Duff & Phelps Reports 2012 Third Quarter Results, and Declares Quarterly Dividend

Duff & Phelps Reports 2012 Third Quarter Results, and Declares Quarterly Dividend

HIGHLIGHTS:

  • Quarterly revenue of $111.7 million including reimbursable expenses (representing a $17.3 million or 18.3% increase over the corresponding prior year quarter) and $108.4 million excluding reimbursable expenses (representing a $16.4 million or 17.8% increase over the corresponding prior year quarter)
  • Adjusted EBITDA(1) of $17.6 million, representing a 16.2% margin and a $2.2 million or 14.0% increase over the corresponding prior year quarter
  • Adjusted Pro Forma Net Income(1) of $0.20 per share, compared to $0.20 per share for the corresponding prior year quarter
  • Acquires iEnvision Technology, an advisory firm that assists law firms and corporate legal departments with implementation of document and data management systems, comprising 20 client service professionals (effective October 4, 2012)
  • Acquires CETERIS, an economic consulting firm that provides transfer pricing capabilities, strategic economic analysis and tax valuation services, comprising more than 36 client service professionals in 10 offices across the U.S. (effective October 18, 2012)
  • Declares a quarterly dividend of $0.09 per share of Class A common stock

NEW YORK--(BUSINESS WIRE)-- Duff & Phelps Corporation (NYSE: DUF  ) , a leading independent financial advisory and investment banking firm, today announced its third quarter 2012 financial results and declared a quarterly dividend.

Results

For the quarter ended September 30, 2012, revenue excluding reimbursable expenses increased $16.4 million or 17.8% to $108.4 million, compared to $92.0 million for the corresponding prior year quarter. Adjusted EBITDA(1) for the quarter was $17.6 million, representing 16.2% of revenue excluding reimbursable expenses, compared to $15.4 million for the corresponding prior year quarter, representing 16.7% of revenue excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $5.7 million, or $0.15 per share of Class A common stock on a fully diluted basis, compared to $4.0 million, or $0.14 per share for the corresponding prior year quarter. Adjusted Pro Forma Net Income(1) was $7.7 million, or $0.20 per share on a fully exchanged, fully diluted basis, compared to $7.4 million, or $0.20 per share, for the corresponding prior year quarter.

For the nine months ended September 30, 2012, revenue excluding reimbursable expenses increased $64.3 million or 24.3% to $329.2 million, compared to $265.0 million for the corresponding prior year period. Adjusted EBITDA(1) for the period was $56.7 million, representing 17.2% of revenue excluding reimbursable expenses, compared to $40.5 million for the corresponding prior year period, representing 15.3% of revenue excluding reimbursable expenses. Net income attributable to Duff & Phelps Corporation was $16.2 million, or $0.46 per share of Class A common stock on a fully diluted basis, compared to $11.6 million, or $0.40 per share for the corresponding prior year period. Adjusted Pro Forma Net Income(1) was $25.9 million, or $0.66 per share on a fully exchanged, fully diluted basis, compared to $19.3 million, or $0.50 per share, for the corresponding prior year period.

"I am pleased with the performance and momentum we are seeing from our services," commented Noah Gottdiener, chief executive officer. "We continued to increase our revenue even in the face of a challenging market where there is minimal large-scale M&A activity and low defaults rates. As a result of the pipeline in several key areas of the business, I expect our momentum to continue into the fourth quarter," continued Mr. Gottdiener. "Furthermore, we remain poised to deliver additional growth when the M&A and restructuring markets rebound in the future."

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 November 16, 2012 to shareholders of record on November 6, 2012. Concurrent with the payment of the dividend, the Company will also be distributing $0.09 per unit to holders of its New Class A Units.

