What changed in this filing

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Item 2. Management’s Discussion and Analysis

2021-08-03 compared with 2021-05-06 · 199 added, 145 removed, 364 unchanged (49% of the section changed)

42 unchanged sentences

Transaction-Related Client Reimbursements .

In both our Investment Banking and Investment Management segments, we incur various transaction-related expenditures, such as travel and professional fees, in the course of performing our services.

In our Investment Banking segment, we incur various transaction-related expenditures, such as travel and professional fees, in the course of performing our services.

Pursuant to the engagement letters with our advisory clients, these expenditures may be reimbursable.

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Interest Expense includes interest expense associated with our Notes Payable and lines of credit.

Prior to the sale of our ECB business in Mexico, which was sold on December 16, 2020, Other Revenue and Interest Expense was also derived from investing customer funds in financing transactions.

Prior to the sale of our ECB business in Mexico on December 16, 2020, Other Revenue and Interest Expense was also derived from investing customer funds in financing transactions.

These transactions were principally repurchases and resales of Mexican government and government agency securities.

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We maintain compensation programs, including base salary, cash, deferred cash and equity bonus awards and benefits programs and manage compensation to estimates of competitive levels based on market conditions and performance.

Our level of compensation, including deferred compensation, reflects our plan to maintain competitive compensation levels to retain key personnel, and it reflects the impact of newly-hired senior professionals, including related grants of equity awards which are generally valued at their grant date.

of compensation, including deferred compensation, reflects our plan to maintain competitive compensation levels to retain key personnel, and it reflects the impact of newly-hired senior professionals, including related grants of equity awards which are generally valued at their grant date.

Increasing the number of high-caliber, experienced senior level employees is critical to our growth efforts.

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Distributions pursuant to these interests are anticipated to be made in lieu of any cash incentive compensation payments which may otherwise have been made to our named executive officers in respect of their service for 2021.

Our Long-term Incentive Plan provides for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers, who exceed defined benchmark results over a four-year performance period beginning January 1, 2017.

Our Long-term Incentive Plan provides for incentive compensation awards to Advisory Senior Managing Directors, excluding executive officers, who exceed defined benchmark results over four-year performance periods beginning January 1, 2017 and January 1, 2021.

The first cash distribution under the 2017 Long-term Incentive Plan occurred in March 2021.

Remaining amounts are due to be paid, in cash or Class A Shares, at our discretion, in equal installments in the first quarter of 2022 and 2023, subject to employment at the time of payment.

These awards are subject to retirement eligibility requirements after the performance criteria has been achieved.

Remaining amounts are due to be paid, in cash or Class A Shares, at our discretion, in equal installments in the first quarter of 2022 and 2023 (for the 2017 Long-term Incentive Plan) and in the first quarter of 2025, 2026 and 2027 (for the 2021 Long-term Incentive Plan), subject to employment at the time of payment.

Awards issued under the 2017 Long-term Incentive Plan are subject to retirement eligibility requirements after the performance criteria has been achieved.

We periodically assess the probability of the benchmarks being achieved and expense the probable payout over the requisite service period of the award.

The performance period for the 2017 Long-term Incentive Plan ended on December 31, 2020.

In April 2021, our Board of Directors approved the issuance of the 2021 Long-term Incentive Plan.

Similar to the above arrangement, this plan provides for incentive compensation awards to Advisory Senior Managing Directors, excluding our executive officers, who exceed defined benchmark results over a four-year performance period beginning in 2021.

This plan is due to be paid, in cash or Class A Shares, at our discretion, in three equal installments in the first quarter of 2025, 2026 and 2027, subject to employment at the time of payment.

From time to time, we also grant performance awards to certain individuals which include both performance and service-based vesting requirements.

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Other Expenses include the following:

• Amortization of LP Units and Certain Other Awards – Includes amortization costs associated with the vesting of Class J LP Units issued in conjunction with the acquisition of ISI and certain other related awards.

• Special Charges, Including Business Realignment Costs – Includes expenses in 2020 related to separation and transition benefits and related costs as a result of our review of operations and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives.

• Amortization of LP Units and Certain Other Awards – Includes amortization costs associated with the vesting of Class J LP Units issued in conjunction with the acquisition of ISI.

for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives.

• Acquisition and Transition Costs – Includes costs incurred in connection with acquisitions, divestitures and other ongoing business development initiatives, primarily comprised of professional fees for legal and other services.

• Intangible Asset and Other Amortization – Includes amortization of intangible assets and other purchase accounting-related amortization associated with certain acquisitions.

• Intangible Asset and Other Amortization – Includes amortization of intangible assets associated with certain acquisitions.

Income from Equity Method Investments

Our share of the income (loss) from our equity interests in ABS, Atalanta Sosnoff and Luminis are included within Income from Equity Method Investments, as a component of Income Before Income Taxes, on the Unaudited Condensed Consolidated Statements of Operations.

In July 2021, we acquired a 20% interest in Seneca Evercore for $0.5 million and will maintain proportional representation on the board of directors of Seneca Evercore (but not less than one director) following this transaction.

We will account for our interest under the equity method of accounting and present our share of the income (loss) from our interest within Income from Equity Method Investments, as a component of Income Before Income Taxes, on the Unaudited Condensed Consolidated Statements of Operations.

Provision for Income Taxes

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Results of Operations

The following is a discussion of our results of operations for the three months ended March 31, 2021 and 2020.

The following is a discussion of our results of operations for the three and six months ended June 30, 2021 and 2020.

For a more detailed discussion of the factors that affected the revenue and operating expenses of our Investment Banking and Investment Management business segments in these periods, see the discussion in "Business Segments" below.

For the Three Months Ended March 31,

2021 2020 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

(dollars in thousands, except per share data)

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Operating Expenses 480,852 411,183 17 % 948,947 763,629 24 %

Other Expenses 7 25,258 (100 %)

Other Expenses — 9,163 NM 7 34,421 (100 %)

Total Expenses 480,852 420,346 14 % 948,954 798,050 19 %

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Common Shareholders $ 3.21 $ 1.35 138 % $ 6.46 $ 2.08 211 %

As of March 31, 2021 and 2020, we employed approximately 1,800 and 1,850 people, respectively, worldwide.

Three Months Ended March 31, 2021 versus March 31, 2020

As of June 30, 2021 and 2020, we employed approximately 1,900 and 1,775 people, respectively, worldwide.

Three Months Ended June 30, 2021 versus June 30, 2020

Net Income Attributable to Evercore Inc.

was $144.4 million for the three months ended March 31, 2021, an increase of $113.2 million, or 363%, compared to $31.2 million for the three months ended March 31, 2020.

was $140.4 million for the three months ended June 30, 2021, an increase of $83.9 million, or 149%, compared to $56.4 million for the three months ended June 30, 2020.

The changes in our operating results during these periods are described below.

Net Revenues were $662.3 million for the three months ended March 31, 2021, an increase of $235.3 million, or 55%, versus Net Revenues of $427.0 million for the three months ended March 31, 2020.

