EX-99.1 2 dex991.htm PRESS RELEASE Press Release

Exhibit 99.1

EVERCORE PARTNERS REPORTS THIRD QUARTER 2009 NET INCOME OF $11.0 MILLION OR $0.29 PER SHARE; DECLARES QUARTERLY DIVIDEND OF $0.15 PER SHARE

Highlights

 

  •  

Third Quarter Financial Summary:

 

  •  

Net Revenues of $83 million, up 49% (46% for U.S. GAAP) versus the same period in 2008 and 17% versus the second quarter of 2009

 

  •  

Adjusted Pro Forma Net Income of $11.0 million, or $0.29 per share, is nearly four times the Adjusted Pro Forma Net Income in the third quarter 2008 and more than double the second quarter of 2009

 

  •  

U.S. GAAP Net Income of $2.6 million or $0.14 per share, in contrast to a Net Loss of $0.04 per share in the same period last year and a Net Loss of $0.43 per share in the second quarter of 2009

 

  •  

Strong revenues and earnings in the Advisory business, including restructuring; maintained #1 M&A Advisory boutique ranking and #5 rank overall in the U.S.

 

  •  

Advised ACS on its announced sale to Xerox and sanofi-aventis on its acquisition of the 50% interest in Merial that it did not own

 

  •  

Advised General Motors, which emerged from Chapter 11 bankruptcy; continue to advise CIT, LyondellBasell and others

 

  •  

Progress in Investment Management driven by growth in Assets Under Management (AUM): $3.6 billion of AUM at the quarter end, up 25% versus the second quarter of 2009

 

  •  

Declares quarterly dividend of $0.15 per share

NEW YORK, October 28, 2009 – Evercore Partners Inc. (NYSE: EVR) today announced that its Adjusted Pro Forma Net Revenues were $83.4 million and $205.3 million for the three and nine months ended September 30, 2009, respectively, compared to Adjusted Pro Forma Net Revenues of $56.0 million and $158.9 million for the three and nine months ended September 30, 2008, respectively. Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. was $11.0 million and $16.3 million, or $0.29 and $0.45 per share, for the three and nine months ended September 30, 2009, respectively, compared to Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. of $2.3 million and $12.5 million, or $0.07 and $0.37 per share, for the three and nine months ended September 30, 2008, respectively.

The quarter was driven by strong results in the Advisory business, with revenue contributions from both M&A advisory and restructuring assignments. The Investment Management business reported substantially improved revenues as assets under management grew, driving an increase in fee-based revenues. Operating margins improved as revenue growth exceeded growth in operating expenses.

U.S. GAAP Net Revenues were $83.2 million and $204.0 million for the three and nine months ended September 30, 2009, respectively, compared to U.S. GAAP Net Revenues of $56.8 million and $161.4 million for the three and nine months ended September 30, 2008, respectively. U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. was $2.6

 

1

million and ($3.2) million, or $0.14 and ($0.22) per share, for the three and nine months ended September 30, 2009, respectively, compared to a U.S. GAAP Net Income (Loss) Attributable to Evercore Partners Inc. of ($0.5) million and $0.6 million, or ($0.04) and $0.05 per share, for the three and nine months ended September 30, 2008, respectively.

Evercore’s quarterly results may fluctuate significantly due to the timing and amount of Advisory fees earned, as well as gains or losses relating to the Firm’s Investment Management business and other factors. Accordingly, financial results in any particular quarter may not be representative of future results over a longer period of time.

“Financial performance in the quarter reflected continued improvements in the financial markets and the return on our investments in top talent. Revenues grew for the fourth straight quarter with all businesses contributing. Our Advisory results were balanced between M&A and restructuring assignments, reflecting the early stages of the recovery of the M&A markets. Our Investment Management business reported its best revenue quarter since our IPO, reporting $10 million of fee-based revenues,” said Ralph Schlosstein, President and Chief Executive Officer. “Importantly, we made some progress toward our goal of delivering more of our revenue growth to the bottom line, reducing our compensation ratio to 61% and holding non-compensation costs flat to last quarter, resulting in an increase in operating margin to 23%. We definitely have more work to do here, but we are pleased with the progress that we are making.”

“Evercore’s Advisory franchise continues to strengthen. Our cadre of advisory partners has never been stronger. Our restructuring advisory performance has been stellar. And, overall M&A activity seems to be picking up, albeit gradually. Major client assignments during the quarter included our continued work for General Motors, LyondellBasell and CIT, transactions for ACS, sanofi-aventis and Iridium and strategic financial advice for the Mexico Secretaría de Hacienda y Crédito Público,” said Roger Altman, Chairman. “While results always will vary quarter to quarter, Evercore is quite well positioned going forward.”

Mr. Schlosstein continued, “Our Investment Management business is making steady progress toward its goal of achieving a break-even run rate by the end of 2010; growing both assets under management and fee based revenues during the third quarter, while carefully managing costs. This growth reflects both the continued inflow of client assets as well as the improvement in the equity markets.”

In the discussion below of Evercore and the business segments, information is presented on an adjusted pro forma basis, which is a non-generally accepted accounting principles (“non-GAAP”) measure and is unaudited. Adjusted pro forma results begin with information prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) adjusted to exclude certain items. Evercore believes that the disclosed adjusted pro forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore’s results across several periods and better reflect what management views as ongoing operations. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. For more information about the adjusted pro forma basis of reporting used by management to evaluate the performance of Evercore and each line of business, including reconciliations of U.S. GAAP results to an adjusted pro forma basis, see pages A-1 through A-11 included in Annex I. These adjusted pro forma amounts are allocated to the Company’s two business segments: Advisory and Investment Management.

 

2

Consolidated Adjusted Pro Forma and U.S. GAAP Results

 

    Adjusted Pro Forma  
  Three Months Ended     % Change vs.     Nine Months Ended  
  September 30,
2009		     June 30,
2009(1)		     September 30,
2008		     June 30,
2009		     September 30,
2008		     September 30,
2009		     September 30,
2008		   % Change  
  (dollars in thousands)  

Net Revenues (2)

   $ 83,382      $ 71,312      $ 56,028      17 %    49 %    $ 205,300      $ 158,928   29 % 
                                           

Expenses:

                

Employee Compensation and Benefits

     50,693        51,859        40,311      (2 %)    26 %      138,406        104,626   32 % 

Non-compensation Costs (2)

     13,513        13,376        11,018      1 %    23 %      37,536        33,496   12 % 
                                           

Total Expenses

     64,206        65,235        51,329      (2 %)    25 %      175,942        138,122   27 % 
                                           

Operating Income

     19,176        6,077        4,699      216 %    308 %      29,358        20,806   41 % 

Interest Expense on Long-term Debt (3)

     1,896        1,897        670      (0 %)    183 %      5,685        670   749 % 
                                           

Pre-Tax Income

     17,280        4,180        4,029      313 %    329 %      23,673        20,136   18 % 

Provision for Income Taxes

     7,264        1,757        1,759      313 %    313 %      9,957        7,594   31 % 
                                           

Net Income

     10,016        2,423        2,270      313 %    341 %      13,716        12,542   9 % 

Noncontrolling Interest

     (976 )      (1,127 )      —        13 %    NM        (2,631 )      —     NM   
                                           

Net Income Attributable to Evercore Partners Inc.

