What changed in this filing

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Item 2. Management’s Discussion and Analysis

2022-08-03 compared with 2022-05-06 · 193 added, 120 removed, 394 unchanged (44% of the section changed)

17 unchanged sentences

Investment Banking.

Our Investment Banking business earns fees from our clients for providing advice on mergers, acquisitions, divestitures, capital raising, leveraged buyouts, restructurings, activism and defense and similar corporate finance matters, and from underwriting and private placement activities, as well as commissions, fees and principal revenues from research and our sales and trading activities.

Our Investment Banking business earns fees from its clients for providing advice on mergers, acquisitions, divestitures, capital raising, leveraged buyouts, restructurings, activism and defense and similar corporate finance matters, and from underwriting and private placement activities, as well as commissions, fees and principal revenues from research and its sales and trading activities.

The amount and timing of the fees paid vary by the type of engagement or services provided.

12 unchanged sentences

Revenue trends in our equities business are correlated to market volumes, which generally decrease in periods of low market volatility or unfavorable market or economic conditions.

See "Liquidity and Capital Resources" below for further information.

Investment Management.

57 unchanged sentences

Other Expenses

Other Expenses includes Acquisition and Transition Costs incurred in connection with acquisitions, divestitures and other ongoing business development initiatives, primarily comprised of professional fees for legal and other services.

Other Expenses include the following:

• Special Charges, Including Business Realignment Costs – Includes expenses in 2022 related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the ongoing liquidation of our operations in Mexico.

• 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.

Income from Equity Method Investments

15 unchanged sentences

Results of Operations

The following is a discussion of our results of operations for the three months ended March 31, 2022 and 2021.

The following is a discussion of our results of operations for the three and six months ended June 30, 2022 and 2021.

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,

2022 2021 Change

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

2022 2021 Change 2022 2021 Change

(dollars in thousands, except per share data)

4 unchanged sentences

Asset Management and Administration Fees 15,968 16,183 (1 %) 33,083 31,132 6 %

Other Revenue, Including Interest and Investments (1,779) 7,230 NM

Other Revenue, Including Interest and Investments (23,039) 16,401 NM (24,818) 23,631 NM

Total Revenues 635,175 692,171 (8 %) 1,362,279 1,359,051 — %

2 unchanged sentences

Operating Expenses 484,203 480,852 1 % 997,693 948,947 5 %

Other Expenses — 7 NM

Other Expenses 532 — NM 532 7 NM

Total Expenses 484,735 480,852 1 % 998,225 948,954 5 %

9 unchanged sentences

Common Shareholders $ 2.33 $ 3.21 (27 %) $ 6.13 $ 6.46 (5 %)

As of March 31, 2022 and 2021, we employed approximately 2,000 and 1,800 people, respectively, worldwide.

Three Months Ended March 31, 2022 versus March 31, 2021

As of June 30, 2022 and 2021, we employed approximately 2,135 and 1,900 people, respectively, worldwide.

Three Months Ended June 30, 2022 versus June 30, 2021

Net Income Attributable to Evercore Inc.

was $158.0 million for the three months ended March 31, 2022, an increase of $13.7 million, or 9%, compared to $144.4 million for the three months ended March 31, 2021.

was $95.6 million for the three months ended June 30, 2022, a decrease of $44.7 million, or 32%, compared to $140.4 million for the three months ended June 30, 2021.

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

Net Revenues were $722.9 million for the three months ended March 31, 2022, an increase of $60.5 million, or 9%, versus Net Revenues of $662.3 million for the three months ended March 31, 2021.

Advisory Fees increased $112.6 million, or 22%, Underwriting Fees decreased $43.0 million, or 54%, and Commissions and Related Revenue decreased $2.6 million, or 5%, compared to the three months ended March 31, 2021.

Asset Management and Administration Fees increased $2.2 million, or 14%, compared to the three months ended March 31, 2021.

See "Business Segments" below for further information.

Other Revenue, Including Interest and In vestments, decreased $9.0 million compared to the three months ended March 31, 2021, primarily driven by lower performance of our investment funds portfolio due to the overall market decline.

Net Revenues were $630.9 million for the three months ended June 30, 2022, a decrease of $56.9 million, or 8%, versus Net Revenues of $687.9 million for the three months ended June 30, 2021.

Advisory Fees increased $15.4 million, or 3%, Underwriting Fees decreased $34.5 million, or 72%, and Commissions and Related Revenue increased $1.8 million, or 3%, compared to the three months ended June 30, 2021.

Asset Management and Administration Fees decreased $0.2 million, or 1%, compared to the three months ended June 30, 2021.

See "Business Segments" and "Liquidity and Capital Resources" below for further information.

Ot her Revenue, Including Interest and Investments, decreased $39.4 million compared to the three months ended June 30, 2021, primarily reflecting a shift from gains of $9.8 million to losses of $26.4 million on our investment funds portfolio due to the overall market decline.

The portfolio is used as an economic hedge against our deferred cash compensation program.

The decrease was also driven by a $4.4 million gain on the redemption of the G5 debt security in the second quarter of 2021.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

Total Operating Expenses were $484.2 million for the three months ended June 30, 2022, compared to $480.9 million for the three months ended June 30, 2021, an increase of $3.4 million, or 1%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $389.0 million for the three months ended June 30, 2022, a decrease of $18.8 million, or 5%, versus expense of $407.8 million for the three months ended June 30, 2021.