Advisory Fees increased $153.4 million, or 43%, Underwriting Fees increased $58.1 million, or 275%, and Commissions and Related Revenue decreased $2.0 million, or 4%, compared to the three months ended March 31, 2020.

Asset Management and Administration Fees increased $2.2 million, or 17%, compared to the three months ended March 31, 2020.

Other Revenue, Including Interest and Investments, increased compared to the three months ended March 31, 2020 , primarily reflecting a shift from losses of $22.2 million in the first quarter of 2020 to gains of $6.2 million in the first quarter of 2021 on our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program.

Total Operating Expenses were $468.1 million for the three months ended March 31, 2021, compared to $352.4 million for the three months ended March 31, 2020, an increase of $115.6 million, or 33%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $395.4 million for the three months ended March 31, 2021, an increase of

$125.7 million, or 47%, versus expense of $269.7 million for the three months ended March 31, 2020.

The increase in the amount of compensation recognized for the three months ended March 31, 2021 principally reflects higher levels of incentive compensation, higher amortization of prior period deferred compensation awards and higher base salaries.

Non-Compensation expenses, as a component of Operating Expenses, were $72.7 million for the three months ended March 31, 2021, a decrease of $10.0 million, or 12%, versus $82.7 million for the three months ended March 31, 2020.

Non-Compensation operating expenses decreased compared to the three months ended March 31, 2020, primarily driven by decreased travel and related expenses, as a substantial number of employees continued to work remotely.

Non-Compensation expenses per employee were approximately $40.3 thousand for the three months ended March 31, 2021, versus $44.1 thousand for the three months ended March 31, 2020.

Total Other Expenses of $0.01 million for the three months ended March 31, 2021 reflected Acquisition and Transition Costs.

Total Other Expenses of $25.3 million for the three months ended March 31, 2020 included (a) Special Charges, Including Business Realignment Costs, of $23.7 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) compensation costs of $1.1 million associated with the vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, (c) intangible asset and other amortization of $0.5 million and (d) Acquisition and Transition Costs of $0.01 million.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 59.7% for the three months ended March 31, 2021, compared to 63.4% for the three months ended March 31, 2020.

The compensation ratio for the three months ended March 31, 2020 is 68.5% when the $22.0 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

Net Revenues were $687.9 million for the three months ended June 30, 2021, an increase of $180.8 million, or 36%, versus Net Revenues of $507.1 million for the three months ended June 30, 2020.

Advisory Fees increased $224.4 million, or 67%, Underwriting Fees decreased $45.5 million, or 49%, and Commissions and Related Revenue decreased $3.6 million, or 7%, compared to the three months ended June 30, 2020.

Asset Management and Administration Fees increased $3.2 million, or 25%, compared to the three months ended June 30, 2020.

Other Revenue, Including Interest and In vestments, increased 9% compared to the three months ended June 30, 2020, primarily driven by the gain on the redemption of the G5 debt security in the second quarter of 2021, partially offset by lower performance of our investment funds portfolio, which is used as an

economic hedge against our deferred cash compensation program.

For further information see Notes 7, 8 and 16 to our unaudited condensed consolidated financial statements.

Total Operating Expenses were $480.9 million for the three months ended June 30, 2021, compared to $411.2 million for the three months ended June 30, 2020, an increase of $69.7 million, or 17%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $407.8 million for the three months ended June 30, 2021, an increase of $73.8 million, or 22%, versus expense of $334.0 million for the three months ended June 30, 2020.

The increase in the amount of compensation recognized for the three months ended June 30, 2021 principally reflects higher levels of incentive compensation, higher amortization of prior period deferred compensation awards and higher base salaries.

Non-Compensation expenses, as a component of Operating Expenses, were $73.1 million for the three months ended June 30, 2021, a decrease of $4.1 million, or 5%, versus $77.2 million for the three months ended June 30, 2020.

Non-Compensation operating expenses decreased compared to the three months ended June 30, 2020, primarily driven by a decrease in bad debt expense, which was due in part to recoveries in 2021, partially offset by an increase in professional fees.

Non-Compensation expenses per employee were approximately $39.4 thousand for the three months ended June 30, 2021, versus $42.6 thousand for the three months ended June 30, 2020.

Total Other Expenses of $9.2 million for the three months ended June 30, 2020 included (a) Special Charges, Including Business Realignment Costs, of $8.6 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) intangible asset and other amortization of $0.5 million and (c) Acquisition and Transition Costs of $0.1 million.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 59.3% for the three months ended June 30, 2021, compared to 65.9% for the three months ended June 30, 2020.

The compensation ratio for the three months ended June 30, 2020 was 67.5% when the $8.2 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

The decrease in the compensation ratio principally reflects leverage achieved on higher revenues, partially offset by higher levels of incentive compensation, higher amortization of prior period deferred compensation awards and higher base salaries.

Income from Equity Method Investments was $3.0 million for the three months ended March 31, 2021, compared to $3.1 million for the three months ended March 31, 2020.

The decrease was primarily driven by a decrease in earnings from Luminis, partially offset by an increase in earnings from ABS and Atalanta Sosnoff during the three months ended March 31, 2021.

The provision for income taxes for the three months ended March 31, 2021 was $31.7 million, which reflected an effective tax rate of 16.1%.

The provision for income taxes for the three months ended March 31, 2020 was $13.6 million, which reflected an effective tax rate of 25.8%.

The provision for income taxes for the three months ended March 31, 2021 and 2020 reflects the net impact of the deduction associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $16.7 million and $0.6 million, respectively, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $21.2 million for the three months ended March 31, 2021 compared to $7.7 million for the three months ended March 31, 2020.

The increase in Net Income Attributable to Noncontrolling Interest primarily reflects higher income allocated to noncontrolling interest for Evercore LP during the three months ended March 31, 2021.

Income from Equity Method Investments was $3.4 million for the three months ended June 30, 2021, compared to $2.3 million for the three months ended June 30, 2020.

The increase was driven by an increase in earnings from ABS, Luminis and Atalanta Sosnoff during the three months ended June 30, 2021.

The provision for income taxes for the three months ended June 30, 2021 was $46.5 million, which reflected an effective tax rate of 22.1%.

The provision for income taxes for the three months ended June 30, 2020 was $21.8 million, which reflected an effective tax rate of 24.5%.

The provision for income taxes for the three months ended June 30, 2021 reflects an additional tax benefit of $0.3 million and for the three months ended June 30, 2020 an additional tax expense of $0.5 million due to the net impact associated with the appreciation or depreciation in our share price upon vesting of employee share-based awards above or below the original grant price, the effect of certain nondeductible expenses, including expenses related to Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $23.6 million for the three months ended June 30, 2021 compared to $10.8 million for the three months ended June 30, 2020.

The increase in Net Income Attributable to Noncontrolling Interest primarily reflects higher earnings for Evercore LP during the three months ended June 30, 2021.

Six Months Ended June 30, 2021 versus June 30, 2020

Net Income Attributable to Evercore Inc.

was $284.7 million for the six months ended June 30, 2021, an increase of $197.1 million, or 225%, compared to $87.6 million for the six months ended June 30, 2020.

