Duff & Phelps Corp - FORM 8-K - EX-99.1 - Q4 2011 EARNINGS RELEASE

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8-K - 8-K ITEMS 2.02 AND 9.01(D) - Duff & Phelps Corp	a8kearningsreleaseq42011.htm



FOR IMMEDIATE RELEASE

DUFF & PHELPS REPORTS 2011

FOURTH QUARTER AND FULL YEAR RESULTS,

AND DECLARES QUARTERLY DIVIDEND

FOURTH QUARTER HIGHLIGHTS:


•	Quarterly revenues of $124.6 million including reimbursable expenses (representing a $19.0 million or 18.0% increase over the corresponding prior year quarter) and $119.0 million excluding reimbursable expenses (representing a $15.8 million or 15.3% increase over the corresponding prior year quarter)


•	Adjusted EBITDA⁽¹⁾ of $24.2 million, representing a 20.3% margin and a $5.5 million or 29.6% increase over the corresponding prior year quarter


•	Adjusted Pro Forma Net Income⁽¹⁾ of $0.32 per share, representing a $0.07 or 28.0% increase over the corresponding prior year quarter


•	Increased quarterly dividend by 12.5% to $0.09 per share of Class A common stock

FULL YEAR HIGHLIGHTS:


•	Full year revenues of $396.9 million including reimbursable expenses (representing a $21.8 million or 5.8% increase over the prior year) and $383.9 million excluding reimbursable expenses (representing a $18.4 million or 5.0% increase over the prior year)


•	Adjusted EBITDA⁽¹⁾ of $64.7 million, representing a 16.9% margin and a $3.7 million or 6.1% increase over the prior year


•	Adjusted Pro Forma Net Income⁽¹⁾ of $0.82 per share, representing a $0.05 or 6.5% increase over the prior year


•	Repurchased 2.0 million shares of Class A common stock during the year for an aggregate purchase price of $23.9 million or $11.80 per share, as part of our publicly announced program

NEW YORK—February 15, 2012—Duff & Phelps Corporation (NYSE: DUF), a leading independent financial advisory and investment banking firm, today announced its fourth quarter 2011 financial results and declared a quarterly dividend.

Results

For the quarter ended December 31, 2011, revenues excluding reimbursable expenses increased $15.8 million or 15.3% to $119.0 million, compared to $103.2 million for the corresponding prior year quarter. Adjusted EBITDA⁽¹⁾ for the quarter was $24.2 million, representing 20.3% of revenues excluding reimbursable expenses, compared to $18.7 million for the corresponding prior year quarter, representing 18.1% of revenues excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $7.0 million, or $0.23 per share of Class A common stock on a fully diluted basis, compared to $5.9 million, or $0.20 per share for the corresponding prior year quarter. Adjusted Pro Forma Net Income⁽¹⁾ was $12.4 million, or $0.32 per share on a fully exchanged, fully diluted basis, compared to $9.6 million, or $0.25 per share, for the corresponding prior year quarter.

For the year ended December 31, 2011, revenues excluding reimbursable expenses increased $18.4 million or 5.0% to $383.9 million, compared to $365.5 million for the prior year. Adjusted EBITDA⁽¹⁾ for the year was $64.7 million, representing 16.9% of revenues excluding reimbursable expenses, compared to $61.0 million for the prior year, representing 16.7% of revenues excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $18.6 million, or $0.63 per share of Class A common stock on a fully diluted basis, compared to $16.8 million, or $0.60 per share for the prior year. Adjusted Pro Forma Net Income⁽¹⁾ was $31.7 million, or $0.82 per share on a fully exchanged, fully diluted basis, compared to $29.7 million, or $0.77 per share, for the prior year.

"Duff & Phelps' fourth quarter performance demonstrated momentum in many facets of our business,” said Noah Gottdiener, chief executive officer. “This resulted in a 15% increase in overall revenues with double digit growth in our Dispute, Alternative Asset Advisory and M&A businesses as compared to the corresponding prior year quarter. Going forward, we are confident that investments in M&A industry expertise, expanded restructuring offerings and premier market positioning within our valuation- oriented services position us well for 2012 and beyond.”

