Document and Entity Information
Document and Entity Information - shares | 6 Months Ended | |
Jun. 30, 2016 | Jul. 29, 2016 | |
Entity Registrant Name | Moelis & Co | |
Entity Central Index Key | 1,596,967 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2016 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Accelerated Filer | |
Document Fiscal Year Focus | 2,016 | |
Document Fiscal Period Focus | Q2 | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 20,582,362 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 31,138,551 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition (Unaudited) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Assets | ||
Cash and cash equivalents | $ 113,127 | $ 248,022 |
Restricted cash | 737 | 819 |
Receivables: | ||
Accounts receivable, net of allowance for doubtful accounts of $1,387 and $1,149 as of June 30, 2016 and December 31, 2015, respectively | 26,693 | 28,937 |
Other receivables | 10,656 | 10,333 |
Total receivables | 37,349 | 39,270 |
Deferred compensation | 10,709 | 9,040 |
Investments at fair value (cost basis $63,572 and $38,628 as of June 30, 2016 and December 31, 2015, respectively) | 63,647 | 38,624 |
Equity method investments | 18,746 | 17,459 |
Equipment and leasehold improvements, net | 9,434 | 8,698 |
Deferred tax asset | 167,498 | 165,505 |
Prepaid expenses and other assets | 11,738 | 12,024 |
Total assets | 432,985 | 539,461 |
Liabilities and Equity | ||
Compensation payable | 47,158 | 124,233 |
Accounts payable and accrued expenses | 16,941 | 21,203 |
Amount due pursuant to tax receivable agreement | 120,774 | 120,334 |
Deferred revenue | 9,328 | 7,003 |
Other liabilities | 11,144 | 9,270 |
Total liabilities | 205,345 | 282,043 |
Commitments and Contingencies (See Note 12) | ||
Treasury stock, at cost; 361,223 and 263,622 shares as of June 30, 2016 and December 31, 2015, respectively | (10,225) | (7,616) |
Additional paid-in-capital | 236,532 | 190,703 |
Retained earnings (accumulated deficit) | (37,958) | (15,338) |
Accumulated other comprehensive income (loss) | (140) | 108 |
Total Moelis & Company equity | 188,729 | 168,374 |
Noncontrolling interests | 38,911 | 89,044 |
Total equity | 227,640 | 257,418 |
Total liabilities and equity | 432,985 | 539,461 |
Class A common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | 209 | 205 |
Total equity | 209 | 205 |
Class B common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | 311 | 312 |
Total equity | $ 311 | $ 312 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Unaudited) (Parenthetical) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Accounts receivable, allowance for doubtful accounts | $ 1,387 | $ 1,149 |
Investments at fair value, cost basis | $ 63,572 | $ 38,628 |
Treasury stock, shares | 361,223 | 263,622 |
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 | 20,890,320 | 20,536,740 |
Common stock, shares outstanding | 20,529,097 | 20,273,118 |
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 | 31,138,551 | 31,229,236 |
Common stock, shares outstanding | 31,138,551 | 31,229,236 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Operations (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Revenues | $ 131,725 | $ 125,873 | $ 258,089 | $ 225,285 |
Expenses | ||||
Compensation and benefits | 78,198 | 69,663 | 152,866 | 125,056 |
Occupancy | 6,287 | 3,715 | 10,845 | 7,392 |
Professional fees | 2,511 | 4,143 | 4,747 | 7,697 |
Communication, technology and information services | 5,309 | 4,440 | 10,605 | 8,541 |
Travel and related expenses | 5,831 | 5,131 | 11,962 | 10,744 |
Depreciation and amortization | 806 | 688 | 1,542 | 1,308 |
Other expenses | 2,224 | 5,321 | 6,072 | 10,394 |
Total expenses | 101,166 | 93,101 | 198,639 | 171,132 |
Operating income (loss) | 30,559 | 32,772 | 59,450 | 54,153 |
Other income and (expenses) | 101 | (33) | 204 | (18) |
Income (loss) from equity method investments | 266 | 195 | 2,335 | 3,060 |
Income (loss) before income taxes | 30,926 | 32,934 | 61,989 | 57,195 |
Provision for income taxes | 4,721 | 6,079 | 10,165 | 10,379 |
Net income (loss) | 26,205 | 26,855 | 51,824 | 46,816 |
Net income (loss) attributable to noncontrolling interests | 19,312 | 19,724 | 37,961 | 34,349 |
Net income (loss) attributable to Moelis & Company | 6,893 | 7,131 | 13,863 | 12,467 |
Class A common stock | ||||
Expenses | ||||
Net income (loss) attributable to Moelis & Company | $ 6,893 | $ 7,131 | $ 13,863 | $ 12,467 |
Weighted-average shares of Class A common stock outstanding | ||||
Basic (in shares) | 20,745,043 | 19,978,108 | 20,654,657 | 19,961,286 |
Diluted (in shares) | 23,618,093 | 21,088,220 | 23,052,255 | 21,144,161 |
Net income (loss) per share attributable to holders of shares of Class A common stock | ||||
Basic (in dollars per share) | $ 0.33 | $ 0.36 | $ 0.67 | $ 0.62 |
Diluted (in dollars per share) | 0.29 | 0.34 | 0.60 | 0.59 |
Dividends declared per share of Class A common stock | $ 0.30 | $ 0.20 | $ 1.4 | $ 0.4 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income (Unaudited) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Condensed Consolidated Statements of Comprehensive Income (Unaudited) | ||||
Net income | $ 26,205 | $ 26,855 | $ 51,824 | $ 46,816 |
Unrealized gain (loss) on investments | 21 | 43 | ||
Foreign currency translation adjustment, net of tax | (612) | 2,409 | (700) | 1,566 |
Other comprehensive income (loss) | (591) | 2,409 | (657) | 1,566 |
Comprehensive income (loss) | 25,614 | 29,264 | 51,167 | 48,382 |
Less: Comprehensive income attributable to noncontrolling interests | 18,944 | 21,256 | 37,552 | 35,345 |
Comprehensive income (loss) attributable to Moelis & Company | $ 6,670 | $ 8,008 | $ 13,615 | $ 13,037 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows (Unaudited) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2015 | |
Cash flows from operating activities | ||
Net income (loss) | $ 51,824 | $ 46,816 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Bad debt expense | 450 | 298 |
Depreciation and amortization | 1,542 | 1,308 |
(Income) loss from equity method investments | (2,335) | (3,060) |
Equity-based compensation | 38,706 | 20,518 |
Deferred tax provision | (774) | 1,092 |
Other | 80 | (3) |
Changes in assets and liabilities: | ||
Accounts receivable | 1,444 | 726 |
Other receivables | (92) | (5,204) |
Prepaid expenses and other assets | (116) | (1,797) |
Deferred compensation | (1,788) | (1,121) |
Compensation payable | (75,900) | (89,844) |
Accounts payable and accrued expenses | (4,014) | (2,285) |
Deferred revenue | 2,353 | 2,778 |
Dividends received | 804 | 985 |
Other liabilities | 2,252 | 413 |
Net cash provided by (used in) operating activities | 14,436 | (28,380) |
Cash flows from investing activities | ||
Purchase of investments | (70,928) | (26,994) |
Proceeds from sales of investments | 46,000 | 39,999 |
Notes issued to employees | (352) | |
Purchase of equipment and leasehold improvements | (2,286) | (2,102) |
Return of capital from equity method investments | 9 | 109 |
Change in restricted cash | 21 | (68) |
Net cash provided by (used in) investing activities | (27,536) | 10,944 |
Cash flows from financing activities | ||
Dividends and distributions | (117,910) | (47,754) |
Purchase of treasury stock | (2,609) | (5,953) |
Class A partnership units and other equity purchased | (90) | |
Excess tax benefits from equity-based compensation | 90 | |
Net cash provided by (used in) financing activities | (120,429) | (53,797) |
Effect of exchange rate fluctuations on cash and cash equivalents | (1,366) | 924 |
Net increase (decrease) in cash and cash equivalents | (134,895) | (70,309) |
Cash and cash equivalents, beginning of period | 248,022 | 197,944 |
Cash and cash equivalents, end of period | 113,127 | 127,635 |
Cash paid during the period for: | ||
Income taxes | 14,719 | 11,904 |
Other non-cash activity | ||
Class A Partnership Units or other equity converted into Class A Common Stock | 783 | 3,644 |
Dividend equivalents issued | $ 7,774 | $ 1,339 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Equity (Unaudited) - USD ($) $ in Thousands | Class A common stock | Class B common stock | Treasury Stock | Additional Paid-In Capital | Retained Earnings (Accumulated Deficit) | Accumulated Other Comprehensive Income (Loss) | Noncontrolling Interests | Total |
