|12 Months Ended|
Dec. 31, 2015
Stockholders’ Equity Subsequent to the IPO
As of December 31, 2015 and 2014, there were 37,396,456 and 36,918,442 shares of common stock, $0.0001 par value, issued and outstanding, which includes unvested restricted stock awards issued to non-employee directors, respectively. See Note 13 – “Earnings Per Share” for additional information.
The Company currently does not intend to pay a regular dividend. The Company will evaluate its dividend policy in the future. Any declaration and payment of future dividends to holders of the Company’s common stock will be at the discretion of the board of directors and will depend on many factors, including the Company’s financial condition, earnings, cash flows, capital requirements, level of indebtedness, statutory and contractual restrictions applicable to the payment of dividends and other considerations that the board of directors deems relevant.
The Company has 25,000,000 authorized shares of preferred stock with a par value $0.0001 per share. At December 31, 2015 and 2014, there were no preferred shares issued or outstanding.
Accumulated Other Comprehensive (Loss) Income
The components of accumulated other comprehensive (loss) income as of December 31, 2015, by component, net of income taxes consisted of the following (in thousands):
Stockholders’ Equity Prior to the IPO and Transactions in Connection with the IPO
Prior to the IPO, MMREIS had issued and outstanding 1,000 shares of Series A Redeemable Preferred Stock (“pre-IPO Series A Preferred”) and 234,489 shares of common stock. Terms of the pre-IPO Series A Preferred were as follows:
In the event of voluntary or involuntary liquidation, the pre-IPO Series A Preferred stockholders were entitled to be paid, before any payment was to be made in respect of MMREIS’s common stock, an amount equal to $10 per share of pre-IPO Series A Preferred plus all accrued but unpaid dividends for each share of pre-IPO Series A Preferred. If, upon liquidation, the assets of MMREIS available for distribution to its stockholders were insufficient to pay the holders of pre-IPO Series A Preferred, the entire remaining assets of MMREIS available for distribution would have been distributed ratably among the holders of the pre-IPO Series A Preferred in proportion to the full amount to which they would have otherwise been respectively entitled.
After the payment or setting apart for payment to the holders of the pre-IPO Series A Preferred, the remaining assets and funds of MMREIS available for distribution to the stockholders would have been distributed among the holders of pre-IPO common stock pro rata on the basis of the number of shares of pre-IPO common stock then outstanding.
MMREIS was permitted to redeem any or all shares of pre-IPO Series A Preferred by paying an amount equal to $10 per share plus all declared and unpaid dividends with respect to such shares at the redemption date. The pre-IPO Series A Preferred shares were not convertible into common stock.
The pre-IPO Series A Preferred stockholders did not have voting rights.
On October 30, 2013 and prior to completion of the Company’s IPO, MMC and the other stockholders of MMREIS contributed all of the 1,000 issued and outstanding shares of the pre-IPO Series A Preferred, $10.00 par value and 234,489 of the issued and outstanding shares of MMREIS common stock, $1.00 par value, in exchange for 32,357,901 shares of the new Marcus & Millichap common stock, $0.0001 par value. The 234,489 issued and outstanding shares of MMREIS common stock included 28,749 shares owned by MMREIS managing directors.
Initial Public Offering
On November 5, 2013, the Company completed its IPO of 6,900,000 shares of common stock at a price to the public of $12.00 per share. The Company sold 4,173,413 shares of common stock in the IPO, including 900,000 shares of common stock pursuant to the exercise of the underwriters’ option to purchase additional shares. Selling stockholders sold an aggregate of 2,726,587 shares in the IPO at the same price to the public. The Company did not receive any of the proceeds from the sale of such shares by the selling stockholders. The Company received proceeds from its IPO of $42.3 million, including the underwriters’ full exercise of their option to purchase additional shares and after deducting the underwriting discounts and commissions of $3.5 million and IPO related expenses of $4.3 million.
Prior to the IPO, MMREIS distributed substantially all of its net income to MMC in the form of cash dividends. The stockholders of the pre-IPO Series A Preferred were entitled to receive dividends, payable in preference and priority to any distribution on common stock, at a rate determined by the board of directors, when and as declared by the board of directors. The right to dividends on the pre-IPO Series A Preferred was not cumulative, and no right accrued to the holders of the pre-IPO Series A Preferred by reason of the fact that dividends on such shares were not declared and paid in any prior year, nor are any undeclared or unpaid dividends entitled to bear or accrue interest. No dividends were paid with respect to common stock unless the pre-IPO Series A Preferred stockholders received a dividend return in such year in the amount of $10 for each outstanding share of the pre-IPO Series A Preferred. To the extent that dividends were declared on any common share, a dividend in an equal amount was to be paid on each outstanding share of pre-IPO Series A Preferred.
Total dividends declared and paid on the pre-IPO Series A Preferred shares for the twelve months ended December 31, 2013 were $37.7 million. No dividends were declared for pre-IPO common stock for the twelve months ended December 31, 2013.
Deemed Capital Contribution (Distribution) from MMC
MMC accounted for stock-based compensation and was deemed to make a capital contribution to MMREIS’s additional paid-in capital equal to the amount of stock-based compensation expense attributable to MMREIS. The amounts recorded were net of the applicable taxes in accordance with the tax-sharing agreement between MMREIS and MMC, as the tax deduction on the compensation expense recorded by MMREIS was allocated to MMC.
In conjunction with the Spin-Off, IPO and the termination of the tax-sharing agreement between MMREIS and MMC, certain liabilities and legal obligations of MMREIS that had been previously assumed by MMC were transferred back to MMREIS as non-cash deemed contributions (distributions) from MMC. Such liabilities and legal obligations included (i) the assumption of a liability of $20.0 million related to amounts frozen under the SARs program based on a frozen value calculated as of March 31, 2013; (ii) the assumption of a liability of $12.2 million related to notes payable to certain former stockholders of MMREIS in settlement of SARs and restricted stock awards which were redeemed by MMREIS upon the termination of employment by these former stockholders; (iii) the assumption of a liability of approximately $318,000 related to interest payable associated with notes payable to former stockholders. See Note 6 – “Notes Payable to Former Stockholders” for additional information; and (iv) deferred tax assets, net totaling $26.6 million using an effective tax rate of 40.0% primarily pertaining to these and other items in connection with IPO. See Note 11 – “Income Taxes” for additional information.
A summary of the deemed capital contributions (distributions) from MMC recorded in additional paid in capital for the year ended December 31,2013 consisted of the following (in thousands):
The entire disclosure for shareholders' equity comprised of portions attributable to the parent entity and noncontrolling interest, including other comprehensive income. Includes, but is not limited to, balances of common stock, preferred stock, additional paid-in capital, other capital and retained earnings, accumulated balance for each classification of other comprehensive income and amount of comprehensive income.
Reference 1: http://www.xbrl.org/2003/role/presentationRef