Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2018 | Apr. 19, 2018 | |
Entity Registrant Name | Moelis & Co | |
Entity Central Index Key | 1,596,967 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Entity Current Reporting Status | Yes | |
Entity Filer Category | Large Accelerated Filer | |
Document Fiscal Year Focus | 2,018 | |
Document Fiscal Period Focus | Q1 | |
Class A common stock | ||
Entity Common Stock, Shares Outstanding | 40,024,601 | |
Class B common stock | ||
Entity Common Stock, Shares Outstanding | 15,222,935 |
Condensed Consolidated Statemen
Condensed Consolidated Statements of Financial Condition - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Assets | ||
Cash and cash equivalents | $ 130,990 | $ 213,191 |
Restricted cash | 598 | 703 |
Receivables: | ||
Accounts receivable, net of allowance for doubtful accounts of $2,122 and $1,433 as of March 31, 2018 and December 31, 2017, respectively | 45,260 | 56,725 |
Other receivables | 15,856 | 4,868 |
Total receivables | 61,116 | 61,593 |
Deferred compensation | 11,593 | 8,848 |
Investments at fair value (cost basis $28,644 and $96,351 as of March 31, 2018 and December 31, 2017, respectively) | 28,186 | 96,108 |
Equity method investments | 56,999 | 58,848 |
Equipment and leasehold improvements, net | 10,479 | 10,458 |
Deferred tax asset | 313,469 | 234,000 |
Prepaid expenses and other assets | 14,382 | 15,319 |
Total assets | 627,812 | 699,068 |
Liabilities and Equity | ||
Compensation payable | 56,257 | 145,152 |
Accounts payable and accrued expenses | 16,457 | 18,323 |
Amount due pursuant to tax receivable agreement | 243,997 | 177,148 |
Deferred revenue | 2,924 | 4,948 |
Other liabilities | 8,000 | 9,241 |
Total liabilities | 327,635 | 354,812 |
Commitments and Contingencies (See Note 12) | ||
Treasury stock, at cost; 1,121,743 and 707,416 shares as of March 31, 2018 and December 31, 2017, respectively | (43,977) | (23,188) |
Additional paid-in-capital | 566,015 | 487,163 |
Retained earnings (accumulated deficit) | (194,386) | (139,918) |
Accumulated other comprehensive income (loss) | 1,738 | 352 |
Total Moelis & Company equity | 329,953 | 324,950 |
Noncontrolling interests | (29,776) | 19,306 |
Total equity | 300,177 | 344,256 |
Total liabilities and equity | 627,812 | 699,068 |
Class A common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | 411 | 342 |
Total equity | 411 | 342 |
Class B common stock | ||
Liabilities and Equity | ||
Common stock, par value $0.01 per share | 152 | 199 |
Total equity | $ 152 | $ 199 |
Condensed Consolidated Stateme3
Condensed Consolidated Statements of Financial Condition (Parenthetical) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Accounts receivable, allowance for doubtful accounts | $ 2,122 | $ 1,433 |
Investments at fair value, cost basis | $ 28,644 | $ 96,351 |
Treasury stock, shares | 1,121,743 | 707,416 |
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 | 41,080,910 | 34,163,042 |
Common stock, shares outstanding | 39,959,167 | 33,455,626 |
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 | 15,222,935 | 19,912,230 |
Common stock, shares outstanding | 15,222,935 | 19,912,230 |
Condensed Consolidated Stateme4
Condensed Consolidated Statements of Operations - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Revenues | $ 219,418 | $ 173,258 |
Expenses | ||
Compensation and benefits | 127,177 | 101,726 |
Occupancy | 4,583 | 4,180 |
Professional fees | 5,684 | 5,241 |
Communication, technology and information services | 7,133 | 5,471 |
Travel and related expenses | 11,560 | 6,591 |
Depreciation and amortization | 1,055 | 857 |
Other expenses | 7,157 | 6,158 |
Total expenses | 164,349 | 130,224 |
Operating income (loss) | 55,069 | 43,034 |
Other income and (expenses) | 587 | 238 |
Income (loss) from equity method investments | 888 | 3,104 |
Income (loss) before income taxes | 56,544 | 46,376 |
Provision for income taxes | 2,563 | 6,997 |
Net income (loss) | 53,981 | 39,379 |
Net income (loss) attributable to noncontrolling interests | 20,656 | 24,101 |
Net income (loss) attributable to Moelis & Company | $ 33,325 | 15,278 |
Net income (loss) per share attributable to holders of shares of Class A common stock | ||
Basic (in dollars per share) | $ 0.92 | |
Diluted (in dollars per share) | $ 0.75 | |
Class A common stock | ||
Expenses | ||
Net income (loss) attributable to Moelis & Company | $ 33,325 | $ 15,278 |
Weighted-average shares of Class A common stock outstanding | ||
Basic (in shares) | 36,169,566 | 26,160,969 |
Diluted (in shares) | 44,596,534 | 32,921,576 |
Net income (loss) per share attributable to holders of shares of Class A common stock | ||
Basic (in dollars per share) | $ 0.92 | $ 0.58 |
Diluted (in dollars per share) | 0.75 | 0.46 |
Dividends declared per share of Class A common stock | $ 1.97 | $ 0.37 |
Condensed Consolidated Stateme5
Condensed Consolidated Statements of Comprehensive Income - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Condensed Consolidated Statements of Comprehensive Income | ||
Net income | $ 53,981 | $ 39,379 |
Unrealized gain (loss) on investments | (125) | |
Foreign currency translation adjustment, net of tax | 1,679 | 649 |
Other comprehensive income (loss) | 1,679 | 524 |
Comprehensive income (loss) | 55,660 | 39,903 |
Less: Comprehensive income attributable to noncontrolling interests | 21,266 | 24,379 |
Comprehensive income (loss) attributable to Moelis & Company | $ 34,394 | $ 15,524 |
Condensed Consolidated Stateme6
Condensed Consolidated Statements of Cash Flows - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Cash flows from operating activities | ||
Net income (loss) | $ 53,981 | $ 39,379 |
Adjustments to reconcile net income to net cash provided by (used in) operating activities: | ||
Bad debt expense | 671 | 379 |
Depreciation and amortization | 1,055 | 857 |
(Income) loss from equity method investments | (888) | (3,104) |
Equity-based compensation | 32,244 | 25,903 |
Deferred tax provision | 7,302 | (106) |
Other | 2,603 | 1,831 |
Changes in assets and liabilities: | ||
Accounts receivable | 11,444 | (11,707) |
Other receivables | (7,435) | 2,212 |
Prepaid expenses and other assets | 1,149 | (3,737) |
Deferred compensation | (2,726) | (1,946) |
Compensation payable | (89,487) | (85,706) |
Accounts payable and accrued expenses | (1,963) | 3,678 |
Deferred revenue | (2,024) | 6,527 |
Dividends received | 2,737 | |
Other liabilities | (1,260) | 310 |
Net cash provided by (used in) operating activities | 7,403 | (25,230) |
Cash flows from investing activities | ||
Purchase of investments | (7,972) | (27,955) |
Proceeds from sales of investments | 75,310 | 33,000 |
Note payments received from employees | 204 | 403 |
Purchase of equipment and leasehold improvements | (1,059) | (1,798) |
Net cash provided by (used in) investing activities | 66,483 | 3,650 |
Cash flows from financing activities | ||
Dividends and distributions | (137,029) | (129,154) |
Payments under tax receivable agreement | (5,032) | |
Proceeds from exercise of stock options | 365 | |
Payments to settle employee tax obligations on share-based awards | (20,789) | (7,534) |
Class A partnership units and other equity purchased | (135) | (101) |
Net cash provided by (used in) financing activities | (157,588) | (141,821) |
Effect of exchange rate fluctuations on cash, cash equivalents, and restricted cash | 1,396 | 771 |
Net increase (decrease) in cash, cash equivalents, and restricted cash | (82,306) | (162,630) |
Cash, cash equivalents, and restricted cash, beginning of period | 213,894 | 319,585 |
Cash, cash equivalents, and restricted cash, end of period | 131,588 | 156,955 |
Cash paid during the period for: | ||
Income taxes | 11,466 | 11,369 |
Dividends paid, declared in the prior year | 68,066 | |
Other non-cash activity | ||
Dividend equivalents issued | 20,379 | 3,706 |
Class A Partnership Units or other equity converted into Class A Common Stock | 20,434 | 22,181 |
Forfeiture of fully-vested Group LP units or other equity units | 36 | |
ASU 2016-09 | ||
Other non-cash activity | ||
Cumulative Effect Adjustment upon Adoption of ASU | $ 658 | |
ASU 2014-09 | ||
Other non-cash activity | ||
Cumulative Effect Adjustment upon Adoption of ASU | $ 3,155 |
Condensed Consolidated Stateme7
Condensed Consolidated Statements of Changes in Equity - 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 |
Changes in Equity | ||||||||
Cumulative Effect Adjustment upon Adoption of ASU | ASU 2016-09 | $ 4,855 | $ (4,197) | $ 658 | |||||
Balance at beginning of the period, as adjusted | $ 210 | $ 311 | $ (10,930) | 295,881 | (72,426) | $ (543) | $ 39,596 | 252,099 |
Balance at beginning of the period at Dec. 31, 2016 | $ 210 | $ 311 | $ (10,930) | 291,026 | (68,229) | (543) | 39,596 | 251,441 |
Balance at beginning of the period (in shares) at Dec. 31, 2016 | 20,948,998 | 31,138,193 | (387,890) | |||||
Changes in Equity | ||||||||
Net income (loss) | 15,278 | 24,101 | 39,379 | |||||
Other comprehensive income (loss) | 246 | 278 | 524 | |||||
Equity-based compensation | $ 9 | 25,206 | 688 | 25,903 | ||||
Equity-based compensation (in shares) | 886,818 | |||||||
Equity-based payments to non-employees | 1,874 | 1,874 | ||||||
Dividends declared and distributions | 3,706 | (13,606) | (51,188) | (61,088) | ||||
Treasury Stock purchases | $ (7,534) | $ (7,534) | ||||||
Treasury Stock purchases (in shares) | (205,085) | (205,085) | ||||||
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges | $ 53 | $ (53) | 28,374 | (6,294) | $ 22,080 | |||
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges (in shares) | 5,356,876 | (5,356,876) | ||||||
Other | (36) | (36) | ||||||
Balance at end of the period at Mar. 31, 2017 | $ 272 | $ 258 | $ (18,464) | 355,005 | (70,754) | (297) | 7,181 | 273,201 |
Balance at end of the period (in shares) at Mar. 31, 2017 | 27,192,692 | 25,781,317 | (592,975) | |||||
Balance at beginning of the period at Dec. 31, 2016 | $ 210 | $ 311 | $ (10,930) | 291,026 | (68,229) | (543) | 39,596 | 251,441 |
Balance at beginning of the period (in shares) at Dec. 31, 2016 | 20,948,998 | 31,138,193 | (387,890) | |||||
Changes in Equity | ||||||||
Other comprehensive income (loss) | ASU 2016-01 | 317 | |||||||
Balance at end of the period at Dec. 31, 2017 | $ 342 | $ 199 | $ (23,188) | 487,163 | (139,918) | 352 | 19,306 | 344,256 |
Balance at end of the period (in shares) at Dec. 31, 2017 | 34,163,042 | 19,912,230 | (707,416) | |||||
Changes in Equity | ||||||||
Cumulative Effect Adjustment upon Adoption of ASU | ASU 2014-09 | 3,155 | 3,155 | ||||||
Cumulative Effect Adjustment upon Adoption of ASU | ASU 2016-01 | (317) | 317 | ||||||
Balance at beginning of the period, as adjusted | $ 342 | $ 199 | $ (23,188) | 487,163 | (137,080) | 669 | 19,306 | 347,411 |
Net income (loss) | 33,325 | 20,656 | 53,981 | |||||
Other comprehensive income (loss) | 1,069 | 610 | 1,679 | |||||
Equity-based compensation | $ 22 | 31,764 | 458 | 32,244 | ||||
Equity-based compensation (in shares) | 2,210,079 | |||||||
Equity-based payments to non-employees | 2,016 | 2,016 | ||||||
Dividends declared and distributions | 20,379 | (90,631) | (66,777) | (137,029) | ||||
Treasury Stock purchases | $ (20,789) | $ (20,789) | ||||||
