Business Context and Reporting Period
This Form 8-K filing by Evercore Partners Inc. is dated October 27, 2011. The report primarily addresses the announcement of third-quarter 2011 financial results and a strategic decision to wind down Evercore Asset Management, a 51% owned subsidiary.
Key Financial Metrics and Material Changes
The filing details specific costs associated with the exit activities of Evercore Asset Management rather than full consolidated revenue or profit figures for the quarter.
- Q3 2011 Charges: A charge of $1.0 million was recorded in the third quarter for the write-off of intangible assets associated with the subsidiary.
- Q4 2011 Expected Charges: The company expects to record an additional charge of approximately $1.3 million in the fourth quarter.
- Cost Breakdown: The Q4 charge includes $0.6 million for severance and related expenses and $0.7 million for facilities and contract termination costs.
- Cash Impact: $1.0 million of the total exit costs are estimated to result in future cash expenditures.
Material Change: The decision to wind down Evercore Asset Management represents a significant operational change. The subsidiary was unable to attain sufficient scale to be viable due to factors including the ongoing effects of the financial crisis. This has triggered a phased reduction of substantially all remaining employees and the acceleration of vesting for certain restricted stock units.
Outlook, Risks, and Management Commentary
Management is currently working with vendors and clients to efficiently return assets. The transition is anticipated to be completed in the first quarter of 2012. The filing notes that severance expenses will be paid in a lump sum. The primary risk highlighted is the inability of the subsidiary to achieve scale in the current market environment, necessitating the wind-down.
Investor Verification Checklist
- Verify the full text of the press release attached as Exhibit 99.1 for complete Q3 2011 revenue and earnings data, as this 8-K only summarizes the exit costs.
- Confirm the timeline for the completion of the asset transition, currently projected for Q1 2012.
- Monitor the actual Q4 2011 financial statements to confirm the $1.3 million exit charge and cash outflow.
- Assess the impact of the accelerated vesting of restricted stock units on future compensation expenses.