Duff & Phelps (DUF) 10-Q 2011 Q2 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

þQUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended June 30, 2011

OR

oTRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

Commission File Number: 001-33693

DUFF & PHELPS CORPORATION

(Exact name of registrant as specified in its charter)

DELAWARE	20-8893559
(State of other jurisdiction or incorporation or organization)	(I.R.S. employer identification no.)

55 East 52^nd Street, 31^st Floor

New York, New York 10055

(Address of principal executive offices)

(Zip code)

(212) 871-2000

(Registrant's telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulations S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes þ No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer o     Accelerated filer þ    Non-accelerated filer o Smaller reporting company o

Indicated by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act.) Yes o No þ

The number of shares outstanding of the registrant's Class A common stock, par value $0.01 per share, was 31,631,669 as of July 15, 2011. The number of shares outstanding of the registrant's Class B common stock, par value $0.0001 per share, was 10,817,931 as of July 15, 2011.

DUFF & PHELPS CORPORATION

AND SUBSIDIARIES

TABLE OF CONTENTS

Part I.	Financial Information	1
	Item 1.Financial Statements	1
	Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations	24
	Item 3. Quantitative and Qualitative Disclosures About Market Risk	52
	Item 4. Controls and Procedures	52
Part II.	Other Information	53
	Item 1.Legal Proceedings	53
	Item 1A.Risk Factors	53
	Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	53
	Item 3.Defaults Upon Senior Securities	54
	Item 4. (Removed and Reserved)	54
	Item 5. Other Information	54
	Item 6. Exhibits	54
	Signatures	55

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF INCOME

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Revenues	$	87,886		$	88,742		$	172,932		$	177,906
Reimbursable expenses	3,074			1,962			4,966			4,760
Total revenues	90,960			90,704			177,898			182,666
Direct client service costs
Compensation and benefits (includes $4,130 and $4,215 of equity-based compensation for the three months ended June 30, 2011 and 2010, respectively, and $9,065 and $7,932 for the six months ended June 30, 2011 and 2010, respectively)	49,059			50,415			95,967			99,013
Other direct client service costs	1,480			1,881			2,909			3,869
Acquisition retention expenses (includes $297 and $379 of equity-based compensation for the three and six months ended June 30, 2011)	297			—			379			—
Reimbursable expenses	3,132			2,039			5,069			4,893
	53,968			54,335			104,324			107,775
Operating expenses
Selling, general and administrative (includes $769 and $2,005 of equity- based compensation for the three months ended June 30, 2011 and 2010, respectively, and $2,292 and $3,458 for the six months ended June 30, 2011 and 2010, respectively)	24,982			26,304			49,304			50,388
Depreciation and amortization	2,567			2,350			5,056			4,843
Restructuring charges (Note 10)	904			—			904			—
Merger and acquisition costs	272			321			466			321
Charge from impairment of certain intangible assets	—			—			—			674
	28,725			28,975			55,730			56,226
Operating income	8,267			7,394			17,844			18,665
Other expense/(income), net
Interest income	(27		)	(53		)	(55		)	(77		)
Interest expense	91			76			148			168
Other expense/(income)	—			247			(7		)	232
	64			270			86			323
Income before income taxes	8,203			7,124			17,758			18,342
Provision for income taxes	2,556			2,506			5,620			6,156
Net income	5,647			4,618			12,138			12,186
Less: Net income attributable to noncontrolling interest	2,223			2,111			4,601			5,406
Net income attributable to Duff & Phelps Corporation	$	3,424		$	2,507		$	7,537		$	6,780
Weighted average shares of Class A common stock outstanding
Basic	27,296			25,058			27,104			25,022
Diluted	28,067			25,754			28,095			25,903
Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation (Note 4)
Basic	$	0.12		$	0.10		$	0.27		$	0.26
Diluted	$	0.12		$	0.09		$	0.26		$	0.25
Cash dividends declared per common share	$	0.08		$	0.06		$	0.16		$	0.11

See accompanying notes to the condensed consolidated financial statements.

1

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

(In thousands, except per share amounts)

(Unaudited)

	June 30, 2011		December 31, 2010
ASSETS
Current assets
Cash and cash equivalents	$	69,475	$	113,328
Accounts receivable (net of allowance for doubtful accounts of $1,750 and $1,347 at June 30, 2011 and December 31, 2010, respectively)	60,243		60,358
Unbilled services	41,418		23,101
Prepaid expenses and other current assets	11,634		7,479
Net deferred income taxes, current	485		2,555
Total current assets	183,255		206,821
Property and equipment (net of accumulated depreciation of $29,511 and $26,375 at June 30, 2011 and December 31, 2010, respectively)	31,071		29,250
Goodwill	147,150		139,170
Intangible assets (net of accumulated amortization of $22,705 and $20,656 at June 30, 2011 and December 31, 2010, respectively)	30,786		30,407
Other assets	4,453		2,638
Investments related to deferred compensation plan (Note 9)	25,124		23,151
Net deferred income taxes, non-current	114,464		116,789
Total non-current assets	353,048		341,405
Total assets	$	536,303	$	548,226
LIABILITIES AND STOCKHOLDERS' EQUITY
Current liabilities
Accounts payable	$	2,866	$	2,397
Accrued expenses	8,208		11,254
Accrued compensation and benefits	12,746		39,875
Liability related to deferred compensation plan, current portion (Note 9)	540		1,314
Deferred revenues	3,949		2,427
Other current liabilities	—		430
Due to noncontrolling unitholders, current portion	5,640		5,640
Total current liabilities	33,949		63,337
Liability related to deferred compensation plan, less current portion (Note 9)	24,986		21,764
Other long-term liabilities	18,720		16,676
Due to noncontrolling unitholders, less current portion	105,638		103,885
Total non-current liabilities	149,344		142,325
Total liabilities	183,293		205,662
Commitments and contingencies (Note 11)
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; 31,648 and 30,166 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)	316		302
Class B common stock, par value $0.0001 per share (50,000 shares authorized; 10,818 and 11,151 shares issued and outstanding at June 30, 2011 and December 31, 2010, respectively)	1		1
Additional paid-in capital	240,782		232,644
Accumulated other comprehensive income	3,049		1,400
Retained earnings	19,491		16,923
Total stockholders' equity of Duff & Phelps Corporation	263,639		251,270
Noncontrolling interest	89,371		91,294
Total stockholders' equity	353,010		342,564
Total liabilities and stockholders' equity	$	536,303	$	548,226

See accompanying notes to the condensed consolidated financial statements.

2

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(In thousands)    

(Unaudited)

	Six Months Ended
	June 30, 2011			June 30, 2010
Cash flows from operating activities:
Net income	$	12,138		$	12,186
Adjustments to reconcile net income to net cash provided by/(used in) operating activities:
Depreciation and amortization	5,056			4,843
Equity-based compensation	11,736			11,390
Bad debt expense	1,347			809
Net deferred income taxes	6,151			5,364
Other	359			801
Changes in assets and liabilities providing/(using) cash:
Accounts receivable	(1,148		)	5,316
Unbilled services	(18,317		)	(4,823		)
Prepaid expenses and other current assets	(285		)	(1,699		)
Other assets	(381		)	728
Accounts payable and accrued expenses	(7,312		)	(6,901		)
Accrued compensation and benefits	(22,674		)	(18,704		)
Deferred revenues	1,520			(121		)
Other liabilities	83			(27		)
Net cash provided by/(used in) operating activities	(11,727		)	9,162
Cash flows from investing activities:
Purchase of property and equipment	(4,012		)	(3,561		)
Business acquisitions, net of cash acquired	(5,891		)	(11,807		)
Purchase of investments	(3,250		)	(2,975		)
Net cash used in investing activities	(13,153		)	(18,343		)
Cash flows from financing activities:
Repurchases of Class A common stock	(13,649		)	(8,177		)
Dividends	(5,012		)	(3,141		)
Distributions and other payments to noncontrolling unitholders	(2,378		)	(2,135		)
Proceeds from exercises of IPO Options	267			82
Increase in restricted cash	—			(3,156		)
Other	—			(3		)
Net cash used in financing activities	(20,772		)	(16,530		)
Effect of exchange rate on cash and cash equivalents	1,799			(2,369		)
Net decrease in cash and cash equivalents	(43,853		)	(28,080		)
Cash and cash equivalents at beginning of period	113,328			107,311
Cash and cash equivalents at end of period	$	69,475		$	79,231

See accompanying notes to the condensed consolidated financial statements.

3

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

AND COMPREHENSIVE INCOME

(In thousands)

(Unaudited)

							Stockholders of Duff & Phelps Corporation
	Total Stockholders'			Comprehensive			Common Stock - Class A					Common Stock - Class B				Additional Paid-in			Accumulated Other Comprehensive			Retained			Noncontrolling
	Equity			Income			Shares		Dollars			Shares		Dollars		Capital			Income			Earnings			Interest
Balance as of December 31, 2010	$	342,564					30,166		$	302		11,151		$	1	$	232,644		$	1,400		$	16,923		$	91,294
Comprehensive income
Net income for the six months ended June 30, 2011	12,138			$	12,138		—		—			—		—		—			—			7,537			4,601
Currency translation adjustment	2,252			2,252			—		—			—		—		—			1,709			—			543
Amortization of post-retirement benefits, net of tax	(79		)	(79		)	—		—			—		—		—			(60		)	—			(19		)
Total comprehensive income	14,311			$	14,311		—		—			—		—		—			1,649			7,537			5,125
Issuance of Class A common stock for acquisitions	2,925						224		2			—		—		2,174			—			—			749
Exchange of New Class A Units	(1		)				332		3			(332	)	—		(4		)	—			—			—
Net issuance of restricted stock awards	(4,696		)				1,674		17			—		—		(3,477		)	—			—			(1,236		)
Adjustment to Tax Receivable Agreement as a result of the exchange of New Class A Units	373						—		—			—		—		373			—			—			—
Issuance for exercises of IPO Options	113						7		—			—		—		83			—			—			30
Forfeitures	(1		)				(130	)	(1		)	(1	)	—		—			—			—			—
Equity-based compensation	12,091						—		—			—		—		8,970			—			—			3,121
Income tax windfall/(shortfall) on equity-based compensation	911						—		—			—		—		911			—			—			—
Distributions to noncontrolling unitholders	(2,101		)				—		—			—		—		(1,551		)	—			—			(550		)
Change in ownership interests between periods	—						—		—			—		—		6,888			—			—			(6,888		)
Deferred tax asset effective tax rate conversion	426						—		—			—		—		390			—			—			36
Repurchases of Class A common stock pursuant to publicly announced program	(8,936		)				(625	)	(7		)	—		—		(6,619		)	—			—			(2,310		)
Dividends on Class A common stock	(4,969		)				—		—			—		—		—			—			(4,969		)	—
Balance as of June 30, 2011	$	353,010					31,648		$	316		10,818		$	1	$	240,782		$	3,049		$	19,491		$	89,371

See accompanying notes to the condensed consolidated financial statements.

4

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENT OF STOCKHOLDERS' EQUITY

AND COMPREHENSIVE INCOME/(LOSS)

(In thousands)

(Unaudited)

							Stockholders of Duff & Phelps Corporation
	Total Stockholders'			Comprehensive			Common Stock - Class A					Common Stock - Class B				Additional Paid-in			Accumulated Other Comprehensive			Retained			Noncontrolling
	Equity			Income			Shares		Dollars			Shares		Dollars		Capital			Income/(Loss)			Earnings			Interest
Balance as of December 31, 2009	$	313,757					27,290		$	273		12,974		$	1	$	207,210		$	693		$	6,709		$	98,871
Comprehensive income
Net income for the six months ended June 30, 2010	12,186			$	12,186		—		—			—		—		—			—			6,780			5,406
Currency translation adjustment	(3,083		)	(3,083		)	—		—			—		—		—			(2,106		)	—			(977		)
Amortization of post-retirement benefits	27			27			—		—			—		—		—			18			—			9
Total comprehensive income	9,130			$	9,130		—		—			—		—		—			(2,088		)	6,780			4,438
Sale of Class A common stock	(3		)				—		—			—		—		(3		)	—			—			—
Issuance of Class A common stock for acquisitions	1,204						93		1			—		—		827			—			—			376
Exchange of New Class A Units	—						43		—			(43	)	—		—			—			—			—
Net issuance of restricted stock awards	(2,483		)				1,336		14			—		—		(1,713		)	—			—			(784		)
Adjustment to Tax Receivable Agreement as a result of the exchange of New Class A Units	61						—		—			—		—		61			—			—			—
Issuance for exercise of IPO Options	66						4		—			—		—		45			—			—			21
Forfeitures	(2		)				(174	)	(2		)	(22	)	—		—			—			—			—
Equity-based compensation	11,928						—		—			—		—		8,169			—			—			3,759
Income tax benefit on equity-based compensation	72						—		—			—		—		72			—			—			—
Distributions to noncontrolling unitholders	(2,135		)				—		—			—		—		(1,462		)	—			—			(673		)
Change in ownership interests between periods	—						—		—			—		—		4,103			—			—			(4,103		)
Deferred tax asset effective tax rate conversion	(147		)				—		—			—		—		253			—			—			(400		)
Repurchases of Class A common stock pursuant to publicly announced program	(5,302		)				(384	)	(4		)	—		—		(3,641		)	—			—			(1,657		)
Dividends on Class A common stock	(3,108		)				—		—			—		—		—			—			(3,108		)	—
Balance as of June 30, 2010	$	323,038					28,208		$	282		12,909		$	1	$	213,921		$	(1,395	)	$	10,381		$	99,848

See accompanying notes to the condensed consolidated financial statements.

5

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 1. DESCRIPTION OF BUSINESS

Duff & Phelps Corporation (the “Company”) is a leading provider of independent financial advisory and investment banking services. Its mission is to help its clients protect, maximize and recover value by providing independent advice on issues involving highly technical and complex assessments in the areas of valuation, transactions, financial restructuring, disputes and taxation. The Company believes that the Duff & Phelps brand is associated with experienced professionals who give trusted guidance in a responsive manner. The Company serves a global client base through offices in 24 cities, comprised of offices in 17 U.S. cities, including New York, Chicago, Houston and Los Angeles, and seven international offices located in Amsterdam, London, Munich, Paris, Shanghai, Tokyo and Toronto.

Note 2. BASIS OF PRESENTATION

Basis of Presentation

The accompanying unaudited condensed consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and with the rules and regulations of the United States Securities and Exchange Commission (“SEC”) for interim financial reporting, and include all adjustments which are, in the opinion of management, necessary for a fair presentation. The financial statements require the use of management estimates and include the accounts of the Company, its controlled subsidiaries and other entities consolidated as required byaccounting principles generally accepted in the United States of America (“GAAP”).References to the “Company,” “its” and “itself,” refer to Duff & Phelps Corporation and its subsidiaries, unless the context requires otherwise.

The balance sheet at December 31, 2010 was derived from audited financial statements, but does not include all disclosures required by GAAP. Accordingly, certain information and footnote disclosures normally included in financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations. In management's opinion, all adjustments necessary for a fair presentation are reflected in the interim periods presented. All significant intercompany accounts and transactions have been eliminated in consolidation.

