HOULIHAN LOKEY, INC. Forward-Looking Statements
The following discussion should be read together with our consolidated financial statements and the related notes that appear elsewhere in this Quarterly Report on Form 10-Q. We make statements in this discussion that are forward-looking statements. In some cases, you can identify these statements by forward-looking words such as "may," "might," "will," "should," "expects," "plans," "anticipates," "could," "targets," "projects," "contemplates," "believes," "estimates," "intends," "predicts," "potential" or "continue," the negative of these terms or other similar expressions. These forward-looking statements, which are subject to risks, uncertainties, and assumptions about us, may include projections of our future financial performance, based on our growth strategies and anticipated trends in our business. These statements are only predictions based on our current expectations and projections about future events. There are important factors that could cause our actual results, level of activity, performance or achievements to differ materially from the results, level of activity, performance or achievements expressed or implied by the forward-looking statements, including but not limited to, the factors listed under the heading "Cautionary Note Regarding Forward-Looking Statements" in our Annual Report on Form 10-K for the year endedMarch 31, 2022 (the "2022 Annual Report"). Although we believe the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, level of activity, performance or achievements. Moreover, neither we nor any other person assumes responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements speak only as of the date of this filing. You should not rely upon forward-looking statements as a prediction of future events. We are under no duty to and we do not undertake any obligation to update or review any of these forward-looking statements after the date of this filing to conform our prior statements to actual results or revised expectations whether as a result of new information, future developments or otherwise. Key Financial Measures Revenues Revenues include fee revenues and reimbursements of expenses (see Note 2 and Note 3 to our unaudited consolidated financial statements in this Form 10-Q for additional information). Revenues reflect revenues from our Corporate Finance ("CF"), Financial Restructuring ("FR"), and Financial and Valuation Advisory ("FVA") business segments that substantially consist of fees for advisory services. Revenues for all three business segments are recognized upon satisfaction of the performance obligation and may be satisfied over time or at a point in time. The amount and timing of the fees paid vary by the type of engagement. In general, advisory fees are paid at the time an engagement letter is signed ("Retainer Fees"), during the course of the engagement ("Progress Fees"), or upon the successful completion of a transaction or engagement ("Completion Fees"). CF provides general financial advisory services in addition to advice on mergers and acquisitions and capital markets offerings. We advise public and private institutions on a wide variety of situations, including buy-side and sell-side transactions, as well as leveraged loans, private mezzanine debt, high-yield debt, initial public offerings, follow-ons, convertibles, equity private placements, private equity, and liability management transactions, and advise financial sponsors on all types of transactions. The majority of our CF revenues consists of Completion Fees. A CF transaction can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to Retainer Fees and in some cases Progress Fees that may have been received. FR provides advice to debtors, creditors and other parties-in-interest in connection with recapitalization/deleveraging transactions implemented both through bankruptcy proceedings and through out-of-court exchanges, consent solicitations or other mechanisms, as well as in distressed mergers and acquisitions and capital markets activities. As part of these engagements, our FR business segment offers a wide range of advisory services to our clients, including: the structuring, negotiation, and confirmation of plans of reorganization; structuring and analysis of exchange offers; corporate viability assessment; dispute resolution and expert testimony; and procuring debtor-in-possession financing. Although atypical, FR transactions can fail to be completed for many reasons that are outside of our control. In these instances, our fees are generally limited to the Retainer Fees and/or Progress Fees. FVA primarily provides valuations of various assets, including: companies; illiquid debt and equity securities; and intellectual property (among other assets and liabilities). These valuations are used for financial reporting, tax reporting, and other purposes. In addition, our FVA business segment renders fairness opinions in connection with mergers and acquisitions and other transactions, and solvency opinions in connection with corporate spin-offs and dividend recapitalizations, and other types of financial opinions in connection with other transactions. Also, our FVA business segment provides dispute resolution services to clients where fees are usually based on the hourly rates of our financial professionals. Unlike our CF or FR segments, the fees generated in our FVA segment are generally not contingent on the successful completion of a transaction. 28
