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Duff & Phelps Reports 2012 Fourth Quarter Results, And Declares Quarterly Dividend

Stocks in this article: DUF

We define Adjusted EBITDA as operating income before depreciation and amortization, equity-based compensation originating prior to our IPO and associated with grants of ownership units of D&P Acquisitions and stock options granted in conjunction with our IPO and other items which are generally not part of our ongoing operations, including but not limited to restructuring charges and acquisition related expenses. We define Adjusted Pro Forma Net Income as net income before equity compensation associated with grants of ownership units of D&P Acquisitions and stock options granted in conjunction with our IPO, and certain items which are generally not part of our ongoing operations, including but not limited to restructuring charges and acquisition related expenses, less pro forma corporate income tax applied at an assumed effective corporate tax rate. Adjusted Pro Forma Net Income per share consists of Adjusted Pro Forma Net Income divided by the fully dilutive weighted average number of the Company's Class A and Class B shares for the applicable period. These measures are reconciled in the tables below.

Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures which are not prepared in accordance with, and should not be considered a substitute for or superior to measurements required by GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, these non-GAAP measures are not defined in the same manner by all companies and may not be comparable to other similarly titled measures of other companies.

 
Reconciliation of Adjusted EBITDA
       

Quarter Ended

Year Ended

December 31,2012   December 31,2011 December 31,2012   December 31,2011
Net income attributable to Duff & Phelps Corporation $ 6,065 $ 7,045 $ 22,264 $ 18,614
Net income attributable to noncontrolling interest 590 4,110 4,037 11,115
Provision for income taxes 7,630 5,566 20,022 13,841
Other expense/(income), net (292 ) 1,591   1,069   1,703
Operating income 13,993 18,312 47,392 45,273
Depreciation and amortization 5,128 3,230 18,138 11,164
Equity-based compensation associated with Legacy Units and IPO Options (1) (34 ) 22 207
Acquisition retention expenses (2) 3,029 1,024 9,536 1,624
Restructuring charges (3) (28 ) 95 1,796 4,090
Acquisition, integration and corporate development costs (4) 4,951   1,571   6,865   2,372
Adjusted EBITDA $ 27,073   $ 24,198   $ 83,749   $ 64,730
 
 
Reconciliation of Adjusted Pro Forma Net Income
         

Quarter Ended

Year Ended

December 31,2012   December 31,2011 December 31,2012 December 31,2011
Net income attributable to Duff & Phelps Corporation $ 6,065 $ 7,045 $ 22,264 $ 18,614
Net income attributable to noncontrolling interest 590 4,110 4,037 11,115
Equity-based compensation associated with Legacy Units and IPO Options (1) (34 ) 22 207
Acquisition retention expenses (2) 3,029 1,024 9,536 1,624
Restructuring charges (3) (28 ) 95 1,796 4,090
Acquisition, integration and corporate development costs (4) 4,951 1,571 6,865 2,372
Loss from the write off of an investment (5) 1,500 376 1,500
Adjustment to provision for income taxes (6) (1,197 ) (2,910 ) (5,621 ) (7,824 )
Adjusted Pro Forma Net Income, as defined $ 13,410   $ 12,401   $ 39,275   $ 31,698  
 
Fully diluted weighted average shares of Class A common stock 37,245 27,674 34,585 27,832
Weighted average New Class A Units outstanding 2,002   10,650   4,466   10,883  
Pro forma fully exchanged, fully diluted shares outstanding 39,247   38,324   39,051   38,715  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding $ 0.34   $ 0.32   $ 1.01   $ 0.82  
 
 
_______________
(1)  

Represents elimination of equity-compensation expense from Legacy Units associated with ownership units of D&P Acquisitions ("Legacy Units") and stock options granted in conjunction with our IPO ("IPO Options"). See further detail in the Notes to the Consolidated Financial Statements.

