In the "Results Of Operations By Segment" financial table, the entries for segment operating income and segment operating income margin for the three months ended September 30, 2010 are corrected.

The corrected release reads:

DUFF & PHELPS REPORTS THIRD QUARTER 2010 RESULTS AND DECLARES QUARTERLY DIVIDEND

HIGHLIGHTS:
  • Quarterly revenues of $86.8 million including reimbursable expenses and $84.4 million excluding reimbursable expenses
  • Adjusted EBITDA(1) of $12.2 million, representing a 14.5% margin
  • Adjusted Pro Forma Net Income (1) of $0.15 per share
  • Declares quarterly dividend of $0.06 per share of Class A common stock

Duff & Phelps Corporation (NYSE: DUF), a leading independent financial advisory and investment banking firm, today announced financial results for its third quarter of 2010 and declared a quarterly dividend.

Results

For the quarter ended September 30, 2010, Duff & Phelps generated revenues excluding reimbursable expenses of $84.4 million, compared to $93.2 million for the corresponding prior year quarter. Adjusted EBITDA (1) for the quarter was $12.2 million, representing 14.5% of revenues excluding reimbursable expenses, compared to $16.5 million for the corresponding prior year quarter, representing 17.7% of revenues excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $4.1 million, or $0.15 per share of Class A common stock on a fully diluted basis, compared to $3.5 million, or $0.14 for the corresponding prior year quarter. Adjusted Pro Forma Net Income (1) was $5.7 million, or $0.15 per share on a fully exchanged, fully diluted basis, compared to $8.4 million, or $0.22 per share, for the corresponding prior year quarter.

For the nine months ended September 30, 2010, Duff & Phelps generated revenues excluding reimbursable expenses of $262.3 million, compared to $272.6 million for the corresponding prior year period. Adjusted EBITDA (1) for the period was $42.4 million, representing 16.1% of revenues excluding reimbursable expenses, compared to $48.5 million for the corresponding prior year period, representing 17.8% of revenues excluding reimbursable expenses. Adjusted EBITDA for the nine months ended September 30, 2010 excludes a $3.6 million charge related to the departure of our former president and one of our segment leaders (2). Net income attributable to Duff & Phelps Corporation was $10.9 million, or $0.40 per share of Class A common stock on a fully diluted basis, compared to $7.0 million, or $0.35 for the corresponding prior year period. Adjusted Pro Forma Net Income (1) was $20.2 million, or $0.52 per share on a fully exchanged, fully diluted basis, compared to $23.4 million, or $0.64 per share, for the corresponding prior year period. Adjusted Pro Forma Net Income (1) per share excludes a $0.05 per share charge related to the departure of our former president and one of our segment leaders (2).

“During the third quarter, certain of our businesses experienced revenue challenges due to the recent economic environment and lower restructuring activity. In addition, we faced a difficult year-over-year comparison given the significant revenue contribution of last year’s Lehman Examiner assignment,” said Noah Gottdiener, chief executive officer. “Despite these challenges, we saw meaningful improvements in our M&A correlated businesses compared to last year. Based on increased levels of transaction activity, we anticipate improved business performance in the fourth quarter, in particular from our M&A correlated businesses.”

Declaration of Quarterly Dividend

The Company also announced today that its board of directors has declared a quarterly dividend of $0.06 per share on its outstanding Class A common stock. The dividend is payable on December 3, 2010 to shareholders of record on November 23, 2010.

__________

(1) Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. See definitions and disclosures herein.

(2) On April 22, 2010, the Company announced certain management changes related to the departure of our former president and one of our segment leaders. The Company incurred a onetime charge associated with these changes of approximately $3.6 million in its second quarter of 2010 related to cash severance and the accounting impact of accelerated vesting of equity-based awards. Of this amount, approximately $3.0 million primarily resulted from cash severance and a charge from the accelerated vesting of restricted stock awards which is added back to Adjusted EBITDA and Adjusted Pro Forma Net Income (as defined below). The remaining approximately $0.5 million related to a charge from the accelerated vesting of Legacy Units and IPO Options, which is also added back to Adjusted EBITDA and Adjusted Pro Forma Net Income (as defined below) consistent with prior presentation.

Earnings Call Webcast

As previously announced, Duff & Phelps will host a conference call today, October 28, 2010, at 5 p.m. EDT to discuss the Company’s financial results. Interested parties can access the webcast for this call through http://ir.duffandphelps.com/.

