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Evercore Partners Reports Third Quarter 2012 Results; Increases Quarterly Dividend To $0.22 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”), and then those results are 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 third quarter, Evercore’s Investment Banking segment reported net revenues of $128.2 million, which represents a decrease of 7% year-over-year and 15% sequentially. Operating income of $27.4 million decreased by 12% from the third quarter of last year and 23% sequentially. Operating margins were 21% in comparison to 22% this time last year. For the nine months ended September 30, 2012, Investment Banking reported net revenues of $364.4 million, an increase of 10% from last year. Year-to-date operating income was $70.4 million compared to $76.8 million last year. Year-to-date operating margins were 19%, compared to 23% last year. The Company had 61 Investment Banking Senior Managing Directors as of September 30, 2012.

 
Adjusted Pro Forma
Three Months Ended   Nine Months Ended
September 30,   June 30,  

September 30,

September 30,   September 30,
2012 2012

2011

2012 2011
(dollars in thousands)
Net Revenues:
Investment Banking $ 127,588 $ 151,397 $ 138,121 $ 363,605 $ 330,169
Other Revenue, net   647     (187 )   230     820     949  
Net Revenues   128,235     151,210     138,351     364,425     331,118  
 
Expenses:
Employee Compensation and Benefits 77,331 89,829 85,945 221,622 200,723
Non-compensation Costs   23,504     25,858     21,301     72,373     53,568  
Total Expenses   100,835     115,687     107,246     293,995     254,291  
 
Operating Income $ 27,400   $ 35,523   $ 31,105   $ 70,430   $ 76,827  
 
Compensation Ratio 60 % 59 % 62 % 61 % 61 %
Operating Margin 21 % 23 % 22 % 19 % 23 %
 
 
U.S. GAAP
Three Months Ended Nine Months Ended
September 30, June 30, September 30, September 30, September 30,
2012 2012 2011 2012 2011
(dollars in thousands)
Net Revenues:
Investment Banking $ 133,850 $ 154,426 $ 139,995 $ 372,771 $ 337,743
Other Revenue, net   (435 )   (1,262 )   (829 )   (2,407 )   (2,222 )
Net Revenues   133,415     153,164     139,166     370,364     335,521  
 
Expenses:
Employee Compensation and Benefits 88,774 100,754 98,059 257,757 232,766
Non-compensation Costs 30,180 29,165 25,660 86,199 65,481
Special Charges   -     662     2,626     662     2,626  
Total Expenses   118,954     130,581     126,345     344,618     300,873  
 
Operating Income $ 14,461   $ 22,583   $ 12,821   $ 25,746   $ 34,648  
 
Compensation Ratio 67 % 66 % 70 % 70 % 69 %
Operating Margin 11 % 15 % 9 % 7 % 10 %
 

Revenues

During the quarter, Investment Banking earned advisory fees from 147 clients (vs. 112 in Q3 2011 and 137 in Q2 2012) and fees in excess of $1 million from 30 transactions (vs. 26 in Q3 2011 and 30 in Q2 2012). For the first nine months of the year, Investment Banking earned advisory fees from 247 clients (vs. 188 last year) and fees in excess of $1 million from 77 transactions (vs. 65 last year).

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