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Section 1: 8-K (8-K)

Document
false0001302215 0001302215 2019-10-24 2019-10-24


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, DC 20549
FORM 8-K

CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934


Date of report (Date of earliest event reported):
October 24, 2019

Houlihan Lokey, Inc.
(Exact Name of Registrant as Specified in Charter)
Delaware
 
001-37537
 
95-2770395
(State or Other Jurisdiction of
Incorporation)
 
(Commission File Number)
 
(IRS Employer
Identification No.)
10250 Constellation Blvd.
5th Floor
Los Angeles, California 90067
(Address of principal executive offices) (Zip Code)

310-788-5200
Registrant’s telephone number, including area code:

N/A
(Former Name or Former Address, if Changed Since Last Report)

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions (see General Instruction A.2. below):
 
Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
 
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
 
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
 
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:
Title of Each Class
 
Trading Symbol(s)
 
Name of each exchange on which registered
Class A Common Stock, par value $0.001
 
HLI
 
New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§240.12b-2 of this chapter).
Emerging growth company
If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ¨





Item 2.02.    Results of Operations and Financial Condition.

On October 24, 2019, Houlihan Lokey, Inc. issued a press release announcing its financial results for the second fiscal quarter ended September 30, 2019. A copy of the press release is furnished as Exhibit 99.1 to this Current Report on Form 8-K and is incorporated by reference herein.

The information in Item 2.02 of this Current Report on Form 8-K, including the information contained in Exhibit 99.1, is being furnished to the Securities and Exchange Commission pursuant to Item 2.02, and shall not be deemed to be “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or otherwise subject to the liabilities of that section, and shall not be deemed to be incorporated by reference into any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by a specific reference in such filing.

Item 9.01.    Financial Statements and Exhibits.

(d)  Exhibits

99.1    Press Release dated October 24, 2019.






SIGNATURE
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
 
Date:
October 24, 2019
Houlihan Lokey, Inc.
 
 
 
 
 
 
 
 
By:
/s/ J. Lindsey Alley
 
 
 
 
Name: J. Lindsey Alley
 
 
 
 
Position: Chief Financial Officer
 






EXHIBIT INDEX
Exhibit No.
 
Description
 
 
 
99.1
 



(Back To Top)

Section 2: EX-99.1 (EXHIBIT 99.1)

Exhibit
400639609_hl2019logo.jpg

Houlihan Lokey Reports Second Quarter Fiscal 2020 Financial Results

Second Quarter Fiscal 2020 Revenues of $273 million
Second Quarter Fiscal 2020 Diluted EPS of $0.50
Adjusted Second Quarter Fiscal 2020 Diluted EPS of $0.70
Announces Dividend of $0.31 per Share for Third Quarter Fiscal 2020

LOS ANGELES and NEW YORK - October 24, 2019 - Houlihan Lokey, Inc. (NYSE:HLI) (“Houlihan Lokey” or the “Company”) today reported financial results for its second quarter ended September 30, 2019. For the second quarter ended September 30, 2019, revenues were $273 million compared with $275 million for the second quarter ended September 30, 2018.
Net income was $33 million, or $0.50 per diluted share, for the second quarter ended September 30, 2019, compared with $40 million, or $0.61 per diluted share, for the second quarter ended September 30, 2018. Adjusted net income for the second quarter ended September 30, 2019 was $46 million, or $0.70 per diluted share, compared with $46 million, or $0.70 per diluted share, for the second quarter ended September 30, 2018.
"We are very pleased with our second quarter and first half results.  All three product lines have shown growth year-to-date and we enter the second half of our fiscal year with solid momentum across all our businesses.  Client confidence and M&A transaction activity remain strong and there are enough pockets of business disruption to maintain strength in our restructuring business.  Our positive financial results continue to reflect the benefits of our balanced and diversified business model in today’s uncertain macroeconomic conditions." stated Scott Beiser, Chief Executive Officer of Houlihan Lokey.