The decrease in the amount of compensation recognized for the three months ended June 30, 2022 principally reflects a lower accrual for incentive compensation, partially offset by higher base salaries, costs associated with investments in new hires and an increase in the amortization of prior period deferred compensation awards.

Non-compensation expenses as a component of Operating Expenses were $95.2 million for the three months ended June 30, 2022, an increase of $22.1 million, or 30%, versus $73.1 million for the three months ended June 30, 2021.

The increase was primarily driven by an increase in travel and related expenses, as travel began to resume during the fourth quarter of 2021, higher professional fees, including fee sharing agreements with sub advisors, as well as an increase in bad debt expense compared to a reversal of bad debt expense in the prior year period.

Non-Compensation expenses per employee were approximately $46.2 thousand for the three months ended June 30, 2022, versus $39.4 thousand for the three months ended June 30, 2021.

Total Other Expenses of $0.5 million for the three months ended June 30, 2022 included Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the ongoing liquidation of our operations in Mexico.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 61.7% for the three months ended June 30, 2022, compared to 59.3% for the three months ended June 30, 2021.

This ratio was also impacted by the lower performance of our investment funds portfolio during the second quarter.

Income from Equity Method Investments was $2.3 million for the three months ended June 30, 2022, compared to $3.4 million for the three months ended June 30, 2021.

The decrease was driven by lower income earned by ABS, principally reflecting a decrease in our ownership following the sale of a portion of our interests during the first quarter of 2022.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

The provision for income taxes for the three months ended June 30, 2022 was $38.6 million, which reflected an effective tax rate of 26.0%.

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, 2022 and 2021 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $0.7 million and $0.3 million, respectively.

The provision for income taxes also reflects 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 $14.3 million for the three months ended June 30, 2022 compared to $23.6 million for the three months ended June 30, 2021.

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to Evercore LP during the three months ended June 30, 2022, partially due to the decrease in noncontrolling ownership interest during the first quarter of 2022.

See Note 12 to our unaudited condensed consolidated financial statements for further information.

Six Months Ended June 30, 2022 versus June 30, 2021

Net Income Attributable to Evercore Inc.

was $253.6 million for the six months ended June 30, 2022, a decrease of $31.1 million, or 11%, compared to $284.7 million for the six months ended June 30, 2021.

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

Net Revenues were $1.354 billion for the six months ended June 30, 2022, an increase of $3.6 million versus Net Revenues of $1.350 billion for the six months ended June 30, 2021.

Advisory Fees increased $128.1 million, or 12%, Underwriting Fees decreased $77.5 million, or 61%, and Commissions and Related Revenue decreased $0.9 million, or 1%, compared to the six months ended June 30, 2021.

Asset Management and Administration Fees increased $2.0 million, or 6%, compared to the six months ended June 30, 2021.

See "Business Segments" below for further information.

Ot her Revenue, Including Interest and Investments, decreased $48.4 million compared to the six months ended June 30, 2021, primarily reflecting a shift from gains of $16.0 million to losses of $31.5 million on our investment funds portfolio due to the overall market decline.

The decrease was also driven by a $4.4 million gain on the redemption of the G5 debt security in the second quarter of 2021.

This was partially offset by a $1.3 million gain on the sale of a portion of our interests in ABS during the first quarter of 2022.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

Total Operating Expenses were $513.5 million for the three months ended March 31, 2022, compared to $468.1 million for the three months ended March 31, 2021, an increase of $45.4 million, or 10%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $429.7 million for the three months ended March 31, 2022, an increase of $34.3 million, or 9%, versus expense of $395.4 million for the three months ended March 31, 2021.

The increase in the amount of compensation recognized for the three months ended March 31, 2022 is in line with the increase in Net Revenues.

Non-compensation expenses as a component of Operating Expenses were $83.8 million for the three months ended March 31, 2022, an increase of $11.1 million, or 15%, versus $72.7 million for the three months ended March 31, 2021.

The increase was primarily driven by an increase in travel and related expenses, as travel slowed during the peak of the COVID pandemic and began to resume during the fourth quarter of 2021, as well as higher professional fees and inflationary pressures, all of which are continuing.

Non-Compensation expenses per employee were approximately $42.4 thousand for the three months ended March 31, 2022, versus $40.3 thousand for the three months ended March 31, 2021.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 59.4% for the three months ended March 31, 2022, compared to 59.7% for the three months ended March 31, 2021.

Income from Equity Method Investments was $2.5 million for the three months ended March 31, 2022, compared to $3.0 million for the three months ended March 31, 2021.

Total Operating Expenses were $997.7 million for the six months ended June 30, 2022, compared to $948.9 million for the six months ended June 30, 2021, an increase of $48.7 million, or 5%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $818.7 million for the six months ended June 30, 2022, an increase of $15.5 million, or 2%, versus expense of $803.2 million for the six months ended June 30, 2021.

The increase in the amount of compensation recognized for the six months ended June 30, 2022 principally reflects higher base salaries and costs associated with investments in new hires, as well as an increase in the amortization of prior period deferred compensation awards, partially offset by a lower accrual for incentive compensation.

Non-compensation expenses as a component of Operating Expenses were $179.0 million for the six months ended June 30, 2022, an increase of $33.3 million, or 23%, versus $145.7 million for the six months ended June 30, 2021.

Non-Compensation expenses per employee were approximately $88.2 thousand for the six months ended June 30, 2022, versus $79.3 thousand for the six months ended June 30, 2021.

Total Other Expenses of $0.5 million for the six months ended June 30, 2022 included Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the ongoing liquidation of our operations in Mexico.