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) | 12,467 | 34,349 | 46,816 | |||||
Equity-based compensation | $ 1 | 18,605 | 1,912 | 20,518 | ||||
Equity-based compensation (in shares) | 81,608 | (5,300) | ||||||
Other comprehensive income (loss) | 570 | 996 | 1,566 | |||||
Dividends and distributions | 1,339 | (9,298) | (39,795) | (47,754) | ||||
Treasury Stock purchases | $ (5,953) | $ (5,953) | ||||||
Treasury Stock purchases (in shares) | (192,660) | (192,660) | ||||||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock | $ 5 | $ (2) | 4,203 | (652) | $ 3,554 | |||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock (in shares) | 501,259 | (213,569) | ||||||
Net excess tax benefit from Equity-based compensation | 47 | 47 | ||||||
Balance at end of period at Jun. 30, 2015 | $ 204 | $ 314 | $ (5,953) | 161,090 | (20,949) | 655 | 57,818 | 193,179 |
Balance at end of the period (in shares) at Jun. 30, 2015 | 20,353,760 | 31,402,673 | (192,660) | |||||
Balance at beginning of period at Dec. 31, 2015 | $ 205 | $ 312 | $ (7,616) | 190,703 | (15,338) | 108 | 89,044 | 257,418 |
Balance at beginning of the period (in shares) at Dec. 31, 2015 | 20,536,740 | 31,229,236 | (263,622) | |||||
Changes in Equity | ||||||||
Net income (loss) | 13,863 | 37,961 | 51,824 | |||||
Equity-based compensation | $ 3 | 37,070 | 1,633 | 38,706 | ||||
Equity-based compensation (in shares) | 250,042 | (1,774) | ||||||
Other comprehensive income (loss) | (248) | (409) | (657) | |||||
Dividends and distributions | 7,774 | (36,483) | (89,201) | (117,910) | ||||
Treasury Stock purchases | $ (2,609) | $ (2,609) | ||||||
Treasury Stock purchases (in shares) | (97,601) | (97,601) | ||||||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock | $ 1 | $ (1) | 900 | (117) | $ 783 | |||
Class A Partnership Units and other equity purchased or converted into Class A Common Stock (in shares) | 103,538 | (88,911) | ||||||
Net excess tax benefit from Equity-based compensation | (47) | (47) | ||||||
Other | 132 | 132 | ||||||
Balance at end of period at Jun. 30, 2016 | $ 209 | $ 311 | $ (10,225) | $ 236,532 | $ (37,958) | $ (140) | $ 38,911 | $ 227,640 |
Balance at end of the period (in shares) at Jun. 30, 2016 | 20,890,320 | 31,138,551 | (361,223) |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Class A common stock | ||||
Dividends declared per share of Class A common stock | $ 0.30 | $ 0.20 | $ 1.4 | $ 0.4 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 6 Months Ended |
Jun. 30, 2016 | |
ORGANIZATION AND BASIS OF PRESENTATION | |
ORGANIZATION AND BASIS OF PRESENTATION | 1. ORGANIZATION AND BASIS OF PRESENTATION Moelis & Company and its consolidated subsidiaries (the "Company," "we," "our," or "us") is a leading global investment bank, incorporated in Delaware. Prior to the Company's IPO in April 2014, the business operated as a Delaware limited partnership that commenced operations during 2007. Following Moelis & Company's IPO, the operations are owned by Moelis & Company Group LP ("Group LP"), a U.S. Delaware limited partnership, and Group LP is controlled by Moelis & Company. Moelis & Company's shareholders are entitled to receive a portion of Group LP's economics through their direct ownership interests in shares of Class A common stock of Moelis & Company. The noncontrolling interest owners of Group LP (not Moelis & Company) receive economics of the operations primarily through their ownership interests in Group LP partnership units. 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 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 Hong Kong Moelis & Company Asia Limited Beijing Representative Office, as well as having a wholly-owned Chinese subsidiary, 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 | 6 Months Ended |
Jun. 30, 2016 | |
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 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 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 financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated 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, 2015. Consolidation —The Company's policy is to consolidate (i) entities, other than limited partnerships, 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 has ownership of the majority of voting interests. 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 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 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 June 30, 2016, the Company had cash equivalents of $73,348 (December 31, 2015: $178,872) invested primarily in government securities money market funds and U.S. Treasury Bills. Additionally, as of June 30, 2016, the Company had cash of $39,779 (December 31, 2015: $69,150) maintained in U.S. and non-U.S. bank accounts, of which most bank account balances had little or no insurance coverage (most balances are held in U.S. and U.K. accounts which exceeded the U.S. Federal Deposit Insurance Corporation and U.K. Financial Services Compensation Scheme Coverage limits). Restricted Cash —As of June 30, 2016 and December 31, 2015, the Company held cash of $737 and $819, respectively, in restricted collateral deposits primarily held by certain non-U.S. subsidiaries. Receivables —The accompanying condensed consolidated 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 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 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 statements of financial condition and any gain or loss is reflected in the condensed consolidated statements of operations. Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement —In conjunction with the IPO, the Company was treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. Additional Group LP Class A partnership units may be exchanged for shares of Class A common stock in the Company. The initial purchase and 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 the 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 and subsequent exchanges described above as a deferred tax asset in the condensed consolidated 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 and subsequent exchanges described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated 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 statements of operations, net of client reimbursements. Reimbursable expenses billed to clients totaled $4,143 and $2,998 for the three months ended June 30, 2016 and 2015, respectively, and $7,394 and $5,871 for the six months ended June 30, 2016 and 2015, 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 based on quoted market prices at the time of grant amortized over the service period required by the award's vesting terms. 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 7 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 are 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 noncontrolling interest holders, which is primarily made up of individual partners and members, and have historically not been reflected in the condensed consolidated 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 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 six months ended June 30, 2016 and 2015, 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 relating to uncertain tax positions, if applicable, as a component of income tax expense. For the three and six months ended June 30, 2016 and 2015, 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 statements of operations. |
RECENT ACCOUNTING PRONOUNCEMENT
RECENT ACCOUNTING PRONOUNCEMENTS | 6 Months Ended |
Jun. 30, 2016 | |
