a percent) | 64.00% | 72.00% | |||
Group LP | Class A partnership units | |||||
Secondary Offering | |||||
Number of limited partner units held by parent | 19,770,893 | ||||
Number of limited partner units held by noncontrolling interests | 34,479,961 | ||||
Group LP | Class A partnership units | Secondary Offering | |||||
Secondary Offering | |||||
Number of units acquired by parent | 4,509,400 | ||||
Group LP | Class A common stock | |||||
Secondary Offering | |||||
Common stock, shares outstanding | 20,158,230 |
EQUITY METHOD INVESTMENTS (Deta
EQUITY METHOD INVESTMENTS (Detail) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Equity Method Investments | ||||
Income (loss) from equity method investments | $ 450 | $ 1,105 | $ 3,510 | $ (2,966) |
Cash contribution made | 4,445 | |||
Moelis Australia Holdings | ||||
Equity Method Investments | ||||
Ownership percentage (as a percent) | 50.00% | 50.00% | ||
Moelis Australia Holdings | ||||
Equity Method Investments | ||||
Ownership percentage (as a percent) | 50.00% | 50.00% | ||
Income (loss) from equity method investments | $ 163 | $ 1,105 | $ 442 | (2,966) |
Cash contribution made | 4,180 | |||
Entity controlled by Moelis Asset Management LP | ||||
Equity Method Investments | ||||
Income (loss) from equity method investments | $ 287 | 3,068 | ||
Cash contribution made | $ 265 | |||
Cash distributions | $ 2,694 |
EQUIPMENT AND LEASEHOLD IMPRO41
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 | |
Equipment and leasehold improvements | |||||
Total | $ 20,085 | $ 20,085 | $ 17,576 | ||
Less accumulated depreciation and amortization | (11,797) | (11,797) | (10,238) | ||
Equipment and leasehold improvements, net | 8,288 | 8,288 | 7,338 | ||
Depreciation and amortization expenses | 646 | $ 542 | 1,954 | $ 1,595 | |
Office equipment | |||||
Equipment and leasehold improvements | |||||
Total | 10,427 | 10,427 | 9,387 | ||
Furniture and fixtures | |||||
Equipment and leasehold improvements | |||||
Total | 2,858 | 2,858 | 2,258 | ||
Leasehold improvements | |||||
Equipment and leasehold improvements | |||||
Total | $ 6,800 | $ 6,800 | $ 5,931 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Dec. 31, 2014 | |
Fair value measurements | ||
Investments in securities | $ 113,002 | $ 39,997 |
Total financial assets | 142,421 | 168,736 |
Government securities money market | ||
Fair value measurements | ||
Cash and cash equivalents | $ 19,419 | 128,739 |
U.S. treasury bills | ||
Fair value measurements | ||
Maximum investment term | 12 months | |
Cash and cash equivalents | $ 10,000 | |
Investments in securities | 113,002 | 39,997 |
Level 2 | ||
Fair value measurements | ||
Total financial assets | 142,421 | 168,736 |
Level 2 | Government securities money market | ||
Fair value measurements | ||
Cash and cash equivalents | 19,419 | 128,739 |
Level 2 | U.S. treasury bills | ||
Fair value measurements | ||
Cash and cash equivalents | 10,000 | |
Investments in securities | 113,002 | $ 39,997 |
Level 3 | ||
Fair value measurements | ||
Total financial assets | $ 0 |
FAIR VALUE MEASUREMENTS (Deta43
FAIR VALUE MEASUREMENTS (Details 2) - USD ($) $ in Thousands | 9 Months Ended | |
Sep. 30, 2015 | Sep. 30, 2014 | |
Changes to the Company's investment classified as Level 3 | ||
Transfers between Level 1, Level 2 or Level 3 | $ 0 | $ 0 |
Common Stock | ||
Changes to the Company's investment classified as Level 3 | ||
Balance at beginning of the period | $ 1,904 | |
Non-cash settlement of customer receivable | 1,000 | |
Distribution to Parent | $ (2,904) |
NET INCOME (LOSS) PER SHARE A44
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Apr. 30, 2014 | |
Numerator: | |||||
Net income (loss) attributable to holders of shares of Class A common stock - basic | $ 10,090 | $ 6,500 | $ 22,557 | $ (12,510) | |
Class A common stock | |||||
Numerator: | |||||
Net income (loss) attributable to holders of shares of Class A common stock - basic | 10,090 | 6,500 | 22,557 | (12,510) | |
Net income (loss) attributable to holders of shares of Class A common stock - diluted | $ 10,090 | $ 6,500 | $ 22,557 | $ (12,510) | |