As a result of the factors noted above, Employee Compensation and Benefits Expense as a percentage of Net Revenues was 60.5% for the six months ended June 30, 2022, compared to 59.5% for the six months ended June 30, 2021.

This ratio was also impacted by the lower performance of our investment funds portfolio during the current year period.

Income from Equity Method Investments was $4.8 million for the six months ended June 30, 2022, compared to $6.4 million for the six months ended June 30, 2021.

The decrease was driven by lower income earned by ABS, principally reflecting a decrease in our ownership following the sale of a portion of our interests during the first quarter of 2022.

See Note 7 to our condensed consolidated financial statements for further information.

This decrease was partially offset by an increase in earnings from our investments in Atalanta Sosnoff, Luminis and Seneca Evercore during the three months ended March 31, 2022.

The provision for income taxes for the three months ended March 31, 2022 was $34.8 million, which reflected an effective tax rate of 16.4%.

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, 2022 and 2021 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $19.0 million and $16.7 million, respectively.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

The provision for income taxes for the six months ended June 30, 2022 was $73.3 million, which reflected an effective tax rate of 20.4%.

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, 2022 and 2021 reflects the net impact associated with the appreciation in our share price upon vesting of employee share-based awards above the original grant price of $19.8 million and $17.0 million, respectively.

Net Income Attributable to Noncontrolling Interest was $19.1 million for the three months ended March 31, 2022 compared to $21.2 million for the three months ended March 31, 2021.

The decrease in Net Income Attributable to Noncontrolling Interest primarily reflects lower income allocated to Evercore LP during the three months ended March 31, 2022, driven by the decrease in noncontrolling ownership interest during the first quarter of 2022.

Net Income Attributable to Noncontrolling Interest was $33.3 million for the six months ended June 30, 2022 compared to $44.8 million for the six months ended June 30, 2021.

The decrease in Net Income Attributable to Noncontrolling Interest reflects lower income allocated to Evercore LP during the six months ended June 30, 2022, partially due to the decrease in noncontrolling ownership interest during the first quarter of 2022.

See Note 12 to our unaudited condensed consolidated financial statements for further information.

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

For the Three Months Ended March 31,

2022 2021 Change

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

2022 2021 Change 2022 2021 Change

(dollars in thousands)

4 unchanged sentences

Other Revenue, net (1)(2)

(7,467) 2,584 NM

(26,996) 11,233 NM (34,463) 13,817 NM

Net Revenues 615,250 670,820 (8 %) 1,319,551 1,318,105 — %

Operating Expenses 470,540 468,160 1 % 971,112 924,686 5 %

Other Expenses — 7 NM

Other Expenses 532 — NM 532 7 NM

Total Expenses 471,072 468,160 1 % 971,644 924,693 5 %

3 unchanged sentences

Pre-Tax Income $ 144,342 $ 203,209 (29 %) $ 348,445 $ 394,130 (12 %)

(1) Includes interest expense on Notes Payable and lines of credit of $4.3 million and $4.6 million for the three months ended March 31, 2022 and 2021, respectively.

(1) Includes interest expense on Notes Payable and lines of credit of $4.3 million and $8.5 million for the three and six months ended June 30, 2022, respectively, and $4.3 million and $8.9 million for the three and six months ended June 30, 2021, respectively.

(2) 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.

(3) Equity in Luminis and Seneca Evercore is classified as Income from Equity Method Investments.

For the three months ended March 31, 2022 , the dollar value of North American announced and completed M&A activity decreased 23% and increased 10%, respectively, compared to the three months ended March 31, 2021 , and the dollar value of Global announced and completed M&A activity decreased 21% and increased 23%, respectively, compared to the three months ended March 31, 2021 .

For the Three Months Ended March 31,

2022 2021 Change

For the three months ended June 30, 2022 , the dollar value of North American announced and completed M&A activity decreased 38% and 13%, respectively, compared to the three months ended June 30, 2021 , and the dollar value of Global announced and completed M&A activity decreased 22% and 16%, respectively, compared to the three months ended June 30, 2021 .

For the six months ended June 30, 2022 , the dollar value of North American announced and completed M&A activity decreased 31% and increased 4%, respectively, compared to the six months ended June 30, 2021, and the dollar value of Global announced and completed M&A activity decreased 21% and increased 7%, respectively, compared to the six months ended June 30, 2021 .

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

2022 2021 Change 2022 2021 Change

Industry Statistics ($ in billions) *

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Total Number of Underwriting Transactions as a Bookrunner 5 25 (80 %) 18 56 (68 %)

Refinitiv April 1, 2022

Refinitiv July 26, 2022

** Includes revenue generating clients

Investment Banking Results of Operations

Three Months Ended March 31, 2022 versus March 31, 2021

Investment Banking Net Revenues were $704.3 million for the three months ended March 31, 2022, compared to $647.3 million for the three months ended March 31, 2021, an increase of $57.0 million, or 9%.

The increase in revenues for the three months ended March 31, 2022 was primarily driven by an increase of $112.6 million, or 22%, in Advisory Fees.

Although the number of fees recognized in the three months ended March 31, 2022 declined compared to three months ended March 31, 2021, the growth in average fee size, which was driven by a number of large M&A fees during the first quarter of 2022, contributed to the increase in revenue .

Underwriting Fees decreased $43.0 million, or 54%, compared to the three months ended March 31, 2021, reflecting a decrease in the number of transactions we participated in due to the decline in overall market issuances.

