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,
|
|
|
June
30,
|
|
|
June
30,
|
|
|
June
30,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
2010
|
|
|
2009
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
88,742 |
|
|
$ |
90,053 |
|
|
$ |
177,906 |
|
|
$ |
179,318 |
|
|
Reimbursable
expenses
|
|
|
1,962 |
|
|
|
2,626 |
|
|
|
4,760 |
|
|
|
4,663 |
|
|
Total
revenues
|
|
|
90,704 |
|
|
|
92,679 |
|
|
|
182,666 |
|
|
|
183,981 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Direct
client service costs
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Compensation
and benefits (includes $4,215 and $5,075 of equity-based compensation for
the three months ended June 30, 2010 and 2009, respectively, and $7,932
and $9,338 for the six months ended June 30, 2010 and 2009,
respectively)
|
|
|
50,415 |
|
|
|
51,698 |
|
|
|
99,013 |
|
|
|
102,828 |
|
|
Other
direct client service costs
|
|
|
1,881 |
|
|
|
1,543 |
|
|
|
3,869 |
|
|
|
2,847 |
|
|
Reimbursable
expenses
|
|
|
2,039 |
|
|
|
2,637 |
|
|
|
4,893 |
|
|
|
4,652 |
|
|
|
|
|
54,335 |
|
|
|
55,878 |
|
|
|
107,775 |
|
|
|
110,327 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
expenses
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Selling,
general and administrative (includes $2,005 and $1,665 of equity-based
compensation for the three months ended June 30, 2010 and 2009,
respectively, and $3,458 and $3,556 for the six months ended June 30, 2010
and 2009, respectively)
|
|
|
26,304 |
|
|
|
24,488 |
|
|
|
50,388 |
|
|
|
49,428 |
|
|
Depreciation
and amortization
|
|
|
2,350 |
|
|
|
2,556 |
|
|
|
4,843 |
|
|
|
5,118 |
|
|
Charge
from impairment of certain intangible assets (Note 11)
|
|
|
- |
|
|
|
- |
|
|
|
674 |
|
|
|
- |
|
|
Merger
and acquisition costs
|
|
|
321 |
|
|
|
- |
|
|
|
321 |
|
|
|
- |
|
|
|
|
|
28,975 |
|
|
|
27,044 |
|
|
|
56,226 |
|
|
|
54,546 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating
income
|
|
|
7,394 |
|
|
|
9,757 |
|
|
|
18,665 |
|
|
|
19,108 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other
expense/(income), net
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest
income
|
|
|
(53 |
) |
|
|
(3 |
) |
|
|
(77 |
) |
|
|
(17 |
) |
|
Interest
expense
|
|
|
76 |
|
|
|
333 |
|
|
|
168 |
|
|
|
988 |
|
|
Loss
on early extinguishment of debt
|
|
|
- |
|
|
|
1,737 |
|
|
|
- |
|
|
|
1,737 |
|
|
Other
expense
|
|
|
247 |
|
|
|
70 |
|
|
|
232 |
|
|
|
87 |
|
|
|
|
|
270 |
|
|
|
2,137 |
|
|
|
323 |
|
|
|
2,795 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Income
before income taxes
|
|
|
7,124 |
|
|
|
7,620 |
|
|
|
18,342 |
|
|
|
16,313 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Provision
for income taxes
|
|
|
2,506 |
|
|
|
2,421 |
|
|
|
6,156 |
|
|
|
4,533 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income
|
|
|
4,618 |
|
|
|
5,199 |
|
|
|
12,186 |
|
|
|
11,780 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Less:Net
income attributable to noncontrolling interest
|
|
|
2,111 |
|
|
|
3,465 |
|
|
|
5,406 |
|
|
|
8,281 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income attributable to Duff & Phelps Corporation
|
|
$ |
2,507 |
|
|
$ |
1,734 |
|
|
$ |
6,780 |
|
|
$ |
3,499 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted
average shares of Class A common stock outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
25,058 |
|
|
|
17,356 |
|
|
|
25,022 |
|
|
|
15,428 |
|
|
Diluted
|
|
|
25,754 |
|
|
|
18,111 |
|
|
|
25,903 |
|
|
|
16,045 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income per share attributable to stockholders of Class A common stock of
Duff & Phelps Corporation (Note 5)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