Treasury Stock purchases (in shares) | (414,327) | (414,327) | ||||||
Exercise of stock options | 365 | $ 365 | ||||||
Exercise of stock options (in shares) | 18,494 | |||||||
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges | $ 47 | $ (47) | 24,328 | (4,029) | 20,299 | |||
Issuance of Class A common stock and cancellation of Class B common stock in connection with offerings and other exchanges (in shares) | 4,689,295 | (4,689,295) | ||||||
Balance at end of the period at Mar. 31, 2018 | $ 411 | $ 152 | $ (43,977) | $ 566,015 | $ (194,386) | $ 1,738 | $ (29,776) | $ 300,177 |
Balance at end of the period (in shares) at Mar. 31, 2018 | 41,080,910 | 15,222,935 | (1,121,743) |
Condensed Consolidated Stateme8
Condensed Consolidated Statements of Changes in Equity (Parenthetical) - $ / shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Class A common stock | ||
Dividends declared per share of Class A common stock | $ 1.97 | $ 0.37 |
ORGANIZATION AND BASIS OF PRESE
ORGANIZATION AND BASIS OF PRESENTATION | 3 Months Ended |
Mar. 31, 2018 | |
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, the business operated as a Delaware limited partnership that commenced operations during 2007. Following the 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 and investments: · 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) · Moelis & Company Europe Limited, Frankfurt am Main Branch (German branch) · Moelis & Company UK LLP, DIFC Branch (Dubai branch) · 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. · An equity method investment in Moelis Australia Limited (“Moelis Australia”), a public company listed on the Australian Securities Exchange |
SUMMARY OF SIGNIFICANT ACCOUNTI
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | 3 Months Ended |
Mar. 31, 2018 | |
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 audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. 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 measurement and realization of deferred taxes; · the measurement of amount due pursuant to tax receivable agreement; · the measurement and vesting of equity‑based compensation; and · other matters that affect the reported amounts and disclosures of contingencies in the financial statements. Cash, Cash Equivalents and Restricted Cash —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. The Company’s cash is 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). The Company’s cash equivalents are invested primarily in government securities money markets, government debt securities and U.S. Treasury instruments. Effective January 1, 2018, the Company adopted ASU 2016-18 which requires restricted cash to be included in the beginning and ending balances of cash and cash equivalents within the condensed consolidated statement of cash flows. As a result, the beginning and ending balances of the prior period in the condensed consolidated statement of cash flows has been adjusted to include restricted cash. The Company’s restricted cash is comprised of collateral deposits primarily held by certain non-U.S. subsidiaries. These deposits are required for certain direct debit accounts and are used to satisfy future medical claims. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of March 31, 2018 and 2017, is presented below. March 31, 2018 2017 Cash $ 76,791 $ 40,184 Cash equivalents 54,199 116,143 Restricted cash 598 628 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 131,588 $ 156,955 Additionally, as of December 31, 2017, the Company held cash of $86,032 and cash equivalents of $127,159. 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. Effective January 1, 2018, the Company adopted ASU 2016-01 using the modified retrospective approach. As a result, a cumulative adjustment was recorded which decreased retained earnings and increased accumulated other comprehensive income by $317. The adjustment is related to the accumulated unrealized losses in fair value of an equity investment as of December 31, 2017. No prior periods were adjusted as a result of this change in accounting policy. The adoption of ASU 2016-01 requires that changes in fair value of equity investments measured at fair value be recognized in net income prospectively. For each period where a consolidated statement of operations is presented, the Company will disclose the portion of realized and/or unrealized gains and losses related to equity investments held at the reporting date or sold during the period. 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 reflect 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. Certain adjustments have been made to account for the Company’s equity method investment in Moelis Australia under US GAAP as Moelis Australia Limited follows local accounting principles under Australian Accounting Standards. 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 Initial Adoption —Effective January 1, 2018, the Company adopted ASU 2014-09 and all related amendments (“Topic 606”) using the modified retrospective method for all contracts. The adoption of the new standard requires the Company to present reimbursable expenses gross in revenues and expenses and to use new revenue recognition patterns as discussed below in the policy. As a result, a cumulative adjustment was recorded which increased the opening balance of other receivables and retained earnings by $3,722 for outstanding reimbursable expenses at December 31, 2017, which would have been recognized as revenues under the new standard. The tax effect of this adjustment decreased retained earnings by $567, resulting in a net increase to the opening balance of retained earnings of $3,155. No prior periods were adjusted as a result of this change in accounting policy. Impact of Adoption on Year-to-date Results —See below for the impact to our condensed consolidated financial statements from the adoption of Topic 606, as of and for the three months ended March 31, 2018: March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Financial Condition Other receivables $ 15,856 $ 12,374 $ 3,482 Accounts payable and accrued expenses 16,457 15,934 523 Retained earnings (accumulated deficit) (194,386) (197,345) 2,959 For the three months ended March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Operations Revenues $ 219,418 $ 216,230 $ 3,188 Expenses Professional fees 5,684 4,890 794 Communication, technology and information services 7,133 6,827 306 Travel and related expenses 11,560 9,571 1,989 Other expenses 7,157 6,818 339 Income (loss) before income taxes 56,544 56,784 (240) Provision for income taxes 2,563 2,607 (44) Net income (loss) $ 53,981 $ 54,177 $ (196) Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ 0.92 $ 0.92 $ — Diluted $ 0.75 $ 0.75 $ — The adoption of Topic 606 is not anticipated to have a material impact to our condensed consolidated financial statements as the vast majority of our revenues are from variable transaction fees which are constrained for recognition until it is probable that a significant revenue reversal will not occur, which is similar to our accounting under the old standard where revenues were primarily recognized upon the completion of our engagements. The Company recognizes revenues from providing advisory services when or as our obligations are fulfilled and collection is reasonably assured. The vast majority of our advisory revenues, which include reimbursements for certain out-of-pocket expenses, are recognized over time; however, a small number of transactions may be recognized at a point in time. We provide our advisory service on an ongoing basis which, for example, may include evaluating and selecting one of multiple strategies. During such engagements, our clients are continuously benefitting from our counsel and the over time recognition matches the transfer of such benefits. However, the recognition of transaction fees is constrained until substantially all services have been provided, specified conditions have been met and the transaction is effectively complete. Upfront fees and retainers specified in our engagement letters that meet the over time criteria will be recognized on a systematic basis over the estimated period where the related services are performed. Revenues may be recognized at a point in time if the engagement represents a singular objective that does not transfer any notable value until formally completed, such as when issuing a fairness opinion. In these instances, the point in time recognition appropriately matches the transfer and consumption of our services. Incremental costs of obtaining a contract are expensed as incurred since such costs are generally not recoverable and the typical duration of our advisory contracts is less than one year (as allowed per ASC 340-40-25-1). Costs to fulfill contracts consist of out-of-pocket expenses that are part of performing our advisory services and are typically expensed as incurred, except where the transfer and consumption of our services occurs at a point in time. For engagements recognized at a point in time, out-of-pocket expenses are capitalized and subsequently expensed in the condensed consolidated statement of operations upon completion of the engagement. The Company records deferred revenues when it receives fees from clients that have not yet been earned (e.g. an upfront fee) or when the Company has an unconditional right to consideration before all performance obligations are complete (e.g. upon satisfying conditions to earn an announcement fee, but before the transaction is consummated). 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. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units (“RSUs”). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a dividend payment and a charge to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the award does not vest. Effective January 1, 2017, the Company adopted a change in accounting policy in accordance with Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”) to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative decrease to retained earnings and an increase in additional paid-in capital (“APIC”) of $4,855 as of January 1, 2017. The tax effect of this adjustment increased deferred tax assets and retained earnings by $658. No prior periods were adjusted as a result of this change in accounting policy. The Company has a retirement plan whereby a retiring employee generally will not forfeit certain qualifying incentive RSUs granted during employment if at retirement the employee meets certain requirements. For qualifying awards issued prior to December 1, 2016, the employee must (i) be at least 54 years old and (ii) have provided at least 8 consecutive years of service to the Company. For qualifying awards issued on or after December 1, 2016, (i) the employee must be at least 56 years old, (ii) the employee must have provided at least 5 consecutive years of service to the Company and (iii) the total of (i) and (ii) must be equal to at least 65 years. 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 —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 months ended March 31, 2018 and 2017, 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 months ended March 31, 2018 and 2017, no such amounts were recorded. Prior to January 1, 2017, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in APIC and any tax deficiencies were either offset against APIC, or were recognized in the income statement under certain conditions. Under ASU 2016-09, all excess tax benefits and deficiencies are recognized as income tax benefits or expenses in the condensed consolidated statement of operations prospectively. Under ASU 2016-09, the Company is now required to present excess tax benefits and detriments as an operating activity in the same manner as other cash flows related to income taxes rather than as a financing activity. The Company adopted these changes retrospectively, and prior year excess tax benefits are now reflected in changes in prepaid expenses and other assets within the condensed consolidated statement of cash flows. Foreign Currency Translation —Assets and liabilities held in non‑U.S. dollar denominated 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 | 3 Months Ended |