_______________
(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.

Earnings Call Webcast

As previously announced, Duff & Phelps will host a conference call today, October 25, 2012, at 5:00 p.m. EDT to discuss the Company's financial results. For participants who wish to take part in the question-and-answer portion of the call, the telephone dial-in number in the United States is +1-866-277-1182. The telephone dial-in number for participants outside the United States is +1-617-597-5359. A live webcast and replay will be available on our website at 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; Pagemill Partners; and GCP Securities, 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. 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 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
   
Three Months Ended Nine Months Ended
September 30,
2012
  September 30,
2011
September 30,
2012
  September 30,
2011
Net income attributable to Duff & Phelps Corporation $ 5,701 $ 4,032 $ 16,199 $ 11,569
Net income attributable to noncontrolling interest 515 2,404 3,447 7,005
Provision for income taxes 3,953 2,655 12,392 8,275
Other expense/(income), net 171   26   1,361   112
Operating income 10,340 9,117 33,399 26,961
Depreciation and amortization 4,765 2,878 13,010 7,934
Equity-based compensation associated with Legacy Units and IPO Options(1) (232 ) 22 241
Acquisition retention expenses 2,020 221 6,507 600
Restructuring charges 406 3,091 1,824 3,995
Transaction and integration costs 35   335   1,914   801
Adjusted EBITDA $ 17,566   $ 15,410   $ 56,676   $ 40,532
Reconciliation of Adjusted Pro Forma Net Income
     
Three Months Ended Nine Months Ended
September 30,
2012
  September 30,
2011
September 30,
2012
September 30,
2011
Net income attributable to Duff & Phelps Corporation $ 5,701 $ 4,032 $ 16,199 $ 11,569
Net income attributable to noncontrolling interest 515 2,404 3,447 7,005
Equity-based compensation associated with Legacy Units and IPO Options(1) (232 ) 22 241
Acquisition retention expenses 2,020 221 6,507 600
Restructuring charges 406 3,091 1,824 3,995
Transaction and integration costs 35 335 1,914 801
Loss from the write off of an investment(2) 376
Adjustment to provision for income taxes(3) (1,023 ) (2,402 ) (4,424 ) (4,914 )
Adjusted Pro Forma Net Income, as defined $ 7,654   $ 7,449   $ 25,865   $ 19,297  
 
Fully diluted weighted average shares of Class A common stock 36,208 27,060 33,718 27,834
Weighted average New Class A Units outstanding 2,897   10,813   5,294   10,962  
Pro forma fully exchanged, fully diluted shares outstanding 39,105   37,873   39,012   38,796  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding $ 0.20   $ 0.20   $ 0.66   $ 0.50  
_______________
(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 condensed consolidated financial statements.
(2) Reflects a charge from the write off of a minority investment. The charge is reflected in "Other expense" on the Company's Condensed Consolidated Statement of Operations.
(3) Represents an adjustment to reflect an assumed annual effective corporate tax rate of approximately 39.4% and 40.6% as applied to the three and nine months ended September 30, 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. For the three months ended September 30, 2011, the pro forma tax rate of 40.4% reflects a true-up adjustment relating to the six months ended June 30, 2011. 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.

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

   
Three Months Ended Nine Months Ended
September 30,
2012
  September 30,
2011
September 30,
2012
  September 30,
2011
Revenue $ 108,413 $ 92,028 $ 329,247 $ 264,960
Reimbursable expenses 3,299   2,395   10,319   7,361  
Total revenue 111,712 94,423 339,566 272,321
 
Direct client service costs
Compensation and benefits (includes $4,710 and $4,316 of equity-based compensation for the three months ended September 30, 2012 and 2011, respectively, and $14,839 and $13,381 for the nine months ended September 30, 2012 and 2011, respectively) 58,630 50,705 179,019 146,672
Other direct client service costs 3,330 2,050 8,643 4,959
Acquisition retention expenses (includes $730 and $221 of equity-based compensation for the three months ended September 30, 2012 and 2011, respectively, and $2,174 and $600 for the nine months ended September 30, 2012 and 2011, respectively) 2,020 221 6,507 600
Reimbursable expenses 3,364   2,415   10,373   7,484  
67,344   55,391   204,542   159,715  
Operating expenses
Selling, general and administrative (includes $844 and $819 of equity-based compensation for the three months ended September 30, 2012 and 2011, respectively, and $2,707 and $3,111 for the nine months ended September 30, 2012 and 2011, respectively) 28,822 23,611 84,877 72,915
Depreciation and amortization 4,765 2,878 13,010 7,934
Restructuring charges 406 3,091 1,824 3,995
Transaction and integration costs 35   335   1,914   801  
34,028   29,915   101,625   85,645  
 
