DUFF & PHELPS ANNOUNCES 2007 FULL YEAR AND FOURTH QUARTER
FINANCIAL RESULTS
HIGHLIGHTS
| | · | Annual revenue of $341.2 million, representing 38.3% growth vs. prior year |
| | · | Adjusted EBITDA of $68.9 million, representing 20.2% margin |
| | · | Current credit market dislocation providing meaningful opportunities for Duff & Phelps’ unique, independent services |
| | · | Balanced business maintains stability and creates worldwide growth opportunities |
NEW YORK, NY - March 11, 2008 - Duff & Phelps Corporation (NYSE: DUF), a leading independent financial advisory and investment banking firm, today announced financial results for the fiscal year and three months ended December 31, 2007. The financial results described below relate to the results for Duff & Phelps Corporation as the successor entity to Duff & Phelps Acquisitions, LLC (together with Duff & Phelps Corporation, referred to as “Duff & Phelps” or the “Company”). See the explanatory note below for more information.
For the fiscal year ended December 31, 2007, Duff & Phelps generated revenues excluding reimbursable expenses of $341.2 million, an increase of 38.3% compared with $246.7 million for 2006. Adjusted EBITDA for the period was $68.9 million, representing 20.2% of revenue excluding reimbursable expenses, compared with $44.1 million for 2006, representing 17.9% of revenue excluding reimbursable expenses. Adjusted pro forma net income for the period was $31.8 million, or $0.93 per share on a fully exchanged, fully diluted basis.
Duff & Phelps believes that Adjusted EBITDA (earnings before interest, taxes, depreciation and amortization) and adjusted pro forma net income, which are non-GAAP measures, viewed alongside GAAP financial performance metrics, provide relevant and useful benchmarks for investors to assess the Company’s financial performance and comparability to other companies in its industry, given Duff & Phelps’ recent level of acquisition activity, related capital investments and equity grants not associated with its current long-term compensation program, as well as the complexities associated with its ownership and tax structure.*
For the three months ended December 31, 2007, revenues excluding reimbursable expenses increased 21.7% to $92.7 million, compared with $76.2 million for the year-ago quarter. Adjusted EBITDA for the three months ended December 31, 2007 was $17.5 million, representing 18.9% of revenue excluding reimbursable expenses, compared with $15.5 million for the year-ago quarter, representing 20.3% of revenue excluding reimbursable expenses.
As of December 31, 2007, Duff & Phelps had 844 client service professionals, compared to 671 client service professionals as of December 31, 2006.
* Adjusted EBITDA, as defined by Duff & Phelps, consists of net income/(loss) before (a) interest income and expense, (b) provision/(benefit) for income taxes, (c) other (income)/expense, (d) depreciation and amortization, (e) acquisition retention expenses, (f) equity-based compensation associated with legacy units of Duff & Phelps Acquisitions, LLC and IPO options included in "Compensation and benefits", (g) equity-based compensation associated with legacy units of Duff & Phelps Acquisitions, LLC and IPO options included in "selling, general & administrative", (h) merger & acquisition costs and (i) non-controlling interest. Adjusted pro forma net income, as defined by Duff & Phelps, consists of Adjusted EBITDA (as defined above), less depreciation and amortization, interest income and expense, other income, and pro forma corporate income tax applied at an assumed 41.5% rate. Adjusted pro forma net income per share, as defined by Duff & Phelps, consists of adjusted pro forma net income divided by the aggregate number of the Company’s Class A and Class B shares outstanding as of December 31, 2007, incorporating the material effects, if any, of dilutive shares.
Noah Gottdiener, Chairman and Chief Executive Officer, said, “We are excited to complete our first calendar year as a publicly-traded company with financial results that underscore our focus on worldwide growth through economic cycles. Our business continues to be driven by increasing demand for independent assessments of complex valuation-related matters. The current dislocation in the global credit markets heightens this demand and has created numerous significant opportunities for Duff & Phelps to serve constituents seeking the highest quality independent valuation and financial advice.”
Gottdiener also noted, “Our service offerings and geographic reach are broad and balanced. Our unique, complementary mix of businesses creates a stable platform that is positioned to continue its record of growth, and which has demonstrated an ability to attract and retain the best professionals in the industry.”