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. In August 2015, the FASB issued ASU No. 2015-14, "Deferral of the Effective Date" ("ASU 2015-14"), which provides amendments that defer the effective date of ASU 2014-09 by one year. In March and April 2016, the FASB issued ASU No. 2016-08 and ASU No. 2016-10, respectively, both entitled, "Revenue from Contracts with Customers". The amendments provide clarification on the implementation guidance for principal versus agent considerations and for identifying performance obligations and licensing in Topic 606, but the updates do not change the core principles of the codification. Similarly, in May 2016 the FASB issued ASU 2016-12 to modify narrow aspects of Topic 606, but not the core principles. The amendments in these updates are effective either retrospectively to each prior reporting period presented, or as a cumulative-effect adjustment as of the date of adoption, during interim and annual periods beginning after December 15, 2017, with early adoption permitted beginning after December 15, 2016. The Company is currently assessing the impact the adoption of ASU 2014-09 will have on its condensed consolidated financial statements. In January 2016, the FASB issued ASU No. 2016-01, "Financial Instruments—Overall: Recognition and Measurement of Financial Assets and Financial Liabilities" ("ASU 2016-01"). ASU 2016-01 enhances the reporting model for financial instruments by addressing certain aspects of the recognition, measurement, presentation and disclosure of financial instruments. Key provisions require equity investments with readily determinable fair values (except those accounted for under the equity method of accounting) to be measured at fair value with changes in fair value recognized in net income. In addition, the exit price notion must be used when measuring the fair value of financial instruments for disclosure purposes. ASU 2016-01 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2017. The Company is currently assessing the impact the adoption of ASU 2016-01 will have on its condensed consolidated financial statements. In February 2016, the FASB issued ASU No. 2016-02, "Leases" ("ASU 2016-02"). ASU 2016-02 increases the transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. The amendments will retain lease classifications, distinguishing finance leases from operating leases, using criteria that is substantially similar for distinguishing capital leases from operating leases in previous guidance. Lessees and lessors are required to recognize and measure leases at the beginning of the earliest period presented using a modified retrospective approach. ASU 2016-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-02 will have on its condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-07, "Investments—Equity Method and Joint Ventures" ("ASU 2016-07"). ASU 2016-07 simplifies the accounting for investments that become qualified for the equity method of accounting as a result of an increase in the level of ownership or degree of influence by eliminating the requirement of adjusting the investment, results of operations and retained earnings retroactively as if the equity method had been in effect during all previous periods. ASU 2016-07 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The adoption of ASU 2016-07 will not have a material impact on the Company's condensed consolidated financial statements. In March 2016, the FASB issued ASU No. 2016-09, "Compensation—Stock Compensation" ("ASU 2016-09"). ASU 2016-09 simplifies the accounting for share-based payment awards to employees. The amendments in the update affect several aspects of Topic 718, including income tax consequences, classification of awards as either equity or liabilities, and classification on the statement of cash flows. ASU 2016-09 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016. Early adoption is permitted. The Company is currently assessing the impact the adoption of ASU 2016-09 will have on its condensed consolidated financial statements. |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | 6 Months Ended |
Jun. 30, 2016 | |
EQUITY METHOD INVESTMENTS. | |
EQUITY METHOD INVESTMENTS | 4. 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 June 30, 2016 and 2015, income of $232 and a loss of $33 was recorded on this investment, respectively, and for the six months ended June 30, 2016 and 2015, income of $605 and $279 was recorded on this investment, respectively. 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 financial statements. For the three months ended June 30, 2016 and 2015, $34 and $228 of income was recorded on this investment, respectively, and for the six months ended June 30, 2016 and 2015, $1,730 and $2,781 of income was recorded on this investment, respectively. During the six months ended June 30, 2016 and 2015, the Company received cash distributions from this entity in the amount of $813 and $1,094, respectively. |
EQUIPMENT AND LEASEHOLD IMPROVE
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 6 Months Ended |
Jun. 30, 2016 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements, net consist of the following: June 30, 2016 December 31, 2015 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 $806 and $688 for the three months ended June 30, 2016 and 2015, respectively, and $1,542 and $1,308 for the six months ended June 30, 2016 and 2015, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 6 Months Ended |
Jun. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
FAIR VALUE MEASUREMENTS | 6. 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. 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. The estimated fair values of government securities money markets and U.S. Treasury Bills as of June 30, 2016 and December 31, 2015 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. See Note 2 for further information on the Company's fair value hierarchy. In fiscal 2015 the Company received convertible notes as compensation for its services and classified this investment as available-for-sale. These convertible notes do not have readily determinable market values and are categorized accordingly as level 3. The fair value of the convertible notes as of December 31, 2015, was recorded at the initial transaction price at which such notes were purchased by third party investors in the capital market transaction on which the Company provided services. The subsequent measurement of the fair value of the convertible notes as of June 30, 2016, was recorded at carrying value plus accrued interest. Unrealized changes in fair value are reflected in other comprehensive income in the condensed consolidated financial statements. The following table summarizes the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall as of June 30, 2016: 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 — Convertible notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 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 — Convertible notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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. The changes to the Company's investment classified as level 3 are as follows for the six months ended June 30, 2016. Convertible notes January 1, 2016 $ Unrealized gains (losses) included in accumulated other comprehensive income ​ ​ ​ ​ ​ June 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains (losses) related to investment still held as of June 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ At the end of the reporting period, the Company reviews U.S. treasury bills held to determine whether the securities are of the most recent issuance of that security with the same maturity (referred to as "on-the-run", which is the most liquid version of the maturity band). If a U.S. treasury bill held at the end of the reporting period was from the most recent issuance it is classified as level 1, otherwise it is referred to as "off-the-run" and is classified as level 2. During the six months ended June 30, 2016, there were transfers of $19,993 from level 1 to level 2 related to U.S. Treasury bills that were initially acquired as on-the-run and classified as level 1, but subsequently transferred to level 2 as a result of becoming off-the-run. There were no transfers between level 1, level 2 or level 3 during the six months ended June 30, 2015. |
NET INCOME (LOSS) PER SHARE ATT
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | 6 Months Ended |