The changes in our operating results during these periods are described below.

Net Revenues were $1.35 billion for the six months ended June 30, 2021, an increase of $416.1 million, or 45%, versus Net Revenues of $934.1 million for the six months ended June 30, 2020.

Advisory Fees increased $377.7 million, or 54%, Underwriting Fees increased $12.6 million, or 11%, and Commissions and Related Revenue decreased $5.6 million, or 5%, compared to the six months ended June 30, 2020.

Asset Management and Administration Fees increased $5.4 million, or 21%, compared to the six months ended June 30, 2020.

Other Revenue, Including Interest and Investments, increased compared to the six months ended June 30, 2020, which was primarily driven by a shift from net losses of $6.8 million for the six months ended June 30, 2020 to gains of $16.0 million for the six months ended June 30, 2021 on our investment funds portfolio, which

is used as an economic hedge against our deferred cash compensation program, as well as the gain on the redemption of the G5 debt security in the second quarter of 2021.

For further information see Notes 7, 8 and 16 to our unaudited condensed consolidated financial statements.

Total Operating Expenses were $948.9 million for the six months ended June 30, 2021, compared to $763.6 million for the six months ended June 30, 2020, an increase of $185.3 million, or 24%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $803.2 million for the six months ended June 30, 2021, an increase of $199.5 million, or 33%, versus expense of $603.7 million for the six months ended June 30, 2020.

The increase in the amount of compensation recognized in the six months ended June 30, 2021 is driven by higher levels of incentive compensation, higher amortization of prior period deferred compensation awards and higher base salaries.

Non-compensation expenses as a component of Operating Expenses were $145.7 million for the six months ended June 30, 2021, a decrease of $14.2 million, or 9%, versus $159.9 million for the six months ended June 30, 2020.

Non-compensation operating expenses decreased compared to the six months ended June 30, 2020, primarily driven by decreased travel and related expenses, as a substantial number of employees continued to work remotely in 2021, as well as a decrease in bad debt expense, which was due in part to recoveries in 2021, partially offset by an increase in professional fees.

Non-Compensation expenses per employee were approximately $79.3 thousand for the six months ended June 30, 2021, versus $86.7 thousand for the six months ended June 30, 2020.

Total Other Expenses of $0.01 million for the six months ended June 30, 2021 reflected Acquisition and Transition Costs.

Total Other Expenses of $34.4 million for the six months ended June 30, 2020 included (a) Special Charges, Including Business Realignment Costs, of $32.2 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) compensation costs of $1.1 million associated with the vesting of Class J LP Units, (c) intangible asset and other amortization of $1.0 million and (d) Acquisition and Transition Costs of $0.1 million.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 59.5% for the six months ended June 30, 2021, compared to 64.7% for the six months ended June 30, 2020.

The compensation ratio for the six months ended June 30, 2020 was 68.0% when the $30.2 million of separation and transition benefits expense, which is presented within Special Charges, Including Business Realignment Costs, is also included.

Income from Equity Method Investments was $6.4 million for the six months ended June 30, 2021, compared to $5.4 million for the six months ended June 30, 2020.

The increase was a result of an increase in earnings from ABS, Atalanta Sosnoff and Luminis during the six months ended June 30, 2021.

The provision for income taxes for the six months ended June 30, 2021 was $78.2 million, which reflected an effective tax rate of 19.2%.

The provision for income taxes for the six months ended June 30, 2020 was $35.4 million, which reflected an effective tax rate of 25.0%.

The provision for income taxes for the six months ended June 30, 2021 and 2020 reflects the net impact of the deduction associated with the appreciation of our share price upon vesting of employee share-based awards above the original grant price of $17.0 million and $0.1 million, respectively, the effect of certain nondeductible expenses, including expenses related to Class J LP Units and Class I-P and K-P Units, as well as the noncontrolling interest associated with LP Units and other adjustments.

Net Income Attributable to Noncontrolling Interest was $44.8 million for the six months ended June 30, 2021 compared to $18.5 million for the six months ended June 30, 2020.

The increase in Net Income Attributable to Noncontrolling Interest primarily reflects higher earnings for Evercore LP during the six months ended June 30, 2021.

Business Segments

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The following table summarizes the operating results of the Investment Banking segment.

For the Three Months Ended March 31,

2021 2020 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

(dollars in thousands)

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Advisory Fees $ 560,814 $ 336,436 67 % $ 1,072,732 $ 695,000 54 %

$ 511,918 $ 358,564 43 %

Underwriting Fees 48,048 93,565 (49 %) 127,305 114,683 11 %

79,257 21,118 275 %

Commissions and Related Revenue (1)

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Operating Expenses 468,160 399,476 17 % 924,686 739,271 25 %

Other Expenses 7 25,226 (100 %)

Other Expenses — 9,163 NM 7 34,389 (100 %)

Total Expenses 468,160 408,639 15 % 924,693 773,660 20 %

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Pre-Tax Income $ 203,209 $ 86,800 134 % $ 394,130 $ 135,971 190 %

(1) Includes client related expenses of $3.2 million and $4.9 million for the three months ended March 31, 2021 and 2020, respectively.

(2) Includes client related expenses of $3.2 million and $2.0 million for the three months ended March 31, 2021 and 2020, respectively.

(3) We renamed "Commissions and Related Fees" to "Commissions and Related Revenue" and reclassified $0.2 million of principal trading gains and losses from our institutional equities business from "Other Revenue, net" to "Commissions and Related Revenue" for the three months ended March 31, 2020.

(4) Includes interest expense on Notes Payable of $4.6 million and $4.8 million for the three months ended March 31, 2021 and 2020, respectively.

(1) We renamed "Commissions and Related Fees" to "Commissions and Related Revenue" and reclassified $0.2 million and $0.4 million of principal trading gains and losses from our institutional equities business from "Other Revenue, net" to "Commissions and Related Revenue" for the three and six months ended June 30, 2020, respectively.

See Note 2 to our unaudited condensed consolidated financial statements for further information.

(2) Includes interest expense on Notes Payable of $4.3 million and $8.9 million for the three and six months ended June 30, 2021, respectively, and $4.5 million and $9.4 million for the three and six months ended June 30, 2020, respectively .

(3) Includes a gain of $4.4 million for the three and six months ended June 30, 2021, resulting from the redemption of our G5 debt security.

(4) Equity in Luminis is classified as Income from Equity Method Investments.

For the three months ended March 31, 2021, the dollar value of North American announced and completed M&A activity increased 172% and 19%, respectively, compared to the three months ended March 31, 2020, and the dollar value of Global announced and completed M&A activity increased 95% and 35%, respectively, compared to the three months ended March 31, 2020.

For the three months ended March 31, 2021, the dollar value of North American and Global announced M&A activity between $1 - $5 billion increased 225% and 174%, respectively, compared to the three months ended March 31, 2020.

For the Three Months Ended March 31,

2021 2020 Change

For the three months ended June 30, 2021, the dollar value of North American announced and completed M&A activity increased 491% and decreased 14%, respectively, compared to the three months ended June 30, 2020, and the dollar value of Global announced and completed M&A activity increased 185% and 2%, respectively, compared to the three months ended June 30, 2020.