Selected Financial Data
(In thousands, except per share data)
U.S. GAAP
Three Months Ended September 30,
 
Six Months Ended September 30,
2019
 
2018
 
2019
 
2018
Revenues
$
272,810

 
$
274,992

 
$
523,159

 
$
494,994

Operating expenses:

 

 

 

Employee compensation and benefits
174,638

 
175,321

 
337,949

 
314,501

Non-compensation expenses
53,019

 
43,496

 
92,280

 
84,188

Operating income
45,153

 
56,175

 
92,930

 
96,305

Other (income)/expense, net
(1,101
)
 
(1,007
)
 
(2,748
)
 
(2,613
)
Income before provision for income taxes
46,254

 
57,182

 
95,678

 
98,918

Provision for income taxes
13,144

 
17,063

 
19,793

 
29,115

Net income attributable to Houlihan Lokey, Inc.
$
33,110

 
$
40,119

 
$
75,885

 
$
69,803

 
 
 
 
 
 
 
 
Diluted earnings per share
$
0.50

 
$
0.61

 
$
1.15

 
$
1.06


Revenues

For the second quarter ended September 30, 2019, Corporate Finance ("CF") revenues increased 7%, Financial Restructuring ("FR") revenues decreased (17)%, and Financial Advisory Services ("FAS") revenues increased 9% when compared with the second quarter ended September 30, 2018.


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Expenses

The Company’s employee compensation and benefits, non-compensation expenses, and provision for income taxes during the periods presented and described below are on a GAAP and an adjusted basis.
 
U.S. GAAP
 
Adjusted (Non-GAAP) *
 
Three Months Ended September 30,
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits
$
174,638

 
$
175,321

 
$
165,459

 
$
169,119

% of Revenues
64.0
%
 
63.8
%
 
60.7
%
 
61.5
%
Non-compensation expenses
$
53,019

 
$
43,496

 
$
44,226

 
$
41,286

% of Revenues
19.4
%
 
15.8
%
 
16.2
%
 
15.0
%
Provision for Income Taxes
$
13,144

 
$
17,063

 
$
18,252

 
$
19,573

% of Pre-Tax Income
28.4
%
 
29.8
%
 
28.4
%
 
29.8
%
*
Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.
 
U.S. GAAP
 
Adjusted (Non-GAAP) *
 
Six Months Ended September 30,
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Expenses:
 
 
 
 
 
 
 
Employee compensation and benefits
$
337,949

 
$
314,501

 
$
318,174

 
$
302,224

% of Revenues
64.6
%
 
63.5
%
 
60.8
%
 
61.1
%
Non-compensation expenses
$
92,280

 
$
84,188

 
$
81,519

 
$
78,232

% of Revenues
17.6
%
 
17.0
%
 
15.6
%
 
15.8
%
Provision for Income Taxes
$
19,793

 
$
29,115

 
$
36,129

 
$
34,254

% of Pre-Tax Income
20.7
%
 
29.4
%
 
28.6
%
 
29.4
%
*
Adjusted figures represent non-GAAP information. See “Non-GAAP Financial Measures” and the tables at the end of this release for an explanation of the adjustments and reconciliations to the comparable GAAP numbers.
Employee compensation and benefits expenses remained relatively flat at $175 million for the second quarter ended September 30, 2019 and the second quarter ended September 30, 2018. Adjusted employee compensation and benefits expenses were $165 million for the second quarter ended September 30, 2019, compared with $169 million for the second quarter ended September 30, 2018. This resulted in an adjusted compensation ratio of 60.7% for the second quarter ended September 30, 2019, versus 61.5% for the second quarter ended September 30, 2018. The decrease in adjusted employee compensation and benefits expenses was primarily a result of a decrease in fee revenues for the quarter when compared with the same quarter last year.