Jun. 30, 2016 | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | 7. 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 six months ended June 30, 2016 and 2015 are presented below. Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands, except per share amounts) 2016 2015 2016 2015 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 $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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 57,386,765 and 55,248,459 for the three months ended June 30, 2016 and 2015, respectively, and 56,911,313 and 55,321,222 for the six months ended June 30, 2016 and 2015, 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 six months ended June 30, 2016 and 2015, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive. (b) During the three and six months ended June 30, 2016 and 2015, 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 June 30, 2016 and 2015, the additional weighted average amount of RSUs that would have been included in this calculation if the effect were dilutive would have been 1,793 and 1,701,845 units, respectively, and 899 and 1,012,501 units for the six months ended June 30, 2016 and 2015, respectively. Additionally, during the three months ended June 30, 2016 and 2015, the additional weighted average amount of options that would have been included in this calculation if the effect were dilutive would have been 14,505 and 10,000, respectively, and 1,053,593 and 0 weighted average options for the six months ended June 30, 2016 and 2015, respectively. |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 6 Months Ended |
Jun. 30, 2016 | |
EQUITY-BASED COMPENSATION | |
EQUITY-BASED COMPENSATION | 8. EQUITY-BASED COMPENSATION Partnership Units Prior to the Company's restructuring and IPO, the business operated as a partnership and its ownership structure was comprised of common partners (principally outside investors) holding units and employees holding units. The common partners contributed capital to the partnership and were 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 unit holders. 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 June 30, 2016, partners held 33,698,658 Group LP partnership units, 582,948 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 $736 and $846 for the three months ended June 30, 2016 and 2015, respectively, and expenses of $1,633 and $1,912 for the six months ended June 30, 2016 and 2015, respectively. As of June 30, 2016, there was $4,621 of unrecognized compensation expense related to unvested Class A partnership units which is expected to be recognized over a weighted-average period of 1.9 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 June 30, 2016, 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 issues RSUs which generally vest over a service life of four to five years. For the three months ended June 30, 2016 and 2015, the Company recognized expenses of $19,942 and $10,148, respectively, and expenses of $34,795 and $16,572 for the six months ended June 30, 2016 and 2015, respectively, in relation to the vesting of RSUs. The following table summarizes activity related to restricted stock and RSUs for the six months ended June 30, 2016 and 2015. Restricted Stock & RSUs 2016 2015 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 June 30, $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ As of June 30, 2016, the total compensation expense related to unvested restricted stock and RSUs not yet recognized was $121,811. 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 June 30, 2016 is 2.2 years. 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 and March 4, 2016 the Company paid special dividends of $1.00 and $0.80 per share, respectively. 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 $1.80 from $25.00 per share to $23.20 per share. The following table summarizes activity related to stock options for the six months ended June 30, 2016 and 2015. Stock Options Outstanding 2016 2015 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 June 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ For the three months ended June 30, 2016 and 2015, the Company recognized expenses of $1,335 and $975, respectively, and expenses of $2,278 and $2,034 for the six months ended June 30, 2016 and 2015, respectively, in relation to these stock options. As of June 30, 2016, the total compensation expense related to unvested stock options not yet recognized was $8,332. 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 2.3 years. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 6 Months Ended |
Jun. 30, 2016 | |
STOCKHOLDERS EQUITY | |
STOCKHOLDERS EQUITY | 9. 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 June 30, 2016, 20,890,320 shares of Class A common stock were issued and 20,529,097 shares were outstanding. As of December 31, 2015, 20,536,740 shares of Class A common stock were issued and 20,273,118 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. Moelis & Company Partner Holdings LP ("Partner Holdings") holds all shares of Class B common stock, enabling it initially to exercise majority voting control over the Company. 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 June 30, 2016 and December 31, 2015, 31,138,551 and 31,229,236 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 six months ended June 30, 2016 and 2015, the Company repurchased 97,601 and 192,660 shares, respectively, pursuant to the Company's share repurchase program and 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 $2,609 and $5,953, respectively, in the treasury stock balance on the Company's condensed consolidated statement of financial condition as of June 30, 2016 and December 31, 2015. Noncontrolling Interests 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 June 30, 2016 and December 31, 2015, partners held 33,698,658 and 33,803,921 Group LP partnership units, respectively, representing a 62% and 63% noncontrolling interest in Moelis & Company, respectively. 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 20,529,097 shares of Class A common stock outstanding at June 30, 2016 represents the controlling interest. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 6 Months Ended |
Jun. 30, 2016 | |
RELATED-PARTY TRANSACTIONS | |
RELATED-PARTY TRANSACTIONS | 10. RELATED-PARTY TRANSACTIONS Aircraft Lease —On August 30, 2014, a related party, Moelis & Company Manager LLC ("Manager"), acquired an 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 each of the three months ended June 30, 2016 and 2015, the Company incurred $312 in aircraft lease costs to be paid to Manager, respectively, and $624 in aircraft costs for each of the six months ended June 30, 2016 and 2015, 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 June 30, 2016, there were $448 of unsecured promissory notes from employees held by the Company (December 31, 2015: $119). Any outstanding balances are reflected in other receivables on the condensed consolidated statements of financial condition. The notes held as of June 30, 2016 and December 31, 2015 bear a fixed interest rate of 4.00%. During each of the six months ended June 30, 2016 and 2015, the Company received $0 of principal repayments and recognized interest income of $8 and $2, respectively, on such notes, which is included in other income and expenses on the condensed consolidated statements of operations. 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. This fee totaled $349 and $399 for the three months ended June 30, 2016 and 2015, respectively, and $711 and $845 for the six months ended June 30, 2016 and 2015, 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 June 30, 2016 and December 31, 2015, the Company had balances due from Moelis Asset Management LP of $0 and $3, respectively. Joint Venture —As of June 30, 2016 and December 31, 2015, the Company had a net balance due from the Australian JV of $54 and a net balance due to the Australian JV of $167, respectively, which are reflected in other receivables on the condensed consolidated 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 financial statements. For the three months ended June 30, 2016 and 2015, income of $34 and $228 was recorded on this investment, respectively, and income of $1,730 and $2,781 was recorded on this investment for the six months ended June 30, 2016 and 2015, respectively. During the six months ended June 30, 2016 and 2015, the Company received cash distributions from this entity in the amounts of $813 and $1,094, respectively. Revenues —From time to time, Moelis Asset Management LP and its affiliates hire the Company to provide financial advisory services in the ordinary course of business. The Company earned revenues associated with such transactions of $6,616 and $3,594 for the three months ended June 30, 2016 and 2015, respectively, and revenues of $7,016 and $4,336 for the six months ended June 30, 2016 and 2015, respectively. |