About Duff & Phelps

As a leading global independent provider of financial advisory and investment banking services, Duff & Phelps delivers trusted advice to our clients principally in the areas of valuation, transactions, financial restructuring, dispute and taxation. Our world class capabilities and resources, combined with an agile and responsive delivery, distinguish our clients' experience in working with us. With offices in North America, Europe and Asia, Duff & Phelps is committed to fulfilling its mission to protect, recover and maximize value for its clients. Investment banking services in the United States are provided by Duff & Phelps Securities, LLC. Investment banking services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd. Duff & Phelps Securities Ltd. is authorized and regulated by the Financial Services Authority. Investment banking services in France are provided by Duff & Phelps SAS. For more information, visit www.duffandphelps.com. (NYSE: DUF)

Non-GAAP Financial Measures

Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. We believe that Adjusted EBITDA provides a relevant and useful alternative measure of our ongoing profitability and performance, when viewed in conjunction with GAAP measures, as it adjusts net income or loss attributable to Duff & Phelps Corporation for (a) net income or loss attributable to noncontrolling interest, (b) provision for income taxes, (c) interest expense and depreciation and amortization (a significant portion of which relates to debt and capital investments that have been incurred as the result of acquisitions and investments in stand-alone infrastructure which we do not expect to incur at the same levels in the future), (d) equity-based compensation associated with the Legacy Units of D&P Acquisitions, a significant portion of which is due to certain onetime grants associated with acquisitions prior to our IPO, and options to purchase shares of the Company’s Class A common stock granted in connection with the IPO, (e) impairment charges, acquisition retention expenses and other merger and acquisition costs, which are generally non-recurring in nature or are related to deferred payments associated with prior acquisitions, and (f) costs incurred from the realignment of our senior management which are generally non-recurring in nature and primarily include cash severance and charges from the accounting impact of the acceleration of vesting of restricted stock awards.

Given the level of acquisition activity during the period prior to our IPO, and related capital investments and one time equity grants associated with acquisitions during the this period (which we do not expect to incur at the same levels post IPO) and the IPO, and our belief that, as a professional services organization, our operations are not capital intensive on an ongoing basis, we believe the Adjusted EBITDA measure, in addition to GAAP financial measures, provides a relevant and useful benchmark for investors, in order to assess our financial performance and comparability to other companies in our industry. The Adjusted EBITDA measure is utilized by our senior management to evaluate our overall performance and operating expense characteristics and to compare our performance to that of certain of our competitors. A measure similar to Adjusted EBITDA is the principal measure that determines the compensation of our senior management team. In addition, a measure similar to Adjusted EBITDA is a key measure that determines compliance with certain financial covenants under our credit facility. Management compensates for the inherent limitations associated with using the Adjusted EBITDA measure through disclosure of such limitations, presentation of our financial statements in accordance with GAAP and reconciliation of Adjusted EBITDA to the most directly comparable GAAP measure, net income or loss. Furthermore, management also reviews GAAP measures, and evaluates individual measures that are not included in Adjusted EBITDA such as our level of capital expenditures, equity issuance and interest expense, among other measures.

Adjusted EBITDA, as defined by the Company and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) provision for income taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e) charges from impairment of intangible assets, (f) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (g) acquisition retention expenses, (h) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, and (i) merger and acquisition costs:
Reconciliation of Adjusted EBITDA
           
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2010 2009 2010 2009
Revenues (excluding client reimbursables) $ 84,427 $ 93,240 $ 262,333 $ 272,558
 
Net income attributable to Duff & Phelps Corporation $ 4,109 $ 3,452 $ 10,889 $ 6,951
Net income attributable to noncontrolling interest 3,088 4,136 8,494 12,417
Provision for income taxes 2,010 2,999 8,166 7,532
Other expense/(income), net (6 ) 124 317 2,919
Depreciation and amortization 2,567 2,594 7,410 7,712
Charge from impairment of certain intangible assets - - 674 -

Equity-based compensation associated with Legacy Units and IPO Options
391 3,229 2,968 10,963

Charge from realignment of senior management (not included in equity-based compensation from Legacy
Units and IPO Options above) - - 3,040 -
Merger and acquisition costs   76     -     397     -  
Adjusted EBITDA $ 12,235   $ 16,534   $ 42,355   $ 48,494  
Adjusted EBITDA as a percentage of revenues 14.5 % 17.7 % 16.1 % 17.8 %