Non-compensation expenses were $53 million for the second quarter ended September 30, 2019, compared with $43 million for the second quarter ended September 30, 2018. The increase in non-compensation expenses was primarily driven by an increase in rent expense and other operating expenses as a result of the one-time write-down of lease assets and fixed assets that are no longer in use in London, among other one-time items associated with the move. In July 2019, we moved all bankers from two separate locations in London into a new London headquarters. Adjusted non-compensation expenses were $44 million for the quarter ended September 30, 2019, compared with $41 million for the second quarter ended September 30, 2018. The increase in adjusted non-compensation expenses was primarily driven by an increase in information technology and communication expenses and adjusted other operating expenses.

The provision for income taxes was $13 million, representing an effective tax rate of 28.4% for the second quarter ended September 30, 2019, compared with $17 million, representing an effective tax rate of 29.8% for the second quarter ended September 30, 2018. The adjusted provision for income taxes was $18 million, representing an adjusted effective tax rate of 28.4% for the second quarter ended September 30, 2019, compared with $20 million, representing an adjusted effective tax rate of 29.8% for the second quarter ended September 30, 2018.

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Segment Reporting for the Second Quarter

Corporate Finance
CF revenues increased 7% to $156 million for the second quarter ended September 30, 2019, compared with $146 million for the second quarter ended September 30, 2018. Revenues increased primarily due to an increase in the number of closed transactions. CF closed 69 transactions in the second quarter ended September 30, 2019, versus 62 transactions in the second quarter ended September 30, 2018.
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Corporate Finance
 
 
 
 
 
 
 
Revenues
$
155,981

 
$
146,057

 
$
289,570

 
$
278,928

# of MDs
119

 
106

 
119

 
106

# of Closed transactions
69

 
62

 
130

 
131


Financial Restructuring
FR revenues were $77 million for the second quarter ended September 30, 2019, compared with $93 million for the second quarter ended September 30, 2018. Revenues decreased primarily as a result of a decrease in the number of closed transactions and a reduction in the average transaction fee.
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Financial Restructuring
 
 
 
 
 
 
 
Revenues
$
77,276

 
$
92,684

 
$
156,630

 
$
143,160

# of MDs
45

 
45

 
45

 
45

# of Closed Transactions
17

 
20

 
42

 
33

Financial Advisory Services
FAS revenues increased 9% to $40 million for the quarter ended September 30, 2019, compared with $36 million for the second quarter ended September 30, 2018. The number of Fee Events increased to 523 in the second quarter ended September 30, 2019, compared with 469 for the second quarter ended September 30, 2018.
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(Dollars in thousands)
2019
 
2018
 
2019
 
2018
Financial Advisory Services
 
 
 
 
 
 
 
Revenues
$
39,553

 
$
36,251

 
$
76,959

 
$
72,906

# of MDs
32

 
35

 
32

 
35

# of Fee Events (1)
523

 
469

 
821

 
771

(1)
A Fee Event includes any engagement that involves revenue activity during the measurement period based on a revenue minimum of $1,000.
Balance Sheet and Capital Allocation

The Board of Directors of the Company declared a regular quarterly cash dividend of $0.31 per share of Class A and Class B common stock. The dividend will be payable on December 16, 2019 to stockholders of record as of the close of business on December 5, 2019.

As of September 30, 2019, the Company had $305 million of cash and cash equivalents and investment securities, and $33 million of loans payable and other liabilities.

Investor Conference Call and Webcast

The Company will host a conference call and live webcast at 5:00 p.m. Eastern Time on Thursday, October 24, 2019, to discuss its second quarter fiscal 2020 results. The number to call is 1-877-407-4018 (domestic) or 1-201-689-8471 (international). A live webcast will be available in the Investor Relations section of the Company’s website. A replay of the conference call will be available from

3

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October 24, 2019 through October 31, 2019, by dialing 1-844-512-2921 (domestic) or 1-412-317-6671 (international) and entering the passcode 13694940#. A replay of the webcast will be archived and available on the Company’s website.

