Highlights
-- Record adjusted pro forma net revenues for fourth quarter of $93.8
million and fiscal year of $321.6 million represent 19% and 49% growth
compared to prior respective periods.
-- Adjusted pro forma net income of $9.3 million for the quarter and $51.4
million for the year ended December 31, 2007. U.S. GAAP net income of $3.1
million for the quarter and net loss of $34.5 million for the same periods.
-- Twelve month Advisory revenues, net revenues and adjusted pro forma net
income all exceed the previous full year records.
-- Advisory backlog remains strong.
NEW YORK, Feb. 12 /PRNewswire-FirstCall/ -- Evercore Partners Inc.
(NYSE: EVR) today announced that for the fourth quarter ended December 31,
2007 its adjusted pro forma net income was $9.3 million or $0.28 per share,
compared to adjusted pro forma net income of $14.5 million or $0.45 per
share for the prior year quarter. For the fiscal year ended December 31,
2007, Evercore's adjusted pro forma net revenues were $321.6 million and
net income was $51.4 million or $1.56 per share, compared to net revenues
of $216.4 million and net income of $40.5 million or $1.27 per share for
the same period in 2006. Adjusted Pro Forma Net revenues increased 19% to
$93.8 million for the quarter ended December 31, 2007 compared to adjusted
pro forma net revenues of $79.0 million for the quarter ended December 31,
2006.
For the quarter ended December 31, 2007, Evercore's U.S. GAAP net
income was $3.1 million or $0.25 per share. Evercore reported a net loss of
$34.5 million, or $3.38 per share, for the fiscal year ended December 31,
2007. Evercore's 2007 reported results reflect a non-cash equity-based
compensation expense of $124 million associated with the vesting of
employee equity awards during the year.
The following table provides an overview of the Company's results:
Twelve Months Ended December 31,
(dollars in thousands, except per share data)
Adjusted Pro Forma (1)
U.S. GAAP
2006(1) 2007 % Change 2006 2007 % Change
Net Revenues:
Advisory $183,781 $295,751 60.9% $193,826 $295,751 52.6%
Investment
Management $23,451 $20,158 (14.0%) $20,485 $20,158 (1.6%)
Other - Net $2,482 $5,690 129.3% $2,078 $5,690 173.8%
Net Revenues $209,714 $321,599 53.4% $216,389 $321,599 48.6%
Pre-Tax Income
(Loss) $94,132 $(54,935) N/A $70,610 $86,097 21.9%
Pre-Tax Margin 44.9% (17.1%) 32.6% 26.8%
Net Income
(Loss) $69,737 $(34,495) N/A $40,531 $51,443 26.9%
EPS $(3.38) $1.27 $1.56 22.8%
Three Months Ended December 31,
(dollars in thousands, except per share data)
Adjusted Pro Forma (1)
U.S. GAAP
2006(1) 2007 % Change 2006 2007 % Change
Net Revenues:
Advisory $75,085 $87,824 17.0% $75,738 $87,824 16.0%
Investment
Management $2,404 $4,347 80.8% $2,404 $4,347 80.8%
Other - Net $1,374 $1,621 18.0% $874 $1,621 85.5%
Net Revenues $78,863 $93,792 18.9% $79,016 $93,792 18.7%
Pre-Tax Income $23,795 $14,251 (40.1%) $25,181 $15,543 (38.3%)
Pre-Tax Margin 30.2% 15.2% 31.9% 16.6%
Net Income $3,487 $3,138 (10.0%) $14,453 $9,287 (35.7%)
EPS $0.69 $0.25 (63.8%) $0.45 $0.28 (37.8%)
(1) See "Basis of Alternative Financial Statement Presentations" on page 9
and Annex I for a detailed discussion of the presentation of results
in 2006 and the differences in the calculation of the Company's
results prepared in accordance with U.S. GAAP and on an adjusted pro
forma basis. Any financial measure other than U.S. GAAP results
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP.
Over the course of 2007, Evercore announced the hiring of eight new
Senior Managing Directors across the firm. Within its Advisory business,
seven new Senior Managing Directors were added, expanding the firm's
capabilities in the Consumer/Retail, Energy, Health Care, and
Aerospace/Defense sectors and its presence in Europe. After adjusting for
the recruiting and compensation costs ($14.7 million and $9.0 million
after-tax for the fiscal year and fourth quarter 2007, respectively) of
Senior Managing Directors hired in 2007, adjusted pro forma net income for
the fiscal year and fourth quarter 2007 would be $66.1 million (54% growth)
and $18.3 million (18% growth), respectively. Earnings per share for the
fiscal year and fourth quarter would have been $2.01 and $0.54,
respectively.
Evercore's revenues and net income can fluctuate materially depending
on the number, size and timing of the completed transactions on which it
advises, the number and size of Investment Management gains or losses and
other factors. Accordingly, the revenues and net income in any particular
quarter may not be indicative of future results. Evercore believes that
annual results are the most meaningful.
Business Overview
"We are pleased with our results during the fourth quarter and the full
year," said Roger C. Altman, Chairman, Evercore. "We achieved record
revenues in both periods. All of our new partners have started and are
active in the global marketplace. We remain focused on our core clients -
major multinational corporations - who are benefiting from the shift in
emphasis in the marketplace to strategic transactions. This environment
creates opportunities for us, and we are continuing to add challenging and
diverse assignments to our backlog."
"Our Investment Management business performed well in 2007 despite
challenging market conditions in both the private and public securities
markets," said Austin M. Beutner, President and Co-Chief Executive Officer,
Evercore. "We have concluded the investment period of our second private
equity fund and have commenced our fundraising efforts for our successor
fund. Asset accumulation was robust in both our U.S. and Mexican public
securities businesses in 2007 and will continue to be our focus in 2008."