Mar. 31, 2018 | |
RECENT ACCOUNTING PRONOUNCEMENTS | |
RECENT ACCOUNTING PRONOUNCEMENTS | 3. RECENT ACCOUNTING PRONOUNCEMENTS 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. Upon initial evaluation, the Company has determined it will record right-to-use assets and liabilities measured at the present value of reasonably certain lease payments on our consolidated statements of financial condition. We do not anticipate any material changes to our condensed and consolidated statements of operations. In February 2018, the FASB issued ASU No. 2018-02, “Income Statement—Reporting Comprehensive Income” (“ASU 2018-02”). ASU 2018-02 allows a reclassification from accumulated other comprehensive income to retained earnings for stranded tax effects resulting from the Tax Cuts and Jobs Act. ASU 2018-02 is effective for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2018. Early adoption is permitted. Upon initial evaluation, we do not anticipate any material changes to our condensed consolidated financial statements. |
EQUITY METHOD INVESTMENTS
EQUITY METHOD INVESTMENTS | 3 Months Ended |
Mar. 31, 2018 | |
EQUITY METHOD INVESTMENTS. | |
EQUITY METHOD INVESTMENTS | 4. EQUITY METHOD INVESTMENTS Moelis Australia On April 1, 2010, the Company entered into a 50‑50 joint venture in Moelis Australia Holdings PTY Limited, investing a combination of cash and certain net assets in exchange for its interests. The remaining 50% was owned by an Australian trust established by and for the benefit of Moelis Australia senior executives. On April 10, 2017, Moelis Australia Holdings PTY Limited consummated their initial public offering and became listed on the Australian Securities Exchange as Moelis Australia Limited (ASX: MOE). As a result of the offering, the Company’s ownership interest in Moelis Australia was diluted to less than 50% and the Company recognized a gain of approximately $15,170 during the second quarter of 2017, recorded in other income and expenses on the condensed consolidated statement of operations. Contemporaneous with the offering, Moelis Australia agreed to terminate an asset management related revenue sharing agreement resulting in a payment to a third party, of which the Company recognized a charge of approximately $2,400 in income (loss) from equity method investments during the second quarter of 2017. In connection with Moelis Australia’s initial public offering, the Company and Moelis Australia entered into a Strategic Alliance Agreement for Moelis Australia to continue to conduct its investment banking advisory business in Australia and New Zealand as an integrated part of the global advisory business of the Company consistent with the manner in which Moelis Australia and the Company have partnered together since 2010. Also, in connection with the offering and new shareholders agreement, the Company and Moelis Australia terminated a put option enabling the key senior Australian executive to sell his shares held in Moelis Australia back to the Company, and a call option held by the Company to purchase additional shares in Moelis Australia. On March 20, 2017, Moelis Australia declared a dividend, of which the Company received $11,672 on April 18, 2017. The Company accounted for the dividend as a return on investment and reduced the carrying value of the investment in Moelis Australia by $11,672 on April 18, 2017. On September 13, 2017 and October 30, 2017, Moelis Australia completed offerings of 11,940,000 and 10,060,000 shares of common stock, respectively, to raise additional capital. The issuance of shares further reduced Moelis & Company’s ownership interest in Moelis Australia. These shares were issued at a fair value greater than the carrying value of the ownership interest disposed, resulting in gains of approximately $14,429 and $9,680, during the third and fourth quarter of 2017, respectively, recorded in other income on the condensed and consolidated statement of operations. Moelis Australia issued additional shares during 2017 related to acquisitions, which further reduced Moelis & Company’s ownership interest in Moelis Australia. The shares were issued at a fair value greater than the carrying value of the ownership interest disposed, resulting in gains of approximately $2,280 and $92, during the second and third quarter of 2017, respectively, recorded in other income and expenses on the condensed and consolidated statement of operations. On February 20, 2018, Moelis Australia declared a dividend, of which the Company received $2,737 on March 7, 2018. The Company accounted for the dividend as a return on investment and reduced the carrying value of the investment in Moelis Australia by $2,737. For the three months ended March 31, 2018 and 2017, income from this equity method investment was $888 and $3,112, respectively. |
EQUIPMENT AND LEASEHOLD IMPROVE
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 3 Months Ended |
Mar. 31, 2018 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | 5. EQUIPMENT AND LEASEHOLD IMPROVEMENTS Equipment and leasehold improvements, net consists of the following: March 31, December 31, 2018 2017 Office equipment $ 9,694 $ 9,639 Furniture and fixtures 3,429 3,424 Leasehold improvements 12,215 11,324 Total 25,338 24,387 Less accumulated depreciation and amortization (14,859) (13,929) Equipment and leasehold improvements, net $ 10,479 $ 10,458 Depreciation and amortization expenses for fixed assets totaled $1,055 and $857 for the three months ended March 31, 2018 and 2017, respectively. |
FAIR VALUE MEASUREMENTS
FAIR VALUE MEASUREMENTS | 3 Months Ended |
Mar. 31, 2018 | |
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, U.S. Treasury instruments, and government debt securities as of March 31, 2018 and December 31, 2017 are based on quoted prices for recent trading activity in identical or similar instruments. The Company generally invests in U.S. Treasury instruments with maturities of less than twelve months. See Note 2 for further information on the Company’s fair value hierarchy. The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of March 31, 2018: Total Level 1 Level 2 Level 3 Financial assets: Included in cash and cash equivalents Government debt securities (1) $ 6,183 $ — $ 6,183 $ — U.S. treasury instruments 39,905 39,905 — — Government securities money market 8,113 — 8,113 — Investments Government debt securities (1) 13,549 — 13,549 — U.S. treasury instruments 14,328 14,328 — — Common stock 309 309 — — Total financial assets $ 82,387 $ 54,542 $ 27,845 $ — (1) Consists of municipal bonds, agency bonds and agency discount notes. For the three months ended March 31, 2018, unrealized gains of $46 were recognized in other income and expenses on the condensed consolidated statement of operations related to common stock held at the reporting date. The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of December 31, 2017: Total Level 1 Level 2 Level 3 Financial assets: Included in cash and cash equivalents Government debt securities (1) $ 41,086 $ — $ 41,086 $ — U.S. treasury instruments 39,978 — 39,978 — Government securities money market 46,095 — 46,095 Investments Government debt securities (1) 39,910 — 39,910 — U.S. treasury instruments 55,935 7,943 47,992 — Common stock 263 263 — Total financial assets $ 223,267 $ 8,206 $ 215,061 $ — (1) For the three months ended March 31, 2017, unrealized losses of $125 were recognized in unrealized gain loss on investments on the condensed consolidated statement of comprehensive income related to common stock held at the reporting date. 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. At the end of the reporting period, the Company reviews U.S. treasury instruments 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 instrument 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 three months ended March 31, 2018 and 2017, there were no transfers from level 1 to level 2 related to U.S. treasury instruments acquired on-the-run that as of the reporting period became off-the-run. |
NET INCOME (LOSS) PER SHARE ATT
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS | 3 Months Ended |
Mar. 31, 2018 | |
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 months ended March 31, 2018 and 2017 are presented below. Three Months Ended March 31, (dollars in thousands, except per share amounts) 2018 2017 Numerator: Net income (loss) attributable to holders of shares of Class A common stock—basic $ 33,325 $ 15,278 Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) Net income (loss) attributable to holders of shares of Class A common stock—diluted $ 33,325 $ 15,278 Denominator: Weighted average shares of Class A common stock outstanding—basic 36,169,566 26,160,969 Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method 8,426,968 (b) 6,760,607 (b) Weighted average shares of Class A common stock outstanding—diluted 44,596,534 32,921,576 Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ 0.92 $ 0.58 Diluted $ 0.75 $ 0.46 We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation. (a) (b) |
EQUITY-BASED COMPENSATION
EQUITY-BASED COMPENSATION | 3 Months Ended |
Mar. 31, 2018 | |
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. 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 March 31, 2018, partners held 17,783,042 Group LP partnership units, 422,323 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 $459 and $688 for the three months ended March 31, 2018 and 2017, respectively. As of March 31, 2018, there was $915 of unrecognized compensation expense related to unvested Class A partnership units which is expected to be recognized over a weighted-average period of 0.6 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 March 31, 2018, approximately $20 million of shares 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 March 31, 2018 and 2017, the Company recognized expense of $31,180 and $24,463, respectively, in relation to the vesting of RSUs. The following table summarizes activity related to restricted stock and RSUs for the three months ended March 31, 2018 and 2017. Restricted Stock & RSUs 2018 2017 Weighted Weighted Average Average Number of Grant Date Number of Grant Date Shares Fair Value Shares Fair Value Unvested Balance at January 1, 9,357,999 $ 30.15 8,504,190 $ 26.70 Granted 2,715,840 54.26 2,569,302 37.03 Forfeited (46,306) 37.41 (29,491) 29.12 Vested (2,197,193) 32.23 (1,041,696) 26.82 Unvested Balance at March 31, 9,830,340 $ 36.23 10,002,305 $ 29.50 As of March 31, 2018, the total compensation expense related to unvested restricted stock and RSUs not yet recognized was $191,118. The weighted-average period over which this compensation expense is expected to be recognized at March 31, 2018 is 1.9 years. Beginning in January of 2017, the Company accounts for forfeitures as they occur per the guidance in ASU 2016-09. See Note 2 for further discussion on this change in accounting policy. 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) 6 Weighted-average risk free interest rate 1.91 % Expected volatility 35 % Dividend yield 2.72 % Weighted-average fair value at grant date $ 6.70 The Company paid special dividends of $5.55, in aggregate, through March 31, 2018. 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 $5.55 from $25.00 per share to $19.45 per share. The following table summarizes activity related to stock options for the three months ended March 31, 2018 and 2017. Stock Options Outstanding 2018 2017 Weighted Weighted Average Average Number Exercise Price Number Exercise Price Outstanding Per Share Outstanding Per Share Outstanding at January 1, 2,436,232 $ 19.45 2,822,728 $ 19.45 Grants — — — — Exercises (18,494) 19.45 — — Forfeitures or expirations (12,000) 19.45 (35,500) 19.45 Outstanding at March 31, 2,405,738 $ 19.45 2,787,228 $ 19.45 For the three months ended March 31, 2018 and 2017, the Company recognized expenses of $605 and $752, respectively. As of March 31, 2018, the total compensation expense related to unvested stock options not yet recognized was $2,290. The weighted-average period over which this compensation expense is expected to be recognized at March 31, 2018 is 0.9 years. Beginning in January of 2017, the Company accounts for forfeitures as they occur per the guidance in ASU 2016-09. See Note 2 for further discussion on this change in accounting policy. |
STOCKHOLDERS EQUITY
STOCKHOLDERS EQUITY | 3 Months Ended |
Mar. 31, 2018 | |
STOCKHOLDERS EQUITY | |
STOCKHOLDERS EQUITY | 9. STOCKHOLDERS EQUITY Class A Common Stock In April 2014, the Company issued 15,263,653 shares of Class A common stock in connection with the IPO and reorganization. Since its IPO, the Company has conducted several offerings of Class A common stock in order to facilitate organized liquidity and increase the public float of its Class A common stock. The details of these offerings are displayed below. The Company did not retain any proceeds from the sale of its Class A common stock. Total Shares Total Increase in Date of Offering Offered Shares Outstanding November, 2014 6,325,000 4,511,058 January, 2017 5,750,000 5,356,876 July, 2017 6,000,000 5,680,903 March, 2018 5,000,000 4,689,295 Total 23,075,000 20,238,132 As of March 31, 2018, 41,080,910 shares of Class A common stock were issued and 39,959,167 shares were outstanding, and as of December 31, 2017, 34,163,042 shares of Class A common stock were issued and 33,455,626 shares were outstanding. The changes in Class A common stock are due primarily to the IPO and offering transactions described above, in addition to the vesting of restricted stock units in connection with the Company’s annual compensation process and ongoing hiring process. Class B Common Stock 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). Shares of Class B common stock are generally not transferrable and, if transferred other than in the limited circumstances set forth in Moelis & Company’s Amended and Restated Certificate of Incorporation, such shares shall automatically convert into a number of shares of Class A common stock, or dollar equivalent. Each share of Class B common stock may also be converted to a number of Class A shares at the option of the holder. 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. In connection with each of the Company’s follow-on offerings, the Company purchased shares of Class B common stock from Partner Holdings for cash, or Partner Holdings surrendered shares of Class B common stock for Class A common stock (at a ratio of .00055 to 1) and subsequently cancelled those shares. The Company did not retain any proceeds from the offerings. Class B Stock Purchased / Purchase Cost Date of Offering Surrendered (in thousands) November, 2014 4,507,453 $ 28 January, 2017 5,356,876 101 July, 2017 5,680,903 128 March, 2018 4,689,295 135 Total 20,234,527 $ 392 As of March 31, 2018 and December 31, 2017, 15,222,935 and 19,912,230 shares of Class B common stock were issued and outstanding, respectively, due primarily to the IPO, offering transactions, and Class B conversions described above. Treasury Stock During the three months ended March 31, 2018 and 2017, the Company repurchased 414,327 and 205,085 shares, respectively, 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 $20,789 and $7,534, respectively, in the treasury stock balance on the Company’s condensed consolidated statements of changes in equity as of March 31, 2018 and 2017. 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 March 31, 2018 and December 31, 2017, partners held 17,783,042 and 22,472,337 Group LP partnership units, respectively, representing a 31% and 40% noncontrolling interest in Moelis & Company, respectively. Controlling Interests 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 39,959,167 shares of Class A common stock outstanding at March 31, 2018 (33,455,626 as of December 31, 2017), represents the controlling interest. |
RELATED-PARTY TRANSACTIONS
RELATED-PARTY TRANSACTIONS | 3 Months Ended |
Mar. 31, 2018 | |
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 the three months ended March 31, 2018 and 2017, the Company incurred $468 and $468 in aircraft lease costs to be paid to Manager, respectively. In addition, Mr. Moelis is the other lessee of the aircraft and shares the operating and related costs of the plane in proportion to his respective use pursuant to a cost sharing and operating agreement. Promissory Notes —As of March 31, 2018, there were $362 of unsecured promissory notes from employees held by the Company (December 31, 2017: $552). Any outstanding balances are reflected in other receivables on the condensed consolidated statements of financial condition. The notes held as of March 31, 2018 and December 31, 2017 bear a fixed interest rate of 4.00%. During the three months ended March 31, 2018 and 2017, the Company received $204 and $403 of principal repayments and recognized interest income of $9 and $7, 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 $157 and $313 for the three months ended March 31, 2018 and 2017, 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 March 31, 2018 and December 31, 2017, there were no balances due from Moelis Asset Management LP. Moelis Australia —As of March 31, 2018 and December 31, 2017, the Company had net balances due from Moelis Australia of $64 and $128, respectively, which are reflected in other receivables on the condensed consolidated statements of financial condition. These balances consist of amounts due to or from Moelis Australia for advisory services performed as well as billable expenses incurred by the Company on behalf of Moelis Australia during the period. The relationship between the Company and Moelis Australia is governed by a services agreement. Revenues —From time to time, the Company enters into advisory transactions with Moelis Asset Management LP and its affiliates. The Company earned revenues associated with such transactions of $0 and $1,019 for the three months ended March 31, 2018 and 2017, respectively. |
REGULATORY REQUIREMENTS
REGULATORY REQUIREMENTS | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018, Moelis U.S. had net capital of $75,935, which was $75,685 in excess of its required net capital. At December 31, 2017, Moelis U.S. had net capital of $29,259 which was $29,009 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 March 31, 2018, the aggregate regulatory net capital of Moelis UK was $47,530 which exceeded the minimum requirement by $47,468. At December 31, 2017, the aggregate regulatory net capital of Moelis UK was $50,498, which exceeded the minimum requirement by $50,439. |
COMMITMENTS AND CONTINGENCIES
COMMITMENTS AND CONTINGENCIES | 3 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
COMMITMENTS AND CONTINGENCIES | 12. COMMITMENTS AND CONTINGENCIES Bank Line of Credit —In April 2017 the Company renewed its revolving credit facility which extended the maturity date to June 30, 2019. As of March 31, 2018, 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 March 31, 2018 and December 31, 2017, the Company had no borrowings under the credit facility. As of March 31, 2018, the Company’s available credit under this facility was $34,727 as a result of the issuance of an aggregate amount of $5,273 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 $3,937 and $3,756 for the three months ended March 31, 2018 and 2017, respectively. In addition, during the second quarter of 2016, 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 the aforementioned sublease loss reserve, which is remeasured at each reporting period for the three months ended March 31, 2018 and 2017, was $0 and $150, respectively. The future minimum rental payments required under the operating leases in place at March 31, 2018, are as follows: Fiscal year ended Operating Leases Sublease Income Net Minimum Payments 2018 $ 14,947 $ (352) $ 14,595 2019 19,901 (586) 19,315 2020 13,151 (938) 12,213 2021 7,656 (938) 6,718 2022 7,212 (938) 6,274 Thereafter 11,400 (2,344) 9,056 Total $ 74,267 $ (6,096) $ 68,171 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. 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. |
EMPLOYEE BENEFIT PLANS
EMPLOYEE BENEFIT PLANS | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, 2018 and 2017, in the amounts of $595 and $516, respectively. |
INCOME TAXES
INCOME TAXES | 3 Months Ended |
Mar. 31, 2018 | |
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 their interest holders, which were primarily made up of individual partners prior to the IPO 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 $2,563 and 5% and $6,997 and 15% for the three months ended March 31, 2018 and 2017, respectively. The income tax provision for the aforementioned periods primarily reflects the Company’s allocable share of earnings from Group LP at the 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 entity-level taxes. The Company recorded an increase in the net deferred tax asset of $79,469 for the three months ended March 31, 2018, which was primarily attributable to the step-up in tax basis in Group LP assets resulting from the exchange of Class A partnership units in connection with the Company’s follow-on offering in March 2018. Approximately $78,645 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 $66,848) 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 statements of financial condition. The remaining tax benefit is allocable to the Company and is recorded in additional paid-in-capital. The Company also recorded an increase in the deferred tax asset related to deferred equity compensation, which was principally offset by the vesting and delivery of equity awards during the first quarter in 2018. On December 22, 2017, the U.S. enacted comprehensive tax legislation commonly referred to as the Tax Cuts and Jobs Act (“Tax Act”). The Tax Act made broad and complex changes to the U.S. tax code including, but not limited to, reducing the U.S. federal corporate tax rate from 35 percent to 21 percent, effective January 1, 2018. The SEC staff issued SAB 118, which provides guidance on accounting for the tax effects of the Tax Act. SAB 118 provides a measurement period that should not extend beyond one year from the tax legislation enactment date for companies to complete the accounting under ASC 740. In accordance with SAB 118, a company must reflect the income tax effects of those aspects of the Tax Act for which the accounting under ASC 740 is complete or a reasonable estimate if such accounting is incomplete. The Company recorded a provisional amount related to its analysis of the impact of the Tax Act in its consolidated statements of financial condition for the year ended December 31, 2017. The impact of the Tax Act may differ from the estimated amounts recorded due to, among other things, further refinement of the Company’s calculations, changes in interpretations and assumptions the Company has made in conjunction with the release of additional regulatory guidance that may be issued, and actions the Company may take as a result of Tax Act. The Company has not yet finalized its analysis and no adjustment to the provisional estimate has been recorded as of March 31, 2018. |
REVENUES AND BUSINESS INFORMATI
REVENUES AND BUSINESS INFORMATION | 3 Months Ended |
Mar. 31, 2018 | |
REVENUES AND BUSINESS INFORMATION | |
REVENUES AND BUSINESS INFORMATION | 15. REVENUES AND 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 earn substantially all of our revenues from advisory engagements, and, in many cases, we are not paid until the completion of an underlying transaction. The vast majority of our advisory revenues are recognized over time, although the recognition of our transaction fees are generally constrained until the engagement is effectively complete. Complications that may terminate or delay a transaction include failure to agree upon final terms with the counterparty, failure to obtain required regulatory consents, failure to obtain board or stockholder approvals, failure to secure financing, adverse market conditions or unexpected operating or financial problems related to either party to the transaction. In these circumstances, we often do not receive advisory fees that would have been received if the transaction had been completed, despite the fact that we may have devoted considerable time and resources to the transaction. Barriers to the completion of a restructuring transaction may include a lack of anticipated bidders for the assets of our client, the inability of our client to restructure its operations, or indebtedness due to a failure to reach agreement with its creditors. In these circumstances, our fees are generally limited to monthly retainer fees and reimbursement of certain out‑of‑pocket expenses. 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 holistic 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. 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 disaggregates the 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. No client accounted for more than 10% of revenues in either of the three month periods ended March 31, 2018, and 2017. Three Months Ended March 31, 2018 2017 Revenues: United States $ 178,682 $ 138,402 Europe 23,436 22,019 Rest of World 17,300 12,837 Total $ 219,418 $ 173,258 March 31, December 31, 2018 2017 Assets: United States $ 496,043 $ 519,933 Europe 37,413 83,834 Rest of World 94,356 95,301 Total $ 627,812 $ 699,068 As of March 31, 2018, and December 31, 2017, the Company had deferred revenues of $2.9 million and $4.9 million, respectively. These amounts primarily consist of upfront fees and retainers for our services. During the three months ended March 31, 2018, $3.8 million of revenues were recognized from the opening balance of deferred revenues. Due to the factors that may delay or terminate a transaction (as described above), the Company does not estimate constrained transaction fees for revenue recognition. In accordance with ASC 606-10-50-14A, quantitative disclosures of constrained variable consideration are not provided for remaining performance obligations. In addition, remaining performance obligations related to retainers, upfront fees and announcement fees are typically associated with contracts that have durations of one year or less. In accordance with ASC 606-10-50-14, the Company does not disclose the expected timing and amount of revenues remaining related to such contracts. |
SUBSEQUENT EVENTS
SUBSEQUENT EVENTS | 3 Months Ended |
Mar. 31, 2018 | |
SUBSEQUENT EVENTS | |
SUBSEQUENT EVENTS | 16. SUBSEQUENT EVENTS On April 19, 2018, the Board of Directors of Moelis & Company declared a quarterly dividend of $0.47 per share to be paid on May 17, 2018 to shareholders of record as of May 3, 2018. |
SUMMARY OF SIGNIFICANT ACCOUN25
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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 audited financial statements and notes thereto included in our Annual Report on Form 10-K for the year ended December 31, 2017. |
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 measurement and realization of deferred taxes; · the measurement of amount due pursuant to tax receivable agreement; · the measurement and vesting of equity‑based compensation; and · other matters that affect the reported amounts and disclosures of contingencies in the financial statements. |
Cash, Cash Equivalents and Restricted Cash | Cash, Cash Equivalents and Restricted Cash —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. The Company’s cash is 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). The Company’s cash equivalents are invested primarily in government securities money markets, government debt securities and U.S. Treasury instruments. Effective January 1, 2018, the Company adopted ASU 2016-18 which requires restricted cash to be included in the beginning and ending balances of cash and cash equivalents within the condensed consolidated statement of cash flows. As a result, the beginning and ending balances of the prior period in the condensed consolidated statement of cash flows has been adjusted to include restricted cash. The Company’s restricted cash is comprised of collateral deposits primarily held by certain non-U.S. subsidiaries. These deposits are required for certain direct debit accounts and are used to satisfy future medical claims. A reconciliation of the Company’s cash, cash equivalents and restricted cash as of March 31, 2018 and 2017, is presented below. March 31, 2018 2017 Cash $ 76,791 $ 40,184 Cash equivalents 54,199 116,143 Restricted cash 598 628 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 131,588 $ 156,955 Additionally, as of December 31, 2017, the Company held cash of $86,032 and cash equivalents of $127,159. |
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. Effective January 1, 2018, the Company adopted ASU 2016-01 using the modified retrospective approach. As a result, a cumulative adjustment was recorded which decreased retained earnings and increased accumulated other comprehensive income by $317. The adjustment is related to the accumulated unrealized losses in fair value of an equity investment as of December 31, 2017. No prior periods were adjusted as a result of this change in accounting policy. The adoption of ASU 2016-01 requires that changes in fair value of equity investments measured at fair value be recognized in net income prospectively. For each period where a consolidated statement of operations is presented, the Company will disclose the portion of realized and/or unrealized gains and losses related to equity investments held at the reporting date or sold during the period. |
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 reflect 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. Certain adjustments have been made to account for the Company’s equity method investment in Moelis Australia under US GAAP as Moelis Australia Limited follows local accounting principles under Australian Accounting Standards. |
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 Initial Adoption —Effective January 1, 2018, the Company adopted ASU 2014-09 and all related amendments (“Topic 606”) using the modified retrospective method for all contracts. The adoption of the new standard requires the Company to present reimbursable expenses gross in revenues and expenses and to use new revenue recognition patterns as discussed below in the policy. As a result, a cumulative adjustment was recorded which increased the opening balance of other receivables and retained earnings by $3,722 for outstanding reimbursable expenses at December 31, 2017, which would have been recognized as revenues under the new standard. The tax effect of this adjustment decreased retained earnings by $567, resulting in a net increase to the opening balance of retained earnings of $3,155. No prior periods were adjusted as a result of this change in accounting policy. Impact of Adoption on Year-to-date Results —See below for the impact to our condensed consolidated financial statements from the adoption of Topic 606, as of and for the three months ended March 31, 2018: March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Financial Condition Other receivables $ 15,856 $ 12,374 $ 3,482 Accounts payable and accrued expenses 16,457 15,934 523 Retained earnings (accumulated deficit) (194,386) (197,345) 2,959 For the three months ended March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Operations Revenues $ 219,418 $ 216,230 $ 3,188 Expenses Professional fees 5,684 4,890 794 Communication, technology and information services 7,133 6,827 306 Travel and related expenses 11,560 9,571 1,989 Other expenses 7,157 6,818 339 Income (loss) before income taxes 56,544 56,784 (240) Provision for income taxes 2,563 2,607 (44) Net income (loss) $ 53,981 $ 54,177 $ (196) Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ 0.92 $ 0.92 $ — Diluted $ 0.75 $ 0.75 $ — The adoption of Topic 606 is not anticipated to have a material impact to our condensed consolidated financial statements as the vast majority of our revenues are from variable transaction fees which are constrained for recognition until it is probable that a significant revenue reversal will not occur, which is similar to our accounting under the old standard where revenues were primarily recognized upon the completion of our engagements. The Company recognizes revenues from providing advisory services when or as our obligations are fulfilled and collection is reasonably assured. The vast majority of our advisory revenues, which include reimbursements for certain out-of-pocket expenses, are recognized over time; however, a small number of transactions may be recognized at a point in time. We provide our advisory service on an ongoing basis which, for example, may include evaluating and selecting one of multiple strategies. During such engagements, our clients are continuously benefitting from our counsel and the over time recognition matches the transfer of such benefits. However, the recognition of transaction fees is constrained until substantially all services have been provided, specified conditions have been met and the transaction is effectively complete. Upfront fees and retainers specified in our engagement letters that meet the over time criteria will be recognized on a systematic basis over the estimated period where the related services are performed. Revenues may be recognized at a point in time if the engagement represents a singular objective that does not transfer any notable value until formally completed, such as when issuing a fairness opinion. In these instances, the point in time recognition appropriately matches the transfer and consumption of our services. Incremental costs of obtaining a contract are expensed as incurred since such costs are generally not recoverable and the typical duration of our advisory contracts is less than one year (as allowed per ASC 340-40-25-1). Costs to fulfill contracts consist of out-of-pocket expenses that are part of performing our advisory services and are typically expensed as incurred, except where the transfer and consumption of our services occurs at a point in time. For engagements recognized at a point in time, out-of-pocket expenses are capitalized and subsequently expensed in the condensed consolidated statement of operations upon completion of the engagement. The Company records deferred revenues when it receives fees from clients that have not yet been earned (e.g. an upfront fee) or when the Company has an unconditional right to consideration before all performance obligations are complete (e.g. upon satisfying conditions to earn an announcement fee, but before the transaction is consummated). |
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. The Company records as treasury stock shares repurchased from its employees for the purpose of settling tax liabilities incurred upon the vesting of restricted stock units (“RSUs”). The Company records dividends in kind, net of forfeitures, on outstanding RSUs as a dividend payment and a charge to equity. Dividends in kind on RSUs are subject to the same vesting conditions as the underlying RSUs on which they were accrued. Dividends in kind will be forfeited if the award does not vest. Effective January 1, 2017, the Company adopted a change in accounting policy in accordance with Accounting Standards Update 2016-09, “Compensation—Stock Compensation (Topic 718)” (“ASU 2016-09”) to account for forfeitures as they occur. The change was applied on a modified retrospective basis with a cumulative decrease to retained earnings and an increase in additional paid-in capital (“APIC”) of $4,855 as of January 1, 2017. The tax effect of this adjustment increased deferred tax assets and retained earnings by $658. No prior periods were adjusted as a result of this change in accounting policy. The Company has a retirement plan whereby a retiring employee generally will not forfeit certain qualifying incentive RSUs granted during employment if at retirement the employee meets certain requirements. For qualifying awards issued prior to December 1, 2016, the employee must (i) be at least 54 years old and (ii) have provided at least 8 consecutive years of service to the Company. For qualifying awards issued on or after December 1, 2016, (i) the employee must be at least 56 years old, (ii) the employee must have provided at least 5 consecutive years of service to the Company and (iii) the total of (i) and (ii) must be equal to at least 65 years. 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 —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 months ended March 31, 2018 and 2017, 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 months ended March 31, 2018 and 2017, no such amounts were recorded. Prior to January 1, 2017, all excess tax benefits resulting from exercise or settlement of share-based payment transactions were recognized in APIC and any tax deficiencies were either offset against APIC, or were recognized in the income statement under certain conditions. Under ASU 2016-09, all excess tax benefits and deficiencies are recognized as income tax benefits or expenses in the condensed consolidated statement of operations prospectively. Under ASU 2016-09, the Company is now required to present excess tax benefits and detriments as an operating activity in the same manner as other cash flows related to income taxes rather than as a financing activity. The Company adopted these changes retrospectively, and prior year excess tax benefits are now reflected in changes in prepaid expenses and other assets within the condensed consolidated statement of cash flows. |
Foreign Currency Translation | Foreign Currency Translation —Assets and liabilities held in non‑U.S. dollar denominated 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. |
SUMMARY OF SIGNIFICANT ACCOUN26
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES | |
Summary of cash, cash equivalents and restricted cash | March 31, 2018 2017 Cash $ 76,791 $ 40,184 Cash equivalents 54,199 116,143 Restricted cash 598 628 Total cash, cash equivalents, and restricted cash shown in the statement of cash flows $ 131,588 $ 156,955 |
Schedule of impact of adoption on year-to-date results of Topic 606 | March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Financial Condition Other receivables $ 15,856 $ 12,374 $ 3,482 Accounts payable and accrued expenses 16,457 15,934 523 Retained earnings (accumulated deficit) (194,386) (197,345) 2,959 For the three months ended March 31, 2018 As Excluding adoption reported of Topic 606 Change Statement of Operations Revenues $ 219,418 $ 216,230 $ 3,188 Expenses Professional fees 5,684 4,890 794 Communication, technology and information services 7,133 6,827 306 Travel and related expenses 11,560 9,571 1,989 Other expenses 7,157 6,818 339 Income (loss) before income taxes 56,544 56,784 (240) Provision for income taxes 2,563 2,607 (44) Net income (loss) $ 53,981 $ 54,177 $ (196) Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ 0.92 $ 0.92 $ — Diluted $ 0.75 $ 0.75 $ — |
EQUIPMENT AND LEASEHOLD IMPRO27
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
EQUIPMENT AND LEASEHOLD IMPROVEMENTS | |
Schedule of equipment and leasehold improvements, net | March 31, December 31, 2018 2017 Office equipment $ 9,694 $ 9,639 Furniture and fixtures 3,429 3,424 Leasehold improvements 12,215 11,324 Total 25,338 24,387 Less accumulated depreciation and amortization (14,859) (13,929) Equipment and leasehold improvements, net $ 10,479 $ 10,458 |
FAIR VALUE MEASUREMENTS (Tables
FAIR VALUE MEASUREMENTS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
FAIR VALUE MEASUREMENTS | |
Summary of the levels of the fair value hierarchy into which the Company's financial assets fall | The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of March 31, 2018: Total Level 1 Level 2 Level 3 Financial assets: Included in cash and cash equivalents Government debt securities (1) $ 6,183 $ — $ 6,183 $ — U.S. treasury instruments 39,905 39,905 — — Government securities money market 8,113 — 8,113 — Investments Government debt securities (1) 13,549 — 13,549 — U.S. treasury instruments 14,328 14,328 — — Common stock 309 309 — — Total financial assets $ 82,387 $ 54,542 $ 27,845 $ — (1) Consists of municipal bonds, agency bonds and agency discount notes. For the three months ended March 31, 2018, unrealized gains of $46 were recognized in other income and expenses on the condensed consolidated statement of operations related to common stock held at the reporting date. The following table summarizes the levels of the fair value hierarchy into which the Company’s financial assets fall as of December 31, 2017: Total Level 1 Level 2 Level 3 Financial assets: Included in cash and cash equivalents Government debt securities (1) $ 41,086 $ — $ 41,086 $ — U.S. treasury instruments 39,978 — 39,978 — Government securities money market 46,095 — 46,095 Investments Government debt securities (1) 39,910 — 39,910 — U.S. treasury instruments 55,935 7,943 47,992 — Common stock 263 263 — Total financial assets $ 223,267 $ 8,206 $ 215,061 $ — (1) |
NET INCOME (LOSS) PER SHARE A29
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
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 March 31, (dollars in thousands, except per share amounts) 2018 2017 Numerator: Net income (loss) attributable to holders of shares of Class A common stock—basic $ 33,325 $ 15,278 Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) Net income (loss) attributable to holders of shares of Class A common stock—diluted $ 33,325 $ 15,278 Denominator: Weighted average shares of Class A common stock outstanding—basic 36,169,566 26,160,969 Add (deduct) dilutive effect of: Noncontrolling interests related to Class A partnership units (a) (a) Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method 8,426,968 (b) 6,760,607 (b) Weighted average shares of Class A common stock outstanding—diluted 44,596,534 32,921,576 Net income (loss) per share attributable to holders of shares of Class A common stock Basic $ 0.92 $ 0.58 Diluted $ 0.75 $ 0.46 We have not included the impact of Class B common stock because these shares are entitled to an insignificant amount of economic participation. (a) (b) |
EQUITY-BASED COMPENSATION (Tabl
EQUITY-BASED COMPENSATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
EQUITY-BASED COMPENSATION | |
Summary of activity related to restricted stock and RSUs | Restricted Stock & RSUs 2018 2017 Weighted Weighted Average Average Number of Grant Date Number of Grant Date Shares Fair Value Shares Fair Value Unvested Balance at January 1, 9,357,999 $ 30.15 8,504,190 $ 26.70 Granted 2,715,840 54.26 2,569,302 37.03 Forfeited (46,306) 37.41 (29,491) 29.12 Vested (2,197,193) 32.23 (1,041,696) 26.82 Unvested Balance at March 31, 9,830,340 $ 36.23 10,002,305 $ 29.50 |
Schedule of assumptions used to estimate the fair value of stock option using the Black-Scholes valuation model | Assumptions Expected life (in years) 6 Weighted-average risk free interest rate 1.91 % Expected volatility 35 % Dividend yield 2.72 % Weighted-average fair value at grant date $ 6.70 |
Summary of activity related to stock options | Stock Options Outstanding 2018 2017 Weighted Weighted Average Average Number Exercise Price Number Exercise Price Outstanding Per Share Outstanding Per Share Outstanding at January 1, 2,436,232 $ 19.45 2,822,728 $ 19.45 Grants — — — — Exercises (18,494) 19.45 — — Forfeitures or expirations (12,000) 19.45 (35,500) 19.45 Outstanding at March 31, 2,405,738 $ 19.45 2,787,228 $ 19.45 |
STOCKHOLDERS EQUITY (Tables)
STOCKHOLDERS EQUITY (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Class A common stock | |
Class of Stock [Line Items] | |
Schedule of shares offered and increase in shares outstanding in follow-on offerings | Total Shares Total Increase in Date of Offering Offered Shares Outstanding November, 2014 6,325,000 4,511,058 January, 2017 5,750,000 5,356,876 July, 2017 6,000,000 5,680,903 March, 2018 5,000,000 4,689,295 Total 23,075,000 20,238,132 |
Class B common stock | |
Class of Stock [Line Items] | |
Schedule of shares offered and increase in shares outstanding in follow-on offerings | Class B Stock Purchased / Purchase Cost Date of Offering Surrendered (in thousands) November, 2014 4,507,453 $ 28 January, 2017 5,356,876 101 July, 2017 5,680,903 128 March, 2018 4,689,295 135 Total 20,234,527 $ 392 |
COMMITMENTS AND CONTINGENCIES (
COMMITMENTS AND CONTINGENCIES (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
COMMITMENTS AND CONTINGENCIES | |
Schedule of future minimum rental payments required under the operating leases in place | Fiscal year ended Operating Leases Sublease Income Net Minimum Payments 2018 $ 14,947 $ (352) $ 14,595 2019 19,901 (586) 19,315 2020 13,151 (938) 12,213 2021 7,656 (938) 6,718 2022 7,212 (938) 6,274 Thereafter 11,400 (2,344) 9,056 Total $ 74,267 $ (6,096) $ 68,171 |
REVENUES AND BUSINESS INFORMA33
REVENUES AND BUSINESS INFORMATION (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
REVENUES AND BUSINESS INFORMATION | |
Schedule of geographical distribution of revenues and assets | Three Months Ended March 31, 2018 2017 Revenues: United States $ 178,682 $ 138,402 Europe 23,436 22,019 Rest of World 17,300 12,837 Total $ 219,418 $ 173,258 March 31, December 31, 2018 2017 Assets: United States $ 496,043 $ 519,933 Europe 37,413 83,834 Rest of World 94,356 95,301 Total $ 627,812 $ 699,068 |
SUMMARY OF SIGNIFICANT ACCOUN34
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Cash and Cash Equivalents and Restricted Cash (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | Dec. 31, 2016 |
Cash and Cash Equivalents | ||||
Cash | $ 76,791 | $ 86,032 | $ 40,184 | |
Cash equivalents | 54,199 | 127,159 | 116,143 | |
Restricted cash | 598 | 703 | 628 | |
Total cash, cash equivalents, and restricted cash shown in the statement of cash flows | $ 131,588 | $ 213,894 | $ 156,955 | $ 319,585 |
SUMMARY OF SIGNIFICANT ACCOUN35
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES – Impact of ASU 2016-01 (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Retained Earnings Adjustments [Line Items] | |||
Retained earnings (accumulated deficit) | $ (194,386) | $ (139,918) | |
Accumulated other comprehensive income | $ 1,679 | $ 524 | |
ASU 2016-01 | |||
Retained Earnings Adjustments [Line Items] | |||
Retained earnings (accumulated deficit) | (317) | ||
Accumulated other comprehensive income | $ 317 |
SUMMARY OF SIGNIFICANT ACCOUN36
SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES - Equipment, Deferred Tax Asset, Revenue and Expense Recognition, Equity-Based Compensation and Income Taxes (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | Jan. 01, 2017 | |
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% | |||
Statement of Financial Condition | ||||
Other receivables | $ 15,856 | $ 4,868 | ||
Accounts payable and accrued expenses | 16,457 | 18,323 | ||
Retained earnings (accumulated deficit) | (194,386) | (139,918) | ||
Statement of Operations | ||||
Revenues | 219,418 | $ 173,258 | ||
Expenses | ||||
Professional fees | 5,684 | 5,241 | ||
Communication, technology and information services | 7,133 | 5,471 | ||
Travel and related expenses | 11,560 | 6,591 | ||
Other expenses | 7,157 | 6,158 | ||
Income (loss) before income taxes | 56,544 | 46,376 | ||
Provision for income taxes | 2,563 | 6,997 | ||
Net income (loss) | $ 53,981 | 39,379 | ||
Net income (loss) per share attributable to holders of shares of Class A common stock | ||||
Basic (in dollars per share) | $ 0.92 | |||
Diluted (in dollars per share) | $ 0.75 | |||
Income Taxes | ||||
Unrecognized tax benefits | $ 0 | 0 | ||
Retained Earnings (Accumulated Deficit) | ||||
Expenses | ||||
Net income (loss) | 33,325 | $ 15,278 | ||
ASU 2014-09 | ||||
Revenue and Expense Recognition and Equity-based Compensation | ||||
Cumulative effect on retained earnings and APIC | 3,722 | |||
Tax effect of adjustment | 567 | |||
Net change resulting from cumulative effect on retained earnings and APIC | $ 3,155 | |||
ASU 2014-09 | Change | ||||
Statement of Financial Condition | ||||
Other receivables | 3,482 | |||
Accounts payable and accrued expenses | 523 | |||
Retained earnings (accumulated deficit) | 2,959 | |||
Statement of Operations | ||||
Revenues | 3,188 | |||
Expenses | ||||
Professional fees | 794 | |||
Communication, technology and information services | 306 | |||
Travel and related expenses | 1,989 | |||
Other expenses | 339 | |||
Income (loss) before income taxes | (240) | |||
Provision for income taxes | (44) | |||
Net income (loss) | $ (196) | |||
ASU 2016-09 | Adjusted | Deferred Tax Assets | ||||
Revenue and Expense Recognition and Equity-based Compensation | ||||
Tax effect of adjustment | $ 658 | |||
ASU 2016-09 | Adjusted | Retained Earnings (Accumulated Deficit) | ||||
Revenue and Expense Recognition and Equity-based Compensation | ||||
Cumulative effect on retained earnings and APIC | (4,855) | |||
Tax effect of adjustment | 658 | |||
ASU 2016-09 | Adjusted | Additional Paid-In Capital | ||||
Revenue and Expense Recognition and Equity-based Compensation | ||||
Cumulative effect on retained earnings and APIC | $ 4,855 | |||
Issued Prior to December 1, 2016 | ||||
Revenue and Expense Recognition and 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 | |||
Issued On or after December 1, 2016 | ||||
Revenue and Expense Recognition and Equity-based Compensation | ||||
Minimum age of retiring employees required so that certain qualifying awards granted during employment will not be forfeited | 56 years | |||
Consecutive years of service of retiring employees required so that certain qualifying awards granted during employment will not be forfeited | 5 years | |||
Minimum total age and consecutive years of service of retiring employees required so that certain qualifying awards granted during employment will not be forfeited | 65 years | |||
Excluding adoption of Topic 606 | ASU 2014-09 | ||||
Statement of Financial Condition | ||||
Other receivables | $ 12,374 | |||
Accounts payable and accrued expenses | 15,934 | |||
Retained earnings (accumulated deficit) | (197,345) | |||
Statement of Operations | ||||
Revenues | 216,230 | |||
Expenses | ||||
Professional fees | 4,890 | |||
Communication, technology and information services | 6,827 | |||
Travel and related expenses | 9,571 | |||
Other expenses | 6,818 | |||
Income (loss) before income taxes | 56,784 | |||
Provision for income taxes | 2,607 | |||
Net income (loss) | $ 54,177 | |||
Net income (loss) per share attributable to holders of shares of Class A common stock | ||||
Basic (in dollars per share) | $ 0.92 | |||
Diluted (in dollars per share) | $ 0.75 | |||
Office equipment and furniture and fixtures | Minimum | ||||
Equipment and leasehold improvements, net | ||||
Useful lives | 3 years | |||
Office equipment and furniture and fixtures | Maximum | ||||
Equipment and leasehold improvements, net | ||||
Useful lives | 7 years |
EQUITY METHOD INVESTMENTS (Deta
EQUITY METHOD INVESTMENTS (Details) - USD ($) $ in Thousands | Feb. 20, 2018 | Oct. 30, 2017 | Sep. 13, 2017 | Apr. 18, 2017 | Apr. 10, 2017 | Mar. 31, 2018 | Dec. 31, 2017 | Sep. 30, 2017 | Jun. 30, 2017 | Mar. 31, 2017 |
Equity Method Investments | ||||||||||
Income (loss) from equity method investments | $ 888 | $ 3,104 | ||||||||
Moelis Australia Holdings | ||||||||||
Equity Method Investments | ||||||||||
Gain recognized by Company on issuance of shares | $ 9,680 | $ 14,429 | $ 15,170 | |||||||
Income (loss) from equity method investments | $ (2,400) | $ 888 | $ 3,112 | |||||||
Return of capital from equity method investments | $ 2,737 | $ 11,672 | ||||||||
Shares issued | 10,060,000 | 11,940,000 | ||||||||
Gain recognized by Company on issuance of shares related to acquisitions | $ 92 | $ 2,280 |
EQUIPMENT AND LEASEHOLD IMPRO38
EQUIPMENT AND LEASEHOLD IMPROVEMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Equipment and leasehold improvements, net | |||
Total | $ 25,338 | $ 24,387 | |
Less accumulated depreciation and amortization | (14,859) | (13,929) | |
Equipment and leasehold improvements, net | 10,479 | 10,458 | |
Depreciation and amortization expenses | 1,055 | $ 857 | |
Office equipment | |||
Equipment and leasehold improvements, net | |||
Total | 9,694 | 9,639 | |
Furniture and fixtures | |||
Equipment and leasehold improvements, net | |||
Total | 3,429 | 3,424 | |
Leasehold improvements | |||
Equipment and leasehold improvements, net | |||
Total | $ 12,215 | $ 11,324 |
FAIR VALUE MEASUREMENTS (Detail
FAIR VALUE MEASUREMENTS (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Fair value measurements | |||
Investments in securities | $ 28,186 | $ 96,108 | |
Total financial assets | 82,387 | 223,267 | |
Income (loss) from equity method investments | 888 | $ 3,104 | |
Government debt securities | |||
Fair value measurements | |||
Cash and cash equivalents | 6,183 | 41,086 | |
Investments in securities | 13,549 | 39,910 | |
U.S. treasury instruments | |||
Fair value measurements | |||
Cash and cash equivalents | 39,905 | 39,978 | |
Investments in securities | 14,328 | 55,935 | |
Transfers from level 1 to level 2 | 0 | 0 | |
Government securities money market | |||
Fair value measurements | |||
Cash and cash equivalents | 8,113 | 46,095 | |
Common Stock | |||
Fair value measurements | |||
Investments in securities | 309 | 263 | |
Income (loss) from equity method investments | 46 | $ (125) | |
Level 1 | |||
Fair value measurements | |||
Total financial assets | 54,542 | 8,206 | |
Level 1 | U.S. treasury instruments | |||
Fair value measurements | |||
Cash and cash equivalents | 39,905 | ||
Investments in securities | 14,328 | 7,943 | |
Level 1 | Common Stock | |||
Fair value measurements | |||
Investments in securities | 309 | 263 | |
Level 2 | |||
Fair value measurements | |||
Total financial assets | 27,845 | 215,061 | |
Level 2 | Government debt securities | |||
Fair value measurements | |||
Cash and cash equivalents | 6,183 | 41,086 | |
Investments in securities | 13,549 | 39,910 | |
Level 2 | U.S. treasury instruments | |||
Fair value measurements | |||
Cash and cash equivalents | 39,978 | ||
Investments in securities | 47,992 | ||
Level 2 | Government securities money market | |||
Fair value measurements | |||
Cash and cash equivalents | $ 8,113 | $ 46,095 |
NET INCOME (LOSS) PER SHARE A40
NET INCOME (LOSS) PER SHARE ATTRIBUTABLE TO CLASS A COMMON SHAREHOLDERS (Details) - USD ($) $ / shares in Units, $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Apr. 30, 2014 | |
Numerator: | |||
Net income (loss) attributable to holders of shares of Class A common stock - basic | $ 33,325 | $ 15,278 | |
Net income (loss) per share attributable to holders of shares of Class A common stock | |||
Basic (in dollars per share) | $ 0.92 | ||
Diluted (in dollars per share) | $ 0.75 | ||
Class A common stock | |||
Numerator: | |||
Net income (loss) attributable to holders of shares of Class A common stock - basic | $ 33,325 | 15,278 | |
Net income (loss) attributable to holders of shares of Class A common stock - diluted | $ 33,325 | $ 15,278 | |
Denominator: | |||
Weighted average shares of Class A common stock outstanding - basic | 36,169,566 | 26,160,969 | |
Weighted average number of incremental shares issuable from unvested restricted stock, RSUs and stock options, as calculated using the treasury stock method | 8,426,968 | 6,760,607 | |
Weighted average shares of Class A common stock outstanding—diluted | 44,596,534 | 32,921,576 | |
Net income (loss) per share attributable to holders of shares of Class A common stock | |||
Basic (in dollars per share) | $ 0.92 | $ 0.58 | |
Diluted (in dollars per share) | $ 0.75 | $ 0.46 | |
Number of shares of common stock to be issued upon exchange of a partnership unit | 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 | 66,323,929 | 62,321,050 | |
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 | 79,217 | 896 |
EQUITY-BASED COMPENSATION - Par
EQUITY-BASED COMPENSATION - Partnership Units and 2014 Omnibus Incentive Plan (Details) - USD ($) $ in Thousands | 3 Months Ended | |||
Mar. 31, 2018 | Mar. 31, 2017 | 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 | ||
Class A common stock | Share repurchase program authorized first quarter 2015 | ||||
Equity-based compensation | ||||
Share value authorized for repurchase | $ 25,000 | |||
Value of remaining shares authorized for repurchase | $ 20,000 | |||
Partnership units | ||||
Equity-based compensation | ||||
Units held by partners | 17,783,042 | |||
Unvested units held by partners | 422,323 | |||
Compensation expenses | $ 459 | $ 688 | ||
Unrecognized compensation expenses | $ 915 | |||
Weighted average period to recognize unrecognized compensation expense | 7 months 6 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 | 1 Months Ended | 3 Months Ended | 12 Months Ended | 42 Months Ended | ||
Apr. 30, 2014 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2014 | Mar. 31, 2018 | Nov. 09, 2014 | |
Class A common stock | ||||||
Number Outstanding | ||||||
Exercises (in shares) | (18,494) | |||||
Restricted stock and RSUs | ||||||
Number of shares | ||||||
Unvested Balance at the beginning of the period (in shares) | 9,357,999 | 8,504,190 | ||||
Granted (in shares) | 2,715,840 | 2,569,302 | ||||
Forfeited (in shares) | (46,306) | (29,491) | ||||
Vested (in shares) | (2,197,193) | (1,041,696) | ||||
Unvested Balance at the end of the period (in shares) | 9,830,340 | 10,002,305 | 9,830,340 | |||
Weighted Average Grant Date Fair Value | ||||||
Unvested Balance at the beginning of the period (in dollars per share) | $ 30.15 | $ 26.70 | ||||
Granted (in dollars per share) | 54.26 | 37.03 | ||||
Forfeited (in dollars per share) | 37.41 | 29.12 | ||||
Vested (in dollars per share) | 32.23 | 26.82 | ||||
Unvested Balance at the end of the period (in dollars per share) | $ 36.23 | $ 29.50 | $ 36.23 | |||
Total compensation expense not yet recognized | $ 191,118 | $ 191,118 | ||||
Weighted average period to recognize compensation expense | 1 year 10 months 24 days | |||||
RSUs | ||||||
Equity-based compensation | ||||||
Compensation expenses | $ 31,180 | $ 24,463 | ||||
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 | $ 605 | $ 752 | ||||
Weighted average remaining period for recognition of unrecognized compensation cost | 10 months 24 days | |||||
Weighted Average Grant Date Fair Value | ||||||
Total compensation expense not yet recognized | $ 2,290 | $ 2,290 | ||||
Special dividends paid (in dollars per share) | $ 5.55 | |||||
Reduction to exercise price of options outstanding due to special dividend paid (in dollars per share) | 5.55 | |||||
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 | |||||
Exercise price (in dollars per share) | $ 19.45 | $ 19.45 | $ 25 | |||
Number Outstanding | ||||||
Outstanding at the beginning of the period (in shares | 2,436,232 | 2,822,728 | ||||
Grants (in shares) | 3,501,881 | |||||
Exercises (in shares) | (18,494) | |||||
Forfeitures or expirations (in shares) | (12,000) | (35,500) | ||||
Outstanding at the end of the period (in shares | 2,405,738 | 2,787,228 | 2,405,738 | |||
Weighted-Average Exercise Price Per Share | ||||||
Outstanding at the beginning of the period (in dollars per share) | $ 19.45 | $ 19.45 | ||||
Exercises (in dollars per share) | 19.45 | |||||
Forfeitures or expirations (in dollars per share) | 19.45 | 19.45 | ||||
Outstanding at the end of the period (in dollars per share) | $ 19.45 | $ 19.45 | $ 19.45 |
STOCKHOLDERS EQUITY (Details)
STOCKHOLDERS EQUITY (Details) $ in Thousands | 1 Months Ended | 3 Months Ended | 42 Months Ended | ||||||
Mar. 31, 2018USD ($)shares | Jul. 31, 2017USD ($)shares | Jan. 31, 2017USD ($)shares | Nov. 30, 2014USD ($)shares | Apr. 30, 2014shares | Mar. 31, 2018USD ($)shares | Mar. 31, 2017USD ($)shares | Mar. 31, 2018USD ($)shares | Dec. 31, 2017shares | |
Stockholders Equity | |||||||||
Treasury stock shares acquired (in shares) | 414,327 | 205,085 | |||||||
Treasury stock shares acquired | $ | $ 20,789 | $ 7,534 | |||||||
Number of units held by noncontrolling interest holders | 17,783,042 | 17,783,042 | 17,783,042 | 22,472,337 | |||||
Group LP | |||||||||
Stockholders Equity | |||||||||
Noncontrolling interests (as a percent) | 31.00% | 31.00% | 31.00% | 40.00% | |||||
Class A common stock | |||||||||
Stockholders Equity | |||||||||
Aggregate stock issuance (in shares) | 15,263,653 | ||||||||
Total Shares Offered | 5,000,000 | 6,000,000 | 5,750,000 | 6,325,000 | 23,075,000 | ||||
Total Increase in Shares Outstanding | 4,689,295 | 5,680,903 | 5,356,876 | 4,511,058 | 20,238,132 | ||||
Common stock, shares issued | 41,080,910 | 41,080,910 | 41,080,910 | 34,163,042 | |||||
Common stock, shares outstanding | 39,959,167 | 39,959,167 | 39,959,167 | 33,455,626 | |||||
Number of shares of common stock to be issued upon exchange of a partnership unit | 1 | 1 | 1 | 1 | |||||
Class A common stock | Group LP | |||||||||
Stockholders Equity | |||||||||
Common stock, shares outstanding | 39,959,167 | 39,959,167 | 39,959,167 | 33,455,626 | |||||
Class B common stock | |||||||||
Stockholders Equity | |||||||||
Total Increase in Shares Outstanding | 36,158,698 | ||||||||
Stock Purchased/Surrendered | 4,689,295 | 5,680,903 | 5,356,876 | 4,507,453 | 20,234,527 | ||||
Common stock, shares issued | 15,222,935 | 15,222,935 | 15,222,935 | 19,912,230 | |||||
Common stock, shares outstanding | 15,222,935 | 15,222,935 | 15,222,935 | 19,912,230 | |||||
Purchase Cost | $ | $ 135 | $ 128 | $ 101 | $ 28 | $ 392 | ||||
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 |
RELATED-PARTY TRANSACTIONS (Det
RELATED-PARTY TRANSACTIONS (Details) - USD ($) $ in Thousands | Apr. 10, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Related-party transactions | ||||
Principal repayments | $ 204 | $ 403 | ||
Investment into the entity controlled by a related party | 56,999 | $ 58,848 | ||
Income (loss) from equity method investments | 888 | 3,104 | ||
Manager | Aircraft lease entered into during August 2014 | ||||
Related-party transactions | ||||
Expenses | 468 | 468 | ||
Employees | Unsecured promissory notes | ||||
Related-party transactions | ||||
Unsecured promissory notes from employees | $ 362 | $ 552 | ||
Interest rates (as a percent) | 4.00% | 4.00% | ||
Principal repayments | $ 204 | 403 | ||
Interest income recognized | 9 | 7 | ||
Moelis Asset Management LP | ||||
Related-party transactions | ||||
Fee for services | 157 | 313 | ||
Due from related party | 0 | $ 0 | ||
Revenue from related parties | 0 | 1,019 | ||
Moelis Australia Holdings | ||||
Related-party transactions | ||||
Due from related party | 64 | |||
Due to related party | $ 128 | |||
Income (loss) from equity method investments | $ (2,400) | $ 888 | $ 3,112 |
REGULATORY REQUIREMENTS (Detail
REGULATORY REQUIREMENTS (Details) - USD ($) $ in Thousands | Mar. 31, 2018 | Dec. 31, 2017 |
Regulatory requirements | ||
Minimum net capital requirement | $ 250 | $ 250 |
Moelis US | ||
Regulatory requirements | ||
Net capital | 75,935 | 29,259 |
Net capital in excess of required net capital | 75,685 | 29,009 |
Moelis UK | ||
Regulatory requirements | ||
Net capital | 47,530 | 50,498 |
Net capital in excess of required net capital | $ 47,468 | $ 50,439 |
COMMITMENTS AND CONTINGENCIES46
COMMITMENTS AND CONTINGENCIES (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Bank line of credit | |||
Available credit under the facility | $ 34,727 | ||
Leases | |||
Rent expense incurred relating to operating leases | 3,937 | $ 3,756 | |
Sublease loss reserve | 0 | $ 150 | |
Future minimum rental payments | |||
2,018 | 14,947 | ||
2,019 | 19,901 | ||
2,020 | 13,151 | ||
2,021 | 7,656 | ||
2,022 | 7,212 | ||
Thereafter | 11,400 | ||
Total | 74,267 | ||
Sublease Income | |||
2,018 | (352) | ||
2,019 | (586) | ||
2,020 | (938) | ||
2,021 | (938) | ||
2,022 | (938) | ||
Thereafter | (2,344) | ||
Total | (6,096) | ||
Net Minimum Payments | |||
2,018 | 14,595 | ||
2,019 | 19,315 | ||
2,020 | 12,213 | ||
2,021 | 6,718 | ||
2,022 | 6,274 | ||
Thereafter | 9,056 | ||
Total | 68,171 | ||
Unsecured revolving credit facility | |||
Bank line of credit | |||
Commitment amount | $ 40,000 | ||
Fixed rate of interest (as a percent) | 3.50% | ||
Borrowings under the credit facility | $ 0 | $ 0 | |
Unsecured revolving credit facility | LIBOR | |||
Bank line of credit | |||
Reference rate (as a percent) | LIBOR | ||
Interest rate margin (as a percent) | 1.00% | ||
Unsecured revolving credit facility | Prime | |||
Bank line of credit | |||
Reference rate (as a percent) | Prime | ||
Interest rate margin (as a percent) | (1.50%) | ||
Standby letters of credit | |||
Bank line of credit | |||
Letters of credit outstanding | $ 5,273 | ||
Fee on the outstanding balances (as a percent) | 1.00% |
EMPLOYEE BENEFIT PLANS (Details
EMPLOYEE BENEFIT PLANS (Details) - USD ($) $ in Thousands | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
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 | $ 595 | $ 516 |
INCOME TAXES (Details)
INCOME TAXES (Details) - USD ($) $ in Thousands | 3 Months Ended | 12 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Income taxes | |||
Provision for income taxes | $ 2,563 | $ 6,997 | |
Effective tax rate (as a percent) | 5.00% | 15.00% | |
Net deferred tax asset increase | $ 79,469 | ||
U.S. statutory tax rate | 21.00% | 35.00% | |
Group LP | |||
Income taxes | |||
Deferred tax assets attributable to exchanges by partners | $ 78,645 | ||
Percentage of cash distribution to partners in connection to IPO attributable to exchanges by partners, payable to partners | 85.00% | ||
Total tax receivable agreement obligation | $ 66,848 | ||
Period of tax receivable agreement | 15 years |
REVENUES AND BUSINESS INFORMA49
REVENUES AND BUSINESS INFORMATION (Details) - USD ($) $ in Thousands | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Business information | |||
Total revenues | $ 219,418 | $ 173,258 | |
Total assets | 627,812 | $ 699,068 | |
Deferred revenue | 2,924 | 4,948 | |
Revenues recognized from opening balance of deferred revenues | 3,800 | ||
United States | |||
Business information | |||
Total revenues | 178,682 | 138,402 | |
Total assets | 496,043 | 519,933 | |
Europe | |||
Business information | |||
Total revenues | 23,436 | 22,019 | |
Total assets | 37,413 | 83,834 | |
Rest Of World | |||
Business information | |||
Total revenues | 17,300 | $ 12,837 | |
Total assets | $ 94,356 | $ 95,301 |
SUBSEQUENT EVENTS (Details)
SUBSEQUENT EVENTS (Details) | Apr. 19, 2018$ / shares |
Subsequent event | |
Subsequent events | |
Dividends declared per share | $ 0.47 |