Adjusted Pro Forma Net Income, as defined by Duff & Phelps and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) a non-recurring charge from the repayment and subsequent termination of our former credit agreement, (c) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (d) acquisition retention expenses, (e) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, (f) merger and acquisition costs, and less (g) pro forma corporate income tax applied at an assumed rate as specified in the applicable footnote (such assumed pro forma corporate income tax rate may fluctuate between periods and may include true-ups relating to prior periods, based on management estimates and judgments). Adjusted Pro Forma Net Income per share, as defined by Duff & Phelps, consists of Adjusted Pro Forma Net Income divided by the weighted average number of the Company's Class A and Class B shares for the applicable period, giving effect to the dilutive impact, if any, of stock options and restricted stock awards.
Reconciliation of Adjusted Pro Forma Net Income
         
Three Months Ended Nine Months Ended
September 30, September 30, September 30, September 30,
2010 2009 2010 2009
Net income attributable to Duff & Phelps Corporation $ 4,109 $ 3,452 $ 10,889 $ 6,951
Net income attributable to noncontrolling interest(a) 3,088 4,136 8,494 12,417
Loss on early extinguishment of debt(b) - - - 1,737

Equity-based compensation associated with Legacy Units and IPO Options(c)
391 3,229 2,968 10,963

Charge from realignment of senior management (not included in equity-based compensation from Legacy Units and IPO Options above)(d)
- - 3,040 -
Merger and acquisition costs 76 - 397 -
Adjustment to provision for income taxes(e)   (1,967 )   (2,458 )   (5,606 )   (8,625 )
 
Adjusted Pro Forma Net Income, as defined $ 5,697   $ 8,359   $ 20,182   $ 23,443  
 
Pro forma fully exchanged, fully diluted shares outstanding(f)   37,857     38,694     38,673     36,781  

 

Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding
$ 0.15   $ 0.22   $ 0.52   $ 0.64  
________________
(a) Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.
(b) Represents a non-recurring charge from the repayment and subsequent termination of our credit agreement.
(c) Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.
(d) Represents elimination of a charge from the departure of our former president and one of our segment leaders which is not included in equity-based compensation from Legacy Units and IPO Options.
(e) Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% and 40.8% for the full year, as applied to the three and nine months ended September 30, 2010 and 2009, 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. For the three months ended September 30, 2010 and 2009, the pro forma tax rates of 41.1% and 39.5% reflect a true-up adjustment relating to the six months ended June 30, 2010 and 2009, respectively. Assumes full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company.
(f) Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and dilutive effect of Ongoing RSAs for the three and nine months ended September 30, 2010 and 2009, respectively. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.

Both Adjusted EBITDA and Adjusted Pro Forma Net Income are non-GAAP financial measures which are not prepared in accordance with, and should not be considered alternatives to, measurements required by GAAP, such as operating income, net income or loss, net income or loss per share, cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with 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, it should be noted that companies calculate Adjusted EBITDA and Adjusted Pro Forma Net Income differently and, therefore, Adjusted EBITDA and Adjusted Pro Forma Net Income as presented for us may not be comparable to Adjusted EBITDA and Adjusted Pro Forma Net Income reported by other companies.

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, 2009 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 SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF INCOME(In thousands, except per share amounts)(Unaudited)
   
Three Months Ended Nine Months Ended
September 30,   September 30, September 30,   September 30,
  2010     2009     2010     2009  
 
Revenues $ 84,427 $ 93,240 $ 262,333 $ 272,558
Reimbursable expenses   2,403     3,394     7,163     8,057  
Total revenues   86,830     96,634     269,496     280,615  
 
Direct client service costs

Compensation and benefits (includes $3,430 and $4,294 of equity- based compensation for the three months ended September 30, 2010 and 2009, respectively, and $11,362 and $13,631 for the nine months ended September 30, 2010 and 2009, respectively)
47,829 52,287 146,842 155,115
Other direct client service costs 1,342 2,954 5,211 5,801
Reimbursable expenses   2,330     3,468     7,223     8,120  
  51,501     58,709     159,276     169,036  
 
Operating expenses

Selling, general and administrative (includes $1,004 and $2,018 of equity-based compensation for the three months ended September 30, 2010 and 2009, respectively, and $4,462 and $5,574 for the nine months ended September 30, 2010 and 2009, respectively)
23,485 24,620 73,873 74,048
Depreciation and amortization 2,567 2,594 7,410 7,712
Charge from impairment of certain intangible assets - - 674 -
Merger and acquisition costs   76     -     397     -  
  26,128     27,214     82,354     81,760  
 