Revenues
Advisory
Advisory revenues were earned from clients in the following geographic
markets:
Twelve Months Ended December 31,
(dollars in thousands)
U.S. GAAP
2006 (1) 2007 % Change
United States $140,166 $230,143 64.2%
Europe 37,799 41,405 9.5%
Latin America 5,816 20,963 260.4%
Other - 3,240 N/A
Advisory Revenue $183,781 $295,751 60.9%
Adjusted Pro Forma (1)
2006 2007 % Change
United States $140,166 $230,143 64.2%
Europe 40,796 41,405 1.5%
Latin America 12,864 20,963 63.0%
Other - 3,240 N/A
Advisory Revenue $193,826 $295,751 52.6%
Three Months Ended December 31,
(dollars in thousands)
U.S. GAAP
2006 (1) 2007 % Change
United States $47,936 $71,551 49.3%
Europe 22,674 4,239 (81.3%)
Latin America 4,475 9,119 103.8%
Other - 2,915 N/A
Advisory Revenue $75,085 $87,824 17.0%
Adjusted Pro Forma (1)
2006 2007 % Change
United States $47,936 $71,551 49.3%
Europe 23,327 4,239 (81.8%)
Latin America 4,475 9,119 103.8%
Other - 2,915 N/A
Advisory Revenue $75,738 $87,824 16.0%
(1) See "Basis of Alternative Financial Statement Presentations" on page 9
and Annex I for a detailed discussion of the presentation of results
in 2006 and the differences in the calculation of the Company's
results prepared in accordance with U.S. GAAP and on an adjusted pro
forma basis. Any financial measure other than U.S. GAAP results
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP.
Transactions completed during the fourth quarter of 2007 on which
Evercore advised included:
-- E*Trade on its strategic sale of securities to Citadel Investment
-- PSP Investments on its purchase of a 36% equity stake in Telsat
-- International Securities Exchange (ISE) on its sale to Eurex
-- Sequa Corporation on its sale to Carlyle
-- North Pittsburgh Systems on its sale to Consolidated Communications
-- BlueLithium on its sale to Yahoo!
Among the transactions announced during the fourth quarter 2007 on
which Evercore is advising are:
-- Cengage Learning on its acquisition of Houghton-Mifflin's college
division
-- Bracco Diagnostics on its acquisition of E-Z-EM
-- Bright Horizons on its sale to Bain Capital
-- Ocwen Financial on its sale to a group of investors led by their CEO
-- Haights Cross on the sale of its business assets
-- Performance Food Group on its sale to Blackstone
The Restructuring group continues to perform well having recently been
involved in a number of noteworthy mandates. In addition, Evercore is
experiencing a high level of strategic discussions among corporate clients
continuing the shift in activity from financial sponsors toward corporate
acquirers.
According to Thomson Financial, for 2007, Evercore ranked 12th among
all financial institutions in U.S. announced deals. Among boutiques,
Evercore was the number one ranked firm as measured in U.S. announced
transactions and closed transactions. Evercore's 2007 results reflect the
firm's success in serving clients in diverse industries, including the
automotive, media, education, financial services, and energy sectors.
Investment Management
The historical Combined Statements of Operations for the period prior
to the August 10, 2006 initial public offering (IPO) included the results
of the general partners of the private equity funds Evercore managed.
Following the IPO, the Company does not consolidate the results of the
general partners of those private equity funds as they were not contributed
as part of the formation transaction. However, through its equity interest
in the general partner of Evercore Capital Partners II (ECP II) and the
Discovery Fund, Evercore recognizes as revenue 8% to 9% of any carried
interest from these funds plus the pro rata share of realized and
unrealized gains and losses associated with capital invested.
Evercore currently intends to be entitled to 100% of any management
fees and portfolio company fees earned in relation to any private equity
fund formed after the IPO that it manages. The Company also currently
intends to consolidate the general partners of any private equity fund
formed after the IPO that it manages. Accordingly, it expects to record as
revenue 100% of any carried interest and realized or unrealized gains (or
losses) on investments earned by these entities. However, the Company
expects to allocate to its Senior Managing Directors and other employees,
through the direct interests these individuals will hold, a significant
percentage of any such carried interest. In addition, these individuals
will be entitled to any such gains (or losses) on investment based on the
amount of the general partners' capital they contribute in respect of any
such fund. Unlike Evercore Capital Partners I, where the Company made no
direct investment or ECP II where the Company's direct investment is less
than 2% of total capital committed, the Company currently intends to make
significant capital commitments to any future private equity fund it
manages.
Evercore's Investment Management Revenues were comprised of the following:
Twelve Months Ended December 31,
(dollars in thousands)
Adjusted Pro Forma (1)
U.S. GAAP
2006 (1) 2007 % Change 2006 2007 % Change
Private Equity:
Management Fee
Including Portfolio
Company Fee $16,727 $14,608 (12.7%) $17,130 $14,608 (14.7%)
Realized and
Unrealized Gains
(Losses) Including
Carried Interest $5,861 $5,580 (4.8%) $856 $5,580 551.9%
$22,588 $20,188 (10.6%) $17,986 $20,188 12.2%
Public Securities:
Management Fee $191 $1,166 510.5% $420 $1,166 177.6%
Realized and
Unrealized Gains
(Losses) Including
Performance Fee $672 $(1,196) (278.0%) $2,079 $(1,196) (157.5%)
$863 $(30) (103.5%) $2,499 $(30) (101.2%)
Investment
Management Revenue $23,451 $20,158 (14.0%) $20,485 $20,158 (1.6%)
Three Months Ended December 31,
(dollars in thousands)
Adjusted Pro Forma (1)
U.S. GAAP
2006 (1) 2007 % Change 2006 2007 % Change
Private Equity:
Management Fee
Including Portfolio
Company Fee $3,040 $3,856 26.8% $3,040 $3,856 26.8%
Realized and
Unrealized Gains
(Losses) Including
Carried Interest $(1,760) $1,290 173.3% $(1,760) $1,290 173.3%
$1,280 $5,146 302.0% $1,280 $5,146 302.0%
Public Securities:
Management Fee $156 $560 259.0% $156 $560 259.0%
Realized and
Unrealized Gains
(Losses) Including
Performance Fee $968 $(1,359) (240.4%) $968 $(1,359) (240.4%)
$1,124 $(799) (171.1%) $1,124 $(799) (171.1%)
Investment
Management Revenue $2,404 $4,347 80.8% $2,404 $4,347 80.8%
(1) See "Basis of Alternative Financial Statement Presentations" on page 9
and Annex I for a detailed discussion of the presentation of results
in 2006 and the differences in the calculation of the Company's
results prepared in accordance with U.S. GAAP and on an adjusted pro
forma basis. Any financial measure other than U.S. GAAP results
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP.