For the three months ended June 30, 2021, the dollar value of North American and Global announced M&A activity between $1 - $5 billion increased 463% and 396%, respectively, compared to the three months ended June 30, 2020.

For the six months ended June 30, 2021, the dollar value of North American announced and completed M&A activity increased 266% and 1%, respectively, compared to the six months ended June 30, 2020, and the dollar value of Global announced and completed M&A activity increased 132% and 17%, respectively, compared to the six months ended June 30, 2020.

For the six months ended June 30, 2021, the dollar value of North American and Global announced M&A activity between $1 - $5 billion increased 302% and 260%, respectively, compared to the six months ended June 30, 2020.

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

Industry Statistics ($ in billions) *

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Total Number of Underwriting Transactions as a Bookrunner 25 21 19 % 56 29 93 %

Refinitiv April 6, 2021

** Includes revenue generating clients only from Advisory and Underwriting transactions

Refinitiv June 30, 2021

** Includes revenue generating clients

Investment Banking Results of Operations

Three Months Ended March 31, 2021 versus March 31, 2020

Investment Banking Net Revenues were $647.3 million for the three months ended March 31, 2021, compared to $413.7 million for the three months ended March 31, 2020, an increase of $233.6 million, or 56%.

We earned 248 fees from Advisory clients for the three months ended March 31, 2021, compared to 222 for the three months ended March 31, 2020, representing a 12% increase.

We earned 103 fees in excess of $1.0 million for the three months ended March 31, 2021, compared to 73 for the three months ended March 31, 2020, representing a 41% increase.

The increase in revenues from the three months ended March 31, 2020 was partially attributed to an increase of $153.4 million, or 43%, in Advisory Fees, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions during the three months ended March 31, 2021.

Underwriting Fees increased $58.1 million, or 275%, compared to the three months ended March 31, 2020, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions.

Commissions and Related Revenue decreased $2.0 million, or 4%, compared to the three months ended March 31, 2020.

Other Revenue, net, for the three months ended March 31, 2021 increased versus the three months ended March 31, 2020, primarily reflecting a shift from losses of $22.2 million in the first quarter of 2020 to gains of $6.2 million in the first quarter of 2021 on our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program.

Operating Expenses were $456.5 million for the three months ended March 31, 2021, compared to $339.8 million for the three months ended March 31, 2020, an increase of $116.7 million, or 34%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $386.7 million for the three months ended March 31, 2021, compared to $260.9 million for the three months ended March 31, 2020, an increase of $125.8 million, or 48%.

Non-Compensation expenses, as a component of Operating Expenses, were $69.8 million for the three months ended March 31, 2021, compared to $78.9 million for the three months ended March 31, 2020, a decrease of $9.1 million, or 12%.

Non-Compensation operating expenses decreased from the three months ended March 31, 2020 primarily driven by decreased travel and related expenses, as a substantial number of employees continued to work remotely.

Other Expenses of $0.01 million for the three months ended March 31, 2021 reflected Acquisition and Transition Costs.

Other Expenses of $25.2 million for the three months ended March 31, 2020 included (a) Special Charges, Including Business Realignment Costs, of $23.6 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) compensation costs of $1.1 million associated with the

vesting of Class J LP Units and certain other awards granted in conjunction with the acquisition of ISI, (c) intangible asset and other amortization of $0.5 million and (d) Acquisition and Transition Costs of $0.01 million.

Three Months Ended June 30, 2021 versus June 30, 2020

Investment Banking Net Revenues were $670.8 million for the three months ended June 30, 2021, compared to $495.4 million for the three months ended June 30, 2020, an increase of $175.4 million, or 35%.

We earned 255 fees from Advisory clients for the three months ended June 30, 2021, compared to 222 for the three months ended June 30, 2020, representing a 15% increase.

We earned 115 fees in excess of $1.0 million for the three months ended June 30, 2021, compared to 77 for the three months ended June 30, 2020, representing a 49% increase.

The increase in revenues from the three months ended June 30, 2020 was primarily driven by an increase of $224.4 million, or 67%, in Advisory Fees, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions during the three months ended June 30, 2021.

Underwriting Fees decreased $45.5 million, or 49%, compared to the three months ended June 30, 2020, reflecting a decrease in the number of transactions we participated in, as well as the relative fee size of those transactions.

Commissions and Related Revenue decreased $3.6 million, or 7%, compared to the three months ended June 30, 2020.

Other Revenue, net, for the three months ended June 30, 2021 increased 2% versus the three months ended June 30, 2020, primarily driven by the gain on the redemption of the G5 debt security in the second quarter of 2021, partially offset by lower performance of our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program.

Operating Expenses were $468.2 million for the three months ended June 30, 2021, compared to $399.5 million for the three months ended June 30, 2020, an increase of $68.7 million, or 17%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $398.2 million for the three months ended June 30, 2021, compared to $325.7 million for the three months ended June 30, 2020, an increase of $72.5 million, or 22%.

Non-Compensation expenses, as a component of Operating Expenses, were $70.0 million for the three months ended June 30, 2021, compared to $73.8 million for the three months ended June 30, 2020, a decrease of $3.8 million, or 5%.

Non-Compensation operating expenses decreased from the three months ended June 30, 2020 primarily driven by a decrease in bad debt expense, partially offset by an increase in professional fees.

Other Expenses of $9.2 million for the three months ended June 30, 2020 included (a) Special Charges, Including Business Realignment Costs, of $8.6 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) intangible asset amortization of $0.5 million and (c) Acquisition and Transition Costs of $0.1 million.

Six Months Ended June 30, 2021 versus June 30, 2020

Investment Banking Net Revenues were $1.32 billion for the six months ended June 30, 2021, compared to $909.0 million for the six months ended June 30, 2020, an increase of $409.1 million, or 45%.

We earned 418 fees from Advisory clients for the six months ended June 30, 2021, compared to 358 for the six months ended June 30, 2020, representing a 17% increase.

We earned 218 fees in excess of $1.0 million for the six months ended June 30, 2021, compared to 150 for the six months ended June 30, 2020, representing a 45% increase.

The increase in revenues from the six months ended June 30, 2020 was primarily driven by an increase of $377.7 million, or 54%, in Advisory Fees, reflecting an increase in the number of Advisory fees earned and an increase in revenue earned from large transactions during the six months ended June 30, 2021.

Underwriting Fees increased $12.6 million, or 11%, compared to the six months ended June 30, 2020, reflecting an increase in the number of transactions we participated in, as well as the relative size of our participation in those transactions .

Commissions and Related Revenue decreased $5.6 million, or 5%, compared to the six months ended June 30, 2020.

Other Revenue, net, for the six months ended June 30, 2021 increased versus the six months ended June 30, 2020, primarily driven by a shift from net losses of $6.8 million for the six months ended June 30, 2020 to gains of $16.0 million for the six months ended June 30, 2021 on our investment funds portfolio, which is used as an economic hedge against our deferred cash compensation program, as well as the gain on the redemption of the G5 debt security in the second quarter of 2021.