Operating income 9,201 10,711 27,866 29,819
 
Other expense/(income), net
Interest income (29 ) (17 ) (106 ) (34 )
Interest expense 66 91 234 1,079
Loss on early extinguishment of debt - - - 1,737
Other expense   (43 )   50     189     137  
  (6 )   124     317     2,919  
 
Income before income taxes 9,207 10,587 27,549 26,900
 
Provision for income taxes   2,010     2,999     8,166     7,532  
 
Net income 7,197 7,588 19,383 19,368
 
Less: Net income attributable to noncontrolling interest   3,088     4,136     8,494     12,417  
 
Net income attributable to Duff & Phelps Corporation $ 4,109   $ 3,452   $ 10,889   $ 6,951  
 
Weighted average shares of Class A common stock outstanding
Basic 24,873 21,625 24,972 17,517
Diluted 24,954 22,448 25,741 18,197
 

Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation
Basic $ 0.15 $ 0.15 $ 0.41 $ 0.37
Diluted $ 0.15 $ 0.14 $ 0.40 $ 0.35
 
Cash dividends declared per common share $ 0.06 $ 0.05 $ 0.17 $ 0.10
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESYEAR-OVER-YEAR SUMMARY OF REVENUE BY SEGMENT(In thousands)

(Unaudited)
                         
2009 2010

VarianceQ3 2010 vs Q3 2009

VarianceYTD 2010 vs YTD 2009
Q1 Q2 Q3 Q4 Total Q1 Q2 Q3 Total Dollar Percent Dollar Percent
Financial Advisory
Valuation Advisory $

40,370

 
$

33,772

 
$

29,692

 
$

34,676

 
$

138,510

 
$

35,020

 
$

32,829

 
$

31,173

 
$

99,022

 
$ 1,481 5.0 % $ (4,812 ) (4.6 %)
Tax Services 10,878 11,972 15,045 10,007 47,902 9,447 12,089 11,157 32,693 (3,888 ) (25.8 %) (5,202 ) (13.7 %)
Dispute & Legal
Management Consulting   9,643     12,162     12,897     12,518     47,220     9,415     9,316     10,571     29,302     (2,326 ) (18.0 %)   (5,400 ) (15.6 %)
  60,891     57,906     57,634     57,201     233,632     53,882     54,234     52,901     161,017     (4,733 ) (8.2 %)   (15,414 ) (8.7 %)
 
Corporate Finance Consulting
Portfolio Valuation 6,295 4,338 5,858 5,662 22,153 5,482 4,642 4,455 14,579 (1,403 ) (24.0 %) (1,912 ) (11.6 %)
Financial Engineering 4,148 5,159 5,201 4,663 19,171 4,126 3,355 2,481 9,962 (2,720 ) (52.3 %) (4,546 ) (31.3 %)
Strategic Value Advisory 2,620 3,588 4,034 3,208 13,450 3,158 2,883 2,840 8,881 (1,194 ) (29.6 %) (1,361 ) (13.3 %)
Due Diligence   1,553     1,893     2,352     2,384     8,182     2,170     2,439     3,072     7,681     720   30.6 %   1,883   32.5 %
  14,616     14,978     17,445     15,917     62,956     14,936     13,319     12,848     41,103     (4,597 ) (26.4 %)   (5,936 ) (12.6 %)
 
Investment Banking
Global Restructuring Advisory 5,578 8,614 11,038 12,164 37,394 9,841 12,004 7,363 29,208 (3,675 ) (33.3 %) 3,978 15.8 %
Transaction Opinions 6,101 6,180 2,714 6,081 21,076 6,823 6,041 6,711 19,575 3,997 147.3 % 4,580 30.5 %
M&A Advisory   2,079     2,375     4,409     6,982     15,845     3,682     3,144     4,604     11,430     195   4.4 %   2,567   29.0 %
  13,758     17,169     18,161     25,227     74,315     20,346     21,189     18,678     60,213     517   2.8 %   11,125   22.7 %
 
Total Revenues $ 89,265   $ 90,053   $ 93,240   $ 98,345   $ 370,903   $ 89,164   $ 88,742   $ 84,427   $ 262,333   $ (8,813 ) (9.5 %) $ (10,225 ) (3.8 %)
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESRESULTS OF OPERATIONS BY SEGMENT(In thousands, except headcount data)(Unaudited)
   
Three Months Ended Nine Months Ended
September 30,   September 30, September 30,   September 30,
  2010     2009     2010     2009  
Financial Advisory
Revenues (excluding reimbursables) $ 52,901 $ 57,634 $ 161,017 $ 176,431
Segment operating income $