On an adjusted pro forma basis, Investment Management revenues
decreased from $20.5 million in 2006 to $20.2 million in 2007 and increased
from $2.4 million in the fourth quarter 2006 to $4.3 million in the fourth
quarter 2007.
For the fiscal year ended December 31, 2007 the increase in Private
Equity revenue resulted from gains in the value of investments partially
offset by changes in fee income. Private Equity revenues in the fourth
quarter 2007 increased compared to the fourth quarter 2006 due to increases
in fee income as well as gains in the value of investments.
As of December 31, 2007, the carrying value of Evercore's direct
investments in its private equity funds totaled $14.8 million.
For the fiscal year and quarter ended December 31, 2007 increases in
Management Fees earned from Evercore's Public Securities business in Mexico
when compared to the prior year periods were more than offset by losses on
Evercore's seed capital investments in products managed by the firm's U.S.
Public Securities investment manager.
As of December 31, 2007 assets under management in Evercore's public
securities business in the U.S. and Mexico were $491 million and $649
million, respectively.
Expenses
Operating Expenses
Evercore's operating expenses for the fiscal year and quarter ended
December 31, 2007 and 2006 were as follows:
Twelve Months Ended December 31,
(dollars in thousands)
U.S. GAAP Adjusted Pro Forma (1)
2006 (1) 2007 % Change 2006 2007 % Change
Employee Compensation
and Benefits Expense $72,914 $299,327 N/A $107,072 $173,333 61.9%
% of Net Revenue 34.8% 93.1% 49.5% 53.9%
Non-compensation
Expenses $42,668 $77,207 80.9% $38,708 $62,169 60.6%
% of Net Revenue 20.3% 24.0% 17.9% 19.3%
Three Months Ended December 31,
(dollars in thousands)
U.S. GAAP Adjusted Pro Forma (1)
2006 (1) 2007 % Change 2006 2007 % Change
Employee Compensation
and Benefits Expense $41,347 $57,751 39.7% $41,270 $59,940 45.2%
% of Net Revenue 52.4% 61.6% 52.2% 63.9%
Non-compensation
Expenses $13,721 $21,790 58.8% $12,565 $18,309 45.7%
% of Net Revenue 17.4% 23.2% 15.9% 19.5%
(1) See "Basis of Alternative Financial Statement Presentations" on page 9
and Annex I for a detailed discussion of the presentation of results
in 2006 and the differences in the calculation of the Company's
results prepared in accordance with U.S. GAAP and on an adjusted pro
forma basis. Any financial measure other than U.S. GAAP results
should not be considered a substitute for, or superior to, measures of
financial performance prepared in accordance with U.S. GAAP.
Compensation and Benefits
Because Evercore operated as a series of limited liability companies
prior to its IPO, payments for services rendered by Evercore's Senior
Managing Directors generally were accounted for as distributions of
members' capital, rather than compensation expenses. As a result,
Evercore's pre-IPO compensation and benefits expenses do not reflect a
large portion of payments for services rendered by Evercore's Senior
Managing Directors and do not fairly reflect the operating costs Evercore
incurs as a public company. As a corporation, Evercore includes all
payments for services rendered by its Senior Managing Directors in
compensation and benefits expenses.
Evercore's compensation expense is generally based upon revenue and can
fluctuate materially in any particular quarter depending upon the amount of
revenue recognized as well as other factors. Accordingly, the amount of
compensation expense recognized in any particular quarter may not be
indicative of compensation expense in a future period.
The Company has targeted total employee compensation and benefits
awarded to employees at a level approximating 50% of net revenue. During
2007, the Company exceeded that level principally as a result of the new
Senior Managing Director hires, which have positioned Evercore for
continued growth. The Company retains the ability to exceed its
compensation and benefits award target, change the target or change how the
target is calculated at any time.
The Company's employee compensation and benefits costs for the quarter
and year ended December 31, 2007 were $59.9 million and $173.3 million,
respectively. When compared to net revenues for the associated periods the
ratios of compensation to net revenues were 63.9% and 53.9% respectively.
These ratios compare with 52.2% and 49.5%, respectively, for the quarter
and year ended December 31, 2006.
Compensation and benefits costs included $15.0 million and $23.3
million of compensation awarded to new Senior Managing Directors in the
quarter and year ended December 31, 2007, respectively. The compensation to
net revenue ratios when such amounts are excluded are 47.9% and 46.7%,
respectively. The compensation and benefits costs for Senior Managing
Directors that joined in 2006 were $1.8 million and $4.0 million in the
quarter and year ended December 31, 2006, respectively. The ratio of
compensation to net revenues, excluding such costs, was 50.0% and 47.6%,
respectively, for the quarter and year ended December 31, 2006.
As of December 31, 2007, Evercore's total headcount was 290 employees,
compared with 247 as of December 31, 2006.
As of December 31,
2007
Evercore Evercore Evercore Evercore
2006 U.S. Mexico Europe Total
Headcount:
Senior Managing Directors:
Advisory 21 17 6 5 28
Investment 9 7 1 1 9
Management
Corporate 3 3 0 0 3
Other Employees:
Other Professionals
and Support Staff 214 143 95 12 250
Total 247 170 102 18 290
The above table excludes Anthony Fry who joined Evercore on January 1,
2008.
Non-Compensation Expenses
Non-compensation expenses for the quarter and the fiscal year ended
December 31, 2007 were $18.3 million and $62.2 million respectively. These
compare to $12.6 million and $38.7 million, respectively, for the quarter
and year ended December 31, 2006. For the fiscal year ended December 31,
2007, Occupancy and Equipment Rental expenses were $13.3 million and
Professional Fees were $28.7 million. These two categories comprised 67.5%
of Evercore's total non-compensation expense.
-- Occupancy and Equipment Rental expenses were higher in 2007 than they
were in 2006 primarily due to Evercore's move to larger space in New
York which was completed during the third quarter 2007. The move
resulted in one time transition costs that amounted to $4.4 million for
the fiscal year 2007.
-- Professional Fees were higher in 2007 than they were in 2006 on account
of the costs of $1.3 million associated with recruiting Evercore's new
Senior Managing Directors, and by the ongoing costs of improving the
firm's support infrastructure to meet the requirements of operating as
a public company, in particular those requirements associated with the
requirements of Section 404 of Sarbanes-Oxley. Evercore remains
focused on completing the projects required to remediate its reported
material weaknesses and it anticipates completing those projects during
the first quarter of 2008.