--------------------------------------------------------------------------------
Table of Contents
Operating Expenses
Our operating expenses are classified as employee compensation and benefits expense and non-compensation expense; revenue and headcount are the primary drivers of our operating expenses. Reimbursements of certain out-of-pocket deal expenses are recorded on a gross basis and are therefore included in both Revenues and Operating expenses on the Consolidated Statements of Comprehensive Income. Employee Compensation and Benefits Expense. Our employee compensation and benefits expense, which accounts for the majority of our operating expenses, is determined by management based on revenues earned, headcount, the competitiveness of the prevailing labor market, and anticipated compensation expectations of our employees. These factors may fluctuate, and as a result, our employee compensation and benefits expense may fluctuate materially in any particular period. Accordingly, the amount of employee compensation and benefits expense recognized in any particular period may not be consistent with prior periods or indicative of future periods. Our employee compensation and benefits expense consists of base salary, payroll taxes, benefits, annual incentive compensation payable as cash bonus awards, deferred cash bonus awards, and the amortization of equity-based bonus awards. Base salary and benefits are paid ratably throughout the year. Our annual equity-based bonus awards include fixed share compensation awards and liability classified fixed dollar awards as a component of the annual bonus awards for certain employees. These equity awards are generally subject to annual vesting requirements over a four-year period beginning at the date of grant, which occurs in the first quarter of each fiscal year; accordingly, expenses are amortized over the stated vesting period. In most circumstances, the unvested portion of these awards is subject to forfeiture should the employee depart from the Company. Cash bonuses, which are accrued monthly, are discretionary and dependent upon a number of factors including the Company's performance, and are generally paid in the first fiscal quarter of each fiscal year with respect to prior year performance. Generally, a portion of the cash bonus is deferred and paid in the third quarter of the fiscal year in which the bonus is awarded. Annual bonuses paid to employees ofGCA Corporation ("GCA") were historically paid in the first calendar quarter of each year and we maintained that schedule for calendar year 2022 and paid all GCA bonuses in the first calendar quarter of 2022 with respect to calendar year 2021 performance. Bonuses paid to GCA employees in 2022 included both cash andHoulihan Lokey, Inc. , Class B common stock awards subject to vesting similar to what is described above. After the first calendar quarter 2022 payment, GCA will be on the same bonus schedule as otherHoulihan Lokey employees referred to above. We refer to the ratio of our employee compensation and benefits expenses to our revenues as our "Compensation Ratio." Non-Compensation Expense. The balance of our operating expenses includes costs for travel, meals and entertainment, rent, depreciation and amortization, information technology and communications, professional fees, and other operating expenses. We refer to all of these expenses as non-compensation expenses. A portion of our non-compensation expenses fluctuates in response to changes in headcount. Other Expense, Net Other expense, net includes (i) interest income earned on non-marketable and investment securities, cash and cash equivalents, loans receivable from affiliates, employee loans, and commercial paper, (ii) interest expense and fees on our 2019 Line of Credit (defined herein), (iii) interest expense on the loan payable to affiliate, loans payable to former shareholders, and the loan payable to non-affiliates, (iv) equity income and/or gains or losses from funds and partnership interests where we have more than a minor ownership interest or more than minor influence over operations, but do not have a controlling interest and are not the primary beneficiary, and (v) gains and/or losses associated with the reduction/increase of earnout liabilities.