   $ 10,992      $ 3,550      $ 2,270      210 %    384 %    $ 16,347      $ 12,542   30 % 
                                           

Earnings Per Share

   $ 0.29      $ 0.10      $ 0.07      190 %    314 %    $ 0.45      $ 0.37   22 % 
                                           
    U.S. GAAP  
  Three Months Ended     % Change vs.     Nine Months Ended  
  September 30,
2009		     June 30,
2009(1)		     September 30,
2008		     June 30,
2009		     September 30,
2008		     September 30,
2009		     September 30,
2008		   % Change  
  (dollars in thousands)  

Net Revenues (2)

   $ 83,196      $ 71,043      $ 56,813      17 %    46 %    $ 203,965      $ 161,419   26 % 
                                           

Expenses:

                

Employee Compensation and Benefits

     55,104        51,859        40,311      6 %    37 %      142,817        112,078   27 % 

Non-compensation Costs (2)

     15,806        15,983        12,937      (1 %)    22 %      44,206        38,072   16 % 

Special Charges

     —          16,138        1,695      NM      NM        16,138        4,132   291 % 
                                           

Total Expenses

     70,910        83,980        54,943      (16 %)    29 %      203,161        154,282   32 % 
                                           

Operating Income (Loss)

     12,286        (12,937 )      1,870      NM      557 %      804        7,137   (89 %) 

Interest Expense on Long-term Debt (3)

     —          —          —        NM      NM        —          —     NM   
                                           

Pre-Tax Income (Loss)

     12,286        (12,937 )      1,870      NM      557 %      804        7,137   (89 %) 

Provision for Income Taxes

     4,602        1,373        1,475      235 %    212 %      7,033        3,642   93 % 
                                           

Net Income (Loss)

     7,684        (14,310 )      395      NM      NM        (6,229 )      3,495   NM   

Noncontrolling Interest

     5,051        (8,267 )      863      NM      485 %      (3,010 )      2,872   NM   
                                           

Net Income (Loss) Attributable to Evercore Partners Inc.

   $ 2,633      $ (6,043 )    $ (468 )    NM      NM      $ (3,219 )    $ 623   NM   
                                           

Earnings (Loss) Per Share

   $ 0.14      $ (0.43 )    $ (0.04 )    NM      NM      $ (0.22 )    $ 0.05   NM   
                                           

 

(1) The June 30, 2009 Adjusted Pro Forma and U.S. GAAP results and reconciliation were previously disclosed in the earnings release furnished to the SEC on July 29, 2009. We have included the historical Adjusted Pro Forma and U.S. GAAP results in this press release merely as additional information. A copy of the related reconciliation from the prior press release is available on our website.
(2) For Adjusted Pro Forma purposes, reimbursable client related expenses and expenses associated with revenue sharing arrangements with third parties have been presented as a reduction from the associated Non-compensation Costs for all periods. In prior years, such amounts were included in Net Revenues.
(3) Interest Expense on Long-term Debt represents interest expense on the Senior Notes and is presented below Operating Income (Loss) on an Adjusted Pro Forma basis.

 

3

Business Line Reporting

A discussion of Adjusted Pro Forma revenues and expenses is presented below for the Advisory and Investment Management segments. Unless otherwise stated, all of the financial measures presented in this discussion are Adjusted Pro Forma measures.

Advisory

Evercore’s Advisory business produced solid results that were balanced between M&A advisory and restructuring assignments, with increased revenues from clients headquartered outside the U.S. In addition to revenue growth, our continued focus on expense management resulted in improved operating leverage this quarter with pre-tax margins increasing to 31.4% from 29.6% last quarter and 13.3% in the same period last year.

 

    Three Months Ended    % Change vs.     Nine Months Ended  
  September 30,
2009		    June 30,
2009		     September 30,
2008		    June 30,
2009		     September 30,
2008		     September 30,
2009		   September 30,
2008		   % Change  
  (dollars in thousands)  

Net Revenues:

                  

Advisory (1)

   $ 71,596    $ 68,439      $ 50,372    5 %    42 %    $ 188,084   $ 147,336   28 % 

Other Revenue, net

     1,208      (71 )      1,071    NM      13 %      1,739     2,580   (33 %) 
                                       

Net Revenues

     72,804      68,368        51,443    6 %    42 %      189,823     149,916   27 % 
                                       

Expenses:

                  

Employee Compensation and Benefits

     41,119      39,682        35,172    4 %    17 %      110,013     90,403   22 % 

Non-compensation Costs (1)

     8,812      8,468        9,454    4 %    (7 %)      24,571     27,432   (10 %) 
                                       

Total Expenses

     49,931      48,150        44,626    4 %    12 %      134,584     117,835   14 % 
                                       

Adjusted Pro Forma Operating Income

     22,873      20,218        6,817    13 %    236 %      55,239     32,081   72 % 

Interest Expense on Long-term Debt (2)

     1,024      683        —      50 %    NM        1,707     —     NM   
                                       

Adjusted Pro Forma Pre-Tax Income

   $ 21,849    $ 19,535      $ 6,817    12 %    221 %    $ 53,532   $ 32,081   67 % 
                                       

 

(1) Reimbursable client related expenses and expenses associated with revenue sharing arrangements with third parties have been presented as a reduction from the associated Non-compensation Costs for all periods. In prior years, such amounts were included in Net Revenues.
(2) Interest expense related to the Senior Notes is presented in Interest Expense on Long-term Debt in order to clearly reflect the operating results of the business.

Revenues

Advisory revenue was $71.6 million and $188.1 million for the three and nine months ended September 30, 2009, respectively, compared to $50.4 million and $147.3 million for the three and nine months ended September 30, 2008, respectively. The increase in revenues reflects continued contribution from prominent restructuring assignments including General Motors and CIT, prominent M&A advisory assignments with sanofi-aventis, Iridium and ACS and a financial advisory assignment for the Mexico Secretaría de Hacienda y Crédito Público.

According to Thomson Reuters, industry-wide M&A volumes are down from 2008 levels, with the dollar value of global completed M&A transactions down 47% year-to-date and U.S. completed M&A transactions down 30% year-to-date. Restructuring activity, however, continues to remain high.

According to Thomson Reuters, among boutiques, Evercore was ranked number one in the U.S. as measured by the value of announced transactions during the first nine months of 2009 and #5 in the U.S. among all advisors. The Company earned Advisory revenues in excess of $1 million from 11 clients during the third quarter of 2009, down from the number of clients in the third quarter of 2008 but up from 10 clients in the second quarter of 2009. The number of fee paying clients for the first nine months of 2009 grew to 126 compared to 122 in the first nine months of 2008.

 

4

Expenses

Compensation costs for the Advisory segment for the three and nine months ended September 30, 2009, were $41.1 million and $110.0 million, respectively, up from $35.2 million and $90.4 million for the three and nine months ended September 30, 2008, respectively. The year-on-year increase in compensation is due to higher compensation accrued associated with revenues earned and the impact of new hires. For the three and nine months ended September 30, 2009, Evercore’s Advisory compensation ratio was 56.5% and 58.0%, respectively, versus the compensation ratio reported for the three and nine months ended September 30, 2008 of 68.4% and 60.3%, respectively. Excluding stock compensation costs of $4.5 million and $12.0 million for the three and nine months ended September 30, 2009, respectively, related to new Advisory Senior Managing Directors1, the ratio would have been 50.3% and 51.6%, respectively.