(2)

Acquisition retention expenses include expense associated with equity or cash-based retention incentives to certain individuals who became employees of the Company through an acquisition. Equity-based incentives are typically subject to certain annual or cliff vesting provisions over three years contingent upon certain conditions which include employment. Cash-based incentives are generally subject to certain annual or cliff vesting provisions up to four years contingent upon certain conditions which may include employment. Cash-based retentive incentives may also include incentives paid to acquired employees upon the closing of an acquisition. These incentives may be in addition to future grants or cash bonuses awarded as a component of ongoing incentive compensation.

 
(3)   In June 2011, the Company identified opportunities for cost savings through office consolidations of underutilized space and workforce reductions of non-client service professionals. The Company incurred restructuring charges of $4,090 during the year ended December 31, 2011 related to these initiatives. In March 2012, the Company identified opportunities for cost savings through the elimination of our M&A Advisory practice in France and certain Investment Banking positions in France. The Company incurred restructuring charges of $1,796 during the year ended December 31, 2012 related to these initiatives and for changes in estimates of original assumptions.
(4) Acquisition, integration and corporate development costs include fees and charges associated with acquisitions and ongoing corporate development initiatives, including costs resulting from the pending merger. These costs are primarily comprised of (i) professional fees from legal, accounting, investment banking and other services, (ii) integration costs principally related to marketing, information technology, finance and real estate that are incremental and one-time in nature, (iii) gains or losses resulting from the recalculation of contingent consideration, (iv) foreign currency gains or losses from the translation of acquisition-related intercompany loans and (v) other charges such as regulatory filing fees and travel and entertainment expenses that are incremental in nature.
(5) Reflects a charge from the write off of a minority investment. The charge is reflected in "Other expense" on the Company's Consolidated Statements of Operations.
(6) Represents an adjustment to reflect an assumed annual effective corporate tax rate of approximately 39.5% and 40.6% as applied to the years ended December 31, 2012 and 2011, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. Assumes (i) full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company, (ii) the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at prevailing corporate rates and (iii) all deferred tax assets related to foreign operations are fully realizable.
 

Disclosure Regarding Forward-Looking Statements

Statements in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this discussion are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us, or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and the risk factors section that are included in our Annual Report on Form 10-K for the year ended December 31, 2012 and any subsequent filings of our Quarterly Reports on Form 10-Q. The forward-looking statements included in this press release are made only as of the date this press release was issued. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
     

Quarter Ended

 

Year Ended

December 31,2012   December 31,2011 December 31,2012   December 31,2011
Revenue $ 139,917 $ 118,980 $ 469,164 $ 383,940
Reimbursable expenses 5,218   5,573   15,537   12,934  
Total revenue 145,135 124,553 484,701 396,874
 
Direct client service costs

Compensation and benefits (includes $4,259 and $3,705 of equity-based compensation for the quarters ended December 31, 2012 and2011, respectively, and $19,098 and $17,086 for the years endedDecember 31, 2012 and 2011, respectively)

77,070 62,934 256,089 209,606
Other direct client service costs 4,476 4,089 13,119 9,048

Acquisition retention expenses (includes $734 and $454 of equity-based compensation for the quarters ended December 31, 2012 and2011, respectively, and $2,908 and $1,054 for the years endedDecember 31, 2012 and 2011, respectively)

3,029 1,024 9,536 1,624
Reimbursable expenses 5,361   5,589   15,734   13,073  
89,936   73,636   294,478   233,351  
Operating expenses

Selling, general and administrative (includes $824 and $633 ofequity-based compensation for the quarters ended December 31,2012 and 2011, respectively, and $3,531 and $3,744 for the yearsended December 31, 2012 and 2011, respectively)

31,155 27,709 116,032 100,624
Depreciation and amortization 5,128 3,230 18,138 11,164
Restructuring charges (28 ) 95 1,796 4,090
Acquisition, integration and corporate development costs 4,951   1,571   6,865   2,372  
41,206   32,605   142,831   118,250  
 