Denominator: | |||||
Weighted average shares of Class A common stock outstanding - basic | 20,184,835 | 15,262,343 | 19,919,675 | 15,262,940 | |
Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method | 1,281,186 | 942,911 | 1,185,848 | ||
Weighted average shares of Class A common stock outstanding-diluted | 21,466,021 | 16,205,254 | 21,105,523 | 15,262,940 | |
Net income (loss) per share attributable to holders of shares of Class A common stock | |||||
Basic (in dollars per share) | $ 0.50 | $ 0.43 | $ 1.13 | $ (0.82) | |
Diluted (in dollars per share) | $ 0.47 | $ 0.40 | $ 1.07 | $ (0.82) | |
Number of shares of common stock to be issued upon exchange of a partnership unit | 1 | 1 | 1 | ||
Fully diluted shares of common stock outstanding if all Class A partnership units were to be exchanged for common stock immediately following the reorganization | 55,398,692 | 55,197,575 | 55,303,354 | 54,254,664 | |
Class A common stock | Stock options | |||||
Net income (loss) per share attributable to holders of shares of Class A common stock | |||||
Number of antidilutive securities excluded from calculation of diluted income (loss) per share | 1,049,977 | 0 | 0 | 0 | |
Class A common stock | RSUs | |||||
Net income (loss) per share attributable to holders of shares of Class A common stock | |||||
Number of antidilutive securities excluded from calculation of diluted income (loss) per share | 15,397 | 11,644 | 7,945 | 665,649 |
EQUITY-BASED COMPENSATION (Deta
EQUITY-BASED COMPENSATION (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Apr. 30, 2014 | |
Share repurchase program authorized first quarter 2015 | |||||
Equity-based compensation | |||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 20,000 | $ 20,000 | |||
Class A common stock | |||||
Equity-based compensation | |||||
Number of shares of common stock to be issued upon exchange of a partnership unit | 1 | 1 | 1 | ||
Class A common stock | Share repurchase program authorized first quarter 2015 | |||||
Equity-based compensation | |||||
Share value authorized for repurchase | $ 25,000 | $ 25,000 | |||
Partnership units | |||||
Equity-based compensation | |||||
Units held by partners | 33,933,414 | 33,933,414 | |||
Unvested units held by partners | 639,821 | 639,821 | |||
Compensation expenses | $ 945 | $ 886 | $ 2,857 | $ 100,835 | |
Unrecognized compensation expenses | $ 6,822 | $ 6,822 | |||
Weighted average period to recognize unrecognized compensation expense | 2 years 4 months 24 days | ||||
Managing Directors | Partnership units | Minimum | |||||
Equity-based compensation | |||||
Vesting period | 5 years | ||||
Managing Directors | Partnership units | Maximum | |||||
Equity-based compensation | |||||
Vesting period | 8 years | ||||
Non-managing director employees | Partnership units | |||||
Equity-based compensation | |||||
Vesting period | 4 years |
EQUITY-BASED COMPENSATION (De46
EQUITY-BASED COMPENSATION (Details 2) - USD ($) $ / shares in Units, $ in Thousands | Nov. 24, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | Dec. 31, 2014 |
Weighted Average Grant Date Fair Value | ||||||
Treasury stock shares acquired (in shares) | 242,619 | |||||
Treasury Stock, Value, Acquired, Cost Method | $ 7,006 | |||||
Restricted stock and RSUs | ||||||
Equity-based compensation | ||||||
Award issued (in shares) | 2,615,660 | 2,477,272 | ||||
Number of shares | ||||||
Unvested Balance at the beginning of the period (in shares) | 2,473,624 | |||||
Granted (in shares) | 2,615,660 | 2,477,272 | ||||
Forfeited (in shares) | (36,903) | (56,642) | ||||
Vested (in shares) | (92,717) | (9,190) | ||||
Unvested Balance at the end of the period (in shares) | 4,959,664 | 2,411,440 | 4,959,664 | 2,411,440 | 2,473,624 | |
Weighted Average Grant Date Fair Value | ||||||
Unvested Balance at the beginning of the period (in dollars per share) | $ 25.86 | |||||
Granted (in dollars per share) | 31.92 | $ 26.08 | ||||
Forfeited (in dollars per share) | 28.79 | 25 | ||||
Vested (in dollars per share) | 27.45 | 28.02 | ||||