Operating Expenses were $924.7 million for the six months ended June 30, 2021, compared to $739.3 million for the six months ended June 30, 2020, an increase of $185.4 million, or 25%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $784.8 million for the six months ended June 30, 2021, compared to $586.6 million for the six months ended June 30, 2020, an increase of $198.2 million, or 34%.

Non-compensation expenses, as a component of Operating Expenses, were $139.9 million for the six months ended June 30, 2021, compared to $152.7 million for the six months ended June 30, 2020 , a decrease of $12.8 million, or 8%.

Non-compensation operating expenses decreased from the six months ended June 30, 2020 primarily driven by decreased travel and related expenses, as a substantial number of employees continued to work remotely in 2021, as well as a decrease in bad debt expense, partially offset by an increase in professional fees.

Other Expenses of $0.01 million for the six months ended June 30, 2021 reflected Acquisition and Transition Costs.

Other Expenses of $34.4 million for the six months ended June 30, 2020 included (a) Special Charges, Including Business Realignment Costs, of $32.2 million related to separation and transition benefits and related costs and the acceleration of depreciation expense for leasehold improvements and certain other fixed assets in conjunction with the expansion of our headquarters in New York and our business realignment initiatives, (b) compensation costs of $1.1 million associated with the vesting of Class J LP Units granted in conjunction with the acquisition of ISI, (c) intangible asset amortization of $1.0 million and (d) Acquisition and Transition Costs of $0.1 million.

Investment Management

The following table summarizes the operating results of the Investment Management segment.

For the Three Months Ended March 31,

2021 2020 Change

For the Three Months Ended June 30, For the Six Months Ended June 30,

2021 2020 Change 2021 2020 Change

(dollars in thousands)

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Institutional Asset Management (1)

— 321 NM — 740 NM

Asset Management and Administration Fees 16,183 12,953 25 % 31,132 25,700 21 %

Other Revenue, net 76 604 (87 %)

Other Revenue, net 862 (1,252) NM 938 (648) NM

Net Revenues 17,045 11,701 46 % 32,070 25,052 28 %

Operating Expenses 12,692 11,707 8 % 24,261 24,358 — %

Other Expenses — 32 NM

Other Expenses — — NM — 32 NM

Total Expenses 12,692 11,707 8 % 24,261 24,390 (1 %)

Operating Income 3,456 668 417 %

Operating Income (Loss) 4,353 (6) NM 7,809 662 NM

Income from Equity Method Investments (2)

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In the event the private equity funds perform below certain thresholds, we may be obligated to repay certain carried interest previously distributed.

As of March 31, 2021, $0.8 million of previously distributed carried interest received from the funds was subject to repayment.

As of June 30, 2021, $0.8 million of previously distributed carried interest received from the funds was subject to repayment.

• We also hold interests in ABS and Atalanta Sosnoff that are accounted for under the equity method of accounting.

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Assets Under Management

AUM for our Wealth Management business of $10.6 billion at March 31, 2021 increased compared to $10.2 billion at December 31, 2020.

AUM for our Wealth Management business of $11.1 billion at June 30, 2021 increased compared to $10.2 billion at December 31, 2020.

The amounts of AUM presented in the table below reflect the fair value of assets which we manage on behalf of Wealth Management clients.

As defined in ASC 820, valuations performed for Level 1 investments are based on

quoted prices obtained from active markets generated by third parties and Level 2 investments are valued through the use of models based on either direct or indirect observable inputs in the use of models or other valuation methodologies performed by third parties to determine fair value.

For both the Level 1 and Level 2 investments, we obtain both active quotes from nationally recognized exchanges and third-party pricing services to determine market or fair value quotes, respectively.

As defined in ASC 820, valuations performed for Level 1 investments are based on quoted prices obtained from active markets generated by third parties and Level 2 investments are valued through the use of models based on either direct or indirect observable inputs in the use of models or other valuation methodologies performed by third parties to determine fair value.

For both the Level 1 and Level 2 investments, we obtain both active quotes from nationally

recognized exchanges and third-party pricing services to determine market or fair value quotes, respectively.

For Level 3 investments, pricing inputs are unobservable for the investment and includes situations where there is little, if any, market activity for the investment.

The inputs into the determination of fair value require significant management judgment or estimation.

Wealth Management maintained 74% and 72% of Level 1 investments, 22% and 24% of Level 2 investments and 4% of Level 3 investments as of March 31, 2021 and December 31, 2020, respectively.

Wealth Management maintained 75% and 72% of Level 1 investments, 21% and 24% of Level 2 investments and 4% of Level 3 investments as of June 30, 2021 and December 31, 2020, respectively.

The fees that we receive for providing investment advisory and management services are primarily driven by the level and composition of AUM.

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The fees we earn are also impacted by our investment performance, as the appreciation or depreciation in the value of the assets that we manage directly impacts our fees.

The following table summarizes AUM activity for the three months ended March 31, 2021:

The following table summarizes AUM activity for the six months ended June 30, 2021:

Management (1)

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Market Appreciation 808

Balance at March 31, 2021 $ 10,555

Unconsolidated Affiliates - Balance at March 31, 2021:

Balance at June 30, 2021 $ 11,134

Unconsolidated Affiliates - Balance at June 30, 2021:

Atalanta Sosnoff $ 8,277

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $76.4 million as of March 31, 2021 and December 31, 2020.

The following table represents the composition of AUM for Wealth Management as of March 31, 2021:

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $76.3 million and $76.4 million as of June 30, 2021 and December 31, 2020, respectively.

The following table represents the composition of AUM for Wealth Management as of June 30, 2021:

Wealth Management

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Investment performance in the Wealth Management businesses is measured against appropriate indices based on the AUM, most frequently the S&P 500 and a composite fixed income index principally reflecting BarCap and MSCI indices.

For the three months ended March 31, 2021, AUM for Wealth Management increased 4%, reflecting a 3% increase due to market appreciation and a 1% increase due to flows.

For the six months ended June 30, 2021, AUM for Wealth Management increased 10%, reflecting an 8% increase due to market appreciation and a 2% increase due to flows.

Wealth Management outperformed the S&P 500 on a 1 and 3-year basis by approximately 2% and 3%, respectively, during the period.

Wealth Management lagged the fixed income composite on a 1 and 3 year basis by approximately 10 basis points and 50 basis points, respectively, during the period.

For the three months ended March 31, 2021, the S&P 500 was up approximately 6% and the fixed income composite was down approximately 1%.

Wealth Management outperformed the fixed income composite on a

1-year basis by approximately 70 basis points and lagged the fixed income composite on a 3-year basis by approximately 40 basis points, respectively, during the period.

For the six months ended June 30, 2021, the S&P 500 was up approximately 15% and the fixed income composite was down approximately 1%.

AUM from our unconsolidated affiliates increased 8% compared to December 31, 2020, primarily related to positive performance in ABS and Atalanta Sosnoff.

Three Months Ended March 31, 2021 versus March 31, 2020

Investment Management Net Revenues were $15.0 million for the three months ended March 31, 2021, compared to $13.4 million for the three months ended March 31, 2020, which represented an increase of 13%.

