FOR IMMEDIATE RELEASE
DUFF & PHELPS REPORTS
2011 THIRD QUARTER RESULTS,
AND DECLARES QUARTERLY DIVIDEND
HIGHLIGHTS:
| |
| • | Quarterly revenues of $94.4 million including reimbursable expenses (representing a $7.6 million or 8.7% increase over the corresponding prior year quarter) and $92.0 million excluding reimbursable expenses (representing a $7.6 million or 9.0% increase over the corresponding prior year quarter) |
| |
| • | Adjusted EBITDA(1) of $15.4 million, representing a 16.7% margin and a $3.2 million or 26.0% increase over the corresponding prior year quarter |
| |
| • | Adjusted Pro Forma Net Income(1) of $0.20 per share, representing a $0.05 or 33.3% increase over the corresponding prior year quarter |
| |
| • | Acquired MCR, an independent provider of insolvency, turnaround and restructuring services based in the United Kingdom, comprising 123 client service professionals, including 19 partners and directors (effective October 31, 2011). MCR generated £21.1 million or $33.9 million of revenues excluding reimbursable expenses for its fiscal year ended June 30, 2011 |
| |
| • | Repurchased 989,801 shares of Class A common stock during the quarter for an aggregate purchase price of $10.3 million or $10.39 per share, and 1,947,342 shares year-to-date through October 31, 2011 for $22.9 million or $11.76 per share, as part of our publicly announced program |
| |
| • | Amended senior secured revolving credit facility to provide for a $75.0 million five-year facility (effective October 13, 2011) |
| |
| • | Declares a quarterly dividend of $0.08 per share of Class A common stock |
NEW YORK—November 1, 2011—Duff & Phelps Corporation (NYSE: DUF), a leading independent financial advisory and investment banking firm, today announced its third quarter 2011 financial results and declared a quarterly dividend.
Results
For the quarter ended September 30, 2011, revenues excluding reimbursable expenses increased $7.6 million or 9.0% to $92.0 million, compared to $84.4 million for the corresponding prior year quarter. Adjusted EBITDA(1) for the quarter was $15.4 million, representing 16.7% of revenues excluding reimbursable expenses, compared to $12.2 million for the corresponding prior year quarter, representing 14.5% of revenues excluding reimbursable expenses. Adjusted EBITDA(1) excludes a $3.1 million restructuring charge incurred during the current period quarter related to office consolidations of underutilized space and workforce reductions of non-client service professionals. Net income attributable to Duff & Phelps Corporation was $4.0 million, or $0.14 per share of Class A common stock on a fully diluted basis, compared to $4.1 million, or $0.15 per share for the corresponding prior year quarter. Adjusted Pro Forma Net Income(1) was $7.4 million, or $0.20 per share on a fully exchanged, fully diluted basis, compared to $5.7 million, or $0.15 per share, for the corresponding prior year quarter. Adjusted Pro Forma Net Income(1) excludes a $0.04 per share restructuring charge incurred during the current period quarter related to office consolidations of underutilized space and workforce reductions of non-client service professionals.
For the nine months ended September 30, 2011, revenues excluding reimbursable expenses increased $2.6 million or 1.0% to $265.0 million, compared to $262.3 million for the corresponding prior year period. Adjusted EBITDA(1) for the period was $40.5 million, representing 15.3% of revenues excluding reimbursable expenses, compared to $42.4 million for the corresponding prior year period, representing 16.1% of revenues excluding reimbursable expenses. Adjusted EBITDA(1) excludes a $4.0 million restructuring charge incurred during the nine months ended September 30, 2011 related to office consolidations of underutilized space. Net income attributable to Duff & Phelps Corporation was $11.6 million, or $0.40 per share of Class A common stock on a fully diluted basis, compared to $10.9 million, or $0.40 for the corresponding prior year period. Adjusted Pro Forma Net Income(1) was $19.3 million, or $0.50 per share on a fully exchanged, fully diluted basis, compared to $20.2 million, or $0.52 per share, for the corresponding prior year period. Adjusted Pro Forma Net Income(1) excludes a $0.05 per share restructuring charge incurred during the nine months ended September 30, 2011 related to office consolidations of underutilized space and workforce reductions of non-client service professionals.
“We are pleased with the performance and momentum we are seeing in the business which we anticipate will continue and result in a strong Q4,” said Noah Gottdiener, chief executive officer. “Additionally, I am thrilled about the acquisition of MCR, which we announced yesterday, and the opportunity to capitalize on synergies throughout existing parts of the business.”
__________
| |
(1) | Adjusted EBITDA, Adjusted Pro Forma Net Income and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. See definitions and disclosures herein. |
Declaration of Quarterly Dividend
The Company also announced today that its board of directors has declared a quarterly dividend of $0.08 per share on its outstanding Class A common stock. The dividend is payable on December 2, 2011 to shareholders of record on November 22, 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.
Earnings Call Webcast
As previously announced, Duff & Phelps will host a conference call today, November 1, 2011, at 8:30 a.m. EDT to discuss the Company's financial results. Interested parties can access the webcast for this call through http://ir.duffandphelps.com/.