During the fourth quarter 2007, Evercore has implemented other cost
management initiatives in order to support growth in its operating margins
in the future.
Income Taxes
Prior to the IPO, Evercore was not subject to Federal income taxes, but
was subject to New York City Unincorporated Business Tax and New York City
general corporation taxes. As a result of the IPO, the operating business
entities of Evercore were restructured and a portion of Evercore's income
is subject to U.S. Federal income taxes. For the fiscal year ended December
31, 2007 Evercore's effective tax rate was approximately 40%, reflecting
Evercore's income subject to U.S. Federal, foreign, state and local taxes.
The effective tax rate was approximately 43% for the fourth quarter of
2006.
Prior to August 10, 2006, the Company had not been subject to U.S.
Federal income tax, but had been subject to the New York City
Unincorporated Business Tax and New York City general corporate tax on its
U.S. earnings, including certain non-income tax fees in other jurisdictions
where the Company was restructured and a portion of the Company's income is
subject to U.S. Federal income taxes and taxed at the prevailing corporate
tax rates.
Dividend
On February 5, 2008 the Board of Directors of Evercore declared a
quarterly dividend of $0.12 per share to be paid on March 14, 2008 to
common stockholders of record on February 29, 2008.
Basis of Alternative Financial Statement Presentations
The aggregate 2006 results represent the Predecessor and Successor
company results prior to and subsequent to the IPO on August 10, 2006.
Predecessor Company results represent the results of the combined entities
known as Evercore Holdings prior to the IPO. The Successor Company results
represent the consolidated results of Evercore Partners Inc. and its
subsidiaries subsequent to the Company's IPO on August 10, 2006. Both the
Predecessor and Successor Company results have been prepared in accordance
with accounting principles generally accepted in the United States of
America (U.S. GAAP). The aggregate results are non-GAAP financial measures
and should not be used in isolation or substitution of predecessor and
successor results. See Annex I accompanying this press release for the
detailed U.S. GAAP amounts for the Predecessor and Successor entities which
have been aggregated above. Evercore believes that these results provide an
overall annual view of performance that is useful in evaluating Evercore's
ongoing operations.
Adjusted pro forma results are provided principally to give additional
information about the per-share effect of previously issued but unvested
equity and to exclude charges associated with Evercore's line of credit,
amortization of intangible assets acquired with Protego and Braveheart and
the compensation charge resulting from equity awards that vested in
conjunction with Evercore's May 2007 follow-on-offering.
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 prior
and subsequent to the IPO. 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,
as well as a description of how management believes the adjusted pro forma
results provide useful information in evaluating Evercore's ongoing
operations.
Conference Call
Evercore will host a conference call to discuss its results for the
fiscal year and quarter ended December 31, 2007 on February 12, 2008, at
8:00 a.m. Eastern Standard Time with access available via the Internet and
telephone. Investors and analysts may participate in the live conference
call by dialing (888) 200-8715 (toll-free domestic) or (973) 582-2771
(international); passcode: 34015215. 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) 642-1687 (toll-free domestic) or
(706) 645-9291 (international); passcode: 34015215. A live webcast of the
conference call will be available on the Investor Relations section of
Evercore's Web site at http://www.evercore.com. The webcast will be archived on
the Web site after the call.
About Evercore Partners
Evercore Partners is a leading investment banking boutique and
investment company. Evercore's Advisory business counsels its clients on
mergers, acquisitions, divestitures, restructurings and other strategic
transactions. Evercore's Investment Management business manages private
equity funds and traditional asset management services for sophisticated
institutional investors. Evercore serves a diverse set of clients around
the world from its offices in New York, Los Angeles, San Francisco, London,
Mexico City and Monterrey, Mexico. More information about Evercore can be
found on the Company's Web site at http://www.evercore.com.
Forward-Looking Statements
This discussion 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. Such forward-looking statements
are subject to various risks and uncertainties. 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, 2006. These factors should not be construed as
exhaustive and should be read in conjunction with the other cautionary
statements that are included in this discussion. 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.
EVERCORE PARTNERS INC.
CONDENSED COMBINED/CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE TWELVE MONTHS ENDED DECEMBER 31, 2006 AND 2007
(dollars in thousands, except per share data)
(UNAUDITED)
January August January
1, 2006 10, 2006 1, 2006
through through through
August December December December
9, 2006 31, 2006 31, 2006 31, 2007
Predecessor Successor Aggregate Successor
(1)
REVENUES
Advisory Revenue $96,122 $87,659 $183,781 $295,751
Investment Management Revenue (2) 16,860 6,591 23,451 20,158
Interest Income and Other Revenue 643 8,622 9,265 24,141
TOTAL REVENUES 113,625 102,872 216,497 340,050
Interest Expense - 6,783 6,783 18,451
NET REVENUES 113,625 96,089 209,714 321,599
EXPENSES
Employee Compensation and Benefits 20,598 52,316 72,914 299,327
Occupancy and Equipment Rental 2,233 1,971 4,204 13,275
Professional Fees 13,527 6,739 20,266 28,691
Travel and Related Expenses 4,176 3,130 7,306 8,203
Financing Costs 1,706 11 1,717 -
Communications and Information
Services 1,075 815 1,890 2,321
Depreciation and Amortization 666 3,234 3,900 17,421
Other Operating Expenses 1,319 2,066 3,385 7,296
TOTAL EXPENSES 45,300 70,282 115,582 376,534
INCOME (LOSS) BEFORE INCOME TAXES
AND MINORITY INTEREST 68,325 25,807 94,132 (54,935)
Provision for Income Taxes 2,368 6,030 8,398 12,401
Minority Interest 6 15,991 15,997 (32,841)
NET INCOME (LOSS) $65,951 $3,786 $69,737 $(34,495)
Net Loss Available to Holders of
Shares of Class A Common Stock: $(34,495)
Weighted Average Shares of Class A
Common Stock Outstanding:
Basic 10,219
Diluted 10,219
Net Loss Available to Holders of
Shares of Class A Common Stock Per
Share:
Basic $(3.38)
Diluted $(3.38)
(1) See "Basis of Alternative Financial Statement Presentations" on page 9
for a detailed discussion of the presentation of results in 2006 and
the differences in the calculation of the Company's results prepared
in accordance with U.S. GAAP and on an Adjusted Pro Forma basis. Any
financial measure other than U.S. GAAP results should not be
considered a substitute for, or superior to, measures of financial
performance prepared in accordance with U.S. GAAP.