5,743
$ 8,855 $ 21,730 $ 29,543
Segment operating income margin

10.9
% 15.4 % 13.5 % 16.7 %
 
Corporate Finance Consulting
Revenues (excluding reimbursables) $ 12,848 $ 17,445 $ 41,103 $ 47,039
Segment operating income $

2,754
$ 5,389 $ 6,913 $ 11,819
Segment operating income margin

21.4
% 30.9 % 16.8 % 25.1 %
 
Investment Banking
Revenues (excluding reimbursables) $ 18,678 $ 18,161 $ 60,213 $ 49,088
Segment operating income $

3,665
$ 2,364 $ 13,772 $ 7,195
Segment operating income margin

19.6
% 13.0 % 22.9 % 14.7 %
 
Total
Revenues (excluding reimbursables) $ 84,427 $ 93,240 $ 262,333 $ 272,558
 
Segment operating income $ 12,162 $ 16,608 $ 42,415 $ 48,557
Net client reimbursable expenses 73 (74 ) (60 ) (63 )

Equity-based compensation from Legacy Units and IPO Options
(391 ) (3,229 ) (2,968 ) (10,963 )
Depreciation and amortization (2,567 ) (2,594 ) (7,410 ) (7,712 )
Charge from impairment of certain intangible assets - - (674 ) -
Charge from realignment of senior management - - (3,040 ) -
Merger and acquisition costs   (76 )   -     (397 )   -  
Operating income $ 9,201   $ 10,711   $ 27,866   $ 29,819  
 
_____________________________________________
 
 
Average Client Service Professionals
Financial Advisory 546 642 574 668
Corporate Finance Consulting 107 133 115 133
Investment Banking   124     130     128     134  
Total   777     905     817     935  
 
End of Period Client Service Professionals
Financial Advisory 555 641 555 641
Corporate Finance Consulting 106 131 106 131
Investment Banking   128     130     128     130  
Total   789     902     789     902  
 
Revenue per Client Service Professional
Financial Advisory $ 97 $ 90 $ 281 $ 264
Corporate Finance Consulting $ 120 $ 131 $ 357 $ 354
Investment Banking $ 151 $ 140 $ 470 $ 366
Total $ 109 $ 103 $ 321 $ 292
 
   

DUFF & PHELPS CORPORATION AND SUBSIDIARIESRESULTS OF OPERATIONS BY SEGMENT – CONTINUED(In thousands, except utilization, rate-per-hour and headcount data)(Unaudited)
 
Three Months Ended Nine Months Ended
September 30,   September 30, September 30,   September 30,
  2010     2009     2010     2009  
Utilization(1)
Financial Advisory 66.3 % 62.4 % 65.1 % 64.0 %
Corporate Finance Consulting 62.0 % 70.0 % 58.9 % 62.0 %
 
Rate-Per-Hour(2)
Financial Advisory $ 346 $ 336 $ 343 $ 322
Corporate Finance Consulting $ 428 $ 402 $ 444 $ 407
 
_____________________________________________
 
 
Revenues (excluding reimbursables)
Financial Advisory $ 52,901 $ 57,634 $ 161,017 $ 176,431
Corporate Finance Consulting 12,848 17,445 41,103 47,039
Investment Banking   18,678     18,161     60,213     49,088  
Total $ 84,427   $ 93,240   $ 262,333   $ 272,558  
 
Average Number of Managing Directors
Financial Advisory 92 95 92 98
Corporate Finance Consulting 29 31 30 30
Investment Banking   40     40     41     38  
Total   161     166     163     166  
 
End of Period Managing Directors
Financial Advisory 90 93 90 93
Corporate Finance Consulting 28 29 28 29
Investment Banking   40     40     40     40  
Total   158     162     158     162  
 
Revenue per Managing Director
Financial Advisory $ 575 $ 607 $ 1,750 $ 1,800
Corporate Finance Consulting $ 443 $ 563 $ 1,370 $ 1,568
Investment Banking $ 467 $ 454 $ 1,469 $ 1,292
Total $ 524 $ 562 $ 1,609 $ 1,642
 

____________________________________
(1) 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. Financial Advisory utilization excludes client service professionals associated with Rash & Associates, L.P. (“Rash”), a wholly-owned subsidiary, due to the nature of the work performed, and client service professionals from our acquisition of Cole Valuation Partners Limited prior to their transition to the Company’s financial system.
(2) Average billing rate-per-hour is calculated by dividing applicable revenues for the period by the number of hours worked on client assignments (including internal projects for the Company) during the same period. Financial Advisory revenues used to calculate rate-per-hour exclude revenues associated with Rash. The average billing rate also excludes certain hours from our acquisition of Cole Valuation Partners Limited prior to their transition to the Company’s financial system.
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESSUMMARY OF CLIENT SERVICE PROFESSIONALS BY SEGMENT(Unaudited)
                 