Recently Accounting Pronouncements

Effective January 1, 2011, the Company adopted the Financial Accounting Standards Board's (“FASB”) Accounting Standards Update (“ASU”) No. 2009-13, Multiple-Deliverable Revenue Arrangements. ASU 2009-13 supersedes certain guidance in FASB ASC 605-25, Revenue Recognition-Multiple-Element Arrangements and requires an entity to allocate arrangement consideration at the inception of an arrangement to all of its deliverables based on their relative selling prices (the relative-selling-price method). ASU 2009-13 eliminates the use of the residual method of allocation in which the undelivered element is measured at its estimated selling price and the delivered element is measured as the residual of the arrangement consideration, and requires the relative-selling-price method in all circumstances in which an entity recognizes revenue for an arrangement with multiple deliverable subject to ASU 2009-13. The adoption of ASU 2009-13 did not have a material effect on the Company's consolidated financial statements.

In May 2011, the FASB issued Accounting Standards Update ("ASU") No. 2011-04, Fair Value Measurement (Topic 820). This update is the result of the work by the FASB and the International Accounting Standards Board ("IASB") to develop common requirements for measuring fair value and for disclosing information about fair value measurements in accordance with GAAP and International Financial Reporting Standards ("IFRSs"). The amendments in this update explain how to measure fair value. They do not require additional fair value measurements and are not intended to establish valuation standards or affect valuation practices outside of financial reporting. The amendments in this update become effective during interim and annual periods beginning after December 15, 2011. The Company does not anticipate that the adoption of ASU 2011-04 will have a material effect on its consolidated financial statements.

6

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

In June 2011, the FASB issued ASU 2011-05, Comprehensive Income (Topic 220). This update revises the manner in which entities present comprehensive income in their financial statements. The guidance removes the presentation options in ASC 220 and requires entities to report components of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. Under the two-statement approach, the first statement would include components of net income, which is consistent with the income statement format used today, and the second statement would include components of other comprehensive income ("OCI"). The ASU does not change the items that must be reported in OCI. The FASB's issuance of ASU 2011-05 represents another step toward its goal of convergence with IFRSs. The amendments in this update should be applied retrospectively and are effective for fiscal years and interim periods within those years beginning after December 15, 2011. The Company does not anticipate that the adoption of ASU 2011-05 will have a material effect on its consolidated financial statements.

Critical Accounting Policies

There have been no significant changes in new accounting pronouncements or in our critical accounting policies and estimates from those that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010. The Company believes that the disclosures herein are adequate so that the information presented is not misleading; however, it is suggested that these financial statements be read in conjunction with the financial statements and the notes thereto in our Annual Report on Form 10-K for the year ended December 31, 2010. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year.

7

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 3. NONCONTROLLING INTEREST

As described in the Company's Annual Report on Form 10-K for the year ended December 31, 2010, the Company has sole voting power in and controls the management of D&P Acquisitions, LLC and its subsidiaries (“D&P Acquisitions”), which collectively represent the operating subsidiaries of the Company. As a result, the Company consolidates the financial results of D&P Acquisitions and records noncontrolling interest for the economic interest in D&P Acquisitions held by the existing unitholders to the extent the book value of their interest in D&P Acquisitions is greater than zero. The Company's economic interest in D&P Acquisitions totaled 74.5% at June 30, 2011. The noncontrolling unitholders' interest in D&P Acquisitions totaled 25.5% at June 30, 2011.

Net income attributable to the noncontrolling interest on the statement of operations represents the portion of earnings or loss attributable to the economic interest in D&P Acquisitions held by the noncontrolling unitholders. Noncontrolling interest on the balance sheet represents the portion of net assets of D&P Acquisitions attributable to the noncontrolling unitholders based on the portion of total units of D&P Acquisitions owned by such unitholders (“New Class A Units”). The ownership of the New Class A Units is summarized as follows:

	Duff & Phelps Corporation		Non- controlling Unitholders		Total
As of December 31, 2010	30,166		11,151		41,317
Issuance of Class A common stock for acquisitions	224		—		224
Exchange to Class A common stock	332		(332	)	—
Net issuance of restricted stock awards	1,674		—		1,674
Issuance for exercises of IPO Options	7		—		7
Repurchases of Class A common stock pursuant to publicly announced program	(625	)	—		(625	)
Forfeitures	(130	)	(1	)	(131	)
As of June 30, 2011	31,648		10,818		42,466
Percent of total
December 31, 2010	73.0	%	27.0	%	100	%
June 30, 2011	74.5	%	25.5	%	100	%

8

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

A reconciliation from “Income before income taxes” to “Net income attributable to the noncontrolling interest” and “Net income attributable to Duff & Phelps Corporation” is detailed as follows:

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Income before income taxes	$	8,203		$	7,124		$	17,758		$	18,342
Less:  provision for income taxes for entities other than Duff & Phelps Corporation(a)(b)	214			(410		)	(346		)	(1,330		)
Income before income taxes, as adjusted	8,417			6,714			17,412			17,012
Ownership percentage of noncontrolling interest(d)	26.4		%	31.4		%	26.4		%	31.8		%
Net income attributable to noncontrolling interest	2,223			2,111			4,601			5,406
Income before income taxes, as adjusted, attributable to Duff & Phelps Corporation	6,194			4,603			12,811			11,606
Less:  provision for income taxes of Duff & Phelps Corporation(a)(c)	(2,770		)	(2,096		)	(5,274		)	(4,826		)
Net income attributable to Duff & Phelps Corporation	$	3,424		$	2,507		$	7,537		$	6,780

^{_________________________________} 

^(a)  The consolidated provision for income taxes is equal to the sum of (i) the provision for income taxes for entities other than Duff & Phelps Corporation and (ii) the provision for income taxes of Duff & Phelps Corporation. The consolidated provision for income taxes totaled $2,556 and $2,506 for the three months ended June 30, 2011 and 2010, respectively, and $5,620 and $6,156 for the six months ended June 30, 2011 and 2010, respectively.

^(b)  The provision for income taxes for entities other than Duff & Phelps Corporation represents taxes imposed directly on Duff & Phelps, LLC, a wholly-owned subsidiary of D&P Acquisitions, and its subsidiaries, such as taxes imposed on certain domestic subsidiaries (e.g., Rash & Associates, L.P.), taxes imposed by certain foreign jurisdictions, and taxes imposed by certain local and other jurisdictions (e.g., New York City). Since Duff & Phelps, LLC is taxed as a partnership and a flow-through entity for U.S. federal and state income tax purposes, there is no provision for these taxes on income allocable to the noncontrolling interest.

^(c)  The provision of income taxes of Duff & Phelps Corporation includes all U.S. federal and state income taxes.

^(d)  Income before income taxes, as adjusted, is allocated to the noncontrolling interest based on the total New Class A Units vested for income tax purposes (“Tax-Vested Units”) owned by the noncontrolling interest as a percentage of the aggregate amount of all Tax-Vested Units. This percentage may not necessarily correspond to the total number of New Class A Units at the end of each respective period.

Distributions and Other Payments to Noncontrolling Unitholders

The following table summarizes distributions and other payments to noncontrolling unitholders, as described more fully below:

	Six Months Ended
	June 30, 2011		June 30, 2010
Distributions for taxes	$	416	$	708
Other distributions	1,962		1,427
Payments pursuant to the Tax Receivable Agreement	—		—
	$	2,378	$	2,135

9

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Distributions for taxes

As a limited liability company, D&P Acquisitions does not incur significant federal or state and local taxes, as these taxes are primarily the obligations of the members of D&P Acquisitions. As authorized by the Third Amended and Restated LLC Agreement of D&P Acquisitions, D&P Acquisitions is required to distribute cash, generally, on a pro rata basis, to its members to the extent necessary to provide funds to pay the members' tax liabilities, if any, with respect to the earnings of D&P Acquisitions. The tax distribution rate has been set at 45% of each member's allocable share of taxable income of D&P Acquisitions. D&P Acquisitions is only required to make such distributions if cash is available for such purposes as determined by the Company. The Company expects cash will be available to make these distributions. Upon completion of its tax returns with respect to the prior year, D&P Acquisitions may make true-up distributions to its members, if cash is available for such purposes, with respect to actual taxable income for the prior year.

Other distributions

Concurrent with the payment of dividends to shareholders of Class A common stock, holders of New Class A Units receive a corresponding distribution per vested unit. These amounts will be treated as a reduction in basis of each member's ownership interests. Pursuant to the terms of the Third Amended and Restated LLC Agreement of D&P Acquisitions, a corresponding amount per unvested unit was deposited into a segregated account and will be distributed once a year with respect to units that vested during that year.  Any amounts related to unvested units that forfeit are returned to the Company.

Payments pursuant to the Tax Receivable Agreement

As a result of the Company's acquisition of New Class A Units of D&P Acquisitions, the Company expects to benefit from depreciation and other tax deductions reflecting D&P Acquisitions' tax basis for its assets. Those deductions will be allocated to the Company and will be taken into account in reporting the Company's taxable income. Further, as a result of a federal income tax election made by D&P Acquisitions applicable to a portion of the Company's acquisition of New Class A Units of D&P Acquisitions, the income tax basis of the assets of D&P Acquisitions underlying a portion of the units the Company has and will acquire (pursuant to the exchange agreement) will be adjusted based upon the amount that the Company has paid for that portion of its New Class A Units of D&P Acquisitions.

The Company has entered into a tax receivable agreement (“TRA”) with the existing unitholders of D&P Acquisitions (for the benefit of the existing unitholders of D&P Acquisitions) that provides for the payment by the Company to the unitholders of D&P Acquisitions of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the Company realizes (i) from the tax basis in its proportionate share of D&P Acquisitions' goodwill and similar intangible assets that the Company receives as a result of the exchanges and (ii) from the federal income tax election referred to above. D&P Acquisitions expects to make future payments under the TRA to the extent cash is available for such purposes.

As of June 30, 2011, the Company recorded a liability of $111,278, representing the payments due to D&P Acquisitions' unitholders under the TRA (see current and non-current portion of “Due to noncontrolling unitholders” on the Company's Condensed Consolidated Balance Sheets).  

Within the next 12 month period, the Company expects to pay $5,640 of the total amount. The basis for determining the current portion of the payments due to D&P Acquisitions' unitholders under the TRA is the expected amount of payments to be made within the next 12 months.  The long-term portion of the payments due to D&P Acquisitions' unitholders under the tax receivable agreement is the remainder. Payments are anticipated to be made annually over 15 years, commencing from the date of each event that gives rise to the TRA benefits, beginning with the date of the closing of the IPO on October 3, 2007.  The payments are made in accordance with the terms of the TRA.  The timing of the payments is subject to certain contingencies including Duff & Phelps Corporation having sufficient taxable income to utilize all of the tax benefits defined in the TRA.

10

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

To determine the current amount of the payments due to D&P Acquisitions' unitholders under the TRA, the Company estimated the amount of taxable income that Duff & Phelps Corporation has generated over the previous fiscal year. Next, the Company estimated the amount of the specified TRA deductions at year end. This was used as a basis for determining the amount of tax reduction that generates a TRA obligation. In turn, this was used to calculate the estimated payments due under the TRA that the Company expects to pay in the next 12 months. These calculations are performed pursuant to the terms of the TRA.

Obligations pursuant to the TRA are obligations of Duff & Phelps Corporation.  They do not impact the noncontrolling interest.  These obligations are not income tax obligations and have no impact on the tax provision or the allocation of taxes. Furthermore, the TRA has no impact on the allocation of the provision for income taxes to the Company's net income.  In general, items of income and expense are allocated on the basis of member's ownership interests pursuant to the Third Amended and Restated Limited Liability Company Agreement of Duff & Phelps Acquisitions, LLC.

11

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 4. EARNINGS PER SHARE

Basic earnings per share (“EPS”) measures the performance of an entity over the reporting period. Diluted earnings per share measures the performance of an entity over the reporting period while giving effect to all potentially dilutive common shares that were outstanding during the period. The treasury stock method is used to determine the dilutive potential of stock options, restricted stock awards and units, performance-vesting restricted stock awards and units, and New Class A Units and Class B common stock that are exchangeable into the Company's Class A common stock.

In accordance with FASB ASC 260, Earnings Per Share, all outstanding unvested share-based payments that contain rights to nonforfeitable dividends participate in the undistributed earnings with the common stockholders and are therefore participating securities. Companies with participating securities are required to apply the two-class method in calculating basic and diluted net income per share.

The Company's restricted stock awards are considered participating securities as they receive nonforfeitable dividends at the same rate as the Company's Class A common stock. The computation of basic and diluted net income per share is reduced for a presumed hypothetical distribution of earnings to the holders of the Company's unvested restricted stock. Accordingly, the effect of the allocation reduces earnings available for common stockholders.

The Company's performance-vesting restricted stock awards are not considered participating securities as the related dividends are forfeitable to the extent the performance conditions are not met.

The following is a reconciliation of the numerator and denominator used in the basic and diluted EPS calculations:

12

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Basic and diluted net income per share:
Numerator
Net income available to holders of Class A common stock	$	3,424		$	2,507		$	7,537		$	6,780
Earnings allocated to participating securities	(115		)	(97		)	(311		)	(393		)
Earnings available for common stockholders	$	3,309		$	2,410		$	7,226		$	6,387
Denominator for basic net income per share of Class A common stock
Weighted average shares of Class A common stock	27,296			25,058			27,104			25,022
Denominator for diluted net income per share of Class A common stock
Weighted average shares of Class A common stock	27,296			25,058			27,104			25,022
Add dilutive effect of the following:
Restricted stock awards and units	771			696			991			881
Dilutive weighted average shares of Class A common stock	28,067			25,754			28,095			25,903
Basic income per share of Class A common stock	$	0.12		$	0.10		$	0.27		$	0.26
Diluted income per share of Class A common stock	$	0.12		$	0.09		$	0.26		$	0.25

Anti-dilution is the result of (i) the allocation of income or loss associated with the exchange of New Class A Units for Class A common stock and (ii) outstanding options exceeding those outstanding under the treasury stock method. Accordingly, the following shares were anti-dilutive and excluded from this calculation:

	Three Months Ended		Six Months Ended
	June 30, 2011	June 30, 2010	June 30, 2011	June 30, 2010
Weighted average New Class A Units outstanding	10,947	12,927	11,038	12,947
Weighted average IPO Options outstanding	1,642	1,771	1,646	1,791

The potential dilutive effect of the Company's performance-vesting restricted stock awards and units were excluded from the calculation as the performance conditions had not been met as of the period ended June 30, 2011.

In addition, shares of Class B common stock do not share in the earnings of the Company and are therefore not participating securities. Accordingly, basic and diluted earnings per share of Class B common stock have not been presented.