REGULATORY REQUIREMENTS
REGULATORY REQUIREMENTS | 6 Months Ended |
Jun. 30, 2016 | |
REGULATORY REQUIREMENTS | |
REGULATORY REQUIREMENTS | 11. 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 June 30, 2016, Moelis U.S. had net capital of $55,156, which was $54,906 in excess of its required net capital. At December 31, 2015, Moelis U.S. had net capital of $41,373 which was $41,123 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 June 30, 2016, the aggregate regulatory net capital of Moelis UK was $16,026 which exceeded the minimum requirement by $15,971. At December 31, 2015, the aggregate regulatory net capital of Moelis UK was $17,586, which exceeded the minimum requirement by $17,531. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 6 Months Ended |
Jun. 30, 2016 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. 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 June 30, 2016, 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 June 30, 2016 and December 31, 2015, the Company had no borrowings under the credit facility. As of June 30, 2016, the Company's available credit under this facility was $33,160 as a result of the issuance of an aggregate amount of $6,840 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 2026. The Company incurred expense relating to its operating leases of $5,707 and $3,143 for the three months ended June 30, 2016 and 2015, respectively, and expenses of $9,459 and $6,385 for the six months ended June 30, 2016 and 2015, respectively. During the second quarter, the Company decided to sublet a portion of its growth space in the U.K. which required a sublease loss reserve to be recognized for the estimated net economics of such sublet. The expense related to operating leases for the three months ended June 30, 2016, includes $2,359 related to the aforementioned sublease loss reserve. The Company subleases office space under agreements which expire in October 2016. Sublease income from such agreements were $279 and $0 for the three months ended June 30, 2016 and 2015, respectively, and $524 and $0 for the six months ended June 30, 2016 and 2015, respectively, which were included as reductions of occupancy expense on the condensed consolidated statements of operations. The future minimum rental payments required under the operating leases in place at June 30, 2016, are as follows: Fiscal year ended Amount Remainder of 2016 (net of $351 committed sublease income) $ 2017 2018 2019 2020 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 —In the ordinary course of business, from time to time the Company and its affiliates are involved in judicial or regulatory proceedings, arbitration or mediation concerning matters arising in connection with the conduct of its businesses, including contractual and employment matters. In addition, government agencies and self-regulatory organizations conduct periodic examinations and initiate administrative proceedings regarding the Company's business, including, among other matters, compliance, accounting and operational matters, that can result in censure, fine, the issuance of cease-and-desist orders or the suspension or expulsion of a broker-dealer, investment advisor, or its directors, officers or employees. In view of the inherent difficulty of determining whether any loss in connection with such matters is probable and whether the amount of such loss can be reasonably estimated, particularly in cases where claimants seek substantial or indeterminate damages or where investigations and proceedings are in the early stages, the Company cannot estimate the amount of such loss or range of loss, if any, related to such matters, how or if such matters will be resolved, when they will ultimately be resolved, or what the eventual settlement, fine, penalty or other relief, if any, might be. Subject to the foregoing, the Company believes, based on current knowledge and after consultation with counsel, that it is not currently party to any material pending proceedings, individually or in the aggregate, the resolution of which would have a material effect on the Company. The Company was previously named as one of several defendants in litigation arising from activities in 2011. The parties reached an agreement in principle to settle the litigation in March 2016, resulting in the Company incurring $2.8 million of expense recognized in the quarter ended December 31, 2015. While there is an agreement in principle to settle the litigation, the Company cannot make assurances whether the court will approve the settlement. In such event, the ultimate resolution could result in higher costs for the Company. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 6 Months Ended |
Jun. 30, 2016 | |
EMPLOYEE BENEFIT PLANS | |
EMPLOYEE BENEFIT PLANS | 13. 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 June 30, 2016 and 2015, in the amounts of $468 and $360, respectively, and $974 and $656 for the six months ended June 30, 2016 and 2015, respectively. |
INCOME TAXES
INCOME TAXES | 6 Months Ended |
Jun. 30, 2016 | |
INCOME TAXES | |
INCOME TAXES | 14. 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 are 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 noncontrolling interest holders, which is primarily made up of individual partners and members and have historically not been reflected in the condensed consolidated 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 $4,721 and 15% and $6,079 and 18% for the three months ended June 30, 2016 and 2015, respectively. For the six months ended June 30, 2016 and 2015, the Company's provision for income taxes and effective tax rate were $10,165 and 16% and $10,379 and 18%, respectively. The income tax provision for the aforementioned periods primarily reflects the Company's allocable share of earnings from Group LP at prevailing U.S. federal, state and local corporate income tax rates and the effect of the allocable earnings to noncontrolling interests being subject to UBT and certain other foreign, state and local taxes. The Company recorded an increase in the net deferred tax asset of $1,993 for the six months ended June 30, 2016, which was primarily attributable to an increase in deferred compensation and 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 second quarter. Approximately $518 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 $440) 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 | 6 Months Ended |
Jun. 30, 2016 | |
BUSINESS INFORMATION | |
BUSINESS INFORMATION | 15. 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 or six months ended June 30, 2016 or 2015. 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 June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenues: United States $ $ $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2016 December 31, 2015 Assets: United States $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 6 Months Ended |
Jun. 30, 2016 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS The Board of Directors of Moelis & Company declared a quarterly dividend of $0.32 per share to be paid on September 6, 2016 to Class A common stockholders of record on August 22, 2016. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 6 Months Ended |
Jun. 30, 2016 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Basis of Accounting | Basis of Accounting —The Company prepared the accompanying condensed consolidated 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 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 financial statements contain all adjustments, consisting of normal recurring adjustments, necessary to fairly present the accompanying unaudited condensed consolidated financial statements. These unaudited condensed consolidated 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, 2015. |