About Duff & Phelps
As a leading global provider of financial advisory and investment banking services, Duff & Phelps balances analytical skills, deep market insight and independence to help clients make sound decisions. The firm provides expertise in the areas of valuation, transactions, financial restructuring, alternative assets, disputes and taxation, with more than 1,000 employees serving clients from offices in North America, Europe and Asia. Investment banking services in the United States are provided by Duff & Phelps Securities, LLC. Member FINRA/SIPC. Investment banking services in the United Kingdom and Germany are provided by Duff & Phelps Securities Ltd. Duff & Phelps Securities Ltd. is authorized and regulated by the Financial Services Authority. Investment banking services in France are provided by Duff & Phelps SAS. For more information, visit www.duffandphelps.com. (NYSE: DUF)
Non-GAAP Financial Measures
Adjusted EBITDA, Adjusted Pro Forma Net Income, and Adjusted Pro Forma Net Income per share are non-GAAP financial measures. We believe that Adjusted EBITDA provides a relevant and useful alternative measure of our ongoing profitability and performance, when viewed in conjunction with GAAP measures, as it adjusts net income or loss attributable to Duff & Phelps Corporation for (a) net income or loss attributable to noncontrolling interest, (b) provision for income taxes, (c) interest expense and depreciation and amortization (a significant portion of which relates to debt and capital investments that have been incurred as the result of acquisitions and investments in stand-alone infrastructure which we do not expect to incur at the same levels in the future), (d) equity-based compensation associated with the Legacy Units of D&P Acquisitions, a significant portion of which is due to certain onetime grants associated with acquisitions prior to our IPO, and options to purchase shares of the Company's Class A common stock granted in connection with the IPO, (e) 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, as applicable, 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 | | Nine Months Ended |
| | September 30,
2011 | | September 30,
2010 | | September 30,
2011 | | September 30,
2010 |
| Net income attributable to Duff & Phelps Corporation | $ | 4,032 |
| | $ | 4,109 |
| | $ | 11,569 |
| | $ | 10,889 |
|
| Net income attributable to noncontrolling interest | 2,404 |
| | 3,088 |
| | 7,005 |
| | 8,494 |
|
| Provision for income taxes | 2,655 |
| | 2,010 |
| | 8,275 |
| | 8,166 |
|
| Other expense/(income), net | 26 |
| | (6 | ) | | 112 |
| | 317 |
|
| Depreciation and amortization | 2,878 |
| | 2,567 |
| | 7,934 |
| | 7,410 |
|
| Equity-based compensation associated with Legacy Units and IPO Options | (232 | ) | | 391 |
| | 241 |
| | 2,968 |
|
| Acquisition retention expenses | 221 |
| | — |
| | 600 |
| | — |
|
| Restructuring charges | 3,091 |
| | — |
| | 3,995 |
| | — |
|
| Merger and acquisition costs | 335 |
| | 76 |
| | 801 |
| | 397 |
|
| Charge from realignment of senior management | — |
| | — |
| | — |
| | 3,040 |
|
| Charge from impairment of certain intangible assets | — |
| | — |
| | — |
| | 674 |
|
| Adjusted EBITDA | $ | 15,410 |
| | $ | 12,235 |
| | $ | 40,532 |
| | $ | 42,355 |
|
Adjusted Pro Forma Net Income, as defined by Duff & Phelps and reconciled below, as applicable, 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 | | Nine Months Ended |
| | September 30,
2011 | | September 30,
2010 | | September 30,
2011 | | September 30,
2010 |
| Net income attributable to Duff & Phelps Corporation | $ | 4,032 |
| | $ | 4,109 |
| | $ | 11,569 |
| | $ | 10,889 |
|
Net income attributable to noncontrolling interest(a) | 2,404 |
| | 3,088 |
| | 7,005 |
| | 8,494 |
|
Equity-based compensation associated with Legacy Units and IPO Options(b) | (232 | ) | | 391 |
| | 241 |
| | 2,968 |
|
Acquisition retention expenses(c) | 221 |
| | — |
| | 600 |
| | — |
|
Restructuring charges(d) | 3,091 |
| | — |
| | 3,995 |
| | — |
|
Merger and acquisition costs(d) | 335 |
| | 76 |
| | 801 |
| | 397 |
|
Charge from realignment of senior management(d) | — |
| | — |
| | — |
| | 3,040 |
|
Adjustment to provision for income taxes(e) | (2,402 | ) | | (1,967 | ) | | (4,914 | ) | | (5,606 | ) |
| Adjusted Pro Forma Net Income, as defined | $ | 7,449 |
| | $ | 5,697 |
| | $ | 19,297 |
| | $ | 20,182 |
|
| | | | | | | | |
| Fully diluted weighted average shares of Class A common stock | 27,060 |
| | 24,954 |
| | 27,834 |
| | 25,741 |
|
| Weighted average New Class A Units outstanding | 10,813 |
| | 12,903 |
| | 10,962 |
| | 12,932 |
|
Pro forma fully exchanged, fully diluted shares outstanding(f) | 37,873 |
| | 37,857 |
| | 38,796 |
| | 38,673 |
|
| | | | | | | | |
| Adjusted Pro Forma Net Income per fully exchanged, fully diluted share outstanding | $ | 0.20 |
| | $ | 0.15 |
| | $ | 0.50 |
| | $ | 0.52 |
|
_________________________
| |
(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 40.6% and 40.6% for the full year, respectively, as applied to the nine months ended September 30, 2011, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. For the three months ended September 30, 2011 and 2010, the pro forma tax rates of 40.4% and 41.1% reflect a true-up adjustment, if any, relating to the six months ended June 30, 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. |
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.
Disclosure Regarding Forward-Looking Statements
Statements in this press release contain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934 (the “Exchange Act”), which reflect the Company's current views with respect to, among other things, future events and financial performance. The Company generally identifies forward looking statements by terminology such as “outlook,” “believes,” “expects,” “potential,” “continues,” “may,” “will,” “could,” “should,” “seeks,” “approximately,” “predicts,” “intends,” “plans,” “estimates,” “anticipates” or the negative version of those words or other comparable words. Any forward-looking statements contained in this discussion are based upon our historical performance and on our current plans, estimates and expectations. The inclusion of this forward-looking information should not be regarded as a representation by us, or any other person that the future plans, estimates or expectations contemplated by us will be achieved. Such forward-looking statements are subject to various risks and uncertainties and assumptions relating to our operations, financial results, financial condition, business prospects, growth strategy and liquidity. If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, our actual results may vary materially from those indicated in these statements. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements and the risk factors section that are included in our Annual Report on Form 10-K for the year ended December 31, 2010 and any subsequent filings of our Quarterly Reports on Form 10-Q. The forward-looking statements included in this press release are made only as of the date this press release was issued. The Company does not undertake any obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.
