| Segment Reporting |
Segment Reporting
Basis for Presentation
The Company structures its segments primarily based upon the nature of the financial products and services provided to customers and the Company’s management organization. The Company evaluates performance and allocates resources based on segment pre-tax operating income or loss and segment pre-tax operating margin. Revenues and expenses directly associated with each respective segment are included in determining their operating results. Other revenues and expenses that are not directly attributable to a particular segment are allocated based upon the Company’s allocation methodologies, including each segment’s respective net revenues, use of shared resources, headcount or other relevant measures. The financial management of assets is performed on an enterprise-wide basis. As such, assets are not assigned to the business segments.
Segment pre-tax operating income and segment pre-tax operating margin exclude the results of discontinued operations.
Reportable segment financial results from continuing operations are as follows: | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | (Dollars in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Capital Markets | | | | | | | | Investment banking | | | | | | | | Financing | | | | | | | | Equities | $ | 14,269 |
| | $ | 30,010 |
| | $ | 93,628 |
| | $ | 66,085 |
| Debt | 14,435 |
| | 12,808 |
| | 48,148 |
| | 51,971 |
| Advisory services | 66,320 |
| | 20,215 |
| | 145,743 |
| | 39,165 |
| Total investment banking | 95,024 |
| | 63,033 |
| | 287,519 |
| | 157,221 |
| | | | | | | | | Institutional sales and trading | | | | | | | | Equities | 16,711 |
| | 22,958 |
| | 59,337 |
| | 65,077 |
| Fixed income | 22,737 |
| | 17,083 |
| | 69,060 |
| | 49,732 |
| Total institutional sales and trading | 39,448 |
| | 40,041 |
| | 128,397 |
| | 114,809 |
| | | | | | | | | Management and performance fees | 1,387 |
| | 1,094 |
| | 4,512 |
| | 2,677 |
| | | | | | | | | Investment income | 5,224 |
| | 7,892 |
| | 20,600 |
| | 14,213 |
| | | | | | | | | Long-term financing expenses | (1,613 | ) | | (1,797 | ) | | (5,058 | ) | | (5,618 | ) | | | | | | | | | Net revenues | 139,470 |
| | 110,263 |
| | 435,970 |
| | 283,302 |
| | | | | | | | | Operating expenses (1) | 119,001 |
| | 103,906 |
| | 364,622 |
| | 266,301 |
| | | | | | | | | Segment pre-tax operating income | $ | 20,469 |
| | $ | 6,357 |
| | $ | 71,348 |
| | $ | 17,001 |
| | | | | | | | | Segment pre-tax operating margin | 14.7 | % | | 5.8 | % | | 16.4 | % | | 6.0 | % | | | | | | | | |
| | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | (Dollars in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Asset Management | | | | | | | | Management and performance fees | | | | | | | | Management fees | $ | 19,738 |
| | $ | 17,547 |
| | $ | 59,474 |
| | $ | 52,191 |
| Performance fees | 470 |
| | 60 |
| | 834 |
| | 716 |
| Total management and performance fees | 20,208 |
| | 17,607 |
| | 60,308 |
| | 52,907 |
| | | | | | | | | Investment income/(loss) | (252 | ) | | 444 |
| | 1,312 |
| | 1,410 |
| | | | | | | | | Net revenues | 19,956 |
| | 18,051 |
| | 61,620 |
| | 54,317 |
| | | | | | | | | Operating expenses (1) | 14,733 |
| | 12,348 |
| | 44,146 |
| | 37,757 |
| | | | | | | | | Segment pre-tax operating income | $ | 5,223 |
| | $ | 5,703 |
| | $ | 17,474 |
| | $ | 16,560 |
| | | | | | | | | Segment pre-tax operating margin | 26.2 | % | | 31.6 | % | | 28.4 | % | | 30.5 | % | | | | | | | | | | | | | | | | | Total | | | | | | | | Net revenues | $ | 159,426 |
| | $ | 128,314 |
| | $ | 497,590 |
| | $ | 337,619 |
| | | | | | | | | Operating expenses (1) | 133,734 |
| | 116,254 |
| | 408,768 |
| | 304,058 |
| | | | | | | | | Pre-tax operating income | $ | 25,692 |
| | $ | 12,060 |
| | $ | 88,822 |
| | $ | 33,561 |
| | | | | | | | | Pre-tax operating margin | 16.1 | % | | 9.4 | % | | 17.9 | % | | 9.9 | % |
| | (1) | Operating expenses include intangible asset amortization expense as set forth in the table below: |
| | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | (Dollars in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Capital Markets | $ | 743 |
| | $ | 1,238 |
| | $ | 2,229 |
| | $ | 1,238 |
| Asset Management | 1,575 |
| | 1,661 |
| | 4,725 |
| | 4,983 |
| Total intangible asset amortization expense | $ | 2,318 |
| | $ | 2,899 |
| | $ | 6,954 |
| | $ | 6,221 |
|
Geographic Areas
The Company operates in both U.S. and non-U.S. markets. The Company’s non-U.S. business activities are principally conducted through European locations. Net revenues and long-lived assets for the Company's Asian location was not significant. Net revenues disclosed in the following table reflect the regional view, with financing revenues allocated to geographic locations based upon the location of the capital market, advisory revenues allocated based upon the location of the investment banking team and net institutional sales and trading revenues allocated based upon the location of the client. Asset management revenues are allocated to the U.S. based upon the geographic location of the Company’s asset management team. Net revenues exclude discontinued operations for all periods presented. | | | | | | | | | | | | | | | | | | Three Months Ended | | Nine Months Ended | | September 30, | | September 30, | (Dollars in thousands) | 2014 | | 2013 | | 2014 | | 2013 | Net revenues: | | | | | | | | United States | $ | 153,375 |
| | $ | 126,458 |
| | $ | 486,251 |
| | $ | 329,379 |
| Europe | 6,051 |
| | 1,856 |
| | 11,339 |
| | 8,240 |
| Consolidated | $ | 159,426 |
| | $ | 128,314 |
| | $ | 497,590 |
| | $ | 337,619 |
|
Long-lived assets are allocated to geographic locations based upon the location of the asset. The following table presents long-lived assets by geographic region: | | | | | | | | | | September 30, | | December 31, | (Dollars in thousands) | 2014 | | 2013 | Long-lived assets: | | | | United States | $ | 293,823 |
| | $ | 296,516 |
| Europe | 5,899 |
| | 6,414 |
| Consolidated | $ | 299,722 |
| | $ | 302,930 |
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