"Our financial strength enabled us to execute quickly on strategic acquisitions and investments that drive growth,” said Patrick Puzzuoli, chief financial officer. "Furthermore, our balance sheet and cost discipline provide a level of financial flexibility to continue to grow the business while enabling a 12.5% increase in our quarterly dividend from $0.08 to $0.09 per share."

_______________


⁽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.

Declaration of Quarterly Dividend

The Company also announced today that its board of directors has declared a quarterly dividend of $0.09 per share on its outstanding Class A common stock. The dividend is payable on March 16, 2012 to shareholders of record on March 6, 2012. Concurrent with the payment of the dividend, the Company will also be distributing $0.09 per unit to holders of New Class A Units.

Earnings Call Webcast

As previously announced, Duff & Phelps will host a conference call today, February 15, 2012, at 5:00 p.m. EST 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 financial advisory and investment banking firm, Duff & Phelps balances analytical skills, deep market insight and independence to help clients make sound decisions. The firm provides expertise in the areas of valuation, transactions, financial restructuring, alternative assets, disputes and taxation, with more than 1,000 employees serving clients from offices in North America, Europe and Asia. Investment banking services in the United States are provided by Duff & Phelps Securities, LLC and Pagemill Partners, LLC. Member FINRA/SIPC. M&A advisory 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 these measures provide a relevant and useful alternative measure of our ongoing profitability and performance. We believe the Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share, in addition to GAAP financial measures, provide a relevant and useful benchmark for investors, in order to assess our financial performance, ongoing operating results and comparability to other companies in our industry. These measures are utilized by our senior management to evaluate our overall performance.

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 non-recurring in nature, 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 generally nonrecurring in nature, 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, 2011			December 31, 2010		December 31, 2011		December 31, 2010
Net income attributable to Duff & Phelps Corporation	$	7,045		$	5,876	$	18,614	$	16,765
Net income attributable to noncontrolling interest	4,110			4,087		11,115		12,581
Provision for income taxes	5,566			5,337		13,841		13,503
Other expense/(income), net	1,591			56		1,703		373
Operating income	18,312			15,356		45,273		43,222
Depreciation and amortization	3,230			2,506		11,164		9,916
Equity-based compensation associated with Legacy Units and IPO Options⁽¹⁾	(34		)	431		207		3,399
Acquisition retention expenses	1,024			11		1,624		11
Restructuring charges	95			—		4,090		—
Transaction and integration costs	1,571			307		2,372		704
Charge from realignment of senior management⁽²⁾	—			60		—		3,100
Charge from impairment of certain intangible assets	—			—		—		674
Adjusted EBITDA	$	24,198		$	18,671	$	64,730	$	61,026



Reconciliation of Adjusted Pro Forma Net Income

	Quarter Ended						Year Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Net income attributable to Duff & Phelps Corporation	$	7,045		$	5,876		$	18,614		$	16,765
Net income attributable to noncontrolling interest	4,110			4,087			11,115			12,581
Equity-based compensation associated with Legacy Units and IPO Options⁽¹⁾	(34		)	431			207			3,399
Acquisition retention expenses	1,024			11			1,624			11
Restructuring charges	95			—			4,090			—
Transaction and integration costs	1,571			307			2,372			704
Loss from the write off of an investment⁽³⁾	1,500			—			1,500			—
Charge from realignment of senior management⁽²⁾	—			60			—			3,100
Adjustment to provision for income taxes⁽⁴⁾	(2,910		)	(1,217		)	(7,824		)	(6,823		)
Adjusted Pro Forma Net Income, as defined	$	12,401		$	9,555		$	31,698		$	29,737

Fully diluted weighted average shares of Class A common stock	27,674			26,807			27,832			26,089
Weighted average New Class A Units outstanding	10,650			12,023			10,883			12,703
Pro forma fully exchanged, fully diluted	38,324			38,830			38,715			38,792

Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding	$	0.32		$	0.25		$	0.82		$	0.77



_______________
(1)	Represents elimination of equity-compensation expense from Legacy Units associated with grants of ownership units of D&P Acquisitions and IPO Options granted in conjunction with our IPO. See further detail in the notes to the consolidated financial statements.
(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 $3,100 primarily resulted from cash severance and a charge from the accelerated vesting of restricted stock awards.