Investor Relations
Marty Dauer, +1-212-871-7700
investor.relations@duffandphelps.com
Media Relations
Alex Wolfe, +1-212-871-9087
alex.wolfe@duffandphelps.com
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30,
2011 | | September 30,
2010 | | September 30,
2011 | | September 30,
2010 |
| Revenues | $ | 92,028 |
| | $ | 84,427 |
| | $ | 264,960 |
| | $ | 262,333 |
|
| Reimbursable expenses | 2,395 |
| | 2,403 |
| | 7,361 |
| | 7,163 |
|
| Total revenues | 94,423 |
| | 86,830 |
| | 272,321 |
| | 269,496 |
|
| | | | | | | | |
| Direct client service costs | | | | | | | |
| Compensation and benefits (includes $4,316 and $3,430 of equity-based compensation for the three months ended September 30, 2011 and 2010, respectively, and $13,381 and $11,362 for the nine months ended September 30, 2011 and 2010, respectively) | 50,705 |
| | 48,369 |
| | 146,672 |
| | 147,382 |
|
| Other direct client service costs | 2,050 |
| | 1,342 |
| | 4,959 |
| | 5,211 |
|
| Acquisition retention expenses (includes $221 and $600 of equity-based compensation for the three and nine months ended September 30, 2011, respectively) | 221 |
| | — |
| | 600 |
| | — |
|
| Reimbursable expenses | 2,415 |
| | 2,330 |
| | 7,484 |
| | 7,223 |
|
| | 55,391 |
| | 52,041 |
| | 159,715 |
| | 159,816 |
|
| Operating expenses | | | | | | | |
| Selling, general and administrative (includes $819 and $1,004 of equity-based compensation for the three months ended September 30, 2011 and 2010, respectively, and $3,111 and $4,462 for the nine months ended September 30, 2011 and 2010, respectively) | 23,611 |
| | 22,945 |
| | 72,915 |
| | 73,333 |
|
| Depreciation and amortization | 2,878 |
| | 2,567 |
| | 7,934 |
| | 7,410 |
|
| Restructuring charges | 3,091 |
| | — |
| | 3,995 |
| | — |
|
| Merger and acquisition costs | 335 |
| | 76 |
| | 801 |
| | 397 |
|
| Charge from impairment of certain intangible assets | — |
| | — |
| | — |
| | 674 |
|
| | 29,915 |
| | 25,588 |
| | 85,645 |
| | 81,814 |
|
| | | | | | | | |
| Operating income | 9,117 |
| | 9,201 |
| | 26,961 |
| | 27,866 |
|
| | | | | | | | |
| Other expense/(income), net | | | | | | | |
| Interest income | (14 | ) | | (29 | ) | | (69 | ) | | (106 | ) |
| Interest expense | 30 |
| | 66 |
| | 178 |
| | 234 |
|
| Other expense/(income) | 10 |
| | (43 | ) | | 3 |
| | 189 |
|
| | 26 |
| | (6 | ) | | 112 |
| | 317 |
|
| | | | | | | | |
| Income before income taxes | 9,091 |
| | 9,207 |
| | 26,849 |
| | 27,549 |
|
| Provision for income taxes | 2,655 |
| | 2,010 |
| | 8,275 |
| | 8,166 |
|
| Net income | 6,436 |
| | 7,197 |
| | 18,574 |
| | 19,383 |
|
| Less: Net income attributable to noncontrolling interest | 2,404 |
| | 3,088 |
| | 7,005 |
| | 8,494 |
|
| Net income attributable to Duff & Phelps Corporation | $ | 4,032 |
| | $ | 4,109 |
| | $ | 11,569 |
| | $ | 10,889 |
|
| | | | | | | | |
| Weighted average shares of Class A common stock outstanding | | | | | | | |
| Basic | 26,945 |
| | 24,873 |
| | 27,050 |
| | 24,972 |
|
| Diluted | 27,060 |
| | 24,954 |
| | 27,834 |
| | 25,741 |
|
| | | | | | | | |
| Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation | | | | | | | |
| Basic | $ | 0.14 |
| | $ | 0.15 |
| | $ | 0.41 |
| | $ | 0.41 |
|
| Diluted | $ | 0.14 |
| | $ | 0.15 |
| | $ | 0.40 |
| | $ | 0.40 |
|
| | | | | | | | |
| Cash dividends declared per common share | $ | 0.08 |
| | $ | 0.06 |
| | $ | 0.24 |
| | $ | 0.17 |
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
QUARTERLY REVENUES BY SEGMENT
(In thousands)
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2010 | | 2011 | | Variance Q3 2011 vs Q3 2010 | | Variance YTD 2011 vs YTD 2010 |
| | Q1 | | Q2 | | Q3 | | Q4 | | Total | | Q1 | | Q2 | | Q3 | | Total | | Dollar | | Percent | | Dollar | | Percent |
| Financial Advisory | | | | | | | | | | | | | | | | | | | | | | | | | |
| Valuation Advisory | $ | 38,178 |
| | $ | 35,712 |
| | $ | 34,013 |
| | $ | 38,992 |
| | $ | 146,895 |
| | $ | 37,614 |
| | $ | 32,604 |
| | $ | 33,887 |
| | $ | 104,105 |
| | $ | (126 | ) | | (0.4 | )% | | $ | (3,798 | ) | | (3.5 | )% |
| Tax Services | 9,447 |
| | 12,089 |
| | 11,157 |
| | 10,631 |
| | 43,324 |
| | 7,547 |
| | 15,128 |
| | 9,572 |
| | 32,247 |
| | (1,585 | ) | | (14.2 | )% | | (446 | ) | | (1.4 | )% |
| Dispute & Legal Management Consulting | 9,415 |
| | 9,316 |
| | 10,571 |
| | 11,760 |
| | 41,062 |
| | 13,436 |
| | 13,005 |
| | 18,319 |
| | 44,760 |
| | 7,748 |
| | 73.3 | % | | 15,458 |
| | 52.8 | % |
| | 57,040 |
| | 57,117 |
| | 55,741 |
| | 61,383 |
| | 231,281 |
| | 58,597 |
| | 60,737 |
| | 61,778 |
| | 181,112 |
| | 6,037 |
| | 10.8 | % | | 11,214 |
| | 6.6 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Alternative Asset Advisory | | | | | | | | | | | | | | | | | | | | | | | | | |
| Portfolio Valuation | 5,482 |
| | 4,642 |
| | 4,455 |
| | 5,216 |
| | 19,795 |
| | 6,519 |
| | 6,220 |
| | 6,730 |
| | 19,469 |
| | 2,275 |
| | 51.1 | % | | 4,890 |
| | 33.5 | % |
| Complex Asset Solutions | 4,126 |
| | 3,355 |
| | 2,481 |
| | 3,512 |
| | 13,474 |
| | 5,321 |
| | 4,125 |
| | 3,998 |
| | 13,444 |
| | 1,517 |
| | 61.1 | % | | 3,482 |
| | 35.0 | % |
| Due Diligence | 2,170 |
| | 2,439 |
| | 3,072 |
| | 3,085 |
| | 10,766 |
| | 1,645 |
| | 4,070 |
| | 2,643 |
| | 8,358 |
| | (429 | ) | | (14.0 | )% | | 677 |
| | 8.8 | % |
| | 11,778 |
| | 10,436 |
| | 10,008 |
| | 11,813 |
| | 44,035 |
| | 13,485 |
| | 14,415 |
| | 13,371 |
| | 41,271 |
| | 3,363 |
| | 33.6 | % | | 9,049 |