$ |
0.10 |
|
|
$ |
0.10 |
|
|
$ |
0.26 |
|
|
$ |
0.21 |
|
|
Diluted
|
|
$ |
0.09 |
|
|
$ |
0.09 |
|
|
$ |
0.25 |
|
|
$ |
0.20 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Cash
dividends declared per common share
|
|
$ |
0.06 |
|
|
$ |
0.05 |
|
|
$ |
0.11 |
|
|
$ |
0.05 |
|
|
Duff & Phelps Corp
CIK:1397821
|
2010-03-30
to
2010-06-30
(3-months) |
2009-03-30
to
2009-06-30
(3-months) |
2009-12-30
to
2010-06-30
(6-months) |
2008-12-30
to
2009-06-30
(6-months) |
| Revenues | $88,742 | $90,053 | $177,906 | $179,318 |
| Reimbursable expenses | 1,962 | 2,626 | 4,760 | 4,663 |
| Total revenues | 90,704 | 92,679 | 182,666 | 183,981 |
| Direct client service costs |
| Compensation and benefits (includes $4,215 and $5,075 of equity-based compensation for the three months ended June 30, 2010 and 2009, respectively, and $7,932 and $9,338 for the six months ended June 30, 2010 and 2009, respectively) | 50,415 | 51,698 | 99,013 | 102,828 |
| Other direct client service costs | 1,881 | 1,543 | 3,869 | 2,847 |
| Reimbursable expenses | 2,039 | 2,637 | 4,893 | 4,652 |
| 54,335 | 55,878 | 107,775 | 110,327 |
| Operating expenses |
| Selling, general and administrative (includes $2,005 and $1,665 of equity-based compensation for the three months ended June 30, 2010 and 2009, respectively, and $3,458 and $3,556 for the six months ended June 30, 2010 and 2009, respectively) | 26,304 | 24,488 | 50,388 | 49,428 |
| Depreciation and amortization | 2,350 | 2,556 | 4,843 | 5,118 |
| Charge from impairment of certain intangible assets (Note 11) | | 674 |
| Merger and acquisition costs | 321 | | 321 |
| 28,975 | 27,044 | 56,226 | 54,546 |
| Operating income | 7,394 | 9,757 | 18,665 | 19,108 |
| Other expense/(income), net |
| Interest income | (53) | (3) | (77) | (17) |
| Interest expense | 76 | 333 | 168 | 988 |
| Loss on early extinguishment of debt | | 1,737 | | 1,737 |
| Other expense | 247 | 70 | 232 | 87 |
| 270 | 2,137 | 323 | 2,795 |
| Income before income taxes | 7,124 | 7,620 | 18,342 | 16,313 |
| Provision for income taxes | 2,506 | 2,421 | 6,156 | 4,533 |
| Net income | 4,618 | 5,199 | 12,186 | 11,780 |
| Less:Net income attributable to noncontrolling interest | 2,111 | 3,465 | 5,406 | 8,281 |
| Net income attributable to Duff & Phelps Corporation | $2,507 | $1,734 | $6,780 | $3,499 |
| Weighted average shares of Class A common stock outstanding |
| Basic | 25,058 | 17,356 | 25,022 | 15,428 |
| Diluted | 25,754 | 18,111 | 25,903 | 16,045 |
| Net income per share attributable to stockholders of Class A common stock of Duff & Phelps Corporation (Note 5) |
| Basic | $0.10 | $0.10 | $0.26 | $0.21 |
| Diluted | $0.09 | $0.09 | $0.25 | $0.20 |
| Cash dividends declared per common share | $0.06 | $0.05 | $0.11 | $0.05 |
|
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
(In thousands, except per share amounts)
(Unaudited)
|
|
|
|
June
30,
|
|
|
December31,
|
|
|
|
|
2010
|
|
|
2009
|
|
|
ASSETS
|
|
|
|
|
|
|
|
Current
assets
|
|
|
|
|
|
|
|
Cash
and cash equivalents
|
|
$ |
79,231 |
|
|
$ |
107,311 |
|
|
Restricted
cash (Note 4)
|
|
|
3,156 |
|
|
|
- |
|
|
Accounts
receivable (net of allowance for doubtful accounts of $1,279 at June 30,
2010 and $1,690 at December 31, 2009)
|
|
|
51,812 |
|
|
|
55,079 |
|
|
Unbilled
services
|
|
|
27,743 |
|
|
|
22,456 |
|
|
Prepaid
expenses and other current assets
|
|
|
8,962 |
|
|
|
6,100 |
|
|
Net
deferred income taxes, current
|
|
|
566 |
|
|
|
4,601 |
|
|
Total
current assets
|
|
|
171,470 |
|
|
|
195,547 |
|
|
|
|
|
|
|
|
|
|
|
|
Property
and equipment (net of accumulated depreciation of $23,111 at June 30, 2010
and $20,621 at December 31, 2009)