Operating income 10,340 9,117 33,399 26,961
 
Other expense/(income), net
Interest income (4 ) (14 ) (37 ) (69 )
Interest expense 121 30 492 178
Other expense 54   10   906   3  
171   26   1,361   112  
 
Income before income taxes 10,169 9,091 32,038 26,849
Provision for income taxes 3,953   2,655   12,392   8,275  
Net income 6,216 6,436 19,646 18,574
Less: Net income attributable to noncontrolling interest 515   2,404   3,447   7,005  
Net income attributable to Duff & Phelps Corporation $ 5,701   $ 4,032   $ 16,199   $ 11,569  
 
Weighted average shares of Class A common stock outstanding
Basic 34,830 26,945 32,449 27,050
Diluted 36,208 27,060 33,718 27,834
 
Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation
Basic $ 0.16 $ 0.14 $ 0.48 $ 0.41
Diluted $ 0.15 $ 0.14 $ 0.46 $ 0.40
 
Cash dividends declared per common share $ 0.09 $ 0.08 $ 0.27 $ 0.24

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

QUARTERLY REVENUE BY SEGMENT

(In thousands)

(Unaudited)

       
2011 2012 Q3

2012 vs 2011

YTD

2012 vs 2011

Q1   Q2   Q3   Q4   Total Q1   Q2   Q3   Total Dollar   Percent Dollar   Percent
Financial Advisory
Valuation Advisory $ 37,614 $ 32,604 $ 33,887 $ 39,046 $ 143,151 $ 39,490 $ 33,610 $ 33,895 $ 106,995 $ 8 % $ 2,890 2.8 %
Tax Services 7,547 15,128 9,572 8,698 40,945 5,488 13,035 11,008 29,531 1,436 15.0 % (2,716 ) (8.4 )%
Dispute & Legal Management Consulting 13,436   13,005   18,319   22,032   66,792   14,675   19,979   22,708   57,362   4,389   24.0 % 12,602   28.2 %
58,597   60,737   61,778   69,776   250,888   59,653   66,624   67,611   193,888   5,833   9.4 % 12,776   7.1 %
 
Alternative Asset Advisory
Portfolio Valuation 6,519 6,220 6,730 6,272 25,741 7,622 6,059 6,417 20,098 (313 ) (4.7 )% 629 3.2 %
Complex Asset Solutions 5,321 4,125 3,998 4,631 18,075 4,904 4,048 6,270 15,222 2,272 56.8 % 1,778 13.2 %
Due Diligence 1,645   4,070   2,643   3,492   11,850   2,423   2,312   2,516   7,251   (127 ) (4.8 )% (1,107 ) (13.2 )%
13,485   14,415   13,371   14,395   55,666   14,949   12,419   15,203   42,571   1,832   13.7 % 1,300   3.1 %
 
Investment Banking
M&A Advisory 1,450 1,853 5,741 16,568 25,612 9,354 14,953 8,145 32,452 2,404 41.9 % 23,408 258.8 %
Transaction Opinions 8,231 7,266 7,466 5,811 28,774 6,742 8,171 5,957 20,870 (1,509 ) (20.2 )% (2,093 ) (9.1 )%
Global Restructuring Advisory 3,283   3,615   3,672   12,430   23,000   15,647   12,322   11,497   39,466   7,825   213.1 % 28,896   273.4 %
12,964   12,734   16,879   34,809   77,386   31,743   35,446   25,599   92,788   8,720   51.7 % 50,211   117.9 %
 