Gerry Creagh, President, said, “Both our Financial Advisory and Investment Banking segments continue to grow at a rapid pace, and we are pleased with the ramp-up of our businesses in Europe and Asia. Our Financial Advisory segment has particularly benefited from the expansion of our Portfolio Valuation, Financial Engineering and Specialty Tax businesses. Our M&A advisory business enters 2008 with record backlog, and our market-leading Transaction Opinions practice continues to see high levels of demand, particularly related to situations arising out of the current credit environment.”
Earnings Call Webcast
As previously announced, Duff & Phelps will be hosting a conference call today, March 11, 2008, at 8:30am ET, to discuss the Company’s financial results. Interested parties can access the webcast for this call through http://ir.duffandphelps.com/events.cfm.
About Duff & Phelps
Duff & Phelps Corporation (NYSE: DUF) is a leading provider of independent financial advisory and investment banking services, supporting client needs principally in the areas of valuation, transactions, financial restructurings and disputes. Founded in 1932, the Company’s mission is to protect, recover and maximize value for its clients, by providing independent and unbiased advice on issues related to highly technical and complex assessments of value. Services include financial reporting valuation, tax services, real estate and fixed asset services, M&A advisory, corporate finance consulting, fairness and solvency opinions, restructuring advisory, and dispute and legal management consulting. Investment banking services are provided by Duff & Phelps Securities, LLC and Duff & Phelps Securities, Ltd. With over 1,000 employees serving clients worldwide through offices located in the United States, Europe and Asia, Duff & Phelps is committed to delivering insightful advice and service of exceptional quality, integrity and objectivity. For more information, visit www.duffandphelps.com.
Forward-Looking and Cautionary Statements
Statements in this press release, which are not historical in nature and concern Duff & Phelps Corporation’s current expectations about the Company's reported results for 2007 and beyond may contain “forward-looking” statements as defined in Section 21E of the Securities Exchange Act of 1934 and the Private Securities Litigation Reform Act of 1995. Forward-looking statements are identified by words such as “outlook,” “may,” “will,” “could,” “should,” “seeks,” "expects," “predicts,” “intends,” “plans,” “anticipates,” “believes”, “approximately,” “estimates,” “potential,” or “continue” or the negative version of those words or other comparable words. Any forward-looking statements reflect our current expectation about our future results, levels of activity, performance or achievements, including without limitation, that our business continues to grow at the current expectations with respect to, among other factors, utilization and billing rates, number of revenue-generating professionals; that we are able to expand our service offerings; that we successfully integrate the businesses we acquire; and that existing market conditions do not change from current expectations. These statements involve known and unknown risks, uncertainties and other factors that may cause actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements. Therefore you should not place undue reliance on these forward-looking statements. Please see "Risk Factors" in our Registration Statement on Form S-1 and in other documents we file with the Securities and Exchange Commission for a complete description of the material risks we face. We do not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
(Financial tables follow)
EXPLANATORY NOTE
References to “D&P Corporation,” the “Company,” and “Successor” refer subsequent to the IPO and related transactions described below to Duff & Phelps Corporation, a Delaware corporation incorporated in 2007, and its consolidated subsidiaries. These references (other than “Successor”) refer prior to the IPO and related transactions to Duff & Phelps Acquisitions, LLC and Subsidiaries (“D&P Acquisitions” or “Predecessor”). D&P Acquisitions was comprised of certain combined and consolidated entities under the common ownership of D&P Acquisitions.
D&P Corporation, a Delaware corporation, was incorporated on April 23, 2007 as a holding company for the purpose of facilitating an initial public offering (“IPO”) of common equity. D&P Corporation has not engaged in any business or other activities except in connection with its formation and the IPO. On September 27, 2007, a registration statement relating to shares of Class A common stock of D&P Corporation was declared effective and the price of such shares was set at $16.00 per share. The IPO closed on October 3, 2007.