| | 28.1 | % |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Investment Banking | | | | | | | | | | | | | | | | | | | | | | | | | |
| M&A Advisory | 3,682 |
| | 3,144 |
| | 4,604 |
| | 11,289 |
| | 22,719 |
| | 1,450 |
| | 1,853 |
| | 5,741 |
| | 9,044 |
| | 1,137 |
| | 24.7 | % | | (2,386 | ) | | (20.9 | )% |
| Transaction Opinions | 6,823 |
| | 6,041 |
| | 6,711 |
| | 9,328 |
| | 28,903 |
| | 8,231 |
| | 7,266 |
| | 7,466 |
| | 22,963 |
| | 755 |
| | 11.3 | % | | 3,388 |
| | 17.3 | % |
| Global Restructuring Advisory | 9,841 |
| | 12,004 |
| | 7,363 |
| | 9,400 |
| | 38,608 |
| | 3,283 |
| | 3,615 |
| | 3,672 |
| | 10,570 |
| | (3,691 | ) | | (50.1 | )% | | (18,638 | ) | | (63.8 | )% |
| | 20,346 |
| | 21,189 |
| | 18,678 |
| | 30,017 |
| | 90,230 |
| | 12,964 |
| | 12,734 |
| | 16,879 |
| | 42,577 |
| | (1,799 | ) | | (9.6 | )% | | (17,636 | ) | | (29.3 | )% |
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| Total Revenues | $ | 89,164 |
| | $ | 88,742 |
| | $ | 84,427 |
| | $ | 103,213 |
| | $ | 365,546 |
| | $ | 85,046 |
| | $ | 87,886 |
| | $ | 92,028 |
| | $ | 264,960 |
| | $ | 7,601 |
| | 9.0 | % | | $ | 2,627 |
| | 1.0 | % |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT
(In thousands, except headcount data)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, 2011 | | September 30, 2010 | | September 30, 2011 | | September 30, 2010 |
| Financial Advisory | | | | | | | |
| Revenues (excluding reimbursables) | $ | 61,778 |
| | $ | 55,741 |
| | $ | 181,112 |
| | $ | 169,898 |
|
| Segment operating income | $ | 10,995 |
| | $ | 6,568 |
| | $ | 30,364 |
| | $ | 22,205 |
|
| Segment operating income margin | 17.8 | % | | 11.8 | % | | 16.8 | % | | 13.1 | % |
| | | | | | | | |
| Alternative Asset Advisory | | | | | | | |
| Revenues (excluding reimbursables) | $ | 13,371 |
| | $ | 10,008 |
| | $ | 41,271 |
| | $ | 32,222 |
|
| Segment operating income | $ | 2,821 |
| | $ | 1,929 |
| | $ | 9,345 |
| | $ | 6,438 |
|
| Segment operating income margin | 21.1 | % | | 19.3 | % | | 22.6 | % | | 20.0 | % |
| | | | | | | | |
| Investment Banking | | | | | | | |
| Revenues (excluding reimbursables) | $ | 16,879 |
| | $ | 18,678 |
| | $ | 42,577 |
| | $ | 60,213 |
|
| Segment operating income | $ | 1,614 |
| | $ | 3,665 |
| | $ | 946 |
| | $ | 13,772 |
|
| Segment operating income margin | 9.6 | % | | 19.6 | % | | 2.2 | % | | 22.9 | % |
| |
| | | | | | |
| Total | | | | | | | |
| Revenues (excluding reimbursables) | $ | 92,028 |
| | $ | 84,427 |
| | $ | 264,960 |
| | $ | 262,333 |
|
| | | | | | | | |
| Segment operating income | $ | 15,430 |
| | $ | 12,162 |
| | $ | 40,655 |
| | $ | 42,415 |
|
| Net client reimbursable expenses | (20 | ) | | 73 |
| | (123 | ) | | (60 | ) |
| Equity-based compensation from Legacy Units and IPO Options | 232 |
| | (391 | ) | | (241 | ) | | (2,968 | ) |
| Depreciation and amortization | (2,878 | ) | | (2,567 | ) | | (7,934 | ) | | (7,410 | ) |
| Acquisition retention expenses | (221 | ) | | — |
| | (600 | ) | | — |
|
| Restructuring charges | (3,091 | ) | | — |
| | (3,995 | ) | | — |
|
| Merger and acquisition costs | (335 | ) | | (76 | ) | | (801 | ) | | (397 | ) |
| Charge from realignment of senior management | — |
| | — |
| | — |
| | (3,040 | ) |
| Charge from impairment of certain intangible assets | — |
| | — |
| | — |
| | (674 | ) |
| Operating income | $ | 9,117 |
| | $ | 9,201 |
| | $ | 26,961 |
| | $ | 27,866 |
|
| | | | | | | | |
| |
| | | | | | | | |
| | | | | | | | |
| Average Client Service Professionals | | | | | | | |
| Financial Advisory | 576 |
| | 574 |
| | 572 |
| | 604 |
|
| Alternative Asset Advisory | 98 |
| | 79 |
| | 93 |
| | 85 |
|
| Investment Banking | 147 |
| | 124 |
| | 136 |
| | 128 |
|
| Total | 821 |
| | 777 |
| | 801 |
| | 817 |
|
| | | | | | | | |
| End of Period Client Service Professionals | | | | | | | |
| Financial Advisory | 580 |
| | 583 |
| | 580 |
| | 583 |
|
| Alternative Asset Advisory | 100 |
| | 78 |
| | 100 |
| | 78 |
|
| Investment Banking | 149 |
| | 128 |
| | 149 |
| | 128 |
|
| Total | 829 |
| | 789 |
| | 829 |
| | 789 |
|
| | | | | | | | |
| Revenue per Client Service Professional | | | | | | | |
| Financial Advisory | $ | 107 |
| | $ | 97 |
| | $ | 317 |
| | $ | 281 |
|
| Alternative Asset Advisory | $ | 136 |
| | $ | 127 |
| | $ | 444 |
| | $ | 379 |
|
| Investment Banking | $ | 115 |
| | $ | 151 |
| | $ | 313 |
| | $ | 470 |
|
| Total | $ | 112 |
| | $ | 109 |
| | $ | 331 |
| | $ | 321 |
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
RESULTS OF OPERATIONS BY SEGMENT - CONTINUED
(In thousands, except utilization, rate-per-hour and headcount data)
(Unaudited)
|
| | | | | | | | | | | | | | | |
| | Three Months Ended | | Nine Months Ended |
| | September 30, 2011 | | September 30, 2010 | | September 30, 2011 | | September 30, 2010 |
Utilization(1) | | | | | | | |
| Financial Advisory | 71.2 | % | | 65.9 | % | | 71.3 | % | | 64.6 | % |
| Alternative Asset Advisory | 58.6 | % | | 63.3 | % | | 60.6 | % | | 59.9 | % |
| | | | | | | | |
Rate-Per-Hour(2) | | | | | | | |
| Financial Advisory | $ | 338 |
| | $ | 344 |
| | $ | 338 |
| | $ | 343 |
|
| Alternative Asset Advisory | $ | 501 |
| | $ | 478 |
| | $ | 515 |
| | $ | 485 |
|
| | | | | | | | |
| |
| | | | | | | | |
| | | | | | | | |
| Revenues (excluding reimbursables) | | | | | | | |
| Financial Advisory | $ | 61,778 |
| | $ | 55,741 |
| | $ | 181,112 |
| | $ | 169,898 |
|
| Alternative Asset Advisory | 13,371 |
| | 10,008 |
| | 41,271 |
