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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
PR Newswire
Oct 28, 2009
NEW YORK, Oct. 28 /PRNewswire-FirstCall/ --
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
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 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 Secretaria de Hacienda y Credito Publico," 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.
Consolidated Adjusted Pro Forma and U.S. GAAP Results
Adjusted Pro Forma
--------------------------------------------
Three Months Ended % Change vs.
----------------------------- --------------
June
September 30, September June September
30, 2009 30, 30, 30,
2009 (1) 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues (2) $83,382 $71,312 $56,028 17% 49%
------- ------- -------
Expenses:
Employee Compensation and
Benefits 50,693 51,859 40,311 (2%) 26%
Non-compensation Costs (2) 13,513 13,376 11,018 1% 23%
Total Expenses 64,206 65,235 51,329 (2%) 25%
------ ------ ------
Operating Income 19,176 6,077 4,699 216% 308%
Interest Expense on Long-term
Debt (3) 1,896 1,897 670 0% 183%
----- ----- ---
Pre-Tax Income 17,280 4,180 4,029 313% 329%
Provision for Income Taxes 7,264 1,757 1,759 313% 313%
----- ----- -----
Net Income 10,016 2,423 2,270 313% 341%
Noncontrolling Interest (976) (1,127) - 13% NM
---- ------ ---
Net Income Attributable to
Evercore Partners Inc. $10,992 $3,550 $2,270 210% 384%
======= ====== ======
Earnings Per Share $0.29 $0.10 $0.07 190% 314%
===== ===== =====
Adjusted Pro Forma
--------------------------------
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues (2) $205,300 $158,928 29%
-------- --------
Expenses:
Employee Compensation and
Benefits 138,406 104,626 32%
Non-compensation Costs (2) 37,536 33,496 12%
Total Expenses 175,942 138,122 27%
------- -------
Operating Income 29,358 20,806 41%
Interest Expense on Long-term
Debt (3) 5,685 670 749%
----- ---
Pre-Tax Income 23,673 20,136 18%
Provision for Income Taxes 9,957 7,594 31%
----- -----
Net Income 13,716 12,542 9%
Noncontrolling Interest (2,631) - NM
------ ---
Net Income Attributable to
Evercore Partners Inc. $16,347 $12,542 30%
======= =======
Earnings Per Share $0.45 $0.37 22%
===== =====
U.S. GAAP
---------------------------------------------
Three Months Ended % Change vs.
------------------------------ --------------
June
September 30, September June September
30, 2009 30, 30, 30,
2009 (1) 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues (2) $83,196 $71,043 $56,813 17% 46%
------- ------- -------
Expenses:
Employee Compensation and
Benefits 55,104 51,859 40,311 6% 37%
Non-compensation Costs (2) 15,806 15,983 12,937 (1%) 22%
Special Charges - 16,138 1,695 NM NM
--- ------ -----
Total Expenses 70,910 83,980 54,943 (16%) 29%
------ ------ ------
Operating Income (Loss) 12,286 (12,937) 1,870 NM 557%
Interest Expense on Long-term
Debt (3) - - - NM NM
--- --- ---
Pre-Tax Income (Loss) 12,286 (12,937) 1,870 NM 557%
Provision for Income Taxes 4,602 1,373 1,475 235% 212%
----- ----- -----
Net Income (Loss) 7,684 (14,310) 395 NM NM
Noncontrolling Interest 5,051 (8,267) 863 NM 485%
----- ------ ---
Net Income (Loss)
Attributable to Evercore
Partners Inc. $2,633 $(6,043) $(468) NM NM
====== ======= =====
Earnings (Loss) Per Share $0.14 $(0.43) $(0.04) NM NM
===== ====== ======
U.S. GAAP
--------------------------------
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues (2) $203,965 $161,419 26%
-------- --------
Expenses:
Employee Compensation and
Benefits 142,817 112,078 27%
Non-compensation Costs (2) 44,206 38,072 16%
Special Charges 16,138 4,132 291%
------ -----
Total Expenses 203,161 154,282 32%
------- -------
Operating Income (Loss) 804 7,137 (89%)
Interest Expense on Long-term
Debt (3) - - NM
--- ---
Pre-Tax Income (Loss) 804 7,137 (89%)
Provision for Income Taxes 7,033 3,642 93%
----- -----
Net Income (Loss) (6,229) 3,495 NM
Noncontrolling Interest (3,010) 2,872 NM
------ -----
Net Income (Loss)
Attributable to Evercore
Partners Inc. $(3,219) $623 NM
======= ====
Earnings (Loss) Per Share $(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.
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.