Operating income 13,993 18,312 47,392 45,273
 
Other expense/(income), net
Interest income (22 ) (8 ) (59 ) (77 )
Interest expense 256 97 748 275
Other expense/(income) (526 ) 1,502   380   1,505  
(292 ) 1,591   1,069   1,703  
 
Income before income taxes 14,285 16,721 46,323 43,570
Provision for income taxes 7,630   5,566   20,022   13,841  
Net income 6,655 11,155 26,301 29,729
Less: Net income attributable to noncontrolling interest 590   4,110   4,037   11,115  
Net income attributable to Duff & Phelps Corporation $ 6,065   $ 7,045   $ 22,264   $ 18,614  
 
Weighted average shares of Class A common stock outstanding
Basic 35,704 26,685 33,267 26,958
Diluted 37,245 27,674 34,585 27,832
 

Net income per share attributable to stockholders of Class A commonstock of Duff & Phelps Corporation

Basic $ 0.16 $ 0.24 $ 0.64 $ 0.65
Diluted $ 0.16 $ 0.23 $ 0.62 $ 0.63
 
Cash dividends declared per common share $ 0.09 $ 0.08 $ 0.36 $ 0.32
 
                       

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

QUARTERLY REVENUE BY SEGMENT

(In thousands)

(Unaudited)

 
   

2011

   

2012

VarianceQ4 2011 vs Q4 2012

Variance 2011 vs 2012

Q1  

 Q2 

  Q3   Q4   Total Q1   Q2   Q3   Q4   Total Dollar   Percent Dollar   Percent
Financial Advisory
Valuation Advisory (a) $ 37,614 $ 32,604 $ 33,887 $ 39,046 $ 143,151 $ 39,490 $ 33,610 $ 33,895 $ 43,334 $ 150,329 $ 4,288 11.0 % $ 7,178 5.0 %
Tax Services (b) 7,547 15,128 9,572 8,698 40,945 5,488 13,035 11,008 10,295 39,826 1,597 18.4 % (1,119 ) (2.7 )%
Dispute & Legal Management Consulting (c) 13,436   13,005   18,319   22,032   66,792   14,675   19,979   22,708   24,430   81,792   2,398   10.9 % 15,000   22.5 %
58,597   60,737   61,778   69,776   250,888   59,653   66,624   67,611   78,059   271,947   8,283   11.9 % 21,059   8.4 %
 
Alternative Asset Advisory
Portfolio Valuation 6,519 6,220 6,730 6,272 25,741 7,622 6,059 6,417 5,725 25,823 (547 ) (8.7 )% 82 0.3 %
Complex Asset Solutions 5,321 4,125 3,998 4,631 18,075 4,904 4,048 6,270 5,828 21,050 1,197 25.8 % 2,975 16.5 %
Due Diligence 1,645   4,070   2,643   3,492   11,850   2,423   2,312   2,516   2,926   10,177   (566 ) (16.2 )% (1,673 ) (14.1 )%
13,485   14,415   13,371   14,395   55,666   14,949   12,419   15,203   14,479   57,050   84   0.6 % 1,384   2.5 %
 
Investment Banking
M&A Advisory (d) 1,450 1,853 5,741 16,568 25,612 9,354 14,953 8,145 18,537 50,989 1,969 11.9 % 25,377 99.1 %
Transaction Opinions 8,231 7,266 7,466 5,811 28,774 6,742 8,171 5,957 13,830 34,700 8,019 138.0 % 5,926 20.6 %
Global Restructuring Advisory (e) 3,283   3,615   3,672   12,430   23,000   15,647   12,322   11,497   15,012   54,478   2,582   20.8 % 31,478   136.9 %
12,964   12,734   16,879   34,809   77,386   31,743   35,446   25,599   47,379   140,167   12,570   36.1 % 62,781   81.1 %
 
Total Revenue (excluding reimbursables) $ 85,046   $ 87,886   $ 92,028   $ 118,980   $ 383,940   $ 106,345   $ 114,489   $ 108,413   $ 139,917   $ 469,164   $ 20,937   17.6 % $ 85,224   22.2 %
 