(2) The above reflects a reclassification of certain management fees from
Other Revenue to Investment Management Revenue within Evercore's
Public Securities business. For the twelve months ended December 31,
2006 and 2007, the amounts reclassified were $191 and $1,166,
respectively.
EVERCORE PARTNERS INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS ENDED DECEMBER 31, 2006 AND 2007
(dollars in thousands, except per share data)
(UNAUDITED)
Three Months Ended December 31,
2006 2007
REVENUES
Advisory Revenue $75,085 $87,824
Investment Management Revenue (1) 2,404 4,347
Interest Income and Other Revenue 4,838 8,429
TOTAL REVENUES 82,327 100,600
Interest Expense 3,464 6,808
NET REVENUES 78,863 93,792
EXPENSES
Employee Compensation and Benefits 41,347 57,751
Occupancy and Equipment Rental 1,164 3,921
Professional Fees 6,076 9,309
Travel and Related Expenses 2,166 1,969
Financing Costs - -
Communications and Information Services 504 685
Depreciation and Amortization 2,141 4,126
Other Operating Expenses 1,670 1,780
TOTAL EXPENSES 55,068 79,541
INCOME BEFORE INCOME TAXES AND
MINORITY INTEREST 23,795 14,251
Provision for Income Taxes 5,733 3,606
Minority Interest 14,575 7,507
NET INCOME $3,487 $3,138
Net Income Available to Holders
of Shares of Class A Common Stock: $3,487 $3,138
Weighted Average Shares of Class
A Common Stock Outstanding:
Basic 5,045 12,414
Diluted 5,045 12,669
Net Income Available to Holders
of Shares of Class A Common Stock Per Share:
Basic $0.69 $0.25
Diluted $0.69 $0.25
(1) The above reflects a reclassification of certain management fees from
Other Revenue to Investment Management Revenue within Evercore's
Public Securities business. For the three months ended December 31,
2006 and 2007, the amounts reclassified were $156 and $560,
respectively.
Adjusted Pro Forma Results and Adjusted Pro Forma Net Income per Common
Share
The adjusted pro forma results reflect the following adjustments as
shown in the table below:
Exclusion of financing costs for the line of credit. The line of credit
was used for additional working capital. The line of credit was repaid out
of a portion of the proceeds of the IPO and terminated concurrently with
the IPO. Management believes that after the IPO it will rely on other
sources of funding to fund working capital and thus excluding financing
costs associated with the line of credit facilitates a meaningful
comparison of its non- compensation expenses prior and subsequent to the
IPO.
Exclusion of amortization of intangible assets acquired with Protego
and Braveheart. The Protego acquisition was undertaken in contemplation of
the IPO and substantially all of these charges were recognized by December
31, 2006. The Braveheart acquisition occurred on December 19, 2006.
Management believes that these charges are not reflective of ongoing
operations, and therefore exclusion of these charges enhances understanding
of the Company's operating performance.
Exclusion of compensation charges associated with the vesting of
contingently vesting LP partnership units and Stock Based Awards. Evercore
issued partnership units and stock based awards which vest upon the
occurrence of specified vesting events. In periods prior to the completion
of the May 2007 follow-on offering we concluded that it was not probable
that the vesting conditions would be achieved. Accordingly, we had not been
accruing compensation expense relating to these unvested partnership units
or stock- based awards. The completion of our May 2007 follow-on offering
resulted in Messrs. Altman, Beutner and Aspe, and trusts benefiting their
families and permitted transferees, collectively, ceasing to beneficially
own at least 90% of the aggregate Evercore LP partnership units owned by
them on the date of the internal reorganization resulting in the vesting of
certain partnership units and stock based awards. The vesting of these
awards resulted in a non- cash compensation expense of $124 million that
was the result of the successful completion of Evercore's equity offering
in May 2007 as well as an adjustment that was recognized in the fourth
quarter of 2007. In addition, a severance agreement recognized in the third
quarter of 2007 resulted in a $2 million compensation charge. Management
believes that the expense is neither reflective of ongoing compensation
expense nor meaningful when comparing prior periods. Therefore, exclusion
of these charges enhances the understanding of the Company's operating
performance.
Tax effect of prior adjustments. Prior to the IPO, the Company was a
collection of limited liability companies, partnership and sub-chapter S
entities which are not subject to Federal income taxes. As a result of the
IPO, the operating business entities of the Company were restructured and a
portion of the Company's income is subject to U.S. Federal income taxes.
Thus the prior three adjustments also need to be tax effected.
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 event based Evercore LP partnership
units and 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 event based unvested partnership units or stock based
awards will be achieved or satisfied.
The unaudited condensed combined/consolidated adjusted pro forma
financial information is included for informational purposes only and does
not purport to reflect the results of operations or financial position of
Evercore that would have occurred had we operated as a public company
during the periods presented. The unaudited condensed combined/consolidated
adjusted pro forma financial information should not be relied upon as being
indicative of Evercore'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
combined/consolidated adjusted pro forma financial information also does
not project the results of operations or financial position for any future
period or date.
CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENTS OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 2007
(dollars in thousands, except per share data)
(UNAUDITED)
Evercore
Evercore Partners Inc.