Unvested Balance at the end of the period (in dollars per share) | $ 28.93 | $ 26.10 | $ 28.93 | $ 26.10 | $ 25.86 | |
Total compensation expense not yet recognized | $ 88,882 | $ 88,882 | ||||
Forfeiture rate (as a percent) | 3.00% | |||||
Weighted average period to recognize compensation expense | 2 years 8 months 12 days | |||||
RSUs | ||||||
Equity-based compensation | ||||||
Award issued (in shares) | 2,615,660 | |||||
Vesting period | 5 years | |||||
Compensation expenses | 10,826 | $ 4,509 | $ 27,398 | $ 7,835 | ||
Number of shares | ||||||
Granted (in shares) | 2,615,660 | |||||
RSUs | Minimum | ||||||
Equity-based compensation | ||||||
Vesting period | 4 years | |||||
RSUs | Maximum | ||||||
Equity-based compensation | ||||||
Vesting period | 5 years | |||||
Stock options | ||||||
Equity-based compensation | ||||||
Award issued (in shares) | 3,501,881 | |||||
Vesting period | 5 years | 5 years | ||||
Compensation expenses | 1,048 | $ 1,094 | $ 3,082 | $ 2,046 | ||
Number of shares | ||||||
Granted (in shares) | 3,501,881 | |||||
Weighted Average Grant Date Fair Value | ||||||
Total compensation expense not yet recognized | $ 12,161 | $ 12,161 | ||||
Forfeiture rate (as a percent) | 3.00% | |||||
Weighted average period to recognize compensation expense | 3 years 1 month 6 days | |||||
Special dividend declared (in dollars per share) | $ 1 | |||||
Reduction to exercise price of options outstanding due to special dividend paid (in dollars per share) | $ 1 | |||||
Assumptions used to estimates fair value | ||||||
Expected life (in years) | 6 years | |||||
Weighted-average risk free interest rate (as a percent) | 1.91% | |||||
Expected volatility (as a percent) | 35.00% | |||||
Dividend yield (as a percent) | 2.72% | |||||
Weighted - average fair value at grant date | $ 6.70 | |||||
Number Outstanding | ||||||
Outstanding at the beginning of the period (in shares | 3,296,906 | |||||
Grants (in shares) | 3,501,881 | |||||
Forfeiture or expirations (in shares) | (174,727) | (130,975) | ||||
Outstanding at the end of the period (in shares | 3,122,179 | 3,370,906 | 3,122,179 | 3,370,906 | 3,296,906 | |
Weighted-Average Exercise Price Per Share | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 24 | |||||
Grants (in dollars per share) | $ 24 | |||||
Exercises (in dollars per share) | 24 | |||||
Forfeiture or expirations (in dollars per share) | 24 | 24 | ||||
Outstanding at the end of the period (in dollars per share) | $ 24 | $ 24 | $ 24 | $ 24 | $ 24 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) $ / shares in Units, $ in Thousands | 1 Months Ended | 9 Months Ended | ||
Nov. 30, 2014$ / sharesshares | Apr. 30, 2014shares | Sep. 30, 2015USD ($)shares | Dec. 31, 2014shares | |
STOCKHOLDERS EQUITY | ||||
Treasury stock shares acquired (in shares) | 242,619 | |||
Treasury stock shares acquired | $ | $ 7,006 | |||
Group LP | ||||
STOCKHOLDERS EQUITY | ||||
Number of units held by noncontrolling interest holders | 33,933,414 | |||
Noncontrolling interests (as a percent) | 63.00% | |||
Class A common stock | ||||
STOCKHOLDERS EQUITY | ||||
Aggregate stock issuance (in shares) | 15,263,653 | |||
Reorganization of equity structure (in shares) | 7,699,851 | |||
Common Stock issued in connection with settlement of appreciation rights issued in prior years (in shares) | 88,802 | |||
Common stock, shares issued | 20,400,849 | 19,770,893 | ||
Common stock, shares outstanding | 19,770,893 | 20,158,230 | 19,770,893 | |
Number of shares of common stock to be issued upon exchange of a partnership unit | 1 | 1 | ||
Class A common stock | IPO | ||||
STOCKHOLDERS EQUITY | ||||
Common Stock issued (in shares) | 7,475,000 | |||
Class A common stock | Secondary Offering | ||||
STOCKHOLDERS EQUITY | ||||
Common Stock issued (in shares) | 4,509,400 | |||
Issuance of new and sale of existing common stock (in shares) | 6,325,000 | |||
Issuance of Class A common stock and acquisition of Class A partnership units in connection with secondary offering (in shares) | 4,511,058 | |||
Shares issued upon conversion | 1,658 | |||
Class A common stock | Group LP | ||||
STOCKHOLDERS EQUITY | ||||