 
_______________    
(a)   For the year ended December 31, 2012, Valuation Advisory includes $2,362 of incremental revenue from our acquisition of Ceteris from the effective date of the acquisition (October 18, 2012) through the end of the year. Ceteris is an independent provider of transfer pricing and valuation advisory services. (d) For the year ended December 31, 2012, M&A Advisory includes $2,846 of incremental revenue from our acquisition of Growth Capital Partners from the beginning of the year through June 30, 2012, the one year anniversary of the acquisition. For the year ended December 31, 2011, M&A Advisory includes $7,507 of incremental revenue from the effective date of the acquisition (June 30, 2011) through the end of the year. Growth Capital Partners is a Houston-based investment banking firm focused on transactions in the middle market.
(b) For the year ended December 31, 2012, Tax Services includes $279 of incremental revenue from our acquisition of Growth Capital Partners from the beginning of the year through June 30, 2012, the one year anniversary of the acquisition. For the year ended December 31, 2011, Tax Services includes $543 of incremental revenue from the effective date of the acquisition (June 30, 2011) through the end of the year. Growth Capital Partners is a Houston-based investment banking firm focused on transactions in the middle market. For the year ended December 31, 2012, M&A Advisory also includes $17,023 of incremental revenue from our acquisition of Pagemill Partners from the beginning of the year through December 31, 2012, the one year anniversary of the acquisition. Pagemill Partners is a Silicon Valley-based investment banking firm.
 
(c) For the year ended December 31, 2012, Dispute & Legal Management Consulting includes $891 of incremental revenue from our acquisition of iEnvision Technology from the effective date of the acquisition (October 4, 2012) through the end of the year. iEnvision Technology is an advisory firm that assists law firms and corporate legal departments with implementation of document and data management systems. (e) For the year ended December 31, 2012, Global Restructuring Advisory includes $28,520 of incremental revenue from our acquisition of MCR from the beginning of the year through October 31, 2012, the one year anniversary of the acquisition. For the year ended December 31, 2011, Global Restructuring Advisory includes $4,726 of incremental revenue from the effective date of the acquisition (October 31, 2011) through the end of the year. MCR is a United Kingdom-based partnership specializing in insolvency, turnaround and restructuring services.
 
For the year ended December 31, 2012, Global Restructuring Advisory includes $7,405 of incremental revenue from our acquisition of the Toronto-based financial restructuring practice of RSM Ricther from the beginning of the year through December 9, 2012, the one year anniversary of the acquisition. For the year ended December 31, 2011, Global Restructuring Advisory includes $321 of incremental revenue from the effective date of the acquisition (December 9, 2011) through the end of the year.
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES RESULTS OF OPERATIONS BY SEGMENT(In thousands, except headcount data)(Unaudited)

 

 
     

Quarter Ended

 

Year Ended

December 31,2012

  December 31,2011 December 31,2012   December 31,2011
Financial Advisory
Revenue (excluding reimbursables) $ 78,059 $ 69,776 $ 271,947 $ 250,888
Segment operating income $ 13,118 $ 14,848 $ 50,778 $ 45,212
Segment operating income margin 16.8 % 21.3 % 18.7 % 18.0 %
 
Alternative Asset Advisory
Revenue (excluding reimbursables) $ 14,479 $ 14,395 $ 57,050 $ 55,666
Segment operating income $ 2,108 $ 3,545 $ 12,759 $ 12,890
Segment operating income margin 14.6 % 24.6 % 22.4 % 23.2 %
 
Investment Banking
Revenue (excluding reimbursables) $ 47,379 $ 34,809 $ 140,167 $ 77,386
Segment operating income $ 11,990 $ 5,821 $ 20,409 $ 6,767
Segment operating income margin 25.3 % 16.7 % 14.6 % 8.7 %
 