As a result of the IPO and certain other recapitalization transactions, D&P Corporation became the sole managing member of and has a controlling interest in D&P Acquisitions LLC and subsidiaries. D&P Corporation’s only business is to act as the sole managing member of D&P Acquisitions, and, as such, D&P Corporation operates and controls all of the business and affairs of D&P Acquisitions and consolidates the financial results of D&P Acquisitions into D&P Corporation’s consolidated financial statements effective as of the close of business on October 3, 2007. D&P Acquisitions is the parent of Duff & Phelps, LLC, an independent financial advisory firm, offering a range of financial advisory and investment banking services, including valuation advisory services, corporate finance consulting services, dispute and legal management consulting, specialty tax advisory services, merger and acquisition advisory services, transaction opinions and financial restructuring advisory services. Duff & Phelps, LLC serves a full spectrum of multinational clients, including public and private corporations, private equity firms, law firms and public and private middle market companies.
Schedule of Tables
| Unaudited Consolidated Statements of Operations for the Aggregated Year Ended December 31, 2007, the Period from October 4, 2007 to December 31, 2007 (Successor), the Period from January 1, 2007 to October 3, 2007 and the Year Ended December 31, 2006 (Predecessor) | Page 5 |
| Unaudited Consolidated Statements of Operations for the Aggregated Three Months Ended December 31, 2007, the Period from October 4, 2007 to December 31, 2007 (Successor), the Period from October 1, 2007 to October 3, 2007 and the Three Months Ended December 31, 2006 (Predecessor) | Page 6 |
| Unaudited Other Operating Data for the Aggregated Year Ended December 31, 2007, the Year Ended December 31, 2006 (Predecessor), the Aggregated Three Months Ended December 31, 2007 and the Three Months Ended December 31, 2006 (Predecessor) | Page 7 |
| Unaudited Segment Operating Results for the Aggregated Year Ended December 31, 2007, the Period from October 4, 2007 to December 31, 2007 (Successor), the Period from January 1, 2007 to October 3, 2007 and the Year Ended December 31, 2006 (Predecessor) | Page 8 |
| Unaudited Segment Operating Results for the Aggregated Three Months Ended December 31, 2007, the Period from October 4, 2007 to December 31, 2007 (Successor), the Period from October 1, 2007 to October 3, 2007 and the Three Months Ended December 31, 2006 (Predecessor) | Page 9 |
| Unaudited Adjusted Pro Forma Consolidated Statements of Operations for the Aggregated Year Ended December 31, 2007 | Page 10 |
DUFF & PHELPS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
| | | Aggregated* | | Successor | | Predecessor | |
| | | Year ended December 31, 2007 | | Period from October 4, 2007 to December 31, 2007 | | Period from January 1, 2007 to October 3, 2007 | | Year ended December 31, 2006 | |
| Revenues | | $ | 341,158 | | $ | 87,883 | | $ | 253,275 | | $ | 246,742 | |
| Reimbursable expenses | | | 12,770 | | | 2,824 | | | 9,946 | | | 12,526 | |
Total revenues | | | 353,928 | | | 90,707 | | | 263,221 | | | 259,268 | |
| Direct client service costs | | | | | | | | | | | | | |
Compensation and benefits (including $46,992 of equity-based compensation for the year ended December 31, 2007, $23,805 for the period from October 4 - December 31, 2007, $23,187 for the period January 1 - October 3, 2007, and $10,244 for the year ended December 31, 2006, respectively) | | | 229,889 | | | 71,141 | | | 158,748 | | | 146,926 | |
Other direct client service costs | | | 3,747 | | | 1,440 | | | 2,307 | | | 1,034 | |
Acquisition retention expenses | | | 2,252 | | | 217 | | | 2,035 | | | 6,003 | |
