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Evercore Partners Reports Record Fourth Quarter And Full Year 2012 Results

Stocks in this article: EVR

Realized and Unrealized Gains of $0.8 million in the quarter increased relative to the prior year but decreased relative to the previous quarter; the change relative to the prior periods was driven principally by valuation adjustments in Private Equity.

Equity in Earnings of Affiliates of $0.5 million in the quarter increased relative to the prior year, reflecting an increased contribution from ABS Investment Management, and was down from the prior quarter.

Expenses

Investment Management’s fourth quarter expenses were $20.2 million, down 1% compared to the fourth quarter of 2011 and up 6% compared to previous quarter. Included in the quarter were $0.7 million of acquisition costs. Year-to-date Investment Management expenses were $78.4 million, down 12% from a year ago. The decrease from the prior year results primarily reflects lower compensation costs driven by the decline in revenues and profitability.

Other U.S. GAAP Expenses

Evercore’s Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. for the three and twelve months ended December 31, 2012 was higher than U.S. GAAP as a result of the exclusion of expenses associated with the vesting of IPO equity awards and awards granted in conjunction with the Lexicon acquisition and certain business acquisition-related costs, including Special Charges. In addition, for Adjusted Pro Forma purposes, client related expenses and expenses associated with revenue-sharing engagements with third parties have been presented as a reduction from Revenues and Non-compensation costs. Further details of these expenses, as well as an explanation of similar expenses for the three and twelve months ended December 31, 2011 and the three months ended September 30, 2012, are included in Annex I, pages A-2 to A-11.

Non-controlling Interests

Non-controlling Interests in certain subsidiaries are owned by the principals and strategic investors in these businesses. Evercore’s equity ownership percentages in these businesses range from 51% to 86%. For the periods ended December 31, 2012, September 30, 2012, and December 30, 2011 the gain (loss) allocated to non-controlling interests was as follows:

                             
Net Gain (Loss) Allocated to Noncontrolling Interests
Three Months Ended Twelve Months Ended
December 31,

2012

September 30,

2012

December 31,

2011

December 31,

2012

December 31,

2011

Segment

(dollars in thousands)
Investment Banking (1) $ (668 )       $ (742 ) $ (2,112 ) $ (1,673 ) $ (5,553 )
Investment Management (1)   (478 )   452     (1 )   418     2,616  
Total $ (1,146 ) $ (290 ) $ (2,113 ) $ (1,255 ) $ (2,937 )
(1) The difference between Adjusted Pro Forma and U.S. GAAP Noncontrolling Interests relates primarily to intangible amortization expense for certain acquisitions which we excluded from the Adjusted Pro Forma results.
 

Income Taxes

For the three and twelve months ended December 31, 2012, Evercore’s Adjusted Pro Forma effective tax rate was 38%, compared to 32% and 39%, respectively, for the three and twelve months ended December 31, 2011.

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