2009 2010
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 YTD
Average Client Service Professionals
Financial Advisory 700 658 642 627 657 607 566 546 574
Corporate Finance Consulting 131 134 133 130 132 124 113 107 115
Investment Banking 136 135 130 131 133 131 127 124 128
967 927 905 888 922 862 806 777 817
 
End of Period Client Service Professionals
Financial Advisory 681 640 641 618 585 548 555
Corporate Finance Consulting 130 136 131 129 117 109 106
Investment Banking 137 131 130 131 128 125 128
948 907 902 878 830 782 789
 
 
2009 2010
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 YTD
Average Managing Directors
Financial Advisory 101 99 95 93 97 91 91 92 92
Corporate Finance Consulting 30 30 31 29 30 32 30 29 30
Investment Banking 36 39 40 40 39 40 41 40 41
167 168 166 162 166 163 162 161 163
 
End of Period Managing Directors
Financial Advisory 101 96 93 93 88 94 90
Corporate Finance Consulting 30 31 29 30 31 29 28
Investment Banking 38 38 40 40 39 40 40
169 165 162 163 158 163 158
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED BALANCE SHEETS(In thousands, except per share amounts)(Unaudited)
 
September 30, December 31,
  2010     2009  
ASSETS
Current assets
Cash and cash equivalents $

98,798

 
$

107,311

 

Accounts receivable (net of allowance for doubtful accounts of $1,332 at September 30, 2010 and $1,690 at December 31, 2009)
52,043 55,079
Unbilled services 27,518 22,456
Prepaid expenses and other current assets 6,357 6,100
Net deferred income taxes, current   1,687     4,601  
Total current assets   186,403     195,547  
 

Property and equipment (net of accumulated depreciation of $24,836 at September 30, 2010 and $20,621 at December 31, 2009)
28,484 27,413
Goodwill 132,894 122,876

Intangible assets (net of accumulated amortization of $19,670 at September 30, 2010 and $16,881 at December 31, 2009)
29,936 27,907
Other assets 2,880 3,218
Investments related to deferred compensation plan 21,780 17,807
Net deferred income taxes, non-current   108,780     112,265  
Total non-current assets   324,754     311,486  
 
Total assets $ 511,157   $ 507,033  
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 2,996 $ 2,459
Accrued expenses 8,226 11,609
Accrued compensation and benefits 21,611 35,730
Liability related to deferred compensation plan, current portion 1,537 -
Deferred revenues 3,692 3,633
Other current liabilities 127 993
Due to noncontrolling unitholders, current portion   4,303     4,303  
Total current liabilities   42,492     58,727  
 
Liability related to deferred compensation plan, less current portion 20,386 18,051
Other long-term liabilities 15,387 15,400
Due to noncontrolling unitholders, less current portion   102,499     101,098  
Total non-current liabilities   138,272     134,549  
 
Total liabilities   180,764     193,276  
 
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; 28,120 and 27,290 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively)
281 273

Class B common stock, par value $0.0001 per share (50,000 shares authorized; 12,898 and 12,974 shares issued and outstanding at September 30, 2010 and December 31, 2009, respectively)
1 1
Additional paid-in capital 212,834 207,210
Accumulated other comprehensive income 564 693
Retained earnings   12,820     6,709  
Total stockholders' equity of Duff & Phelps Corporation 226,500 214,886
Noncontrolling interest   103,893     98,871  
Total stockholders' equity   330,393     313,757  
Total liabilities and stockholders' equity $ 511,157   $ 507,033  
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESCONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS(In thousands)(Unaudited)
 
Nine Months Ended
September 30,   September 30,
  2010     2009  
Cash flows from operating activities:
Net income $ 19,383 $ 19,368
 

Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 7,410 7,712
Equity-based compensation 15,824 19,205
Bad debt expense 1,141 1,698
Net deferred income taxes 4,741 4,637
Charge from impairment of certain intangible assets 674 -
Loss on early extinguishment of debt - 1,674
Other (570 ) (582 )
Changes in assets and liabilities providing/(using) cash:
Accounts receivable 4,765 (8,065 )
Unbilled services

(4,544
) (9,012 )
Prepaid expenses and other current assets (31 ) 973
Other assets (597 ) (2,396 )
Accounts payable and accrued expenses (3,506 ) 4,668
Accrued compensation and benefits