Results of Consolidated Operations
The following is a discussion of our results of consolidated operations for the three and six months endedSeptember 30, 2022 and 2021. As described in Note 19 of Part I, Item 1 of this Form 10-Q, the Company completed the acquisition of GCA during the third quarter of fiscal 2021; therefore, our results of consolidated operations for the three and six months endedSeptember 30, 2022 include GCA. The comparative results of consolidated operations for the three and six months endedSeptember 30, 2021 , do not include GCA. For a more detailed discussion of the factors that affected the revenues and the operating expenses of our CF, FR, and FVA business segments in these periods, see Part I, Item 2 of this Form 10-Q under the heading "Business Segments" below. 29
--------------------------------------------------------------------------------
Table of Contents
Three Months Ended September 30, Six Months Ended September 30,
($ in thousands) 2022 2021 Change 2022 2021 Change
Revenues $ 489,537 $ 537,272 (9) % $ 908,181 $ 909,994 - %
Operating expenses:
Employee compensation and benefits 309,859 333,374 (7) % 575,594 565,678 2 %
Non-compensation 90,307 46,579 94 % 165,646 79,321 109 %
Total operating expenses 400,166 379,953 5 % 741,240 644,999 15 %
Operating income 89,371 157,319 (43) % 166,941 264,995 (37) %
Other expense, net 5,104 853 498 % 6,853 752 811 %
Income before provision for income
taxes 84,267 156,466 (46) % 160,088 264,243 (39) %
Provision for income taxes 23,537 43,583 (46) % 28,576 65,400 (56) %
Net income attributable to Houlihan
Lokey, Inc. $ 60,730 $ 112,883 (46) % $ 131,512 $ 198,843 (34) %
Three Months Ended
Revenues were$489.5 million for the three months endedSeptember 30, 2022 , compared with$537.3 million for the three months endedSeptember 30, 2021 , representing a decrease of (9)%. Revenues decreased primarily as a result of a decrease in the number of closed transactions and the average transaction fee on closed transactions for our CF business segment. This decrease was partially offset by an increase in the number of closed transactions for our FR business segment and an increase in the number of Fee Events for our FVA business segment. For the quarter, CF revenues decreased (19)%, FR revenues increased 17%, and FVA revenues increased 17% when compared with the three months endedSeptember 30, 2021 . Operating expenses were$400.2 million for the three months endedSeptember 30, 2022 , compared with$380.0 million for the three months endedSeptember 30, 2021 , representing an increase of 5%. Employee compensation and benefits expense, as a component of operating expenses, was$309.9 million for the three months endedSeptember 30, 2022 , compared with$333.4 million for the three months endedSeptember 30, 2021 , representing a decrease of (7)%. The decrease in employee compensation and benefits expense was primarily a result of a decrease in revenues for the quarter when compared with the same quarter last year. The Compensation Ratio was 63.3% for the three months endedSeptember 30, 2022 , compared with 62.0% for the three months endedSeptember 30, 2021 . Non-compensation expense, as a component of operating expenses, was$90.3 million for the three months endedSeptember 30, 2022 , compared with$46.6 million for the three months endedSeptember 30, 2021 , representing an increase of 94%. The increase in non-compensation expense was primarily a result of the inclusion of GCA's non-compensation expenses in the second quarter endedSeptember 30, 2022 , which were not included in the second quarter endedSeptember 30, 2021 , amortization of intangible assets recognized in connection with the acquisition of GCA, integration related costs associated with our acquisition of GCA and an increase in other operating expenses and travel, meals, and entertainment expenses. Other expense, net was$5.1 million for the three months endedSeptember 30, 2022 , compared with$0.9 million for the three months endedSeptember 30, 2021 . Other expense, net increased primarily due to an increase in the fair value of an earnout liability for one of our previous acquisitions and a loss recognized in connection with a periodic warrant revaluation. The provision for income taxes for the three months endedSeptember 30, 2022 was$23.5 million , which reflected an effective tax rate of 27.9%. The provision for income taxes for the three months endedSeptember 30, 2021 was$43.6 million which reflected an effective tax rate of 27.9%. 30
--------------------------------------------------------------------------------
Table of Contents
Six Months Ended
