Evercore Partners Reports Record Fourth Quarter And Full Year 2012 Results

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 fourth quarter, Evercore’s Investment Banking segment reported Net Revenues of $191.6 million, which represents an increase of 112% year-over-year and 49% sequentially. Operating Income of $56.8 million increased by 203% from the fourth quarter of last year and 107% sequentially. Operating Margins were 29.7% in comparison to 20.8% for the fourth quarter last year. For the twelve months ended December 31, 2012, Investment Banking reported Net Revenues of $556.0 million, an increase of 32% from last year. Year-to-date Operating Income was $127.3 million, up 33% compared to $95.6 million last year. Results for 2011 included four months of contribution from Lexicon following the closing of the acquisition on August 19, 2011. Year-to-date Operating Margins were 22.9%, comparable to last year. The Company had 60 Investment Banking Senior Managing Directors as of December 31, 2012 as compared to 60 as of December 31, 2011.

					Adjusted Pro Forma
					Three Months Ended															Twelve Months Ended
					December 31, 2012					September 30, 2012					December 31, 2011					December 31, 2012					December 31, 2011
					(dollars in thousands)
Net Revenues:
Investment Banking					$	191,140				$	127,588				$	89,485				$	554,745				$	419,654
Other Revenue, net						473					647					816					1,293					1,765
Net Revenues						191,613					128,235					90,301					556,038					421,419
Expenses:
Employee Compensation and Benefits						110,201					77,331					49,008					331,823					249,731
Non-compensation Costs						24,563					23,504					22,543					96,936					76,111
Total Expenses						134,764					100,835					71,551					428,759					325,842
Operating Income					$	56,849				$	27,400				$	18,750				$	127,279				$	95,577
Compensation Ratio						57.5	%				60.3	%				54.3	%				59.7	%				59.3	%
Operating Margin						29.7	%				21.4	%				20.8	%				22.9	%				22.7	%
					U.S. GAAP
					Three Months Ended															Twelve Months Ended
					December 31, 2012					September 30, 2012					December 31, 2011					December 31, 2012					December 31, 2011
					(dollars in thousands)
Net Revenues:
Investment Banking					$	195,467				$	133,850				$	92,854				$	568,238				$	430,597
Other Revenue, net						(612	)				(435	)				(251	)				(3,019	)				(2,473	)
Net Revenues						194,855					133,415					92,603					565,219					428,124
Expenses:
Employee Compensation and Benefits						120,593					88,774					61,304					378,350					294,070
Non-compensation Costs						30,073					30,180					30,032					116,272					95,513
Special Charges						-					-					1,268					662					3,894
Total Expenses						150,666					118,954					92,604					495,284					393,477
Operating Income (Loss)					$	44,189				$	14,461				$	(1	)			$	69,935				$	34,647
Compensation Ratio						61.9	%				66.5	%				66.2	%				66.9	%				68.7	%
Operating Margin						22.7	%				10.8	%				(0.0	%)				12.4	%				8.1	%

Revenues

During the quarter, Investment Banking earned advisory fees from 169 clients (vs. 127 in Q4 2011 and 147 in Q3 2012) and fees in excess of $1 million from 48 transactions (vs. 26 in Q4 2011 and 30 in Q3 2012). For the twelve months ended December 31, 2012, Investment Banking earned advisory fees from 324 clients (vs. 245 last year) and fees in excess of $1 million from 125 transactions (vs. 94 last year).

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