---------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues:
Advisory (1) $71,596 $68,439 $50,372 5% 42%
Other Revenue, net 1,208 (71) 1,071 NM 13%
----- --- -----
Net Revenues 72,804 68,368 51,443 6% 42%
------ ------ ------
Expenses:
Employee Compensation and
Benefits 41,119 39,682 35,172 4% 17%
Non-compensation Costs (1) 8,812 8,468 9,454 4% (7%)
----- ----- -----
Total Expenses 49,931 48,150 44,626 4% 12%
------ ------ ------
Adjusted Pro Forma Operating
Income 22,873 20,218 6,817 13% 236%
Interest Expense on Long-term
Debt (2) 1,024 683 - 50% NM
----- --- ---
Adjusted Pro Forma Pre-Tax
Income $21,849 $19,535 $6,817 12% 221%
======= ======= ======
Nine Months Ended
-------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues:
Advisory (1) $188,084 $147,336 28%
Other Revenue, net 1,739 2,580 (33%)
----- -----
Net Revenues 189,823 149,916 27%
------- -------
Expenses:
Employee Compensation and
Benefits 110,013 90,403 22%
Non-compensation Costs (1) 24,571 27,432 (10%)
------ ------
Total Expenses 134,584 117,835 14%
------- -------
Adjusted Pro Forma Operating
Income 55,239 32,081 72%
Interest Expense on Long-term
Debt (2) 1,707 - NM
----- ---
Adjusted Pro Forma Pre-Tax
Income $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 Secretaria de Hacienda y Credito Publico.
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.
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 Directors(1), 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.
(1) Stock compensation costs for Senior Managing Directors hired in the past twenty-four months
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.
---------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Net Revenues:
Private Equity (2) $2,354 $(1,812) $3,184 NM (26%)
Institutional Asset
Management 6,476 3,450 900 88% 620%
Wealth Management 955 522 (163) 83% NM
--- --- ----
Investment Management
Revenues 9,785 2,160 3,921 353% 150%
Other Revenue, net (3) 793 784 664 1% 19%
--- --- ---
Net Revenues 10,578 2,944 4,585 259% 131%
------ ----- -----
Expenses:
Employee Compensation
and Benefits 9,574 12,177 5,139 (21%) 86%
Non-compensation Costs (2) 4,701 4,908 1,564 (4%) 201%
----- ----- -----
Total Expenses 14,275 17,085 6,703 (16%) 113%
------ ------ -----
Adjusted Pro Forma
Operating Income (Loss) (3,697) (14,141) (2,118) 74% (75%)
Interest Expense on
Long-term Debt (3) 872 1,214 670 (28%) 30%
--- ----- ---
Adjusted Pro Forma
Pre-Tax Income (Loss) $(4,569) $(15,355) $(2,788) 70% (64%)
======= ======== =======
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Net Revenues:
Private Equity (2) $2,012 $8,615 (77%)
Institutional Asset Management 8,856 (414) NM
Wealth Management 1,643 (163) NM
----- ----
Investment Management Revenues 12,511 8,038 56%
Other Revenue, net (3) 2,966 974 205%
----- ---
Net Revenues 15,477 9,012 72%
------ -----
Expenses:
Employee Compensation and Benefits 28,393 14,223 100%
Non-compensation Costs (2) 12,965 6,064 114%
------ -----
Total Expenses 41,358 20,287 104%
------ ------
Adjusted Pro Forma Operating
Income (Loss) (25,881) (11,275) (130%)
Interest Expense on Long-term Debt (3) 3,978 670 494%
----- ---
Adjusted Pro Forma Pre-Tax Income
(Loss) $(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.
Revenues
Investment Management Revenue Components
Three Months Ended % Change vs.
----------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Management Fees
Wealth Management $1,144 $707 $- 62% NM
Institutional Asset
Management 5,851 3,311 375 77% NM
Private Equity 2,970 2,002 2,405 48% 23%
----- ----- -----
Total Management Fees 9,965 6,020 2,780 66% 258%
----- ----- -----
Realized and Unrealized Gains
(Losses)
Institutional Asset
Management 625 139 565 350% 11%
Private Equity (616) (3,814) 779 84% NM
---- ------ ---
Total Realized and Unrealized
Gains (Losses) 9 (3,675) 1,344 NM (99%)
--- ------ -----
HighView - - - NM NM
Equity in EAM Losses - - (40) NM NM
Equity in Pan Losses (189) (185) (163) (2%) (16%)
---- ---- ----
Investment Management Revenues $9,785 $2,160 $3,921 353% 150%
====== ====== ======
Nine Months Ended
---------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Management Fees
Wealth Management $2,221 $- NM
Institutional Asset
Management 10,167 2,393 325%
Private Equity 7,119 6,158 16%
----- -----
Total Management Fees 19,507 8,551 128%
------ -----
Realized and Unrealized Gains (Losses)
Institutional Asset
Management (57) (2,492) 98%
Private Equity (5,107) 2,457 NM
------ -----
Total Realized and Unrealized
Gains (Losses) (5,164) (35) NM
------ ---
HighView (920) - NM
Equity in EAM Losses (334) (315) (6%)
Equity in Pan Losses (578) (163) (255%)
---- ----
Investment Management Revenues $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.