Revenues were relatively flat at$908.2 million for the six months endedSeptember 30, 2022 , compared with$910.0 million for the six months endedSeptember 30, 2021 . For the six months endedSeptember 30, 2022 , CF revenues decreased (3)%, FR revenues decreased (3)%, and FVA revenues increased 18% when compared with the six months endedSeptember 30, 2021 . Operating expenses were$741.2 million for the six months endedSeptember 30, 2022 , compared with$645.0 million for the six months endedSeptember 30, 2021 , an increase of 15%. Employee compensation and benefits expense, as a component of operating expenses, was$575.6 million for the six months endedSeptember 30, 2022 , compared with$565.7 million for the six months endedSeptember 30, 2021 , an increase of 2%. The Compensation Ratio was 63.4% for the six months endedSeptember 30, 2022 , compared with 62.2% for the six months endedSeptember 30, 2021 . Non-compensation expense, as a component of operating expenses, was$165.6 million for the six months endedSeptember 30, 2022 , compared with$79.3 million for the six months endedSeptember 30, 2021 , an increase of 109%. The increase in non-compensation expense was primarily a result of the inclusion of GCA's non-compensation expenses in the six months endedSeptember 30, 2022 , which were not included in the six months endedSeptember 30, 2021 , amortization of intangible assets recognized in connection with the acquisition of GCA, and an increase in other operating expenses and travel, meals, and entertainment expenses. Other expense, net increased to$6.9 million for the six months endedSeptember 30, 2022 , compared with$0.8 million for the six months endedSeptember 30, 2021 , primarily due to an increase in the fair value of an earnout liability for one of our previous acquisitions and a loss recognized in connection with a periodic warrant revaluation. The provision for income taxes for the six months endedSeptember 30, 2022 was$28.6 million , which reflected an effective tax rate of 17.9%. The provision for income taxes for the six months endedSeptember 30, 2021 was$65.4 million , which reflected an effective tax rate of 24.7%. The decrease in the Company's tax rate during the six months endedSeptember 30, 2022 relative to the same period in 2021 was primarily a result of the release of the provision for an uncertain tax position as a result of the successful closure of a state audit. As ofMarch 31, 2022 , the Company had recorded unrecognized tax positions in the amounts of$18.7 million . During the six months endedSeptember 30, 2022 , the Company received a Consent to Field Audit Adjustment from theState of New York for the years endedMarch 31, 2017 ,March 31, 2018 andMarch 31, 2019 . During the six months endedSeptember 30, 2022 , a decrease to the Company's unrecognized tax benefits of$7.3 million was recognized as a result of this Consent to Field Audit Adjustment. The Company believes that it is reasonably possible that a decrease of up to$0.5 million in gross unrecognized income tax benefits for federal and state items may be necessary within the next 12 months. For the remaining uncertain income tax positions, it is difficult at this time to estimate the timing of the resolution. 31
--------------------------------------------------------------------------------
Table of Contents
Business Segments
The following table presents revenues, expenses and contributions from our
continuing operations by business segment. The revenues by segment represents
each segment's revenues, and the profit by segment represents profit for each
segment before corporate expenses, other expense, net, and income taxes.
Three Months Ended September 30, Six Months Ended September 30,
($ in thousands) 2022 2021 Change 2022 2021 Change
Revenues by Segment
Corporate Finance $ 315,016 $ 388,410 (19) % $ 578,967 $ 598,401 (3) %
Financial Restructuring 97,694 83,184 17 % 176,532 181,959 (3) %
Financial and Valuation Advisory 76,827 65,678 17 % 152,682 129,634 18 %
Revenues $ 489,537 $ 537,272 (9) % $ 908,181 $ 909,994 - %
Segment Profit (1)
Corporate Finance $ 93,794 $ 151,185 (38) % $ 185,359 $ 236,334 (22) %
Financial Restructuring 17,563 20,082 (13) % 44,259 46,175 (4) %
Financial and Valuation Advisory 26,169 18,367 42 % 45,203 40,576 11 %
Total Segment Profit 137,526 189,634 (27) % 274,821 323,085 (15) %
Corporate Expenses (2) 48,155 32,315 49 % 107,880 58,090 86 %
Other expense, net 5,104 853 498 % 6,853 752 811 %
Income before provision for income taxes $ 84,267 $ 156,466 (46) % $ 160,088 $ 264,243 (39) %
Segment Metrics
Number of Managing Directors
Corporate Finance 210 126 67 % 210 126 67 %
Financial Restructuring 56 51 10 % 56 51 10 %
Financial and Valuation Advisory 40 37 8 % 40 37 8 %
Number of Closed Transactions/Fee Events
(3)
Corporate Finance 114 134 (15) % 238 218 9 %
Financial Restructuring 24 20 20 % 40 44 (9) %
Financial and Valuation Advisory 890 806 10 % 1,404 1,242 13 %
(1)We adjust the compensation expense for a business segment in situations where an employee residing in one business segment is performing work in another business segment where the revenues are accrued. Segment Profit may vary significantly between periods depending on the levels of collaboration among the different segments. (2)Corporate expenses represent expenses that are not allocated to individual business segments such as office of the executives, accounting, information technology, compliance, legal, marketing, and human capital. (3)Fee Events applicable to FVA only; a Fee Event includes any engagement that involves revenue activity during the measurement period with a revenue minimum ofone thousand dollars . References to closed transactions should be understood to be the same as transactions that are "effectively closed" as described in Note 2 of our Consolidated Financial Statements.