Consolidation | Consolidation —The Company's policy is to consolidate (i) entities, other than limited partnerships, 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 has ownership of the majority of voting interests. 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 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 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 June 30, 2016, the Company had cash equivalents of $73,348 (December 31, 2015: $178,872) invested primarily in government securities money market funds and U.S. Treasury Bills. Additionally, as of June 30, 2016, the Company had cash of $39,779 (December 31, 2015: $69,150) maintained in U.S. and non-U.S. bank accounts, of which most bank account balances had little or no insurance coverage (most balances are held in U.S. and U.K. accounts which exceeded the U.S. Federal Deposit Insurance Corporation and U.K. Financial Services Compensation Scheme Coverage limits). |
Restricted Cash | Restricted Cash —As of June 30, 2016 and December 31, 2015, the Company held cash of $737 and $819, respectively, in restricted collateral deposits primarily held by certain non-U.S. subsidiaries. |
Receivables | Receivables —The accompanying condensed consolidated 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 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 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 statements of financial condition and any gain or loss is reflected in the condensed consolidated 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 was treated for U.S. federal income tax purposes as having directly purchased Class A partnership units in Group LP from the existing unitholders. Additional Group LP Class A partnership units may be exchanged for shares of Class A common stock in the Company. The initial purchase and 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 the 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 and subsequent exchanges described above as a deferred tax asset in the condensed consolidated 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 and subsequent exchanges described above is recorded as amount due pursuant to tax receivable agreement in the condensed consolidated 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 statements of operations, net of client reimbursements. Reimbursable expenses billed to clients totaled $4,143 and $2,998 for the three months ended June 30, 2016 and 2015, respectively, and $7,394 and $5,871 for the six months ended June 30, 2016 and 2015, 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 based on quoted market prices at the time of grant amortized over the service period required by the award's vesting terms. 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 7 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 are 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 noncontrolling interest holders, which is primarily made up of individual partners and members, and have historically not been reflected in the condensed consolidated 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 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 six months ended June 30, 2016 and 2015, 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 relating to uncertain tax positions, if applicable, as a component of income tax expense. For the three and six months ended June 30, 2016 and 2015, 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 statements of operations. |
EQUIPMENT AND LEASEHOLD IMPRO26
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
Schedule of equipment and leasehold improvements, net | June 30, 2016 December 31, 2015 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) | 6 Months Ended |
Jun. 30, 2016 | |
FAIR VALUE MEASUREMENTS | |
Summary of the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall | The following table summarizes the levels of the fair value hierarchy into which the Company's financial assets and liabilities fall as of June 30, 2016: 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 — Convertible notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ 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, 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 — Convertible notes — — ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total financial assets $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of changes to the Company's investment classified as Level 3 | Convertible notes January 1, 2016 $ Unrealized gains (losses) included in accumulated other comprehensive income ​ ​ ​ ​ ​ June 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Unrealized gains (losses) related to investment still held as of June 30, 2016 $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
NET INCOME (LOSS) PER SHARE A28
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | |
Schedule of calculations of basic and diluted net income (loss) per share | Three Months Ended June 30, Six Months Ended June 30, (dollars in thousands, except per share amounts) 2016 2015 2016 2015 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 57,386,765 and 55,248,459 for the three months ended June 30, 2016 and 2015, respectively, and 56,911,313 and 55,321,222 for the six months ended June 30, 2016 and 2015, 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 six months ended June 30, 2016 and 2015, such exchange is not reflected in diluted net income (loss) per share as the assumed exchange is not dilutive. (b) During the three and six months ended June 30, 2016 and 2015, 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 June 30, 2016 and 2015, the additional weighted average amount of RSUs that would have been included in this calculation if the effect were dilutive would have been 1,793 and 1,701,845 units, respectively, and 899 and 1,012,501 units for the six months ended June 30, 2016 and 2015, respectively. Additionally, during the three months ended June 30, 2016 and 2015, the additional weighted average amount of options that would have been included in this calculation if the effect were dilutive would have been 14,505 and 10,000, respectively, and 1,053,593 and 0 weighted average options for the six months ended June 30, 2016 and 2015, respectively. |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
EQUITY-BASED COMPENSATION | |
Summary of activity related to restricted stock and RSUs | Restricted Stock & RSUs 2016 2015 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 June 30, $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
Schedule of assumptions used to estimate the fair value of stock option awards 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 2016 2015 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 June 30, $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
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 June 30, 2016, are as follows: Fiscal year ended Amount Remainder of 2016 (net of $351 committed sublease income) $ 2017 2018 2019 2020 Thereafter ​ ​ ​ ​ ​ Total $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
BUSINESS INFORMATION (Tables)
BUSINESS INFORMATION (Tables) | 6 Months Ended |
Jun. 30, 2016 | |
BUSINESS INFORMATION | |
Schedule of geographical distribution of revenues and assets | Three Months Ended June 30, Six Months Ended June 30, 2016 2015 2016 2015 Revenues: United States $ $ $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ June 30, 2016 December 31, 2015 Assets: United States $ $ Europe Rest of World ​ ​ ​ ​ ​ ​ ​ ​ Total $ $ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ ​ |
ORGANIZATION AND BASIS OF PRE32
ORGANIZATION AND BASIS OF PRESENTATION (Details) | Jun. 30, 2016 |
Moelis Australia Holdings | |
Equity Method Investments | |
Ownership percentage (as a percent) | 50.00% |
SUMMARY OF SIGNIFICANT ACCOUN33
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash, Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Cash and Cash Equivalents | ||
Cash equivalents | $ 73,348 | $ 178,872 |
Cash | 39,779 | 69,150 |
Restricted Cash | ||
Cash in restricted collateral deposits | $ 737 | $ 819 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Equipment, Deferred Tax Asset, Revenue and Expense Recognition, Equity-Based Compensation and Income Taxes (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Deferred Tax Asset and Amount Due Pursuant to Tax Receivable Agreement | ||||
Percentage of tax benefits payable to partners under tax receivable agreement | 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 | $ 4,143 | $ 2,998 | $ 7,394 | $ 5,871 |