Totals
Revenue (excluding reimbursables) $ 139,917 $ 118,980 $ 469,164 $ 383,940
 
Segment operating income $ 27,216 $ 24,214 $ 83,946 $ 64,869
Net client reimbursable expenses (143 ) (16 ) (197 ) (139 )
Equity-based compensation from Legacy Units and IPO Options 34 (22 ) (207 )
Depreciation and amortization (5,128 ) (3,230 ) (18,138 ) (11,164 )
Acquisition retention expenses (3,029 ) (1,024 ) (9,536 ) (1,624 )
Restructuring charges 28 (95 ) (1,796 ) (4,090 )
Acquisition, integration and corporate development costs (4,951 ) (1,571 ) (6,865 ) (2,372 )
Operating income $ 13,993   $ 18,312   $ 47,392   $ 45,273  
 
 
Average Client Service Professionals
Financial Advisory 691 584 640 575
Alternative Asset Advisory 106 99 103 94
Investment Banking 315   213   306   158  
Total 1,112   896   1,049   827  
 
End of Period Client Service Professionals
Financial Advisory 704 590 704 590
Alternative Asset Advisory 105 100 105 100
Investment Banking 311   303   311   303  
Total 1,120   993   1,120   993  
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT - CONTINUED

(In thousands, except headcount data)

(Unaudited)

     

Quarter Ended

 

Year Ended

December 31,2012

 

December 31,2011

December 31,2012

 

December 31,2011

Revenue per Client Service Professional
Financial Advisory $ 113 $ 119 $ 425 $ 436
Alternative Asset Advisory $ 137 $ 145 $ 554 $ 592
Investment Banking $ 150 $ 163 $ 458 $ 490
Total $ 126 $ 133 $ 447 $ 464
 
 
Utilization (a)
Financial Advisory 75.4 % 81.7 % 73.1 % 73.8 %
Alternative Asset Advisory 62.5 % 63.0 % 60.2 % 61.2 %
 
Rate-Per-Hour (b)
Financial Advisory $ 372 $ 356 $ 344 $ 343
Alternative Asset Advisory $ 487 $ 516 $ 501 $ 515
 
 
Revenue (excluding reimbursables)
Financial Advisory $ 78,059 $ 69,776 $ 271,947 $ 250,888
Alternative Asset Advisory 14,479 14,395 57,050 55,666
Investment Banking 47,379   34,809   140,167   77,386  
Total $ 139,917   $ 118,980   $ 469,164   $ 383,940  
 
Average Managing Directors
Financial Advisory 106 90 97 92
Alternative Asset Advisory 23 24 23 25
Investment Banking 73   58   74   47  
Total 202   172   194   164  
 
End of Period Managing Directors
Financial Advisory 110 92 110 92
Alternative Asset Advisory 23 24 23 24
Investment Banking 71   76   71   76  
Total 204   192   204   192  
 
Revenue per Managing Director
Financial Advisory $ 736 $ 775 $ 2,804 $ 2,727
Alternative Asset Advisory $ 630 $ 600 $ 2,480 $ 2,227
Investment Banking $ 649   $ 600   $ 1,894   $ 1,647  
Total $ 693   $ 692   $ 2,418   $ 2,341  
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(In thousands, except headcount data)

(Unaudited)

_______________
(a)   The utilization rate for any given period is calculated by dividing the number of hours incurred by client service professionals who worked on client assignments (including internal projects for the Company) during the period by the total available working hours for all of such client service professionals during the same period, assuming a 40 hour work week, less paid holidays and vacation days. Utilization excludes client service professionals associated with certain property tax services due to the nature of the work performed and client service professionals from certain acquisitions prior to their transition to the Company's financial system.
(b) Average billing rate-per-hour is calculated by dividing revenue for the period by the number of hours worked on client assignments (including internal projects for the Company) during the same period. Financial Advisory revenue used to calculate rate-per-hour exclude revenue associated with certain property tax engagements. The average billing rate excludes certain hours from our acquisitions prior to their transition to the Company's financial system.
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

SUMMARY OF CLIENT SERVICE PROFESSIONALS

(Unaudited)

       

2011

   