Corporate Finance
Three Months Ended
Revenues for CF were$315.0 million for the three months endedSeptember 30, 2022 , compared with$388.4 million for the three months endedSeptember 30, 2021 , representing a decrease of (19)%. Revenues decreased primarily due to a decrease in the number of closed transactions when compared to the same quarter last year. Segment profit for CF was$93.8 million for the three months endedSeptember 30, 2022 , compared with$151.2 million for the three months endedSeptember 30, 2021 , representing a decrease of (38)%. Profitability decreased primarily as a result of a decrease in revenues and an increase in non-compensation expenses when compared to the same quarter last year. 32
--------------------------------------------------------------------------------
Table of Contents
Six Months Ended
Revenues for CF were$579.0 million for the six months endedSeptember 30, 2022 , compared with$598.4 million for the six months endedSeptember 30, 2021 , representing a decrease of (3)%. Revenues decreased primarily due to a decrease in the average transaction fee on closed transactions when compared to the same period last year. Segment profit for CF was$185.4 million for the six months endedSeptember 30, 2022 , compared with$236.3 million for the six months endedSeptember 30, 2021 . Profitability decreased primarily as a result of a decrease in revenues and higher non-compensation expenses when compared to the same period last year.
Financial Restructuring
Three Months Ended
Revenues for FR were$97.7 million for the three months endedSeptember 30, 2022 , compared with$83.2 million for the three months endedSeptember 30, 2021 , representing an increase of 17%. Revenues increased primarily due to an increase in the number of closed transactions when compared to the same quarter last year and the closing of a significant fee event during the current year quarter when compared to the same quarter last year. Segment profit for FR was$17.6 million for the three months endedSeptember 30, 2022 , compared with$20.1 million for the three months endedSeptember 30, 2021 , a decrease of (13)%. Profitability decreased primarily as a result of an increase in compensation expenses when compared to the same quarter last year.
Six Months Ended
Revenues for FR were$176.5 million for the six months endedSeptember 30, 2022 , compared with$182.0 million for the six months endedSeptember 30, 2021 , representing a decrease of (3)%. The decrease in revenues was primarily a result of a decrease in the number of closed transactions when compared to the same period last year. Segment profit for FR was$44.3 million for the six months endedSeptember 30, 2022 , compared with$46.2 million for the six months endedSeptember 30, 2021 , a decrease of (4)%. Profitability decreased primarily as a result of a decrease in revenues and higher non-compensation expenses when compared to the same period last year.
Financial and Valuation Advisory
Three Months Ended
Revenues for FVA were$76.8 million for the three months endedSeptember 30, 2022 , compared with$65.7 million for the three months endedSeptember 30, 2021 , representing an increase of 17%. Revenues increased primarily due to an increase in the number of Fee Events when compared to the same quarter last year. Segment profit for FVA was$26.2 million for the three months endedSeptember 30, 2022 , compared with$18.4 million for the three months endedSeptember 30, 2021 , an increase of 42%. Profitability increased primarily as a result of an increase in revenues and a decrease in compensation expenses as a percentage of revenues when compared to the same quarter last year.