Total Revenue (excluding reimbursables) $ 85,046   $ 87,886   $ 92,028   $ 118,980   $ 383,940   $ 106,345   $ 114,489   $ 108,413   $ 329,247   $ 16,385   17.8 % $ 64,287   24.3 %

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT

(In thousands, except headcount data)

(Unaudited)

   
Three Months Ended Nine Months Ended
September 30,
2012
  September 30,
2011
September 30,
2012
  September 30,
2011
Financial Advisory
Revenue (excluding reimbursables) $ 67,611 $ 61,778 $ 193,888 $ 181,112
Segment operating income $ 14,056 $ 10,995 $ 37,660 $ 30,364
Segment operating income margin 20.8 % 17.8 % 19.4 % 16.8 %
 
Alternative Asset Advisory
Revenue (excluding reimbursables) $ 15,203 $ 13,371 $ 42,571 $ 41,271
Segment operating income $ 4,120 $ 2,821 $ 10,651 $ 9,345
Segment operating income margin 27.1 % 21.1 % 25.0 % 22.6 %
 
Investment Banking
Revenue (excluding reimbursables) $ 25,599 $ 16,879 $ 92,788 $ 42,577
Segment operating income/(loss) $ (545 ) $ 1,614 $ 8,419 $ 946
Segment operating income/(loss) margin (2.1 )% 9.6 % 9.1 % 2.2 %
 
Totals
Revenue (excluding reimbursables) $ 108,413 $ 92,028 $ 329,247 $ 264,960
 
Segment operating income $ 17,631 $ 15,430 $ 56,730 $ 40,655
Net client reimbursable expenses (65 ) (20 ) (54 ) (123 )
Equity-based compensation from Legacy Units and IPO Options 232 (22 ) (241 )
Depreciation and amortization (4,765 ) (2,878 ) (13,010 ) (7,934 )
Acquisition retention expenses (2,020 ) (221 ) (6,507 ) (600 )
Restructuring charges (406 ) (3,091 ) (1,824 ) (3,995 )
Transaction and integration costs (35 ) (335 ) (1,914 ) (801 )
Operating income $ 10,340   $ 9,117   $ 33,399   $ 26,961  
 
Average Client Service Professionals
Financial Advisory 646 576 621 572
Alternative Asset Advisory 106 98 103 93
Investment Banking 310   147   303   136  
Total 1,062   821   1,027   801  
 
End of Period Client Service Professionals
Financial Advisory 657 580 657 580
Alternative Asset Advisory 106 100 106 100
Investment Banking 311   149   311   149  
Total 1,074   829   1,074   829  
 
Revenue per Client Service Professional
Financial Advisory $ 105 $ 107 $ 312 $ 317
Alternative Asset Advisory $ 143 $ 136 $ 413 $ 444
Investment Banking $ 83 $ 115 $ 306 $ 313
Total $ 102 $ 112 $ 321 $ 331

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

RESULTS OF OPERATIONS BY SEGMENT—CONTINUED

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

(Unaudited)

   
Three Months Ended Nine Months Ended
September 30,
2012
  September 30,
2011
September 30,
2012
  September 30,
2011
Utilization (a)
Financial Advisory 70.3 % 71.2 % 72.2 % 71.3 %
Alternative Asset Advisory 62.1 % 58.6 % 59.4 % 60.6 %
 
Rate-Per-Hour (b)
Financial Advisory $ 344 $ 338 $ 334 $ 338
Alternative Asset Advisory $ 504 $ 501 $ 506 $ 515
 
Revenues (excluding reimbursables)
Financial Advisory $ 67,611 $ 61,778 $ 193,888 $ 181,112
Alternative Asset Advisory 15,203 13,371 42,571 41,271
Investment Banking 25,599   16,879   92,788   42,577  
Total $ 108,413   $ 92,028   $ 329,247   $ 264,960  
 
Average Managing Directors
Financial Advisory 96 91 94 92
Alternative Asset Advisory 24 25 23 25
Investment Banking 73   48   74   43  
Total 193   164   191   160  
 