Forward-Looking Statements

This press release contains forward-looking statements within the meaning of the federal securities laws. You can identify these statements by our use of the words “assumes,” “believes,” “estimates,” “expects,” “guidance,” “intends,” “plans,” “projects,” and similar expressions that do not relate to historical matters. You should exercise caution in interpreting and relying on forward-looking statements because they involve known and unknown risks, uncertainties, and other factors which are, in some cases, beyond the Company’s control and could materially affect actual results, performance, or achievements. For a further description of such factors, you should read the Company’s filings with the Securities and Exchange Commission. The Company does not undertake any obligation to update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise.

Non-GAAP Financial Measures

Adjusted net income, total and on a per share basis, adjusted operating expenses and adjusted provision for income taxes are presented and discussed in this earnings press release and are non-GAAP measures that management believes, when presented together with comparable GAAP measures, are useful to investors in understanding the Company’s operating results. Adjusted net income, adjusted operating expenses and adjusted provision for income taxes remove the significant accounting impact of one-time or non-recurring charges associated with the Company’s one-time/non-recurring matters, as set forth in the tables at the end of this release.

Adjusted net income as calculated by the Company is not necessarily comparable to similarly titled measures reported by other companies. Additionally, adjusted net income is not a measurement of financial performance or liquidity under GAAP and should not be considered as an alternative to the Company’s financial information determined under GAAP. For a description of the Company’s use of adjusted net income and a reconciliation with net income, as well as a reconciliation of the specific line items in adjusted net income, see the section of this press release titled “Reconciliation of GAAP to Adjusted Financial Information.” Please refer to our financial statements, prepared in accordance with GAAP, for purposes of evaluating our financial condition, results of operations, and cash flows.

About Houlihan Lokey

Houlihan Lokey (NYSE:HLI) is a global investment bank with expertise in mergers and acquisitions, capital markets, financial restructuring, and valuation. The firm serves corporations, institutions, and governments worldwide with offices in the United States, Europe, the Middle East, and the Asia-Pacific region. Independent advice and intellectual rigor are hallmarks of the firm's commitment to client success across its advisory services. Houlihan Lokey is ranked as the No. 1 M&A advisor for all U.S. transactions in number of transactions, the No. 1 global restructuring advisor in both number of transactions and value, and the No. 1 global M&A fairness opinion advisor in number of transactions over the past 20 years, according to Thomson Reuters. For more information, please visit www.HL.com.





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Contact Information
Investor Relations
212.331.8225
OR
Public Relations
212.331.8223

Appendix

Condensed Consolidated Balance Sheet (Unaudited)
Condensed Consolidated Statement of Income (Unaudited)
Reconciliation of GAAP to Adjusted Financial Information (Unaudited)


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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(UNAUDITED)
(In thousands, except share data and par value)
September 30, 2019
 
March 31,
2019
Assets
 
 
 
Cash and cash equivalents

$220,248

 

$285,746

Restricted cash
372

 
369

Investment securities
84,822

 
125,258

Accounts receivable, net of allowance for doubtful accounts
64,814

 
70,830

Unbilled work in process, net of allowance for doubtful accounts
62,722

 
71,891

Receivable from affiliates

 
8,631

Income taxes receivable
3,380

 

Deferred income taxes
6,539

 
2,854

Property and equipment, net
40,938

 
31,034

Operating lease right-of-use asset
131,776

 

Goodwill and other intangibles, net
797,564

 
794,604

Other assets
34,725

 
34,695

Total assets
$
1,447,900

 
$
1,425,912

 
 
 
 
Liabilities and Stockholders' Equity
 
 
 
Liabilities:
 
 
 
Accrued salaries and bonuses
$
297,396

 
$
404,717

Accounts payable and accrued expenses
40,911

 
55,048

Deferred income
29,709

 
27,812

Income taxes payable

 
7,759

Deferred income taxes
3,327

 
8,058

Loans payable to former shareholders
1,810

 
2,047

Loan payable to non-affiliate
6,458

 
6,610

Operating lease liabilities
151,669

 