(14,507
) (10,019 )
Deferred revenues (113 ) 1,219
Other liabilities   395     (1,399 )
Net cash provided by operating activities  

30,465
    29,681  
 
Cash flows from investing activities:
Purchase of property and equipment (4,998 ) (4,744 )
Business acquisitions, net of cash acquired (11,807 ) (61 )
Purchase of investments for deferred compensation plan   (3,175 )   (6,409 )
Net cash used in investing activities   (19,980 )   (11,214 )
 
Cash flows from financing activities:
Repurchases of Class A common stock (8,608 ) (821 )
Distributions and other payments to noncontrolling unitholders (5,480 ) (15,510 )
Dividends (4,828 ) (2,394 )
Net proceeds from sale of Class A common stock (3 ) 111,808
Proceeds from exercises of IPO Options 82 456
Redemption of noncontrolling unitholders - (67,112 )
Repayments of debt - (42,763 )
Increase in restricted cash - (689 )
Fees associated with early extinguishment of debt - (63 )
Other   -     -  
Net cash used in financing activities   (18,837 )   (17,088 )
 
Effect of exchange rate on cash and cash equivalents  

(161
)   1,436  
 
Net increase/(decrease) in cash and cash equivalents (8,513 ) 2,815
Cash and cash equivalents at beginning of period   107,311     81,381  
Cash and cash equivalents at end of period $ 98,798   $ 84,196  
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(In thousands, except per share amounts)(Unaudited)
 
Three Months Ended September 30, 2010
AsReported       Adjustments   AdjustedPro Forma
 
Revenues $ 84,427 $ - $ 84,427
Reimbursable expenses   2,403     -     2,403  
Total revenues   86,830     -     86,830  
 
Direct client service costs
Compensation and benefits 47,829 84 (a) 47,913
Other direct client service costs 1,342 - 1,342
Reimbursable expenses   2,330     -     2,330  
  51,501     84     51,585  
 
Operating expenses
Selling, general and administrative 23,485 (475 ) (a) 23,010
Depreciation and amortization 2,567 - 2,567
Merger and acquisition costs   76     (76 ) (b)   -  
  26,128     (551 )   25,577  
 
Operating income 9,201 467 9,668
 
Other expense/(income), net
Interest income (29 ) - (29 )
Interest expense 66 - 66
Other expense   (43 )   -     (43 )
  (6 )   -     (6 )
 
Income before income taxes 9,207 467 9,674
-
Provision for income taxes   2,010     1,967   (c)   3,977  
 
Net income 7,197 (1,500 ) 5,697
 
Less: Net income attributable to the noncontrolling interest   3,088     (3,088 ) (d)   -  
 
Net income attributable to Duff & Phelps Corporation $ 4,109   $ 1,588   $ 5,697  
 
 
Pro forma fully exchanged, fully diluted shares outstanding (e)   37,857  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.15  
 
____________________
(a) Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.
(b) Represents elimination of merger and acquisitions costs.
(c) Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, 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. For the three months ended September 30, 2010, the pro forma tax rate of approximately 41.1% reflects a true-up adjustment relating to the six months ended June 30, 2010. Assumes full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company.
(d) Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.
(e) Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and dilutive effect of Ongoing RSAs for the quarter ended September 30, 2010. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(In thousands, except per share amounts)(Unaudited)
 
Three Months Ended September 30, 2009
AsReported       Adjustments AdjustedPro Forma
 
Revenues $ 93,240 $ - $ 93,240
Reimbursable expenses   3,394     -     3,394  
Total revenues   96,634     -     96,634  
 
Direct client service costs
Compensation and benefits 52,287 (2,124 ) (a) 50,163
Other direct client service costs 2,954 - 2,954
Reimbursable expenses   3,468     -     3,468  
  58,709     (2,124 )   56,585  
 
Operating expenses
Selling, general and administrative 24,620 (1,105 ) (a) 23,515
Depreciation and amortization   2,594     -     2,594  
  27,214     (1,105 )   26,109  
 
Operating income 10,711 3,229 13,940
 
Other expense/(income), net
Interest income (17 ) - (17 )
Interest expense 91 - 91
Other expense   50     -     50  
  124     -     124  
 
Income before income taxes 10,587 3,229 13,816
-
Provision for income taxes   2,999     2,458   (b)   5,457  
 
Net income 7,588 771 8,359
 
Less: Net income attributable to the noncontrolling interest   4,136     (4,136 ) (c)   -  
 
Net income attributable to Duff & Phelps Corporation $ 3,452   $ 4,907   $ 8,359  
 
 
Pro forma fully exchanged, fully diluted shares outstanding (d)   38,694  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.22  
 
____________________
(a) Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.
(b) Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.8% for the full year, 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. For the quarter ended September 30, 2009, the pro forma tax rate of 39.5% reflects a true-up adjustment relating to the six months ended June 30, 2009. Assumes full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company.
(c) Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.
(d) Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and dilutive effect of Ongoing RSAs for the three months ended September 30, 2009. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.
 