2012

Q1   Q2   Q3   Q4   YTD Q1   Q2   Q3   Q4   YTD
Average Client Service Professionals

 

Financial Advisory 574 562 576 584 575 600 612 646 691 640
Alternative Asset Advisory 87 94 98 99 94 99 101 106 106 103
Investment Banking 129   128   147   213   158   302   291   310   315   306
790   784   821   896   827   1,001   1,004   1,062   1,112   1,049
 
 

End of Period Client Service Professionals

Financial Advisory 571 552 580 590 605 612 657 704
Alternative Asset Advisory 90 97 100 100 94 103 106 105
Investment Banking 127   131   149   303   294   292   311   311  
788   780   829   993   993   1,007   1,074   1,120  
 
 
 

2011

2012

Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 Q4 YTD

Average Managing Directors

Financial Advisory 94 93 91 90 92 92 95 96 106 97
Alternative Asset Advisory 26 25 25 24 25 23 23 24 23 23
Investment Banking 39   41   48   58   47   76   74   73   73   74
159   159   164   172   164   191   192   193   202   194
 
 

End of Period Managing Directors

Financial Advisory 94 91 90 92 95 95 96 110
Alternative Asset Advisory 26 25 25 24 23 23 24 23
Investment Banking 39   43   50   76   73   73   73   71  
159   159   165   192   191   191   193   204  
 
   

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

 

December 31,2012 December 31,2011
ASSETS
Current assets
Cash and cash equivalents $ 68,732 $ 38,986

Accounts receivable (net of allowance for doubtful accounts of $2,037 and $1,753 at December 31,2012 and 2011, respectively)

79,360 77,795
Unbilled services 54,159 51,427
Prepaid expenses and other current assets 10,980 8,257
Net deferred income taxes, current 1,819   2,545
Total current assets 215,050   179,010
 

Property and equipment (net of accumulated depreciation of $39,534 and $32,516 at December 31, 2012and 2011, respectively)

49,926 33,632
Goodwill 205,653 192,970

Intangible assets (net of accumulated amortization of $35,144 and $25,626 at December 31, 2012 and2011, respectively)

38,201 40,977
Other assets 16,969 13,942
Investments related to deferred compensation plan 28,775 23,542
Net deferred income taxes, less current portion 161,339   115,826
Total non-current assets 500,863   420,889
Total assets $ 715,913   $ 599,899
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,131 $ 4,148
Accrued expenses 23,939 22,612
Accrued compensation and benefits 54,315 41,518
Liability related to deferred compensation plan, current portion 506 646
Deferred revenues 6,388 4,185
Due to noncontrolling unitholders, current portion 7,623   6,209
Total current liabilities 97,902   79,318
 
Long-term debt 22,500
Liability related to deferred compensation plan, less current portion 28,361 23,083
Other long-term liabilities 36,511 32,248
Due to noncontrolling unitholders, less current portion 140,458   101,557
Total non-current liabilities 227,830   156,888
Total liabilities 325,732   236,206
 
Commitments and contingencies
 
Stockholders' equity
Preferred stock (50,000 shares authorized; zero issued and outstanding)

Class A common stock, par value $0.01 per share (100,000 shares authorized; 42,420 and 31,646 sharesissued and outstanding at December 31, 2012 and 2011, respectively)

424 316

Class B common stock, par value $0.0001 per share (50,000 shares authorized; zero and 10,488 sharesissued and outstanding at December 31, 2012 and 2011, respectively)

1
Additional paid-in capital 352,858 252,572
Accumulated other comprehensive income 2,620 287
Retained earnings 34,279   25,631
Total stockholders' equity of Duff & Phelps Corporation 390,181 278,807
Noncontrolling interest   84,886
Total stockholders' equity 390,181   363,693
Total liabilities and stockholders' equity $ 715,913   $ 599,899
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
     

Year Ended

December 31,2012   December 31,2011
Cash flows from operating activities:
Net income $ 26,301 $ 29,729
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 18,138 11,164
Equity-based compensation 25,537 21,884
Bad debt expense 1,628 3,363
Net deferred income taxes