| | 32,222 |
|
| Investment Banking | 16,879 |
| | 18,678 |
| | 42,577 |
| | 60,213 |
|
| Total | $ | 92,028 |
| | $ | 84,427 |
| | $ | 264,960 |
| | $ | 262,333 |
|
| | | | | | | | |
| Average Managing Directors | | | | | | | |
| Financial Advisory | 91 |
| | 97 |
| | 92 |
| | 97 |
|
| Alternative Asset Advisory | 25 |
| | 24 |
| | 25 |
| | 24 |
|
| Investment Banking | 48 |
| | 40 |
| | 43 |
| | 41 |
|
| Total | 164 |
| | 161 |
| | 160 |
| | 162 |
|
| | | | | | | | |
| End of Period Managing Directors | | | | | | | |
| Financial Advisory | 90 |
| | 95 |
| | 90 |
| | 95 |
|
| Alternative Asset Advisory | 25 |
| | 23 |
| | 25 |
| | 23 |
|
| Investment Banking | 50 |
| | 40 |
| | 50 |
| | 40 |
|
| Total | 165 |
| | 158 |
| | 165 |
| | 158 |
|
| | | | | | | | |
| Revenue per Managing Director | | | | | | | |
| Financial Advisory | $ | 679 |
| | $ | 575 |
| | $ | 1,969 |
| | $ | 1,752 |
|
| Alternative Asset Advisory | $ | 535 |
| | $ | 417 |
| | $ | 1,651 |
| | $ | 1,343 |
|
| Investment Banking | $ | 352 |
| | $ | 467 |
| | $ | 990 |
| | $ | 1,469 |
|
| Total | $ | 561 |
| | $ | 524 |
| | $ | 1,656 |
| | $ | 1,619 |
|
_____________________
| |
(1) | The utilization rate for any given period is calculated by dividing the number of hours incurred by client service professionals who worked on client assignments (including internal projects for the Company) during the period by the total available working hours for all of such client service professionals during the same period, assuming a 40 hour work week, less paid holidays and vacation days. Utilization excludes client service professionals associated with certain property tax services due to the nature of the work performed and client service professionals from certain acquisitions prior to their transition to the Company's financial system. |
| |
(2) | Average billing rate-per-hour is calculated by dividing revenues for the period by the number of hours worked on client assignments (including internal projects for the Company) during the same period. Financial Advisory revenues used to calculate rate-per-hour exclude revenues associated with certain property tax engagements. The average billing rate excludes certain hours from our acquisitions prior to their transition to the Company's financial system. |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
SUMMARY OF CLIENT SERVICE PROFESSIONALS
(Unaudited)
|
| | | | | | | | | | | | | | | | | | | | | | | | | | |
| | 2010 | | 2011 |
| | Q1 | | Q2 | | Q3 | | Q4 | | YTD | | Q1 | | Q2 | | Q3 | | YTD |
| Average Client Service Professionals | | | | | | | | | | | | | | | | | |
| Financial Advisory | 640 |
| | 594 |
| | 574 |
| | 572 |
| | 596 |
| | 574 |
| | 562 |
| | 576 |
| | 572 |
|
| Alternative Asset Advisory | 92 |
| | 85 |
| | 79 |
| | 78 |
| | 83 |
| | 87 |
| | 94 |
| | 98 |
| | 93 |
|
| Investment Banking | 131 |
| | 127 |
| | 124 |
| | 129 |
| | 128 |
| | 129 |
| | 128 |
| | 147 |
| | 136 |
|
| | 863 |
| | 806 |
| | 777 |
| | 779 |
| | 807 |
| | 790 |
| | 784 |
| | 821 |
| | 801 |
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| End of Period Client Service Professionals | | | | | | | | | | | | | | | | | |
| Financial Advisory | 614 |
| | 576 |
| | 583 |
| | 572 |
| | | | 571 |
| | 552 |
| | 580 |
| | |
| Alternative Asset Advisory | 88 |
| | 81 |
| | 78 |
| | 85 |
| | | | 90 |
| | 97 |
| | 100 |
| | |
| Investment Banking | 128 |
| | 125 |
| | 128 |
| | 128 |
| | | | 127 |
| | 131 |
| | 149 |
| | |
| | 830 |
| | 782 |
| | 789 |
| | 785 |
| | | | 788 |
| | 780 |
| | 829 |
| | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| | 2010 | | 2011 |
| | Q1 | | Q2 | | Q3 | | Q4 | | YTD | | Q1 | | Q2 | | Q3 | | YTD |
| Average Managing Directors | | | | | | | | | | | | | | | | | |
| Financial Advisory | 98 |
| | 97 |
| | 97 |
| | 94 |
| | 96 |
| | 94 |
| | 93 |
| | 91 |
| | 92 |
|
| Alternative Asset Advisory | 25 |
| | 25 |
| | 24 |
| | 24 |
| | 24 |
| | 26 |
| | 25 |
| | 25 |
| | 25 |
|
| Investment Banking | 40 |
| | 41 |
| | 40 |
| | 39 |
| | 40 |
| | 39 |
| | 41 |
| | 48 |
| | 43 |
|
| | 163 |
| | 163 |
| | 161 |
| | 157 |
| | 160 |
| | 159 |
| | 159 |
| | 164 |
| | 160 |
|
| | | | | | | | | | | | | | | | | | |
| | | | | | | | | | | | | | | | | | |
| End of Period Managing Directors | | | | | | | | | | | | | | | | | |
| Financial Advisory | 94 |
| | 99 |
| | 95 |
| | 93 |
| | | | 94 |
| | 91 |
| | 90 |
| | |
| Alternative Asset Advisory | 25 |
| | 24 |
| | 23 |
| | 26 |
| | | | 26 |
| | 25 |
| | 25 |
| | |
| Investment Banking | 39 |
| | 40 |
| | 40 |
| | 38 |
| | | | 39 |
| | 43 |
| | 50 |
| | |
| | 158 |
| | 163 |
| | 158 |
| | 157 |
| | | | 159 |
| | 159 |
| | 165 |
| | |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | |
| | September 30,
2011 | | December 31,
2010 |
| ASSETS |
| Current assets | | | |
| Cash and cash equivalents | $ | 77,594 |
| | $ | 113,328 |
|
| Accounts receivable (net of allowance for doubtful accounts of $1,745 and $1,347 at September 30, 2011 and December 31, 2010, respectively) | 63,760 |
| | 60,358 |
|
| Unbilled services | 38,462 |
| | 23,101 |
|
| Prepaid expenses and other current assets | 6,716 |
| | 7,479 |
|
| Net deferred income taxes, current | 2,467 |
| | 2,555 |
|
| Total current assets | 188,999 |
| | 206,821 |
|
| | | | |
| Property and equipment (net of accumulated depreciation of $30,969 and $26,375 at September 30, 2011 and December 31, 2010, respectively) | 32,276 |
| | 29,250 |
|
| Goodwill | 146,650 |