Other liabilities
24,756

 
22,532

Total liabilities
556,036

 
534,583

 
 
 
 
Stockholders' equity:
 
 
 
Class A common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 41,817,614 and 38,200,802 shares, respectively
42

 
38

Class B common stock, $0.001 par value. Authorized 1,000,000,000 shares; issued and outstanding 24,079,076 and 27,197,734 shares, respectively
24

 
27

Treasury stock, at cost: 252,306 and 0 shares, respectively
(11,219
)
 

Additional paid-in capital
635,362

 
645,090

Retained earnings
311,360

 
276,468

Accumulated other comprehensive (loss)
(43,705
)
 
(30,294
)
Total stockholders' equity
891,864

 
891,329

Total liabilities and stockholders' equity
$
1,447,900

 
$
1,425,912


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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(UNAUDITED)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(In thousands, except share and per share data)
2019
 
2018
 
2019
 
2018
Revenues
$
272,810

 
$
274,992

 
$
523,159

 
$
494,994

Operating expenses:
 
 
 
 
 
 
 
Employee compensation and benefits
174,638

 
175,321

 
337,949

 
314,501

Travel, meals, and entertainment
10,200

 
10,111

 
19,817

 
19,697

Rent
14,922

 
10,437

 
24,923

 
18,625

Depreciation and amortization
3,981

 
3,706

 
7,944

 
7,174

Information technology and communications
6,928

 
4,709

 
12,252

 
10,298

Professional fees
5,834

 
5,784

 
10,290

 
12,061

Other operating expenses
11,154

 
8,749

 
17,054

 
16,333

Total operating expenses
227,657

 
218,817

 
430,229

 
398,689

Operating income
45,153

 
56,175

 
92,930

 
96,305

Other (income)/expense, net
(1,101
)
 
(1,007
)
 
(2,748
)
 
(2,613
)
Income before provision for income taxes
46,254

 
57,182

 
95,678

 
98,918

Provision for income taxes
13,144

 
17,063

 
19,793

 
29,115

Net income attributable to Houlihan Lokey, Inc.
$
33,110

 
$
40,119

 
$
75,885

 
$
69,803

 
 
 
 
 
 
 
 
  Weighted average shares of common stock outstanding:
 
 
 
 
 
 
 
    Basic
62,477,085

 
62,258,919

 
62,292,798

 
62,620,017

    Fully diluted
66,086,210

 
66,045,921

 
65,851,514

 
66,099,770

Earnings per share
 
 
 
 
 
 
 
    Basic
$
0.53

 
$
0.64

 
$
1.22

 
$
1.11

    Fully diluted
$
0.50

 
$
0.61

 
$
1.15

 
$
1.06



7

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HOULIHAN LOKEY, INC. AND SUBSIDIARIES
RECONCILIATION OF GAAP TO ADJUSTED FINANCIAL INFORMATION
(UNAUDITED)
 
Three Months Ended September 30,
 
Six Months Ended September 30,
(In thousands, except per share data)
2019
 
2018
 
2019
 
2018
Revenues
$
272,810

 
$
274,992

 
$
523,159

 
$
494,994

 
 
 
 
 
 
 
 
Employee compensation and benefits
 
 
 
 
 
 
 
Employee compensation and benefits (GAAP)
$
174,638

 
$
175,321

 
$
337,949

 
$
314,501

Less/plus: adjustments (1)
(9,179
)
 
(6,202
)
 
(19,775
)
 
(12,278
)
Employee compensation and benefits (adjusted)
165,459

 
169,119

 
318,174

 
302,224

 


 


 
 
 
 
Non-compensation expenses
 
 
 
 
 
 
 
Non-compensation expenses (GAAP)
$
53,019

 
$
43,496

 
$
92,280

 
$
84,188

Less/plus: adjustments (2)
(8,793
)
 
(2,209
)
 
(10,761
)
 
(5,955
)
Non-compensation expenses (adjusted)
44,226

 
41,286

 
81,519

 
78,232

 
 