Reimbursable expenses | | | 12,665 | | | 2,586 | | | 10,079 | | | 12,685 | |
Total direct client service costs | | | 248,553 | | | 75,384 | | | 173,169 | | | 166,648 | |
| Operating expenses: | | | | | | | | | | | | | |
Selling, general and administrative (including $11,098 of equity-based compensation for the year ended December 31, 2007, $2,857 for the period from October 4 - December 31, 2007, $8,241 for the period January 1 - October 3, 2007, and $3,790 for the year ended December 31, 2006, respectively) | | | 96,254 | | | 25,308 | | | 70,946 | | | 68,606 | |
Depreciation and amortization | | | 9,138 | | | 2,384 | | | 6,754 | | | 7,702 | |
Total operating expenses | | | 105,392 | | | 27,692 | | | 77,700 | | | 76,308 | |
Operating (loss)/income | | | (17 | ) | | (12,369 | ) | | 12,352 | | | 16,312 | |
| Other (income)/expense | | | | | | | | | | | | | |
Interest income | | | (2,069 | ) | | (763 | ) | | (1,306 | ) | | (556 | ) |
Interest expense | | | 6,920 | | | 1,426 | | | 5,494 | | | 5,911 | |
Other (income)/expense | | | 584 | | | 369 | | | 215 | | | (243 | ) |
Total other expenses, net | | | 5,435 | | | 1,032 | | | 4,403 | | | 5,112 | |
| (Loss)/income before non-controlling interest and income taxes | | | (5,452 | ) | | (13,401 | ) | | 7,949 | | | 11,200 | |
| Non-controlling interest | | | (8,225 | ) | | (8,225 | ) | | - | | | - | |
| Provision for income taxes | | | 2,227 | | | 1,176 | | | 1,051 | | | 701 | |
| Net (loss)/income | | $ | 546 | | $ | (6,352 | ) | $ | 6,898 | | $ | 10,499 | |
| Weighted average shares of Class A common stock outstanding: | | | | | | | | | | | | | |
Basic | | | | | | 13,018 | | | | | | | |
Basic loss per Class A share | | | | | $ | (0.49 | ) | | | | | | |
Diluted | | | | | | 13,018 | | | | | | | |
Diluted loss per Class A share | | | | | $ | (0.49 | ) | | | | | | |
| * | Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-year presentation of the Company’s results for comparability purposes. |
DUFF & PHELPS CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
(In thousands, except per share amounts)
(Unaudited)
| | | Aggregated* | | Successor | | Predecessor | |
| | | Three months ended December 31, 2007 | | Period from October 4, 2007 to December 31, 2007 | | Period from October 1, 2007 to October 3, 2007 | | Three Months ended December 31, 2006 | |
| | | | | | | | | | |
| Revenues | | $ | 92,708 | | $ | 87,883 | | $ | 4,825 | | $ | 76,186 | |
| Reimbursable expenses | | | 3,017 | | | 2,824 | | | 193 | | | 3,297 | |
| Total revenues | | | 95,725 | | | 90,707 | | | 5,018 | | | 79,483 | |
| Direct client service costs | | | | | | | | | | | | | |
Compensation and benefits (including $23,922 of equity-based compensation for the three months ended December 31, 2007, $23,805 for the period from October 4 - December 31, 2007, $117 for the period from October 1 - October 3, 2007, and $4,613 for the three months ended December 31, 2006, respectively) | | | 73,536 | | | 71,141 | | | 2,395 | | | 45,261 | |
Other direct client service costs | | | 1,740 | | | 1,440 | | | 300 | | | 560 | |
Acquisition retention expenses | | | 226 | | | 217 | | | 9 | | | 710 | |
Reimbursable expenses | | | 2,840 | | | 2,586 | | | 254 | | | 3,782 | |
| Total direct client service costs | | | 78,342 | | | 75,384 | | | 2,958 | | | 50,313 | |
| Operating expenses: | | | | | | | | | | | | | |
Selling, general and administrative (including $2,894 of equity-based compensation for the three months ended December 31, 2007, $2,857 for the period from October 4 - December 31, 2007, $37 for the period from October 1 - October 3, 2007, and $1,578 for the three months ended December 31, 2006, respectively) | | | 26,370 | | | 25,308 | | | 1,062 | | | 20,608 | |