| | 139,170 |
|
| Intangible assets (net of accumulated amortization of $23,959 and $20,656 at September 30, 2011 and December 31, 2010, respectively) | 29,112 |
| | 30,407 |
|
| Other assets | 4,360 |
| | 2,638 |
|
| Investments related to deferred compensation plan | 22,598 |
| | 23,151 |
|
| Net deferred income taxes, non-current | 113,087 |
| | 116,789 |
|
| Total non-current assets | 348,083 |
| | 341,405 |
|
| Total assets | $ | 537,082 |
| | $ | 548,226 |
|
| | | | |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities | | | |
| Accounts payable | $ | 2,470 |
| | $ | 2,397 |
|
| Accrued expenses | 8,463 |
| | 11,254 |
|
| Accrued compensation and benefits | 20,641 |
| | 39,875 |
|
| Liability related to deferred compensation plan, current portion | 503 |
| | 1,314 |
|
| Deferred revenues | 4,424 |
| | 2,427 |
|
| Other current liabilities | — |
| | 430 |
|
| Due to noncontrolling unitholders, current portion | 5,642 |
| | 5,640 |
|
| Total current liabilities | 42,143 |
| | 63,337 |
|
| | | | |
| Liability related to deferred compensation plan, less current portion | 21,851 |
| | 21,764 |
|
| Other long-term liabilities | 19,714 |
| | 16,676 |
|
| Due to noncontrolling unitholders, less current portion | 106,008 |
| | 103,885 |
|
| Total non-current liabilities | 147,573 |
| | 142,325 |
|
| Total liabilities | 189,716 |
| | 205,662 |
|
| | | | |
| Commitments and contingencies |
|
| |
|
|
| | | | |
| Stockholders' equity | | | |
| Preferred stock (50,000 shares authorized; zero issued and outstanding) | — |
| | — |
|
| Class A common stock, par value $0.01 per share (100,000 shares authorized; 30,546 and 30,166 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively) | 305 |
| | 302 |
|
| Class B common stock, par value $0.0001 per share (50,000 shares authorized; 10,811 and 11,151 shares issued and outstanding at September 30, 2011 and December 31, 2010, respectively) | 1 |
| | 1 |
|
| Additional paid-in capital | 234,185 |
| | 232,644 |
|
| Accumulated other comprehensive income | 1,130 |
| | 1,400 |
|
| Retained earnings | 21,053 |
| | 16,923 |
|
| Total stockholders' equity of Duff & Phelps Corporation | 256,674 |
| | 251,270 |
|
| Noncontrolling interest | 90,692 |
| | 91,294 |
|
| Total stockholders' equity | 347,366 |
| | 342,564 |
|
| Total liabilities and stockholders' equity | $ | 537,082 |
| | $ | 548,226 |
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(In thousands)
(Unaudited)
|
| | | | | | | |
| | Nine Months Ended |
| | September 30,
2011 | | September 30,
2010 |
| | | | |
| Cash flows from operating activities: | | | |
| Net income | $ | 18,574 |
| | $ | 19,383 |
|
| Adjustments to reconcile net income to net cash provided by/(used in) operating activities: | | | |
| Depreciation and amortization | 7,934 |
| | 7,410 |
|
| Equity-based compensation | 17,092 |
| | 15,824 |
|
| Bad debt expense | 1,920 |
| | 1,141 |
|
| Net deferred income taxes | 5,919 |
| | 4,741 |
|
| Other | 2,448 |
| | 104 |
|
| Changes in assets and liabilities providing/(using) cash: | | | |
| Accounts receivable | (5,236 | ) | | 4,765 |
|
| Unbilled services | (15,416 | ) | | (4,544 | ) |
| Prepaid expenses and other current assets | 1,777 |
| | (31 | ) |
| Other assets | 2,453 |
| | (597 | ) |
| Accounts payable and accrued expenses | (4,674 | ) | | (3,506 | ) |
| Accrued compensation and benefits | (18,201 | ) | | (14,507 | ) |
| Deferred revenues | 1,994 |
| | (113 | ) |
| Other liabilities | (1,172 | ) | | 395 |
|
| Net cash provided by/(used in) operating activities | 15,412 |
| | 30,465 |
|
| | | | |
| Cash flows from investing activities: | | | |
| Purchases of property and equipment | (6,410 | ) | | (4,998 | ) |
| Business acquisitions, net of cash acquired | (5,891 | ) | | (11,807 | ) |
| Purchases of investments | (3,500 | ) | | (3,175 | ) |
| Net cash used in investing activities | (15,801 | ) | | (19,980 | ) |
| | | | |
| Cash flows from financing activities: | | | |
| Repurchases of Class A common stock | (24,114 | ) | | (8,608 | ) |
| Dividends | (7,502 | ) | | (5,480 | ) |
| Distributions and other payments to noncontrolling unitholders | (4,306 | ) | | (4,828 | ) |
| Proceeds from exercises of IPO Options | 267 |
| | 82 |
|
| Other | — |
| | (3 | ) |
| Net cash used in financing activities | (35,655 | ) | | (18,837 | ) |
| | | | |
| Effect of exchange rate on cash and cash equivalents | 310 |
| | (161 | ) |
| | | | |
| Net decrease in cash and cash equivalents | (35,734 | ) | | (8,513 | ) |
| Cash and cash equivalents at beginning of period | 113,328 |
| | 107,311 |
|
| Cash and cash equivalents at end of period | $ | 77,594 |
| | $ | 98,798 |
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | |
| | Three Months Ended September 30, 2011 |
| | As Reported | | Adjustments | | Adjusted Pro Forma |
| Revenues | $ | 92,028 |
| | $ | — |
| | $ | 92,028 |
|
| Reimbursable expenses | 2,395 |
| | — |
| | 2,395 |
|
| Total revenues | 94,423 |
| | — |
| | 94,423 |
|
| | | | | | |
| Direct client service costs | | | | | |
| Compensation and benefits | 50,705 |
| | 419 |
| (a) | 51,124 |
|
| Other direct client service costs | 2,050 |
| | — |
| | 2,050 |
|
| Acquisition retention expenses | 221 |
| | (221 | ) | (b) | — |
|
| Reimbursable expenses | 2,415 |
| | — |
| | 2,415 |
|
| | 55,391 |
| | 198 |
| | 55,589 |
|
| Operating expenses | | | | | |
| Selling, general and administrative | 23,611 |
| | (187 | ) | (a) | 23,424 |
|
| Depreciation and amortization | 2,878 |