|
|
|
28,387 |
|
|
|
27,413 |
|
|
Goodwill
|
|
|
129,636 |
|
|
|
122,876 |
|
|
Intangible
assets (net of accumulated amortization of $18,603 at June 30, 2010 and
$16,881 at December 31, 2009)
|
|
|
30,818 |
|
|
|
27,907 |
|
|
Other
assets
|
|
|
2,889 |
|
|
|
3,218 |
|
|
Investments
related to deferred compensation plan (Note 10)
|
|
|
20,295 |
|
|
|
17,807 |
|
|
Net
deferred income taxes, non-current
|
|
|
111,221 |
|
|
|
112,265 |
|
|
Total
non-current assets
|
|
|
323,246 |
|
|
|
311,486 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
assets
|
|
$ |
494,716 |
|
|
$ |
507,033 |
|
|
|
|
|
|
|
|
|
|
|
|
LIABILITIES
AND STOCKHOLDERS' EQUITY
|
|
|
|
|
|
|
|
|
|
Current
liabilities
|
|
|
|
|
|
|
|
|
|
Accounts
payable
|
|
$ |
2,038 |
|
|
$ |
2,459 |
|
|
Accrued
expenses
|
|
|
5,805 |
|
|
|
11,609 |
|
|
Accrued
compensation and benefits
|
|
|
18,345 |
|
|
|
35,730 |
|
|
Deferred
revenues
|
|
|
3,683 |
|
|
|
3,633 |
|
|
Other
current liabilities
|
|
|
170 |
|
|
|
993 |
|
|
Current
portion due to noncontrolling unitholders
|
|
|
4,303 |
|
|
|
4,303 |
|
|
Total
current liabilities
|
|
|
34,344 |
|
|
|
58,727 |
|
|
|
|
|
|
|
|
|
|
|
|
Liability
related to deferred compensation plan, less current portion (Note
10)
|
|
|
20,237 |
|
|
|
18,051 |
|
|
Other
long-term liabilities
|
|
|
15,715 |
|
|
|
15,400 |
|
|
Due
to noncontrolling unitholders, less current portion
|
|
|
101,382 |
|
|
|
101,098 |
|
|
Total
non-current liabilities
|
|
|
137,334 |
|
|
|
134,549 |
|
|
|
|
|
|
|
|
|
|
|
|
Total
liabilities
|
|
|
171,678 |
|
|
|
193,276 |
|
|
|
|
|
|
|
|
|
|
|
|
Commitments
and contingencies (Note 12)
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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;
28,208 and 27,290 shares issued and outstanding at June 30, 2010 and
December 31, 2009, respectively)
|
|
|
282 |
|
|
|
273 |
|
|
Class
B common stock, par value $0.0001 per share (50,000 shares authorized;
12,909 and 12,974 shares issued and outstanding at June 30, 2010 and
December 31, 2009, respectively)
|
|
|
1 |
|
|
|
1 |
|
|
Additional
paid-in capital
|
|
|
213,921 |
|
|
|
207,210 |
|
|
Accumulated
other comprehensive income/(loss)
|
|
|
(1,395 |
) |
|
|
693 |
|
|
Retained
earnings
|
|
|
10,381 |
|
|
|
6,709 |
|
|
Total
stockholders' equity of Duff & Phelps Corporation
|
|
|
223,190 |
|
|
|
214,886 |
|
|
Noncontrolling
interest
|
|
|
99,848 |
|
|
|
98,871 |
|
|
Total
stockholders' equity
|
|
|
323,038 |
|
|
|
313,757 |
|
|
Total
liabilities and stockholders' equity
|
|
$ |
494,716 |
|
|
$ |
507,033 |
|
|
Duff & Phelps Corp
CIK:1397821
|
2010-06-30 |
|
| ASSETS |
| Current assets |
| Cash and cash equivalents | $79,231 | $107,311 |
| Restricted cash (Note 4) | 3,156 |
| Accounts receivable (net of allowance for doubtful accounts of $1,279 at June 30, 2010 and $1,690 at December 31, 2009) | 51,812 | 55,079 |
| Unbilled services | 27,743 | 22,456 |
| Prepaid expenses and other current assets | 8,962 | 6,100 |
| Net deferred income taxes, current | 566 | 4,601 |
| Total current assets | 171,470 | 195,547 |
| Property and equipment (net of accumulated depreciation of $23,111 at June 30, 2010 and $20,621 at December 31, 2009) | 28,387 | 27,413 |
| Goodwill | 129,636 | 122,876 |
| Intangible assets (net of accumulated amortization of $18,603 at June 30, 2010 and $16,881 at December 31, 2009) | 30,818 | 27,907 |
| Other assets | 2,889 | 3,218 |
| Investments related to deferred compensation plan (Note 10) | 20,295 | 17,807 |
| Net deferred income taxes, non-current | 111,221 | 112,265 |
| Total non-current assets | 323,246 | 311,486 |
| Total assets | $494,716 | $507,033 |