Partners Inc. Pro Forma Adjusted Pro
Successor Adjustments Forma
Adjusted Net Income
Advisory Revenue $ 295,751 $ - $295,751
Investment Management
Revenue 20,158 20,158
Interest Income and
Other Revenue 24,141 24,141
Total Revenues 340,050 - 340,050
Interest Expense 18,451 18,451
Net Revenues 321,599 - 321,599
Employee Compensation
and Benefits 299,327 (125,994) (p) 173,333
Professional Fees 28,691 28,691
Other Operating Expense 33,478 33,478
Amortization of
Intangibles 15,038 (15,038) (l) -
Total Expenses 376,534 (141,032) 235,502
Income (Loss) Before Income
Tax and Minority
Interest (54,935) 141,032 86,097
Provision for Income
Taxes 12,401 22,253 (m) 34,654
Income (Loss) Before
Minority Interest (67,336) 118,779 51,443
Minority Interest (32,841) 32,841 (n) -
Net Income (Loss) $ (34,495) $ 85,938 $ 51,443
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted
Average Shares of Class A
Common Stock Outstanding 9,354 41 (o) 9,395
Vested Partnership Units - 16,433 (o) 16,433
Unvested Partnership Units - 4,853 (o) 4,853
Vested Restricted Stock Units
- Event Based 865 379 (o) 1,244
Unvested Restricted Stock
Units - Event Based - 881 (o) 881
Unvested Restricted Stock
Units - Service Based - 78 (o) 78
Unvested Restricted Stock -
Service Based - 51 (o) 51
Restricted Stock -
Contingently Issuable - 7 (o) 7
Total Shares 10,219 22,723 32,942
Net Income (Loss) per Share:
Basic $ (3.38) $ 1.56
Diluted $ (3.38) $ 1.56
CONDENSED CONSOLIDATED ADJUSTED PRO FORMA STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2007
(dollars in thousands, except per share data)
(UNAUDITED)
Evercore
Evercore Partners Inc.
Partners Inc. Pro Forma Adjusted Pro
Successor Adjustments Forma
Adjusted Net Income
Advisory Revenue $ 87,824 $ - $ 87,824
Investment Management
Revenue 4,347 4,347
Interest Income and
Other Revenue 8,429 8,429
Total Revenues 100,600 - 100,600
Interest Expense 6,808 6,808
Net Revenues 93,792 - 93,792
Employee Compensation
and Benefits 57,751 2,189 (p) 59,940
Professional Fees 9,309 9,309
Other Operating Expense 9,000 9,000
Amortization of
Intangibles 3,481 (3,481) (l) -
Total Expenses 79,541 (1,292) 78,249
Income (Loss) Before Income
Tax and Minority
Interest 14,251 1,292 15,543
Provision for Income
Taxes 3,606 2,650 (m) 6,256
Income (Loss) Before
Minority Interest 10,645 (1,358) 9,287
Minority Interest 7,507 (7,507)(n) -
Net Income $ 3,138 $ 6,149 $ 9,287
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted
Average Shares of Class A
Common Stock Outstanding 11,170 - (o) 11,170
Vested Partnership Units - 15,273 (o) 15,273
Unvested Partnership Units 77 4,776 (o) 4,853
Vested Restricted Stock Units
- Event Based 1,244 - (o) 1,244
Unvested Restricted Stock
Units - Event Based - 881 (o) 881
Unvested Restricted Stock
Units - Service Based 69 - (o) 69
Unvested Restricted Stock -
Service Based 83 - (o) 83
Restricted Stock -
Contingently Issuable 26 - (o) 26
Total Shares 12,669 20,930 33,599
Net Income per Share:
Basic $ 0.25 $ 0.28
Diluted $ 0.25 $ 0.28
CONDENSED COMBINED/CONSOLIDATED ADJUSTED PRO FORMA STATEMENTS OF OPERATIONS
TWELVE MONTHS ENDED DECEMBER 31, 2006
(dollars in thousands, except per share data)
(UNAUDITED)
Acquired
Adjustments Company
for Combination
Predecessor Formation Adjustments(c)
Adjusted Net Income
Advisory Revenue $183,781 $- $10,045
Investment Management Revenue (1) 23,451 (5,005) (a) 2,039
Interest Income and Other Revenue 9,265 - 5,883
Total Revenues 216,497 (5,005) 17,967
Interest Expense 6,783 - 6,287
Net Revenues 209,714 (5,005) 11,680
Employee Compensation and Benefits 72,914 - 8,885
Professional Fees 20,266 - 1,981
Other Operating Expense 19,748 - 2,729
Amortization of Intangibles 2,654 - 14,631 (d)
Total Expenses 115,582 - 28,226
Income Before Income Tax and Minority
Interest 94,132 (5,005) (16,546)
Provision for Income Taxes 8,398 (131) (b) (166)(e)
Income Before Minority Interest 85,734 (4,874) (16,380)
Minority Interest 15,997 - (258)(f)
Net Income $69,737 $(4,874) $(16,122)
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted Average
Shares of Class A Common Stock
Outstanding
Vested Partnership Units
Unvested Partnership Units
Unvested Restricted Stock Units -
Event Based
Unvested Restricted Stock Units -
Service Based
Total Shares
Net Income per Share:
Basic
Diluted
Pro Forma
Adjustments for Pro Forma Adjusted
the IPO Adjustments Pro Forma
Adjusted Net Income
Advisory Revenue $- $- $193,826
Investment Management Revenue(1) - - 20,485
Interest Income and Other Revenue - - 15,148
Total Revenues - - 229,459
Interest Expense - - 13,070
Net Revenues - - 216,389
Employee Compensation and Benefits 25,273 (g) - 107,072
Professional Fees (4,300)(h) - 17,947
Other Operating Expense - (1,717)(k) 20,760
Amortization of Intangibles - (17,285)(l) -
Total Expenses 20,973 (19,002) 145,779
Income Before Income Tax and Minority
Interest (20,973) 19,002 70,610
Provision for Income Taxes 637 (i) 21,341 (m) 30,079
Income Before Minority Interest (21,610) (2,339) 40,531
Minority Interest 17,746 (j) (33,485)(n) -
Net Income $(39,356) $31,146 $40,531
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted Average
Shares of Class A Common Stock
Outstanding - (o) 6,567
Vested Partnership Units 13,433 (o) 13,433
Unvested Partnership Units 9,708 (o) 9,708
Unvested Restricted Stock Units -
Event Based 2,079 (o) 2,079
Unvested Restricted Stock Units -
Service Based 10 (o) 10
Total Shares 25,230 31,797
Net Income per Share:
Basic $1.27
Diluted $1.27
(1) The above reflects a reclassification of certain management fees from
Other Revenue to Investment Management Revenue within Evercore's
Public Securities business. For the twelve months ended December 31,
2006, the amounts reclassified were $191 and $420, for U.S. GAAP and
Adjusted Pro Forma, respectively.