(3)	Reflects a one-time charge from the write off of a minority investment in WR Managed Accounts, LLC. The charge is reflected in "Other expense" on the Company's Consolidated Statement of Operations.
(4)	Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the years ended December 31, 2011 and 2010, 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 quarter ended December 31, 2010, the pro forma tax rates of 40.7% reflects a true-up adjustment relating to the nine months ended September 30, 2010. 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, 2011 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.

Investor Relations

Marty Dauer, +1-212-871-7700

investor.relations@duffandphelps.com

Media Relations

Alex Wolfe, +1-212-871-9087

alex.wolfe@duffandphelps.com

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)



	Quarter Ended						Year Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Revenues	$	118,980		$	103,213		$	383,940		$	365,546
Reimbursable expenses	5,573			2,322			12,934			9,485
Total revenues	124,553			105,535			396,874			375,031

Direct client service costs
Compensation and benefits (includes $3,705 and $3,529 of equity-based compensation for the quarters ended December 31, 2011 and 2010, respectively, and $17,086 and $14,891 of equity-based compensation for the years ended December 31, 2011 and 2010, respectively)	62,934			58,576			209,606			205,958
Other direct client service costs	4,089			2,337			9,048			7,548
Acquisition retention expenses (includes $454 and $11 of equity-based compensation for the quarters ended December 31, 2011 and 2010, respectively, and $1,054 and $11 of equity-based compensation for the years ended December 31, 2011 and 2010, respectively)	1,024			11			1,624			11
Reimbursable expenses	5,589			2,324			13,073			9,547
	73,636			63,248			233,351			223,064
Operating expenses
Selling, general and administrative (includes $633 and $1,080 of equity-based compensation for the quarters ended December 31, 2011 and 2010, respectively, and $3,744 and $5,542 of equity-based compensation for the years ended December 31, 2011 and 2010, respectively)	27,709			24,118			100,624			97,451
Depreciation and amortization	3,230			2,506			11,164			9,916
Restructuring charges	95			—			4,090			—
Transaction and integration costs	1,571			307			2,372			704
Charge from impairment of certain intangible assets	—			—			—			674
	32,605			26,931			118,250			108,745

Operating income	18,312			15,356			45,273			43,222

Other expense/(income), net
Interest income	(8		)	(6		)	(77		)	(112		)
Interest expense	97			78			275			312
Other expense	1,502			(16		)	1,505			173
	1,591			56			1,703			373

Income before income taxes	16,721			15,300			43,570			42,849
Provision for income taxes	5,566			5,337			13,841			13,503
Net income	11,155			9,963			29,729			29,346
Less: Net income attributable to noncontrolling interest	4,110			4,087			11,115			12,581
Net income attributable to Duff & Phelps Corporation	$	7,045		$	5,876		$	18,614		$	16,765

Weighted average shares of Class A common stock outstanding
Basic	26,685			25,758			26,958			25,170
Diluted	27,674			26,807			27,832			26,089

Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation
Basic	$	0.24		$	0.21		$	0.65		$	0.62
Diluted	$	0.23		$	0.20		$	0.63		$	0.60

Cash dividends declared per common share	$	0.08		$	0.06		$	0.32		$	0.23

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

QUARTERLY REVENUES BY SEGMENT

(In thousands)

(Unaudited)