Six Months Ended
Revenues for FVA were$152.7 million for the six months endedSeptember 30, 2022 , compared with$129.6 million for the six months endedSeptember 30, 2021 , representing an increase of 18%. The increase in revenues was primarily a result of a higher number of Fee Events when compared to the same period last year. Segment profit for FVA was$45.2 million for the six months endedSeptember 30, 2022 , compared with$40.6 million for the six months endedSeptember 30, 2021 , an increase of 11%. Profitability increased primarily as a result of an increase in revenues and a reduction in compensation expenses as a percentage of revenues when compared to the same period last year. 33
--------------------------------------------------------------------------------
Table of Contents
Corporate Expenses
Three Months Ended
Corporate expenses were$48.2 million for the three months endedSeptember 30, 2022 , compared with$32.3 million for the three months endedSeptember 30, 2021 . This 49% increase was primarily driven by corporate expenses attributable to GCA, integration costs associated with our acquisition of GCA, and amortization of intangible assets recognized in connection with the acquisition of GCA, which were not included in the same quarter last year.
Six Months Ended
Corporate expenses were$107.9 million for the six months endedSeptember 30, 2022 , compared with$58.1 million for the six months endedSeptember 30, 2021 . This 86% increase was primarily driven by corporate expenses attributable to GCA, integration costs associated with our acquisition of GCA, and amortization of intangible assets recognized in connection with the acquisition of GCA, which were not included in the same period last year. 34
--------------------------------------------------------------------------------
Table of Contents
Liquidity and Capital Resources
Our current assets comprise cash and cash equivalents, investment securities, receivables from affiliates, accounts receivable, and unbilled work in progress related to fees earned from providing advisory services. Our current liabilities include deferred income, accounts payable and accrued expenses, accrued salaries and bonuses, income taxes payable, and the current portion of loan obligations. Our cash and cash equivalents include cash held at banks. We maintain moderate levels of cash on hand in support of regulatory requirements for our registered broker-dealer. As ofSeptember 30, 2022 andMarch 31, 2022 , we had$374.4 million and$477.0 million of cash in foreign subsidiaries, respectively. Our excess cash may be invested from time to time in short-term investments, including treasury securities, commercial paper, certificates of deposit, and investment grade corporate debt securities, and special purpose acquisition companies. Please refer to Note 6 for further detail.
As of
September 30,
(In thousands) 2022 March 31, 2022
Cash and cash equivalents $ 503,806 $ 833,697
Investment securities 35,742 109,143Total unrestricted cash and cash equivalents, including investment securities
539,548 942,840
Restricted cash (1) 373 373
Total cash, cash equivalents, and restricted cash, including investment securities
$ 539,921
(1)Represents a deposit in support of a letter of credit issued for our
Our liquidity is highly dependent upon cash receipts from clients that are generally dependent upon the successful completion of transactions, as well as the timing of receivables collections, which typically occur within 60 days of billing. As ofSeptember 30, 2022 , accounts receivable, net of credit losses was$135.2 million . As ofSeptember 30, 2022 , unbilled work in progress, net of credit losses was$155.9 million . OnAugust 23, 2019 , the Company entered into a syndicated revolving line of credit with theBank of America, N.A . and certain other financial institutions party thereto, which allows for borrowings of up to$100.0 million (and, subject to certain conditions, provides the Company with an expansion option, which, if exercised in full, would provide for a total credit facility of$200.0 million ) (the "2019 Line of Credit"). OnAugust 2, 2022 , the agreement governing the 2019 Line of Credit was amended to, among other things, (a) extend the maturity toAugust 23, 2025 , (b) replace the LIBOR reference rate with Term SOFR plus an applicable credit spread adjustment, (c) modify certain covenant restrictions, and (d) make certain other technical amendments. As ofSeptember 30, 2022 , no principal was outstanding under the 2019 Line of Credit. The loan agreement requires compliance with certain loan covenants including, but not limited to, the maintenance of minimum consolidated earnings before interest, taxes, depreciation