Common stock, shares outstanding | 20,158,230 | |||
Class B common stock | ||||
STOCKHOLDERS EQUITY | ||||
Common Stock issued (in shares) | 36,158,698 | |||
Common stock, shares issued | 31,358,729 | 31,621,542 | ||
Common stock, shares outstanding | 31,358,729 | 31,621,542 | ||
Ratio of subscription price to the initial public offering price of shares of common stock | 0.00055 | |||
Aggregate number of shares of Class B common stock that may be converted into Class A common stock | 20,000 | |||
Dividends payable ratio to outstanding shares of publicly traded common stock | 0.00055 | |||
Class B common stock | Secondary Offering | ||||
STOCKHOLDERS EQUITY | ||||
Issuance of Class A common stock and acquisition of Class A partnership units in connection with secondary offering (in shares) | 4,507,453 | |||
Shares converted | 2,998,322 | |||
Conversion ratio | 0.00055 | |||
Number of shares repurchased and retired | 1,509,131 | |||
Price per share of stock which was repurchased and retired | $ / shares | $ 28 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) $ in Thousands | Aug. 30, 2014item | Apr. 15, 2014 | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2014USD ($) | Sep. 30, 2015USD ($) | Sep. 30, 2014USD ($) | Dec. 31, 2014USD ($) | Jun. 30, 2014USD ($) |
Related-party transactions | |||||||||
Aircraft operating expenses | $ 0 | $ 401 | |||||||
Principal repayments | 831 | ||||||||
Investment into the entity controlled by a related party | $ 18,231 | $ 18,231 | $ 17,416 | ||||||
Income (loss) from equity method investments | 450 | 1,105 | 3,510 | (2,966) | |||||
Cash contribution made | 4,445 | ||||||||
Aircraft lease entered into during August 2014 | |||||||||
Related-party transactions | |||||||||
Number of lessees of aircraft (other than the Company), including related party | item | 2 | ||||||||
Manager | |||||||||
Related-party transactions | |||||||||
Expenses | 156 | 310 | |||||||
Manager | Aircraft lease entered into during April 2014 | |||||||||
Related-party transactions | |||||||||
Aircraft lease term | 10 years | ||||||||
Manager | Aircraft lease entered into during August 2014 | |||||||||
Related-party transactions | |||||||||
Expenses | 312 | 61 | 936 | 61 | |||||
Number of lessees of aircraft who are a related party | item | 1 | ||||||||
Employees | Unsecured promissory notes | |||||||||
Related-party transactions | |||||||||
Unsecured promissory notes from employees | 119 | $ 119 | $ 119 | ||||||
Interest rates (as a percent) | 4.00% | 4.00% | |||||||
Principal repayments | $ 0 | 831 | |||||||
Interest income recognized | 4 | 5 | |||||||
Old Holdings | Expense allocation of occupancy expenses | |||||||||
Related-party transactions | |||||||||
Expenses | 0 | 2,316 | |||||||
Old Holdings | Expense allocation of communication, technology and information service expense | |||||||||
Related-party transactions | |||||||||
Expenses | 0 | 2,745 | |||||||
Moelis Australia Holdings | |||||||||
Related-party transactions | |||||||||
Due from related party | 62 | 62 | $ 945 | ||||||
Moelis Asset Management LP | |||||||||
Related-party transactions | |||||||||
Fee for services | 420 | 500 | $ 960 | 1,265 | |||||
Due from related party | 0 | 0 | $ 79 | ||||||
Investment into the entity controlled by a related party | $ 265 | ||||||||
Income (loss) from equity method investments | 287 | 0 | 3,068 | 0 | |||||
Revenue from Related Parties | $ 1,299 | $ 2,769 | 5,635 | 3,717 | |||||
Cash distributions | $ 2,694 | $ 0 |
REGULATORY REQUIREMENTS (Detail
REGULATORY REQUIREMENTS (Details) - USD ($) $ in Thousands | Sep. 30, 2015 | Dec. 31, 2014 |
Regulatory requirements | ||
Minimum net capital requirement | $ 250 | |
Moelis US | ||
Regulatory requirements | ||
Net capital | 45,821 | $ 80,270 |
Net capital in excess of required net capital | 45,571 | 80,020 |
Moelis UK | ||
Regulatory requirements | ||
Net capital | 18,104 | 22,980 |
Net capital in excess of required net capital | $ 18,048 | $ 22,919 |
COMMITMENTS AND CONTINGENCIES50
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Leases | ||||