End of Period Managing Directors
Financial Advisory 96 90 96 90
Alternative Asset Advisory 24 25 24 25
Investment Banking 73   50   73   50  
Total 193   165   193   165  
 
Revenue per Managing Director
Financial Advisory $ 704 $ 679 $ 2,063 $ 1,969
Alternative Asset Advisory $ 633 $ 535 $ 1,851 $ 1,651
Investment Banking $ 351 $ 352 $ 1,254 $ 990
Total $ 562 $ 561 $ 1,724 $ 1,656
_______________
(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 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)

       
2011 2012
Q1   Q2   Q3   Q4   YTD Q1   Q2   Q3   YTD
Average Client Service Professionals
Financial Advisory 574 562 576 584 575 600 612 646 621
Alternative Asset Advisory 87 94 98 99 94 99 101 106 103
Investment Banking 129   128   147   213   158   302   291   310   303
790   784   821   896   827   1,001   1,004   1,062   1,027
 
 
End of Period Client Service Professionals
Financial Advisory 571 552 580 590 605 612 657
Alternative Asset Advisory 90 97 100 100 94 103 106
Investment Banking 127   131   149   303   294   292   311  
788   780   829   993   993   1,007   1,074  
 
 
 
2011 2012
Q1 Q2 Q3 Q4 YTD Q1 Q2 Q3 YTD
Average Managing Directors
Financial Advisory 94 93 91 90 92 92 95 96 94
Alternative Asset Advisory 26 25 25 24 25 23 23 24 23
Investment Banking 39   41   48   58   47   76   74   73   74
159   159   164   172   164   191   192   193   191
 
 
End of Period Managing Directors
Financial Advisory 94 91 90 92 95 95 96
Alternative Asset Advisory 26 25 25 24 23 23 24
Investment Banking 39   43   50   76   73   73   73  
159   159   165   192   191   191   193  

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

   
September 30,
2012
December 31,
2011
ASSETS
Current assets
Cash and cash equivalents $ 46,837 $ 38,986
Accounts receivable (net of allowance for doubtful accounts of $1,918 and $1,753 at September 30, 2012 and December 31, 2011, respectively) 73,455 77,795
Unbilled services 59,932 51,427
Prepaid expenses and other current assets 9,264 8,257
Net deferred income taxes, current 2,285   2,545
Total current assets 191,773   179,010
 
Property and equipment (net of accumulated depreciation of $36,971 and $32,516 at September 30, 2012 and December 31, 2011, respectively) 49,356 33,632
Goodwill 195,726 192,970
Intangible assets (net of accumulated amortization of $32,739 and $25,626 at September 30, 2012 and December 31, 2011, respectively) 34,017 40,977
Other assets 14,570 13,942
Investments related to deferred compensation plan 28,389 23,542
Net deferred income taxes, less current portion 150,017   115,826
Total non-current assets 472,075   420,889
Total assets $ 663,848   $ 599,899
 
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable $ 5,331 $ 4,148
Accrued expenses 27,716 22,612
Accrued compensation and benefits 26,560 41,518
Liability related to deferred compensation plan, current portion 625 646
Deferred revenues 5,247 4,185
Due to noncontrolling unitholders, current portion 6,214   6,209
Total current liabilities 71,693   79,318
 
Long-term debt 17,500
Liability related to deferred compensation plan, less current portion 27,945 23,083
Other long-term liabilities 29,836 32,248
Due to noncontrolling unitholders, less current portion 137,726   101,557
Total non-current liabilities 213,007   156,888
Total liabilities 284,700   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; 40,399 and 31,646 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively) 404 316
Class B common stock, par value $0.0001 per share (50,000 shares authorized; 2,029 and 10,488 shares issued and outstanding at September 30, 2012 and December 31, 2011, respectively) 1
Additional paid-in capital 327,129 252,572
Accumulated other comprehensive income 2,390 287
Retained earnings 31,806   25,631
Total stockholders' equity of Duff & Phelps Corporation 361,729 278,807
Noncontrolling interest 17,419   84,886
Total stockholders' equity 379,148   363,693
Total liabilities and stockholders' equity $ 663,848   $ 599,899