Asset Management and Administration Fees earned from the management of client portfolios increased 17% for the three months ended March 31, 2021, primarily driven by an increase of $2.6 million in fees from Wealth Management clients, as associated AUM increased 28%.

Fee-based revenues included $0.07 million of revenues from performance fees for the three months ended March 31, 2020.

Income from Equity Method Investments increased from the three months ended March 31, 2020, as a result of an increase in earnings from our investments in ABS and Atalanta Sosnoff.

Operating Expenses were $11.6 million for the three months ended March 31, 2021, compared to $12.7 million for the three months ended March 31, 2020, a decrease of $1.1 million, or 9%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $8.7 million for the three months ended March 31, 2021, compared to $8.8 million for the three months ended March 31, 2020, a decrease of $0.1 million, or 1%.

Non-Compensation expenses, as a component of Operating Expenses, were $2.9 million for the three months ended March 31, 2021, compared to $3.9 million for the three months ended March 31, 2020, a decrease of $1.0 million, or 26%.

Other Expenses of $0.03 million for the three months ended March 31, 2020 included Special Charges, Including Business Realignment Costs, related to separation and transition benefits and related costs as a result of the review of our operations.

Three Months Ended June 30, 2021 versus June 30, 2020

Investment Management Net Revenues were $17.0 million for the three months ended June 30, 2021, compared to $11.7 million for the three months ended June 30, 2020, which represented an increase of 46%.

Asset Management and Administration Fees earned from the management of client portfolios increased 25% for the three months ended June 30, 2021, primarily driven by an increase of $3.6 million in fees from Wealth Management clients, as associated AUM increased 23%.

Fee-based revenues included $0.01 million of revenues from performance fees for the three months ended June 30, 2020.

Income from Equity Method Investments increased from the three months ended June 30, 2020, as a result of an increase in earnings from our investments in ABS and Atalanta Sosnoff.

Operating Expenses were $12.7 million for the three months ended June 30, 2021, compared to $11.7 million for the three months ended June 30, 2020, an increase of $1.0 million, or 8%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $9.6 million for the three months ended June 30, 2021, compared to $8.3 million for the three months ended June 30, 2020, an increase of $1.3 million, or 16%.

Non-Compensation expenses, as a component of Operating Expenses, were $3.1 million for the three months ended June 30, 2021, compared to $3.4 million for the three months ended June 30, 2020, a decrease of $0.3 million, or 9%.

Six Months Ended June 30, 2021 versus June 30, 2020

Investment Management Net Revenues were $32.1 million for the six months ended June 30, 2021, compared to $25.1 million for the six months ended June 30, 2020, which represented an increase of 28%.

Asset Management and Administration Fees earned from the management of client portfolios increased 21% for the six months ended June 30, 2021, primarily driven by an increase of $6.2 million in fees from Wealth Management clients, as associated AUM increased 23%.

Fee-based revenues included $0.07 million of revenues from performance fees for the six months ended June 30, 2020.

Income from Equity Method Investments increased from the six months ended June 30, 2020, as a result of an increase in earnings from our investments in ABS and Atalanta Sosnoff.

Operating Expenses were $24.3 million for the six months ended June 30, 2021, flat compared to the six months ended June 30, 2020.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $18.3 million for the six months ended June 30, 2021, compared to $17.1 million for the six months ended June 30, 2020, an increase of $1.2 million, or 7%.

Non-Compensation expenses, as a component of Operating Expenses, were $6.0 million for the six months ended June 30, 2021, compared to $7.3 million for the six months ended June 30, 2020, a decrease of $1.3 million, or 18%.

Other Expenses of $0.03 million for the six months ended June 30, 2020 included Special Charges, Including Business Realignment Costs, related to separation and transition benefits and related costs.

Our operating cash flows are primarily influenced by the timing and receipt of investment banking and investment management fees and the payment of operating expenses, including incentive compensation to our employees and interest expense on our repurchase agreements (prior to the sale of our ECB business), Notes Payable and lines of credit, and the payment of income taxes.

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Likewise, payments to fund investments related to hedging our deferred cash compensation plans are generally funded in the first three months of each calendar year.

Our investing and financing cash flows are primarily influenced by activities to invest our cash in highly liquid securities or bank certificates of deposit, deploy capital to fund investments and acquisitions, raise capital through the issuance of stock or debt, repurchase of outstanding Class A Shares, and/or noncontrolling interest in Evercore LP, as well as our other subsidiaries, payment of dividends and other periodic distributions to our stakeholders.

capital through the issuance of stock or debt, repurchase of outstanding Class A Shares, and/or noncontrolling interest in Evercore LP, as well as our other subsidiaries, payment of dividends and other periodic distributions to our stakeholders.

We generally make dividend payments and other distributions on a quarterly basis.

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A summary of our operating, investing and financing cash flows is as follows:

For the Three Months Ended March 31,

For the Six Months Ended June 30,

(dollars in thousands)

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End of Period $ 450,991 $ 1,025,020

Three Months Ended March 31, 2021.

Cash, Cash Equivalents and Restricted Cash were $419.6 million at March 31, 2021, a decrease of $418.6 million versus Cash, Cash Equivalents and Restricted Cash of $838.2 million at December 31, 2020.

Operating activities resulted in a net outflow of $330.1 million, primarily related to the payment of 2020 bonus awards and deferred cash compensation, partially offset by earnings.

Cash of $190.2 million was provided by investing activities primarily related to net proceeds from sales and maturities of investment securities, partially offset by the purchase of certificates of deposit and purchases of equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $280.5 million, primarily for purchases of treasury stock, the payment of our Notes Payable and dividends and distributions to noncontrolling interest holders, partially offset by the issuance of the 2021 Private Placement Notes.

Six Months Ended June 30, 2021.

Cash, Cash Equivalents and Restricted Cash were $451.0 million at June 30, 2021, a decrease of $387.2 million versus Cash, Cash Equivalents and Restricted Cash of $838.2 million at December 31, 2020.

Operating activities resulted in a net inflow of $114.5 million, primarily related to earnings, partially offset by the payment of 2020 bonus awards and deferred cash compensation.

Cash of $12.0 million was provided by investing activities primarily related to net proceeds from sales and maturities of investment securities and the proceeds from the redemption of the G5 debt security, partially offset by the purchase of certificates of deposit and purchases of equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $517.2 million, primarily for purchases of treasury stock and noncontrolling interests, the payment of our Notes Payable and dividends and distributions to noncontrolling interest holders, partially offset by the issuance of the 2021 Private Placement Notes.

For further information, see Note 11 to our unaudited condensed consolidated financial statements.

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currencies to U.S.

Three Months Ended March 31, 2020.

Cash, Cash Equivalents and Restricted Cash were $600.1 million at March 31, 2020, a decrease of $43.7 million versus Cash, Cash Equivalents and Restricted Cash of $643.9 million at December 31, 2019.

Operating activities resulted in a net outflow of $174.3 million, primarily related to the payment of 2019 bonus awards and deferred cash compensation, partially offset by earnings.