| LIABILITIES AND STOCKHOLDERS' EQUITY |
| Current liabilities |
| Accounts payable | $2,038 | $2,459 |
| Accrued expenses | 5,805 | 11,609 |
| Accrued compensation and benefits | 18,345 | 35,730 |
| Deferred revenues | 3,683 | 3,633 |
| Other current liabilities | 170 | 993 |
| Current portion due to noncontrolling unitholders | 4,303 | 4,303 |
| Total current liabilities | 34,344 | 58,727 |
| Liability related to deferred compensation plan, less current portion (Note 10) | 20,237 | 18,051 |
| Other long-term liabilities | 15,715 | 15,400 |
| Due to noncontrolling unitholders, less current portion | 101,382 | 101,098 |
| Total non-current liabilities | 137,334 | 134,549 |
| Total liabilities | 171,678 | 193,276 |
| Commitments and contingencies (Note 12) |
| 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; 28,208 and 27,290 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively) | 282 | 273 |
| Class B common stock, par value $0.0001 per share (50,000 shares authorized; 12,909 and 12,974 shares issued and outstanding at June 30, 2010 and December 31, 2009, respectively) | 1 | 1 |
| Additional paid-in capital | 213,921 | 207,210 |
| Accumulated other comprehensive income/(loss) | (1,395) | 693 |
| Retained earnings | 10,381 | 6,709 |
| Total stockholders' equity of Duff & Phelps Corporation | 223,190 | 214,886 |
| Noncontrolling interest | 99,848 | 98,871 |
| Total stockholders' equity | 323,038 | 313,757 |
| Total liabilities and stockholders' equity | $494,716 | $507,033 |
|
|
DUFF & PHELPS CORPORATION AND SUBSIDIARIES
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
(In thousands, except per share amounts)
(Unaudited)
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, 2009. The financial data for the interim periods may not necessarily be indicative of results to be expected for the year.
Note 3-NONCONTROLLING INTEREST
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 Companys economic interest in D&P Acquisitions totaled 68.6% at June 30, 2010. The noncontrolling unitholders interest in D&P Acquisitions totaled 31.4% at June 30, 2010.
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
&
|
|
|
Non-
|
|
|
|
|
|
|
|
Phelps
|
|
|
controlling
|
|
|
|
|
|
|
|
Corporation
|
|
|
Unitholders
|
|
|
Total
|
|
|
December
31, 2009
|
|
|
27,290 |
|
|
|
12,974 |
|
|
|
40,264 |
|
|
Issuance
of Class A common stock for acquisitions
|
|
|
93 |
|
|
|
- |
|
|
|
93 |
|
|
Exchange
to Class A common stock
|
|
|
43 |
|
|
|
(43 |
) |
|
|
- |
|
|
Net
issuance of restricted stock awards
|
|
|
1,336 |
|
|
|
- |
|
|
|
1,336 |
|
|
Issuance
for exercises of IPO Options
|
|
|
4 |
|
|
|
- |
|
|
|
4 |
|
|
Repurchases
of Class A common stock pursuant to publicly announced
program
|
|
|
(384 |
) |
|
|
- |
|
|
|
(384 |
) |
|
Forfeitures
|
|
|
(174 |
) |
|
|
(22 |
) |
|
|
(196 |
) |
|
June
30, 2010
|
|
|
28,208 |
|
|
|
12,909 |
|
|
|
41,117 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Percent
of total
|
|
|
|
|
|
|
|
|
|
|
|
|
|
December
31, 2009
|
|
|
67.8 |
% |
|
|
32.2 |
% |
|
|
100 |
% |
|
June
30, 2010
|
|
|
68.6 |
% |
|
|
31.4 |
% |
|
|
100 |
% |
|
Duff & Phelps Corp
CIK:1397821
|
|
|
|
| Issuance of Class A common stock for acquisitions | 93 | | 93 |
| Exchange to Class A common stock | 43 | (43) |
| Net issuance of restricted stock awards | 1,336 | | 1,336 |
| Issuance for exercises of IPO Options | 4 | | 4 |
| Repurchases of Class A common stock pursuant to publicly announced program | (384) | | (384) |
| Forfeitures | (174) | (22) | (196) |
| June 30, 2010 | 28,208 | 12,909 | 41,117 |
| Percent of total |
| December 31, 2009 | 67.8 | 32.2 | 100 |
| June 30, 2010 | 68.6 | 31.4 | 100 |
|
|