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 benefit | 0 | 0 | $ 0 | 0 |
Unrecognized tax benefit, 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 |
EQUITY METHOD INVESTMENTS (Deta
EQUITY METHOD INVESTMENTS (Details) - USD ($) $ in Thousands | 1 Months Ended | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Equity Method Investments | |||||
Income (loss) from equity method investments | $ 266 | $ 195 | $ 2,335 | $ 3,060 | |
Moelis Australia Holdings | |||||
Equity Method Investments | |||||
Ownership percentage (as a percent) | 50.00% | 50.00% | |||
Income (loss) from equity method investments | $ 232 | (33) | $ 605 | 279 | |
Entity controlled by Moelis Asset Management LP | |||||
Equity Method Investments | |||||
Income (loss) from equity method investments | $ 34 | $ 228 | 1,730 | 2,781 | |
Cash contribution made | $ 265 | ||||
Cash distributions | $ 813 | $ 1,094 |
EQUIPMENT AND LEASEHOLD IMPRO36
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Equipment and leasehold improvements | |||||
Total | $ 23,293 | $ 23,293 | $ 21,182 | ||
Less accumulated depreciation and amortization | (13,859) | (13,859) | (12,484) | ||
Equipment and leasehold improvements, net | 9,434 | 9,434 | 8,698 | ||
Depreciation and amortization expenses | 806 | $ 688 | 1,542 | $ 1,308 | |
Office equipment | |||||
Equipment and leasehold improvements | |||||
Total | 12,011 | 12,011 | 11,193 | ||
Furniture and fixtures | |||||
Equipment and leasehold improvements | |||||
Total | 3,250 | 3,250 | 2,916 | ||
Leasehold improvements | |||||
Equipment and leasehold improvements | |||||
Total | $ 8,032 | $ 8,032 | $ 7,073 |
FAIR VALUE MEASUREMENTS - Fair
FAIR VALUE MEASUREMENTS - Fair Value of Financial Assets and Liabilities (Details) - USD ($) $ in Thousands | 6 Months Ended | |
Jun. 30, 2016 | Dec. 31, 2015 | |
Fair value measurements | ||
Investments in securities | $ 63,647 | $ 38,624 |
Total financial assets | 136,995 | 217,496 |
Convertible notes | ||
Fair value measurements | ||
Investments in securities | $ 678 | 635 |
U.S. treasury bills | ||
Fair value measurements | ||
Maximum investment term | 12 months | |
Cash and cash equivalents | $ 19,997 | 100,996 |
Investments in securities | 62,969 | 37,989 |
Government securities money market | ||
Fair value measurements | ||
Cash and cash equivalents | 53,351 | 77,876 |
Level 1 | ||
Fair value measurements | ||
Total financial assets | 17,981 | 91,988 |
Level 1 | U.S. treasury bills | ||
Fair value measurements | ||
Cash and cash equivalents | 9,997 | 71,998 |
Investments in securities | 7,984 | 19,990 |
Level 2 | ||
Fair value measurements | ||
Total financial assets | 118,336 | 124,873 |
Level 2 | U.S. treasury bills | ||
Fair value measurements | ||
Cash and cash equivalents | 10,000 | 28,998 |
Investments in securities | 54,985 | 17,999 |
Level 2 | Government securities money market | ||
Fair value measurements | ||
Cash and cash equivalents | 53,351 | 77,876 |
Level 3 | ||
Fair value measurements | ||
Total financial assets | 678 | 635 |
Level 3 | Convertible notes | ||
Fair value measurements | ||
Investments in securities | $ 678 | $ 635 |
FAIR VALUE MEASUREMENTS - Chang
FAIR VALUE MEASUREMENTS - Changes to Level 3 Investment and Transfers (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |
Jun. 30, 2016 | Jun. 30, 2016 | Jun. 30, 2015 | |
Changes to the Company's investment classified as Level 3 | |||
Unrealized gains (losses) related to investment still held | $ 21 | $ 43 | |
Transfers from level 1 to level 2 | 19,993 | ||
Transfers between level 1, level 2 or level 3 | $ 0 | ||
Convertible notes | |||
Changes to the Company's investment classified as Level 3 | |||
Balance at beginning of the period | 635 | ||
Unrealized gains (losses) included in accumulated other comprehensive income | 43 | ||
Balance at end of the period | $ 678 | 678 | |
Unrealized gains (losses) related to investment still held | $ 43 |
NET INCOME (LOSS) PER SHARE A39
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Apr. 30, 2014 | |
Numerator: | |||||
Net income (loss) attributable to holders of shares of Class A common stock - basic | $ 6,893 | $ 7,131 | $ 13,863 | $ 12,467 | |
Class A common stock | |||||
Numerator: | |||||
Net income (loss) attributable to holders of shares of Class A common stock - basic | 6,893 | 7,131 | 13,863 | 12,467 | |
Net income (loss) attributable to holders of shares of Class A common stock - diluted | $ 6,893 | $ 7,131 | $ 13,863 | $ 12,467 | |
Denominator: | |||||
Weighted average shares of Class A common stock outstanding - basic | 20,745,043 | 19,978,108 | 20,654,657 | 19,961,286 | |
Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method | 2,873,050 | 1,110,112 | 2,397,598 | 1,182,875 | |
Weighted average shares of Class A common stock outstanding-diluted | 23,618,093 | 21,088,220 | 23,052,255 | 21,144,161 | |
Net income (loss) per share attributable to holders of shares of Class A common stock | |||||
Basic (in dollars per share) | $ 0.33 | $ 0.36 | $ 0.67 | $ 0.62 | |
Diluted (in dollars per share) | $ 0.29 | $ 0.34 | $ 0.60 | $ 0.59 | |
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 | 57,386,765 | 55,248,459 | 56,911,313 | 55,321,222 | |
Class A common stock | Restricted stock and 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 | 1,793 | 1,701,845 | 899 | 1,012,501 | |
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 | 14,505 | 10,000 | 1,053,593 | 0 |
EQUITY-BASED COMPENSATION - Par
EQUITY-BASED COMPENSATION - Partnership Units and 2014 Omnibus Incentive Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Mar. 31, 2015 | Apr. 30, 2014 | |
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 | |||||
Stock Repurchase Program, Remaining Authorized Repurchase Amount | $ 20,000 | $ 20,000 | ||||
Partnership units | ||||||
Equity-based compensation | ||||||
Units held by partners | 33,698,658 | 33,698,658 | ||||
Unvested units held by partners | 582,948 | 582,948 | ||||
Compensation expenses | $ 736 | $ 846 | $ 1,633 | $ 1,912 | ||
Unrecognized compensation expenses | $ 4,621 | $ 4,621 | ||||
Weighted average period to recognize unrecognized compensation expense | 1 year 10 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 - Res
EQUITY-BASED COMPENSATION - Restricted Stock and Stock Options (Details) - USD ($) $ / shares in Units, $ in Thousands | Mar. 04, 2016 | Nov. 24, 2014 | Apr. 30, 2014 | Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2014 |
Restricted stock and RSUs | ||||||||
Number of shares | ||||||||
Unvested Balance at the beginning of the period (in shares) | 5,123,481 | 2,473,624 | ||||||
Granted (in shares) | 3,561,401 | 2,369,571 | ||||||
Forfeited (in shares) | (33,559) | (21,149) | ||||||
Vested (in shares) | (472,954) | (82,236) | ||||||
Unvested Balance at the end of the period (in shares) | 8,178,369 | 4,739,810 | 8,178,369 | 4,739,810 | 2,473,624 | |||
Weighted Average Grant Date Fair Value | ||||||||
Unvested Balance at the beginning of the period (in dollars per share) | $ 28.67 | $ 25.86 | ||||||
Granted (in dollars per share) | 24.07 | 32.13 | ||||||
Forfeited (in dollars per share) | 26.95 | 30.32 | ||||||
Vested (in dollars per share) | 28.07 | 27.14 | ||||||
Unvested Balance at the end of the period (in dollars per share) | $ 26.86 | $ 28.83 | $ 26.86 | $ 28.83 | $ 25.86 | |||
Total compensation expense not yet recognized | $ 121,811 | $ 121,811 | ||||||
Forfeiture rate (as a percent) | 3.00% | |||||||
Weighted average period to recognize compensation expense | 2 years 2 months 12 days | |||||||
RSUs | ||||||||
Equity-based compensation | ||||||||
Compensation expenses | 19,942 | $ 10,148 | $ 34,795 | $ 16,572 | ||||
RSUs | Minimum | ||||||||
Equity-based compensation | ||||||||
Vesting period | 4 years | |||||||
RSUs | Maximum | ||||||||
Equity-based compensation | ||||||||
Vesting period | 5 years | |||||||
Stock options | ||||||||
Equity-based compensation | ||||||||
Vesting period | 5 years | |||||||
Compensation expenses | 1,335 | $ 975 | $ 2,278 | $ 2,034 | ||||
Weighted Average Grant Date Fair Value | ||||||||
Total compensation expense not yet recognized | $ 8,332 | $ 8,332 | ||||||
Forfeiture rate (as a percent) | 3.00% | |||||||
Weighted average period to recognize compensation expense | 2 years 3 months 18 days | |||||||
Assumptions used to estimate 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 | |||||||