| | — |
| | 2,878 |
|
| Restructuring charges | 3,091 |
| | (3,091 | ) | (c) | — |
|
| Merger and acquisition costs | 335 |
| | (335 | ) | (c) | — |
|
| | 29,915 |
| | (3,613 | ) | | 26,302 |
|
| | | | | | |
| Operating income | 9,117 |
| | 3,415 |
| | 12,532 |
|
| | | | | | |
| Other expense/(income), net | | | | | |
| Interest income | (14 | ) | | — |
| | (14 | ) |
| Interest expense | 30 |
| | — |
| | 30 |
|
| Other expense/(income) | 10 |
| | — |
| | 10 |
|
| | 26 |
| | — |
| | 26 |
|
| | | | | | |
| Income before income taxes | 9,091 |
| | 3,415 |
| | 12,506 |
|
| Provision for income taxes | 2,655 |
| | 2,402 |
| (d) | 5,057 |
|
| Net income | 6,436 |
| | 1,013 |
| | 7,449 |
|
| Less: Net income attributable to noncontrolling interest | 2,404 |
| | (2,404 | ) | (e) | — |
|
| Net income attributable to Duff & Phelps Corporation | $ | 4,032 |
| | $ | 3,417 |
| | $ | 7,449 |
|
| | | | | | |
| | | | | | |
| Pro forma fully exchanged, fully diluted shares outstanding | | (f) | 37,873 |
|
| | | | | | |
| Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | | | $ | 0.20 |
|
_______________________
| |
| (a) | Represents elimination of equity-based compensation associated with Legacy Units and IPO Options. |
| |
| (b) | 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 acquisitions. |
| |
| (c) | Represents elimination of restructuring charges or merger and acquisitions costs, respectively. |
| |
| (d) | Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, as applied to the three months ended September 30, 2011, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. For the three months ended September 30, 2011, the pro forma tax rate of 40.4% reflects a true-up adjustment, if any, relating to the six months ended June 30, 2011. Assumes (i) full exchange of existing unitholders' partnership units and Class B common stock of the Company into Class A common stock of the Company, (ii) the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at prevailing corporate rates and (iii) all deferred tax assets related to foreign operations are fully realizable. |
| |
| (e) | 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. |
| |
| (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. |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | |
| | Three Months Ended September 30, 2010 |
| | As Reported | | Adjustments | | Adjusted Pro Forma |
| Revenues | $ | 84,427 |
| | $ | — |
| | $ | 84,427 |
|
| Reimbursable expenses | 2,403 |
| | — |
| | 2,403 |
|
| Total revenues | 86,830 |
| | — |
| | 86,830 |
|
| | | | | | |
| Direct client service costs | | | | | |
| Compensation and benefits | 48,369 |
| | 84 |
| (a) | 48,453 |
|
| Other direct client service costs | 1,342 |
| | — |
| | 1,342 |
|
| Reimbursable expenses | 2,330 |
| | — |
| | 2,330 |
|
| | 52,041 |
| | 84 |
| | 52,125 |
|
| | | | | | |
| Operating expenses | | | | | |
| Selling, general and administrative | 22,945 |
| | (475 | ) | (a) | 22,470 |
|
| Depreciation and amortization | 2,567 |
| | — |
| | 2,567 |
|
| Merger and acquisition costs | 76 |
| | (76 | ) | (b) | — |
|
| | 25,588 |
| | (551 | ) | | 25,037 |
|
| | | | | | |
| Operating income | 9,201 |
| | 467 |
| | 9,668 |
|
| | | | | | |
| Other expense/(income), net | | | | | |
| Interest income | (29 | ) | | — |
| | (29 | ) |
| Interest expense | 66 |
| | — |
| | 66 |
|
| Other expense/(income) | (43 | ) | | — |
| | (43 | ) |
| | (6 | ) | | — |
| | (6 | ) |
| | | | | | |
| Income before income taxes | 9,207 |
| | 467 |
| | 9,674 |
|
| Provision for income taxes | 2,010 |
| | 1,967 |
| (c) | 3,977 |
|
| Net income | 7,197 |
| | (1,500 | ) | | 5,697 |
|
| Less: Net income attributable to noncontrolling interest | 3,088 |
| | (3,088 | ) | (d) | — |
|
| Net income attributable to Duff & Phelps Corporation | $ | 4,109 |
| | $ | 1,588 |
| | $ | 5,697 |
|
| | | | | | |
| | | | | | |
| Pro forma fully exchanged, fully diluted shares outstanding | | (e) | 37,857 |
|
| | | | | | |
| Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | | | $ | 0.15 |
|
_______________________
| |
| (a) | Represents elimination of equity-based compensation associated with Legacy Units and IPO Options. |
| |
| (b) | Represents elimination of merger and acquisitions costs. |
| |
| (c) | Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, as applied to the three months ended September 30, 2010, which includes a provision for U.S. federal income taxes and assumes the highest statutory rates apportioned to each state, local and/or foreign jurisdiction. For the three months ended September 30, 2010, the pro forma tax rate of approximately 41.1% reflects a true-up adjustment relating to the six months ended June 30, 2010. Assumes (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. |
| |
| (d) | Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company. |
| |
| (e) | Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and the dilutive effect of Ongoing RSAs. The Company believes that IPO Options would not be considered dilutive when applying the treasury method. |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | |
| | Nine Months Ended September 30, 2011 |
| | As Reported | | Adjustments | | Adjusted Pro Forma |
| Revenues | $ | 264,960 |
| | $ | — |
| | $ | 264,960 |
|
| Reimbursable expenses | 7,361 |
| | — |
| | 7,361 |
|
| Total revenues | 272,321 |
| | — |
| | 272,321 |
|
| | | | | | — |
|
| Direct client service costs | | | | | — |
|
| Compensation and benefits | 146,672 |