	2010										2011										Variance Q4 2011 vs Q4 2010					Variance 2011 vs 2010
	Q1		Q2		Q3		Q4		Total		Q1		Q2		Q3		Q4		Total		Dollar			Percent		Dollar			Percent
Financial Advisory
Valuation Advisory	$	38,178	$	35,712	$	34,013	$	38,992	$	146,895	$	37,614	$	32,604	$	33,887	$	39,046	$	143,151	$	54		0.1	%	$	(3,744	)	(2.5	)%
Tax Services	9,447		12,089		11,157		10,631		43,324		7,547		15,128		9,572		8,698		40,945		(1,933		)	(18.2	)%	(2,379		)	(5.5	)%
Dispute & Legal Management Consulting	9,415		9,316		10,571		11,760		41,062		13,436		13,005		18,319		22,032		66,792		10,272			87.3	%	25,730			62.7	%
	57,040		57,117		55,741		61,383		231,281		58,597		60,737		61,778		69,776		250,888		8,393			13.7	%	19,607			8.5	%

Alternative Asset Advisory
Portfolio Valuation	5,482		4,642		4,455		5,216		19,795		6,519		6,220		6,730		6,272		25,741		1,056			20.2	%	5,946			30.0	%
Complex Asset Solutions	4,126		3,355		2,481		3,512		13,474		5,321		4,125		3,998		4,631		18,075		1,119			31.9	%	4,601			34.1	%
Due Diligence	2,170		2,439		3,072		3,085		10,766		1,645		4,070		2,643		3,492		11,850		407			13.2	%	1,084			10.1	%
	11,778		10,436		10,008		11,813		44,035		13,485		14,415		13,371		14,395		55,666		2,582			21.9	%	11,631			26.4	%

Investment Banking
M&A Advisory	3,682		3,144		4,604		11,289		22,719		1,450		1,853		5,741		16,568		25,612		5,279			46.8	%	2,893			12.7	%
Transaction Opinions	6,823		6,041		6,711		9,328		28,903		8,231		7,266		7,466		5,811		28,774		(3,517		)	(37.7	)%	(129		)	(0.4	)%
Global Restructuring Advisory	9,841		12,004		7,363		9,400		38,608		3,283		3,615		3,672		12,430		23,000		3,030			32.2	%	(15,608		)	(40.4	)%
	20,346		21,189		18,678		30,017		90,230		12,964		12,734		16,879		34,809		77,386		4,792			16.0	%	(12,844		)	(14.2	)%

Total Revenues (excluding reimbursables)	$	89,164	$	88,742	$	84,427	$	103,213	$	365,546	$	85,046	$	87,886	$	92,028	$	118,980	$	383,940	$	15,767		15.3	%	$	18,394		5.0	%

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(In thousands, except headcount data)

(Unaudited)



	Quarter Ended						Year Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Financial Advisory
Revenues (excluding reimbursables)	$	69,776		$	61,383		$	250,888		$	231,281
Segment operating income	$	14,848		$	7,614		$	45,212		$	29,819
Segment operating income margin	21.3		%	12.4		%	18.0		%	12.9		%

Alternative Asset Advisory
Revenues (excluding reimbursables)	$	14,395		$	11,813		$	55,666		$	44,035
Segment operating income	$	3,545		$	2,770		$	12,890		$	9,208
Segment operating income margin	24.6		%	23.4		%	23.2		%	20.9		%

Investment Banking
Revenues (excluding reimbursables)	$	34,809		$	30,017		$	77,386		$	90,230
Segment operating income	$	5,821		$	8,289		$	6,767		$	22,061
Segment operating income margin	16.7		%	27.6		%	8.7		%	24.4		%

Total
Revenues (excluding reimbursables)	$	118,980		$	103,213		$	383,940		$	365,546

Segment operating income	$	24,214		$	18,673		$	64,869		$	61,088
Net client reimbursable expenses	(16		)	(2		)	(139		)	(62		)
Equity-based compensation from Legacy Units and IPO Options	34			(431		)	(207		)	(3,399		)
Depreciation and amortization	(3,230		)	(2,506		)	(11,164		)	(9,916		)
Acquisition retention expenses	(1,024		)	(11		)	(1,624		)	(11		)
Restructuring charges	(95		)	—			(4,090		)	—
Transaction and integration costs	(1,571		)	(307		)	(2,372		)	(704		)
Charge from realignment of senior management	—			(60		)	—			(3,100		)
Charge from impairment of certain intangible assets	—			—			—			(674		)
Operating income	$	18,312		$	15,356		$	45,273		$	43,222