Depreciation and amortization | | | 2,455 | | | 2,384 | | | 71 | | | 1,811 | |
| Total operating expenses | | | 28,825 | | | 27,692 | | | 1,133 | | | 22,419 | |
| Operating (loss)/income | | | (11,442 | ) | | (12,369 | ) | | 927 | | | 6,751 | |
| Other (income)/ expense: | | | | | | | | | | | | | |
Interest income | | | (782 | ) | | (763 | ) | | (19 | ) | | (265 | ) |
Interest expense | | | 1,478 | | | 1,426 | | | 52 | | | 1,819 | |
Other (income)/expense | | | 369 | | | 369 | | | - | | | 164 | |
| Total other expenses, net | | | 1,065 | | | 1,032 | | | 33 | | | 1,718 | |
(Loss)/income before non-controlling interest and income taxes | | | (12,507 | ) | | (13,401 | ) | | 894 | | | 5,033 | |
| Non-controlling interest | | | (8,225 | ) | | (8,225 | ) | | - | | | - | |
| Provision for income taxes | | | 1,193 | | | 1,176 | | | 17 | | | 214 | |
| Net (loss)/income | | $ | (5,475 | ) | $ | (6,352 | ) | $ | 877 | | $ | 4,819 | |
| Weighted average shares of Class A common stock outstanding: | | | | | | | | | | | | | |
| Basic | | | | | | 13,018 | | | | | | | |
| Basic loss per share | | | | | $ | (0.49 | ) | | | | | | |
| Diluted | | | | | | 13,018 | | | | | | | |
| Diluted loss per share | | | | | $ | (0.49 | ) | | | | | | |
| * | Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-period presentation of the Company’s results for comparability purposes. |
DUFF & PHELPS CORPORATION
OTHER OPERATING DATA
(In thousands, except rate-per-hour data)
(Unaudited)
| | | Aggregated* | | | | Aggregated* | | | |
| | | Year ended December 31, 2007 | | Year ended December 31, 2006 | | Three Months ended December 31, 2007 | | Three Months ended December 31, 2006 | |
Other Financial Data | | | | | | | | | | | | | |
Adjusted EBITDA (1) | | $ | 68,943 | | $ | 44,051 | | $ | 17,535 | | $ | 15,463 | |
| | | | | | | | | | | | | | |
Other Operating Data | | | | | | | | | | | | | |
| Number of client service professionals | | | | | | | | | | | | | |
| (at period end) | | | | | | | | | | | | | |
| Financial Advisory | | | 746 | | | 553 | | | 746 | | | 553 | |
| Investment Banking | | | 98 | | | 118 | | | 98 | | | 118 | |
| Total | | | 844 | | | 671 | | | 844 | | | 671 | |
| | | | | | | | | | | | | | |
| Average number of client service professionals | | | | | | | | | | | | | |
| for the period | | | | | | | | | | | | | |
| Financial Advisory | | | 634 | | | 506 | | | 717 | | | 562 | |
| Investment Banking | | | 101 | | | 88 | | | 98 | | | 104 | |
| Total | | | 735 | | | 594 | | | 815 | | | 666 | |
| | | | | | | | | | | | | | |
Financial Advisory utilization rate (2) | | | 69.0 | % | | 68.1 | % | | 69.8 | % | | 75.3 | % |
Financial Advisory rate-per-hour (3) | | $ | 323 | | $ | 300 | | $ | 328 | | $ | 303 | |
| | | Adjusted EBITDA reconciliation |
| | $ | 546 | | $ | 10,499 | | $ | (5,475 | ) | $ | 4,819 | |
| Provision for income taxes | | | 2,227 | | | 701 | | | 1,193 | | | 214 | |
| Interest income | | | (2,069 | ) | | (556 | ) | | (782 | ) | | (265 | ) |
| Interest expense | | | 6,920 | | | 5,911 | | | 1,478 | | | 1,819 | |
| Other (income)/expense | | | 584 | | | (243 | ) | | 369 | | | 164 | |
| Depreciation and amortization | | | 9,138 | | | 7,702 | | | 2,455 | | | 1,811 | |
| Acquisition retention expenses | | | 2,252 | | | 6,003 | | | 226 | | | 710 | |
| Equity based compensation associated with legacy units and IPO options included in "compensation and benefits" | | | 46,970 | | | 10,244 | | | 23,900 | | | 4,613 | |
| Equity based compensation associated with legacy units and IPO options included in "selling, general and administrative" | | | 10,600 | | | 3,790 | | | 2,396 | | | 1,578 | |
| Non-controlling interest | | | (8,225 | ) | | - | | | (8,225 | ) | | - | |
| Adjusted EBITDA | | $ | 68,943 | | $ | 44,051 | | $ | 17,535 | | $ | 15,463 | |
| * | Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-period presentation of the Company’s results for comparability purposes. |
| (1) | The Adjusted EBITDA measure presented consists of net income/(loss) before (a) interest income and expense, (b) provision/(benefit) for income taxes, (c) other (income) / expense, (d) depreciation and amortization, (e) acquisition retention expenses, (f) equity-based compensation associated with legacy units of D&P Acquisitions, LLC and IPO options included in "Compensation and benefits", (g) equity-based compensation associated with legacy units of D&P Acquisitions, LLC and IPO options included in "selling, general & administrative", (h) merger & acquisition costs and (i) non-controlling interest. |
| (2) | The utilization rate for any given period is calculated by dividing the number of hours Financial Advisory client service professionals (except certain professionals associated with Rash & Associates, the Company’s wholly owned subsidiary) worked on client assignments 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. |
| (3) | Average billing rate per hour is calculated by dividing applicable revenues for the period by the number of hours worked on client assignments during the same period. |
DUFF & PHELPS CORPORATION
SEGMENT OPERATING RESULTS
(In thousands)
(Unaudited)
| | | Aggregated* | | Successor | | Predecessor | |
| | | Year ended December 31, 2007 | | Period from October 4, 2007 to December 31, 2007 | | Period from January 1, 2007 to October 3, 2007 | | Year ended December 31, 2006 | |
Financial Advisory: | | | | | | | | | | | | | |
| Revenues | | $ | 259,569 | | $ | 68,821 | | $ | 190,748 | | $ | 189,486 | |
| Segment operating income | | | 43,174 | | | 12,177 | | | 30,997 | | | 27,045 | |
| Segment operating income margin | | | 16.6 | % | | 17.7 | % | | 16.3 | % | | 14.3 | % |
Investment Banking: | | | | | | | | | | | | | |
| Revenues | | | 81,589 | | | 19,062 | | | 62,527 | | | 57,256 | |
| Segment operating income | | | 25,664 | | | 3,959 | | | 21,705 | | | 17,165 | |
| Segment operating income margin | | | 31.5 | % | | 20.8 | % | | 34.7 | % | | 30.0 | % |
Total Company: | | | | | | | | | | | | | |
| Revenues | | | 341,158 | | | 87,883 | | | 253,275 | | | 246,742 | |
| Reimbursable expenses | | | 12,770 | | | 2,824 | | | 9,946 | | | 12,526 | |
Total revenues and reimbursable expenses | | $ | 353,928 | | $ | 90,707 | | $ | 263,221 | | $ | 259,268 | |
Statement of operations reconciliation: | | | | | | | | | | | | | |
| Total segment operating income | | $ | 68,838 | | $ | 16,136 | | $ | 52,702 | | $ | 44,210 | |
| Charges not allocated at the segment level: | | | | | | | | | | | | | |
Net client reimbursable expenses | | | (105 | ) | | (238 | ) | | 133 | | | 159 | |
Equity-based compensation associated with legacy units and IPO options | | | 57,570 | | | 26,142 | | | 31,428 | | | 14,034 | |
Depreciation and amortization | | | 9,138 | | | 2,384 | | | 6,754 | | | 7,702 | |
Acquisition retention expenses | | | 2,252 | | | 217 | | | 2,035 | | | 6,003 | |
| Operating (loss)/income | | | (17 | ) | | (12,369 | ) | | 12,352 | | | 16,312 | |
Interest expense, net | | | 4,851 | | | 663 | | | 4,188 | | | 5,355 | |
Other expense/(income) | | | 584 | | | 369 | | | 215 | | | (243 | ) |
(Loss)/income before non-controlling interest and income taxes | | | (5,452 | ) | | (13,401 | ) | | 7,949 | | | 11,200 | |
| Non-controlling interest | | | (8,225 | ) | | (8,225 | ) | | - | | | - | |
| Provision for income taxes | | | 2,227 | | | 1,176 | | | 1,051 | | | 701 | |
Net (loss)/income | | $ | 546 | | $ | (6,352 | ) | $ | 6,898 | | $ | 10,499 | |
| * | Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-year presentation of the Company’s results for comparability purposes. |