| | 241 |
| (a) | 146,913 |
|
| Other direct client service costs | 4,959 |
| | — |
| | 4,959 |
|
| Acquisition retention expenses | 600 |
| | (600 | ) | (b) | — |
|
| Reimbursable expenses | 7,484 |
| | — |
| | 7,484 |
|
| | 159,715 |
| | (359 | ) | | 159,356 |
|
| Operating expenses | | | | | — |
|
| Selling, general and administrative | 72,915 |
| | (482 | ) | (a) | 72,433 |
|
| Depreciation and amortization | 7,934 |
| | — |
| | 7,934 |
|
| Restructuring charges | 3,995 |
| | (3,995 | ) | (c) | — |
|
| Merger and acquisition costs | 801 |
| | (801 | ) | (c) | — |
|
| | 85,645 |
| | (5,278 | ) | | 80,367 |
|
| | | | | | — |
|
| Operating income | 26,961 |
| | 5,637 |
| | 32,598 |
|
| | | | | | — |
|
| Other expense/(income), net | | | | | — |
|
| Interest income | (69 | ) | | — |
| | (69 | ) |
| Interest expense | 178 |
| | — |
| | 178 |
|
| Other expense/(income) | 3 |
| | — |
| | 3 |
|
| | 112 |
| | — |
| | 112 |
|
| | | | | | — |
|
| Income before income taxes | 26,849 |
| | 5,637 |
| | 32,486 |
|
| Provision for income taxes | 8,275 |
| | 4,914 |
| (d) | 13,189 |
|
| Net income | 18,574 |
| | 723 |
| | 19,297 |
|
| Less: Net income attributable to noncontrolling interest | 7,005 |
| | (7,005 | ) | (e) | — |
|
| Net income attributable to Duff & Phelps Corporation | $ | 11,569 |
| | $ | 7,728 |
| | $ | 19,297 |
|
| | | | | | |
| | | | | | |
| Pro forma fully exchanged, fully diluted shares outstanding | | (f) | 38,796 |
|
| | | | | | |
| Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | | | $ | 0.50 |
|
_______________________
| |
| (a) | Represents elimination of equity-based compensation associated with Legacy Units and IPO Options. |
| |
| (b) | 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 acquisitions. |
| |
| (c) | Represents elimination of restructuring charges or merger and acquisitions costs, respectively. |
| |
| (d) | Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, as applied to the nine months ended September 30, 2011, 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. |
| |
| (e) | 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. |
| |
| (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. |
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
ADJUSTED PRO FORMA CONSOLIDATED STATEMENT OF INCOME
(In thousands, except per share amounts)
(Unaudited)
|
| | | | | | | | | | | |
| | Nine Months Ended September 30, 2010 |
| | As Reported | | Adjustments | | Adjusted Pro Forma |
| Revenues | $ | 262,333 |
| | $ | — |
| | $ | 262,333 |
|
| Reimbursable expenses | 7,163 |
| | — |
| | 7,163 |
|
| Total revenues | 269,496 |
| | — |
| | 269,496 |
|
| | | | | | |
| Direct client service costs | | | | | |
| Compensation and benefits | 147,382 |
| | (1,690 | ) | (a) | 145,692 |
|
| Other direct client service costs | 5,211 |
| | — |
| | 5,211 |
|
| Reimbursable expenses | 7,223 |
| | — |
| | 7,223 |
|
| | 159,816 |
| | (1,690 | ) | | 158,126 |
|
| Operating expenses | | | | | |
| Selling, general and administrative | 73,333 |
| | (4,318 | ) | (a) | 69,015 |
|
| Depreciation and amortization | 7,410 |
| | — |
| | 7,410 |
|
| Merger and acquisition costs | 397 |
| | (397 | ) | (b) | — |
|
| Charge from impairment of certain intangible assets | 674 |
| | — |
| | 674 |
|
| | 81,814 |
| | (4,715 | ) | | 77,099 |
|
| | | | | | |
| Operating income | 27,866 |
| | 6,405 |
| | 34,271 |
|
| | | | | | |
| Other expense/(income), net | | | | | |
| Interest income | (106 | ) | | — |
| | (106 | ) |
| Interest expense | 234 |
| | — |
| | 234 |
|
| Other expense/(income) | 189 |
| | — |
| | 189 |
|
| | 317 |
| | — |
| | 317 |
|
| | | | | | |
| Income before income taxes | 27,549 |
| | 6,405 |
| | 33,954 |
|
| Provision for income taxes | 8,166 |
| | 5,606 |
| (c) | 13,772 |
|
| Net income | 19,383 |
| | 799 |
| | 20,182 |
|
| Less: Net income attributable to noncontrolling interest | 8,494 |
| | (8,494 | ) | (d) | — |
|
| Net income attributable to Duff & Phelps Corporation | $ | 10,889 |
| | $ | 9,293 |
| | $ | 20,182 |
|
| | | | | | |
| | | | | | |
| Pro forma fully exchanged, fully diluted shares outstanding | | (e) | 38,673 |
|
| | | | | | |
| Adjusted Pro Forma Net Income per fully exchanged, fully diluted shares outstanding | | | $ | 0.52 |
|
_______________________
| |
| (a) | Represents elimination of equity-based compensation associated with Legacy Units and IPO Options and a charge from the departure of our former president and one of our segment leaders. |
| |
| (b) | Represents elimination of merger and acquisitions costs. |
| |
| (c) | Represents an adjustment to reflect an assumed effective corporate tax rate of approximately 40.6% for the full year, as applied to the nine months ended September 30, 2010, 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. |
| |
| (d) | Represents elimination of the noncontrolling interest associated with the ownership by existing unitholders of D&P Acquisitions (excluding D&P Corporation), as if such unitholders had fully exchanged their partnership units and Class B common stock of the Company for shares of Class A common stock of the Company. |
| |
| (e) | Based on the weighted-average number of aggregated Class A and Class B shares of common stock outstanding, excluding Ongoing RSAs, and the dilutive effect of Ongoing RSAs. The Company believes that IPO Options would not be considered dilutive when applying the treasury method. |
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