Average Client Service Professionals
Financial Advisory	584			572			575			596
Alternative Asset Advisory	99			78			94			83
Investment Banking	213			129			158			128
Total	896			779			827			807

End of Period Client Service Professionals
Financial Advisory	590			572			590			572
Alternative Asset Advisory	100			85			100			85
Investment Banking	303			128			303			128
Total	993			785			993			785

Revenue per Client Service Professional
Financial Advisory	$	119		$	107		$	436		$	388
Alternative Asset Advisory	$	145		$	151		$	592		$	531
Investment Banking	$	163		$	233		$	490		$	705
Total	$	133		$	132		$	464		$	453

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT—CONTINUED

(In thousands, except utilization, rate-per-hour and headcount data)

(Unaudited)



	Quarter Ended						Year Ended
	December 31, 2011			December 31, 2010			December 31, 2011			December 31, 2010
Utilization⁽¹⁾
Financial Advisory	81.7		%	76.0		%	73.8		%	67.3		%
Alternative Asset Advisory	63.0		%	68.4		%	61.2		%	62		%

Rate-Per-Hour⁽²⁾
Financial Advisory	$	356		$	346		$	343		$	344
Alternative Asset Advisory	$	516		$	468		$	515		$	481




Revenues (excluding reimbursables)
Financial Advisory	$	69,776		$	61,383		$	250,888		$	231,281
Alternative Asset Advisory	14,395			11,813			55,666			44,035
Investment Banking	34,809			30,017			77,386			90,230
Total	$	118,980		$	103,213		$	383,940		$	365,546

Average Managing Directors
Financial Advisory	90			94			92			96
Alternative Asset Advisory	24			24			25			24
Investment Banking	58			39			47			40
Total	172			157			164			160

End of Period Managing Directors
Financial Advisory	92			93			92			93
Alternative Asset Advisory	24			26			24			26
Investment Banking	76			38			76			38
Total	192			157			192			157

Revenue per Managing Director
Financial Advisory	$	775		$	653		$	2,727		$	2,409
Alternative Asset Advisory	$	600		$	492		$	2,227		$	1,835
Investment Banking	$	600		$	770		$	1,647		$	2,256
Total	$	692		$	657		$	2,341		$	2,285



_______________
(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. 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.
(2)	Average billing rate-per-hour is calculated by dividing 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 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)



	2010					2011
	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	Q4	YTD
Average Client Service Professionals
Financial Advisory	640	594	574	572	596	574	562	576	584	575
Alternative Asset Advisory	92	85	79	78	83	87	94	98	99	94
Investment Banking	131	127	124	129	128	129	128	147	213	158
	863	806	777	779	807	790	784	821	896	827


End of Period Client Service Professionals
Financial Advisory	614	576	583	572		571	552	580	590
Alternative Asset Advisory	88	81	78	85		90	97	100	100
Investment Banking	128	125	128	128		127	131	149	303
	830	782	789	785		788	780	829	993



	2010					2011
	Q1	Q2	Q3	Q4	YTD	Q1	Q2	Q3	Q4	YTD
Average Managing Directors
Financial Advisory	98	97	97	94	96	94	93	91	90	92
Alternative Asset Advisory	25	25	24	24	24	26	25	25	24	25
Investment Banking	40	41	40	39	40	39	41	48	58	47
	163	163	161	157	160	159	159	164	172	164


End of Period Managing Directors
Financial Advisory	94	99	95	93		94	91	90	92
Alternative Asset Advisory	25	24	23	26		26	25	25	24
Investment Banking	39	40	40	38		39	43	50	76
	158	163	158	157		159	159	165	192