Commissions and Related Revenue decreased $2.6 million, or 5%, compared to the three months ended March 31, 2021, primarily reflecting lower trading volumes, partially offset by increased revenues from research subscriptions and convertible securities.

Other Revenue, net, decreased $10.1 million compared to the three months ended March 31, 2021, primarily driven by lower performance of our investment funds portfolio due to the overall market decline.

Three Months Ended June 30, 2022 versus June 30, 2021

Investment Banking Net Revenues were $615.3 million for the three months ended June 30, 2022, compared to $670.8 million for the three months ended June 30, 2021, a decrease of $55.6 million, or 8%.

The decrease in revenues for the three months ended June 30, 2022 was primarily driven by a decrease of $34.5 million, or 72%, in Underwriting Fees, principally reflecting a decrease in the number of transactions we participated in due to the decline in overall market issuances.

Advisory Fees increased $15.4 million, or 3%, compared to the three months ended June 30, 2021, reflecting growth in average fee size in strategic advisory assignments during the second quarter of 2022 compared to the second quarter of 2021.

Commissions and Related Revenue increased $1.8 million, or 3%, compared to the three months ended June 30, 2021, primarily reflecting higher trading volumes.

Other Revenue, net, decreased $38.2 million compared to the three months ended June 30, 2021, primarily reflecting a shift from gains of $9.8 million to losses of $26.4 million on our investment funds portfolio due to the overall market decline.

The portfolio is used as an economic hedge against our deferred cash compensation program.

Operating Expenses were $500.6 million for the three months ended March 31, 2022, compared to $456.5 million for the three months ended March 31, 2021, an increase of $44.0 million, or 10% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $419.9 million for the three months ended March 31, 2022, compared to $386.7 million for the three months ended March 31, 2021, an increase of $33.2 million , or 9%.

The increase in the amount of compensation recognized for the three months ended March 31, 2022 is in line with the increase in Net Revenues.

Non-compensation expenses, as a component of Operating Expenses, were $80.7 million for the three months ended March 31, 2022 , compared to $69.8 million for the three months ended March 31, 2021 , an increase of $10.9 million , or 16%.

Non-compensation operating expenses increased from the prior year, primarily driven by an increase in travel and related expenses, as travel slowed during the peak of the COVID pandemic and began to resume during the fourth quarter of 2021, as well as higher professional fees and inflationary pressures, all of which are continuing.

The decrease was also driven by a $4.4 million gain on the redemption of the G5 debt security in the second quarter of 2021.

Operating Expenses were $470.5 million for the three months ended June 30, 2022, compared to $468.2 million for the three months ended June 30, 2021, an increase of $2.4 million, or 1% .

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $378.8 million for the three months ended June 30, 2022, compared to $398.2 million for the three months ended June 30, 2021, a decrease of $19.4 million , or 5%.

Non-compensation expenses, as a component of Operating Expenses, were $91.7 million for the three months ended June 30, 2022 , compared to $70.0 million for the three months ended June 30, 2021 , an increase of $21.7 million , or 31%.

Non-compensation operating expenses increased from the prior year, primarily driven by an increase in travel and related expenses, as travel began to resume during the fourth quarter of 2021, higher professional fees, including fee sharing agreements with sub advisors, as well as an increase in bad debt expense compared to a reversal of bad debt expense in the prior year period.

Other Expenses of $0.5 million for the three months ended June 30, 2022 included Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the ongoing liquidation of our operations in Mexico.

Six Months Ended June 30, 2022 versus June 30, 2021

Investment Banking Net Revenues were $1.320 billion for the six months ended June 30, 2022, compared to $1.318 billion for the six months ended June 30, 2021, an increase of $1.4 million.

The increase in revenues for the six months ended June 30, 2022 was primarily driven by an increase of $128.1 million, or 12%, in Advisory Fees, reflecting growth in average fee size in strategic advisory assignments during 2022 compared to the same period in 2021.

Underwriting Fees decreased $77.5 million, or 61%, compared to the six months ended June 30, 2021, principally reflecting a decrease in the number of transactions we participated in due to the decline in overall market issuances.

Commissions and Related Revenue decreased $0.9 million, or 1%, compared to the six months ended June 30, 2021, primarily reflecting lower trading volumes, partially offset by increased revenues from research subscriptions.

Other Revenue, net, decreased $48.3 million compared to the six months ended June 30, 2021, primarily reflecting a shift from gains of $16.0 million to losses of $31.5 million on our investment funds portfolio due to the overall market decline.

The decrease was also driven by a $4.4 million gain on the redemption of the G5 debt security in the second quarter of 2021.

Operating Expenses were $971.1 million for the six months ended June 30, 2022, compared to $924.7 million for the six months ended June 30, 2021, an increase of $46.4 million, or 5%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $798.7 million for the six months ended June 30, 2022, compared to $784.8 million for the six months ended June 30, 2021, an increase of $13.9 million , or 2% .

Non-compensation expenses, as a component of Operating Expenses, were $172.4 million for the six months ended June 30, 2022 , compared to $139.9 million for the six months ended June 30, 2021 , an increase of $32.5 million , or 23% .

Other Expenses of $0.5 million for the six months ended June 30, 2022 included Special Charges, Including Business Realignment Costs, related to charges associated with the prepayment of our Series B Notes during the second quarter, as well as certain professional fees related to the ongoing liquidation of our operations in Mexico.