---------------------------- --------------
September June September June September
30, 30, 30, 30, 30,
2009 2009 2008 2009 2008
---- ---- ---- ---- ----
(dollars in thousands)
Adjusted Pro Forma Pre-Tax
Income (Loss) $(4,569) $(15,355) $(2,788) 70% (64%)
Net Income (Loss) Attributable
to Noncontrolling Interest (976) (1,127) - 13% NM
---- ------ ---
Adjusted Pro Forma Pre-Tax
Income (Loss) Net of
Noncontrolling Interest $(3,593) $(14,228) $(2,788) 75% (29%)
======= ======== =======
Nine Months Ended
--------------------------------
September September
30, 30,
2009 2008 % Change
---- ---- --------
(dollars in thousands)
Adjusted Pro Forma Pre-Tax
Income (Loss) $(29,859) $(11,945) (150%)
Net Income (Loss) Attributable to
Noncontrolling Interest (2,631) - NM
------ ---
Adjusted Pro Forma Pre-Tax Income
(Loss) Net of Noncontrolling
Interest $(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.
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. EVR-X
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.
ANNEX I
Schedule Page Number
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
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 Nine Months
Ended Ended
September 30, 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.
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.
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.
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
Evercore Partners
Partners Inc.
Inc. Pro Adjusted
U.S. Forma Pro
GAAP Adjustments 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
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
Evercore Partners
Partners Inc.
Inc. Pro Adjusted
U.S. Forma Pro
GAAP Adjustments 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
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
Evercore Partners
Partners Inc.
Inc. Pro Adjusted
U.S. Forma Pro
GAAP Adjustments 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
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
Evercore Partners
Partners Inc.
Inc. Pro Adjusted
U.S. Forma Pro
GAAP Adjustments 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
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 U.S. GAAP
------------------------ Basis
Investment ------------
Manage- Consolidated
Advisory ment Adjustments 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 U.S. GAAP
------------------------ Basis
Investment ------------
Manage- Consolidated
Advisory ment Adjustments 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
====== ======= ======= ======
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 U.S. GAAP
------------------------ Basis
Investment ------------
Manage- Consolidated
Advisory ment Adjustments 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 U.S. GAAP
------------------------ Basis
Investment ------------
Manage- Consolidated
Advisory ment Adjustments 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
======= ======== ======== ======
Notes to Unaudited Condensed Consolidated Adjusted Pro Forma Statements of Operations
1. The Company has reflected the reclassification of reimbursable expenses
and expenses associated with revenue sharing engagements with third
parties from revenue.
2. 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.
3. 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.
4. Reflects expenses associated with amortization of intangible assets
acquired in the Protego, Braveheart, SFS and EAM acquisitions.
5. 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.
6. 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.
7. 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.
8. Reflects adjustment to eliminate noncontrolling interest related to all
Evercore LP partnership units which are assumed to be converted to Class
A common stock.
9. 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.
10. 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.
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 June March December
30, 30, 31, 31,
2009 2009 2009 2008
--------- ---- ------ ---------
REVENUES
Advisory Revenue $71,596 $68,439 $48,049 $31,085
Investment Management Revenue 9,785 2,160 566 766
Other Revenue, net 2,001 713 1,991 2,607
----- --- ----- -----
NET REVENUES 83,382 71,312 50,606 34,458
------ ------ ------ ------
EXPENSES
Employee Compensation and Benefits 50,693 51,859 35,854 34,585
Non-compensation Costs 13,513 13,376 10,647 12,309
------ ------ ------ ------
TOTAL EXPENSES 64,206 65,235 46,501 46,894
------ ------ ------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes 19,176 6,077 4,105 (12,436)
Interest Expense on Long-term
Debt 1,896 1,897 1,892 1,884
----- ----- ----- -----
Income (Loss) Before Income Taxes 17,280 4,180 2,213 (14,320)
Provision (Benefit) for Income
Taxes 7,264 1,757 936 (5,831)
----- ----- --- ------
Net Income (Loss) 10,016 2,423 1,277 (8,489)
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)
======= ====== ====== =======
Earnings (Loss) Per Share $0.29 $0.10 $0.05 $(0.25)
===== ===== ===== ======
Three Months Ended
-------------------------
September June March
30, 30, 31,
2008 2008 2008
--------- ---- -----
REVENUES
Advisory Revenue $50,372 $56,566 $40,398
Investment Management Revenue 3,921 1,702 2,415
Other Revenue, net 1,735 597 1,222
----- --- -----
NET REVENUES 56,028 58,865 44,035
------ ------ ------
EXPENSES
Employee Compensation and Benefits 40,311 38,512 25,803
Non-compensation Costs 11,018 10,699 11,779
------ ------ ------
TOTAL EXPENSES 51,329 49,211 37,582
------ ------ ------
Income (Loss) Before Interest
Expense on Long-term Debt and
Income Taxes 4,699 9,654 6,453
Interest Expense on Long-term Debt 670 - -
--- --- ---
Income (Loss) Before Income Taxes 4,029 9,654 6,453
Provision (Benefit) for Income
Taxes 1,759 3,877 1,958
----- ----- -----
Net Income (Loss) 2,270 5,777 4,495
Net Income (Loss) Attributable to
Noncontrolling Interest - - -
--- --- ---
Net Income (Loss) Attributable to
Evercore Partners Inc. $2,270 $5,777 $4,495
====== ====== ======
Earnings (Loss) Per Share $0.07 $0.17 $0.13
===== ===== =====
SOURCE Evercore Partners Inc.
Copyright (2009) PR Newswire. All Rights Reserved.
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