13

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 5.    EQUITY-BASED COMPENSATION

For a detailed description of past equity-based compensation activity, please refer to the Company's Annual Report on Form 10-K for the year ended December 31, 2010. There have been no significant changes in the Company's equity-based compensation accounting policies and assumptions from those that were disclosed in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

Equity-based compensation with respect to (a) grants of Legacy Units, (b) options to purchase shares of the Company's Class A common stock granted in connection with the IPO (“IPO Options”) and (c) restricted stock awards and units and performance-vesting restricted stock awards and units issued in connection with the Company's ongoing long-term compensation program (“Ongoing RSAs”) is detailed in the table below:

	Three Months Ended								Three Months Ended
	June 30, 2011								June 30, 2010
	Client Service			SG&A		Total			Client Service		SG&A		Total
Legacy Units	$	(195	)	$	57	$	(138	)	$	298	$	587	$	885
IPO Options	140			54		194			338		271		609
Ongoing RSAs	4,482			658		5,140			3,579		1,147		4,726
Total	$	4,427		$	769	$	5,196		$	4,215	$	2,005	$	6,220

	Six Months Ended							Six Months Ended
	June 30, 2011							June 30, 2010
	Client Service			SG&A		Total		Client Service		SG&A		Total
Legacy Units	$	(100	)	$	187	$	87	$	563	$	919	$	1,482
IPO Options	278			108		386		671		424		1,095
Ongoing RSAs	9,266			1,997		11,263		6,698		2,115		8,813
Total	$	9,444		$	2,292	$	11,736	$	7,932	$	3,458	$	11,390

Legacy Units

The following table summarizes activity for New Class A Units attributable to equity-based compensation during the six months ended June 30, 2011:

	New Class A Units Attributable to Equity-Based Compensation
Balance as of December 31, 2010	1,530
Redeemed or exchanged	(332	)
Forfeited	(1	)
Balance as of June 30, 2011	1,197
Vested	1,090
Unvested	107

14

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

IPO Options

The following table summarizes option activity during the six months ended June 30, 2011:

	IPO Options			Weighted Average Grant Date Fair Value
Balance as of December 31, 2010	1,661			$	7.33
Exercised	(7		)	7.33
Forfeited	(19		)	7.33
Balance as of June 30, 2011	1,635			$	7.33
Vested	1,251
Unvested	384
Weighted average exercise price	$	16.00
Weighted average remaining contractual term	6.25
Total intrinsic value of exercised options	$	9
Total fair value of vested options	$	9,166
Aggregate intrinsic value of outstanding options	$	—
Options expected to vest	1,620
Aggregate intrinsic value of options expected to vest	$	—

Restricted Stock

Restricted stock awards and restricted stock units are granted as a form of incentive compensation and are accounted for similarly.  Corresponding expense is recognized based on the fair market value of the Company's Class A common stock on the date of grant over the service period.  Restricted stock units are generally contingent on continued employment and are converted to common stock when restrictions on transfer lapse after three years.

Performance-vesting restricted stock awards and units are granted as a form of incentive compensation and accounted for similarly. Performance-vesting restricted stock awards and units will become non-forfeitable on the third anniversary of the date of grant if and to the extent certain targets of total shareholder return are attained. Expense for performance-vesting restricted stock awards and units is recognized based on their calculated fair market value as of the date of grant using a lattice model. They are expensed over a three year period from the date of grant.

During the six months endedJune 30, 2011, the Company issued 2,004 Ongoing RSAs related to annual bonus incentive compensation, performance incentive initiatives, promotions and recruiting efforts. The restrictions on transfer and forfeiture provisions are generally eliminated after three years for all awards granted to non-executives with certain exceptions related to retiree eligible employees and termination of employees without cause. Of the 2,004 Ongoing RSAs granted, 205 awards are performance-vesting restricted stock awards or units and are subject to the vesting provisions described previously.

Of the 2,004 Ongoing RSAs granted, 140 restricted stock awards and 130 performance-vesting restricted stock awards were granted to executives on March 2, 2011 and March 11, 2011, respectively. For grants made to executives, the restrictions on transfer and forfeiture provisions on 65 of the restricted stock awards are eliminated annually over three years based on ratable vesting and the restrictions on 75 of the restricted stock awards lapse after three years. In addition, 30 awards were granted to members of the board of directors on May 12, 2011. The restrictions on transfer and forfeiture provisions are eliminated annually over four years based on ratable vesting.

15

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

The following table summarizes award activity:

	Restricted Stock Awards		Weighted Average Grant Date Fair Value		Restricted Stock Units		Weighted Average Grant Date Fair Value
Balance as of December 31, 2010	3,432		$	15.13	303		$	15.03
Granted	1,704		15.20		95		15.71
Converted to Class A common stock upon lapse of restrictions	(842	)	13.16		(87	)	13.02
Forfeited	(130	)	16.57		(5	)	15.58
Balance as of June 30, 2011	4,164		$	15.51	306		$	15.81
Vested	—				—
Unvested	4,164				306

	Performance- Vesting Restricted Stock Awards	Weighted Average Grant Date Fair Value		Performance- Vesting Restricted Stock Units	Weighted Average Grant Date Fair Value
Balance as of December 31, 2010	—	$	—	—	$	—
Granted	183	7.52		22	7.83
Balance as of June 30, 2011	183	$	7.52	22	$	7.83
Vested	—			—
Unvested	183			22

For all equity-based compensation awards, forfeitures are estimated at the time an award is granted and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates. Pre-vesting forfeitures were estimated to be between 2% and 21% as of June 30, 2011 based on historical experience and future expectations.

The total unamortized compensation cost related to all non-vested awards was $35,673 at June 30, 2011. A tax benefit of $5,069 and $1,074 was recognized for the stock options issued in conjunction with the IPO and Ongoing RSAs for the six months endedJune 30, 2011 and 2010, respectively.

16

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 6. FAIR VALUE MEASUREMENTS

The following table presents assets and liabilities measured at fair value on a recurring basis as of June 30, 2011:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Investments held in conjunction with deferred compensation plan(1)	$	—	$	25,124	$	—	$	25,124
Total assets	$	—	$	25,124	$	—	$	25,124
Benefits payable in conjunction with deferred compensation plan	$	—	$	25,526	$	—	$	25,526
Total liabilities	$	—	$	25,526	$	—	$	25,526

_____________________

⁽¹⁾     Investments held in conjunction with the deferred compensation plan exclude approximately $250 which is included in "Cash and cash equivalents" on the Company's Condensed Consolidated Balance Sheet at June 30, 2011.

For comparative purposes, the following table presents assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:

	Quoted Prices in Active Markets for Identical Assets		Significant Other Observable Inputs		Significant Unobservable Inputs
Description	(Level 1)		(Level 2)		(Level 3)		Total
Investments held in conjunction with deferred compensation plan	$	—	$	23,151	$	—	$	23,151
Total assets	$	—	$	23,151	$	—	$	23,151
Benefits payable in conjunction with deferred compensation plan	$	—	$	23,078	$	—	$	23,078
Total liabilities	$	—	$	23,078	$	—	$	23,078

The investments held and benefits payable to participants in conjunction with the deferred compensation plan were primarily based on quoted prices for similar assets in active markets. Changes in the fair value of the investments are recognized as an increase or decrease in compensation expense. Changes in the fair value of the benefits payables to participants are recognized as a corresponding offset to compensation expense. The net impact of changes in fair value is not material. The deferred compensation plan is further discussed in Note 9.

The Company does not have any material financial assets in a market that is not active.

17

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 7. LONG-TERM DEBT

On July 15, 2009, Duff & Phelps, LLC entered into a credit agreement with Bank of America, N.A., as administrative agent and the lenders from time to time party thereto ("Credit Agreement"), providing for a $30,000 senior secured revolving credit facility (“Credit Facility”), including a $10,000 sub-limit for the issuance of letters of credit. The proceeds of the facility are permitted to be used for working capital, permitted acquisitions and general corporate purposes. The maturity date is July 15, 2012 and amounts borrowed may be voluntarily prepaid at any time without penalty or premium, subject to customary breakage costs.

There were no amounts outstanding under the Credit Facility at June 30, 2011 or through the filing date of this Quarterly Report on Form 10-Q. As of June 30, 2011, the Company had $4,440 of outstanding letters of credit of which $3,981 were issued against the Credit Facility. These letters of credit were issued in connection with real estate leases.

Loans under the Credit Facility will, at the Company's option, bear interest on the principal amount outstanding at either (a) a rate equal to LIBOR, plus an applicable margin or (b) a base rate, plus an applicable margin. The applicable margin rate will be based on the Company's most recent consolidated leverage ratio and ranges from 1.75% to 2.50% per annum depending on the Company's consolidated leverage ratio. In addition, the Company is required to pay an unused commitment fee on the actual daily amount of the unutilized portion of the commitments of the lenders at a rate ranging from 0.25% to 0.50% per annum, based on the Company's most recent consolidated leverage ratio. Based on the Company's consolidated leverage ratio at June 30, 2011, the Company qualifies for the 1.75% applicable margin and 0.25% unused commitment fee.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, limitations on (a) the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to make dividends and distributions, as well as redeem and repurchase equity interests, and (d) acquisitions, mergers, consolidations and sales of assets. In addition, the Credit Agreement contains financial covenants that do not permit (a) a total leverage ratio of greater than 2.75 to 1.00 until the quarter ending September 30, 2010, and 2.50 to 1.00 thereafter and (b) a consolidated fixed charge coverage ratio of less than 2.00 to 1.00 until September 30, 2010, and 1.25 to 1.00 thereafter. The financial covenants are tested on the last day of each fiscal quarter based on the last four fiscal quarter periods. Management believes that the Company was in compliance with all of its covenants as of June 30, 2011. The Credit Agreement permits dividend payments or other distributions in the Company's common stock or other equity interests subject to certain limitations.

The obligation of the Company to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an "Event of Default" as defined in the Credit Agreement. The Company's obligations under the Credit Agreement are guaranteed by D&P Acquisitions, and certain domestic subsidiaries of the Company (collectively, the "Guarantors"). The Credit Agreement is secured by a lien on substantially all of the personal property of the Company and each of the Guarantors.

18

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 8. INCOME TAXES

The Company's effective tax rate is summarized in the following table:

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Provision for income taxes	$	2,556		$	2,506		$	5,620		$	6,156
Effective income tax rate	31.2		%	35.2		%	31.6		%	33.6		%

The tax provision for the current year period is based on our estimate of the Company's annualized income tax rate. The effective tax rate is calculated by dividing the provision for income taxes by income before income taxes.

The Company's effective tax rate includes a rate benefit attributable to the fact that the Company's subsidiaries operate as a series of limited liability companies and other flow-through entities which are not subject to federal income tax.  Accordingly, a portion of the Company's earnings are not subject to corporate level taxes.  This favorable impact is partially offset by the impact of certain permanent items, primarily attributable to certain compensation related expenses that are not deductible for tax purposes. 

The Company accounts for uncertainties in income tax positions in accordance with FASB ASC 740, Income Taxes. A reconciliation of the beginning and ending amount of unrecognized tax benefit is summarized as follows:

Balance as of December 31, 2010	$	535
Additional based on tax positions related to the current year	54
Additional based on tax positions related to prior years	13
Balance as of June 30, 2011	$	602

The Company recognizes interest income and expense related to income taxes as a component of interest expense and penalties as a component of selling, general and administrative expenses.

The Company and its subsidiaries file income tax returns in the U.S. federal jurisdiction and various states and foreign jurisdictions. Duff & Phelps, LLC and D&P Acquisitions are open for federal income tax purposes from 2007 forward. These entities are not subject to federal income taxes as they are flow-through entities. The Company is open for federal income tax purposes beginning in 2007.

With respect to state and local jurisdictions and countries outside of the United States, the Company and its subsidiaries are typically subject to examination for four to five years after the income tax returns have been filed. Although the outcome of tax audits is always uncertain, the Company believes that adequate amounts of tax, interest and penalties have been provided for in the accompanying consolidated financial statements for any adjustments that might be incurred due to state, local or foreign audits.

19

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 9. DEFERRED COMPENSATION PLAN

The Company maintains the Duff & Phelps Deferred Compensation Plan (“Deferred Compensation Plan”) for key employees. This plan is detailed further in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

Under the terms of the plan, the Company established a “rabbi trust” as a vehicle for accumulating assets to pay benefits under the plan. Payments under the plan may be paid from the general assets of the Company or from the assets of any such rabbi trust. Payment from any such source reduces the obligation owed to the participant or beneficiary. The rabbi trust invests in an investment vehicle structured as a corporate-owned life insurance (“COLI”) policy with a cash surrender value that mirrors the payable to the participants of the plan and tracks the value of the plan assets. Participants can earn a return on their deferred compensation that is based on hypothetical investment funds. The policy is redeemable on demand in an amount equal to the cash surrender value. The cash surrender value approximates fair value.

The fair market value of the investments in the rabbi trust is included in “Investments related to the deferred compensation plan” with the corresponding deferred compensation obligation included in current and non-current portion of the liability related to the deferred compensation plan on the Condensed Consolidated Balance Sheets. Changes in the fair value of the investments are recognized as compensation expense (or credit). Changes in the fair value of the benefits payables to participants are recognized as a corresponding offset to compensation expense (or credit). The net impact of changes in fair value is not material.

Note 10. RESTRUCTURING CHARGES

During the three months ended June 30, 2011, the Company identified opportunities for cost savings through office consolidations of underutilized space and workforce reductions of non-client service professionals. The Company currently anticipates that it will incur a pre-tax restructuring charge of approximately $3,500 to $4,500 for these identified initiatives and expects them to be completed by December 31, 2011. The portion of the anticipated charge related to office consolidations was estimated based on the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreements, partially offset by projected sublease income which was calculated based on certain sublease assumptions.

During the three months ended June 30, 2011, actual charges incurred related to this plan were $904 from the exiting of office space due to excess capacity. The charge is primarily comprised of the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreement, partially offset by future sublease income. This restructuring reserve balance is summarized as follows:

Balance as of December 31, 2010	$	—
Restructuring charges	904
Adjustment to deferred rent	258
Adjustments against reserve	(237		)
Balance as of June 30, 2011	$	925

Note 11. COMMITMENTS AND CONTINGENCIES

The Company is involved in various claims or disputes arising in the normal course of business. Management does not believe that these matters would have a material adverse effect on the Company's financial position, results of operations or liquidity.

20

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 12. SEGMENT INFORMATION

The Company provides services through three segments: Financial Advisory, Alternative Asset Advisory (formerly Corporate Finance Consulting) and Investment Banking. Effective January 1, 2011, the Company renamed its Corporate Finance Consulting segment Alternative Asset Advisory to more appropriately define the services offered by this segment. In addition, our Alternative Asset Advisory segment previously included services associated with Strategic Value Advisory. This service line was primarily integrated into Financial Advisory. As a result, prior period results have been restated to reflect this change.

The Financial Advisory segment provides services associated with valuation advisory, tax, and dispute and legal management consulting. The Alternative Asset Advisory segment provides services related to portfolio valuation, complex asset solutions and due diligence. The Investment Banking segment provides merger and acquisition advisory services, transaction opinions and restructuring advisory services.

	Three Months Ended						Six Months Ended
	June 30, 2011			June 30, 2010			June 30, 2011			June 30, 2010
Financial Advisory
Revenues (excluding reimbursables)	$	60,737		$	57,117		$	119,334		$	114,157
Segment operating income	$	9,787		$	7,931		$	19,369		$	15,637
Segment operating income margin	16.1		%	13.9		%	16.2		%	13.7		%
Alternative Asset Advisory
Revenues (excluding reimbursables)	$	14,415		$	10,436		$	27,900		$	22,214
Segment operating income	$	3,302		$	1,695		$	6,524		$	4,509
Segment operating income margin	22.9		%	16.2		%	23.4		%	20.3		%
Investment Banking
Revenues (excluding reimbursables)	$	12,734		$	21,189		$	25,698		$	41,535
Segment operating income/(loss)	$	(668	)	$	5,050		$	(668	)	$	10,107
Segment operating income/(loss) margin	(5.2		)%	23.8		%	(2.6		)%	24.3		%
Totals
Revenues (excluding reimbursables)	$	87,886		$	88,742		$	172,932		$	177,906
Segment operating income	$	12,421		$	14,676		$	25,225		$	30,253
Net client reimbursable expenses	(58		)	(77		)	(103		)	(133		)
Equity-based compensation associated with Legacy Units and IPO Options	(56		)	(1,494		)	(473		)	(2,577		)
Depreciation and amortization	(2,567		)	(2,350		)	(5,056		)	(4,843		)
Acquisition retention expenses	(297		)	—			(379		)	—
Restructuring charges	(904		)	—			(904		)	—
Merger and acquisition costs	(272		)	(321		)	(466		)	(321		)
Charge from realignment of senior management	—			(3,040		)	—			(3,040		)
Charge from impairment of certain intangible assets	—			—			—			(674		)
Operating income	$	8,267		$	7,394		$	17,844		$	18,665

21

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Revenues attributable to geographic area is summarized as follows:

	Three Months Ended				Six Months Ended
	June 30, 2011		June 30, 2010		June 30, 2011		June 30, 2010
North America	$	80,887	$	78,846	$	158,104	$	155,917
Europe	5,860		8,875		12,664		20,082
Asia	1,139		1,021		2,164		1,907
Revenues (excluding reimbursables)	$	87,886	$	88,742	$	172,932	$	177,906

There was no intersegment revenues during the periods presented. The Company does not maintain separate balance sheet information by segment.