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)

(Unaudited)

 
Nine Months Ended
September 30,
2012
  September 30,
2011
 
Cash flows from operating activities:
Net income $ 19,646 $ 18,574
Adjustments to reconcile net income to net cash provided by operating activities:
Depreciation and amortization 13,010 7,934
Equity-based compensation 19,720 17,092
Bad debt expense 1,056 1,920
Net deferred income taxes 2,243 5,919
Other 3,399 2,448
Changes in assets and liabilities providing/(using) cash, net of acquired balances:
Accounts receivable 3,526 (5,236 )
Unbilled services (8,289 ) (15,416 )
Prepaid expenses and other current assets (213 ) 1,777
Other assets (2,024 ) 2,453
Accounts payable and accrued expenses 5,967 (5,541 )
Accrued compensation and benefits (7,240 ) (18,201 )
Deferred revenues 1,061 1,994
Other liabilities (5,274 ) (1,172 )
Net cash provided by operating activities 46,588   14,545  
 
Cash flows from investing activities:
Purchases of property and equipment (18,254 ) (6,410 )
Business acquisitions, net of cash acquired (1,432 ) (5,891 )
Purchases of investments (3,150 ) (3,500 )
Net cash used in investing activities (22,836 ) (15,801 )
 
Cash flows from financing activities:
Borrowings under revolving line of credit 30,000
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 (10,083 ) (7,502 )
Repurchases of Class A common stock (6,941 ) (24,114 )
Payments of contingent consideration related to acquisitions (5,314 )
Distributions and other payments to noncontrolling unitholders (2,196 ) (4,306 )
Proceeds from exercises of stock options 16 267
Excess tax benefit from equity-based compensation 711   867  
Net cash used in financing activities (16,035 ) (34,788 )
 
Effect of exchange rate on cash and cash equivalents 134   310  
 
Net increase/(decrease) in cash and cash equivalents 7,851 (35,734 )
Cash and cash equivalents at beginning of year 38,986   113,328  
Cash and cash equivalents at end of period $ 46,837   $ 77,594  

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF OPERATIONS

(In thousands, except per share amounts)

(Unaudited)

 
Three Months Ended September 30, 2012
As Reported   Adjustments Adjusted Pro Forma
Revenues $ 108,413 $ $ 108,413
Reimbursable expenses 3,299     3,299  
Total revenues 111,712     111,712  
 
Direct client service costs
Compensation and benefits 58,630 58,630
Other direct client service costs 3,330 3,330
Acquisition retention expenses 2,020 (2,020 )
Reimbursable expenses 3,364     3,364  
67,344   (2,020 ) 65,324  
 
Operating expenses
Selling, general and administrative 28,822 28,822
Depreciation and amortization 4,765 4,765
Restructuring charges 406 (406 )
Transaction and integration costs 35   (35 )  
34,028   (441 ) 33,587  
 
Operating income 10,340 2,461 12,801
 
Other expense/(income), net
Interest income (4 ) (4 )
Interest expense 121 121
Other expense 54     54  
171     171  
 
Income before income taxes 10,169 2,461 12,630
Provision for income taxes 3,953   1,023   (3) 4,976  
Net income 6,216 1,438 7,654
Less: Net income attributable to noncontrolling interest 515   (515 )  
Net income attributable to Duff & Phelps Corporation $ 5,701   $ 1,953   $ 7,654  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 39,105  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.20  

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)

 
Three Months Ended September 30, 2011
As Reported   Adjustments Adjusted Pro Forma
Revenues $ 92,028 $ $ 92,028
Reimbursable expenses 2,395     2,395  
Total revenues 94,423     94,423  
 
Direct client service costs
Compensation and benefits 50,705 419 (1) 51,124
Other direct client service costs 2,050 2,050
Acquisition retention expenses 221 (221 )
Reimbursable expenses 2,415     2,415  
55,391   198   55,589  
 