CONDENSED COMBINED/CONSOLIDATED ADJUSTED PRO FORMA STATEMENTS OF OPERATIONS
THREE MONTHS ENDED DECEMBER 31, 2006
(dollars in thousands, except per share data)
(UNAUDITED)
Acquired
Adjustments Company
for Combination
Predecessor Formation Adjustments(c)
Adjusted Net Income
Advisory Revenue $75,085 $- $653
Investment Management Revenue 2,404 - -
Interest Income and Other Revenue 4,838 - (500)
Total Revenues 82,327 - 153
Interest Expense 3,464 - -
Net Revenues 78,863 - 153
Employee Compensation and Benefits 41,347 - 2,309
Professional Fees 6,076 - 529
Other Operating Expense 5,769 - 191
Amortization of Intangibles 1,876 - 1,767 (d)
Total Expenses 55,068 - 4,796
Income Before Income Tax and Minority
Interest 23,795 - (4,643)
Provision for Income Taxes 5,733 (2)(b) (1,232) (e)
Income Before Minority Interest 18,062 2 (3,411)
Minority Interest 14,575 - -
Net Income $3,487 $2 $(3,411)
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted Average
Shares of Class A Common Stock
Outstanding
Vested Partnership Units
Unvested Partnership Units
Unvested Restricted Stock Units -
Event Based
Unvested Restricted Stock Units -
Service Based
Total Shares
Net Income per Share:
Basic
Diluted
Pro Forma
Adjustments Pro Forma Adjusted
for the IPO Adjustments Pro Forma
Adjusted Net Income
Advisory Revenue $- $- $75,738
Investment Management Revenue - - 2,404
Interest Income and Other Revenue - - 4,338
Total Revenues - - 82,480
Interest Expense - - 3,464
Net Revenues - - 79,016
Employee Compensation and Benefits (2,386)(g) - 41,270
Professional Fees - - 6,605
Other Operating Expense - - 5,960
Amortization of Intangibles - (3,643)(l) -
Total Expenses (2,386) (3,643) 53,835
Income Before Income Tax and Minority
Interest 2,386 3,643 25,181
Provision for Income Taxes (852)(i) 7,081 (m) 10,728
Income Before Minority Interest 3,238 (3,438) 14,453
Minority Interest (600)(j) (13,975)(n) -
Net Income $3,838 $10,537 $14,453
Adjusted Class A Common Stock
Outstanding
Basic and Diluted Weighted Average
Shares of Class A Common Stock
Outstanding - (o) 6,567
Vested Partnership Units 13,433 (o) 13,433
Unvested Partnership Units 9,708 (o) 9,708
Unvested Restricted Stock Units -
Event Based 2,079 (o) 2,079
Unvested Restricted Stock Units -
Service Based 10 (o) 10
Total Shares 25,230 31,797
Net Income per Share:
Basic $0.45
Diluted $0.45
Notes to Unaudited Condensed Combined/Consolidated Adjusted Pro Forma
Statements of Operations (dollars in thousands, except per share data):
(a) Adjustment reflects the elimination of the historical results of
operations for the general partners of the Evercore Capital Partners
I, Evercore Capital Partners II and Evercore Ventures funds and
certain other entities through which Messrs. Altman and Beutner have
invested capital in the Evercore Capital Partners I fund,
specifically, Evercore Founders LLC and Evercore Founders Cayman
Limited, which were not contributed to Evercore LP. For the twelve
months and three months ended December 31, 2006, this adjustment
reflects $5,005 and $0, respectively, of net gains associated with
carried interest.
(b) Adjustment reflects the tax impact on Evercore LP's New York City
Unincorporated Business Tax, or "UBT," associated with adjustments for
the formation transaction, including the New York City tax impact of
converting the subchapter S corporations to limited liability
companies. Since the entities that form Evercore have been limited
liability companies, partnerships or sub-chapter S entities,
Evercore's income was not subject to U.S. Federal and state income
taxes. Taxes related to income earned by limited liability companies
and partnerships represent obligations of the individual Senior
Managing Directors. Income taxes shown on Evercore Partners Inc.'s
historical combined consolidated statements of operations are
attributable to the New York City UBT, attributable to Evercore's
operations apportioned to New York City.
(c) To include the pre-acquisition results, the following balances reflect
the historical financial results for Braveheart and Protego for the
periods ended December 31, 2006.
October
1, 2006 -
October October October December
1, 2006 - 1, 2006 - 1, 2006 - 31, 2006
December December December Acquired
19, 2006 31, 2006 31, 2006 Company
Braveheart Protego Acquisition Combination
Historical Historical Adjustments* Adjustments
Advisory Revenue $653 $- $- $653
Investment Management Revenue - - - -
Interest Income and Other
Revenue - - (500) (500)
Total Revenues 653 - (500) 153
Interest Expense - - - -
Net Revenues 653 - (500) 153
Employee Compensation and
Benefits 2,309 - - 2,309
Professional Fees 529 - - 529
Other Operating Expense 191 - - 191
Amortization of Intangibles - - 1,767 1,767
Total Expenses 3,029 - 1,767 4,796
Loss Before Minority Interest
and Income Tax (2,376) - (2,267) (4,643)
Provision for Income Taxes (1,019) - (213) (1,232)
Loss Before Minority Interest (1,357) - (2,054) (3,411)
Minority Interest - - - -
Net Income (Loss) $(1,357) $- $(2,054) $(3,411)
January
1, 2006 -
January January January December
1, 2006 - 1, 2006 - 1, 2006 - 31, 2006
December December December Acquired
19, 2006 10, 2006 31, 2006 Company
Braveheart Protego Acquisition Combination
Historical Historical Adjustments* Adjustments
Advisory Revenue $2,997 $7,048 $- $10,045
Investment Management Revenue - 1,810 - 1,810
Interest Income and Other
Revenue - 6,612 (500) 6,112
Total Revenues 2,997 15,470 (500) 17,967
Interest Expense - 6,287 - 6,287
Net Revenues 2,997 9,183 (500) 11,680
Employee Compensation and
Benefits 4,382 4,503 - 8,885
Professional Fees 568 2,749 (1,336) 1,981
Other Operating Expense 717 2,012 - 2,729
Amortization of Intangibles - - 14,631 14,631
Total Expenses 5,667 9,264 13,295 28,226
Loss Before Minority Interest
and Income Tax (2,670) (81) (13,795) (16,546)
Provision for Income Taxes (796) 274 356 (166)
Loss Before Minority Interest (1,874) (355) (14,151) (16,380)
Minority Interest - (422) 164 (258)
Net Income (Loss) $(1,874) $67 $(14,315) $(16,122)
* See footnotes (d), (e) and (f) for discussion of adjustments.