   

DUFF & PHELPS CORPORATION AND SUBSIDIARIESADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(In thousands, except per share amounts)(Unaudited)
 
Nine Months Ended September 30, 2010
AsReported       Adjustments AdjustedPro Forma
 
Revenues $ 262,333 $ - $ 262,333
Reimbursable expenses   7,163     -     7,163  
Total revenues   269,496     -     269,496  
 
Direct client service costs
Compensation and benefits 146,842 (1,690 ) (a) 145,152
Other direct client service costs 5,211 - 5,211
Reimbursable expenses   7,223     -     7,223  
  159,276     (1,690 )   157,586  
 
Operating expenses
Selling, general and administrative 73,873 (4,318 ) (a) 69,555
Depreciation and amortization 7,410 - 7,410
Charge from impairment of certain intangible assets 674 - 674
Merger and acquisition costs   397     (397 ) (b)   -  
  82,354     (4,715 )   77,639  
 
Operating income 27,866 6,405 34,271
 
Other expense/(income), net
Interest income (106 ) - (106 )
Interest expense 234 - 234
Other expense   189     -     189  
  317     -     317  
 
Income before income taxes 27,549 6,405 33,954
-
Provision for income taxes   8,166     5,606   (c)   13,772  
 
Net income 19,383 799 20,182
 
Less: Net income attributable to the noncontrolling interest   8,494     (8,494 ) (d)   -  
 
Net income attributable to Duff & Phelps Corporation $ 10,889   $ 9,293   $ 20,182  
 
 
Pro forma fully exchanged, fully diluted shares outstanding (e)   38,673  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.52  
 
____________________
(a) Represents elimination of equity-based compensation associated with Legacy Units and IPO Options and a charge from the departure of our former president and one of our segment leaders.
(b) Represents elimination of merger and acquisitions costs.
(c) Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, 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. The pro forma tax rate has changed from prior levels as a result of true-up adjustments. Assumes full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company.
(d) Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.
(e) Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and dilutive effect of Ongoing RSAs for the nine months ended September 30, 2010. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.
 
 

DUFF & PHELPS CORPORATION AND SUBSIDIARIESADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS(In thousands, except per share amounts)(Unaudited)
 
Nine Months Ended September 30, 2009
AsReported       Adjustments   AdjustedPro Forma
 
Revenues $ 272,558 $ - $ 272,558
Reimbursable expenses   8,057     -     8,057  
Total revenues   280,615     -     280,615  
 
Direct client service costs
Compensation and benefits 155,115 (8,004 ) (a) 147,111
Other direct client service costs 5,801 - 5,801
Reimbursable expenses   8,120     -     8,120  
  169,036     (8,004 )   161,032  
 
Operating expenses
Selling, general and administrative 74,048 (2,959 ) (a) 71,089
Depreciation and amortization   7,712     -     7,712  
  81,760     (2,959 )   78,801  
 
Operating income 29,819 10,963 40,782
 
Other expense/(income), net
Interest income (34 ) - (34 )
Interest expense 1,079 - 1,079
Loss on early extinguishment of debt 1,737 (1,737 ) (b) -
Other expense   137     -     137  
  2,919     (1,737 )   1,182  
 
Income before income taxes 26,900 12,700 39,600
-
Provision for income taxes   7,532     8,625   (c)   16,157  
 
Net income 19,368 4,075 23,443
 
Less: Net income attributable to the noncontrolling interest   12,417     (12,417 ) (d)   -  
 
Net income attributable to Duff & Phelps Corporation $ 6,951   $ 16,492   $ 23,443  
 
 
Pro forma fully exchanged, fully diluted shares outstanding (e)   36,781  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.64  
 
____________________
(a) Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.
(b) Represents a non-recurring charge from the repayment and subsequent termination of our credit agreement.
(c) Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.8% for the full year, 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 full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company.
(d) Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.
(e) Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and dilutive effect of Ongoing RSAs for the nine months ended September 30, 2009. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.

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