Investment Management

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

For the Three Months Ended March 31,

2022 2021 Change

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

2022 2021 Change 2022 2021 Change

(dollars in thousands)

2 unchanged sentences

Other Revenue, net (1)

(301) 862 NM 1,137 938 21 %

Net Revenues 15,667 17,045 (8 %) 34,220 32,070 7 %

5 unchanged sentences

Pre-Tax Income $ 4,114 $ 7,198 (43 %) $ 11,887 $ 13,509 (12 %)

(1) Includes a gain of $1.3 million for the three months ended March 31, 2022, resulting from the sale of a portion of our interests in ABS.

(1) Includes a gain of $1.3 million for the six months ended June 30, 2022, resulting from the sale of a portion of our interests in ABS.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

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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, 2022, $0.7 million of previously distributed carried interest received from the funds was subject to repayment.

As of June 30, 2022, $0.7 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.

3 unchanged sentences

Assets Under Management

AUM for our Wealth Management business of $11.6 billion at March 31, 2022 decreased $0.6 billion, or 5%, compared to $12.2 billion at December 31, 2021.

AUM for our Wealth Management business of $10.5 billion at June 30, 2022 decreased $1.7 billion, or 14%, compared to $12.2 billion at December 31, 2021.

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

3 unchanged sentences

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

Wealth Management maintained 75% of Level 1 investments, 21% of Level 2 investments and 4% of Level 3 investments as of March 31, 2022 and December 31, 2021.

Wealth Management maintained 72% and 75% of Level 1 investments, 23% and 21% of Level 2 investments and 5% and 4% of Level 3 investments as of June 30, 2022 and December 31, 2021, respectively.

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

Accordingly, client flows, market movements, and changes in our product mix will impact the level of management fees we receive from our Wealth Management business.

Fees vary with the type of assets managed and the

channel in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

Fees vary with the type of assets managed and the channel in which they are managed, with higher fees earned on equity assets and alternative investment funds, such as hedge funds and private equity funds, and lower fees earned on fixed income and cash management products.

Clients will increase or reduce the aggregate amount of AUM that we manage for a number of reasons, including changes in the level of assets that they have available for investment purposes, their overall asset allocation strategy, our relative performance versus competitors offering similar investment products and the quality of our service.

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, 2022:

The following table summarizes AUM activity for the six months ended June 30, 2022:

Management (1)

3 unchanged sentences

Market Appreciation (Depreciation) (1,719)

Balance at March 31, 2022 $ 11,553

Unconsolidated Affiliates - Balance at March 31, 2022:

Balance at June 30, 2022 $ 10,462

Unconsolidated Affiliates - Balance at June 30, 2022:

Atalanta Sosnoff $ 6,995

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $0.3 million and $76.3 million as of March 31, 2022 and December 31, 2021, respectively.

The following table represents the composition of AUM for Wealth Management as of March 31, 2022:

(1) Assets Under Management includes Evercore assets which are managed by Evercore Wealth Management of $0.3 million and $76.3 million as of June 30, 2022 and December 31, 2021, respectively.

The following table represents the composition of AUM for Wealth Management as of June 30, 2022:

Wealth Management

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Investment performance in the Wealth Management business is measured against appropriate indices based on the composition of 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, 2022, AUM for Wealth Management decreased 5%, primarily reflecting a decrease due to market depreciation.

Performance for the three months ended March 31, 2022 reflected:

For the six months ended June 30, 2022, AUM for Wealth Management decreased 14%, primarily reflecting a decrease due to market depreciation.

Performance for the six months ended June 30, 2022 reflected:

• Wealth Management lagged the S&P 500 on a 1-year basis by approximately 3% and outperformed the S&P 500 on a 3-year basis by approximately 2%

• Wealth Management outperformed the fixed income composite on a 1-year basis by approximately 40 basis points and was flat against the fixed income composite on a 3-year basis

• The S&P 500 and fixed income composite were each down approximately 5%

• The S&P 500 and fixed income composite were down approximately 20% and 6%, respectively

AUM from our unconsolidated affiliates decreased 15% compared to December 31, 2021, reflecting declines in both Atalanta Sosnoff and ABS.

Three Months Ended March 31, 2022 versus March 31, 2021

Investment Management Net Revenues were $18.6 million for the three months ended March 31, 2022, compared to $15.0 million for the three months ended March 31, 2021, an increase of $3.5 million, or 23%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios increased $2.2 million, or 14%, for the three months ended March 31, 2022 as associated AUM increased 9%, primarily from market appreciation.

Other Revenue, net, increased $1.4 million from the three months ended March 31, 2021, primarily driven by a $1.3 million gain on the sale of a portion of our interests in ABS during the first quarter of 2022.

Income from Equity Method Investments decreased 25% from the three months ended March 31, 2021, driven by lower income earned by ABS, principally reflecting a decrease in our ownership following the sale of a portion of our interests during the first quarter of 2022.

See Note 7 to our condensed consolidated financial statements for further information.

Three Months Ended June 30, 2022 versus June 30, 2021

Investment Management Net Revenues were $15.7 million for the three months ended June 30, 2022, compared to $17.0 million for the three months ended June 30, 2021, a decrease of $1.4 million, or 8%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios decreased $0.2 million, or 1%, for the three months ended June 30, 2022 as associated AUM decreased 6%, primarily from market depreciation.

Other Revenue, net, decreased $1.2 million from the three months ended June 30, 2021.

Income from Equity Method Investments decreased 26% from the three months ended June 30, 2021, driven by lower income earned by ABS, principally reflecting a decrease in our ownership

following the sale of a portion of our interests during the first quarter of 2022.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

This decrease was partially offset by an increase in earnings from our investment in Atalanta Sosnoff.