Non-compensation costs for the three months ended September 30, 2009 of $8.8 million decreased 7% from the same period last year. Through the first nine months of the year, non-compensation expenses declined 10% from the same period last year, reflecting our ongoing focus on cost control.

Investment Management

The revenues for the Investment Management business improved from last quarter and the prior year as our existing and new businesses generated higher levels of assets under management (AUM) and fee-based revenues. AUM grew 25% to approximately $3.6 billion from $2.9 billion at June 30, 2009, reflecting growth in both net flows and market appreciation. New businesses drove the growth in revenues and expenses for both the three and nine month periods.

 

    Three Months Ended     % Change vs.     Nine Months Ended  
  September 30,
2009		     June 30,
2009		     September 30,
2008		     June 30,
2009		     September 30,
2008		     September 30,
2009		     September 30,
2008		     % Change  
  (dollars in thousands)  

Net Revenues:

                

Private Equity (2)

   $ 2,354      $ (1,812 )    $ 3,184      NM      (26 %)    $ 2,012      $ 8,615      (77 %) 

Institutional Asset Management

     6,476        3,450        900      88 %    620 %      8,856        (414 )    NM   

Wealth Management

     955        522        (163 )    83 %    NM        1,643        (163 )    NM   
                                             

Investment Management Revenues

     9,785        2,160        3,921      353 %    150 %      12,511        8,038      56 % 

Other Revenue, net (3)

     793        784        664      1 %    19 %      2,966        974      205 % 
                                             

Net Revenues

     10,578        2,944        4,585      259 %    131 %      15,477        9,012      72 % 
                                             

Expenses:

                

Employee Compensation and Benefits

     9,574        12,177        5,139      (21 %)    86 %      28,393        14,223      100 % 

Non-compensation Costs (2)

     4,701        4,908        1,564      (4 %)    201 %      12,965        6,064      114 % 
                                             

Total Expenses

     14,275        17,085        6,703      (16 %)    113 %      41,358        20,287      104 % 
                                             

Adjusted Pro Forma Operating Income (Loss)

     (3,697 )      (14,141 )      (2,118 )    74 %    (75 %)      (25,881 )      (11,275 )    (130 %) 

Interest Expense on Long-term Debt (3)

     872        1,214        670      (28 %)    30 %      3,978        670      494 % 
                                             

Adjusted Pro Forma Pre-Tax Income (Loss)

   $ (4,569 )    $ (15,355 )    $ (2,788 )    70 %    (64 %)    $ (29,859 )    $ (11,945 )    (150 %) 
                                             

 

(2) Reimbursable client related expenses have been presented as a reduction from the associated Non-compensation Costs for all periods. In prior years, such amounts were included in Net Revenues.
(3) Other Revenue, net includes interest income and expense on short-term reverse repurchase and repurchase agreements. Interest expense related to the Senior Notes is presented in Interest Expense on Long-term Debt in order to clearly reflect the operating results of the business.

 

 

1

Stock compensation costs for Senior Managing Directors hired in the past twenty-four months

 

5

Revenues

Investment Management Revenue Components

 

    Three Months Ended     % Change vs.     Nine Months Ended  
  September 30,
2009		     June 30,
2009		     September 30,
2008		     June 30,
2009		     September 30,
2008		     September 30,
2009		     September 30,
2008		     % Change  
    (dollars in thousands)  

Management Fees

  

Wealth Management

   $ 1,144      $ 707      $ —        62 %    NM      $ 2,221      $ —        NM   

Institutional Asset Management

     5,851        3,311        375      77 %    NM        10,167        2,393      325 % 

Private Equity

     2,970        2,002        2,405      48 %    23 %      7,119        6,158      16 % 
                                             

Total Management Fees

     9,965        6,020        2,780      66 %    258 %      19,507        8,551      128 % 
                                             

Realized and Unrealized Gains (Losses)

  

Institutional Asset Management

     625        139        565      350 %    11 %      (57 )      (2,492 )    98 % 

Private Equity

     (616 )      (3,814 )      779      84 %    NM        (5,107 )      2,457      NM   
                                             

Total Realized and Unrealized Gains (Losses)

     9        (3,675 )      1,344      NM      (99 %)      (5,164 )      (35 )    NM   
                                             

HighView

     —          —          —        NM      NM        (920 )      —        NM   

Equity in EAM Losses

     —          —          (40 )    NM      NM        (334 )      (315 )    (6 %) 

Equity in Pan Losses

     (189 )      (185 )      (163 )    (2 %)    (16 %)      (578 )      (163 )    (255 %) 
                                             

Investment Management Revenues

   $ 9,785      $ 2,160      $ 3,921      353 %    150 %    $ 12,511      $ 8,038      56 % 
                                             

Fees earned from the management of client portfolios and other investment advisory services of $10.0 million and $19.5 million increased significantly for the three and nine months ended September 30, 2009 compared to the prior periods, reflecting the addition of new businesses.

Expenses

The growth in expenses this quarter reflects the addition of new businesses, including a full quarter of expenses related to Evercore Trust Company.

Noncontrolling Interest

Most of our Investment Management businesses have a significant direct employee ownership, which is accounted for as a Noncontrolling Interest. Evercore’s Adjusted Pro Forma Pre-Tax Income (Loss), net of Noncontrolling Interest, is as follows:

 

    Three Months Ended     % Change vs.     Nine Months Ended  
  September 30,
2009		     June 30,
2009		     September 30,
2008		     June 30,
2009		     September 30,
2008		     September 30,
2009		     September 30,
2008		     % Change  
    (dollars in thousands)  

Adjusted Pro Forma Pre-Tax Income (Loss)

   $ (4,569 )    $ (15,355 )    $ (2,788 )    70 %    (64 %)    $ (29,859 )    $ (11,945 )    (150 %) 

Net Income (Loss) Attributable
to Noncontrolling Interest

     (976 )      (1,127 )      —        13 %    NM        (2,631 )      —        NM   
                                             

Adjusted Pro Forma Pre-Tax Income (Loss)
Net of Noncontrolling Interest

   $ (3,593 )    $ (14,228 )    $ (2,788 )    75 %    (29 %)    $ (27,228 )    $ (11,945 )    (128 %) 
                                             

Other U.S. GAAP Expenses

Our Adjusted Pro Forma Net Income Attributable to Evercore Partners Inc. for the three months ended September 30, 2009 is higher than for U.S. GAAP as a result of the inclusion of expenses associated with IPO equity awards and the amortization of intangibles (which principally relate to Braveheart and Protego). In addition, our Adjusted Pro Forma results reflect the inclusion of income associated with Noncontrolling Interest. Our Adjusted Pro Forma results for the nine months ended September 30, 2009 are driven by similar factors as the three months ended September 30, 2009, and in addition include the restructuring charge incurred in the second quarter of 2009.

 

6

In addition, for Adjusted Pro Forma purposes, reimbursable client related expenses and expenses associated with revenue sharing engagements with third parties have been presented as a reduction from Revenues and the associated Non-compensation costs.