For segment reporting purposes, management uses certain estimates and assumptions to allocate revenues and expenses. Revenues and expenses attributable to reportable segments are generally based on which segment and product line a client service professional is a dedicated member. As a result, revenues recognized that relate to the cross utilization of client service professionals across reportable segments occur each period depending on the expertise required for each engagement. In the three months ended June 30, 2011 and 2010, the Financial Advisory segment (primarily Valuation Advisory services) recognized revenues of $2,770 and $1,247 from the cross utilization of its client service professionals on engagements from the Alternative Asset Advisory segment (primarily Portfolio Valuation services), respectively. In the six months endedJune 30, 2011 and 2010, the Financial Advisory segment (primarily Valuation Advisory services) recognized revenues of $6,058 and $4,192 from the cross utilization of its client service professionals on engagements from the Alternative Asset Advisory segment (primarily Portfolio Valuation services), respectively.

22

DUFF & PHELPS CORPORATION AND SUBSIDIARIES

NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(In thousands, except per share amounts)

(Unaudited)

Note 13. RELATED PARTY TRANSACTIONS

Lovell Minnick Partners

Entities affiliated with Lovell Minnick Partners are holders of Class B common stock and an equivalent number of New Class A Units. Two managing directors of Lovell Minnick Partners serve as independent directors on the Company's Board of Directors.

D&P Acquisitions made distributions to entities affiliated with Lovell Minnick Partners as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010
Distributions for taxes	$	49	$	59
Other distributions	578		398
	$	627	$	457

Distributions for taxes and other distributions are further described in Note 3.

An affiliate of Lovell Minnick Partners engaged the Company to provide certain consulting services in which the Company recorded $91 of revenues during the six months endedJune 30, 2011.

Vestar Capital Partners

Entities affiliated with Vestar Capital Partners are holders of Class B common stock and an equivalent number of New Class A Units. A managing director of Vestar Capital Partners serves as an independent director on the Company's Board of Directors.

D&P Acquisitions made distributions to entities affiliated with Vestar Capital Partners as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010
Distributions for taxes	$	64	$	74
Other distributions	804		552
	$	868	$	626

Distributions for taxes and other distributions are further described in Note 3.

Note 14. SUBSEQUENT EVENTS

Declaration of Quarterly Dividend

On July 27, 2011, the Company announced that its board of directors had declared a quarterly dividend of $0.08 per share on its outstanding Class A common stock. The dividend is payable on August 26, 2011 to shareholders of record on August 16, 2011. Concurrent with the payment of the dividend, the Company will also be distributing $0.08 per unit to holders of New Class A Units.

23

Item 2.Management's Discussion and Analysis of Financial Condition and Results of Operations.

Disclosure Regarding Forward-Looking Statements

This report contains 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, 2010 and any subsequent filings of our Quarterly Reports on Form 10-Q. The forward-looking statements included in this Quarterly Report on Form 10-Q are made only as of the date of this filing with the Securities and Exchange Commission. 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.

Critical Accounting Policies and Estimates

Management's discussion and analysis of the Company's financial condition and results of operations is based upon the Company's consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect amounts of assets and liabilities and disclosures of contingent assets and liabilities as of the date of the financial statements and reported amounts of revenues and expenses during the periods presented. Actual results could differ from these estimates. Estimates and assumptions are reviewed periodically and the effects of revisions are reflected in the consolidated financial statements in the period they are deemed to be necessary. Significant estimates made in the accompanying consolidated financial statements include, but are not limited to the following:

• proportional performance under client engagements for the purpose of determining revenue recognition,

• accounts receivable and unbilled services valuation,

• incentive compensation and other accrued benefits,

• useful lives of intangible assets,

• the carrying value of goodwill and intangible assets,

• amounts due to noncontrolling unitholders,

• reserves for estimated tax liabilities,

• contingent liabilities,

• certain estimates and assumptions used in the allocation of revenues and expenses for our segment reporting, and

• certain estimates and assumptions used in the calculation of the fair value of equity-based compensation issued to employees.

A summary of the Company's critical accounting policies and estimates can be found in our Annual Report on Form 10-K for the year ended December 31, 2010. There have been no significant changes in new accounting pronouncements or in our critical accounting policies and estimates from those that were disclosed in our Annual Report on Form 10-K for the year ended December 31, 2010.

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Overview

We are a leading provider of independent financial advisory and investment banking services. Our mission is to help our clients protect, maximize and recover value by providing independent advice on issues involving highly technical and complex assessments in the areas of valuation, transactions, financial restructuring, disputes and taxation. We believe that the Duff & Phelps brand is associated with experienced professionals who give trusted guidance in a responsive manner. We serve a global client base through offices in 24 cities, comprised of offices in 17 U.S. cities, including New York, Atlanta, Chicago and Los Angeles, and seven international offices located in Amsterdam, London, Munich, Paris, Shanghai, Tokyo and Toronto.

We provide services through three segments: Financial Advisory, Alternative Asset Advisory and Investment Banking.

Effective January 1, 2011, we renamed our Corporate Finance Consulting segment Alternative Asset Advisory. This new name more appropriately defines the services offered by this segment. Concurrent with this change, our Financial Engineering service line was renamed Complex Asset Solutions to more clearly describe the nature of services offered. In addition, our Alternative Asset Advisory segment previously included services associated with Strategic Value Advisory. This service line was primarily integrated into Valuation Advisory. As a result, prior period results have been restated to reflect this change.

Equity-based compensation discussed herein includes (a) grants of units of D&P Acquisitions prior to the recapitalization transaction that were effectuated in conjunction with the IPO (“Legacy Units”), (b) options to purchase shares of the Company's Class A common stock granted in connection with the IPO (“IPO Options”) and (c) restricted stock awards and units and performance-vesting restricted stock awards and units issued in connection with the Company's ongoing long-term compensation program (“Ongoing RSAs”). The IPO, Recapitalization Transactions and the Company's capital structure are further detailed in our Annual Report on Form 10-K for the year ended December 31, 2010.

Amounts are reported in thousands, except for per share amounts, headcount or where the context requires otherwise.

25

Results of Operations

Three months ended June 30, 2011 versus three months ended June 30, 2010

The results of operations are summarized as follows:

	Three Months Ended
	June 30, 2011			June 30, 2010			Unit Change			Percent Change
Revenues	$	87,886		$	88,742		$	(856	)	(1.0	)%
Reimbursable expenses	3,074			1,962			1,112			56.7	%
Total revenues	90,960			90,704			256			0.3	%
Direct client service costs
Compensation and benefits(1)	49,059			50,415			(1,356		)	(2.7	)%
Other direct client service costs	1,480			1,881			(401		)	(21.3	)%
Acquisition retention expenses(2)	297			—			297			N/A
Reimbursable expenses	3,132			2,039			1,093			53.6	%
	53,968			54,335			(367		)	(0.7	)%
Operating expenses
Selling, general and administrative(3)	24,982			26,304			(1,322		)	(5.0	)%
Depreciation and amortization	2,567			2,350			217			9.2	%
Restructuring charges	904			—			904			N/A
Merger and acquisition costs	272			321			(49		)	(15.3	)%
	28,725			28,975			(250		)	(0.9	)%
Operating income	8,267			7,394			873			11.8	%
Other expense/(income), net
Interest income	(27		)	(53		)	26			(49.1	)%
Interest expense	91			76			15			19.7	%
Other expense	—			247			(247		)	(100.0	)%
	64			270			(206		)	(76.3	)%
Income before income taxes	8,203			7,124			1,079			15.1	%
Provision for income taxes	2,556			2,506			50			2.0	%
Net income	5,647			4,618			1,029			22.3	%
Less:  Net income attributable to noncontrolling interest	2,223			2,111			112			5.3	%
Net income attributable to Duff & Phelps Corporation	3,424			$	2,507		917			36.6	%
Other financial and operating data
Adjusted EBITDA(4)	$	12,363		$	14,599		$	(2,236	)	(15.3	)%
Adjusted EBITDA(4) as a percentage of revenues	14.1		%	16.5		%	(2.4		)%	(14.6	)%
Adjusted Pro Forma Net Income(4)	$	5,771		$	7,203		$	(1,432	)	(19.9	)%
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding(4)	$	0.15		$	0.19		$	(0.04	)	(21.5	)%
End of period managing directors(5)	159			163			(4		)	(2.5	)%
End of period client service professionals(5)	780			782			(2		)	(0.3	)%

__________________________

⁽¹⁾  Compensation and benefits include $4,130 and $4,215 of equity-based compensation expense for the three months ended June 30, 2011 and 2010, respectively.

⁽²⁾  Acquisition retention expenses include $297 of equity-based compensation expense for the three months ended June 30, 2011.

⁽³⁾  Selling, general and administrative expenses include $769 and $2,005 of equity-based compensation expense for the three months ended June 30, 2011 and 2010, respectively.

26

⁽⁴⁾  Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. We believe that Adjusted EBITDA provides a relevant and useful alternative measure of our ongoing profitability and performance, when viewed in conjunction with GAAP measures, as it adjusts net income or loss attributable to Duff & Phelps Corporation for (a) net income or loss attributable to noncontrolling interest, (b) provision for income taxes, (c) interest expense and depreciation and amortization (a significant portion of which relates to debt and capital investments that have been incurred as the result of acquisitions and investments in stand-alone infrastructure which we do not expect to incur at the same levels in the future), (d) equity-based compensation associated with the Legacy Units of D&P Acquisitions, a significant portion of which is due to certain onetime grants associated with acquisitions prior to our IPO, and options to purchase shares of the Company's Class A common stock granted in connection with the IPO, (e) restructuring charges, impairment charges, acquisition retention expenses and other merger and acquisition costs, which are generally non-recurring in nature or are related to deferred payments associated with prior acquisitions, and (f) costs incurred from the realignment of our senior management which are generally non-recurring in nature and primarily include cash severance and charges from the accounting impact of the acceleration of vesting of restricted stock awards.

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

Adjusted EBITDA, as defined by the Company and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) provision for income taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e) charges from impairment of intangible assets, (f) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (g) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, (h) acquisition retention expenses, (i) restructuring charges and (j) merger and acquisition costs:

Reconciliation of Adjusted EBITDA
	Three Months Ended
	June 30, 2011		June 30, 2010
Net income attributable to Duff & Phelps Corporation	$	3,424	$	2,507
Net income attributable to noncontrolling interest	2,223		2,111
Provision for income taxes	2,556		2,506
Other expense/(income), net	64		270
Depreciation and amortization	2,567		2,350
Equity-based compensation associated with Legacy Units and IPO Options	56		1,494
Acquisition retention expenses	297		—
Restructuring charges	904		—
Merger and acquisition costs	272		321
Charge from realignment of senior management	—		3,040
Adjusted EBITDA	$	12,363	$	14,599

27

Adjusted Pro Forma Net Income, as defined by Duff & Phelps and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) a non-recurring charge from the repayment and subsequent termination of our former credit agreement, (c) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (d) acquisition retention expenses, (e) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, (f) restructuring charges, (g) merger and acquisition costs, and less (h) pro forma corporate income tax applied at an assumed rate as specified in the applicable footnote (such assumed pro forma corporate income tax rate may fluctuate between periods and may include true-ups relating to prior periods, based on management estimates and judgments). Adjusted Pro Forma Net Income per share, as defined by Duff & Phelps, consists of Adjusted Pro Forma Net Income divided by the weighted average number of the Company's Class A and Class B shares for the applicable period, giving effect to the dilutive impact, if any, of stock options and restricted stock awards and units and performance-vesting restricted stock awards and units issued in connection with the Company's ongoing long-term compensation program (“Ongoing RSAs”).

Reconciliation of Adjusted Pro Forma Net Income
	Three Months Ended
	June 30, 2011			June 30, 2010
Net income attributable to Duff & Phelps Corporation	$	3,424		$	2,507
Net income attributable to noncontrolling interest(a)	2,223			2,111
Equity-based compensation associated with Legacy Units and IPO Options(b)	56			1,494
Acquisition retention expenses(c)	297			—
Restructuring charges(d)	904			—
Merger and acquisition costs(d)	272			321
Charge from realignment of senior management(d)	—			3,040
Adjustment to provision for income taxes(e)	(1,405		)	(2,270		)
Adjusted Pro Forma Net Income, as defined	$	5,771		$	7,203
Fully diluted weighted average shares of Class A common stock	28,067			25,754
Weighted average New Class A Units outstanding	10,947			12,927
Pro forma fully exchanged, fully diluted shares outstanding(f)	39,014			38,681
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding	$	0.15		$	0.19

__________________________

^(a)  Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.

^(b)  Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.

^(c)  Represents elimination of acquisition retention expenses which resulted from expense incurred from certain restricted stock awards that were granted in conjunction with the closing of certain of our acquisitions.

^(d)  Represents elimination of the following: restructuring charges, merger and acquisition costs or the charge incurred from the realignment of senior management.

^(e)  Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.7% and 40.3% for the full year, 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 June 30, 2011 and 2010, the pro forma tax rates of 40.7% and 39.9% reflect a true-up adjustment, if any, relating to the three months ended March 31, 2011 and 2010, respectively. 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.

^(f)  Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and the dilutive effect of Ongoing RSAs. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.

28

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 alternatives to measurements required by GAAP, such as operating income, net income or loss, net income or loss per share, cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, it should be noted that companies calculate Adjusted EBITDA and Adjusted Pro Forma Net Income differently and, therefore, Adjusted EBITDA and Adjusted Pro Forma Net Income as presented for us may not be comparable to Adjusted EBITDA and Adjusted Pro Forma Net Income reported by other companies.

⁽⁵⁾     Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

Revenues

Revenues excluding reimbursable expenses decreased $856 or 1.0% to $87,886 for the three months ended June 30, 2011, compared to $88,742 for the three months ended June 30, 2010. The decrease in revenues primarily resulted from a decrease in revenues from our Investment Banking segment, partially offset by an increase in revenues from our Alternative Asset Advisory and Financial Advisory segments, as summarized in the following table:

	Three Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Financial Advisory
Valuation Advisory	$	32,604	$	35,712	$	(3,108	)	(8.7	)%
Tax Services	15,128		12,089		3,039			25.1	%
Dispute & Legal Management Consulting(1)	13,005		9,316		3,689			39.6	%
	60,737		57,117		3,620			6.3	%
Alternative Asset Advisory
Portfolio Valuation	6,220		4,642		1,578			34.0	%
Complex Asset Solutions(2)	4,125		3,355		770			23.0	%
Due Diligence	4,070		2,439		1,631			66.9	%
	14,415		10,436		3,979			38.1	%
Investment Banking
M&A Advisory	1,853		3,144		(1,291		)	(41.1	)%
Transaction Opinions	7,266		6,041		1,225			20.3	%
Global Restructuring Advisory	3,615		12,004		(8,389		)	(69.9	)%
	12,734		21,189		(8,455		)	(39.9	)%
Total Revenues (excluding reimbursables)	$	87,886	$	88,742	$	(856	)	(1.0	)%

__________________________

⁽¹⁾  For the three months ended June 30, 2011, Dispute & Legal Management Consulting includes approximately $3,200 of revenues through June 15, 2011 from our acquisition of Cole Valuation Partners (effective June 15, 2010) and an additional amount from June Consulting Group effective December 15, 2010.

