Company: HLI
Filing Date: 2025-02-04
Form Type: 10-Q
Source: 0001302215-25-000007
Chunk: 71

Company: HOULIHAN LOKEY, INC.
Filing Date: 2025-02-04
Form: 10-Q
Item: Part I, Item 8
Chunk 71
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 In connection with certain acquisitions, select employees may be entitled to deferred consideration, primarily in the form of retention payments, contingent upon the fulfillment of specific service and/or performance conditions in the future. Accordingly, beginning with the quarter ended September 30, 2024, such deferred consideration is expensed as Acquisition related compensation and benefits in current and future periods. Prior to the quarter ended September 30, 2024, such Acquisition related compensation and benefits were included as a component of Employee compensation and benefits within our Consolidated Statements of Comprehensive Income. Beginning with the Quarterly Report on Form 10-Q for the quarter ended September 30, 2024, management has deemed it beneficial for stakeholders to separately disclose Acquisition related compensation and benefits and Employee compensation and benefits within our Consolidated Statements of Comprehensive Income. Reclassifications have been made to prior year financial statements to conform to this new presentation. These reclassifications had no impact on net income, stockholders' equity, or cash flows as previously reported.Principles of ConsolidationThe consolidated financial statements include the accounts of the Company and its subsidiaries where it has a controlling financial interest. All intercompany balances and transactions have been eliminated.The Company carries its investments in unconsolidated entities over which it has significant influence but does not control using the equity method, and includes its ownership share of the income and losses in Other income, net in the Consolidated Statements of Comprehensive Income.Use of EstimatesThe preparation of the consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities at the date of the consolidated financial statements. Management estimates and assumptions also affect the reported amounts of revenues and expenses during the reporting period, and disclosure of contingent assets and liabilities at the reporting date. These estimates and assumptions are based on management’s best estimates and judgment. Management evaluates its estimates and assumptions on an ongoing basis using historical experience and other factors, including the current economic environment, which management believes to be reasonable under the circumstances. Management adjusts such estimates and assumptions when facts and circumstances dictate. As future events and their effects cannot be determined with precision, actual results could differ significantly from these estimates. Items subject to such estimates and assumptions include, but are not limited to: the allowance for credit losses; the valuation of deferred tax assets, valuation of acquired intangibles and goodwill, accrued expenses, and share based compensation; the allocation of goodwill and other assets across the reporting units (segments); and reserves for income tax uncertainties and other contingencies.RevenuesRevenues consist of fee revenues