Further details of these expenses, as well as an explanation of similar expenses for the three and nine months ended September 30, 2008, are included in Annex I, pages A-2 to A-10.

Income Taxes

For the three and nine months ended September 30, 2009, Evercore’s adjusted pro forma effective tax rate was approximately 42% compared to an effective tax rate of approximately 44% and 38% for the three and nine months ended September 30, 2008, respectively. The adjusted pro forma effective tax rate assumes that the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at the prevailing corporate rate, that all deferred tax assets relating to foreign operations are fully realizable within that structure on a consolidated basis and that adjustments for deferred tax assets related to tax deductions for equity-based compensation awards are made directly to stockholders’ equity.

Balance Sheet

The Company continues to maintain a strong balance sheet, holding liquid assets available for operations and investments of $288.0 million at September 30, 2009. Amounts due related to the Long-Term Notes Payable were $96.3 million at September 30, 2009.

During the quarter the Company repurchased approximately 66,715 shares of Class A common stock pursuant to the net settlement of stock-based compensation awards.

Dividend

On October 26, 2009 the Board of Directors of Evercore declared a quarterly dividend of $0.15 per share to be paid on December 11, 2009 to common stockholders of record on November 27, 2009.

Conference Call

Evercore will host a conference call to discuss its results for the third quarter on Wednesday, October 28, 2009, at 8:00 a.m. Eastern Time with access available via the Internet and telephone. Investors and analysts may participate in the live conference call by dialing (877) 941-6011 (toll-free domestic) or (480) 248-5085 (international); passcode: 4170649. Please register at least 10 minutes before the conference call begins. A replay of the call will be available for one week via telephone starting approximately one hour after the call ends. The replay can be accessed at (800) 406-7325 (toll-free domestic) or (303) 590-3030 (international); passcode: 4170649. A live webcast of the conference call will be available on the Investor Relations section of Evercore’s Web site at www.evercore.com. The webcast will be archived on Evercore’s Web site for 30 days after the call.

About Evercore Partners

Evercore Partners is a leading investment banking boutique and investment management firm. Evercore’s Advisory business counsels its clients on mergers, acquisitions, divestitures, restructurings and other strategic transactions. Evercore's Investment Management business comprises wealth management, institutional asset management and private equity investing. Evercore serves a diverse set of clients around the world from its offices in New York, San Francisco, Boston, Washington D.C., Los Angeles, Houston, London, Mexico City and Monterrey, Mexico. More information about Evercore can be found on the Company’s Web site at www.evercore.com.

#        #        #

 

Investor Contact:    Robert B. Walsh
   Chief Financial Officer, Evercore Partners
   212-857-3100
Media Contact:    Kenny Juarez
   The Abernathy MacGregor Group, for Evercore Partners
   212-371-5999

 

7

Basis of Alternative Financial Statement Presentation

Adjusted pro forma results are a non-GAAP measure. Evercore believes that the disclosed adjusted pro forma measures and any adjustments thereto, when presented in conjunction with comparable U.S. GAAP measures, are useful to investors to compare Evercore’s results across several periods and better reflect what management views as ongoing operations. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. A reconciliation of U.S. GAAP results to adjusted pro forma results is presented in the tables included in Annex I.

Forward-Looking Statements

This release 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, which reflect our current views with respect to, among other things, Evercore’s operations and financial performance. In some cases, you can identify these forward-looking statements by the use of words such as “outlook”, “believes”, “expects”, “potential”, “continues”, “may”, “will”, “should”, “seeks”, “approximately”, “predicts”, “intends”, “plans”, “estimates”, “anticipates” or the negative version of these words or other comparable words. All statements other than statements of historical fact included in this presentation are forward-looking statements and are based on various underlying assumptions and expectations and are subject to known and unknown risks, uncertainties and assumptions, and may include projections of our future financial performance based on our growth strategies and anticipated trends in Evercore’s business. Accordingly, there are or will be important factors that could cause actual outcomes or results to differ materially from those indicated in these statements. Evercore believes these factors include, but are not limited to, those described under “Risk Factors” discussed in Evercore’s Annual Report on Form 10-K for the year ended December 31, 2008 and subsequent quarterly reports on Form 10-Q. These factors should not be construed as exhaustive and should be read in conjunction with the other cautionary statements that are included in this release. In addition, new risks and uncertainties emerge from time to time, and it is not possible for Evercore to predict all risks and uncertainties, nor can Evercore assess the impact of all factors on our business or the extent to which any factor, or combination of factors, may cause actual results to differ materially from those contained in any forward-looking statements. Accordingly, you should not rely upon forward-looking statements as a prediction of actual results and Evercore does not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. Evercore undertakes no obligation to publicly update or review any forward-looking statement, whether as a result of new information, future developments or otherwise.

With respect to any securities offered by any private equity fund referenced herein, such securities have not been and will not be registered under the Securities Act of 1933, as amended, and may not be offered or sold in the United States absent registration or an applicable exemption from registration requirements.

 

8

ANNEX I

 

      Page Number

Schedule

   

Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months Ended September 30, 2009 and 2008

   A-1

Adjusted Pro Forma:

   

Adjusted Pro Forma Results

    A-2

Unaudited Condensed Consolidated Adjusted Pro Forma Statement of Operations for the Three Months Ended September 30, 2009

   A-4

Unaudited Condensed Consolidated Adjusted Pro Forma Statement of Operations for the Three Months Ended September 30, 2008

   A-5

Unaudited Condensed Consolidated Adjusted Pro Forma Statement of Operations for the Nine Months Ended September 30, 2009

   A-6

Unaudited Condensed Consolidated Adjusted Pro Forma Statement of Operations for the Nine Months Ended September 30, 2008

   A-7

Adjusted Pro Forma Segment Reconciliation to U.S. GAAP for the Three Months ended September 30, 2009 and 2008

    A-8

Adjusted Pro Forma Segment Reconciliation to U.S. GAAP for the Nine Months ended September 30, 2009 and 2008

    A-9

Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Statements of Operations

    A-10

Historical Unaudited Condensed Consolidated Adjusted Pro Forma Statements of Operations

    A-11

 

9

EVERCORE PARTNERS INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

THREE AND NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(dollars in thousands, except per share data)

(UNAUDITED)

 

     Three Months Ended September 30,     Nine Months Ended September 30,
   2009    2008     2009     2008

REVENUES

          

Advisory Revenue

    $ 73,306    $ 51,447      $ 192,431      $ 149,870

Investment Management Revenue

      9,785      4,301        12,514        8,665

Other Revenue

      4,603      9,970        18,218        24,893
                             

TOTAL REVENUES

      87,694      65,718        223,163        183,428

Interest Expense (1)

      4,498      8,905        19,198        22,009
                             

NET REVENUES

      83,196      56,813        203,965        161,419
                             

EXPENSES

          

Employee Compensation and Benefits

      55,104      40,311        142,817        112,078

Occupancy and Equipment Rental

      3,434      3,167        10,072        9,539

Professional Fees

      5,673      4,474        14,611        11,746

Travel and Related Expenses

      2,445      2,177        6,500        7,299

Communications and Information Services

      1,026      936        2,715        2,309

Depreciation and Amortization

      1,155      1,028        3,353        3,164

Special Charges

      —        1,695        16,138        4,132

Acquisition and Transition Costs

      —        —          712        —  

Other Operating Expenses

      2,073      1,155        6,243        4,015
                             

TOTAL EXPENSES

      70,910      54,943        203,161        154,282
                             

INCOME BEFORE INCOME TAXES

      12,286      1,870        804        7,137

Provision for Income Taxes

      4,602      1,475        7,033        3,642
                             

NET INCOME (LOSS)

      7,684      395        (6,229 )      3,495

Net Income (Loss) Attributable to Noncontrolling Interest

      5,051      863        (3,010 )      2,872
                             

NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS INC.