DUFF & PHELPS CORPORATION
SEGMENT OPERATING RESULTS
(In thousands)
(Unaudited)
| | | Aggregated* | | Successor | | Predecessor | |
| | | Three Months ended December 31, 2007 | | Period from October 4, 2007 to December 31, 2007 | | Period from October 1, 2007 to October 3, 2007 | | Three months ended December 31, 2006 | |
Financial Advisory: | | | | | | | | | | | | | |
| Revenues | | $ | 71,774 | | $ | 68,821 | | $ | 2,953 | | $ | 58,057 | |
| Segment operating income | | | 12,666 | | | 12,177 | | | 489 | | | 12,243 | |
| Segment operating income margin | | | 17.6 | % | | 17.7 | % | | 16.6 | % | | 21.1 | % |
Investment Banking: | | | | | | | | | | | | | |
| Revenues | | | 20,934 | | | 19,062 | | | 1,872 | | | 18,129 | |
| Segment operating income | | | 4,690 | | | 3,959 | | | 731 | | | 3,705 | |
| Segment operating income margin | | | 22.4 | % | | 20.8 | % | | 39.0 | % | | 20.4 | % |
Total Company: | | | | | | | | | | | | | |
| Revenues | | | 92,708 | | | 87,883 | | | 4,825 | | | 76,186 | |
| Reimbursable expenses | | | 3,017 | | | 2,824 | | | 193 | | | 3,297 | |
Total revenues and reimbursable expenses | | $ | 95,725 | | $ | 90,707 | | $ | 5,018 | | $ | 79,483 | |
Statement of operations reconciliation: | | | | | | | | | | | | | |
| Total segment operating income | | $ | 17,356 | | $ | 16,136 | | $ | 1,220 | | $ | 15,948 | |
| Charges not allocated at the segment level: | | | | | | | | | | | | | |
Net client reimbursable expenses | | | (177 | ) | | (238 | ) | | 61 | | | 485 | |
Equity-based compensation associated with legacy units and IPO options | | | 26,294 | | | 26,142 | | | 152 | | | 6,191 | |
Depreciation and amortization | | | 2,455 | | | 2,384 | | | 71 | | | 1,811 | |
Acquisition retention expenses | | | 226 | | | 217 | | | 9 | | | 710 | |
| Operating (loss)/income | | | (11,442 | ) | | (12,369 | ) | | 927 | | | 6,751 | |
Interest expense, net | | | 696 | | | 663 | | | 33 | | | 1,554 | |
Other expense/(income) | | | 369 | | | 369 | | | - | | | 164 | |
(Loss)/income before non-controlling interest and income taxes | | | (12,507 | ) | | (13,401 | ) | | 894 | | | 5,033 | |
| Non-controlling interest | | | (8,225 | ) | | (8,225 | ) | | - | | | - | |
| Provision for income taxes | | | 1,193 | | | 1,176 | | | 17 | | | 214 | |
Net (loss)/income | | $ | (5,475 | ) | $ | (6,352 | ) | $ | 877 | | $ | 4,819 | |
| |
| * | Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-period presentation of the Company’s results for comparability purposes. |
DUFF & PHELPS CORPORATION
ADJUSTED PRO FORMA CONSOLIDATED STATEMENTS OF OPERATIONS
(Dollars in thousands, except per share amounts)
(Unaudited)
| | | | Predecessor | | | Successor | | | Aggregated* | |
| | | | Period from January 1, 2007 to | | | Period from October 4, 2007 to | | | Year ended December 31, 2007 | |
| | | | October 3, | | | December 31, | | | | | | | | | | | | Adjusted | |
| | | | 2007 | | | 2007 | | | Aggregated | | | Adjustments | | | | | | Pro Forma | |
| | | | | | | | | | | | | | | | | | | | |
| Revenues | | $ | 253,275 | | $ | 87,883 | | $ | 341,158 | | $ | - | | | | | $ | 341,158 | |
| Reimbursable expenses | | | 9,946 | | | 2,824 | | | 12,770 | | | - | | | | | | 12,770 | |
Total revenues | | | 263,221 | | | 90,707 | | | 353,928 | | | - | | | | | | 353,928 | |
| Direct client service costs | | | | | | | | | | | | | | | | | | | |
Compensation and benefits (including $46,992 of equity-based compensation for the year ended December 31, 2007, $23,187 for the period January 1 - October 3, 2007, and $23,805 for the period from October 4 - December 31, 2007) | | | 158,748 | | | 71,141 | | | 229,889 | | | (46,970 | ) | | (1 | ) | | 182,919 | |