Cash of $324.8 million was provided by investing activities primarily related to the maturity of certificates of deposit and net proceeds from sales and maturities of investment securities, partially offset by purchases of equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Six Months Ended June 30, 2020.

Cash, Cash Equivalents and Restricted Cash were $1.0 billion at June 30, 2020, an increase of $381.1 million versus Cash, Cash Equivalents and Restricted Cash of $643.9 million at December 31, 2019.

Operating activities resulted in a net inflow of $118.8 million, primarily related to earnings, partially offset by the payment of 2019 bonus awards and deferred cash compensation.

Cash flows for the first six months of 2020 also reflect the impact of lower tax payments resulting from the deferral of required federal income tax payments pursuant to the Coronavirus Aid, Relief, and Economic Security Act ("CARES" Act).

Cash of $483.6 million was provided by investing activities primarily related to net proceeds from sales and maturities of investment securities and the maturity of certificates of deposit, partially offset by purchases of equipment and leasehold improvements, primarily related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $214.4 million, primarily for purchases of treasury stock and the payment of dividends and distributions to noncontrolling interest holders.

Cash also declined due to the effect of foreign exchange rate fluctuation when translating non-U.S.

Cash is also impacted due to the effect of foreign exchange rate fluctuation when translating non-U.S.

currencies to U.S.

Liquidity and Capital Resources

Our current assets principally include Cash and Cash Equivalents, Investment Securities and Certificates of Deposit, Accounts Receivable and contract assets, included in Other Current Assets, relating to Investment Banking and Investment Management revenues.

Management revenues.

Our current liabilities principally include accrued expenses, accrued liabilities related to improvements in our leased facilities, accrued employee compensation and short-term borrowings.

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these payments are made prior to the end of each calendar quarter.

In addition, dividends on

Class A Shares, and related distributions to partners of Evercore LP, are paid when and if declared by the Board of Directors, which is generally quarterly.

In addition, dividends on Class A Shares, and related distributions to partners of Evercore LP, are paid when and if declared by the Board of Directors, which is generally quarterly.

We regularly monitor our liquidity position, including cash, other significant working capital, current assets and liabilities, long-term liabilities, lease commitments and related fixed assets, principal investment commitments related to our Investment Management business, dividends on Class A Shares, partnership distributions and other capital transactions, as well as other matters relating to liquidity and compliance with regulatory requirements.

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In addition, we may from time to time, purchase noncontrolling interests in subsidiaries.

On October 23, 2017, our Board of Directors authorized (in addition to the net settlement of equity awards) the repurchase of Class A Shares and/or LP Units so that from that date forward, we are able to repurchase an aggregate of the lesser of $750.0 million worth of Class A Shares and/or LP Units and 8.5 million Class A Shares and/or LP Units.

On October 23, 2017, our Board of Directors authorized (in addition to the net settlement of equity awards) the repurchase of Class A Shares and/or LP Units so that from that date forward, we were able to repurchase an aggregate of the lesser of $750.0 million worth of Class A Shares and/or LP Units and 8.5 million Class A Shares and/or LP Units.

Further, on April 27, 2021, our Board of Directors authorized (in addition to the net settlement of equity awards) the repurchase of Class A Shares and/or LP Units so that from that date forward, we are able to repurchase an aggregate of the lesser of $750.0 million worth of Class A Shares and/or LP Units and 8.5 million Class A Shares and/or LP Units.

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 amount of shares repurchased will depend on a variety of factors, including our liquidity position, legal requirements, price, economic and market conditions and the objective to reduce the dilutive effect of equity awards granted as compensation to employees.

This program may be suspended or discontinued at any time and does not have a

specified expiration date.

During the three months ended March 31, 2021, we repurchased 1,023,234 Class A Shares, at an average cost per share of $125.00, for $127.9 million pursuant to our repurchase program.

On April 27, 2021, our Board of Directors authorized (in addition to the net settlement of equity awards) the repurchase of Class A Shares and/or LP Units so that from that date forward, we are able to repurchase an aggregate of the lesser of $750.0 million worth of Class A Shares and/or LP Units and 8.5 million Class A Shares and/or LP Units.

In addition, periodically, we buy shares into treasury from our employees in order to allow them to satisfy their minimum tax requirements for share deliveries under our share equity plan.

During the three months ended March 31, 2021, we repurchased 917,196 Class A Shares, at an average cost per share of $116.61, for $107.0 million primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 1,940,430 Class A Shares repurchased during the three months ended March 31, 2021 were acquired for aggregate purchase consideration of $234.9 million, at an average cost per share of $121.03.

This program may be suspended or discontinued at any time and does not have a specified expiration date.

During the six months ended June 30, 2021, we repurchased 2,374,027 Class A Shares, at an average cost per share of $132.88, for $315.5 million pursuant to our repurchase program.

In addition, we periodically buy shares into treasury from our employees in order to allow them to satisfy their minimum tax requirements for share deliveries under our share equity plan.

During the six months ended June 30, 2021, we repurchased 934,387 Class A Shares, at an average cost per share of $117.02, for $109.3 million primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 3,308,414 Class A Shares repurchased during the six months ended June 30, 2021 were acquired for aggregate purchase consideration of $424.8 million, at an average cost per share of $128.40.

Private Placements

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The 2016 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio, a minimum tangible net worth and a minimum interest coverage ratio, and customary events of default.

As of March 31, 2021, we were in compliance with all of these covenants.

As of June 30, 2021, we were in compliance with all of these covenants.

On August 1, 2019, we issued $175.0 million and £25.0 million of senior unsecured notes through private placement.

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We may, at our option, prepay all, or from time to time any part of, the 2019 Private Placement Notes (without regard to Series), in an amount not less than 5% of the aggregate principal amount of the 2019 Private Placement Notes then outstanding at 100% of the principal amount thereof plus an applicable "make-whole amount." Upon the occurrence of a change of control, the holders of the 2019 Private Placement Notes will have the right to require us to prepay the entire unpaid principal amounts held by each holder of the 2019 Private Placement Notes plus accrued and unpaid interest to the prepayment date.

The 2019 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default.

As of March 31, 2021, we were in compliance with all of these covenants.

The 2019 Note Purchase Agreement contains customary covenants, including

financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default.

As of June 30, 2021, we were in compliance with all of these covenants.

On March 29, 2021, we issued an aggregate of $38.0 million of senior notes, comprised of $38.0 million aggregate principal amount of our 1.97% Series I Notes, pursuant to the 2021 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933.

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The 2021 Note Purchase Agreement contains customary covenants, including financial covenants requiring compliance with a maximum leverage ratio and a minimum tangible net worth, and customary events of default.

As of March 31, 2021, we were in compliance with all of these covenants.

As of June 30, 2021, we were in compliance with all of these covenants.

Lines of Credit

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In addition, the agreement contains certain reporting covenants, as well as certain debt covenants that prohibit East and us from incurring other indebtedness, subject to specified exceptions.

We and our consolidated subsidiaries were in compliance with these covenants as of March 31, 2021.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2021.