    $ 2,633    $ (468 )    $ (3,219 )    $ 623
                             

Net Income (Loss) Attributable to Evercore Partners Inc. Common Shareholders

    $ 2,633    $ (468 )    $ (3,219 )    $ 623

Weighted Average Shares of Class A Common Stock Outstanding:

          

Basic

      16,340      13,085        14,665        12,914

Diluted

      18,353      13,085        14,665        13,163

Net Income (Loss) Per Share Attributable to Evercore Partners Inc. Common Shareholders:

          

Basic

    $ 0.16    $ (0.04 )    $ (0.22 )    $ 0.05

Diluted

    $ 0.14    $ (0.04 )    $ (0.22 )    $ 0.05

 

1

Includes interest expense on long-term debt and interest expense on short-term repurchase agreements.

 

A - 1

Adjusted Pro Forma Results

Evercore prepares its Condensed Consolidated Financial Statements using U.S. GAAP. In addition to analyzing the Company’s results on a U.S. GAAP basis, management reviews the Company’s and business segments’ results on an adjusted pro forma basis, which is a non-GAAP financial measure. These measures should not be considered a substitute for, or superior to, measures of financial performance prepared in accordance with U.S. GAAP. The adjusted pro forma results reflect the following adjustments, which management believes are not reflective of ongoing operations, and therefore exclusion of these charges enhances understanding of the Company’s operating performance.

Vesting of share-based awards in conjunction with equity offering. The Company incurred $4.4 million in expense in Employee Compensation and Benefits for the three and nine months ended September 30, 2009, resulting from the modification of Evercore LP Units, which will vest over a five year period, and the vesting of modified equity awards in conjunction with an offering during the third quarter of 2009.

Exclusion of deferred consideration related to Braveheart acquisition. The former shareholders of Braveheart were issued $7.5 million of restricted stock in the first quarter of 2008 as additional deferred consideration pursuant to the Sale and Purchase Agreement associated with the Braveheart acquisition.

Special Charges. The Company has reflected charges in conjunction with the Company’s decision to suspend capital raising for ECP and other ongoing strategic cost management initiatives. The charge relates to the expense required to be recorded under U.S. GAAP for stock-based compensation awards that are voluntarily forfeited by employees who remain with the Company. During the second quarter of 2009 employees voluntarily forfeited 416,878 unvested restricted stock units and 250,230 partnership units. The Company has also reflected charges for the three and nine months ended September 30, 2008 as Special Charges in connection with employee severance, accelerated share-based vesting, facilities costs associated with the closing of the Los Angeles office and the write-off of certain capitalized costs associated with fundraising initiatives for ECP. Evercore expects to realize cost savings in the future due to these changes.

Acquisition and Transition Costs. The Company has reflected Acquisition and Transition Costs for costs incurred in connection with the acquisition of SFS and the formation of ETC. This charge reflects the change in accounting for deal-related costs required by SFAS No. 141(R), Business Combinations, codified under ASC 805, which was effective January 1, 2009.

Exclusion of amortization of intangible assets acquired with Protego, Braveheart, SFS and EAM. The Protego acquisition was undertaken in contemplation of the IPO. The Braveheart acquisition occurred on December 19, 2006. Also excluded is amortization of intangible assets associated with the recent acquisitions of SFS and EAM.

Client Expenses. The Company has reflected the reclassification of reimbursable expenses and expenses associated with revenue sharing engagements with third parties from revenue.

Vesting of unvested equity. Management believes that it is useful to provide the per-share effect associated with the vesting of previously granted but unvested equity, and thus the adjusted pro forma results reflect the vesting of all unvested Evercore LP partnership units and event-based stock-based awards. However, management has concluded that at the current time it is not probable that the conditions relating to the vesting of the remaining unvested event-based stock-based awards will be achieved or satisfied.

 

A - 2

The unaudited condensed consolidated adjusted pro forma financial information is included for informational purposes only and should not be relied upon as being indicative of the Company’s results of operations or financial condition had the transactions contemplated in connection with the internal reorganization been completed on the dates assumed. The unaudited condensed consolidated adjusted pro forma financial information also does not project the results of operations or financial position for any future period or date.

 

A - 3

EVERCORE PARTNERS INC.

CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2009

(dollars in thousands, except per share data)

(UNAUDITED)

 

     Evercore
Partners
Inc. U.S.
GAAP		    Pro Forma
Adjustments		     Evercore
Partners Inc.
Adjusted
Pro Forma		  

REVENUES

        

Advisory Revenue

    $ 73,306    $ (1,710 )(a)    $ 71,596   

Investment Management Revenue

      9,785      —          9,785   

Other Revenue

      4,603      (2,602 )(b)      2,001   
                       

TOTAL REVENUES

      87,694      (4,312 )      83,382   

Interest Expense

      4,498      (4,498 )(b)      —     
                       

NET REVENUES

      83,196      186        83,382   
                       

EXPENSES

        

Employee Compensation and Benefits

      55,104      (4,411 )(c)      50,693   

Occupancy and Equipment Rental

      3,434      —          3,434   

Professional Fees

      5,673      (745 )(a)      4,928   

Travel and Related Expenses

      2,445      (856 )(a)      1,589   

Communications and Information Services

      1,026      (22 )(a)      1,004   

Depreciation and Amortization

      1,155      (583 )(d)      572   

Special Charges

      —        —          —     

Acquisition and Transition Costs

      —        —          —     

Other Operating Expenses

      2,073      (87 )(a)      1,986   
                       

TOTAL EXPENSES

      70,910      (6,704 )      64,206   
                       

INCOME BEFORE INTEREST EXPENSE ON LONG-TERM DEBT AND INCOME TAXES

      12,286      6,890        19,176   

Interest Expense on Long-term Debt

      —        1,896 (b)      1,896   
                       

INCOME BEFORE INCOME TAXES

      12,286      4,994        17,280   

Provision for Income Taxes

      4,602      2,662 (g)      7,264   
                       

NET INCOME

      7,684      2,332        10,016   

Net Income (Loss) Attributable to Noncontrolling Interest

      5,051      (6,027 )(h)      (976 ) 
                       

NET INCOME ATTRIBUTABLE TO EVERCORE PARTNERS INC.

    $ 2,633    $ 8,359      $ 10,992   
                       

Adjusted Class A Common Stock Outstanding

        

Basic and Diluted Weighted Average Shares of Class A Common Stock Outstanding

      14,583      —          14,583   

Warrants

      242      —          242   

Vested Partnership Units

      —        14,061 (i)      14,061   

Unvested Partnership Units

      —        4,603 (i)      4,603   

Vested Restricted Stock Units - Event Based

      1,197      (10 )(i)      1,187   

Unvested Restricted Stock Units - Event Based

      —        743 (i)      743   

Vested Restricted Stock Units - Service Based

      560      —          560   

Unvested Restricted Stock Units - Service Based

      1,660      —          1,660   

Unvested Restricted Stock - Service Based

      111      —          111   
                       

Total Shares

      18,353      19,397        37,750   
                       

Net Income Per Share Attributable to Evercore Partners Inc. Common Shareholders:

        

Basic

    $ 0.16      $ 0.29   

Diluted

    $ 0.14      $ 0.29   

 

A - 4

EVERCORE PARTNERS INC.

CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS

THREE MONTHS ENDED SEPTEMBER 30, 2008

(dollars in thousands, except per share data)

(UNAUDITED)

 

     Evercore
Partners
Inc. U.S.
GAAP		     Pro Forma
Adjustments		     Evercore
Partners Inc.
Adjusted
Pro Forma

REVENUES

       

Advisory Revenue

    $ 51,447      $ (1,075 )(a)    $ 50,372

Investment Management Revenue

      4,301        (380 )(a)      3,921

Other Revenue

      9,970        (8,235 )(b)      1,735
                      

TOTAL REVENUES

      65,718        (9,690 )      56,028

Interest Expense

      8,905        (8,905 )(b)      —  
                      

NET REVENUES

      56,813        (785 )      56,028
                      

EXPENSES

       

Employee Compensation and Benefits

      40,311        —          40,311

Occupancy and Equipment Rental

      3,167        —          3,167

Professional Fees

      4,474        (974 )(a)      3,500

Travel and Related Expenses

      2,177        (380 )(a)      1,797

Communications and Information Services

      936        (16 )(a)      920

Depreciation and Amortization

      1,028        (464 )(d)      564

Special Charges

      1,695        (1,695 )(e)      —  

Acquisition and Transition Costs

      —          —          —  

Other Operating Expenses

      1,155        (85 )(a)      1,070
                      

TOTAL EXPENSES

      54,943        (3,614 )      51,329
                      

INCOME BEFORE INTEREST EXPENSE ON LONG-TERM DEBT AND INCOME TAXES

      1,870        2,829        4,699

Interest Expense on Long-term Debt

      —          670 (b)      670
                      

INCOME BEFORE INCOME TAXES

      1,870        2,159        4,029

Provision for Income Taxes

      1,475        284 (g)      1,759
                      

NET INCOME

      395        1,875        2,270

Net Income Attributable to Noncontrolling Interest

      863        (863 )(h)      —  
                      

NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS INC.

    $ (468 )    $ 2,738      $ 2,270
                      

Adjusted Class A Common Stock Outstanding

       

Basic and Diluted Weighted Average Shares of Class A Common Stock Outstanding

      11,627        —          11,627

Vested Partnership Units

      —          15,146 (i)      15,146

Unvested Partnership Units

      —          4,853 (i)      4,853

Vested Restricted Stock Units - Event Based

      1,209        —          1,209

Unvested Restricted Stock Units - Event Based

      —          803 (i)      803

Vested Restricted Stock Units - Service Based

      249        —          249

Unvested Restricted Stock Units - Service Based

      —          44 (i)      44

Unvested Restricted Stock - Service Based

      —          140 (i)      140
                      

Total Shares

      13,085        20,986        34,071
                      

Net Income (Loss) Per Share Attributable to Evercore Partners Inc. Common Shareholders:

       

Basic

    $ (0.04 )      $ 0.07

Diluted

    $ (0.04 )      $ 0.07

 

A - 5

EVERCORE PARTNERS INC.

CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2009

(dollars in thousands, except per share data)

(UNAUDITED)

 

     Evercore
Partners
Inc. U.S.
GAAP		     Pro Forma
Adjustments		     Evercore
Partners Inc.
Adjusted
Pro Forma		  

REVENUES

       

Advisory Revenue

    $ 192,431      $ (4,347 )(a)    $ 188,084   

Investment Management Revenue

      12,514        (3 )(a)      12,511   

Other Revenue

      18,218        (13,513 )(b)      4,705   
                        

TOTAL REVENUES

      223,163        (17,863 )      205,300   

Interest Expense

      19,198        (19,198 )(b)      —     
                        

NET REVENUES

      203,965        1,335        205,300   
                        

EXPENSES

       

Employee Compensation and Benefits

      142,817        (4,411 )(c)      138,406   

Occupancy and Equipment Rental

      10,072        —          10,072   

Professional Fees

      14,611        (1,957 )(a)      12,654   

Travel and Related Expenses

      6,500        (2,079 )(a)      4,421   

Communications and Information Services

      2,715        (60 )(a)      2,655   

Depreciation and Amortization

      3,353        (1,608 )(d)      1,745   

Special Charges

      16,138        (16,138 )(e)      —     

Acquisition and Transition Costs

      712        (712 )(f)      —     

Other Operating Expenses

      6,243        (254 )(a)      5,989   
                        

TOTAL EXPENSES

      203,161        (27,219 )      175,942   
                        

INCOME BEFORE INTEREST EXPENSE ON LONG-TERM DEBT AND INCOME TAXES

      804        28,554        29,358   

Interest Expense on Long-term Debt

      —          5,685 (b)      5,685   
                        

INCOME BEFORE INCOME TAXES

      804        22,869        23,673   

Provision for Income Taxes

      7,033        2,924 (g)      9,957   
                        

NET INCOME (LOSS)

      (6,229 )      19,945        13,716   

Net Income (Loss) Attributable to Noncontrolling Interest

      (3,010 )      379 (h)      (2,631 ) 
                        

NET INCOME (LOSS) ATTRIBUTABLE TO EVERCORE PARTNERS INC.

    $ (3,219 )    $ 19,566      $ 16,347   
                        

Adjusted Class A Common Stock Outstanding

       

Basic and Diluted Weighted Average Shares of Class A Common Stock Outstanding

      13,011        —          13,011   

Vested Partnership Units

      —          14,771 (i)      14,771   

Unvested Partnership Units

      —          4,603 (i)      4,603   

Vested Restricted Stock Units - Event Based

      1,205        (19 )(i)      1,186   

Unvested Restricted Stock Units - Event Based

      —          743 (i)      743   

Vested Restricted Stock Units - Service Based

      449        —          449   

Unvested Restricted Stock Units - Service Based

      —          1,061 (i)      1,061   

Unvested Restricted Stock - Service Based

      —          107 (i)      107   
                        

Total Shares

      14,665        21,266        35,931   
                        

Net Income (Loss) Per Share Attributable to Evercore Partners Inc. Common Shareholders:

       

Basic

    $ (0.22 )      $ 0.45   

Diluted

    $ (0.22 )      $ 0.45   

 

A - 6

EVERCORE PARTNERS INC.

CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENT OF OPERATIONS

NINE MONTHS ENDED SEPTEMBER 30, 2008

(dollars in thousands, except per share data)

(UNAUDITED)

 

     Evercore
Partners
Inc. U.S.
GAAP		    Pro Forma
Adjustments		     Evercore
Partners Inc.
Adjusted
Pro Forma

REVENUES

        

Advisory Revenue

    $ 149,870    $ (2,534 )(a)    $ 147,336

Investment Management Revenue

      8,665      (627 )(a)      8,038

Other Revenue

      24,893      (21,339 )(b)      3,554
                     

TOTAL REVENUES

      183,428      (24,500 )      158,928

Interest Expense

      22,009      (22,009 )(b)      —  
                     

NET REVENUES

      161,419      (2,491 )      158,928
                     

EXPENSES

        

Employee Compensation and Benefits

      112,078      (7,452 )(j)      104,626

Occupancy and Equipment Rental

      9,539      —          9,539

Professional Fees

      11,746      (2,039 )(a)      9,707

Travel and Related Expenses

      7,299      (895 )(a)      6,404

Communications and Information Services

      2,309      (44 )(a)      2,265

Depreciation and Amortization

      3,164      (1,415 )(d)      1,749

Special Charges

      4,132      (4,132 )(e)      —  

Acquisition and Transition Costs

      —        —          —  

Other Operating Expenses

      4,015      (183 )(a)      3,832
                     

TOTAL EXPENSES

      154,282      (16,160 )      138,122
                     

INCOME BEFORE INTEREST EXPENSE ON LONG-TERM DEBT AND INCOME TAXES

      7,137      13,669        20,806

Interest Expense on Long-term Debt

      —        670 (b)      670
                     

INCOME BEFORE INCOME TAXES

      7,137      12,999        20,136

Provision for Income Taxes

      3,642      3,952 (g)      7,594
                     

NET INCOME

      3,495      9,047        12,542

Net Income Attributable to Noncontrolling Interest

      2,872      (2,872 )(h)      —  
                     

NET INCOME ATTRIBUTABLE TO EVERCORE PARTNERS INC.

    $ 623    $ 11,919      $ 12,542
                     

Adjusted Class A Common Stock Outstanding

        

Basic and Diluted Weighted Average Shares of Class A Common Stock Outstanding

      11,469      113 (i)      11,582

Vested Partnership Units

      —        15,188 (i)      15,188

Unvested Partnership Units

      77      4,776 (i)      4,853

Vested Restricted Stock Units - Event Based

      1,212      (3 )(i)      1,209

Unvested Restricted Stock Units - Event Based

      —        803 (i)      803

Vested Restricted Stock Units - Service Based

      233      —          233

Unvested Restricted Stock Units - Service Based

      38      —          38

Unvested Restricted Stock - Service Based

      134      —          134
                     

Total Shares

      13,163      20,877        34,040
                     

Net Income Per Share Attributable to Evercore Partners Inc. Common Shareholders:

        

Basic

    $ 0.05      $ 0.37

Diluted

    $ 0.05      $ 0.37

 

A - 7

EVERCORE PARTNERS INC.

ADJUSTED PRO FORMA SEGMENT RECONCILIATION TO U.S. GAAP

THREE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(dollars in thousands)

(UNAUDITED)

 

     Three Months Ended September 30, 2009
     Adjusted Pro Forma Basis     Adjustments     U.S. GAAP
Basis
     Advisory    Investment
Management		       Consolidated
Results

REVENUES

          

Advisory Revenue

    $ 71,596    $ —        $ 1,710 (a)    $ 73,306

Investment Management Revenue

      —        9,785        —          9,785

Other Revenue

      1,208      793        2,602 (b)      4,603
                             

TOTAL REVENUES

      72,804      10,578        4,312        87,694

Interest Expense

      —        —          4,498 (b)      4,498
                             

NET REVENUES

      72,804      10,578        (186 )      83,196
                             

EXPENSES

          

Employee Compensation and Benefits

      41,119      9,574        4,411 (c)      55,104

Non-compensation Costs

      8,812      4,701        2,293 (a)(d)      15,806
                             

TOTAL EXPENSES

      49,931      14,275        6,704        70,910
                             

Income (Loss) Before Interest Expense on Long-term Debt and Income Taxes

      22,873      (3,697 )      (6,890 )      12,286

Interest Expense on Long-term Debt

      1,024      872        (1,896 )(b)      —  
                             

Income (Loss) Before Income Taxes

    $ 21,849    $ (4,569 )    $ (4,994 )    $ 12,286
                             
     Three Months Ended September 30, 2008
     Adjusted Pro Forma Basis     Adjustments     U.S. GAAP
Basis
     Advisory    Investment
Management		       Consolidated
Results

REVENUES

          

Advisory Revenue

    $ 50,372    $ —        $ 1,075 (a)    $ 51,447

Investment Management Revenue

      —        3,921        380 (a)      4,301

Other Revenue

      1,071      664        8,235 (b)      9,970
                             

TOTAL REVENUES

      51,443      4,585        9,690        65,718

Interest Expense

      —        —          8,905 (b)      8,905
                             

NET REVENUES

      51,443      4,585        785        56,813
                             

EXPENSES

          

Employee Compensation and Benefits

      35,172      5,139        —          40,311

Non-compensation Costs

      9,454      1,564        3,614 (a)(d)(e)      14,632
                             

TOTAL EXPENSES

      44,626      6,703        3,614        54,943
                             

Income (Loss) Before Interest Expense on Long-term Debt and Income Taxes

      6,817      (2,118 )      (2,829 )      1,870

Interest Expense on Long-term Debt

      —        670        (670 )(b)      —  
                             

Income (Loss) Before Income Taxes

    $ 6,817    $ (2,788 )    $ (2,159 )    $ 1,870
                             

 

A - 8

EVERCORE PARTNERS INC.

ADJUSTED PRO FORMA SEGMENT RECONCILIATION TO U.S. GAAP

NINE MONTHS ENDED SEPTEMBER 30, 2009 AND 2008

(dollars in thousands)

(UNAUDITED)

 

     Nine Months Ended September 30, 2009
     Adjusted Pro Forma Basis     Adjustments     U.S. GAAP
Basis
     Advisory    Investment
Management		       Consolidated
Results

REVENUES

          

Advisory Revenue

    $ 188,084    $ —        $ 4,347 (a)    $ 192,431

Investment Management Revenue

      —        12,511        3 (a)      12,514

Other Revenue

      1,739      2,966        13,513 (b)      18,218
                             

TOTAL REVENUES

      189,823      15,477        17,863        223,163

Interest Expense

      —        —          19,198 (b)      19,198
                             

NET REVENUES

      189,823      15,477        (1,335 )      203,965
                             

EXPENSES

          

Employee Compensation and Benefits

      110,013      28,393        4,411 (c)      142,817

Non-compensation Costs

      24,571      12,965        22,808 (a)(d)(e)(f)      60,344
                             

TOTAL EXPENSES

      134,584      41,358        27,219        203,161
                             

Income (Loss) Before Interest Expense on Long-term Debt and Income Taxes

      55,239      (25,881 )      (28,554 )      804

Interest Expense on Long-term Debt

      1,707      3,978        (5,685 )(b)      —  
                             

Income (Loss) Before Income Taxes

    $ 53,532    $ (29,859 )    $ (22,869 )    $ 804
                             
     Nine Months Ended September 30, 2008
     Adjusted Pro Forma Basis     Adjustments     U.S. GAAP
Basis
     Advisory    Investment
Management		       Consolidated
Results

REVENUES

          

Advisory Revenue

    $ 147,336    $ —        $ 2,534 (a)    $ 149,870

Investment Management Revenue

      —        8,038        627 (a)      8,665

Other Revenue

      2,580      974        21,339 (b)      24,893
                             

TOTAL REVENUES

      149,916      9,012        24,500        183,428

Interest Expense

      —        —          22,009 (b)      22,009
                             

NET REVENUES

      149,916      9,012        2,491        161,419
                             

EXPENSES

          

Employee Compensation and Benefits

      90,403      14,223        7,452 (j)      112,078

Non-compensation Costs

      27,432      6,064        8,708 (a)(d)(e)      42,204
                             

TOTAL EXPENSES

      117,835      20,287        16,160        154,282
                             

Income (Loss) Before Interest Expense on Long-term Debt and Income Taxes

      32,081      (11,275 )      (13,669 )      7,137

Interest Expense on Long-term Debt

      —        670        (670 )(b)      —  
                             

Income (Loss) Before Income Taxes

    $ 32,081    $ (11,945 )    $ (12,999 )    $ 7,137
                             

 

A - 9

Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Statements of Operations

 

(a) The Company has reflected the reclassification of reimbursable expenses and expenses associated with revenue sharing engagements with third parties from revenue.