⁽²⁾  For the three months ended June 30, 2011, Complex Asset Solutions includes revenues from our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010.

Our Financial Advisory segment was impacted by higher revenues from Dispute & Legal Management Consulting and Tax Services, partially offset by a decrease in revenues from Valuation Advisory. Revenues from Dispute & Legal Management increased primarily from higher utilization due to increased demand as a result of a notable pick up in corporate spending to support commercial litigation. In addition, Dispute & Legal Management Consulting benefited from approximately $3,200 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010. The corresponding prior period results for Dispute & Legal Management Consulting (and to a lesser extent certain business units in our Alternative Asset Advisory segment) include approximately $2,700 of revenues from an engagement to serve as a financial advisor to the court appointed examiner of a large financial services company under bankruptcy protection (of which approximately 70% was recognized in Dispute & Legal Management Consulting and approximately 30% in Alternative Asset Advisory). This engagement wound down during the first half of 2010.

29

The increase in revenues from Tax Services primarily resulted from the timing and value of property tax contingent fees as compared to prior periods.

Revenues from Valuation Advisory decreased primarily from continued weakness in Europe and a reduction of fresh-start accounting for companies emerging from bankruptcy.

Our Alternative Asset Advisory segment benefited from higher revenues from services associated with Portfolio Valuation, Complex Asset Solutions and Due Diligence. Portfolio Valuation and Complex Asset Solutions primarily benefited from a higher effective rate-per-hour and an increase in incremental valuation work. In addition, Complex Asset Solutions benefited from revenues associated with our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010. Our Due Diligence business grew as a result of a meaningful engagement during the quarter.

The decrease in revenues in our Investment Banking segment resulted from lower revenues from services associated with M&A Advisory and Global Restructuring Advisory, partially offset by an increase in revenues from Transaction Opinions. The decrease in revenues from M&A Advisory reflects the lumpy nature of this business as a result of the timing of success fees. The deceleration in Global Restructuring Advisory is consistent with the decline in the global restructuring markets. Transaction Opinions primarily benefited from an increase in revenues from a higher value of fees earned during the period related to transactions requiring fairness and solvency opinions.

Effective June 30, 2011, we acquired Growth Capital Partners, a Houston-based boutique investment banking advisor primarily focused on oil and energy services. This acquisition will add 22 client service professionals of which seven are managing directors to our Investment Banking segment.

Our client service headcount decreased to 780 client service professionals at June 30, 2011, compared to 785 client service professionals at December 31, 2010. In addition, we had 159 client service managing directors at June 30, 2011, compared to 157 at December 31, 2010. Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

Direct Client Service Costs

Direct client service costs decreased $367 or 0.7% to $53,968 for the three months ended June 30, 2011, compared to $54,335 for the three months ended June 30, 2010. Direct client service costs include compensation and benefits for client service employees, fees payable to contractors and other expenses related to the execution of engagements.

The following table adjusts direct client service costs for equity-based compensation associated with Legacy Units and IPO Options, acquisition retention expenses, reimbursable expenses and a charge from the realignment of senior management:

	Three Months Ended
	June 30, 2011			June 30, 2010
Revenues (excluding reimbursables)	$	87,886		$	88,742
Total direct client service costs	$	53,968		$	54,335
Less:  equity-based compensation associated with Legacy Units and IPO Options	55			(636		)
Less:  acquisition retention expenses	(297		)	—
Less:  reimbursable expenses	(3,132		)	(2,039		)
Less:  charge from realignment of senior management	—			(540		)
Direct client service costs, as adjusted	$	50,594		$	51,120
Direct client service costs, as adjusted, as a percentage of revenues	57.6		%	57.6		%

Direct client service costs, as adjusted, decreased between periods as the result of lower severance and incentive-based compensation, partially offset by higher benefit-related costs and equity-based compensation from grants of Ongoing RSAs.

Equity-based compensation from Legacy Units and IPO Options decreased between periods primarily as a result of the accelerated attribution of expense on awards with graded-tranche vesting in prior periods for Legacy Units and IPO Options.

30

Operating Expenses

Operating expenses decreased $250 or 0.9% to $28,725 for the three months ended June 30, 2011, compared to $28,975 for the three months ended June 30, 2010. The following table adjusts operating expenses for equity-based compensation associated with Legacy Units and IPO Options, depreciation and amortization, restructuring charges, merger and acquisition costs and a charge from the realignment of senior management:

	Three Months Ended
	June 30, 2011			June 30, 2010
Revenues (excluding reimbursables)	$	87,886		$	88,742
Total operating expenses	$	28,725		$	28,975
Less:  equity-based compensation associated with Legacy Units and IPO Options	(111		)	(858		)
Less:  depreciation and amortization	(2,567		)	(2,350		)
Less: restructuring charges	(904		)	—
Less:  merger and acquisition costs	(272		)	(321		)
Less: charge from realignment of senior management	—			(2,500		)
Operating expenses, as adjusted	$	24,871		$	22,946
Operating expenses, as adjusted, as a percentage of revenues	28.3		%	25.9		%

Operating expenses, as adjusted, increased between periods primarily from incremental operating expenses from the addition of our Toronto office in conjunction with our acquisition of Cole & Partners, marketing costs related to print media and advertising, and expenses for ongoing recruitment of client service professionals (primarily for our Investment Banking segment). Equity-based compensation from Legacy Units and IPO Options decreased between periods primarily as a result of the accelerated attribution of expense on awards with graded-tranche vesting in prior periods.

During the three months ended June 30, 2011, the Company identified opportunities for cost savings through office consolidations of underutilized space and workforce reductions of non-client service professionals. The Company currently anticipates that it will incur a pre-tax restructuring charge of approximately $3,500 to $4,500 related to these initiatives. The portion of the anticipated charge related to office consolidations was estimated based on the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreements, partially offset by projected sublease income which was calculated based on certain sublease assumptions. The Company expects these initiatives to be completed by December 31, 2011 and anticipates annual savings ranging from approximately $2,500 to $3,500 as a result of these actions.

During the three months ended June 30, 2011, actual charges incurred related to this plan were $904 from the exiting of office space due to excess capacity. The charge is primarily comprised of the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreement, partially offset by future sublease income.

Provision for Income Taxes

The provision for income taxes was $2,556 or 31.2% of income before income taxes for the three months ended June 30, 2011, compared to $2,506 or 35.2% of income before income taxes for the three months ended June 30, 2010. The U.S. statutory income tax rate of 35% plus state and local statutory rates were decreased to the effective tax rate due to the fact that D&P Acquisitions, LLC and many of its subsidiaries operate as limited liability companies or other flow-through entities which are not subject to federal income tax.  This operating structure results in a rate benefit because a portion of the Company's earnings are not subject to corporate level taxes.  This favorable impact is partially offset by an increase due to state and local taxes, the effect of permanent differences and foreign taxes.

Net Income Attributable to the Noncontrolling Interest

Net income attributable to the noncontrolling interest represents the portion of net income or loss before income taxes attributable to the ownership interest in D&P Acquisitions held by the existing unitholders to the extent the book value of their interest in D&P Acquisitions is greater than zero. This interest totaled 26.4% and 31.4% for the three months ended June 30, 2011 and 2010, respectively.

31

Segment Results - Three months ended June 30, 2011 versus three months ended June 30, 2010

The following table sets forth selected segment operating results:

Results of Operations by Segment
	Three Months Ended
	June 30, 2011			June 30, 2010			Unit Change			Percent Change
Financial Advisory
Revenues (excluding reimbursables)	$	60,737		$	57,117		$	3,620		6.3	%
Segment operating income	$	9,787		$	7,931		$	1,856		23.4	%
Segment operating income margin	16.1		%	13.9		%	2.2		%
Alternative Asset Advisory
Revenues (excluding reimbursables)	$	14,415		$	10,436		$	3,979		38.1	%
Segment operating income	$	3,302		$	1,695		$	1,607		94.8	%
Segment operating income margin	22.9		%	16.2		%	6.7		%
Investment Banking
Revenues (excluding reimbursables)	$	12,734		$	21,189		$	(8,455	)	(39.9	)%
Segment operating income/(loss)	$	(668	)	$	5,050		$	(5,718	)	(113.2	)%
Segment operating income/(loss) margin	(5.2		)%	23.8		%	(29.0		)%
Totals
Revenues (excluding reimbursables)	$	87,886		$	88,742
Segment operating income	$	12,421		$	14,676
Net client reimbursable expenses	(58		)	(77		)
Equity-based compensation from Legacy Units and IPO Options	(56		)	(1,494		)
Depreciation and amortization	(2,567		)	(2,350		)
Acquisition retention expenses	(297		)	—
Restructuring charges	(904		)	—
Merger and acquisition costs	(272		)	(321		)
Charge from realignment of senior management	—			(3,040		)
Operating income	$	8,267		$	7,394
Average Client Service Professionals(1)
Financial Advisory	562			594			(32		)	(5.4	)%
Alternative Asset Advisory	94			85			9			10.6	%
Investment Banking	128			127			1			0.8	%
Total	784			806			(22		)	(2.7	)%
End of Period Client Service Professionals(1)
Financial Advisory	552			576			(24		)	(4.2	)%
Alternative Asset Advisory	97			81			16			19.8	%
Investment Banking	131			125			6			4.8	%
Total	780			782			(2		)	(0.3	)%
Revenue per Client Service Professional
Financial Advisory	$	108		$	96		$	12		12.5	%
Alternative Asset Advisory	$	153		$	123		$	30		24.4	%
Investment Banking	$	99		$	167		$	(68	)	(40.7	)%
Total	$	112		$	110		$	2		1.8	%

32

Results of Operations by Segment – Continued
	Three Months Ended
	June 30, 2011			June 30, 2010			Unit  Change			Percent Change
Utilization(2)
Financial Advisory	67.6		%	63.4		%	4.2		%	6.6	%
Alternative Asset Advisory	61.5		%	56.9		%	4.6		%	8.1	%
Rate-Per-Hour(3)
Financial Advisory	$	363		$	358		$	5		1.4	%
Alternative Asset Advisory	$	515		$	460		$	55		12.0	%
Revenues (excluding reimbursables)
Financial Advisory	$	60,737		$	57,117		$	3,620		6.3	%
Alternative Asset Advisory	14,415			10,436			3,979			38.1	%
Investment Banking	12,734			21,189			(8,455		)	(39.9	)%
Total	$	87,886		$	88,742		$	(856	)	(1.0	)%
Average Managing Directors(1)
Financial Advisory	93			97			(4		)	(4.1	)%
Alternative Asset Advisory	25			25			—			—	%
Investment Banking	41			41			—			—	%
Total	159			163			(4		)	(2.5	)%
End of Period Managing Directors(1)
Financial Advisory	91			99			(8		)	(8.1	)%
Alternative Asset Advisory	25			24			1			4.2	%
Investment Banking	43			40			3			7.5	%
Total	159			163			(4		)	(2.5	)%
Revenue per Managing Director
Financial Advisory	$	653		$	589		$	64		10.9	%
Alternative Asset Advisory	$	577		$	417		$	160		38.4	%
Investment Banking	$	311		$	517		$	(206	)	(39.8	)%
Total	$	553		$	544		$	9		1.7	%

__________________________

⁽¹⁾  Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

⁽²⁾  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.

⁽³⁾  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.

For segment reporting purposes, management uses certain estimates and assumptions to allocate revenues and expenses. Revenues and expenses attributable to reportable segments are generally based on which segment and product line a client service professional is a dedicated member. As a result, revenues recognized that relate to the cross utilization of client service professionals across reportable segments occur each period depending on the expertise required for each engagement. In particular, the Financial Advisory segment (primarily Valuation Advisory services) recognized revenues of $2,770 and $1,247 from the cross utilization of its client service professionals on engagements from the Alternative Asset Advisory segment (primarily Portfolio Valuation services) in the three months ended June 30, 2011 and 2010, respectively.

33

Financial Advisory

Revenues

Revenues from the Financial Advisory segment increased $3,620 or 6.3% to $60,737 for the three months ended June 30, 2011, compared to $57,117 for the three months ended June 30, 2010, as summarized in the following table:

	Three Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Financial Advisory
Valuation Advisory	$	32,604	$	35,712	$	(3,108	)	(8.7	)%
Tax Services	15,128		12,089		3,039			25.1	%
Dispute & Legal Management Consulting(1)	13,005		9,316		3,689			39.6	%
	$	60,737	$	57,117	$	3,620		6.3	%

__________________________

⁽¹⁾  For the three months ended June 30, 2011, Dispute & Legal Management Consulting includes approximately $3,800 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010.

Our Financial Advisory segment was impacted by higher revenues from Dispute & Legal Management Consulting and Tax Services, partially offset by a decrease in revenues from Valuation Advisory. Revenues from Dispute & Legal Management increased primarily from higher utilization due to increased demand as a result of a notable pick up in corporate spending to support commercial litigation. In addition, Dispute & Legal Management Consulting benefited from approximately $3,800 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010. The corresponding prior period results for Dispute & Legal Management Consulting (and to a lesser extent certain business units in our Alternative Asset Advisory segment) include approximately $2,700 of revenues from an engagement to serve as a financial advisor to the court appointed examiner of a large financial services company under bankruptcy protection (of which approximately 70% was recognized in Dispute & Legal Management Consulting and approximately 30% in Alternative Asset Advisory). This engagement wound down during the first half of 2010.

The increase in revenues from Tax Services primarily resulted from the timing and value of property tax contingent fees as compared to prior periods.

Revenues from Valuation Advisory decreased primarily from continued weakness in Europe and a reduction of fresh-start accounting for companies emerging from bankruptcy.

Segment Operating Income

Financial Advisory segment operating income increased $1,856 or 23.4% to $9,787 for the three months ended June 30, 2011, compared to $7,931 for the three months ended June 30, 2010. Segment operating income margin, defined as segment operating income expressed as a percentage of segment revenues, was 16.1% for the three months ended June 30, 2011, compared to 13.9% for the three months ended June 30, 2010. Segment operating income increased primarily as a result of higher revenues, partially offset by higher direct and allocated costs.

34

Alternative Asset Advisory

Revenues

Revenues from the Alternative Asset Advisory segment increased $3,979 or 38.1% to $14,415 for the three months ended June 30, 2011, compared to $10,436 for the three months ended June 30, 2010, as summarized in the following table:

	Three Months Ended
	June 30, 2011		June 30, 2010		Dollar Change		Percent Change
Alternative Asset Advisory
Portfolio Valuation	$	6,220	$	4,642	$	1,578	34.0	%
Complex Asset Solutions(1)	4,125		3,355		770		23.0	%
Due Diligence	4,070		2,439		1,631		66.9	%
	$	14,415	$	10,436	$	3,979	38.1	%

__________________________

⁽¹⁾  For the three months ended June 30, 2011, Complex Asset Solutions includes revenues from our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010.