and amortization of no less than$150.0 million as of the end of any quarterly 12-month period and certain leverage ratios including a consolidated leverage ratio of less than 2.00 to 1.00. As ofSeptember 30, 2022 , we were, and expect to continue to be, in compliance with such covenants. The majority of the Company's payment obligations and commitments pertain to routine operating leases. The Company also has various obligations relating to notes payable and contingent consideration issued in connection with businesses previously acquired (see Note 10 included in Part I, Item 1 of this Form 10-Q). In connection with certain acquisitions, certain employees may be entitled to deferred consideration, primarily in the form of retention payments, should certain service and/or performance conditions be met in the future. As a result of these conditions, such deferred consideration would be expensed as compensation in current and future periods and a portion thereof has been accrued as liabilities on the Consolidated Balance Sheets as ofSeptember 30, 2022 andMarch 31, 2022 . 35
--------------------------------------------------------------------------------
Table of Contents
Cash Flows
Our operating cash flows are primarily influenced by the amount and timing of
receipt of advisory fees and the payment of operating expenses, including
payments of incentive compensation to our employees. We pay a significant
portion of our incentive compensation during the first and third quarters of
each fiscal year. A summary of our operating, investing, and financing cash
flows is as follows:
Six Months Ended September 30,
(In thousands) 2022 2021 Change
Operating activities:
Net income $ 131,512 $ 198,843 (34) %
Non-cash charges 132,202 70,778 87 %
Other operating activities (456,631) (149,503) 205 %
Net cash provided by/(used in) operating activities (192,917) 120,118 (261) %
Net cash provided by investing activities 53,465 164,814 (68) %
Net cash (used in) financing activities (168,937) (207,502) (19) %
Effects of exchange rate changes on cash, cash equivalents, and restricted cash
(21,502) (1,272) 1,590 %
Net increase/(decrease) in cash, cash equivalents, and restricted cash
(329,891) 76,158 (533) %
Cash, cash equivalents, and restricted cash - beginning of period
834,070 847,224 (2) %
Cash, cash equivalents, and restricted cash - end of period
(45) %
Six Months Ended
Operating activities resulted in a net outflow of$(192.9) million , primarily attributable to cash bonus payments paid inMay 2022 . Investing activities resulted in a net inflow of$53.5 million , primarily attributable to sales or maturities of investment securities. Financing activities resulted in a net outflow of$(168.9) million , primarily attributable to dividends paid, share repurchases, and payments to settle employee tax obligations on share-based awards.
Six Months Ended
Operating activities resulted in a net inflow of
Contractual Obligations
There have been no material changes outside of the ordinary course of business to our known contractual obligations, which are set forth in the table included in Item 7 in our 2022 Annual Report.
Critical Accounting Policies and Estimates
The preparation of consolidated financial statements and related disclosures in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from those estimates. Estimates and assumptions are reviewed periodically, and the effects of revisions are reflected in the period for which they are determined to be necessary.
Business Combinations
Accounting for business combinations requires management to make significant estimates and assumptions. We allocate the purchase consideration to the tangible and intangible assets acquired and liabilities assumed based on their estimated fair value as of the acquisition date, with the consideration in excess recorded a goodwill. Critical estimates in valuing certain intangible assets include, but are not limited to, future expected cash flows, expected asset lives, geographic risk premiums, discount rates, and more. The amounts and useful lives assigned to acquisition-related intangible assets impact the amount and timing of future amortization expense.
For additional information on critical accounting policies and estimates, see "Critical Accounting Policies and Estimates" in the MD&A of the 2022 Annual Report.
36--------------------------------------------------------------------------------
Table of Contents
Recent Accounting Developments
For information on recently issued accounting developments and their impact or potential impact on our consolidated financial statements, see Note 2 to our unaudited consolidated financial statements in this Form 10-Q.
© Edgar Online, source