East amended this facility on October 30, 2020 such that, among other things, the interest rate provisions were modified to LIBOR plus 150 basis points and the maturity date was extended to October 31, 2022.

On July 26, 2019, East entered into an additional loan agreement with PNC for a revolving credit facility in an aggregate principal amount of up to $20.0 million, to be used for working capital and other corporate activities.

The facility is unsecured.

This facility is unsecured.

In addition, the agreement contains certain reporting requirements and debt covenants consistent with the Existing PNC Facility.

We and our consolidated subsidiaries were in compliance with these covenants as of March 31, 2021.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2021.

On October 30, 2020, East amended this facility such that, among other things, the revolving credit facility has increased to an aggregate principal amount of $30.0 million.

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East is only permitted to borrow under this facility if there is no undrawn availability under the Existing PNC Facility and must repay indebtedness under this facility prior to repaying indebtedness under the Existing PNC Facility.

There have been no drawings under this facility as of March 31, 2021.

There have been no drawings under this facility as of June 30, 2021.

In addition, EGL's clearing broker provides temporary funding for the settlement of securities transactions.

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For further information see Note 17 to our unaudited condensed consolidated financial statements.

On July 1, 2018, we entered into a new lease agreement for office space at our headquarters at 55 East 52nd St., New York, New York, and subsequently entered into an amendment to this lease agreement for additional office space, as well as extending our original commitment, on December 6, 2019.

We expect to spend approximately $5.0 million, net of a tenant improvement allowance, to improve the premises under this lease over the next twelve months.

On July 1, 2018, we entered into a new lease agreement for office space at our headquarters at 55 East 52nd St., New York, New York, and subsequently entered into an amendment to this lease agreement for additional office space, as well as to extend our original commitment, on December 6, 2019.

We expect to spend approximately $0.8 million, net of a tenant

improvement allowance, to improve the premises under this lease over the next twelve months.

Our work at these premises, which was temporarily suspended at the end of the first quarter of 2020 as a result of the COVID-19 pandemic, resumed in June 2020.

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For a further discussion of our contractual obligations, refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2020.

We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition) relating to future capital contributions to private equity funds of $11.8 million and $12.0 million as of March 31, 2021 and December 31, 2020, respectively.

We had total commitments (not reflected on our Unaudited Condensed Consolidated Statements of Financial Condition) relating to future capital contributions to private equity funds of $10.1 million and $12.0 million as of June 30, 2021 and December 31, 2020, respectively.

We expect to fund these commitments with cash flows from operations.

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We hold equity securities and invest in exchange-traded funds principally as an economic hedge against our deferred compensation program.

As of March 31, 2021, the fair value of our investments with these products, based on closing prices, was $131.3 million.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $13.1 million, $26.3 million and $39.4 million, respectively, for the three months ended March 31, 2021.

As of June 30, 2021, the fair value of our investments with these products, based on closing prices, was $141.5 million.

We estimate that a hypothetical 10%, 20% and 30% adverse change in the market value of the investments would have resulted in a decrease in pre-tax income of approximately $14.2 million, $28.3 million and $42.5 million, respectively, for the three months ended June 30, 2021.

In February 2020, we entered into four-month futures contracts on a stock index fund with a notional amount of $38.9 million as an economic hedge against our deferred cash compensation program.

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In accordance with ASC 815, these contracts were carried at fair value, with changes in fair value recorded in Other Revenue, Including Interest and Investments, on the Unaudited Condensed Consolidated Statements of Operations.

We had net unrealized losses of $9.2 million for the three months ended March 31, 2020.

We had net realized gains (losses) of $5.2 million and ($4.0) million for the three and six months ended June 30, 2020, respectively.

Private Equity Funds

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Valuations and analysis regarding our investments in Trilantic and Glisco are performed by their respective professionals, and thus we are not involved in determining the fair value for the portfolio companies of such funds.

We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $1.7 million for the three months ended March 31, 2021.

We estimate that a hypothetical 10% adverse change in the value of the private equity funds would have resulted in a decrease in pre-tax income of approximately $1.8 million for the three months ended June 30, 2021.

Exchange Rate Risk

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dollar would result in an adverse or beneficial impact to our financial results.

A significant portion of our European, Asian and Latin American revenues and expenses have been, and will continue to be, derived from contracts denominated in foreign currencies (i.e.

A significant portion of our European, Asian and Latin

American revenues and expenses have been, and will continue to be, derived from contracts denominated in foreign currencies (i.e.

British Pounds sterling, Euros, Mexican pesos, Brazilian real, among others).

Historically, the value of these foreign currencies has fluctuated relative to the U.S.

For the three months ended March 31, 2021, the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed

Consolidated Statement of Comprehensive Income was $1.6 million.

For the six months ended June 30, 2021, the net impact of the fluctuation of foreign currencies recorded in Other Comprehensive Income (Loss) within the Unaudited Condensed Consolidated Statement of Comprehensive Income was $2.4 million.

It is generally not our intention to hedge our foreign currency exposure in these subsidiaries, and we will reevaluate this policy from time to time.

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The collection period for restructuring transaction receivables may exceed 90 days.

We reversed bad debt expense of approximately $1.7 million for the three months ended March 31, 2021 and recorded bad debt expense of approximately $0.5 million for the three months ended March 31, 2020.

As of March 31, 2021 and December 31, 2020, total receivables recorded in Accounts Receivable amounted to $356.4 million and $368.3 million, respectively, net of an allowance for doubtful accounts, and total receivables recorded in Other Assets amounted to $68.5 million and $71.0 million, respectively.

We reversed bad debt expense of approximately $1.8 million for the six months ended June 30, 2021 and recorded bad debt expense of approximately $5.3 million for the six months ended June 30, 2020.

As of June 30, 2021 and December 31, 2020, total receivables recorded in Accounts Receivable amounted to $328.5 million and $368.3 million, respectively, net of an allowance for doubtful accounts, and total receivables recorded in Other Assets amounted to $76.0 million and $71.0 million, respectively.

Other Current Assets and Other Assets include arrangements in which an estimate of variable consideration has been included in the transaction price and thereby recognized as revenue that precedes the contractual due date (contract assets).

As of March 31, 2021, total contract assets recorded in Other Current Assets and Other Assets amounted to $27.8 million and $4.2 million, respectively.

As of June 30, 2021, total contract assets recorded in Other Current Assets and Other Assets amounted to $54.8 million and $6.7 million, respectively.

As of December 31, 2020, total contract assets recorded in Other Current Assets and Other Assets amounted to $29.3 million and $5.3 million, respectively.

With respect to our Investment Securities portfolio, which is comprised primarily of highly-rated corporate and municipal bonds, treasury bills, exchange-traded funds, mutual funds and securities investments, we manage our credit risk exposure by limiting concentration risk and maintaining investment grade credit quality.

As of March 31, 2021, we had Investment Securities of $799.2 million, of which 84% were treasury bills.

As of June 30, 2021, we had Investment Securities of $940.4 million, of which 85% were treasury bills.

Critical Accounting Policies and Estimates

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Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis