Get Started for Free Contexxia identifies hard-to-find pieces of information in SEC filings. No more highlighters, no more redlining, no more poring over huge documents. Evercore Inc. (1360901) 10-Q published on May 02, 2019 at 4:55 pm
Reporting Period: Mar 30, 2019
The Company adopted ASC 842, "Leases" ("ASC 842") on January 1, 2019, using the modified retrospective method of transition. The Company did not have a cumulative-effect adjustment as of the date of adoption. The Company elected to apply the package of practical expedients, which does not require reassessment of whether contracts are or contain leases, of lease classification and of initial direct costs. The Company also elected the transition option in Accounting Standards Update ("ASU") No. 2018-11, "Leases (Topic 842): Targeted Improvements," ("ASU 2018-11") to not apply the new lease standard in comparative periods presented in financial statements in the year of adoption. Following the adoption of ASC 842, the Company includes all leases, including short-term leases, on its Unaudited Condensed Consolidated Statements of Financial Condition. The Company does not separate lease and non-lease components of contracts.
Following the adoption of ASC 842, the present value of the Company's lease commitments are reflected as long-term assets, within Operating Lease Right-of-Use Assets, with corresponding liabilities classified as current and non-current, within Operating Lease Liabilities on the Company's Unaudited Condensed Consolidated Statement of Financial Condition. The Company determines if an arrangement is a lease at inception. Right-of-use assets represent the Company's right to use the underlying assets for their lease terms and lease liabilities represent the Company's obligation to make lease payments arising from these leases. Right-of-use assets and liabilities are recognized at the lease commencement date based on the estimated present value of lease payments over the lease term. Right-of-use assets are subject to certain adjustments for lease incentives and initial direct costs. The lease terms include options to extend the lease when it is reasonably certain that the Company will exercise that option. The Company's lease agreements do not contain any residual value guarantees.
Beginning on or about November 16, 2016, several putative securities class action complaints were filed against Adeptus Health Inc. ("Adeptus") and certain others, including EGL as underwriter, in connection with Adeptus' June 2014 initial public offering and May 2015, July 2015 and June 2016 secondary public offerings. The cases were consolidated in the U.S. District Court for the Eastern District of Texas where a consolidated complaint was filed asserting, in part, that the offering materials issued in connection with the four public offerings violated the U.S. Securities Act of 1933 by containing alleged misstatements and
omissions. On April 19, 2017, Adeptus filed for Chapter 11 bankruptcy and was subsequently removed as a defendant. On November 21, 2017, the plaintiffs filed a consolidated complaint, and the defendants filed motions to dismiss on February 5, 2018. On September 12, 2018, the defendants' motions to dismiss were granted as to the claims relating to the initial public offering and the May 2015 secondary public offering, but denied as to the claims relating to the July 2015 and June 2016 secondary public offerings. EGL underwrote approximately 293 shares of common stock in the July 2015 secondary public offering, representing an aggregate offering price of approximately $30.8 million, but did not underwrite any shares in the June 2016 secondary public offering. On September 25, 2018, the plaintiffs filed an amended complaint relating only to the July 2015 and June 2016 secondary public offerings. On December 7, 2018, the plaintiffs filed a motion for class certification, and the defendants filed briefs in opposition. On February 16, 2019, the plaintiffs filed a second amended complaint after having been granted leave to amend by the court. On March 4, 2019, the defendants filed a motion to dismiss as to the second amended complaint.
The Company's Provision for Income Taxes was $7,821 and $4,938 for the three months ended March 31, 2019 and 2018, respectively. The effective tax rate was 9% and 4% for the three months ended March 31, 2019 and 2018, respectively. The effective tax rate reflects excess tax benefits from the delivery of Class A common stock under share-based payment arrangements of $12,161 and $21,864 being recognized in the Company's Provision for Income Taxes for the three months ended March 31, 2019 and 2018, respectively, and resulted in a reduction in the effective tax rate of 14 and 19 percentage points for the three months ended March 31, 2019 and 2018, respectively. The effective tax rate for the three months ended March 31, 2019 and 2018 also reflects the effect of certain nondeductible expenses, including expenses related to Class J, I-P and K-P LP Units, as well as the noncontrolling interest associated with LP Units and other adjustments.
Net Investment Banking Revenues were $401.2 million for the three months ended March 31, 2019, compared to $450.2 million for the three months ended March 31, 2018, which represented a decrease of 11%. We earned 217 fees from Advisory clients for the three months ended March 31, 2019 compared to 201 for the three months ended March 31, 2018, representing an 8% increase. We had 69 fees earned in excess of $1.0 million for the three months ended March 31, 2019, compared to 63 for the three months ended March 31, 2018, representing a 10% increase. The decrease in revenues from the three months ended March 31, 2018 primarily reflects a decrease of $52.5 million, or 14%, in Advisory fees, resulting from a decline in revenue earned from large transactions. The decrease in revenues from the three months ended March 31, 2018 was also partially attributed to a decrease of $3.4 million, or 11%, in Underwriting Fees, primarily due to a decrease in fees from our Mexico business, which was partially offset by an increase in fees from our U.S. business. We participated in 22 underwriting transactions for the three months ended March 31, 2019 (compared to 20 for the three months ended March 31, 2018), 16 of which were as a bookrunner (compared to 17 for the three months ended March 31, 2018). Commissions and Related Fees decreased $1.1 million, or 3%, principally driven by the trend of institutional clients adjusting the level of payments for research services. Other Revenue, net, for the three months ended March 31, 2019 was higher than the three months ended March 31, 2018, primarily reflecting gains on the investment funds portfolio which is used as an economic hedge against our deferred cash compensation program.
Beginning on or about November 16, 2016, several putative securities class action complaints were filed against Adeptus and certain others, including EGL as underwriter, in connection with Adeptus’ June 2014 initial public offering and May 2015, July 2015, and June 2016 secondary public offerings. The cases were consolidated in the U.S. District Court for the Eastern District of Texas where a consolidated complaint was filed asserting, in part, that the offering materials issued in connection with the four public offerings violated the U.S. Securities Act of 1933 by containing alleged misstatements and omissions. On April 19, 2017, Adeptus filed for Chapter 11 bankruptcy and was subsequently removed as a defendant. On November 21, 2017, the plaintiffs filed a consolidated complaint, and the defendants filed motions to dismiss on February 5, 2018. On September 12, 2018, the defendants' motions to dismiss were granted as to the claims relating to the initial public offering and the May 2015 secondary public offering, but denied as to the claims relating to the July 2015 and June 2016 secondary public offerings. EGL underwrote approximately 293,250 shares of common stock in the July 2015 secondary public offering, representing an aggregate offering price of approximately $30.8 million, but did not underwrite any shares in the June 2016 secondary public offering. On September 25, 2018, the plaintiffs filed an amended complaint relating only to the July 2015 and June 2016 secondary public offerings. On December 7, 2018, the plaintiffs filed a motion for class certification, and the defendants filed briefs in opposition. On February 16, 2019, the plaintiffs filed a second amended complaint after having been granted leave to amend by the court. On March 4, 2019, the defendants filed a motion to dismiss as to the second amended complaint.