 

(b) Adjusted Pro Forma segment information classifies interest expense on short-term repurchase agreements within the Investment Management segment as Other Revenue, net, whereas U.S. GAAP results reflect this in Interest Expense. Interest Expense on Long-term Debt is presented as a separate line on a segment basis and is included in Interest Expense on a U.S. GAAP Basis.

 

(c) The Company incurred expenses for the three and nine months ended September 30, 2009 from the modification of Evercore LP Units, which will vest over a five year period, and the vesting of modified equity awards in conjunction with an offering during the third quarter of 2009.

 

(d) Reflects expenses associated with amortization of intangible assets acquired in the Protego, Braveheart, SFS and EAM acquisitions.

 

(e) The Company has reflected charges in conjunction with Evercore’s decision to suspend capital raising for ECP and other ongoing strategic cost management initiatives. The charge relates to the expense required to be recorded under U.S. GAAP for stock-based compensation awards that are voluntarily forfeited by employees who remain with the Company. During the second quarter of 2009 employees voluntarily forfeited 416,878 unvested restricted stock units and 250,230 Evercore LP partnership units. The Company has also reflected charges in the first quarter of 2008, as Special Charges in connection with the write-off of certain capitalized costs associated with ECP capital raising initiatives, employee severance, accelerated share-based vesting and facilities costs associated with the closing of the Los Angeles office.

 

(f) The Company has reflected Acquisition and Transition Costs for costs incurred in connection with the acquisition of SFS and the formation of ETC. This charge reflects the change in accounting for deal-related costs required by SFAS No. 141(R), Business Combinations, codified under ASC 805, which was effective January 1, 2009.

 

(g) Evercore is organized as a series of Limited Liability Companies, Partnerships, a C-Corporation and a Public Corporation and therefore, not all of the Company’s income is subject to corporate level taxes. As a result, adjustments have been made to increase Evercore’s effective tax rate to approximately 42% for the three and nine months ended September 30, 2009. The effects of these adjustments increased the effective tax rate to approximately 44% for the three months ended September 30, 2008 and decreased the effective tax rate to 38% for the nine months ended September 30, 2008. These adjustments assume that the Company has adopted a conventional corporate tax structure and is taxed as a C Corporation in the U.S. at the prevailing corporate rates, that all deferred tax assets relating to foreign operations are fully realizable within the structure on a consolidated basis and that adjustments for deferred tax assets related to tax deductions for equity-based compensation awards are made directly to stockholders’ equity. The decrease in the effective tax rate for the nine months ended September 30, 2008 resulted from a discrete net tax benefit that was realized during the quarter. The Company’s effective tax rate would have been 41% excluding that benefit.

 

(h) Reflects adjustment to eliminate noncontrolling interest related to all Evercore LP partnership units which are assumed to be converted to Class A common stock.

 

(i) Assumes the vesting of all Evercore LP partnership units and restricted stock unit event-based awards and reflects on a weighted average basis, the dilution of unvested service-based awards. In the computation of outstanding common stock equivalents for U.S. GAAP net income per share, the unvested Evercore LP partnership units are anti-dilutive and the event-based restricted stock units are excluded from the calculation.

 

(j) Reflects an adjustment for a reduction of compensation expense associated with the issuance of restricted stock to the former shareholders of Braveheart in the first quarter of 2008 as additional deferred consideration pursuant to the Sale and Purchase Agreement associated with the Braveheart acquisition.

 

A - 10

Historical Adjusted Pro Forma Results

The below table reflects summarized historical quarterly Adjusted Pro Forma information for 2009 and 2008. We have included the historical Adjusted Pro Forma results in this press release merely as additional information. Historical U.S. GAAP information and a reconciliation from Adjusted Pro Forma for the three months ended June 30, 2009 and 2008 and the three months ended March 31, 2009 and 2008, can be found in our Q2 2009 and Q1 2009 earnings releases furnished to the SEC on July 29, 2009 and April 30, 2009, respectively. Revenues and Non-compensation costs for the fourth quarter of 2008 have been recast to exclude reimbursable client related expenses and expenses associated with third party revenue sharing arrangements.

 

     Three Months Ended
     September 30,
2009		     June 30,
2009		     March 31,
2009		     December 31,
2008		     September 30,
2008		    June 30,
2008		    March 31,
2008

REVENUES

                 

Advisory Revenue

    $ 71,596      $ 68,439      $ 48,049      $ 31,085      $ 50,372    $ 56,566    $ 40,398

Investment Management Revenue

      9,785        2,160        566        766        3,921      1,702      2,415

Other Revenue, net

      2,001        713        1,991        2,607        1,735      597      1,222
                                                    

NET REVENUES

      83,382        71,312        50,606        34,458        56,028      58,865      44,035
                                                    

EXPENSES

                 

Employee Compensation and Benefits

      50,693        51,859        35,854        34,585        40,311      38,512      25,803

Non-compensation Costs

      13,513        13,376        10,647        12,309        11,018      10,699      11,779
                                                    

TOTAL EXPENSES

      64,206        65,235        46,501        46,894        51,329      49,211      37,582
                                                    

Income (Loss) Before Interest Expense on Long-term Debt and Income Taxes

      19,176        6,077        4,105        (12,436 )      4,699      9,654      6,453

Interest Expense on Long-term Debt

      1,896        1,897        1,892        1,884        670      —        —  
                                                    

Income (Loss) Before Income Taxes

      17,280        4,180        2,213        (14,320 )      4,029      9,654      6,453

Provision (Benefit) for Income Taxes

      7,264        1,757        936        (5,831 )      1,759      3,877      1,958
                                                    

Net Income (Loss)

      10,016        2,423        1,277        (8,489 )      2,270      5,777      4,495

Net Income (Loss) Attributable to Noncontrolling Interest

      (976 )      (1,127 )      (528 )      —          —        —        —  
                                                    

Net Income (Loss) Attributable to Evercore Partners Inc.

    $ 10,992      $ 3,550      $ 1,805      $ (8,489 )    $ 2,270    $ 5,777    $ 4,495
                                                    

Earnings (Loss) Per Share

    $ 0.29      $ 0.10      $ 0.05      $ (0.25 )    $ 0.07    $ 0.17    $ 0.13
                                                    

 

A - 11