6,432

4,811
Other 3,385 3,295
Changes in assets and liabilities providing/(using) cash, net of acquired balances:
Accounts receivable 387 (19,821 )
Unbilled services (1,015 ) (14,471 )
Prepaid expenses and other current assets (2,591 ) 1,399
Other assets (4,339 ) (146 )
Accounts payable and accrued expenses 4,698 5,527
Accrued compensation and benefits

18,363

4,379
Deferred revenues 2,069 1,756
Other liabilities (2,916 ) (869 )
Due to noncontrolling unitholders from payments pursuant to the Tax Receivable Agreement (6,033 ) (5,536 )
Net cash provided by operating activities 90,044   46,464  
 
Cash flows from investing activities:
Purchases of property and equipment (23,706 ) (8,057 )
Business acquisitions, net of cash acquired (13,614 ) (53,464 )
Purchases of investments (3,150 ) (6,200 )
Increase in restricted cash   (6,400 )
Net cash used in investing activities (40,470 ) (74,121 )
 
Cash flows from financing activities:
Borrowings under revolving line of credit 35,000
Repayments of revolving line of credit (12,500 )
Net proceeds from sale of Class A common stock 49,244
Redemption of noncontrolling unitholders (58,972 )
Dividends (13,683 ) (9,989 )
Repurchases of Class A common stock (9,284 ) (28,891 )
Payments of contingent consideration related to acquisitions (6,550 )
Distributions and other payments to noncontrolling unitholders (4,082 ) (8,447 )
Payments of debt issuance costs (302 )
Proceeds from exercises of stock options 16 267
Excess tax benefit from equity-based compensation 836   963  
Net cash used in financing activities (19,975 ) (46,399 )
 
Effect of exchange rate on cash and cash equivalents 147   (286 )
 
Net increase/(decrease) in cash and cash equivalents 29,746 (74,342 )
Cash and cash equivalents at beginning of year 38,986   113,328  
Cash and cash equivalents at end of period $ 68,732   $ 38,986  
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
     

Quarter Ended December 31, 2012

As Reported   Adjustments

Adjusted ProForma

Revenue $ 139,917 $ $ 139,917
Reimbursable expenses 5,218     5,218  
Total revenue 145,135     145,135  
 
Direct client service costs
Compensation and benefits 77,070 77,070
Other direct client service costs 4,476 4,476
Acquisition retention expenses 3,029 (3,029 ) (2)
Reimbursable expenses 5,361     5,361  
89,936   (3,029 ) 86,907  
 
Operating expenses
Selling, general and administrative 31,155 31,155
Depreciation and amortization 5,128 5,128
Restructuring charges (28 ) 28 (3)
Acquisition, integration and corporate development costs 4,951   (4,951 ) (4)  
41,206   (4,923 ) 36,283  
 
Operating income 13,993 7,952 21,945
 
Other expense/(income), net
Interest income (22 ) (22 )
Interest expense 256 256
Other expense/(income) (526 )   (526 )
(292 )   (292 )
 
Income before income taxes 14,285 7,952 22,237
Provision for income taxes 7,630   1,197   (6) 8,827  
Net income 6,655 6,755 13,410
Less: Net income attributable to noncontrolling interest 590   (590 )  
Net income attributable to Duff & Phelps Corporation $ 6,065   $ 7,345   $ 13,410  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 39,247  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.34  
 

See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.