Other direct client service costs | | | 2,307 | | | 1,440 | | | 3,747 | | | - | | | | | | 3,747 | |
Acquisition retention expenses | | | 2,035 | | | 217 | | | 2,252 | | | (2,252 | ) | | (2 | ) | | - | |
Reimbursable expenses | | | 10,079 | | | 2,586 | | | 12,665 | | | - | | | | | | 12,665 | |
Total direct client service costs | | | 173,169 | | | 75,384 | | | 248,553 | | | (49,222 | ) | | | | | 199,331 | |
| Operating expenses: | | | | | | | | | | | | | | | | | | | |
Selling, general and administrative (including $11,098 of equity-based compensation for the year ended December 31, 2007, $8,241 for the period January 1 - October 3, 2007, and $2,857 for the period from October 4 - December 31, 2007) | | | 70,946 | | | 25,308 | | | 96,254 | | | (10,600 | ) | | (1 | ) | | 85,654 | |
Depreciation and amortization | | | 6,754 | | | 2,384 | | | 9,138 | | | - | | | | | | 9,138 | |
Total operating expenses | | | 77,700 | | | 27,692 | | | 105,392 | | | (10,600 | ) | | | | | 94,792 | |
| Operating (loss)/income | | | 12,352 | | | (12,369 | ) | | (17 | ) | | 59,822 | | | | | | 59,805 | |
| Other expense/(income): | | | | | | | | | | | | | | | | | | | |
Interest income | | | (1,306 | ) | | (763 | ) | | (2,069 | ) | | - | | | | | | (2,069 | ) |
Interest expense | | | 5,494 | | | 1,426 | | | 6,920 | | | - | | | | | | 6,920 | |
Other (income)/expense | | | 215 | | | 369 | | | 584 | | | - | | | | | | 584 | |
Total other expenses, net | | | 4,403 | | | 1,032 | | | 5,435 | | | - | | | | | | 5,435 | |
| (Loss)/income before non-controlling interest and income taxes | | | 7,949 | | | (13,401 | ) | | (5,452 | ) | | 59,822 | | | | | | 54,370 | |
| Non-controlling interest | | | - | | | (8,225 | ) | | (8,225 | ) | | 8,225 | | | (3 | ) | | - | |
| Provision for income taxes | | | 1,051 | | | 1,176 | | | 2,227 | | | 20,330 | | | (4 | ) | | 22,557 | |
| Net (loss)/income | | $ | 6,898 | | $ | (6,352 | ) | $ | 546 | | $ | 31,267 | | | | | $ | 31,813 | |
| | | | | | | | | | | | | | | | | | | | |
| Pro forma fully exchanged, fully diluted shares outstanding | | | | | | | | | | | | | | | | | | 34,153 | |
| | | | | | | | | | | | | | | | | | | | |
| Adjusted pro forma net income per fully exchanged, fully diluted share (5) | | | | | | | | | | | | | | | | | $ | 0.93 | |
*Represents aggregate Predecessor and Successor results for the period presented. The combined results are non-GAAP financial measures and should not be used in isolation or substitution of Predecessor and Successor results. The aggregated results provide a full-year presentation of the Company’s results for comparability purposes. |
| (1) | Represents elimination of equity-based compensation associated with (i) “legacy” units of D&P Acquisitions and (ii) one-time options to purchase Class A common stock of D&P Corporation that were granted in connection with the Company’s IPO. |
| (2) | Represents elimination of expense associated with deferred payments made in connection with the acquisition of Corporate Value Consulting business from The McGraw-Hill Companies, Inc. in September 2005. |
| (3) | Represents elimination of the non-controlling 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. |
| (4) | Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 41.5%, 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, and no residual tax benefit associated with deferred tax assets. |
| (5) | Based on the aggregate number of Class A and Class B shares of common stock outstanding as of December 31, 2007. The Company believes that options and restricted stock awards granted during 2007 would not be considered dilutive when applying the treasury method. |
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Investor and Media Relations Marty Dauer (212) 871-7700 investor.relations@duffandphelps.com | |