Our Alternative Asset Advisory segment benefited from higher revenues from services associated with Portfolio Valuation, Complex Asset Solutions and Due Diligence. Portfolio Valuation and Complex Asset Solutions primarily benefited from a higher effective rate-per-hour and an increase in incremental valuation work. In addition, Complex Asset Solutions benefited from revenues associated with our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010. Our Due Diligence business grew as a result of a meaningful engagement during the quarter.

Segment Operating Income

Operating income from the Alternative Asset Advisory segment increased $1,607 or 94.8% to $3,302 for the three months ended June 30, 2011, compared to $1,695 for the three months ended June 30, 2010. Segment operating income margin was 22.9% for the three months ended June 30, 2011, compared to 16.2% for the three months ended June 30, 2010. Segment operating income increased primarily as a result of higher revenues, partially offset by higher direct costs and to a lesser extent higher allocated costs.

35

Investment Banking

Revenues

Revenues from the Investment Banking segment decreased $8,455 or 39.9% to $12,734 for the three months ended June 30, 2011, compared to $21,189 for the three months ended June 30, 2010, as summarized in the following table:

	Three Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Investment Banking
M&A Advisory	$	1,853	$	3,144	$	(1,291	)	(41.1	)%
Transaction Opinions	7,266		6,041		1,225			20.3	%
Global Restructuring Advisory	3,615		12,004		(8,389		)	(69.9	)%
	$	12,734	$	21,189	$	(8,455	)	(39.9	)%

The decrease in revenues in our Investment Banking segment resulted from lower revenues from services associated with M&A Advisory and Global Restructuring Advisory, partially offset by an increase in revenues from Transaction Opinions. The decrease in revenues from M&A Advisory reflects the lumpy nature of this business as a result of the timing of success fees. The deceleration in Global Restructuring Advisory is consistent with the decline in the global restructuring markets. Transaction Opinions primarily benefited from an increase in revenues from a higher value of fees earned during the period related to transactions requiring fairness and solvency opinions.

Effective June 30, 2011, we acquired Growth Capital Partners, a Houston-based boutique investment banking advisor primarily focused on oil and energy services. This acquisition will add 22 client service professionals of which seven are managing directors to our Investment Banking segment.

Segment Operating Income

Operating income from the Investment Banking segment decreased to a loss of $668 for the three months ended June 30, 2011, compared to a profit of $5,050 for the three months ended June 30, 2010. Operating income margin was a negative 5.2% for the three months ended June 30, 2011, compared to a positive 23.8% for the three months ended June 30, 2010. The decrease in segment operating income primarily resulted from lower revenues, partially offset by lower direct costs.

36

Six months endedJune 30, 2011 versus six months endedJune 30, 2010

The results of operations are summarized as follows:

	Six Months Ended
	June 30, 2011			June 30, 2010			Unit Change			Percent Change
Revenues	$	172,932		$	177,906		$	(4,974	)	(2.8	)%
Reimbursable expenses	4,966			4,760			206			4.3	%
Total revenues	177,898			182,666			(4,768		)	(2.6	)%
Direct client service costs
Compensation and benefits(1)	95,967			99,013			(3,046		)	(3.1	)%
Other direct client service costs	2,909			3,869			(960		)	(24.8	)%
Acquisition retention expenses(2)	379			—			379			N/A
Reimbursable expenses	5,069			4,893			176			3.6	%
	104,324			107,775			(3,451		)	(3.2	)%
Operating expenses
Selling, general and administrative(3)	49,304			50,388			(1,084		)	(2.2	)%
Depreciation and amortization	5,056			4,843			213			4.4	%
Restructuring charges	904			—			904			N/A
Merger and acquisition costs	466			321			145			45.2	%
Charge from impairment of certain intangible assets	—			674			(674		)	(100.0	)%
	55,730			56,226			(496		)	(0.9	)%
Operating income	17,844			18,665			(821		)	(4.4	)%
Other expense/(income), net
Interest income	(55		)	(77		)	22			(28.6	)%
Interest expense	148			168			(20		)	(11.9	)%
Other expense	(7		)	232			(239		)	(103.0	)%
	86			323			(237		)	(73.4	)%
Income before income taxes	17,758			18,342			(584		)	(3.2	)%
Provision for income taxes	5,620			6,156			(536		)	(8.7	)%
Net income	12,138			12,186			(48		)	(0.4	)%
Less:  Net income attributable to noncontrolling interest	4,601			5,406			(805		)	(14.9	)%
Net income attributable to Duff & Phelps Corporation	$	7,537		$	6,780		757			11.2	%
Other financial and operating data
Adjusted EBITDA(4)	$	25,122		$	30,120		$	(4,998	)	(16.6	)%
Adjusted EBITDA(4) as a percentage of revenues	14.5		%	16.9		%	(2.4		)%	(14.2	)%
Adjusted Pro Forma Net Income(4)	$	11,848		$	14,485		$	(2,637	)	(18.2	)%
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding(4)	$	0.30		$	0.37		$	(0.07	)	(18.8	)%
End of period managing directors(5)	159			163			(4		)	(2.5	)%
End of period client service professionals(5)	780			782			(2		)	(0.3	)%

__________________________

⁽¹⁾  Compensation and benefits include $9,065 and $7,932 of equity-based compensation expense for the six months endedJune 30, 2011 and 2010, respectively.

⁽²⁾  Acquisition retention expenses include $379 of equity-based compensation expense for the six months endedJune 30, 2011.

⁽³⁾  Selling, general and administrative expenses include $2,292 and $3,458 of equity-based compensation expense for the six months endedJune 30, 2011 and 2010, respectively.

37

⁽⁴⁾  Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. We believe that Adjusted EBITDA provides a relevant and useful alternative measure of our ongoing profitability and performance, when viewed in conjunction with GAAP measures, as it adjusts net income or loss attributable to Duff & Phelps Corporation for (a) net income or loss attributable to noncontrolling interest, (b) provision for income taxes, (c) interest expense and depreciation and amortization (a significant portion of which relates to debt and capital investments that have been incurred as the result of acquisitions and investments in stand-alone infrastructure which we do not expect to incur at the same levels in the future), (d) equity-based compensation associated with the Legacy Units of D&P Acquisitions, a significant portion of which is due to certain onetime grants associated with acquisitions prior to our IPO, and options to purchase shares of the Company's Class A common stock granted in connection with the IPO, (e) restructuring charges, impairment charges, acquisition retention expenses and other merger and acquisition costs, which are generally non-recurring in nature or are related to deferred payments associated with prior acquisitions, and (f) costs incurred from the realignment of our senior management which are generally non-recurring in nature and primarily include cash severance and charges from the accounting impact of the acceleration of vesting of restricted stock awards.

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

Adjusted EBITDA, as defined by the Company and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) provision for income taxes, (c) other expense/(income), net, (d) depreciation and amortization, (e) charges from impairment of intangible assets, (f) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (g) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, (h) acquisition retention expenses, (i) restructuring charges and (j) merger and acquisition costs:

Reconciliation of Adjusted EBITDA
	Six Months Ended
	June 30, 2011		June 30, 2010
Net income attributable to Duff & Phelps Corporation	$	7,537	$	6,780
Net income attributable to noncontrolling interest	4,601		5,406
Provision for income taxes	5,620		6,156
Other expense/(income), net	86		323
Depreciation and amortization	5,056		4,843
Equity-based compensation associated with Legacy Units and IPO Options	473		2,577
Acquisition retention expenses	379		—
Restructuring charges	904		—
Merger and acquisition costs	466		321
Charge from realignment of senior management	—		3,040
Charge from impairment of certain intangible assets	—		674
Adjusted EBITDA	$	25,122	$	30,120

38

Adjusted Pro Forma Net Income, as defined by Duff & Phelps and reconciled below, consists of net income or loss attributable to Duff & Phelps Corporation before (a) net income or loss attributable to the noncontrolling interest, (b) a non-recurring charge from the repayment and subsequent termination of our former credit agreement, (c) equity-based compensation associated with Legacy Units and IPO Options included in both compensation and benefits and in selling, general and administrative expenses, (d) acquisition retention expenses, (e) cash severance and equity-compensation expense from the acceleration of vesting of restricted stock awards due to the realignment of our senior management, (f) restructuring charges, (g) merger and acquisition costs, and less (h) pro forma corporate income tax applied at an assumed rate as specified in the applicable footnote (such assumed pro forma corporate income tax rate may fluctuate between periods and may include true-ups relating to prior periods, based on management estimates and judgments). Adjusted Pro Forma Net Income per share, as defined by Duff & Phelps, consists of Adjusted Pro Forma Net Income divided by the weighted average number of the Company's Class A and Class B shares for the applicable period, giving effect to the dilutive impact, if any, of stock options and restricted stock awards and units and performance-vesting restricted stock awards and units issued in connection with the Company's ongoing long-term compensation program (“Ongoing RSAs”).

Reconciliation of Adjusted Pro Forma Net Income
	Six Months Ended
	June 30, 2011			June 30, 2010
Net income attributable to Duff & Phelps Corporation	$	7,537		$	6,780
Net income attributable to noncontrolling interest(a)	4,601			5,406
Equity-based compensation associated with Legacy Units and IPO Options(b)	473			2,577
Acquisition retention expenses(c)	379			—
Restructuring charges(d)	904			—
Merger and acquisition costs(d)	466			321
Charge from realignment of senior management(d)	—			3,040
Adjustment to provision for income taxes(e)	(2,512		)	(3,639		)
Adjusted Pro Forma Net Income, as defined	$	11,848		$	14,485
Fully diluted weighted average shares of Class A common stock	28,095			25,903
Weighted average New Class A Units outstanding	11,038			12,947
Pro forma fully exchanged, fully diluted shares outstanding(f)	39,133			38,850
Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding	$	0.30		$	0.37

__________________________

^(a)  Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company.

^(b)  Represents elimination of equity-based compensation associated with Legacy Units and IPO Options.

^(c)  Represents elimination of acquisition retention expenses which resulted from expense incurred from certain restricted stock awards that were granted in conjunction with the closing of certain of our acquisitions.

^(d)  Represents elimination of the following: restructuring charges, merger and acquisition costs or the charge incurred from the realignment of senior management.

^(e)  Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.7% and 40.3% for the full year, respectively, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. Assumes (i) full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company, (ii) the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at prevailing corporate rates and (iii) all deferred tax assets related to foreign operations are fully realizable.

^(f)  Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and the dilutive effect of Ongoing RSAs. The Company believes that IPO Options would not be considered dilutive when applying the treasury method.

39

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 alternatives to measurements required by GAAP, such as operating income, net income or loss, net income or loss per share, cash flow from continuing operating activities or any other measure of performance or liquidity derived in accordance with GAAP. The presentation of this additional information is not meant to be considered in isolation or as a substitute for the most directly comparable GAAP measures. In addition, it should be noted that companies calculate Adjusted EBITDA and Adjusted Pro Forma Net Income differently and, therefore, Adjusted EBITDA and Adjusted Pro Forma Net Income as presented for us may not be comparable to Adjusted EBITDA and Adjusted Pro Forma Net Income reported by other companies.

⁽⁵⁾    Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

Revenues

Revenues excluding reimbursable expenses decreased $4,974 or 2.8% to $172,932 for the six months endedJune 30, 2011, compared to $177,906 for the six months endedJune 30, 2010. The decrease in revenues primarily resulted from a decrease in revenues from our Investment Banking segment, partially offset by an increase in revenues from our Alternative Asset Advisory and Financial Advisory segments, as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Financial Advisory
Valuation Advisory	$	70,218	$	73,890	$	(3,672	)	(5.0	)%
Tax Services	22,675		21,536		1,139			5.3	%
Dispute & Legal Management Consulting(1)	26,441		18,731		7,710			41.2	%
	119,334		114,157		5,177			4.5	%
Alternative Asset Advisory
Portfolio Valuation	12,739		10,124		2,615			25.8	%
Complex Asset Solutions(2)	9,446		7,481		1,965			26.3	%
Due Diligence	5,715		4,609		1,106			24.0	%
	27,900		22,214		5,686			25.6	%
Investment Banking
M&A Advisory	3,303		6,826		(3,523		)	(51.6	)%
Transaction Opinions	15,497		12,864		2,633			20.5	%
Global Restructuring Advisory	6,898		21,845		(14,947		)	(68.4	)%
	25,698		41,535		(15,837		)	(38.1	)%
Total Revenues (excluding reimbursables)	$	172,932	$	177,906	$	(4,974	)	(2.8	)%

__________________________

⁽¹⁾  For the six months endedJune 30, 2011, Dispute & Legal Management Consulting includes approximately $6,600 of revenues through June 15, 2011 from our acquisition of Cole Valuation Partners (effective June 15, 2010) and an additional amount from June Consulting Group effective December 15, 2010.

⁽²⁾  For the six months endedJune 30, 2011, Complex Asset Solutions includes revenues from our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010.

Our Financial Advisory segment was impacted by higher revenues from Dispute & Legal Management Consulting and Tax Services, partially offset by a decrease in revenues from Valuation Advisory. Revenues from Dispute & Legal Management increased primarily from higher utilization due to increased demand as a result of a notable pick up in corporate spending to support commercial litigation. In addition, Dispute & Legal Management Consulting benefited from approximately $6,600 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010. The corresponding prior period results for Dispute & Legal Management Consulting (and to a lesser extent certain business units in our Alternative Asset Advisory segment) include approximately $8,200 of revenues from an engagement to serve as a financial advisor to the court appointed examiner of a large financial services company under bankruptcy protection (of which approximately 70% was recognized in Dispute & Legal Management Consulting and approximately 30% in Alternative Asset Advisory). This engagement wound down during the first half of 2010.

40

The increase in revenues from Tax Services primarily resulted from the timing and value of property tax contingent fees as compared to prior periods, partially offset by the departure of staff during the first half of 2010 associated with World Tax Service US (which we acquired in July 2008).

Revenues from Valuation Advisory decreased primarily from continued weakness in Europe and a reduction of fresh-start accounting for companies emerging from bankruptcy, partially offset by an increase in revenues from purchase price allocations and valuations associated with goodwill impairments.

Our Alternative Asset Advisory segment benefited from higher revenues from services associated with Portfolio Valuation, Complex Asset Solutions and Due Diligence. Portfolio Valuation and Complex Asset Solutions primarily benefited from a higher effective rate-per-hour and an increase in incremental valuation work. In addition, Complex Asset Solutions benefited from revenues associated with our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010. Our Due Diligence business grew as a result of a meaningful engagement during the period.

The decrease in revenues in our Investment Banking segment resulted from lower revenues from services associated with M&A Advisory and Global Restructuring Advisory, partially offset by an increase in revenues from Transaction Opinions. The decrease in revenues from M&A Advisory reflects the lumpy nature of this business as a result of the timing of success fees. The deceleration in Global Restructuring Advisory is consistent with the decline in the global restructuring markets. Transaction Opinions primarily benefited from an increase in revenues from a higher value of fees earned during the period related to transactions requiring fairness and solvency opinions.

Effective June 30, 2011, we acquired Growth Capital Partners, a Houston-based boutique investment banking advisor primarily focused on oil and energy services. This acquisition will add 22 client service professionals of which seven are managing directors to our Investment Banking segment.

Our client service headcount decreased to 780 client service professionals at June 30, 2011, compared to 785 client service professionals at December 31, 2010. In addition, we had 159 client service managing directors at June 30, 2011, compared to 157 at December 31, 2010. Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

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Direct Client Service Costs

Direct client service costs decreased $3,451 or 3.2% to $104,324 for the six months endedJune 30, 2011, compared to $107,775 for the six months endedJune 30, 2010. Direct client service costs include compensation and benefits for client service employees, fees payable to contractors and other expenses related to the execution of engagements.