(d) Reflects the amortization of intangible assets acquired in conjunction
with the purchase of Protego with an estimated useful life ranging
from 0.5 years to five years and in conjunction with the purchase of
Braveheart with an estimated useful life ranging from one to six
years. The intangible assets with finite useful lives include the
following asset types: client backlog and relationships, broker dealer
license and, for Protego only, non-competition and non-solicitation
agreements.
(e) For tax purposes, no tax benefit will be realized related to the
intangible assets acquired by Evercore LP in conjunction with the
Protego acquisition. However, a tax benefit was realized by Evercore
Partners Inc. upon consummation of the IPO and the acquisition of
Braveheart. See Footnote (i) under "Notes to Unaudited
Combined/Condensed Consolidated Adjusted Pro Forma Statements of
Operations."
(f) Reflects an adjustment to eliminate a minority interest of 19% in
Protego's asset management subsidiary that Evercore acquired as part
of the Protego acquisition.
(g) Historically the entities that form Evercore were limited liability
companies, partnerships or sub-chapter S entities. Accordingly,
payments for services rendered by Evercore's Senior Managing Directors
generally were accounted for as distributions of members' capital
rather than as compensation expense. Following the IPO, management has
included all payments for services rendered by the Senior Managing
Directors in compensation and benefits expense. In connection with the
IPO, the Company targeted total employee compensation and benefits
expense at a level not to exceed 50% of net revenue (excluding for
these purposes, any revenue associated with gains or losses on
investments, carried interest or reimbursable expenses). The Company
retains the ability to exceed the target, change the target or how the
target is calculated, and starting in 2007, the Company no longer
excludes gains or losses on investments from revenues used to
calculate its compensation and benefits expense target.
Twelve Months Ended Three Months Ended
December 31, 2006 December 31, 2006
Pre formation Net Revenues (1) $216,389 $79,016
Less: Expense Reimbursements (4,825) (1,252)
Less: Carried Interest and
Realized and Unrealized
Gain (Loss) on Investments (1,887) 729
209,677 78,493
Employee Compensation Expense
Target - 50% 104,838 39,247
Braveheart National insurance Adj. 1,583 1,373
Protego Comp. Adj. 650 650
Pro Forma Compensation 107,071 41,270
Historical Compensation and Benefits (81,798) (43,656)
Employee Compensation and
Benefits Expense Adjustment $25,273 $(2,386)
(1) Pre formation Net Revenues have been adjusted for carried interest and
realized and unrealized gain/loss on investments for the pre-IPO
period as discussed in Note (a) above.
(h) Reflects non-recurring expenses associated with IPO and related
internal reorganization transactions.
(i) As a limited liability company, partnership or sub-chapter S entity,
Evercore was generally not subject to income taxes except in foreign
and local jurisdictions. For these adjusted pro forma financial
statements, a provision for corporate income taxes at the actual pre
IPO effective tax rate of approximately 43% for 2006, which assumes
the highest statutory rates apportioned to each state, local and/or
foreign tax jurisdiction and reflected net of U.S. Federal tax
benefit, was used. There is no current foreign tax increase or
benefits assumed with the Protego acquisition as it relates to the
effective tax rate. However, Evercore Partners Inc. will realize
deferred tax increases or benefits upon the Protego and Braveheart
acquisitions as it relates to the tax amortization of goodwill over a
15 year straight-line basis and Braveheart intangibles. The holders of
partnership units in Evercore LP, including Evercore Partners Inc.,
will incur U.S. Federal, state and local income taxes on their
proportionate share of any net taxable income of Evercore LP. In
accordance with the partnership agreement pursuant to which Evercore
LP is governed, management intend to cause Evercore LP to make pro
rata cash distributions to Evercore's Senior Managing Directors and
Evercore Partners Inc. for purposes of funding their tax obligations
in respect of the income of Evercore LP that is allocated to them.
(j) Reflects an adjustment to record the 67.3% minority interest ownership
of Evercore's Senior Managing Directors in Evercore LP relating to
their vested partnership units, reflecting 6,518,558 shares of Class A
common stock assumed outstanding for the three and twelve months ended
December 31, 2006. Partnership units of Evercore LP are, subject to
certain limitations, exchangeable into shares of Class A common stock
of Evercore Partners Inc. on a one-for-one basis. Evercore Partners
Inc.'s interest in Evercore LP is within the scope of EITF 04-5.
Although Evercore Partners Inc. has a minority economic interest in
Evercore LP, it has a majority voting interest and control the
management of Evercore LP. Additionally, although the limited partners
have an economic majority of Evercore LP, they do not have the right
to dissolve the partnership or substantive kick-out rights or
participating rights, and therefore lack the ability to control
Evercore LP. Accordingly, Evercore consolidates Evercore LP and
records minority interest for the economic interest in Evercore LP
held directly by the Senior Managing Directors.
(k) Adjustment for financing costs used for additional working capital.
The line of credit was repaid out of a portion of the proceeds
received from the IPO.
(l) Reflects expenses associated with amortization of intangible assets
acquired in the Protego and Braveheart acquisitions.
(m) An adjustment has been made to increase Evercore's effective tax rate
to approximately 40% for 2007 and 43% for 2006. For further
discussion see footnote (i).
(n) Reflects adjustment to eliminate minority interest as all Evercore LP
partnership units are assumed to be converted to Class A common stock.
(o) Assumes the vesting of all LP partnership units and restricted stock
unit event-based awards and reflects on a weighted average basis, the
accretion 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 and restricted stock
units issued in conjunction with the IPO are excluded from the
calculation.
(p) Adjustment for reduction of compensation associated with one time
vesting of stock based awards related to the follow-on offering and an
adjustment recognized in the fourth quarter of 2007 ($124 million).
It also reflects a severance agreement recognized in the third quarter
of 2007 ($2 million).
SOURCE Evercore Partners Inc.
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Related links:
http://www.evercore.com
CONTACT:
Investors, Robert B. Walsh, Chief Financial
Officer of Evercore Partners, +1-212-857-3100; Media, Kenny
Juarez or Chuck Dohrenwend, +1-212-371-5999, both of The
Abernathy MacGregor Group, for Evercore Partners
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