Special dividends paid | $ 0.80 | $ 1 | ||||||
Reduction to exercise price of options outstanding due to special dividend paid (in dollars per share) | 1.80 | |||||||
Number Outstanding | ||||||||
Outstanding at the beginning of the period (in shares | 3,081,203 | 3,296,906 | ||||||
Grants (in shares) | 3,501,881 | |||||||
Forfeiture or expirations (in shares) | (124,000) | (146,977) | ||||||
Outstanding at the end of the period (in shares | 2,957,203 | 3,149,929 | 2,957,203 | 3,149,929 | 3,296,906 | |||
Weighted-Average Exercise Price Per Share | ||||||||
Outstanding at the beginning of the period (in dollars per share) | $ 23.20 | $ 23.20 | ||||||
Forfeiture or expirations (in dollars per share) | 23.20 | 23.20 | ||||||
Outstanding at the end of the period (in dollars per share) | $ 25 | $ 23.20 | $ 23.20 | $ 23.20 | $ 23.20 | $ 23.20 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) $ in Thousands | 1 Months Ended | 6 Months Ended | |||
Nov. 30, 2014USD ($)shares | Apr. 30, 2014shares | Jun. 30, 2016USD ($)shares | Jun. 30, 2015USD ($)shares | Dec. 31, 2015shares | |
STOCKHOLDERS EQUITY | |||||
Treasury stock shares acquired (in shares) | 97,601 | 192,660 | |||
Treasury stock shares acquired | $ | $ 2,609 | $ 5,953 | |||
Group LP | |||||
STOCKHOLDERS EQUITY | |||||
Number of units held by noncontrolling interest holders | 33,698,658 | 33,803,921 | |||
Noncontrolling interests (as a percent) | 62.00% | 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 | 20,890,320 | 20,536,740 | |||
Common stock, shares outstanding | 20,529,097 | 20,273,118 | |||
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 | |||||
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 | ||||
Class A common stock | Group LP | |||||
STOCKHOLDERS EQUITY | |||||
Common stock, shares outstanding | 20,529,097 | ||||
Class B common stock | |||||
STOCKHOLDERS EQUITY | |||||
Common Stock issued (in shares) | 36,158,698 | ||||
Common stock, shares issued | 31,138,551 | 31,229,236 | |||
Common stock, shares outstanding | 31,138,551 | 31,229,236 | |||
Ratio of subscription price to the initial public offering price of shares of common stock | 0.00055 | ||||
Dividends payable ratio to outstanding shares of publicly traded common stock | 0.00055 | ||||
Class B common stock | Secondary Offering | |||||
STOCKHOLDERS EQUITY | |||||
Shares converted | 2,998,322 | ||||
Shares issued upon conversion | 1,658 | ||||
Conversion ratio | 0.00055 | ||||
Number of shares repurchased and retired | 1,509,131 | ||||
Value of stock repurchased and retired | $ | $ 28 | ||||
Class B common stock | Maximum | |||||
STOCKHOLDERS EQUITY | |||||
Aggregate number of shares of Class B common stock that may be converted into Class A common stock | 20,000 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) $ in Thousands | Aug. 30, 2014item | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Jun. 30, 2016USD ($) | Jun. 30, 2015USD ($) | Dec. 31, 2015USD ($) | Jun. 30, 2014USD ($) |
Related-party transactions | |||||||
Investment into the entity controlled by a related party | $ 18,746 | $ 18,746 | $ 17,459 | ||||
Income (loss) from equity method investments | 266 | $ 195 | 2,335 | $ 3,060 | |||
Manager | Aircraft lease entered into during August 2014 | |||||||
Related-party transactions | |||||||
Expenses | 312 | 312 | 624 | 624 | |||
Number of other lessees | item | 2 | ||||||
Employees | Unsecured promissory notes | |||||||
Related-party transactions | |||||||
Unsecured promissory notes from employees | 448 | $ 448 | $ 119 | ||||
Interest rates (as a percent) | 4.00% | 4.00% | |||||
Principal repayments | $ 0 | 0 | |||||
Interest income recognized | 8 | 2 | |||||
Moelis Australia Holdings | |||||||
Related-party transactions | |||||||
Due to related party | 54 | 54 | $ 167 | ||||
Moelis Asset Management LP | |||||||
Related-party transactions | |||||||
Fee for services | 349 | 399 | 711 | 845 | |||
Due from related party | 0 | 0 | $ 3 | ||||
Investment into the entity controlled by a related party | $ 265 | ||||||
Income (loss) from equity method investments | 34 | 228 | 1,730 | 2,781 | |||
Cash distributions | 813 | 1,094 | |||||
Revenue from related parties | $ 6,616 | $ 3,594 | $ 7,016 | $ 4,336 |
REGULATORY REQUIREMENTS (Detail
REGULATORY REQUIREMENTS (Details) - USD ($) $ in Thousands | Jun. 30, 2016 | Dec. 31, 2015 |
Regulatory requirements | ||
Minimum net capital requirement | $ 250 | |
Moelis US | ||
Regulatory requirements | ||
Net capital | 55,156 | $ 41,373 |
Net capital in excess of required net capital | 54,906 | 41,123 |
Moelis UK | ||
Regulatory requirements | ||
Net capital | 16,026 | 17,586 |
Net capital in excess of required net capital | $ 15,971 | $ 17,531 |
COMMITMENTS AND CONTINGENCIES -
COMMITMENTS AND CONTINGENCIES - Bank Line of Credit and Leases (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | Dec. 31, 2015 | |
Leases | |||||
Rent expense incurred relating to operating leases | $ 5,707 | $ 3,143 | $ 9,459 | $ 6,385 | |
Sublease loss reserve | 2,359 | ||||
Sublease income | 279 | $ 0 | 524 | $ 0 | |
Future minimum rental payments | |||||
Remainder of 2016 (net of $351 committed sublease income) | 8,381 | 8,381 | |||
Committed sublease income | 351 | 351 | |||
2,017 | 17,249 | 17,249 | |||
2,018 | 17,161 | 17,161 | |||
2,019 | 17,163 | 17,163 | |||
2,020 | 11,334 | 11,334 | |||
Thereafter | 22,356 | 22,356 | |||
Total | 93,644 | 93,644 | |||
Unsecured revolving credit facility | |||||
Future minimum rental payments | |||||
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 | ||
Available credit under the facility | 33,160 | $ 33,160 | |||
Unsecured revolving credit facility | LIBOR | |||||
Future minimum rental payments | |||||
Reference rate (as a percent) | LIBOR | ||||
Interest rate margin (as a percent) | 1.00% | ||||
Unsecured revolving credit facility | Prime | |||||
Future minimum rental payments | |||||
Reference rate (as a percent) | Prime | ||||
Interest rate margin (as a percent) | (1.50%) | ||||
Standby letters of credit | |||||
Future minimum rental payments | |||||
Letters of credit outstanding | $ 6,840 | $ 6,840 | |||
Fee on the outstanding balances (as a percent) | 1.00% |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES - Joint Venture Put and Call Options and Legal (Details) - USD ($) $ in Millions | 3 Months Ended | 6 Months Ended |
Dec. 31, 2015 | Jun. 30, 2016 | |
Legal | ||
Litigation settlement expense | $ 2.8 | |
Moelis Australia Holdings | ||
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 | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
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 | $ 468 | $ 360 | $ 974 | $ 656 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 6 Months Ended | ||
Jun. 30, 2016 | Jun. 30, 2015 | Jun. 30, 2016 | Jun. 30, 2015 | |
Income taxes | ||||
Provision for income taxes | $ 4,721 | $ 6,079 | $ 10,165 | $ 10,379 |
Effective tax rate (as a percent) | 15.00% | 18.00% | 16.00% | 18.00% |
Net deferred tax asset increase | $ 1,993 | |||
Group LP | ||||
Income taxes | ||||
Deferred tax assets attributable to exchanges by partners | $ 518 | |||
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 | $ 440 | |||
Period of tax receivable agreement | 15 years |
BUSINESS INFORMATION (Details)
BUSINESS INFORMATION (Details) $ in Thousands | 3 Months Ended | 6 Months Ended | |||
Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($)item | Jun. 30, 2016USD ($)item | Jun. 30, 2015USD ($)item | Dec. 31, 2015USD ($) | |
Business information | |||||
Total revenues | $ 131,725 | $ 125,873 | $ 258,089 | $ 225,285 | |
Total assets | $ 432,985 | $ 432,985 | $ 539,461 | ||
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 | $ 106,219 | $ 95,086 | $ 212,952 | $ 164,517 | |
Total assets | 367,431 | 367,431 | 463,984 | ||
Europe | |||||
Business information | |||||
Total revenues | 13,328 | 23,573 | 24,122 | 48,995 | |
Total assets | 26,054 | 26,054 | 45,067 | ||
Rest of World | |||||
Business information | |||||
Total revenues | 12,178 | $ 7,214 | 21,015 | $ 11,773 | |
Total assets | $ 39,500 | $ 39,500 | $ 30,410 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Sep. 06, 2016$ / shares |
Subsequent event | |
Subsequent events | |
Dividends declared per share | $ 0.32 |