The following table adjusts direct client service costs for equity-based compensation associated with Legacy Units and IPO Options, acquisition retention expenses, reimbursable expenses and a charge from the realignment of senior management:

	Six Months Ended
	June 30, 2011			June 30, 2010
Revenues (excluding reimbursables)	$	172,932		$	177,906
Total direct client service costs	$	104,324		$	107,775
Less:  equity-based compensation associated with Legacy Units and IPO Options	(178		)	(1,234		)
Less:  acquisition retention expenses	(379		)	—
Less:  reimbursable expenses	(5,069		)	(4,893		)
Less:  charge from realignment of senior management	—			(540		)
Direct client service costs, as adjusted	$	98,698		$	101,108
Direct client service costs, as adjusted, as a percentage of revenues	57.1		%	56.8		%

Direct client service costs, as adjusted, decreased between periods. Lower compensation, accrued incentive compensation and severance from a reduction in headcount were partially offset by higher equity-based compensation from grants of Ongoing RSAs and higher benefit-related costs.

Equity-based compensation from Legacy Units and IPO Options decreased between periods primarily as a result of the accelerated attribution of expense on awards with graded-tranche vesting in prior periods for Legacy Units and IPO Options.

Operating Expenses

Operating expenses decreased $496 or 0.9% to $55,730 for the six months endedJune 30, 2011, compared to $56,226 for the six months endedJune 30, 2010. The following table adjusts operating expenses for equity-based compensation associated with Legacy Units and IPO Options, depreciation and amortization, restructuring charges, merger and acquisition costs, charge from realignment of senior management and a charge to impair certain intangible assets:

	Six Months Ended
	June 30, 2011			June 30, 2010
Revenues (excluding reimbursables)	$	172,932		$	177,906
Total operating expenses	$	55,730		$	56,226
Less:  equity-based compensation associated with Legacy Units and IPO Options	(295		)	(1,343		)
Less:  depreciation and amortization	(5,056		)	(4,843		)
Less: restructuring charges	(904		)	—
Less:  merger and acquisition costs	(466		)	(321		)
Less: charge from realignment of senior management	—			(2,500		)
Less: charge from impairment of certain intangible assets	—			(674		)
Operating expenses, as adjusted	$	49,009		$	46,545
Operating expenses, as adjusted, as a percentage of revenues	28.3		%	26.2		%

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Operating expenses, as adjusted, increased between periods primarily from incremental operating expenses from the addition of our Toronto office in conjunction with our acquisition of Cole & Partners, marketing costs related to print media and advertising, expenses for ongoing recruitment of client service professionals (primarily for our Investment Banking segment) and bad debts.

Equity-based compensation from Legacy Units and IPO Options decreased between periods primarily as a result of the accelerated attribution of expense on awards with graded-tranche vesting in prior periods.

During the three months ended June 30, 2011, the Company identified opportunities for cost savings through office consolidations of underutilized space and workforce reductions of non-client service professionals. The Company currently anticipates that it will incur a pre-tax restructuring charge of approximately $3,500 to $4,500 related to these initiatives. The portion of the anticipated charge related to office consolidations was estimated based on the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreements, partially offset by projected sublease income which was calculated based on certain sublease assumptions. The Company expects these initiatives to be completed by December 31, 2011 and anticipates annual savings ranging from approximately $2,500 to $3,500 as a result of these actions. During the three months ended June 30, 2011, actual charges incurred related to this plan were $904 from the exiting of office space due to excess capacity. The charge is primarily comprised of the discounted future cash flows of rent expenses that the Company is obligated to pay under the lease agreement, partially offset by future sublease income.

Provision for Income Taxes

The provision for income taxes was $5,620 or 31.6% of income before income taxes for the six months endedJune 30, 2011, compared to $6,156 or 33.6% of income before income taxes for the six months endedJune 30, 2010. The U.S. statutory income tax rate of 35% plus state and local statutory rates were decreased to the effective tax rate due to the fact that D&P Acquisitions, LLC and many of its subsidiaries operate as limited liability companies or other flow-through entities which are not subject to federal income tax.  This operating structure results in a rate benefit because a portion of the Company's earnings are not subject to corporate level taxes.  This favorable impact is partially offset by an increase due to state and local taxes, the effect of permanent differences and foreign taxes.

Net Income Attributable to the Noncontrolling Interest

Net income attributable to the noncontrolling interest represents the portion of net income or loss before income taxes attributable to the ownership interest in D&P Acquisitions held by the existing unitholders to the extent the book value of their interest in D&P Acquisitions is greater than zero. This interest totaled 26.4% and 31.8% for the six months endedJune 30, 2011 and 2010, respectively.

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Segment Results - Six months endedJune 30, 2011 versus six months endedJune 30, 2010

The following table sets forth selected segment operating results:

Results of Operations by Segment
	Six Months Ended
	June 30, 2011			June 30, 2010			Unit Change			Percent Change
Financial Advisory
Revenues (excluding reimbursables)	$	119,334		$	114,157		$	5,177		4.5	%
Segment operating income	$	19,369		$	15,637		$	3,732		23.9	%
Segment operating income margin	16.2		%	13.7		%	2.5		%
Alternative Asset Advisory
Revenues (excluding reimbursables)	$	27,900		$	22,214		$	5,686		25.6	%
Segment operating income	$	6,524		$	4,509		$	2,015		44.7	%
Segment operating income margin	23.4		%	20.3		%	3.1		%
Investment Banking
Revenues (excluding reimbursables)	$	25,698		$	41,535		$	(15,837	)	(38.1	)%
Segment operating income/(loss)	$	(668	)	$	10,107		$	(10,775	)	(106.6	)%
Segment operating income/(loss) margin	(2.6		)%	24.3		%	(26.9		)%
Totals
Revenues (excluding reimbursables)	$	172,932		$	177,906
Segment operating income	$	25,225		$	30,253
Net client reimbursable expenses	(103		)	(133		)
Equity-based compensation from Legacy Units and IPO Options	(473		)	(2,577		)
Depreciation and amortization	(5,056		)	(4,843		)
Acquisition retention expenses	(379		)	—
Restructuring charges	(904		)	—
Merger and acquisition costs	(466		)	(321		)
Charge from realignment of senior management	—			(3,040		)
Charge from impairment of certain intangible assets	—			(674		)
Operating income	$	17,844		$	18,665
Average Client Service Professionals(1)
Financial Advisory	567			617			(50		)	(8.1	)%
Alternative Asset Advisory	90			88			2			2.3	%
Investment Banking	129			129			—			—	%
Total	786			834			(48		)	(5.8	)%
End of Period Client Service Professionals(1)
Financial Advisory	552			576			(24		)	(4.2	)%
Alternative Asset Advisory	97			81			16			19.8	%
Investment Banking	131			125			6			4.8	%
Total	780			782			(2		)	(0.3	)%
Revenue per Client Service Professional
Financial Advisory	$	210		$	185		$	25		13.5	%
Alternative Asset Advisory	$	310		$	252		$	58		23.0	%
Investment Banking	$	199		$	322		$	(123	)	(38.2	)%
Total	$	220		$	213		$	7		3.3	%

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Results of Operations by Segment – Continued
	Six Months Ended
	June 30, 2011			June 30, 2010			Unit  Change			Percent Change
Utilization(2)
Financial Advisory	71.3		%	64.0		%	7.3		%	11.4	%
Alternative Asset Advisory	61.7		%	58.4		%	3.3		%	5.7	%
Rate-Per-Hour(3)
Financial Advisory	$	338		$	343		$	(5	)	(1.5	)%
Alternative Asset Advisory	$	522		$	489		$	33		6.7	%
Revenues (excluding reimbursables)
Financial Advisory	$	119,334		$	114,157		$	5,177		4.5	%
Alternative Asset Advisory	27,900			22,214			5,686			25.6	%
Investment Banking	25,698			41,535			(15,837		)	(38.1	)%
Total	$	172,932		$	177,906		$	(4,974	)	(2.8	)%
Average Managing Directors(1)
Financial Advisory	93			98			(5		)	(5.1	)%
Alternative Asset Advisory	25			25			—			—	%
Investment Banking	40			41			(1		)	(2.4	)%
Total	158			164			(6		)	(3.7	)%
End of Period Managing Directors(1)
Financial Advisory	91			99			(8		)	(8.1	)%
Alternative Asset Advisory	25			24			1			4.2	%
Investment Banking	43			40			3			7.5	%
Total	159			163			(4		)	(2.5	)%
Revenue per Managing Director
Financial Advisory	$	1,283		$	1,165		$	118		10.1	%
Alternative Asset Advisory	$	1,116		$	889		$	227		25.5	%
Investment Banking	$	642		$	1,013		$	(371	)	(36.6	)%
Total	$	1,095		$	1,085		$	10		0.9	%

__________________________

⁽¹⁾  Headcount figures exclude 22 client service professionals of which seven are managing directors added in conjunction with our acquisition of Growth Capital Partners effective June 30, 2011.

⁽²⁾  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.

⁽³⁾  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.

For segment reporting purposes, management uses certain estimates and assumptions to allocate revenues and expenses. Revenues and expenses attributable to reportable segments are generally based on which segment and product line a client service professional is a dedicated member. As a result, revenues recognized that relate to the cross utilization of client service professionals across reportable segments occur each period depending on the expertise required for each engagement. In particular, the Financial Advisory segment (primarily Valuation Advisory services) recognized revenues of $6,058 and $4,192 from the cross utilization of its client service professionals on engagements from the Alternative Asset Advisory segment (primarily Portfolio Valuation services) in the six months endedJune 30, 2011 and 2010, respectively.

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Financial Advisory

Revenues

Revenues from the Financial Advisory segment increased $5,177 or 4.5% to $119,334 for the six months endedJune 30, 2011, compared to $114,157 for the six months endedJune 30, 2010, as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Financial Advisory
Valuation Advisory	$	70,218	$	73,890	$	(3,672	)	(5.0	)%
Tax Services	22,675		21,536		1,139			5.3	%
Dispute & Legal Management Consulting(1)	26,441		18,731		7,710			41.2	%
	$	119,334	$	114,157	$	5,177		4.5	%

__________________________

⁽¹⁾  For the six months endedJune 30, 2011, Dispute & Legal Management Consulting includes approximately $7,200 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010.

Our Financial Advisory segment was impacted by higher revenues from Dispute & Legal Management Consulting and Tax Services, partially offset by a decrease in revenues from Valuation Advisory. Revenues from Dispute & Legal Management increased primarily from higher utilization due to increased demand as a result of a notable pick up in corporate spending to support commercial litigation. In addition, Dispute & Legal Management Consulting benefited from approximately $7,200 of revenues from our acquisition of Cole Valuation Partners effective June 15, 2010 and an additional amount from June Consulting Group effective December 15, 2010. The corresponding prior period results for Dispute & Legal Management Consulting (and to a lesser extent certain business units in our Alternative Asset Advisory segment) include approximately $8,200 of revenues from an engagement to serve as a financial advisor to the court appointed examiner of a large financial services company under bankruptcy protection (of which approximately 70% was recognized in Dispute & Legal Management Consulting and approximately 30% in Alternative Asset Advisory). This engagement wound down during the first half of 2010.

The increase in revenues from Tax Services primarily resulted from the timing and value of property tax contingent fees as compared to prior periods, partially offset by the departure of staff during the first half of 2010 associated with World Tax Service US (which we acquired in July 2008).

Revenues from Valuation Advisory decreased primarily from continued weakness in Europe and a reduction of fresh-start accounting for companies emerging from bankruptcy, partially offset by an increase in revenues from purchase price allocations and valuations associated with goodwill impairments.

Segment Operating Income

Financial Advisory segment operating income increased $3,732 or 23.9% to $19,369 for the six months endedJune 30, 2011, compared to $15,637 for the six months endedJune 30, 2010. Segment operating income margin, defined as segment operating income expressed as a percentage of segment revenues, was 16.2% for the six months endedJune 30, 2011, compared to 13.7% for the six months endedJune 30, 2010. Segment operating income increased primarily as a result of higher revenues partially offset by an increase in direct costs.

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Alternative Asset Advisory

Revenues

Revenues from the Alternative Asset Advisory segment increased $5,686 or 25.6% to $27,900 for the six months endedJune 30, 2011, compared to $22,214 for the six months endedJune 30, 2010, as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010		Dollar Change		Percent Change
Alternative Asset Advisory
Portfolio Valuation	$	12,739	$	10,124	$	2,615	25.8	%
Complex Asset Solutions(1)	9,446		7,481		1,965		26.3	%
Due Diligence	5,715		4,609		1,106		24.0	%
	$	27,900	$	22,214	$	5,686	25.6	%

__________________________

⁽¹⁾  For the six months endedJune 30, 2011, Complex Asset Solutions includes revenues from our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010.

Our Alternative Asset Advisory segment benefited from higher revenues from services associated with Portfolio Valuation, Complex Asset Solutions and Due Diligence. Portfolio Valuation and Complex Asset Solutions primarily benefited from a higher effective rate-per-hour and an increase in incremental valuation work. In addition, Complex Asset Solutions benefited from revenues associated with our acquisition of the U.S. advisory business of Dynamic Credit Partners effective December 15, 2010. Our Due Diligence business grew as a result of a meaningful engagement during the period.

Segment Operating Income

Operating income from the Alternative Asset Advisory segment increased $2,015 or 44.7% to $6,524 for the six months endedJune 30, 2011, compared to $4,509 for the six months endedJune 30, 2010. Segment operating income margin was 23.4% for the six months endedJune 30, 2011, compared to 20.3% for the six months endedJune 30, 2010. Segment operating income increased primarily as a result of higher revenues partially offset by an increase in direct costs.

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Investment Banking

Revenues

Revenues from the Investment Banking segment decreased $15,837 or 38.1% to $25,698 for the six months endedJune 30, 2011, compared to $41,535 for the six months endedJune 30, 2010, as summarized in the following table:

	Six Months Ended
	June 30, 2011		June 30, 2010		Dollar Change			Percent Change
Investment Banking
M&A Advisory	$	3,303	$	6,826	$	(3,523	)	(51.6	)%
Transaction Opinions	15,497		12,864		2,633			20.5	%
Global Restructuring Advisory	6,898		21,845		(14,947		)	(68.4	)%
	$	25,698	$	41,535	$	(15,837	)	(38.1	)%

The decrease in revenues in our Investment Banking segment resulted from lower revenues from services associated with M&A Advisory and Global Restructuring Advisory, partially offset by an increase in revenues from Transaction Opinions. The decrease in revenues from M&A Advisory reflects the lumpy nature of this business as a result of the timing of success fees. The deceleration in Global Restructuring Advisory is consistent with the decline in the global restructuring markets. Transaction Opinions primarily benefited from an increase in revenues from a higher value of fees earned during the period related to transactions requiring fairness and solvency opinions.

Effective June 30, 2011, we acquired Growth Capital Partners, a Houston-based boutique investment banking advisor primarily focused on oil and energy services. This acquisition will add 22 client service professionals of which seven are managing directors to our Investment Banking segment.

Segment Operating Income

Operating income from the Investment Banking segment decreased $10,775 or 106.6% to a loss of $668 for the six months endedJune 30, 2011, compared to a profit of $10,107 for the six months endedJune 30, 2010. Operating income margin was a negative 2.6% for the six months endedJune 30, 2011, compared to positive 24.3% for the six months endedJune 30, 2010. The decrease in segment operating income primarily resulted from lower revenues partially offset by lower direct costs.

