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Evercore Partners Reports Second Quarter 2012 Results; Quarterly Dividend Of $0.20 Per Share

Throughout the discussion of Evercore’s business segments, information is presented on an Adjusted Pro Forma basis, which is an unaudited non-generally accepted accounting principles (“non-GAAP”) measure. Adjusted Pro Forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) adjusted to exclude certain items and reflect the conversion of vested and unvested Evercore LP Units into Class A shares. Evercore believes that the disclosed Adjusted Pro Forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore’s results across several periods and facilitate an understanding of Evercore’s operating results. Evercore uses these measures to evaluate its operating performance, as well as the performance of individual employees. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. For more information about the Adjusted Pro Forma basis of reporting used by management to evaluate the performance of Evercore and each line of business, including reconciliations of U.S. GAAP results to an Adjusted Pro Forma basis, see pages A-2 through A-11 included in Annex I. These Adjusted Pro Forma amounts are allocated to the Company’s two business segments: Investment Banking and Investment Management.

Business Line Reporting

A discussion of Adjusted Pro Forma revenues and expenses from continuing operations is presented below for the Investment Banking and Investment Management segments. Unless otherwise stated, all of the financial measures presented in this discussion are Adjusted Pro Forma measures. For a reconciliation of the Adjusted Pro Forma segment data to U.S. GAAP results, see pages A-2 to A-11 in Annex I.

Investment Banking

For the quarter ended June 30, 2012, Evercore’s Investment Banking segment reported net revenues of $151.2 million, which represents an increase of 35% year-over-year and 78% sequentially. Operating income of $35.5 million increased by 32% from the same quarter last year and 373% from the prior quarter. Operating margins decreased to 23% from 24% in the second quarter of 2011. The Company had 58 Investment Banking Senior Managing Directors as of June 30, 2012.
               
 
Adjusted Pro Forma
Three Months Ended Six Months Ended
   
June 30, 2012 March 31, 2012 June 30, 2011 June 30, 2012 June 30, 2011
(dollars in thousands)
Net Revenues:
Investment Banking $ 151,397 $ 84,620 $ 111,847 $ 236,017 $ 192,048
Other Revenue, net   (187 )   360     339     173     719  
Net Revenues   151,210     84,980     112,186     236,190     192,767  
 
Expenses:
Employee Compensation and Benefits 89,829 54,462 67,303 144,291 114,778
Non-compensation Costs   25,858     23,011     18,054     48,869     32,267  
Total Expenses   115,687     77,473     85,357     193,160     147,045  
 
Operating Income $ 35,523   $ 7,507   $ 26,829   $ 43,030   $ 45,722  
 
Compensation Ratio 59 % 64 % 60 % 61 % 60 %
Operating Margin 23 % 9 % 24 % 18 % 24 %
 
 
U.S. GAAP
Three Months Ended Six Months Ended
 
June 30, 2012 March 31, 2012 June 30, 2011 June 30, 2012 June 30, 2011
(dollars in thousands)
Net Revenues:
Investment Banking $ 154,426 $ 84,495 $ 114,696 $ 238,921 $ 197,748
Other Revenue, net   (1,262 )   (710 )   (720 )   (1,972 )   (1,393 )
Net Revenues   153,164     83,785     113,976     236,949     196,355  
 
Expenses:
Employee Compensation and Benefits 100,754 68,229 81,345 168,983 134,707
Non-compensation Costs 29,165 26,854 21,506 56,019 39,821
Special Charges   662     -     -     662     -  
Total Expenses   130,581     95,083     102,851     225,664     174,528  
 
Operating Income (Loss) $ 22,583   $ (11,298 ) $ 11,125   $ 11,285   $ 21,827  
 
Compensation Ratio 66 % 81 % 71 % 71 % 69 %
Operating Margin 15 % (13 %) 10 % 5 % 11 %
 
 

Revenues

For the three months ended June 30, 2012, Investment Banking revenues were $151.4 million, an increase of 35% from the second quarter of last year and 79% from the previous quarter. Investment Banking earned advisory fees from 137 clients (vs. 77 in Q2 2011 and 104 in Q1 2012) and fees in excess of $1 million from 30 transactions (vs. 21 in Q2 2011 and 17 in Q1 2012). The Institutional Equities business contributed revenues of $6.7 million, a 29% increase over the prior quarter. The Private Funds Group closed two capital raises during the quarter. Both of these businesses contributed marginally to profitability in the quarter.

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