 
 
 
 
 
 
Operating income
 
 
 
 
 
 
 
Operating income (GAAP)
$
45,153

 
$
56,175

 
$
92,930

 
$
96,305

Less/plus: adjustments (3)
17,972

 
8,411

 
30,536

 
18,233

Operating income (adjusted)
63,125

 
64,586

 
123,466

 
114,538

 
 
 
 
 
 
 
 
Other (income)/expense, net
 
 
 
 
 
 
 
Other (income)/expense, net (GAAP)
$
(1,101
)
 
$
(1,007
)
 
$
(2,748
)
 
$
(2,613
)
Less/plus: adjustments (4)

 

 

 
719

Other (income)/expense, net (adjusted)
(1,101
)
 
(1,007
)
 
(2,748
)
 
(1,894
)
 
 
 
 
 
 
 
 
Provision for income taxes
 
 
 
 
 
 
 
Provision for income taxes (GAAP)
$
13,144

 
$
17,063

 
$
19,793

 
$
29,115

Less/plus: adjustments (5)
5,108

 
2,510

 
16,336

 
5,139

Provision for income taxes (adjusted)
18,252

 
19,573

 
36,129

 
34,254

 
 
 
 
 
 
 
 
Net income
 
 
 
 
 
 
 
Net income (GAAP)
$
33,110

 
$
40,119

 
$
75,885

 
$
69,803

Less/plus: adjustments (6)
12,864

 
5,902

 
14,200

 
12,375

Net income (adjusted)
45,974

 
46,020

 
90,085

 
82,178

 
 
 
 
 
 
 
 
Diluted adjusted EPS
$
0.70

 
$
0.70

 
$
1.37

 
$
1.24

Note: Figures may not sum due to rounding

(1)
Consists of pre-IPO grant vesting, including grants re-awarded following forfeiture, if any ($(5,964) in Q2 FY20 and $(6,202) in Q2 FY19; $(12,076) in YTD Q2 FY20 and $(12,278) in YTD Q2 FY19), and acquisition-related retention pools ($(3,215) in Q2 FY20 and $0 in Q2 FY19; $(7,699) in YTD Q2 FY20 and $0 in YTD Q2 FY19).
(2)
Includes costs associated with Houlihan Lokey, Inc.'s secondary offering of stock ($(251) in Q2 FY20 and $0 in Q2 FY19; $(665) in YTD Q2 FY20 and $(498) in YTD Q2 FY19), acquisition related costs ($0 in Q2 FY20 and $0 Q2 FY19; $0 YTD Q2 FY20 and $(1,929) in YTD Q2 FY19), acquisition-related amortization ($(1,712) in Q2 FY20 and $(1,589) in Q2 FY19; $(3,265) YTD Q2 FY20 and $(2,910) YTD Q2 FY19), HL Finance setup costs ($0 in Q2 FY20 and $(619) in Q2 FY19; $0 in YTD Q2 FY20 and $(619) in YTD Q2 FY19), and costs associated with our London office consolidation and move ($(6,831) in Q2 FY20 and $0 in Q2 FY19; $(6,831) YTD Q2 FY20 and $0 YTD Q2 FY19).
(3)
Includes adjustments from (1) and (2) above.
(4)
Includes the reduction of an earnout liability ($0 in Q2 FY20 and $0 in Q2 FY19; $0 YTD Q2 FY20 and $719 YTD Q2 FY19).
(5)
Includes adjustments relating to the tax impact, using the adjusted effective tax rate, of the adjustments described in footnotes 1, 2, and 4 above ($5,108 in Q2 FY20 and $2,510 in Q2 FY19; $8,731 YTD Q2 FY20 and $5,139 YTD Q2 FY19). Additionally, YTD Q2 FY20 includes an adjustment of $7,605 relating to shares vested during the first quarter of the applicable fiscal year.
(6)
Consists of the adjustments described above net of the tax impact of described adjustments.

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