Operating Expenses were $12.9 million for the three months ended March 31, 2022, compared to $11.6 million for the three months ended March 31, 2021, an increase of $1.3 million, or 12%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $9.8 million for the three months ended March 31, 2022, compared to $8.7 million for the three months ended March 31, 2021, an increase of $1.1 million, or 13%.

Non-Compensation expenses, as a component of Operating Expenses, were $3.1 million for the three months ended March 31, 2022, compared to $2.9 million for the three months ended March 31, 2021, an increase of $0.2 million, or 7%.

Operating Expenses were $13.7 million for the three months ended June 30, 2022, compared to $12.7 million for the three months ended June 30, 2021, an increase of $1.0 million, or 8%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $10.2 million for the three months ended June 30, 2022, compared to $9.6 million for the three months ended June 30, 2021, an increase of $0.6 million, or 6%.

Non-Compensation expenses, as a component of Operating Expenses, were $3.5 million for the three months ended June 30, 2022, compared to $3.1 million for the three months ended June 30, 2021, an increase of $0.4 million, or 13%.

Six Months Ended June 30, 2022 versus June 30, 2021

Investment Management Net Revenues were $34.2 million for the six months ended June 30, 2022, compared to $32.1 million for the six months ended June 30, 2021, an increase of $2.2 million, or 7%.

Asset Management and Administration Fees earned from the management of Wealth Management client portfolios increased $2.0 million, or 6%, for the six months ended June 30, 2022.

Other Revenue, net, increased $0.2 million from the six months ended June 30, 2021.

Income from Equity Method Investments decreased 25% from the six months ended June 30, 2021, driven by lower income earned by ABS, principally reflecting a decrease in our ownership following the sale of a portion of our interests during the first quarter of 2022.

See Note 7 to our unaudited condensed consolidated financial statements for further information.

This decrease was partially offset by an increase in earnings from our investment in Atalanta Sosnoff.

Operating Expenses were $26.6 million for the six months ended June 30, 2022, compared to $24.3 million for the six months ended June 30, 2021, an increase of $2.3 million, or 10%.

Employee Compensation and Benefits Expense, as a component of Operating Expenses, was $20.0 million for the six months ended June 30, 2022, compared to $18.3 million for the six months ended June 30, 2021, an increase of $1.7 million, or 9%.

Non-Compensation expenses, as a component of Operating Expenses, were $6.6 million for the six months ended June 30, 2022, compared to $6.0 million for the six months ended June 30, 2021, an increase of $0.6 million, or 10%.

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, interest expense on our Notes Payable and lines of credit and the payment of income taxes.

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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 $ 453,394 $ 450,991

Three Months Ended March 31, 2022.

Cash, Cash Equivalents and Restricted Cash were $463.9 million at March 31, 2022, a decrease of $123.4 million versus Cash, Cash Equivalents and Restricted Cash of $587.3 million at December 31, 2021.

Six Months Ended June 30, 2022.

Cash, Cash Equivalents and Restricted Cash were $453.4 million at June 30, 2022, a decrease of $133.9 million versus Cash, Cash Equivalents and Restricted Cash of $587.3 million at December 31, 2021.

Operating activities resulted in a net outflow of $168.6 million, primarily related to the payment of 2021 bonus awards and deferred cash compensation, partially offset by earnings.

Cash of $615.6 million was provided by investing activities, primarily related to net proceeds from sales and maturities of investment securities and proceeds received for the sale of a portion of our interests in ABS, partially offset by net purchases of certificates of deposit and purchases of equipment and leasehold improvements, principally related to the expansion of our headquarters in New York.

Financing activities during the period used cash of $329.2 million, primarily for purchases of treasury stock and noncontrolling interests and dividends and distributions to noncontrolling interest holders.

Financing activities during the period used cash of $561.8 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 2022 Private Placement Notes.

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

currencies to U.S.

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 10 to our unaudited condensed consolidated financial statements.

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From time to time, advances and/or commitments may also be granted to new employees at or near the date they begin employment, or to existing employees for the purpose of incentive or retention.

Cash distributions related to partnership tax allocations are made to the partners of Evercore LP and certain other entities in accordance with our corporate

estimated payment calendar;

Cash distributions related to

partnership tax allocations are made to the partners of Evercore LP and certain other entities in accordance with our corporate estimated payment calendar;

these payments are generally made quarterly.

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In addition, revenue related to our equities business is driven by market volumes and institutional investor trends, such as the trend to passive investment strategies.

During periods of unfavorable market or economic conditions, which may result from the current or anticipated impact of climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, including escalating military tension between Russia and Ukraine, terrorism or other geopolitical events, the number and value of M&A transactions, as well as market volumes in equities, generally decrease, and they generally increase during periods of favorable market or economic conditions.

During periods of unfavorable market or economic conditions, which may result from the current or anticipated impact of inflation, changes in the level of interest rates, changes in the availability of financing, supply chain disruptions, the regulatory environment, climate change, extreme weather events or natural disasters, the emergence or continuation of widespread health emergencies or pandemics, cyberattacks or campaigns, military conflict, including escalating military tension between Russia and Ukraine, terrorism or other geopolitical events, the number and value of M&A transactions, as well as market volumes in equities, generally decrease, and they generally increase during periods of favorable market or economic conditions.

Restructuring activity generally is counter-cyclical to M&A activity.

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These adverse conditions could also have an impact on our goodwill impairment assessment, which is done annually, as of November 30th, or more frequently if circumstances indicate impairment may have occurred.