Rent expense incurred relating to operating leases | $ 3,192 | $ 2,756 | $ 9,577 | $ 8,501 |
Future minimum rental payments | ||||
Remainder of 2015 | 3,881 | 3,881 | ||
2,016 | 14,779 | 14,779 | ||
2,017 | 14,521 | 14,521 | ||
2,018 | 14,438 | 14,438 | ||
2,019 | 14,406 | 14,406 | ||
Thereafter | 11,660 | 11,660 | ||
Total | 73,685 | 73,685 | ||
Unsecured revolving credit facility | ||||
Bank line of credit | ||||
Commitment amount | $ 40,000 | $ 40,000 | ||
Fixed rate of interest (as a percent) | 3.50% | 3.50% | ||
Borrowings under the credit facility | $ 0 | $ 0 | $ 0 | $ 0 |
Available credit under the facility | 31,745 | $ 31,745 | ||
Unsecured revolving credit facility | LIBOR | ||||
Bank line of credit | ||||
Reference rate (as a percent) | LIBOR | |||
Interest rate margin (as a percent) | 1.00% | |||
Unsecured revolving credit facility | Prime | ||||
Bank line of credit | ||||
Reference rate (as a percent) | Prime | |||
Interest rate margin (as a percent) | 1.50% | |||
Standby letters of credit | ||||
Bank line of credit | ||||
Letters of credit outstanding | $ 8,255 | $ 8,255 | ||
Fee on the outstanding balances (as a percent) | 1.00% |
COMMITMENTS AND CONTINGENCIES51
COMMITMENTS AND CONTINGENCIES (Details 2) - Moelis Australia Holdings | 9 Months Ended |
Sep. 30, 2015 | |
Joint venture put and call options | |
Percentage of purchase price to be paid immediately if the Parent is public and the put option is exercised | 50.00% |
Period within which the remaining balance is to be paid if the parent is public and the put option is exercised | 18 months |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
EMPLOYEE BENEFIT PLANS | ||||
Minimum age required to be eligible to participate in the 401(k) plan | 21 years | |||
Expenses accrued relating to employer matching contributions | $ 361 | $ 348 | $ 1,017 | $ 973 |
INCOME TAXES ( Details)
INCOME TAXES ( Details) - USD ($) $ in Thousands | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 | |
Income taxes | ||||
Provision for income taxes | $ 5,273 | $ 4,710 | $ 15,652 | $ 5,790 |
Effective tax rate (as a percent) | 13.00% | 13.00% | ||
Income before taxes | $ 39,903 | $ 37,495 | 97,098 | $ 57 |
Net deferred tax asset increase | 4,297 | |||
Group LP | ||||
Income taxes | ||||
Deferred tax assets attributable to exchanges by partners | $ 769 | |||
Percentage of cash distribution to partners in connection to IPO attributable to exchanges by partners, payable to partners | 85.00% | |||
Cash distribution to partners in connection to IPO attributable to exchanges by partners, payable to partners | $ 654 | |||
Period of tax receivable agreement | 15 years |
BUSINESS INFORMATION (Details)
BUSINESS INFORMATION (Details) $ in Thousands | 3 Months Ended | 9 Months Ended | |||
Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($)item | Sep. 30, 2015USD ($)item | Sep. 30, 2014USD ($)item | Dec. 31, 2014USD ($) | |
Business information | |||||
Total revenues | $ 151,789 | $ 128,651 | $ 377,074 | $ 374,855 | |
Total assets | $ 450,908 | $ 450,908 | $ 464,249 | ||
Client | Revenue | |||||
Business information | |||||
Number of clients | item | 0 | 0 | 0 | 0 | |
Client | Revenue | Minimum | |||||
Business information | |||||
Concentration risk (as a percent) | 10.00% | 10.00% | 10.00% | 10.00% | |
United States | |||||
Business information | |||||
Total revenues | $ 130,704 | $ 102,099 | $ 295,221 | $ 291,818 | |
Total assets | 380,880 | 380,880 | 378,573 | ||
Europe | |||||
Business information | |||||
Total revenues | 18,461 | 22,583 | 67,456 | 68,810 | |
Total assets | 48,329 | 48,329 | 52,975 | ||
Rest of world | |||||
Business information | |||||
Total revenues | 2,624 | $ 3,969 | 14,397 | $ 14,227 | |
Total assets | $ 21,699 | $ 21,699 | $ 32,701 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) - Class A common stock - $ / shares | Oct. 28, 2015 | Sep. 30, 2015 | Sep. 30, 2014 | Sep. 30, 2015 | Sep. 30, 2014 |
Subsequent Events | |||||
Dividends declared per share | $ 0.30 | $ 0.20 | $ 0.70 | $ 0.20 | |
Subsequent event | |||||
Subsequent Events | |||||
Dividends declared per share | $ 0.30 |