 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
     

Quarter Ended December 31, 2011

As Reported   Adjustments  

Adjusted ProForma

Revenue $ 118,980 $ $ 118,980
Reimbursable expenses 5,573     5,573  
Total revenue 124,553     124,553  
 
Direct client service costs
Compensation and benefits 62,934 32

(1)

 

62,966
Other direct client service costs 4,089 4,089
Acquisition retention expenses 1,024 (1,024 )

(2)

 

Reimbursable expenses 5,589     5,589  
73,636   (992 ) 72,644  
 
Operating expenses
Selling, general and administrative 27,709 2

(1)

 

27,711
Depreciation and amortization 3,230 3,230
Restructuring charges 95 (95 )

(3)

 

Acquisition, integration and corporate development costs 1,571   (1,571 )

(4)

 

 
32,605   (1,664 ) 30,941  
 
Operating income 18,312 2,656 20,968
 
Other expense/(income), net
Interest income (8 ) (8 )
Interest expense 97 97
Other expense 1,502   (1,500 )

(5)

 

2  
1,591   (1,500 ) 91  
 
Income before income taxes 16,721 4,156 20,877
Provision for income taxes 5,566   2,910  

(6)

 

8,476  
Net income 11,155 1,246 12,401
Less: Net income attributable to noncontrolling interest 4,110   (4,110 )  
Net income attributable to Duff & Phelps Corporation $ 7,045   $ 5,356   $ 12,401  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 38,324  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.32  
 

See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.

 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
     

Year Ended December 31, 2012

As Reported   Adjustments  

Adjusted ProForma

Revenue $ 469,164 $ $ 469,164
Reimbursable expenses 15,537     15,537  
Total revenue 484,701     484,701  
 
Direct client service costs
Compensation and benefits 256,089 43

(1)

 

256,132
Other direct client service costs 13,119 13,119
Acquisition retention expenses 9,536 (9,536 )

(2)

 

Reimbursable expenses 15,734     15,734  
294,478   (9,493 ) 284,985  
 
Operating expenses
Selling, general and administrative 116,032 (65 )

(1)

 

115,967
Depreciation and amortization 18,138 18,138
Restructuring charges 1,796 (1,796 )

(3)

 

Acquisition, integration and corporate development costs 6,865   (6,865 )

(4)

 

 
142,831   (8,726 ) 134,105  
 
Operating income 47,392 18,219 65,611
 
Other expense/(income), net
Interest income (59 ) (59 )
Interest expense 748 748
Other expense 380   (376 )

(5)

 

4  
1,069   (376 ) 693  
 
Income before income taxes 46,323 18,595 64,918
Provision for income taxes 20,022   5,621  

(6)

 

25,643  
Net income 26,301 12,974 39,275
Less: Net income attributable to noncontrolling interest 4,037   (4,037 )  
Net income attributable to Duff & Phelps Corporation $ 22,264   $ 17,011   $ 39,275  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 39,051  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 1.01  
 

See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.

 

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
     

Year Ended December 31, 2011

As Reported   Adjustments  

Adjusted ProForma

Revenue $ 383,940 $ $ 383,940
Reimbursable expenses 12,934     12,934  
Total revenue 396,874     396,874  
 
Direct client service costs
Compensation and benefits 209,606 273

(1)

 

209,879
Other direct client service costs 9,048 9,048
Acquisition retention expenses 1,624 (1,624 )

(2)

 

Reimbursable expenses 13,073     13,073  
233,351   (1,351 ) 232,000  
 
Operating expenses
Selling, general and administrative 100,624 (480 )

(1)

 

100,144
Depreciation and amortization 11,164 11,164
Restructuring charges 4,090 (4,090 )

(3)

 

Acquisition, integration and corporate development costs 2,372   (2,372 )

(4)

 

 
118,250   (6,942 ) 111,308  
 
Operating income 45,273 8,293 53,566
 
Other expense/(income), net
Interest income (77 ) (77 )
Interest expense 275 275
Other expense 1,505   (1,500 )

(5)

 

5  
1,703   (1,500 ) 203  
 
Income before income taxes 43,570 9,793 53,363
Provision for income taxes 13,841   7,824  

(6)

 

21,665  
Net income 29,729 1,969 31,698
Less: Net income attributable to noncontrolling interest 11,115   (11,115 )  
Net income attributable to Duff & Phelps Corporation $ 18,614   $ 13,084   $ 31,698  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 38,715  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.82  
 

See definition of Adjusted Pro Forma Net Income and accompanying footnotes in the preceding section of this press release.



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