We are currently in a period of macroeconomic uncertainty and market volatility, including historically high inflation, supply chain constraints, rising interest rates, changes in the availability of financing, geopolitical tensions, the regulatory environment and the increasing risk of a recession.

These factors have led to a slowing of the pace of M&A transaction announcements and the elongation of the timing of transaction closings, as well as suppressing the level of underwriting activity.

We will continue to assess the potential ongoing impacts of the current environment, including the regular monitoring of our cash levels, liquidity, regulatory capital requirements, debt covenants and our other contractual obligations.

See "Results of Operations" above for further information.

We assess our equity method investments for impairment annually, or more frequently if circumstances indicate impairment may have occurred.

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

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 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.

In addition, on February 22, 2022, 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 $1.4 billion worth of Class A Shares and/or LP Units and 10.0 million Class A Shares and/or LP Units.

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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, 2022, we repurchased 1,075,902 Class A Shares, at an average cost per share of $127.37, for $137.0 million, pursuant to our repurchase program.

During the six months ended June 30, 2022, we repurchased 2,588,200 Class A Shares, at an average cost per share of $117.18, for $303.3 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 three months ended March 31, 2022, we repurchased 915,214 Class A Shares, at an average cost per share of $129.04, for $118.1 million, primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 1,991,116 Class A Shares repurchased during the three months ended March 31, 2022 were acquired for aggregate purchase consideration of $255.1 million, at an average cost per share of $128.14.

During the six months ended June 30, 2022, we repurchased 971,627 Class A Shares, at an average cost per share of $127.99, for $124.3 million, primarily related to minimum tax withholding requirements of share deliveries.

The aggregate 3,559,827 Class A Shares repurchased during the six months ended June 30, 2022 were acquired for aggregate purchase consideration of $427.6 million, at an average cost per share of $120.13.

Noncontrolling Interest Purchases

During the first quarter of 2022, we purchased, at fair value, an additional 0.4% of the EWM Class A Units for $1.4 million, which was included within Other Current Liabilities on the Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022.

This purchase resulted in a decrease to Noncontrolling Interest of $0.1 million and a decrease to Additional-Paid-In-Capital of $1.4 million on our Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022.

During the first quarter of 2022, we purchased, at fair value, an additional 0.4% of the EWM Class A Units for $1.4 million, which was settled in cash during the three months ended June 30, 2022.

On December 31, 2021, we purchased, at fair value, all of the outstanding Class R Interests of Private Capital Advisory L.P.

from employees of the RECA business for $54.3 million.

Our consideration for this transaction included the payment of $6.0 million of cash in 2021, $27.7 million of cash during the three months ended March 31, 2022, and contingent cash consideration which will be settled in early 2024.

As of March 31, 2022 and December 31, 2021, the fair value of the contingent consideration is $20.0 million and $20.6 million, respectively, and is included within Other Long-term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Condition.

Our consideration for this transaction included the payment of $6.0 million of cash in 2021, $27.7 million of cash during the six months ended June 30, 2022, and contingent cash consideration which will be settled in early 2024.

As of June 30, 2022 and December 31, 2021, the fair value of the contingent consideration is $17.3 million and $20.6 million, respectively, and is included within Other Long-term Liabilities on our Unaudited Condensed Consolidated Statement of Financial Condition.

For the three and six months ended June 30, 2022, we recognized a reversal of expense of $2.7 million and $3.3 million, respectively, within Other Operating Expenses on the Unaudited Condensed Consolidated Statements of Operations, related to the change in fair value of the contingent consideration.

The amount of contingent consideration to be paid is dependent on the RECA business achieving certain revenue performance targets.

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On March 30, 2016, we issued an aggregate $170.0 million of senior notes, including:

$38.0 million aggregate principal amount of our 4.88% Series A Notes, $67.0 million aggregate principal amount of our 5.23% Series B Notes, $48.0 million aggregate principal amount of our 5.48% Series C Notes and $17.0 million aggregate principal amount of our 5.58% Series D Notes, pursuant to the 2016 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933.

In March 2021, we repaid the $38.0 million aggregate principal amount of our Series A Notes.

Notes, pursuant to the 2016 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933.

Interest on the 2016 Private Placement Notes is payable semi-annually and the 2016 Private Placement Notes are guaranteed by certain of our domestic subsidiaries.

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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, 2022, we were in compliance with all of these covenants.

As of June 30, 2022, we were in compliance with all of these covenants.

In March 2021, we repaid the $38.0 million aggregate principal amount of our Series A Notes.

On June 28, 2022, we prepaid the $67.0 million aggregate principal amount of our Series B Notes plus the applicable make-whole amount.

In conjunction with the June 2022 prepayment and the acceleration of the remaining debt issuance costs, we recorded a loss of $0.5 million for the three and six months ended June 30, 2022, included within Special Charges, Including Business Realignment Costs, on our Unaudited Condensed Consolidated Statements of Operations.

2019 Private Placement Notes

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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, 2022, we were in compliance with all of these covenants.

As of June 30, 2022, we were in compliance with all of these covenants.

2021 Private Placement Notes

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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, 2022, we were in compliance with all of these covenants.

As of June 30, 2022, we were in compliance with all of these covenants.

2022 Private Placement Notes

On June 28, 2022, we issued $67.0 million aggregate principal amount of our 4.61% Series J Notes, pursuant to the 2022 Note Purchase Agreement, among the Company and the purchasers party thereto in a private placement exempt from registration under the Securities Act of 1933.

Interest on the 2022 Private Placement Notes is payable semi-annually and the 2022 Private Placement Notes are guaranteed by certain of our domestic subsidiaries.

We may, at our option, prepay all, or from time to time any part of, the 2022 Private Placement Notes, in an amount not less than 5% of the aggregate principal amount of the 2022 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 2022 Private Placement Notes will have the right to require us to prepay the entire unpaid principal amounts held by each holder of the 2022 Private Placement Notes plus accrued and unpaid interest to the prepayment date.

The 2022 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, 2022, 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, 2022.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2022.

East amended this facility on October 29, 2021 such that, among other things, the interest rate provisions were LIBOR (or an applicable benchmark replacement) plus 150 basis points and the maturity date was extended to October 28, 2023.

There were no drawings under this facility at March 31, 2022.

There were no drawings under this facility at June 30, 2022.

On July 26, 2019, East entered into an additional loan agreement with PNC for a revolving credit facility in an aggregate principal amount, as amended on October 30, 2020, of up to $30.0 million, to be used for working capital and other corporate activities.

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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, 2022.

We and our consolidated subsidiaries were in compliance with these covenants as of June 30, 2022.

East amended this facility on October 29, 2021 such that, among other things, the revolving credit facility has increased to an aggregate principal amount of $55.0 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 were no drawings under this facility at March 31, 2022.

There were no drawings under this facility at June 30, 2022.

On October 29, 2021, EGL entered into a subordinated revolving credit facility with PNC in an aggregate principal amount of up to $75.0 million, to be used as needed in support of capital requirements from time to time of EGL.

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Drawings under this facility will bear interest at LIBOR (or an applicable benchmark replacement) plus 180 basis points and the maturity date will be October 28, 2023, unless prepayment is otherwise approved earlier by FINRA.

There were no drawings under this facility at March 31, 2022.

There were no drawings under this facility at June 30, 2022.

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

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For further information see above and Notes 12 and 15 to our unaudited condensed consolidated financial statements.

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 $2.7 million and $6.1 million as of March 31, 2022 and December 31, 2021 , 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 $2.7 million and $6.1 million as of June 30, 2022 and December 31, 2021 , respectively.

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

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We do not invest in any off-balance sheet vehicles that provide liquidity, capital resources, market or credit risk support, or engage in any leasing activities that expose us to any liability that is not reflected in our unaudited condensed consolidated financial statements.

Our Unaudited Condensed Consolidated Statement of Financial Condition as of March 31, 2022 included $454.8 million of Cash and Cash Equivalents and $1.1 billion of Investment Securities and Certificates of Deposit, which are generally comprised of highly-liquid investments.

Our Unaudited Condensed Consolidated Statement of Financial Condition as of June 30, 2022 included $444.3 million of Cash and Cash Equivalents and $1.1 billion of Investment Securities and Certificates of Deposit, which are generally comprised of highly-liquid investments.

For further information regarding other cash commitments and the timing of payments, refer to "General" above.

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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, 2022, the fair value of our investments with these products, based on closing prices, was $163.3 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 $16.3 million, $32.7 million and $49.0 million, respectively, for the three months ended March 31, 2022.

As of June 30, 2022, the fair value of our investments with these products, based on closing prices, was $134.4 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 $13.4 million, $26.9 million and $40.3 million, respectively, for the three months ended June 30, 2022.

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 $1.3 million for the three months ended March 31, 2022.

Exchange Rate Risk

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British Pounds sterling, Euros, Singapore dollars, among others).

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

For the three months ended March 31, 2022, 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 ($3.0) million.

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

For the six months ended June 30, 2022, 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 ($21.5) 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 $0.5 million and $1.7 million for the three months ended March 31, 2022 and 2021, respectively.

As of March 31, 2022 and December 31, 2021, total receivables recorded in Accounts Receivable amounted to $313.7 million and $351.7 million, respectively, net of an allowance for credit losses, and total receivables recorded in Other Assets amounted to $75.2 million and $87.8 million, respectively.

We recorded bad debt expense of approximately $1.5 million and reversed bad debt expense of approximately $1.8 million for the six months ended June 30, 2022 and 2021, respectively.

As of June 30, 2022 and December 31, 2021, total receivables recorded in Accounts Receivable amounted to $318.0 million and $351.7 million, respectively, net of an allowance for credit losses, and total receivables recorded in Other Assets amounted to $63.3 million and $87.8 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, 2022, total contract assets recorded in Other Current Assets and Other Assets amounted to $44.6 million and $8.5 million, respectively.

As of June 30, 2022, total contract assets recorded in Other Current Assets and Other Assets amounted to $65.3 million and $1.5 million, respectively.

As of December 31, 2021, total contract assets recorded in Other Current Assets and Other Assets amounted to $14.1 million and $12.9 million, respectively.

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

As of March 31, 2022, we had Investment Securities of $939.5 million, of which 83% were treasury bills.

As of June 30, 2022, we had Investment Securities of $987.1 million, of which 86% were treasury bills.

Critical Accounting Policies and Estimates

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For a discussion of other recently issued accounting standards and their impact or potential impact on our consolidated financial statements, see Note 3 to our unaudited condensed consolidated financial statements.

Quantitative and Qualitative Disclosures About Market Risk

See "Management's Discussion and Analysis of Financial Condition and Results of Operations – Market Risk and Credit Risk." We do not believe we face any material interest rate risk, foreign currency exchange risk, equity price risk or other market risk except as disclosed in Item 2 " – Market Risk and Credit Risk" above.

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