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Liquidity and Capital Resources

Our primary sources of liquidity are our existing cash balances and availability under our revolving credit facility. Our historical cash flows are primarily related to the timing of (i) cash receipt of revenues, (ii) payment of base compensation, benefits and operating expenses, (iii) payment of bonuses to employees, (iv) distributions and other payments to noncontrolling unitholders, (v) corporate tax payments by the Company, (vi) dividends to the extent declared by the board of directors, (vii) funding of our deferred compensation program, (viii) repurchases of Class A common stock, and (ix) cash consideration for acquisitions and acquisition-related expenses.

Cash and cash equivalents decreased by $43,853 to $69,475 at June 30, 2011, compared to $113,328 at December 31, 2010. The decrease in cash primarily resulted from $11,727 used in operating activities, $13,153 used by financing activities and $20,772 used in investing activities.

Operating Activities

During the six months endedJune 30, 2011, cash of $11,727 was used in operating activities, compared to $9,162 provided by operating activities in the corresponding prior year period. The increase of amounts used in operating activities primarily resulted from (i) changes in assets and liabilities using cash, including accounts receivable and unbilled services from the timing of the billing of invoices and (ii) higher cash bonus payments made in 2011 with respect to the 2010 bonus year, as compared to cash bonus payments made in 2010 with respect to the 2009 bonus year, partially offset by lower bonus accruals in the current year, as compared to the prior year.

Investing Activities

During the six months endedJune 30, 2011, cash of $13,153 was used in investing activities, compared to $18,343 used in the corresponding prior year period. Investing activities during the current period included (i) purchases of property and equipment, (ii) cash consideration for acquisitions and related earn-out payment and (iii) purchases of investments related to the Company's deferred compensation plan and other investments.

Financing Activities

During the six months endedJune 30, 2011, cash of $20,772 was used in financing activities, compared to $16,530 used in the corresponding prior year period. Significant financing activities are summarized as follows:

• Repurchases of Class A common stock - Repurchases of Class A common stock includes shares repurchased pursuant to a publicly announced repurchase program as well as shares of Class A common stock withheld to cover payroll tax withholdings related to the lapse of restrictions on Ongoing RSAs.

• Dividends - Cash dividends reflect the payment of quarterly cash dividends per share of our Class A common stock to holders of record. We increased the dividend from $0.05 to $0.06 in the second quarter of 2010 and from $0.06 to $0.08 in the first quarter of 2011.

• Distributions and other payments to noncontrolling unitholders - Distributions and other payments to noncontrolling unitholders are summarized as follows:

	Six Months Ended
	June 30, 2011		June 30, 2010
Distributions for taxes	$	416	$	708
Other distributions	1,962		1,427
Payments pursuant to the Tax Receivable Agreement	—		—
	$	2,378	$	2,135

Distributions for taxes

As a limited liability company, D&P Acquisitions does not incur significant federal or state and local taxes, as these taxes are primarily the obligations of the members of D&P Acquisitions. As authorized by the Third Amended and Restated LLC Agreement of D&P Acquisitions, D&P Acquisitions is required to distribute cash, generally, on a pro rata basis, to its members to the extent necessary to provide funds to pay the members' tax liabilities, if any, with respect to the earnings of D&P Acquisitions. The tax distribution rate has been set at 45% of each member's allocable share of taxable income of D&P Acquisitions. D&P Acquisitions is only required to make such distributions if cash is

49

available for such purposes as determined by the Company. The Company expects cash will be available to make these distributions. Upon completion of its tax returns with respect to the prior year, D&P Acquisitions may make true-up distributions to its members, if cash is available for such purposes, with respect to actual taxable income for the prior year.

Other distributions

Concurrent with the payment of dividends to shareholders of Class A common stock, holders of New Class A Units receive a corresponding distribution per vested unit. These amounts will be treated as a reduction in basis of each member's ownership interests. Pursuant to the terms of the Third Amended and Restated LLC Agreement of D&P Acquisitions, a corresponding amount per unvested unit was deposited into a segregated account and will be distributed once a year with respect to units that vested during that year.  Any amounts related to unvested units that forfeit are returned to the Company.

Payments pursuant to the Tax Receivable Agreement

As a result of the Company's acquisition of New Class A Units of D&P Acquisitions, the Company expects to benefit from depreciation and other tax deductions reflecting D&P Acquisitions' tax basis for its assets. Those deductions will be allocated to the Company and will be taken into account in reporting the Company's taxable income. Further, as a result of a federal income tax election made by D&P Acquisitions applicable to a portion of the Company's acquisition of New Class A Units of D&P Acquisitions, the income tax basis of the assets of D&P Acquisitions underlying a portion of the units the Company has and will acquire (pursuant to the exchange agreement) will be adjusted based upon the amount that the Company has paid for that portion of its New Class A Units of D&P Acquisitions.

The Company has entered into a tax receivable agreement (“TRA”) with the existing unitholders of D&P Acquisitions (for the benefit of the existing unitholders of D&P Acquisitions) that provides for the payment by the Company to the unitholders of D&P Acquisitions of 85% of the amount of cash savings, if any, in U.S. federal, state and local income tax that the Company realizes (i) from the tax basis in its proportionate share of D&P Acquisitions' goodwill and similar intangible assets that the Company receives as a result of the exchanges and (ii) from the federal income tax election referred to above. D&P Acquisitions expects to make future payments under the TRA to the extent cash is available for such purposes.

As of June 30, 2011, the Company recorded a liability of $111,278, representing the payments due to D&P Acquisitions' unitholders under the TRA (see current and non-current portion of “Due to noncontrolling unitholders” on the Company's Condensed Consolidated Balance Sheets).  

Within the next 12 month period, the Company expects to pay $5,640 of the total amount. The basis for determining the current portion of the payments due to D&P Acquisitions' unitholders under the TRA is the expected amount of payments to be made within the next 12 months.  The long-term portion of the payments due to D&P Acquisitions' unitholders under the tax receivable agreement is the remainder. Payments are anticipated to be made annually over 15 years, commencing from the date of each event that gives rise to the TRA benefits, beginning with the date of the closing of the IPO on October 3, 2007.  The payments are made in accordance with the terms of the TRA.  The timing of the payments is subject to certain contingencies including Duff & Phelps Corporation having sufficient taxable income to utilize all of the tax benefits defined in the TRA.

To determine the current amount of the payments due to D&P Acquisitions' unitholders under the TRA, the Company estimated the amount of taxable income that Duff & Phelps Corporation has generated over the previous fiscal year. Next, the Company estimated the amount of the specified TRA deductions at year end. This was used as a basis for determining the amount of tax reduction that generates a TRA obligation. In turn, this was used to calculate the estimated payments due under the TRA that the Company expects to pay in the next 12 months. These calculations are performed pursuant to the terms of the TRA.

Obligations pursuant to the TRA are obligations of Duff & Phelps Corporation.  They do not impact the noncontrolling interest.  These obligations are not income tax obligations and have no impact on the tax provision or the allocation of taxes. Furthermore, the TRA has no impact on the allocation of the provision for income taxes to the Company's net income.  In general, items of income and expense are allocated on the basis of member's ownership interests pursuant to the Third Amended and Restated Limited Liability Company Agreement of Duff & Phelps Acquisitions, LLC.

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Credit Facility

On July 15, 2009, Duff & Phelps, LLC entered into a credit agreement with Bank of America, N.A., as administrative agent and the lenders from time to time party thereto ("Credit Agreement"), providing for a $30,000 senior secured revolving credit facility (“Credit Facility”), including a $10,000 sub-limit for the issuance of letters of credit. The proceeds of the facility are permitted to be used for working capital, permitted acquisitions and general corporate purposes. The maturity date is July 15, 2012 and amounts borrowed may be voluntarily prepaid at any time without penalty or premium, subject to customary breakage costs.

There were no amounts outstanding under the Credit Facility at June 30, 2011 or through the filing date of this Quarterly Report on Form 10-Q. As of June 30, 2011, the Company had $4,440 of outstanding letters of credit of which $3,981 were issued against the Credit Facility. These letters of credit were issued in connection with real estate leases.

Loans under the Credit Facility will, at the Company's option, bear interest on the principal amount outstanding at either (a) a rate equal to LIBOR, plus an applicable margin or (b) a base rate, plus an applicable margin. The applicable margin rate will be based on the Company's most recent consolidated leverage ratio and ranges from 1.75% to 2.50% per annum depending on the Company's consolidated leverage ratio. In addition, the Company is required to pay an unused commitment fee on the actual daily amount of the unutilized portion of the commitments of the lenders at a rate ranging from 0.25% to 0.50% per annum, based on the Company's most recent consolidated leverage ratio. Based on the Company's consolidated leverage ratio at June 30, 2011, the Company qualifies for the 1.75% applicable margin and 0.25% unused commitment fee.

The Credit Agreement contains customary representations and warranties and customary affirmative and negative covenants, including, among others, limitations on (a) the incurrence of liens, (b) the incurrence of indebtedness, (c) the ability to make dividends and distributions, as well as redeem and repurchase equity interests, and (d) acquisitions, mergers, consolidations and sales of assets. In addition, the Credit Agreement contains financial covenants that do not permit (a) a total leverage ratio of greater than 2.75 to 1.00 until the quarter ending September 30, 2010, and 2.50 to 1.00 thereafter and (b) a consolidated fixed charge coverage ratio of less than 2.00 to 1.00 until September 30, 2010, and 1.25 to 1.00 thereafter. The financial covenants are tested on the last day of each fiscal quarter based on the last four fiscal quarter periods. Management believes that the Company was in compliance with all of its covenants as of June 30, 2011. The Credit Agreement permits dividend payments or other distributions in the Company's common stock or other equity interests subject to certain limitations.

The obligation of the Company to pay amounts outstanding under the Credit Facility may be accelerated upon the occurrence of an "Event of Default" as defined in the Credit Agreement. The Company's obligations under the Credit Agreement are guaranteed by D&P Acquisitions, and certain domestic subsidiaries of the Company (collectively, the "Guarantors"). The Credit Agreement is secured by a lien on substantially all of the personal property of the Company and each of the Guarantors.

Future Needs

Our primary financing need has been to fund our growth. Our growth strategy includes hiring additional revenue-generating client service professionals and expanding our service offerings through existing client service professionals, new hires or acquisitions of new businesses. We intend to fund such growth over the next twelve months with cash on-hand, funds generated from operations and borrowings under our revolving credit agreement. We believe these funds will be adequate to fund future growth.

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Item 3.    Quantitative and Qualitative Disclosures About Market Risk.

Market risks at June 30, 2011 have not changed significantly from those discussed in Item 7A of our Annual Report on Form 10-K for the year ended December 31, 2010.

Item 4.    Controls and Procedures.

Disclosure Controls and Procedures

Our management, including our Chief Executive Officer and Chief Financial Officer, evaluated the effectiveness of our disclosure controls and procedures pursuant to Rule 13a-15 under the Exchange Act as of the end of the period covered by this report. Based on that evaluation, our Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of the period covered by this quarterly report, our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Exchange Act) are effective, in all material respects, to ensure that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

The effectiveness of our disclosure controls and procedures and our internal control over financial reporting is subject to various inherent limitations, including cost limitations, judgments used in decision making, assumptions about the likelihood of future events, the soundness of our systems, the possibility of human error, and the risk of fraud. Moreover, projections of any evaluation of effectiveness of future periods are subject to the risk that controls may become inadequate because of changes in conditions and the risk that the degree of compliance with policies or procedures may deteriorate over time. Because of these limitations, there can be no assurance that any system of disclosure controls and procedures or internal control over financial reporting will be successful in preventing all errors or fraud or in making all material information known in a timely manner to the appropriate levels of management.

Changes in Internal Controls

No change in our internal control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act) occurred during our most recent fiscal quarter that has materially affected, or is likely to materially affect, our internal control over financial reporting.

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PART II

OTHER INFORMATION

Item 1.    Legal Proceedings.

From time to time, we are involved in legal proceedings and litigation arising in the ordinary course of business. As of the date of this filing, we are not a party to or threatened with any litigation or other legal proceeding that, in our opinion, could have a material adverse effect on our business, operating results or financial condition

Item 1A.    Risk Factors.

There have been no material changes in the Company's risk factors since those published in the Company's Annual Report on Form 10-K for the year ended December 31, 2010.

Item 2.    Unregistered Sales of Equity Securities and Use of Proceeds.

Issuer Purchases of Equity Securities

The following table summarizes repurchases of shares of the Company's Class A common stock during the three months ended June 30, 2011:

Period	Total Number of Shares Purchased	Average Price Paid Per Share		Total Number of Shares Purchased as Part of Publicly Announced Program	Approximate Dollar Value of Shares that May Yet Be Purchased Under the Program
April 1 through April 30, 2011	26	$	15.25	26	$	42,361
May 1 through May 31, 2011	264	14.62		262	38,533
June 1 through June 30, 2011	263	13.61		263	34,957
Total	553	$	14.17	551

On April 29, 2010, the Company announced that its Board of Directors had approved a stock repurchase program, authorizing the Company to repurchase in the aggregate up to $50,000 of its outstanding common stock. Purchases by the Company under this program were made from time to time at prevailing market prices in open market purchases. The purchases were funded from existing cash balances. Repurchased shares were retired and recorded as a reduction to additional paid-in capital. This program does not obligate the Company to acquire any particular amount of common stock. The timing, frequency and amount of repurchase activity will depend on a variety of factors such as levels of cash generation from operations, cash requirements for investment in the Company's business, current stock price, market conditions, compliance with financial covenants pursuant to our Credit Agreement, and other factors. The share repurchase program may be suspended, modified or discontinued at any time and has no set expiration date.

In addition, the Company withheld shares of our Class A common stock from holders of restricted stock awards to satisfy the holders' tax liabilities in connection with the lapse of restrictions on such shares. These shares were not part of a publicly announced repurchase program and were retired upon purchase.

Exchange of New Class A Units to Shares of Class A Common Stock

In connection with the closing of the IPO, we entered into an exchange agreement, dated as of October 3, 2007 (as amended, the “Exchange Agreement”), by and among us, D&P Acquisitions, and certain unitholders of D&P Acquisitions, through which we may issue shares of Class A common stock upon the exchange of the New Class A Units. Pursuant to the Exchange Agreement, in connection with any such exchange, a corresponding number of shares of our Class B common stock will be cancelled. Subject to the terms and notice requirements as set forth in an amendment to the Exchange Agreement, exchanges are scheduled to occur on March 5th, May 15th, August 15th and November 15th of each year.  

In May 2011, 255 New Class A Units were exchanged for 255 shares of Class A common stock and 255 shares of Class B common stock were cancelled. We filed a registration statement in order to permit the resale of these shares

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from time to time, subject to certain blackouts and other restrictions. We received no other consideration in connection with these exchanges. There were no notices to exchange received by any of our current executive officers or entities affiliated with Lovell Minnick Partners or Vestar Capital Partners with respect to the exchange that occurred in May 2011.

Item 3.    Defaults Upon Senior Securities.

None.

Item 4.    (Removed and Reserved).

Item 5.    Other Information.

None.

Item 6.    Exhibits.

Exhibit Number	Description
31.1	Certification of the Chief Executive Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
31.2	Certification of the Chief Financial Officer, pursuant to Rule 13a-14(a)/15d-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.
32.1	Certification of the Chief Executive Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.
32.2	Certification of the Chief Financial Officer, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002.

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SIGNATURES

     Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

		DUFF & PHELPS CORPORATION
		(Registrant)
Date:	July 27, 2011	/s/ Patrick M. Puzzuoli
		PATRICK M. PUZZUOLI
		Chief Financial Officer

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