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)



	December 31, 2011		December 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	38,986	$	113,328
Accounts receivable (net of allowance for doubtful accounts of $1,753 and $1,347 at December 31, 2011 and 2010, respectively)	77,795		60,358
Unbilled services	51,427		23,101
Prepaid expenses and other current assets	8,257		7,479
Net deferred income taxes, current	2,545		2,555
Total current assets	179,010		206,821

Property and equipment (net of accumulated depreciation of $32,516 and $26,375 at December 31, 2011 and 2010, respectively)	33,632		29,250
Goodwill	192,970		139,170
Intangible assets (net of accumulated amortization of $25,626 and $20,656 at December 31, 2011 and 2010, respectively)	40,977		30,407
Other assets	13,942		2,638
Investments related to deferred compensation plan	23,542		23,151
Net deferred income taxes, less current portion	115,826		116,789
Total non-current assets	420,889		341,405
Total assets	$	599,899	$	548,226

LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	4,148	$	2,397
Accrued expenses	22,612		11,254
Accrued compensation and benefits	41,518		39,875
Liability related to deferred compensation plan, current portion	646		1,314
Deferred revenues	4,185		2,427
Other current liabilities	—		430
Due to noncontrolling unitholders, current portion	6,209		5,640
Total current liabilities	79,318		63,337

Liability related to deferred compensation plan, less current portion	23,083		21,764
Other long-term liabilities	32,248		16,676
Due to noncontrolling unitholders, less current portion	101,557		103,885
Total non-current liabilities	156,888		142,325
Total liabilities	236,206		205,662

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; 31,646 and 30,166 shares issued and outstanding at December 31, 2011 and 2010, respectively)	316		302
Class B common stock, par value $0.0001 per share (50,000 shares authorized; 10,488 and 11,151 shares issued and outstanding at December 31, 2011 and 2010, respectively)	1		1
Additional paid-in capital	252,572		232,644
Accumulated other comprehensive income	287		1,400
Retained earnings	25,631		16,923
Total stockholders' equity of Duff & Phelps Corporation	278,807		251,270
Noncontrolling interest	84,886		91,294
Total stockholders' equity	363,693		342,564
Total liabilities and stockholders' equity	$	599,899	$	548,226

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)



	Year Ended
	December 31, 2011			December 31, 2010
Cash flows from operating activities:
Net income	$	29,729		$	29,346
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization	11,164			9,916
Equity-based compensation	21,884			20,444
Bad debt expense	3,363			2,074
Net deferred income taxes	4,811			3,050
Other	3,295			1,606
Changes in assets and liabilities providing/(using) cash, net of acquired balances:
Accounts receivable	(19,821		)	(3,231		)
Unbilled services	(14,471		)	(12		)
Prepaid expenses and other current assets	1,399			(930		)
Other assets	(146		)	(1,802		)
Accounts payable and accrued expenses	6,490			(1,933		)
Accrued compensation and benefits	4,379			6,157
Deferred revenues	1,756			(1,378		)
Other liabilities	(869		)	734
Due to noncontrolling unitholders from payments pursuant to the Tax Receivable Agreement	(5,536		)	(4,267		)
Net cash provided by operating activities	47,427			59,774

Cash flows from investing activities:
Purchases of property and equipment	(8,057		)	(7,080		)
Business acquisitions, net of cash acquired	(53,464		)	(18,217		)
Purchases of investments	(6,200		)	(3,175		)
Increase in restricted cash	(6,400		)	—
Net cash used in investing activities	(74,121		)	(28,472		)

Cash flows from financing activities:
Repurchases of Class A common stock	(28,891		)	(8,897		)
Dividends	(9,989		)	(6,618		)
Distributions and other payments to noncontrolling unitholders	(8,447		)	(9,833		)
Payment of costs for debt issuance and extinguishment	(302		)	—
Net proceeds from sale of Class A common stock	—			(3		)
Proceeds from exercises of IPO Options	267			144
Net cash used in financing activities	(47,362		)	(25,207		)