Operating expenses
Selling, general and administrative 23,611 (187 ) (1) 23,424
Depreciation and amortization 2,878 2,878
Restructuring charges 3,091 (3,091 )
Transaction and integration costs 335   (335 )  
29,915   (3,613 ) 26,302  
 
Operating income 9,117 3,415 12,532
 
Other expense/(income), net
Interest income (14 ) (14 )
Interest expense 30 30
Other expense 10     10  
26     26  
 
Income before income taxes 9,091 3,415 12,506
Provision for income taxes 2,655   2,402   (3) 5,057  
Net income 6,436 1,013 7,449
Less: Net income attributable to noncontrolling interest 2,404   (2,404 )  
Net income attributable to Duff & Phelps Corporation $ 4,032   $ 3,417   $ 7,449  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 37,873  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.20  

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)

 
Nine Months Ended September 30, 2012
As Reported   Adjustments Adjusted Pro Forma
Revenues $ 329,247 $ $ 329,247
Reimbursable expenses 10,319     10,319  
Total revenues 339,566     339,566  
 
Direct client service costs
Compensation and benefits 179,019 43 (1) 179,062
Other direct client service costs 8,643 8,643
Acquisition retention expenses 6,507 (6,507 )
Reimbursable expenses 10,373     10,373  
204,542   (6,464 ) 198,078  
 
Operating expenses
Selling, general and administrative 84,877 (65 ) (1) 84,812
Depreciation and amortization 13,010 13,010
Restructuring charges 1,824 (1,824 )
Transaction and integration costs 1,914   (1,914 )  
101,625   (3,803 ) 97,822  
 
Operating income 33,399 10,267 43,666
 
Other expense/(income), net
Interest income (37 ) (37 )
Interest expense 492 492
Other expense 906   (376 ) (2) 530  
1,361   (376 ) 985  
 
Income before income taxes 32,038 10,643 42,681
Provision for income taxes 12,392   4,424   (3) 16,816  
Net income 19,646 6,219 25,865
Less: Net income attributable to noncontrolling interest 3,447   (3,447 )  
Net income attributable to Duff & Phelps Corporation $ 16,199   $ 9,666   $ 25,865  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 39,012  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.66  

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)

 
Nine Months Ended September 30, 2011
As Reported   Adjustments Adjusted Pro Forma
Revenues $ 264,960 $ $ 264,960
Reimbursable expenses 7,361     7,361  
Total revenues 272,321     272,321  
 
Direct client service costs
Compensation and benefits 146,672 241 (1) 146,913
Other direct client service costs 4,959 4,959
Acquisition retention expenses 600 (600 )
Reimbursable expenses 7,484     7,484  
159,715   (359 ) 159,356  
 
Operating expenses
Selling, general and administrative 72,915 (482 ) (1) 72,433
Depreciation and amortization 7,934 7,934
Restructuring charges 3,995 (3,995 )
Transaction and integration costs 801   (801 )  
85,645   (5,278 ) 80,367  
 
Operating income 26,961 5,637 32,598
 
Other expense/(income), net
Interest income (69 ) (69 )
Interest expense 178 178
Other expense 3     3  
112     112  
 
Income before income taxes 26,849 5,637 32,486
Provision for income taxes 8,275   4,914   (3) 13,189  
Net income 18,574 723 19,297
Less: Net income attributable to noncontrolling interest 7,005   (7,005 )  
Net income attributable to Duff & Phelps Corporation $ 11,569   $ 7,728   $ 19,297  
 
 
Pro forma fully exchanged, fully diluted shares outstanding 38,796  
 
Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding $ 0.50  

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



Duff & Phelps Corporation
Investor Relations
Marty Dauer, +1-212-871-7700
investor.relations@duffandphelps.com
or
Media Relations
Alex Wolfe, +1-212-871-9087
alex.wolfe@duffandphelps.com

KEYWORDS:   United States  North America  New York

INDUSTRY KEYWORDS:

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