Effect of exchange rate on cash and cash equivalents	(286		)	(78		)

Net increase/(decrease) in cash and cash equivalents	(74,342		)	6,017
Cash and cash equivalents at beginning of year	113,328			107,311
Cash and cash equivalents at end of year	$	38,986		$	113,328

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 Pro Forma
Revenues	$	118,980		$	—			$	118,980
Reimbursable expenses	5,573			—				5,573
Total revenues	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		)		—
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		)		—
Transaction and integration costs	1,571			(1,571		)		—
	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		)	⁽³⁾	2
	1,591			(1,500		)		91

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



	Quarter Ended December 31, 2010
	As Reported			Adjustments				Adjusted Pro Forma
Revenues	$	103,213		$	—			$	103,213
Reimbursable expenses	2,322			—				2,322
Total revenues	105,535			—				105,535

Direct client service costs
Compensation and benefits	58,576			(158		)	⁽¹⁾⁽²⁾	58,418
Other direct client service costs	2,337			—				2,337
Acquisition retention expenses	11			(11		)		—
Reimbursable expenses	2,324			—				2,324
	63,248			(169		)		63,079

Operating expenses
Selling, general and administrative	24,118			(333		)	⁽¹⁾⁽²⁾	23,785
Depreciation and amortization	2,506			—				2,506
Transaction and integration costs	307			(307		)		—
	26,931			(640		)		26,291

Operating income	15,356			809				16,165

Other expense/(income), net
Interest income	(6		)	—				(6		)
Interest expense	78			—				78
Other income	(16		)	—				(16		)
	56			—				56

Income before income taxes	15,300			809				16,109
Provision for income taxes	5,337			1,217			⁽⁴⁾	6,554
Net income	9,963			(408		)		9,555
Less: Net income attributable to noncontrolling interest	4,087			(4,087		)		—
Net income attributable to Duff & Phelps Corporation	$	5,876		$	3,679			$	9,555


Pro forma fully exchanged, fully diluted shares outstanding								38,830

Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding								$	0.25

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 Pro Forma
Revenues	$	383,940		$	—			$	383,940
Reimbursable expenses	12,934			—				12,934
Total revenues	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		)		—
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		)		—
Transaction and integration costs	2,372			(2,372		)		—
	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		)	⁽³⁾	5
	1,703			(1,500		)		203
								—
Income before income taxes	43,570			9,793				53,363
Provision for income taxes	13,841			7,824			⁽⁴⁾	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.

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)



	Year Ended December 31, 2010
	As Reported			Adjustments				Adjusted Pro Forma
Revenues	$	365,546		$	—			$	365,546
Reimbursable expenses	9,485			—				9,485
Total revenues	375,031			—				375,031

Direct client service costs
Compensation and benefits	205,958			(1,848		)	⁽¹⁾⁽²⁾	204,110
Other direct client service costs	7,548			—				7,548
Acquisition retention expenses	11			(11		)		—
Reimbursable expenses	9,547			—				9,547
	223,064			(1,859		)		221,205
Operating expenses
Selling, general and administrative	97,451			(4,651		)	⁽¹⁾⁽²⁾	92,800
Depreciation and amortization	9,916			—				9,916
Transaction and integration costs	704			(704		)		—
Charge from impairment of certain intangible assets	674			—				674
	108,745			(5,355		)		103,390

Operating income	43,222			7,214				50,436

Other expense/(income), net
Interest income	(112		)	—				(112		)
Interest expense	312			—				312
Other expense	173			—				173
	373			—				373

Income before income taxes	42,849			7,214				50,063
Provision for income taxes	13,503			6,823			⁽⁴⁾	20,326
Net income	29,346			391				29,737
Less: Net income attributable to noncontrolling interest	12,581			(12,581		)		—
Net income attributable to Duff & Phelps Corporation	$	16,765		$	12,972			$	29,737


Pro forma fully exchanged, fully diluted shares outstanding								38,792

Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding								$	0.77

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

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